From shock paralysis and hoarding purchases to relief and long-term uncertainty: consumers in Germany have already gone through various stages since the start of the coronavirus crisis. MEDIA Central spoke to Dr Kai Hudetz, Managing Director of IFH, about these phases, the short and long-term effects on retailers and how they are dealing with the new challenges professionally.
Dr Hudetz, what fears, worries or questions are retailers currently approaching you with?
The concerns in most sectors are definitely great and existential - even despite the current easing of restrictions. After all, sales on the shop floor - outside of food retail and drugstores - were virtually zero for a long time because the shops were closed. Even now, we are only seeing around 40 per cent of the customer footfall we had before the crisis. Customers are spending less time in the shops and are usually only buying what they absolutely need. The retail sector is therefore still a long way from a real recovery. In addition to food retailers and drugstores, DIY stores and all providers of technical equipment for the home office were the main beneficiaries.
To what extent has e-commerce been able to compensate for the lack of sales on the shop floor?
For most sectors, it was impossible to compensate for the losses on the shop floor. This is mainly due to a general reluctance to spend in a situation where consumers prefer to keep their money together. This is particularly evident in the fashion industry, where even large shops such as Zalando are incurring high losses. As a consumer, why should I buy nice clothes if I can't show them to anyone anyway? Amazon was the main beneficiary, but Ebay and Otto also benefited. In other words, large shops with a wide range of products, a high profile and highly efficient processes and logistics. Covid-19 has contributed to an acceleration of the concentration process. Amazon's market share in the B2C sector in Germany was already 46 per cent before the crisis, now it is 50 per cent.
What is the situation in food retail? Have delivery services like Picnic been able to capitalise on the crisis and how sustainable will this be?
Yes, these services definitely benefited from the crisis in the beginning. But what will happen if people increasingly get used to shopping with a mask? Will consumers then still be willing to pay for the delivery service or commit to certain delivery times? German consumers are very price-sensitive. I therefore doubt that delivery services will be successful in the mass market in the short to medium term. Even Amazon didn't manage that with "Fresh". In my opinion, these services could be more interesting in rural areas at most, where the nearest supermarket is a long way away. In urban centres, it's more likely to be an absolute premium service for customers who are prepared to pay for this convenience.
How has your own work at IFH changed as a result of the crisis? You had to cancel numerous events...
Yes, that's true. Last year, we had around 230 larger and smaller events. So far this year we have around 40, and the rest have had to be cancelled until September. We are still trying to keep in touch with our customers via webinars or virtual roundtables. In some cases, we organise up to five webinars per week. We are very satisfied with the number of participants and the webinars help us to make up for lost sales. This is because the number of project orders has naturally fallen during the crisis. However, the number of press enquiries has risen sharply.
Note:
As part of the "ECC Webinar Days", IFH is continuously offering exciting webinars:
On Tuesday, 19 May, at 2 pm, Dr Kai Hudetz will take stock of the past weeks of crisis in "COVID 19 and the retail sector". How has consumer behaviour changed during this time? What does this mean for bricks-and-mortar retail? What impact has Covid-19 had on city centres? To what extent is wholesale also affected? And what comes after the crisis?
On Tuesday, 26 May at 2 pm, experts from CMS provider sitecore, digital agency ecx.io and ECC Cologne will present the results of the "Corona Consumer Check" and show how the easing measures are affecting consumer behaviour.
Both webinars are free of charge.