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Why people in Germany should buy Christmas gifts early this year

With global supply chains under pressure, Germany is already seeing popular Christmas gifts in short supply. Here's what's going on - and how you can avoid additional retail stress this season.

Shoppers in Hannover at Christmas
Shoppers with umbrellas walk through Hannover's shopping district ahead of Christmas. Photo: picture alliance/dpa | Swen Pförtner

What’s going on?

According to research carried out by Munich’s Ifo Institute, faltering supply chains from Asia are already having a knock-on effect on retail stocks, with several retailers admitting they are facing shortages of products such as smartphones, bicycles and home improvement supplies.

In a representative survey carried out by Ifo deputy director Dr. Klaus Wohlrabe, 100 percent of bicycle shops said they were struggling to restock this year. Cheap and mid-range bicycles were particularly badly hit, leading to price rises across the board. 

Beyond the bicycle sector, the vast majority of furniture shops, DIY stores and electronics retailers also admitted they were facing stock shortages in the run-up to Christmas. 

The problems are largely to do with a lack of key components being delivered from Asia. These include computer chips that are used in the manufacturer of smartphones and other electronic gadgets.

The vast majority of retailers in Germany are believed to be affected by the delays, leading to fears that shoppers will be facing long waits for popular gifts by the time December rolls around. 

READ ALSO: German shops hit by supply problems ahead of festive season

When should people start Christmas shopping? 

“There my answer would be: immediately,” Dr. Wohlrabe told German broadcaster Tagesschau on Monday.

With the chip shortage overwhelmingly hitting the electronics sector, the lack of smartphones and laptops in particular is likely to become even more noticeable as the festive season draws near. 

“If the gift contains electronic components, then you’d better grab it quickly so that there are no nasty surprises at Christmas,” Wohlrabe added.

Shoppers queue outside the Apple Store on Kurfurstendamm in Berlin
Shoppers queue outside the Apple Store on Kurfurstendamm in Berlin. Electronics goods such as smartphones and tablets could be scarce this year. Photo: picture alliance / Paul Zinken/dpa | Paul Zinken

His advice was echoed by Iwona Husemann, of the North-Rhine Westphalia Consumer Advice Centre, who believes prices are set to rise over the next few months due to the limited availability of key products.

“If it’s available now, you should buy it now,” she told Tagesschau. 

However, according to Husemann, careful price comparison is a better strategy than panic buying, since prices in retail shops may not be as high as customers fear.

Is there a difference between online and brick-and-mortar shops?

Though all sellers are currently hit by supply chain woes, consumer rights experts believe there could be more than one reason to shop on the high street this Christmas. 

For a start, high-street retailers establish their margins and set prices early in the season, meaning that the price hikes customers are seeing online may not be as dramatic in brick-and-mortar premises. 

In addition, Husemann believes customers are likely to face additional bottlenecks if they order items online that then have to be delivered.

“As we get closer to Christmas, you should add at least two to three days to the delivery time,” she explained.

A Galeria Kaufhof sign says "Shop Online Now"
A sign outside Galeria Kaufhof directs shoppers to “Shop Online Now”. This year, visiting brick-and-mortar shops may be a cheaper and more reliable option. Photo: picture alliance/dpa | Armin Weigel

The German Retailers’ Association (HDE) is also keen to reassure customers that they should be able to source the majority of gifts they need in shops – though individual items may become more scarce.

“It is not to be expected that people will be standing in front of empty shelves when they go Christmas shopping,” said the HDE’s Stefan Genth.

In addition, Germany’s primary Booksellers’ Association has assured customers that the supply of books is likely to last through Christmas – though prices may need to rise in the future if shortages of paper continue in the sector. 

READ ALSO: How to send Christmas gifts between Germany and the UK after Brexit

When will things improve?

Though the research from the Ifo Institute has given shoppers a better sense of what to expect this Christmas, it remains unclear just how long the supply issues could continue.

As an estimate, Wohlrabe believes that most products will be freely available again in early 2022, but the electronics sector could face many more months of issues – possibly stretching beyond next Christmas as well.

“For most products, the backlog could be cleared in the first half of 2022. For chips and semiconductors, this could take until 2023,” he said. 

This could potentially mean yet another year with fewer smartphones under the Christmas tree. 

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Where in Germany do people have the highest disposable income?

An economic study has shown huge regional differences in income throughout Germany. So which parts of the country have the most to spend each month, and which are feeling the squeeze?

Where in Germany do people have the highest disposable income?

A study by the Economic and Social Sciences Institute (WSI) of the Hans-Böckler foundation reveals stark regional differences in disposable income in Germany. In some cases, households had as much as double the spending money of those in other parts of the country. 

Here’s where people have the most – and least – disposable income each month.

What is disposable income?

The WSI calculated disposable income as the sum of income from wealth and employment, minus social contributions, income taxes, property taxes and other direct benefits or taxes.

What’s left is the income which private households can either spend on consumer goods or save.

The study, which was based on the most recent available national accounts data for 2019, looked at the disposable income of all of the 401 counties, districts and cities across Germany.

Which regions have the highest and lowest disposable incomes?

The study found that the regions with the highest disposable incomes were in the southern states.

Heilbronn in Baden-Württemberg had the highest disposable income of all 401 German counties and independent cities – with an average per capita disposable income of €42,275. The district of Starnberg in Bayern followed in second place with €38,509.

READ ALSO: REVEALED: How much do employees really earn across Germany’s states?

By comparison, per capita incomes in the cities of Gelsenkirchen and Duisburg in North Rhine-Westphalia were less than half as high, at €17,015 and €17,741 respectively. These regions had the lowest disposable income in the country. 

The study also found that, more than thirty years since German reunification, the eastern regions continue to lag behind those in the west in terms of wages.

According to the WSI, the Potsdam-Mittelmark district is the only district in the former east where the disposable per capita income of €24,127 exceeds the national average of €23,706.

Do regional price differences balance things out?

The study also showed that regionally different price levels contribute to a certain levelling out of disposable incomes, as regions with high incomes also tend to have higher rents and other living costs.

“People then have more money in their wallets, but they cannot afford more to the same extent,” WSI scientist Toralf Pusch explained.

READ ALSO: EXPLAINED: When will Germany raise the minimum wage?

Therefore, incomes in the eastern states, adjusted for purchasing power, are generally somewhat higher than the per capita amounts would suggest.

That could explain why, even after price adjustment, the cities of Gelsenkirchen and Duisburg in western Germany continue to be at the very bottom of the list.

Saxon-Anhalt’s Halle an der Saale, on the other hand, which has an average disposable income of only €18,527, benefits from the lower prices in the east.