Growth of existential fears

The year 2001 was not a rosy one for Germany’s retailers, nor did the DIY sector fare any better as a consequence. The BHB has calculated that the sales increase will be a mere 0.3 per cent. No all-clear has been given for this current year either: the German Retail Association sees no glimmer of hope on the consumer horizon and is forecasting a 1.5 per cent drop in sales. Increasing unemployment and higher fiscal charges are likely to put a damper on the Germans’ willingness to spend. The continuing sluggishness of the construction industry is an additional aggravation for the DIY retail sector. Therefore the process of consolidation is set to continue. This will particularly affect family businesses, and certain DIY store proprietors are plagued by existential fears at the thought of such a prospect.
The incessant price war is another reason for the appearance of worry lines on many a forehead, especially since the abolition of the law on discounts is opening up new horizons. These have meanwhile been recognised in yet another field in the German DIY retail sector, where discount and customer cards are increasingly gaining in significance. But the more the number of cards grows, the more probable it becomes that the whole exercise will simply turn into a zero-sum game for the participants.
The fact that a clear differentiation through price alone can never be the solution is shown by DIY groups that are going for internal growth, by means of increasing staff productivity and introducing state-of-the-art computerised merchandise information and logistics systems. However, opportunities for growth are also promised by expansion into international markets such as those of central and eastern Europe, where the German DIY retail groups are now very much involved.
Sylvia Herzog, DIY in Europe Germany