In the United States we typically hear about German retailers solely in the context of their entrance into the North American market, and not about the particulars of the domestic German retail industry. This is unfortunate, because German retail is sophisticated, competitive and has its own unique challenges and “personality,” all of which can shed light on larger, international retail trends.
Digimarc recently appointed German retail expert Claudius Jaeger to the position of sales director of Europe, where he will work out of the Cologne, Germany office. He shared with us his insights into the top trends in German retail:
Discounters Focusing on CX– German retailers like Aldi and Lidl have long been known as no-frills discount stores; pallets of products go straight from the backroom to the sales floor. But this is changing, as these discounters continue to alter their layout and shelving to emphasize the customer experience (CX).
Add to this the fact that supermarkets have been investing heavily in private brands over the last 10 years (to steal market share from the discounters), and it’s obvious the boundaries between discounters and traditional supermarkets are becoming less clear.
To Sell or Not Sell Online – The competitive pressures and operational efficiencies in German retail are very high; the average margins in food retail are between 1-1.5%. In such a difficult landscape, online modernization has developed slowly; there have been efforts to develop e-commerce, but mostly without a firm sense of direction. The industry is now waiting to see if retailers develop clear strategies and begin investing more, or if they withdraw like Lidl, who recently announced they plan to stop selling food online.
Entrance of Amazon Fresh – There is some indication Amazon Fresh may be scaling back in the United States, but it is new to Germany, and being piloted in a few large cities like Berlin and Hamburg. Amazon Fresh delivers groceries directly to consumer homes in temperature-controlled bags. This year saw a 12% increase in online sales in Germany compared to 2016, but it remains to be seen how consumers will respond to specifically ordering groceries online.
The ‘Greying’ of German Shoppers – The German population is getting older and this is impacting how retailers sell. It’s estimated that over one in three Germans will be over 60 by 2050. German retailers are rethinking store layouts, adding magnifying glasses to shopping carts (making product packaging easier to read) and putting benches in stores, all in an effort to better serve older customers.
And while Millennials in the United States recently surpassed Baby Boomers as “the largest generation,” Boomers still represent a massive chunk of the population (74.9 million), and in North America retailers can learn from German efforts to serve this important demographic.
Mobile Payment Slowly Catching On – Though not yet fully embraced by German consumers, mobile payment is slowly “coming to life.” One in ten German mobile users were expected to make a mobile payment in 2017.
Find out about Digimarc retail and brand solutions by visiting our German-language site or by going directly to digimarc.com.