There is a strong debate going on in respective media whether German retail is endangered or not. I strongly believe it is not, but a change in trade and the way consumers are doing their shopping is obvious. Whereas some are talking about a digital transformation, change is happening at such a fast pace, that it is more like a disruption than a slow transition into a new age. Anyway, be it online or offline, department store or discounter, it seems consumer spendings are at all-time high in Germany according to Süddeutsche Zeitung. Here some brief characteristics of German retail:
- With approx. 82 million inhabitants, a high average income and 80 cities with more than 100,000 inhabitants, Germany is Europe`s largest consumer goods market.
- Representing almost 20% of purchasing power in Europe, the German retail market has a turnover of more than 460 €bn.
- Retail trade is the third largest generator of revenue in Germany after industry and crafts. The market is extremely competitive.
- Despite the high level of maturity, the market shows a continuously positive growth.
- Dynamic market conditions, moderate living costs, low unemployment- and low inflation-rate are important factors contributing to healthy and robust consumer spending power.
- Domestic purchasing power has continued to show stable growth since years, even during recent global economic crisis.
Many companies declare Germany to one of their key consumer goods markets as due to giant retailers and the reasons mentioned above it must look extremely attractive to managers, almost irresistable. That is why the market is also hard-fought and has its very own rules. In order to succeed in the German market, companies need to be able to adapt in minimum three ways:
- in terms of products and/or services regarding needs and habits of German consumers.
- mentality-wise regarding a strict, precise and well-organized German trade culture (YES – accurate logistical data is crucial, and NO – a deadline is not just a recommendation).
- regarding general trends of trading, moving quickly from offline to online and from traditional department stores or supermarkets towards discounters.
Süddeutsche Zeitung, March 14th, 2018
Federal German Statistics Office 2017
World Bank 2016