The American retail titan Walmart has tried it, the French supermarket chain Intermarché and also Delhaize from Belgium: all of them have failed in their attempts to gain a foothold in the German market, and they are not the only foreign market entrants to have a hard time in this country. The German consumer is said to be the most demanding in the world. High expectations and a low frustration limit are only two of the factors that make it very hard to meet halfway. So you better go the extra mile. As advisors of expansion strategies to Germany, we try to understand this bipolar personality, and more importantly, what to do about it:
CHALLENGES – “Observe your enemies, for they first find out your faults”
Germans score on the high end of “uncertainty avoidance”. Before making a purchase, they like to learn as much as possible about other similar products, prices, provenance etc. They use comments and product comparisons, but also word-of-mouth counts a lot. Finally, certifications help a great deal to convey trust. For example the ‘Blauer Engel’, is the eco-label of the federal government of Germany since 1978.
Consumers expect quality and longevity. Regarding fashion, for example, favourite pieces are stored and worn for an average of nine years. They are known to be loyal consumers, buying the same product over and over again, once they are convinced about its quality.
This is best understood in the light of the German mega trend towards a more “moral” consumption overall, in all areas of life. Environmental awareness is common among German consumers. This is reflected in consumption, with the development of organic and local products, vegetarian and vegan food trends, using little energy, etc. For example, the second-hand market is very widespread in Germany, especially in the big cities, for economic, ecological and social reasons. The Fridays-for-future movement had its peak about a year ago, with thousands of scholars missing classes to protest against climate change. Image retrieved from spiegel.de
Generally quite disciplined and restrained, Germans have a strong propensity to save and invest, over being indulgent. Some consumers are willing to pay a premium for a better quality product (i.e. a product they trust, or an organically certified product), but others can be highly price-sensitive: the “Aldi-Effect” describes the fact that in no other industrialised country people have to spend as little on food as in Germany.
Germany is an individualist and a highly decentralised society. Price-sensitivity varies from east to west, and also political and ideological mindsets have an impact on consumer behaviour. For example, Fritz-Cola, the Hamburg-originated soda is very popular in big cosmopolitan cities such as Hamburg, Berlin and Cologne, with rather leftist attitudes: it is a local product and a statement against Globalisation and Capitalism. “Man, wake up!” The fritz-cola campaign supports protests against the summit of G20 in Hamburg in 2017
As mentioned, Germans are quick to get frustrated if anything goes wrong, and they are not forgiving. They expect quick-and-easy transactions, expert advice and fast troubleshooting across all channels. Plus personal attendance: 74 % prefer dealing with human beings over digital channels to solve customer service issues. Last but not least: once lost, it is difficult to regain the trust, so try to forecome pitfalls.
Online shopping, especially in the fashion and electronic devices market, is rising yearly. In this regard, Paypal has proven to be the most popular payment method. However, Germany remains one of the most cash-intensive advanced economies on earth because consumers are slower in adopting new emerging technologies. This has mainly to do with trust. However, just as with online shopping, digital payment is gaining popularity by the year. Online retail sales in Germany (2000-2019). Source: Handelsverband Deutschland
8. Social Media:
Germans value their privacy personally and culturally. As such, despite high levels of internet and smartphone penetration, Germans tend to be more cautious users of social media, with growing numbers now cancelling their social media accounts. Nonetheless, we believe this to be a strong tool if used wisely. Just as e-commerce, these forces can not be ignored in contemporary modern evolution. There is not one clear answer on how the German consumer is like. Rather it’s part of the puzzle that you have to figure out as you do research on particular target groups. It will help you to ask the right questions and sheds light on aspects that are significant when thinking about entering the German market.
Conclusion? Not easy.
Conclusion? Not easy. Germans are highly demanding and reluctant to trust a brand, but not as reluctant to let you fall in case the trust is broken, or promises are not met. Therefore, we recommend you put a great effort into gaining that trust, and furthermore encourage you to maintain and USE it. How? Next week, we will share more insights on which steps to take to gain the trust of German consumers. Stay tuned for more to come →
RECOMMENDED READING: German Consumers: Gaining Brand Loyalty through proper Brand Building 2/2