Ingo R. Titze Research & Consulting

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The German DIY and Home Improvement Market Segment

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1. DIY / home improvement market participants, sales, and sales area in Germany

The German DIY / home improvement market segment is somewhat typical for the German retail landscape as a whole. An ongoing market concentration has led to a "top 7" ranking, including Obi, Praktiker, Bauhaus, Hornbach, Zeus, Rewe (toom) and Globus, who now represent more than 85 percent of sales of the twenty largest retailers in Germany. These top 20 generated gross sales of approx. € 27 billion in 2008.
Sales growth has rarely been achieved on a like-for-like basis but by expanding sales areas (now at 16.9 million sqm with a basis of 3,670 stores). This has resulted in an ongoing decrease in productivity per square metre which only recently has started to recover (around € 1,580 per sqm). However, sales productivity in the German DIY segment is only half of the overall retail industry in Germany.

2. Strategy of DIY / home improvement retailers

What makes the situation even harder, is the fact that the strategic positioning of most DIY retailers is still not clear to the customer in Germany, especially in terms of services. Consumers demand solutions instead of single products. In the DIY segment, this means showing the German customer how (s)he can successfully realise his or her home improvement project. Hornbach has recently adopted this approach - by presenting (seasonal) projects in its advertisement folders, adding the required products for the respective DIY work. Further marketing efforts of large retailers were targeted at women, giving ideas e.g. for fully equipped bathrooms or bedrooms and selling more decorative articles. In addition, many German DIY retailers have reduced their extremely broad assortments to a more healthy level.

3. Chances for German DIY / home improvement retailers and manufacturers

It becomes evident that service and customer counselling should be a pivotal part of the German DIY business - not just from a retailer's point of view but also from manufacturers who should offer easy-to-understand guides, video material and manuals. With prices for handymen becoming less affordable for larger parts of the German population, do-it-yourself can be considered a megatrend, since it helps to enable people. Successfully completing a project can mean a fulfilling activity for most consumers. Both producers and retailers should put more focus on this important issue instead of solely concentrating on selling to professionals.

 

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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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