Ingo R. Titze Research & Consulting

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The German Consumer Electronics Market Segment

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1. Segment structure, market volume and retailers in the German consumer electronics market

There is no single definition of what qualifies for being included in this segment. However, the most important categories are:

  • large electronics: e.g. washing machines, dishwashers, stoves, ovens, microwaves, refrigerators, vacuum cleaners
  • small electronics: e.g. toasters, kitchen utilities, coffee machines, hairdryers, shavers, accessories, lamps
  • consumer electronics: TV sets, Hi-fi systems, game pads, telecommunications
  • computer hardware and software
  • music CDs, film DVDs
  • photo, optics

The total German market segment volume amounts to € 40.1 billion (including large/small electronics, consumer electronics, multimedia, photo and optics). Specialty retailers such as MediaMarkt and Saturn dominate the retail formats. Traditional, much smaller retailers have joined procurement co-operations such as Electronic Partner, Expert, or Euronics. German department stores have reduced their assortments, even in the consumer electronics category. Mail-order and e-commerce companies have entered into enormous price battles due to the transparency of the internet as well as the huge number of very small online retailers who only compete on prices. Hypermarkets and wholesalers (e.g. Metro Cash & Carry) offer electronics, but do not consider them their core business.

The largest local retailers in the segment are given below:

Retailer Sales (€ billion) # stores
MediaMarkt / Saturn 8.4 367
Euronics 3.5 1.869
Electronic Partner 3.2 3,240
expert 2.85 400

2. Categories

Large electronics have an estimated market volume of € 7.5 billion in Germany. This category is quite service-oriented, since delivery, installation and maintenance are usually not carried out by the customers themselves. It comes as no surprise that local German retailers have an advantage towards online retailers. Particularly specialty stores (MediaMarkt, Saturn) are better off than small companies since they can present a broad choice on large sales areas and have most products available.

Small electronics are part of a fierce competition between several formats in Germany, since most products are small and low weight and thus suitable for shipping. After e-commerce retailers had mainly focussed on computer hardware for quite some time, sales of electronic toothbrushes, hair dryers, and shavers have risen strongly. The overall category is considered to have a market volume around € 3 billion. Future prospects for this category are bright, especially due to the ongoing boom of coffee machines in Germany and the steady need for replacement, be it for technical but mostly for aesthetical and innovative reasons. It can be argued that accessories are also part of this category, adding another € 5.5 billion. Accessories include cables, headphones, batteries, adapters and so forth. If lamps and lights would be considered as yet another part of this category, one would estimate an additional market volume of € 4 billion. However, it should be mentioned that this would also include commercial and professional sales.

The third category, consumer electronics, consists of TV sets, Hi-fi systems, game pads, and telecommunication devices. Total sales in Germany amount to approx. € 18 billion, experiencing strong growth. Due to technological progress becoming very evident in this area, products are regularly being replaced or extended by new items (e.g. mobile phone standards, LCD/plasma TV sets).

Computer hardware and software represent a market volume of € 30 billion. Mobile devices, i.e. notebooks and laptops, have been replacing desktop computers and are usually being combined with telecommunication solutions to have mobile internet access.

Music CDs and film DVDs have been severely affected by the internet as well. Illegal downloads have caused the category volume to drop to a low of € 3.3 billion. With an increasing number of German and international artists withdrawing from big record labels and concentrating on earnings from live performances, the market will remain tough. An ever-rising internet bandwidth makes both legal and illegal downloads possible, both resulting in lower sales of physical media.

Photo cameras and other optics products have a market volume of € 4.8 billion in Germany. Digital technology has completely re-invented this area, resulting in a strong boom.

 

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Ingo R. Titze Research & Consulting is a member of the British Chamber of Commerce in Germany and a listed business service provider of the United States Commercial Service.
 

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