German retailers' sales dropped by 1.4 percent in July compared with June, the federal statistics office Destatis said in a statement.
It was the steepest drop since January 2012 and deeper than analysts' expectations.
Retail sales had increased by 1.0 percent the previous month.
On a 12-month basis, however, business increased by 0.7 percent in July compared with the same month last year, the statisticians calculated.
Retail sales data are subsequent to frequent revision.