Discounters continue to dominate Germany's retail landscape, while private labels and shop-within-shops are key trends.
Germany has both Europe's largest economy—with an estimated GDP per capita in 2005 of U.S. $30,100—and Europe's largest population at 82.4 million. However, it traditionally has been a sluggish licensing market compared to others such as the UK, Italy, Spain, and France. This natural tendency recently has been exacerbated by a lackluster economic performance, unemployment that recently passed 10 percent, stagnant GDP real growth (0.9 percent), and the raising of the VAT (purchase tax) from 16 percent to 19 percent.
This situation is reflected in Beanstalk Europe's breakdown of German spending of disposable income, which has apparel and footwear at the bottom, with hotels and restaurants at 5 percent, and leisure and entertainment only slightly better at 9 percent, way behind food and drink and tobacco at 15 percent.
Ciarán Coyle, Beanstalk's European managing director, estimates that "in 2004 the German-speaking EU market for licensed product was $4.75 billion," a healthy number, but one that represents a per capita decline from $64.07 in 1998 to $48.52 in 2004. Coyle says the main product groups were publishing with 23 percent, apparel and accessories a close second with 22 percent, toys/video games third with 15 percent, and food and drink fourth with 11 percent.
Germany differs from other major European economies in another way: the long-established and well-entrenched "discount" sector, as demonstrated by Wal-Mart's recent decision to pull out of the country, selling its site to local retail behemoth Metro. Susanne Schosser, managing director of EM Entertainment, does not see this changing any time soon. "Discounters," she believes, "have considerable growth potential if they stay within a limited and mostly standardized range containing a large share of their own label products." She goes on to quote research from ACNielsen, Metro Group, giving discounters 40 percent of the retail market, with self-service department stores and large convenience stores (1,500 to 4,999 square meters) each taking 15 percent, and supermarkets and stores less than 400 square meters taking 9 percent each.
Both Schosser and Beanstalk's director of brand strategy, Louise French, agree that the combination of these factors has prompted the emergence of several key trends. The most marked of them is the increasing dominance of private labels, which offer greater margins. At the other end of the retail spectrum, both point to the growth of what Schosser describes as "the shop-within-a-shop" and Coyle as "specific branded in-store themed areas," specifically citing "Mustang jeans, footwear, accessories, and fragrances displayed together at Karstadt and Kaufhof," two of the top department store chains.
There is little doubt that in 2006 the dominant brand was the FIFA World Cup, which was held in Germany and licensed by EM. Thereafter, Coyle cites Jaguar as a major brand, focusing on British luxury goods such as eyewear, fragrances, and furniture, while Schosser mentions SpongeBob SquarePants; Bob the Builder; and EM German classic Maya the Bee, which turned 30 in 2006.
In general, Coyle estimates that "the type of licensed property that sells in the German-speaking markets breaks down as follows: fashion, 32 percent; entertainment, 27 percent; trademarks/brands, 15 percent; art/lifestyle, 12 percent; sports, 6 percent; and other, 8 percent."