What Germans watch on TV, which toys and sweets their children prefer, how homeowners want to heat their homes in the future and what the consumer mood is at the moment – GfK knows all of this with 13,000 employees and a turnover of 1.5 billion euros, it is one of the largest market researchers in the world. For a short time, GfK even came close to becoming the global number two. But then the group got into trouble, disappeared from the stock exchange and was dismantled by the financial investor KKR. And now GfK is losing its independence. Germany’s largest market researcher is being swallowed up by US competitor Nielsen IQ – and the surprising thing is that it doesn’t upset anyone in this country.
The news spread by Nielsen IQ and GfK on July 1 was not even worth a local patriotic interjection in the Franconian regional media. The two companies want to merge as soon as the antitrust authorities allow it, probably around the turn of the year. The term “merger” glosses over the fact that the US giant, three times larger, is swallowing up the German number one. Formally, the parent company of Nielsen IQ, the US financial investor Advent, takes over GfK for a rumored 2.7 billion euros. Headquarters of the new entity will be Chicago, chairman of the board presumably Nielsen IQ boss Jim Peck. It is said that GfK will keep its name and the Nuremberg location will remain. However, it is unclear how many people will work there and for GfK in general in the future. After years of downsizing, there are currently 8,000 employees worldwide; Most recently, they generated sales of 1.6 billion euros.
There has long been no room for nostalgia
The acquisition comes as no surprise. KKR has been looking for a buyer for GfK for months. The private equity firm, which also has a stake in the Axel Springer media company, holds just under 47 percent in the Nuremberg market researcher, although it is only a minority. But she’s in charge there. The majority owner, GfK-Verein, brought KKR on board in 2017 because he could no longer get the problems at the then GfK SE under control. In the meantime, the GfK association, which is supported by companies, institutions and private individuals, has been renamed NIM, which stands for “Nuremberg Institute for Market Decisions”. According to its own statements, the organization was founded in 1934 by university teachers as a “non-profit institute for research into consumer and market decisions”. One of them was Ludwig Erhard, who rose to become Economics Minister and Federal Chancellor after the war. Their beautifully worded plan: “Make the voice of the consumer heard”.
However, there has long been no room for nostalgia at GfK. The company has fared too badly for too long, and the concentration process that the market and opinion research industry is experiencing is too great for that. Technically, digitization is driving him forward. On the economic side, the industry is controlled by large financial investors. Just two years ago, Advent bought the Nielsen IQ division of the US data company Nielsen for 2.7 billion US dollars. Parallel to the current deal between Nielsen IQ and GfK, the private equity company Hellman & Friedmann is pushing ahead with the merger of the US market researchers IRI and NPD Group. The number two in the industry, the British Kantar Group, also belongs to a financial investor, namely Bain Capital. Smaller units of large market researchers are constantly changing their owners or small specialists are being bought up by industry giants. According to experts, only those who can provide global customers with global data on the purchasing behavior of consumers will survive.
The acquisition of GfK by Nielsen IQ also follows this logic. According to their own statements, both want to “merge their complementary data and analysis tools, giving customers an even more comprehensive overview of consumer spending throughout the shopping process”. In fact, they complement each other: GfK is strong in data collection and analysis in the field of technology and when it comes to larger, durable consumer goods such as household appliances or electronics. Nielsen IQ, on the other hand, focuses on research into everyday consumer behavior for short-lived goods such as food and cosmetics. And from a regional perspective, Nielsen IQ is strong in the USA, where GfK is weak. Their domain is Europe, where Nielsen IQ is struggling. “Together we have an opportunity to help shape the future of global consumer and retail analytics,” said Nielsen IQ President Jim Peck, “a future that is fast, agile and connected.”
Agile start-ups competed with the sluggish GfK
It was precisely this pace that caused major problems for GfK. At the beginning of this century, the Nuremberg company bought one market researcher after the other worldwide and thus grew from a national to a global player. But there were problems with the integration of the many new acquisitions within a short period of time, some of the work was done in the same fields with different software and methods. People were also strangers to digitization. More and more agile start-ups competed with the cumbersome GfK because they were able to record and evaluate data faster. In 2008, GfK was to merge with British TNS to become the world’s number two. However, local, state and federal politicians opposed it because the new company was to be based in London. Germany needs its own large market researcher, it said.
14 years later, such voices cannot be heard. Perhaps the shock that the temporary decline of GfK instilled in politicians and the public is too deep. When Peter Feld took over the management of GfK in 2017, the company was deep in crisis. Sales stagnated, in 2016 the company had made a record loss of 136.5 million euros and rows of managers failed to stop the downward trend. KKR and the GfK-Verein took GfK off the stock exchange. In this way, Feld was able to calmly tackle the restructuring, using the usual tools of financial investors: he replaced management personnel, cut hundreds of jobs, merged or sold entire divisions such as Custom Research (the study of how products are received by customers). When the GfK employees remaining in Nuremberg moved into a long-planned new building in 2020, their number had shrunk so much that offices remained empty and were rented out.
However, Feld did not just downsize, but also realigned the hull GfK. He drove digital development forward and created gfknewron, a platform that uses artificial intelligence to offer brand companies recommendations for action in real time.
How much will remain of GfK? “In the future, the game will be played according to American rules,” says one of those affected. There are concerns that GfK could go under in the Advent-Nielsen group. A GfK spokesman disagrees: “In the future we will have a global footprint that we have not had before.” NIM will only have a minority stake in the new structure, but is nevertheless pleased that after five years without a dividend, GfK has returned a share of the profits to the association’s treasury. And Peter Feld recently left GfK. His mission is accomplished.