E-commerce to drive German retail sales growth in 2014- GfK

BERLIN (Reuters) - A 25 percent surge in online sales will more than compensate for a one percent drop in trade at German shops this year, according to researchers at GfK, underscoring the shift to e-commerce in Europe's largest economy.

Retail sales are likely to rise 1.2 percent overall in nominal terms, which will yield a lower growth rate after discounting for inflation, the GfK said in a release on Monday.

Despite the drop in shop sales, turnover at conventional retailers is still likely to provide around 10 times more business than e-commerce, generating 408 billion euros compared with 47.5 billion.

"The forecasted retail turnover reflects changing consumer behaviour," GfK market data expert Simone Baecker-Neuchl said. "The online boom also offers opportunities to stationary retail. But small retailers in particular face significant challenges."

Domestic demand is expected to drive economic growth in Germany this year, which is forecast to rise more than fourfold from last year's meek 0.4 percent. The government expects growth of 1.8 percent.

(Reporting by Sarah Marsh; editing by Erik Kirschbaum, Larry King)