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Bright prospects came late. |
Rising exports, an improved business atmosphere, a decrease in unemployment and income tax cuts provide private consumption impetus in Germany, short term.
But the sales gains made in the run up to Christmas 2009 by the toys and games, electronics and even fashion sectors are likely to be given up as 2010 progresses, with the drawdown of the government's stimulus package leaving less money in consumers' pockets.
According to the findings of the latest GfK purchasing power survey for Germany, disposable incomes will fall by Euros42 per capita in 2010.
The effects of the economic crisis will reach private consumers, but this nominal decrease in purchasing power is likely to be kept in check by low inflation.
Having said that, German purchasing power will decrease by Euros7.5 billion or 0.5% compared with 2009 due to decreasing incomes as well as a decline of 216,000 in the population.
This corresponds to a decrease of Euros42 per inhabitant in 2010. On average, Germans will have Euros18,900 per capita per year to spend on the costs of living and consumption.
The consumer climate in Germany will cool in 2010 according to GfK. Although Germans' economic expectations are stabilising once more and income expectations are increasing perceptibly, the propensity to buy is recording losses.
The overall indicator is forecasting a valuation of 3.3 points for January 2010, following a revised valuation of 3.6 points in December 2009. This is predominantly attributable to the fact that consumers - despite the current price retail war - are expecting prices to rise again, particularly in the energy sector.
The correlation between price stability and buying propensity is therefore expected to prevail and overshadow the positive effects of increased income expectations. Another reason is the expected rise in savings since December 2009.
Although consumer sentiment looks good, Germans increasingly debate the price when purchasing goods.
According to an OC&C survey (http://www.occstrategy.com/join.de), this price sensitivity is going to increase.
Consumers who believe the economic crisis could have an impact on their budgets will consider prices over quality and will buy fewer branded goods.
Germans also plan to take their time shopping. Believing the economic crisis could affect their budgets are 14% of workers with net incomes starting from Euros3,000, 15% of workers with net incomes of between Euros2,000 and Euros2,999, 17% of workers with net incomes of between Euros1,500 and Euros1,999 and 26% of those earning less than Euros1,500.
Christmas sales saw toys, electronics uptick
Hubertus Pellengahr, Spokesman for the German retailer association (HDE) reported weak Advent weeks leading into Christmas but there was a late consumer rush which helped bigger stores.
Favoured Christmas gifts were classic doll toys, Lego puzzles, Playmobil items and board games. Game consoles and their matching video games were also in high demand.
Merchandise related to the latest Twilight Saga movie was also very popular, especially among female teenagers.
Cameras and digital photo frames were the biggest bestsellers for adults. Many German shoppers had already snapped up knitted pullovers, coats and jackets for the cold weather.
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| Electronic uptick. |
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Consumer electronics such as flat screen TVs with the latest LED technology and mobile phones with multimedia functions remained popular.
Small household appliances with chic designs such as blenders or espresso machines were also sought-after items.
In addition, high quality fashion accessories like charm bracelets, necklaces, as well as cosmetics and perfumes were popular gifts.
According to a survey conducted by BBE (http://www.bbe-retail-experts.de), a retail expert on retail climate, 27% of German retailers from all sectors and 37% of retail business owners were satisfied or very satisfied of their current situation.
The Allensbacher Computer- und Technik-Analyse (ACTA) 2009 (http://www.acta-online.de) an analysis of the German information technology, telecommunications and other Internet or online-related industries from research organisation Institut für Demoskopie Allensbach (IfD) said that online purchases of goods and other digital services such as downloads and online-tickets had increased by 3.5%, or Euros1.1 million.
German retailers had a merry Christmas as the Ifo Index, an indicator for German business sentiment, rose to 94.7 in December from 93.9 in November.
Younger consumers want change
With a new and younger generation of consumers that considers shopping a lifestyle option, consumer electronics is set to play a major role.
Flat screen TVs and Blu-ray players become faster every year with new technology introduced in the market and prices spiralling downward. So the German market for digital consumer electronics is expected to grow in 2010.
A survey commissioned by BITKOM, the German Federal Association for Information Technology Telecommunications and New Media conducted by market research institute EITO stated these prospects and the published figures speak for themselves: Euros12.2 billion are expectedly spent by German buyers this year on flat screen TV sets, digital cameras and game pads. This is far more than in all other European countries and equivalent to last year's sales.
Additional impetus for buying the latest technology for flat screen TVs is expected to come from this year's Winter Olympic Games in Vancouver and FIFA World Cup 2010 in South Africa.
from Phoebe Tsang and Michael Katzmarck, Frankfurt Office
(Images courtesy of Xinhua News Agency)
