Our first half of July research – now covering more than 9.300 interviews with German online shoppers - indicates that German consumers made fewer overall purchases (i.e. in both online and offline purchases) in July. It is worth noting that July is a summer month, which may impact consumers’ purchase intent. And looking forward, German consumers say that they will reduce their overall purchases in August. However, German consumers also say that they will continue to shift purchases to online channels in August: 14% say they will shift purchases to online channels, and 8% say they will shift purchases to brick-and-mortar stores.
Key motivations for these developments are quite rational, and are related to convenience as well as personal finances. Our research shows that the most important reason for making fewer overall purchases is the need to save money; this is especially evident in the younger age groups. At the same time, German consumers indicate that they partly shift purchases to online channels because they can find lower prices there. This deal-seeking rationale may be explained by the fact that that 18% of German online shoppers say that their financial situation has become more stressed, while only 8% say that their financial situation has improved in July.
However, our research shows that especially ‘Heavy Shoppers’ have a more positive financial outlook. But the share of Heavy Shoppers has decreased in July. In the first half of May, German Heavy Shoppers made up 18% of all shoppers (and make 52% of all online purchases), and by the first half of July this reduces to 13% (making 43% of all online purchases). This reduction affects both the overall purchase growth as well as the overall financial outlook of German consumers.
When looking at the development of online product categories, Fashion stands out in The Germany, as it is the leading category in acquiring new consumers: in the second half of March, 18% of German shoppers made at least one purchase in online Fashion, and this share has grown to 25% by the first half of July.
We asked German consumers to estimate if they would increase or decrease their total number of purchases in general, as well as online purchases specifically. And we find that German consumers project that they will buy less overall, but that they will make a larger share of their purchases online. This means that, providing that consumers act on their intentions, we can expect a continued shift of purchases to online channels, leading e-commerce to slightly grow further in Germany in August. This comes at the expense of purchases in brick-and-mortar stores.
As overall consumption for German consumers slows down in August, consumers’ survey responses indicate that e-commerce will grow in August. In most product categories, recent growth has been driven by a combination of an expanding consumers base as well existing online shoppers buying more. But in Germany, Fashion is an exception as purchases are predominantly driven by the inflow of new consumers: in the second half of March, 18% of German shoppers made at least one purchase in online Fashion, and this share has grown to 25% by the first half of July.
At the same time, we see that especially purchases within Kitchen appliances and Hardware/building materials have shown a significant increase since end of March, but for these categories a continued growth in the coming month is uncertain. Travel/transportation and Tickets are categories which both have and will continue to struggle.
One of the key drivers for consumers to purchase less online is related to a deteriorated financial situation – and the share of consumers claiming that personal finances are limiting purchases has increased since end of March. In Germany, 25% of online shoppers say that their financial situation today is worse than their financial situation in pre-corona times. But looking at the recent change, the share of consumers who say it has worsened is lower (18%). And looking one month ahead, only 12% of German online shoppers think it will become worse. In fact, the outlook for August is positive as the share projecting it will become better is larger than the share thinking it will become worse.
The overall change in future financial outlook can be explained by a shift in composition of the German online consumers; more German consumers have started to shop online since the second half of March, but at the same time the share of Heavy Shoppers (which showed a rapid increase up until the second half of May) has decreased since mid-June.
German online shoppers’ worries decreased continuously from the end of March up until June, but have since then started to flatten out. Worries about personal health have decreased the most, from 51% at the second half of March to 39% by the first half of July. In that same period, worries about the personal financial situation also decreased, from 39% to 34%. From this, we can also conclude that – over the past months - German consumers worries have been more health than finance-focused.
Since end of March, the increased number of online purchases in Germany is largely driven by consumers shifting purchases from brick-and-mortar stores to online channels. 17% of German online shoppers say they have started shopping more online and less in physical stores in the past month, and 6% say they have started shopping more in physical stores and less online. And not surprisingly, the more purchases a consumer currently makes online, the more a consumer states that they have shifted their share of purchases from offline to online.
To understand the shift in a larger context, it is important to note that the share of Dutch, German and Norwegian consumers who have shifted to online purchases is higher than the share who have shifted to offline purchases. In this regard, The Netherlands displays the largest difference (22% online versus 9% offline), followed by Germany and Norway.
The projected online/offline balance for August is also positive towards online purchases, as 14% of German online shoppers claim they will shift purchases to online in August, while 8% claim they will shift purchases towards offline.
In the first phase of German e-commerce development, we saw a rapid increase in e-commerce purchases up until the second half of April, with e-commerce up +36% compared to pre-corona times. In the second phase, going into the second half of May, growth stabilized and a plateau was reached at +36% growth. And during June, growth dampened and has now levelled out at +14% growth since the corona outbreak.
As we do not see an increase in offline purchases during the past month, this dampening of online purchases should not be interpreted as consumers shifting purchases from online to brick-and-mortar stores, they have simply made less purchases overall.
We see interesting developments in the motivations to purchase online over time. In Germany, the fact that prices are cheaper online has increased continuously in importance as a driver to make more purchases online, along with the convenience of online shopping. It looks like the functional benefits of online shopping have increased in impact, and are possibly leading to a lasting change. And since end of March, the fact that stores and restaurants were closed and having to take care of family at home were two important reasons to increase e-commerce purchases for Dutch, German and Norwegian consumers. But these have now significantly decreased in importance.
As for the barriers for German consumers to decrease online purchases, the share of consumers who have virus-related concerns around receiving packages has decreased continuously. On the other hand, a limited personal financial situation has increased in importance for making less e-commerce purchases.
Stay tuned for an updated deep dive into Norwegian e-commerce behavior very soon.