Germany's Finance Minister Olaf Scholz has promised economic support to make up for lost revenue. Businesses that are forced to close are eligible to receive up to 90 percent of their fixed costs, up to 500,000 euros ($608,000) a month.
The lockdown will give an undoubtable boost to online retailers in the lead up to Christmas. Under the new rules, they're allowed to continue sales – much to the dismay of many small business owners.
"What annoys me is the boom for Amazon," said Rut Meyburg, a leather goods store owner. "It's a tragedy because it's not a real shop."
She said the support from the government would be critical to survival of many small businesses.
New COVID-19 cases have stabilized since Germany began its lockdown light in early November. The Robert Koch Institute is reporting around 20,000 cases a day, which officials have called a "worrying trend."
The new lockdown was announced after Chancellor Angela Merkel met with Germany's 16 state premiers on Sunday.
Merkel has expressed serious concern about how the Christmas holiday could put even more pressure on already strained hospitals.
"Our intention has always been to avoid a strain on the health system. That is why there is an urgent need for action," she said.
The government's decision largely comes with the population's support.
Recent polling suggests a majority of Germans favor tougher measures, even if they inconvenience holiday plans.