• The German economy recovered momentum towards the end of 2014 after a sluggish period of growth during the summer. GDP ended the year up 1.5%.

• Domestic demand was the main driver of growth in 2014. Consumer expenditure was boosted by falling unemployment and rising wages.

• Consumer spend on electrical goods is expected to have recovered in 2014. Nevertheless, it remains constrained, suggesting consumers could be waiting for prices to fall further before buying.

• Electrical goods share of consumer spend has stabilised as expenditure on the category firms up.

Figure 1: Germany: Spending on electrical goods as % all consumer spending, 2009-14

Source: Statistisches Bundesamt/Mintel

• Prices in the electrical goods sector are on a downward spiral, with the telephone and telefax equipment market experiencing the biggest drop in prices in 2014.

• We believe online-only retailers continued to see growth in 2014, driven by Amazon, which accounts for around 30% of the total online electrical goods market.

• A greater focus on online by the specialists is reflected by a slowing in the decline of their share of the total spending on electricals.

• We expect total retail sales to have seen positive growth once again in 2014, boosted by robust consumer spending.

• Total electrical goods specialists retail sales are expected to have remained negative in 2014.

• The sector’s performance in 2014 was typified by market leader, Media Markt/Saturn, which posted a slight fall in revenue in 2014.

• Despite a fall in domestic revenue, Metro Group-owned Media Markt/Saturn remains the leading electrical specialist in Germany.

• Media Markt/Saturn opened a cutting-edge store in Ingolstadt, offering customers a new shopping experience through the networking of online and offline media, interactive features in the store and multimedia product presentations.

• Germany is the single largest market in terms of sales for Expert, Europe’s second largest electricals voluntary group.

• 89% of German households have internet access, according to the latest survey by Eurostat, higher than the EU (28 countries) average of 81%.

• 70% of Germans bought goods online in 2014, according to Eurostat, compared to the EU (28 countries) average of 50%. The percentage buying computer hardware and electronic equipment online is also higher than the EU (28 countries) average.

• We estimate that around 39% of all electrical sales came via online in 2014, through pure-plays and store-based retailers’ online operations.

• We believe the biggest seller of electrical products online is Amazon.de.

• Media Markt and Amazon are by far the most used electricals retailers and they dominate the middle ground in the electricals market.

• Amazon is the dominant player online, but while the store-based retailers have transactional sites, none seems to have made much impact.

Figure 3: Germany: Retailers used to buy electricals goods in the last 12 months, January 2015

Base: 2,001 internet users aged 16+

Source: Lightspeed GMI/Mintel

• There is a general awareness of the varying quality of service in stores.

• Some 53% think that most retailers offer the same price and almost as many don’t trust retailers’ promotions. 59% think that buying online is the best way to get the best price.

• Only 31% would like the option of buying on credit, but there is a strong bias to younger customers among those that would.

Figure 4: Germany: Attitudes to buying electrical goods, January 2015

Base: 1,485 internet users 16+ who have bought electrical/electronic products in-store or online/catalogue in the past 12 months

Source: Lightspeed GMI/Mintel

Germany’s electrical store specialists were unable to capitalise on the upswing in consumer spend on electrical products in 2014. The sector’s total retail sales fell, and their share of consumer spend on the category also shrank. Market leader Media Markt Saturn’s saw revenues fall and Expert shuttered stores. While the store-based specialists struggled, the online-only retailers, led by Amazon, made further gains in the electricals retail market.

59% of German consumers shop for electricals at an online-only retailer because it is cheaper. Given 48% of our sample were sceptical of special offers on electrical goods and 53% believe most retailers offer similar prices, there is not really a compelling need for consumers who know what they want to visit a store-based electrical specialist.