Press release -

Pandemic and Remote Working Push Consumption out of German City Centers

The coronavirus pandemic has shifted consumption from city centers to city outskirts – with ongoing impact. At the end of May 2022, sales in five German consumption centers in downtown urban areas were still 10 percent below pre-crisis levels, but sales increased by up to 20 percent in the outlying suburbs. This is the core finding of an ifo Institute study, based on aggregated and anonymized retail sales data provided by Mastercard. The study analyzed retail sales trends, among other data points including remote working figures, for Berlin, Munich, Hamburg, Stuttgart, Dresden, and their surrounding areas. “Even after almost all coronavirus measures have expired, people are not returning to their pre-crisis shopping habits,” says Carla Krolage of the ifo Institute, one of the study’s coauthors.

Less consumption downtown, more consumption in residential areas and suburbs – this phenomenon is also known as the “donut effect.” In the ifo analysis, this can be observed mainly in the major German cities of Berlin, Munich, and Hamburg, and more so on weekdays than on weekends. Although there was no decline in consumption in city centers on Saturdays compared to the pre-pandemic period, this did not compensate for the loss of sales on weekdays, the authors note.

Another finding of the study is that (residential) areas that traditionally had little remote working in the past and that have seen a high increase in the number of people working from home since the pandemic are seeing 20 percent more consumption than they did before the pandemic. “People have become accustomed to online shopping and are working from home more than before the pandemic,” says Jean-Victor Alipour, another of the study’s coauthors. “Residential areas and suburbs are becoming consumption centers in their own right, with significantly more money being spent locally.”

Simon Krause, another study coauthor, adds: “A lasting increase in remote working and online shopping has caused regional shifts in consumption. These are severely challenging the concept of German city centers as places purely for shopping and working. This can have significant consequences for retail, office complexes, and restaurants, as well as for traffic and urban planning.”

The study looked at anonymized and aggregated domestic card payments, drawn from the Mastercard Retail Location Insights database. This information contains daily spending patterns at points of sale for all postal codes of the five metropolitan regions and was provided to the ifo Institute for the purposes of this project by Mastercard. In addition, the study used representative, microgeographic survey data on remote working collected by infas 360.


Publication

The Future of Work and Consumption in Cities after the Pandemic: First Evidence from Germany”, von Jean-Victor Alipour, Oliver Falck, Simon Krause, Carla Krolage, Sebastian Wichert, CESifo Working Paper, Forthcoming

Article in Journal
Jean-Victor Alipour, Oliver Falck, Simon Krause, Carla Krolage, Sebastian Wichert
ifo Institut, München, 2022
ifo Schnelldienst, 2022, 75, Nr. 10, 53-57

Video

Video

The Future of Work and Consumption in Cities after the Pandemic: First Evidence from Germany

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Portrait Dr. Carla Krolage

Prof. Dr. Carla Krolage

ifo Research Director
Harald Schultz

Harald Schultz

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