Consumption crisis in Germany?

February 13, 2009 at 12:16 pm | Posted in Market Research - Business Environment | Leave a comment

Nuremberg, February 2nd 2009

Gfk held a press conference and focussed on the question: is there a consumption crisis in Germany?

The answer can be based on three statements of the Gfk:

1) “The level of unemployment is not expected to affect consumption until the end of the year and so consequently, consumers are unlikely to experience much of a crisis this year”

2) “Consumer groups will be affected to varying degrees”

3) “Despite the turmoil in the markets, the consumer climate index rose from 1.6 points last September to 2.2 points in January 2009, with a stable trend most recently”

This gives a clear answer to the question: No, this year (2009) consumers are not affected by the financial crisis. They even profit from it, due to a drop in the rate of inflation and still decreasing gas and oil prices. “According to estimates of the German Institute of Economic Research (DIW), the pressure taken off consumers and companies as a result of the massive reduction in energy prices is the equivalent of some EUR 25 billion to EUR 30 billion.” Gfk even forecast a growth in consumption up to o,5%. May the German consumption balance out the economic recession? At least it provides the condition for hope.

But when will purchasing power be affected? During times of economic crisis the cocooning effect increases. People stay at their homes. They will less enjoy events outside do especially the Restaurant industry will be affected by the crisis.

The situation will have a major impact on food retail. The various sectors will also be affected to varying degrees. There will be losers, but also winners in this crisis. Among the winners will certainly be Discount stores and cheap brands because consumers will pay more attention to their expenditures. “However, the premium segment and brands which boast high levels of customer loyalty will also survive the crisis better than others and emerge from it stronger. The demand for chocolate, ready meals, convenience products and soft drinks is set to rise due to the cocooning effect. Conversely, consumers are likely to save when it comes to products such as wine, spirits, coffee, butter, margarine etc. and cosmetics. They will save in two ways, by consuming less and by choosing more favorably priced products with the same product features.”

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