It’s worth taking a closer look at the “spaghetti monster”. This is what the online trade association BEVH calls the graphic that it has created for 2015 to date. It shows that the pandemic and the Ukraine war have changed German consumer behavior more than any other external influence in previous years. You can see how consumers suddenly demand a lot of certain goods online and then completely change their mind. Especially since the outbreak of the corona pandemic, things have been going haywire. A tangle of lines emerged, a monster.
For example everyday items, i.e. toilet paper or pasta: First came the hype, then the crash. The curves for furnishings such as desks are only a little less pronounced. Once bought, the home office is already set up to some extent. Then you don’t need anything for a long time. The clothing is also striking. First there was a spending spree because many fashion shops had closed due to lockdowns. Now that they’re open again, not much is going on online.
The spaghetti of the BEVH meanders like the amplitudes of a shopping ECG. From hoarding at the beginning of the Corona crisis to skimping during the Ukraine war and sharply rising inflation, Germans have experienced a number of extremes in terms of shopping psychology within two years.
The erratic swings can also be seen in the course of individual shares in online companies. First and foremost, the Amazon share, the epitome of online trading, rose to its previous high of more than 3200 euros in 2021. Then it crashed to about 2000 euros. The stock market value of Zalando and other e-commerce companies, both internationally and throughout Germany, has fluctuated from exhilarating to death: Etsy, Wayfair, Shopify, Alibaba, Mercado Libre through to Home24 and Westwing.
When the courier doesn’t ring as often anymore
The loss is in the billions and also affects listed pandemic winners from other industries: in Germany, the delivery services Hellofresh and Delivery Hero, which were just celebrated as heroes, are now being regretted as permanent Dax flops. The end of the online hype can also be seen in the decreasing ringing frequency on the front doors. According to Deutsche Post, parcel volume in Germany shrank by 19 percent in the first three months of this year.
Experts agree that the ups and downs are exaggerations in one direction and the other. At Amazon Germany, therefore, one is anything but worried, but rather accepts the rash as business as usual away. All online retailers are united in their confidence that retail without e-commerce has been unthinkable since the pandemic at the latest, neither for consumers nor for retailers. So far, so encouraging for the industry if only the spaghetti monster didn’t hint at that ugly crash over the past few days. And it looks like it could last in at least some areas, like fashion. Many people prefer to buy clothing in stores.
In addition, many have started to save. The Ukraine war depresses the mood. The HDE trade association has already revised its growth forecasts downwards. In 2022, online retail is also expecting sales to be one billion euros less than in the previous year. Despite this, growth is still expected to be in the double digits.
In total, Germans now spend almost 100 billion euros a year when shopping on the Internet. Every seventh euro that they spent on groceries, electronics, furniture or clothing in 2021 ended up in the accounts of the online retailers.
It is easy to measure how hesitantly or intensively consumers shop online. Already at the beginning of the pandemic in April 2020, many people held back. Sales fell – but only briefly. This time, the prognosis of retailers, both stationary and online, is more pessimistic: “It is to be feared that the shock effect of the Ukraine war and the high inflation will leave an even bigger dent in growth,” says a BEVH spokesman.
Many people want to save
The Cologne Institute for Trade Research (IFH) cites the rising inflation rates, the downward trend in the economy and higher prices as the reasons for the slack in consumption. Every fourth person interviewed by the IFH has already reduced their expenses. Almost two thirds stated that they would like to limit their shopping in the near future, they would like to spend less money on computers, clothing or cars. Every second person also sees savings potential on summer vacations.
The poor consumer mood is having different effects on the individual areas of online trading. According to the BEVH, the online fashion trade and the online furniture trade are feeling the crisis the hardest. It is precisely the retailers who have gained particularly strongly in the pandemic. You are now falling from a greater height, see Zalando and Home24.
Despite the war and inflation, Germans continue to spend more money online than they used to for other things: medicines, groceries, cosmetics, animal feed. When it comes to food in particular, the trend is the opposite. It is only relatively recently that an increasing number of consumers began to buy groceries regularly, also or exclusively, on the Internet. Trade expert Mirko Warschun from the consulting firm AT Kearney believes that this is becoming more and more a matter of course for many. He can imagine that sometimes ten percent or more of sales in food retail are made online. At the moment it’s three to four percent. This means that regardless of external influences, online supermarkets will in all likelihood continue to grow.
Because the trend seems to be unstoppable, many providers are currently rushing onto the market. From the point of view of onliners, food retail is the last bastion that is still almost exclusively dominated by stationary trade. And you know that this is where most of the billions in retail sales are made. Even ten percent of the market can therefore be very lucrative, even if several providers have to share it. The example of groceries also shows that since the outbreak of the corona pandemic, more and more people have been willing to stock up on the Internet for their daily needs.
Grandpa now shops online and is satisfied
During this time, however, something decisive has shifted in favor of online retailers. More and more people over 50 and 60 have discovered the advantages of e-commerce for themselves. Because Germany is an aging society, it is important for traders to know what these age groups are doing. According to the BEVH, it is evident that they are still shopping online at the moment – although all shops are open again.
When asked about their satisfaction with online trading, 80 percent of those surveyed recently gave it the best rating. In 2019 it was only 48 percent. In addition, many consumers have gotten into the habit of checking the offer on their smartphone before going into the store.
Despite the ups and downs, online retail is a clear winner of the corona pandemic. And in Germany that is largely synonymous with Amazon. Chains like Douglas, Media Markt and Ikea are trying to counteract this, some with success. In a list by the EHI trading institute of the 100 largest German online retailers, Amazon is and remains the front runner by a clear margin.