WWhile politics is still arguing diligently about a ban on low prices in the food trade, consumers are already further along. They are now leaving cheap food more and more frequently – as simple market participants and without any restrictions. This is shown by a new study by the Nuremberg Society for Consumer Research (GfK), according to which the quality orientation of German consumers has increased further in the past year.
“The overall growth in sales in the food retail sector compared to 2018 is exclusively due to the quality-oriented shopping behavior of consumers,” wrote the author, GfK expert Robert Kecskes, in his analysis.
The most visible consequence of the trend towards more quality is the loss of market share by discounters. The classic supermarkets such as Rewe, Edeka or Tegut significantly outperformed Aldi, Lidl & Co in 2019 with an increase in sales of three percent, which only grew by 0.9 percent.
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For the first time in four years, their share in the food trade shrank from 43.4 to 43.1 percent. The apparently small difference of 0.3 points corresponds to sales of around half a billion euros. The discounters had reached their best value in 2008 with 44.5 percent.
Nevertheless, cheap offers will continue to find buyers. According to a survey by the Nuremberg market researchers, 17 percent of German households say that they “can hardly afford anything”. According to a study by the Bertelsmann Foundation, those on low incomes spend up to 40 percent of their budget on food in individual cases – every cent counts for them.
Chancellor Angela Merkel rejected a general ban on combat prices in the food trade – beyond the already existing ban on dumping – after a meeting with representatives of the food trade on Monday, while, for example, the Greens co-chairman Robert Habeck had called for a ban on “junk prices”.
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Merkel rejects state minimum prices for food
At a meeting with representatives of the retail chains and members of the government, Chancellor Merkel rejected calls for the government to set minimum prices for food. Minister of Agriculture Klöckner announced further rounds of talks.
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Source: WELT / Eybe Ahlers
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In any case, according to GfK, the number of households that have to pay attention to every cent is steadily falling. Ten years ago, instead of 17 percent today, 26 percent said that they “could hardly afford anything”. At the same time, the proportion of those households that “can afford almost everything” rose from 27 to 42 percent.
This is mainly due to the well-running labor market with full employment in many regions, relief from some government levies, higher wages and improved social benefits. This also applies if one takes into account price increases. According to the Bundesbank, disposable income in Germany in the third quarter of 2019 was 3.3 percent higher than a year earlier.
More money in your pocket – this creates freedom for many consumers to cover their daily needs. This trend runs across product groups, from food to personal care. In the case of dairy products such as yoghurt or curd, for example, organic goods achieved one of the highest growth rates of all categories with an increase of 16.6 percent.
Higher-priced hay and pasture milk performed even better with drinking milk at 21 percent. At the top of the category’s podium – in industry jargon: called the “white line” – are milk alternatives such as soy or almond milk, which were up almost 23 percent.
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More noble versions are also very popular with alcoholic beverages. Gin and liqueurs for the well-kept aperitif pulled away in sales, clear schnapps and brandies lost. The same phenomenon with non-alcoholic beverages: in 2019, the comparatively expensive energy drinks and bitter drinks were popular, conventional limos were less in demand.
Even the Germans strive for better when cleaning. The main contribution to the sales increase of a good two percent in this category was made “by the increased demand for ecological washing, cleaning and cleaning agents, which are generally more expensive than conventional products,” says GfK.
If consumers had not chosen mass-priced, higher-priced product variants, sales would have decreased, as the quantities sold in the grocery and drug stores dropped by 0.5 percent in the past year. The fact that there was still a 1.7 percent increase in sales is solely due to the phenomenon of so-called trading-up, according to the consumer researchers. The biggest increase was in fresh products such as fruit and vegetables with a good three percent.
The question remains, why the discounters could not surf more on this wave, although they apparently recognized the tendency in time. Aldi began years ago to replace or supplement many of its own house brands with manufacturer brands such as Red Bull, Persil or Haribo.
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However, with this they could not have gained as much as they would have lost through the relativized cheap image of their traditional own brands, Kecskes analyzes: “The price and the price perception explain a lot, but not everything!” The consumers not only asked for acceptable ones Prices, but also “a pleasant shopping atmosphere and an attractive range of ecologically sustainable products”.
According to GfK, consumers will continue to rely more on the ecological and organic appearance of products than on the cheapest price – at least as long as they have the financial scope to do so. Only chains that maintain their sustainability image with animal welfare, anti-plastic or regional campaigns have good long-term opportunities.
“Companies that are not or too late to play their part in the survival of life on earth will be punished for this over the next few years,” Kecskes predicts. Here too, supermarkets are better positioned than discounters.
It is unlikely that the consumer trend will soon tip over to the cheap home. German consumers have so far been relatively unaffected by uncertainties such as Brexit, trade wars and political tensions. According to GfK, consumers “registered dark clouds in the economic sky”. But apparently they don’t care that much as long as the job market and therefore their job is not affected.
This seems to be currently being confirmed. In January 2020, all indicators of the much-noticed GfK consumer climate index ’have recovered after previous setbacks, above all income expectations. The propensity to buy is higher than it has been in a year.
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