Germans are willing to pay more for tasty, healthy, and fast food
Cheeses and ham have become cheaper by more than 10 percent, sugar even by 20 percent, a 250-gram pack of butter now costs 89 cents instead of 99 cents, a liter of milk 59 cents instead of 69 cents... For a long time, German discounters Aldi, Lidl, Netto, Penny, Norma have not carried out such aggressive pricing policies as in the past 2014.
Throughout the year, waves of price reductions on food followed one after another, the last one was in early December. Economy-class grocery stores, competing fiercely with each other, changed price tags on dozens of product categories, including, for example, meat and sausages, flour, potato products, soft drinks, wine. According to experts, at market leader Aldi, about a quarter of the entire assortment, including non-food items, became cheaper over the year.
And what happened? The price war did not lead to the desired result. According to preliminary estimates, the total revenue of discounters in Germany decreased by approximately 1.4 percent over the past year, and the number of customers and market share did not grow, reports the dpa agency. On the other hand, the turnover of classic supermarkets like Edeka, Rewe, or Kaiser's increased.
Wolfgang Adlwart, retail specialist at GfK, the leader in the German market research market, explains it this way: "The number of buyers who focus exclusively on price is decreasing." The trend for Germany is not new in itself, but in 2014 it became particularly visible: German consumers are increasingly willing to pay for higher quality – both in food products and service.
That for residents of Germany, quality rather than price is increasingly becoming the decisive criterion when buying food was also stated last autumn by participants in a conference of marketers and advertisers held in Hamburg by the German media holding Bauer Media Group. It publishes, among other things, a number of culinary magazines, and therefore carefully monitors trends in the food market.
In a press release published following the conference, six key trends from a marketing perspective in the German food market are noted. Growing attention to quality (Qualitätsbewusstsein), which has "individual, social, economic, and ecological" reasons, is listed as number three.
First place goes to consumers' desire to have more information about the food products they buy. "The quality of ingredients and components increases the attractiveness of the product," the conference participants noted. The second fundamentally important trend: food choice is increasingly becoming a way to emphasize one's individuality. "Whether it's sushi, vegetarian, or simple home cooking: the buyer's choice always tells us something about them – or about who they would like to be."
Another important trend is buyers' desire to do something beneficial for their health and well-being. At the same time, residents of large cities want to buy and eat food on as flexible a schedule as possible, since modern work and personal life also require flexibility from them. Therefore, today's buyer, the conference's final document notes, demands that "his needs be met at the required quality level at any time and everywhere."
Furthermore, today's Germans want the purchase, preparation, and consumption of food to be simple and not time-consuming. This is the sixth observed trend. It is precisely because of this that services such as food to go and home delivery are booming in Germany, and stores are offering an ever wider selection of convenience food for quick preparation.
It is quite obvious that classic supermarkets have much more opportunities to respond to all these trends (especially the last two) than discounters, which focus in particular on a relatively limited assortment and minimization of service. Therefore, Wolfgang Adlwart from GfK is convinced that 2015 will again be very difficult for German discounters.
Including because in today's Germany, "discounters have practically stopped the process of opening new branches, while large supermarket chains are still expanding, which ensures revenue growth," notes Matthias Queck, expert at the industry information agency Planet Retail.
Aldi and Lidl, leaders among German economy-class stores, have recently been increasingly expanding into foreign markets, which currently provide them with incomparably higher growth rates than the saturated domestic German market. Thus, Matthias Queck points out, in the UK both companies' revenues are increasing by 20-30 percent per year.