Across the globe we’re seeing different retail trends emerging as a result of the COVID-19 pandemic. The need for brands to undergo digital transformation combined with the emergence of new technologies has led to a boom in ecommerce.
With the second-highest population and largest economy in Europe, Germany, in particular, has become an area of focus. In 2020, there was a 14.6% increase in the value of Germany’s ecommerce. And while Germany’s ecommerce may still fall behind those of France and the UK, it’s expected to grow 11% in 2021. We wanted to better understand what has fueled—and will continue to fuel— that growth and how this may impact traditional retail.
Our partner, RetailX, did a deep dive into the ecommerce trends surfacing in Germany over the past year as a result of coronavirus and other factors. This article highlights some key takeaways from the report.
If you’re interested in a more granular breakdown, download the full report.
Why, How, Where?
The Motivation Behind Clicking
According to a Statista Global Consumer Survey, the number one reason German consumers shop online is because the product can get delivered directly to their homes (66%).
Some additional reasons include:
- Because of the round-the-clock availability (62%)
- The convenience (58%)
- Cheaper [than brick-and-mortar stores] (57%)
- Larger variety of products (57%)
Interestingly, when looking at the products that German consumers buy online, it appears they purchase more low-risk, low-price items. For example, clothing, shoes and books/movies/games were the top three most online-purchased categories in 2020.
You would think that because delivery to home is a top driver for online purchases, bigger bulk items like appliances or furniture would be top of the list. However, as a result of COVID-19, many retailers had to close their physical locations and, under pressure, small businesses began to explore ecommerce for the first time, making it easier to purchase lower-priced, smaller items online.
Because of the increase in online shopping, early in the pandemic there was talk of adding a parcel tax to online purchases and giving that additional money to brick-and-mortar stores. Shuttered storefronts, plus the fact that there was not much else to do with restrictions in place, resulted in German shoppers shifting to online shopping more than ever before.
These factors, combined with the increased safety of staying home, skyrocketed direct delivery to a top priority.
Some Categories Shifted to Ecommerce
As expected, certain shopping categories saw a larger increase in ecommerce than others. RetailX highlighted that for shopping in what would now be considered an environment that poses a high health risk, like a clothing store, there was a preference for online versus in-store.
In addition to clothing, which was the category with the largest shift to ecommerce, some other top categories included more day-to-day or lifestyle products like:
- Health products, eg, medicine
- Restaurant delivery/takeaway
- Hygiene products, eg, hand sanitizer, toilet paper
Of note, however, is that over 50% of shoppers stated that they did not shift to online shopping for any products or services. This could be due to the fact that almost 25% of the population is aged 55 or older. Plus, less than 23% of the population is aged 25 or younger.
Retailers need to consider that there is a higher hurdle to getting older generations to shop online. And, over time, as the adoption of ecommerce shopping increases across generations, the success of certain categories may change.
Of those who did shift to online shopping during the pandemic, it’s important to understand not only why they shop online but also what they were shopping for and where.
When They Go Low, You Go Buy
There are certain categories in which shoppers seek out—and highly value—lower prices. What’s more, there’s an overlap in these low-price categories and the top ecommerce categories. The top category that shoppers look for low prices, for example, is clothing: 40% of shoppers said low price is particularly important for them in this category.
Among the other preferred low-price categories for online shopping were:
- Food & non-alcoholic drinks (38%)
- Detergents and cleansing products (34%)
- Shoes (34%)
- Smartphone (31%)
In categories where there isn’t a distinguishable difference between product quality in different price tiers, consumers are less likely to pay premium prices. A less expensive detergent and a more expensive organic detergent, for example, will both clean. With low correlation between price and quality, it makes sense shoppers are more likely to want lower prices for these categories.
For luxury items, however, there is often a larger gap in quality between lower price tiers and higher price tiers. In these big-ticket categories, consumers actually use price to determine quality.
The price of the items could also influence where customers are converting. For instance, shoppers are more likely to purchase lower-priced items via smartphones. In the second quarter of 2020 in the United States, desktop average order value (AOV) was 44% higher than the AOV on smartphones.
All of this is to say, the German market is full of discerning consumers who prioritize quality, yes, but when hindered by pandemic restrictions, price makes more of a difference when considering products in a lower price point category. Retailers would be wise to recognize this distinction moving forward as they look to distinguish themselves from their competition.
Left to Their Own Devices
55% of German shoppers surveyed have used a smartphone to shop. Also, almost a quarter of shoppers under the age of 35 purchased goods via social media in 2020. This compares to just 17% of shoppers aged 35+.
In addition to smartphones, shoppers turn to:
- Laptops (51%)
- Desktop PCs (36%)
- Tablets (27%)
- Smart TVs (6%)
Given the fact that Germany is facing declining birth rates and an aging population, as RetailX points out, it’s important to understand how these demographics influence shopping preferences, such as device preference, to be able to better engage with consumers.
When using devices to online shop, it’s common for shoppers to use multiple devices as part of their shopping journey. Brands should consider a cross-channel marketing strategy when determining how best to communicate with customers.
Retail and Ecommerce in Germany Going Forward
There’s an endless realm of possibilities for the future of retail in Germany. What’s becoming apparent is the importance of customer data and how that data is used. AI, for example, lends itself to multiple use cases in retail.
Data collection has also evolved. With Google no longer supporting third-party cookies, brands have to learn how to collect first- and zero-party data directly from shoppers. Brands are expected to know each customer on an individual level and send marketing messages accordingly.
There has been an evolution. Ecommerce is more prevalent than it has ever been and is only going to keep growing, giving marketers the opportunity to send personalized messages via digital channels to increase engagement with online shoppers. It’s up to brands to set themselves up for success with the right technology and digital mindset to meet consumer expectations.
To learn how Iterable works to create a cohesive retail shopping experience, request a demo today!