ConsumerScope

Newsletter – Autumn 2006

Issue 3/2006

Modern fairy tales are hard work

“Germany: A Summer Fairy Tale” is the name Sönke Wortmann gave to his documen-
tary film on the German national soccer team and the World Cup held in this country.
That sounds buoyant and light and not at all strenuous. In reality, though, such fairy
tales are the result of hard work, and this applies in a similar way to the nonfood
categories. The forward passes delivered by FIFA with the World Cup and the minis-
ter of finance with the increase in the value-added tax have to be accurately convert-
ed by manufacturers and retailers in the remaining months. Then, at the end of the
year 2006 the result might read 1:0 for nonfood – one percent more than last year!

Thanks to favorable conditions, nonfood value
sales grew in the first half of 2006 for the first
time in seven lean years. Retail value sales of
nonfood items (textiles, electro, hard goods
and building supplies ranges) at half-time lay
one-percent above the corresponding value
from the previous year. And as has been dem-
onstrated in the meantime, not only were the
German kickers caught up in this enthusiasm
but German consumers as well. As a result, GfK
ConsumerScope expects growth of one percent
for the entire year 2006 as well.
Modern fairy tales are hard work, and the best
“frame” is worth nothing if the picture within
is no good. Thus manufacturers and retailers
have not simply relied upon others to create a
favorable environment but have also worked
on their own fitness. In the first half of 2006
the deterioration in prices in the retail trade
has to a large extent been brought to a stand-
still, even in the categories in which for years
merchandise has been becoming ever cheaper.
At the same time, consumers have given up
their reticence to purchase. The long since
agreed upon increase in the value-added tax
to 19 percent effective January 1, 2007, has led
to the consequence that a great many house-
holds that have planned for a long time to

Development of nonfood demand

First plus after seven lean years

Nonfood turnover* Forecast

171,3 172,7
169,3 169,1
163,2

152,0
149,5 147,6 147,5
146,1

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
+1,0%

* Nonfood: Electro / textiles / hard goods incl. DIY

GfK ConsumerScope © GfK Panel Services Deutschland

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 ConsumerScope
Newsletter – Autumn 2006
make acquisitions and modernize have decided
to do so in advance – inspired also by the cor-
responding advertising measures of manufac-
turers and retailers. That has had an effect on
the purchase of major electrical appliances, for
example, but also on renovation activities. You
will find more details on these topics in the
GfK Electro*Scope and GfK Living segments of
this newsletter.
In the first six months of the year 2006, 34.3
million households have gone shopping at
least once in the stores of nonfood retailers.
That is more than 200 thousand and 300 thou-
sand more than in the first half of 2005 and
2004 respectively. The average purchasing fre-
quency per customer increased slightly, but in
return consumers spent somewhat less money
on their purchases (minus 0.2% compared to
the same period of the previous year). The to-
tal result for nonfood in the first half of 2006
was an increase in value sales of just under 72
billion euros (+1%). However, the contribution
of the individual nonfood product ranges dif-
fered considerably.
Higher market volume due to increased expenditures
Market development total nonfood market*; 1st half-year respectively
Expenditures in mill. €
2004 2005 2006
72,73 71,25 71,93
Change in avg. expenditures per purchase (index)
2004 2005 2006
100
99,5 99,3
* Gross expenditures / purchasing act private German households
GfK ConsumerScope
2
■ Nonfood product ranges:
A slight lead at half-time
The leader in the growth ranking was the seg-
ment electro, which in the first half of 2006
was able to increase its value sales by 5.4 per-
cent. The soccer world championship intensi-
fied customers’ yearning for consumer elec-
tronics. Along with modern television sets, for
which the consumer must still pay a hefty
price, DVD recorders were in great demand.
For details on developments in the market for
consumer electronics equipment turn to the
third part of this newsletter, GfK Electro*Scope.
Besides consumer electronics, major domestic
appliances contributed decisively to the
growth in value sales. Higher demand (ad-
vance purchases) and higher prices gave rise to
an increase in value sales of 10 percent in the
first half of 2006. On the other hand, growth
in the area of small domestic appliances con-
tinued to flatten out. Nevertheless, there was
an increase in value sales (1.8%) with a simul-
taneous decrease in demand (volume: -1.5 %).
Number of buying households in mills.
Chg. in % 2004 2005 2006
+1,0% 34,0 34,1 34,3 +0,6%
Purchasing frequency per buying HH
2004 2005 2006
36,3 35,9 36,1
- 0,2% +0,6%
© GfK Panel Services Deutschland
 ConsumerScope
Newsletter – Autumn 2006

The largest segment in the nonfood market
are the so-called hard goods, among which are
included the non-electrical household furnish-
ings. This area also benefited from the pent-up
demand of the households. In particular, old
furniture was replaced by new. In this case, be-
cause of the relatively high average investment
involved, the still “low” value-added tax makes
itself apparent. The advertising battles on the
part of the competing furniture outlets took
care of the rest in arousing consumers’ willing-
ness to spend. The entire hard goods range at-
tained an increase in value sales of 3.1 percent.
In contrast to the two segments characterized
by strong growth, electro and hard goods, the
textile area declined somewhat in the first six
months of the current year. In terms of value
sales textiles stagnated with an increase of just
0.6 percent. But here too it is encouraging to
see that consumers’ bargain-hunting orienta-
tion has diminished so that the price deteriora-
tion of the past several years could be stopped
(at least for the time-being).
Badly hit in the first half of the year were the
core categories in the building supplies market.
The cold weather that prevailed well into June
in Germany took the pleasure out of working
in the garden. When summer finally did arrive,
punctually for the start of the World Cup,
watching soccer and celebrating took priority.
The result: a drop in value sales of 8.8 percent
in the building supplies core categories during
the first six months. In the second half of the
year things may well turn out differently.
■ Nonfood sales outlets:
Victory for convenience
The development among the product ranges
finds its equivalent on the retail side: among
the winners in terms of value sales in the first
half of 2006 were the furniture stores and the
electronics specialty stores, but also the textile
department stores, contrary to the trend in the
narrowly-defined range.
Whereas the large department stores and the
discounters stagnated, the rest of the retail
food trade was able to improve distinctly –

Development of nonfood value sales by segment

Market development total nonfood market

1st half-year respectively 2004 2005 2006 Chg. 2006 : 2005 in %

Total expenditures in bill. € 72,73 71,25 71,93

+1,0

Textiles 28,7% 28,3% 28,2% +0,6

Electro 19,8% 19,4% 20,3% +5,4

Hard goods
36,7% 36,5% 37,3% +3,1
Building supplies
core categories 14,8% 15,8% 14,2% -8,8 -0,4

GfK ConsumerScope © GfK Panel Services Deutschland

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 ConsumerScope
Newsletter – Autumn 2006

E-Commerce: Dynamically growing market

E-Commerce development of value sales

in bill. Euros 2002 2003 2004 2005 2006

12,96
+ 16 %
11,20 compared to
half-year period
previous year

E-Commerce value sales 8,84

in total year 7,23
6,35 6,24
5,32
of which in each 3,85
respective half-year
2,54

GfK Web*Scope © GfK Panel Services Deutschland

even though at a comparatively low level. An
essential part of that development can be as-
cribed to the coffee roaster Tchibo, which fur-
ther increased the number of its sales outlets
in the retail food trade. This adversely affects
the remaining specialty shops, whose share of
the total nonfood market has declined by
more than three percentage points within the
last two years, but they suffer even more from
the attractive force exerted by the large spe-
cialty stores.
With rising fuel prices the tendency to make
purchases from the comfort of one’s own home
also increased. German consumers bought 16
percent more merchandise by internet mail-or-
der in the first half of 2006 compared to 2005 –
a rate of increase stationary retailers can only
dream of, as a rule. Nevertheless, at present 85
percent of all nonfood purchases are still made
in stores and a further eight percent by tradi-
tional mail-order, that is, ordering by letter, fax
or telephone.

E-Commerce: Growth at the cost of other sales channels

Value sales shares in percent

Each 1st half-year respectively 2004 2005 2006

Internet 5 6 7

Mail-order business 7 6 6
(without internet)

Stationary trade

88 88 87

Total nonfood in bill. € * 72,73 71,25 71,93

GfK ConsumerScope * Textiles, hard goods, electro © GfK Panel Services Deutschland

4
 ConsumerScope
Newsletter – Autumn 2006
■ Nonfood purchaser groups:
Middle strong in demand
And anyhow, not all groups in the population
contributed to the same degree to the improved
development in value sales. In the first half of
2006 consumers between the ages of 30 and 49
in particular were the ones who made purchases
and exhibited above average spending behavior.
In comparison, older households have either less
need or they are more concerned about the de-
velopment of their own (old-age) income.
Younger households, on the other hand, are
more satisfied with low-priced items and are still
postponing the really large purchases.
■ Other markets: Boom in demand
for consumer goods
The markets for consumer goods – that is,
food, beverages, and drugs and cosmetics – ac-
cording to the GfK Consumer Index have been
showing a stable positive trend since the be-
ginning of the year 2006. At the end of August
the increase in value sales was a good four per-
cent higher than for the comparable period of
the previous year. Actually, after the boom ex-
perienced by certain categories surrounding
the World Cup of soccer and in view of the
“escape from the republic” by the vacation-ad-
dicted in August, one might have expected
more modest growth. But happy consumers in
this month again spent almost six percent
more on purchases of fast-moving consumer
goods.
The most important driving force behind
growth in this case are beverages – certainly:
watching soccer in the sun makes one twice as
thirsty. In the categories cosmetics, paper prod-
ucts, and laundry, washing and cleaning prod-
ucts, however, succeeded in putting through
real price increases in anticipation of 2007. For
5
these categories, in contrast to food and most
beverages, the value-added tax of 19% will
then apply.
Among new-car registrations, too, the menac-
ing increase in the value-added tax is leading
to advance purchases, especially since car deal-
erships are enticing customers by “waiving”
this increase or even the value-added tax com-
pletely. In this way the customer can save at
least a couple of hundred or sometimes even a
couple of thousand euros. It is therefore no
wonder that the branch is writing figures in
the black. By the end of August a plus in regis-
trations of one percent had accumulated, ac-
cording to the automobile industry association
on its homepage. At first glance that doesn’t
seem like much, but a few more percentage
points could follow during the rest of the year.
In the tourism branch the balance-sheet for
the 2006 summer season has not yet been pre-
pared. For one thing, the World Cup of soccer
in their own country kept many fans (and non-
fan family members) from leaving Germany.
This led to a short-term backlog of demand.
On top of that, the weather in August was less
than ideal so that many Germans were driven
to warmer climes. We will analyze the situation
in the coming weeks and keep you up-to-date
in the GfK TravelScope.
■ Preview: The most successful
year in a long time
In the last several months the experts have had
to constantly revise their forecasts regarding
economic development in Germany upward,
towards the increasingly positive. Just recently,
for example, the IMF raised its forecast for Ger-
many to 2.0 percentage points – that is 0.7
points more than estimated in the spring. If
one considers that the prognoses for the USA,
 ConsumerScope
Newsletter – Autumn 2006
Japan and important EU countries are even
better, then it becomes clear that an important
thrust for the German economy comes from
the development of the world economy. How-
ever, that shouldn’t detract from the contribu-
tion being made by domestic demand.
According to the GfK Consumption Climate
Study in September 2006 consumers’ inclination
to purchase reached an all-time high for the
third time already. With the certain expectation
of additional burdens, consumers have appar-
ently decided to seek refuge in attack. That
should lead to lively demand in most of the
nonfood segments for the remainder of the
year. How things look after that is difficult to
estimate since households’ expectations with re-
gard to both the economic outlook and their
own income are not particularly optimistic.
Nevertheless, one can describe the economic
trend in Germany as one of “robust growth,”
as most of the experts are doing. The increase
in the value-added tax may slow down the up-
ward trend briefly, but it won’t stop it. Objec-
tive factors like the slow decline in unemploy-
ment and the increase in job openings confirm
the trend. The confluence with “soft” factors
like confidence and optimism (“We Germans
have shown at the World Cup just what we are
capable of accomplishing …”) has already led
to a distinct waning of the “It’s-cool-to-be-
stingy” wave combined with a visible turn to-
wards more quality. In the food sector every
new scandal leads to the reinforcement and
acceleration of this trend. Thanks to spoiled
meat!?
Contact: Dr. Wolfgang Adlwarth
Phone: ++49 (0) 911 / 395-3664
Fax: ++49 (0) 911 / 395-4092
E-Mail: wolfgang.adlwarth@gfk.com
6
It is equally clear, however, that there are facts
and moods that could have negative effects.
There is still the trend in energy costs, to name
one factor, even if the situation on the oil mar-
ket has grown visibly less tense, and the heating
bill will not turn out to be as high as was once
feared – it is still high enough as it is. Costs for
mobility are also distinctly higher than they were
a year ago. High gasoline prices, however, de-
monstrably affect consumers shopping behavior.
But above all the debate on the future of old-
age pensions and medical insurance could influ-
ence the desire to consume. Because, although
politicians have not exactly demonstrated the
mastery of leadership skills in this regard the di-
rection is clear: things will be more expensive
for everyone. And it is also clear: every euro
that is put aside (or has to be put aside) is with-
drawn from current consumption.
Just what volume this displacement of expendi-
tures might possibly have can be seen by look-
ing at the advertising activities of the insurance
branch which the GfK DirectMail Panel has
been following with interest: from January to
July 2006 the insurance branch sent 31 percent
more advertising mail than in the correspond-
ing period of the previous year. For products in
the area of private medical insurance (includ-
ing costs for dental prostheses) the growth in
mailings at 47 percent was even higher. That
politicians should soon “get with the program”
in this regard would not only be in the inter-
ests of consumers but also equally good for the
development of the domestic economy.
Contact: Herbert Lechner (Trade)
Phone: ++49 (0) 911 / 395-3668
Fax: ++49 (0) 911 / 395-4433
E-Mail: herbert.lechner@gfk.com
 Media*Scope
Newsletter – Autumn 2006

Issue 3/2006

Media are “offside”

Media offer a diversion from everyday life; that applies to books as well as to PC
games. If, however, “real” life itself holds an excess of distraction in readiness
then media will find it difficult to compete. Take the early summer of 2006, for
example, that enticed people into the open air with its fantastic weather. And on
top of that there was fantastic soccer for millions of fans. The ball was the
“medium” this time around, in the stadiums and in the sky.

The GfK Media Budget declined by five per-
cent in terms of volume sales in the first six
months of 2006 compared to the correspond-
ing period of the previous year. But although
consumers bought less they paid slightly high-
er prices on average so that the decrease in
value sales at two percent was noticeably more
moderate.
Naturally it is never pleasant when sales shrink,
but maybe it is some consolation for media
suppliers that most of the losses resulted from
the first quarter of 2006. What is more, sales in
this quarter in the previous year were particu-
larly strong so that the resulting massive basis
effect in this year has a mathematically nega-
tive influence on the media markets.
Of decisive importance for the relatively
“good” balance-sheet in terms of value sales,
compared to volume sales, for the first half of
2006 is the slightly positive value sales trend in
the book market. Books, despite declining mar-
ket shares in the last few years, still contribute
more than a third to the GfK Media Budget
(basis: value). The development at movie-theat-
er box-offices also has a stabilizing effect. The
contribution of commercial downloads is opti-
cally impressive, but the market share of this
segment amounts to just under two percent
and therefore the actual contributions to
growth are rather negligible. The same applies,
by the way, the other way round for the area of
mobile phone content. With a market share of
two percent, a drop in value sales of 20 percent
has a limited effect on the total media budget.

GfK Media Budget: Gains and losses by market

January – June 2006 : 2005

Change compared to previous year’s period in % Volume Value

Commercial downloads 32 31
Movies 8 9
Books -2 1
Music* -5 -3
Entertainment software -3 -4
Video sales (VHS+DVD) -7 -10
Blanks (CD blanks / blank cassettes) -7 -11
Video rentals (VHS+DVD) -11 -13
Mobile content -23 -20
Total -5 -2
* Music videos are registered as “music.”
GfK Media*Scope © GfK Panel Services Deutschland

7
 Media*Scope
Newsletter – Autumn 2006
■ Mobile content: The playful rise
of games for mobile phones
Let us stay for the moment with the taillight of
the GfK Media Budget. The market for content
that can be loaded onto mobile telephones
continues its downward trend. The minus in
value sales in the first half of 2006 amounted
to 20 percent compared to the same period of
the previous year. Nevertheless the decline
slowed down distinctly in the second quarter.
Ring tones still account for the lion’s share of
contents downloaded to cell phones, but also
the downloading of entire music pieces, so-
called full track mobile music, is becoming
more and more popular. In the meantime
these downloads account for about five per-
cent of the total value sales of mobile content.
Despite heavy losses in the total market the out-
look is not so dismal in all segments. The winners
in the market for mobile content, along with the
download of entire musical pieces as already
mentioned, are the games for mobile phones.
They have enjoyed a peak season not only at the
Leipzig Games Convention. In the meantime eve-
ry third download to a mobile phone is a game.
In this case, male players continue to dominate
with almost 60 percent, whereas when it comes
to ring tones women call the tune with 58 per-
cent. When the question is how best to down-
load a game to a mobile phone, WAP technolo-
gy plays a great role. 70 percent of all mobile
phone games are ordered through WAP.
■ Commercial downloads: Music
adopts jaunty tones
Never before has the downloading of music to
PC’s been more popular! Value sales of music
from the internet rose in the first half of 2006
by 37% to 21 million euros compared to the
8
corresponding period of the previous year. Of
the just under 12 million music downloads
about 90 percent are track downloads, i.e. sin-
gle music pieces, and only 10 percent are en-
tire albums.
Of course, software still accounts for the larg-
est share of value sales in the commercial down-
load market. One reason for that are the much
higher average prices in this segment. Whereas
a software download swallowed up on average
about 29 euros, a music download (incl. album
downloads) cost an average 1.82 euro.
The new ways of marketing music in the form
of downloads and full track mobile music ac-
counted for about six percent of total value
sales in the music market in the first six months
of the year 2006. Although the segment is still
comparatively small, it has already repeatedly
proved to be a mainstay for the total music
market. Including downloads, in the first half
year the music market sustained losses of
“only” two percent in terms of value; without
downloads, however, three percent. With this
change, after the first six months the “physical”
music market (without downloads) lies below
the level of value sales of the previous year.
While sales of music DVD’s in the current year
are stable, volume and value sales of CD’s
lagged behind last year’s figures by about four
percent.
■ Entertainment software:
Handhelds fascinate consumers
Just in time for the Games Convention in Leip-
zig (August 24 to 27), Europe’s largest exhibi-
tion of computer and video games, GfK Panel
Services had some good news to report: the
market for electronic games grew in the first
six months of the year 2006 compared to the
 Media*Scope
Newsletter – Autumn 2006
same period of the previous year by 5.9 per-
cent in terms of volume sales to 19.7 million
units sold (2005: 19.1 million). Because, howev-
er, the average price dropped from 24.43 euros
to 23.86 euros, value sales in this period of
time grew by only one percent to 468.9 million
euros (2005: 466.5 million euros).
Of course, the market for electronic games is
split, and the two partial markets in the first
half of 2006 again developed in opposite di-
rections. While PC games sustained losses
amounting to 6.7 percent (down to 219.3 mil-
lion euros) compared to the previous year’s
value sales (first half-year), video games
(games for consoles and handhelds) increased
sales by 7.8 percent (to 249.6 million euros). In
this case the software products for the new
handhelds (Nintendo DS, Sony PSP) were par-
ticularly instrumental in lending wings to the
market.
This positive environment notwithstanding,
that the total market is still on the minus side
with three percent (volume) and four percent
(value) is due to the non-games products. In
the first six months of the year 2006 value
sales decreased by 17 percent and volume sales
by 19 percent. The info and edutainment prod-
ucts with 49 percent account for the largest
share of the non-games market, followed by
application software with 42 percent and op-
erating systems with nine percent.
■ Video markets suffer from a weak
(previous) year at the movies
For the first time since the introduction of the
DVD, the trend on the DVD market was nega-
tive. While volume sales in the first half of
2006 lay only slightly below the previous year,
the continuing decline in average prices gave
rise to an even more distinct decrease in value
9
sales. Among the target groups 40 years and
older, spending on DVD’s are still stable or
even increasing; among the younger age
groups, however, a declining tendency cannot
be overlooked.
Among other things this may have something
to do with the most crucial segment of the
market: the marketing of current films. Be-
cause of the weakness of the cinematic year
2005 heavy losses were incurred in the first
half of this year. On the other hand, the spe-
cial interest and TV areas were able to increase
sales. The TV area in the meantime accounts
for just under one-fifth of DVD value sales.
Prices are falling everywhere. This is most evi-
dent in the segment of new releases. Never-
theless, there is reason to hope for a distinct
revival in the second half of the year especially
in the segment of current movies on DVD. Af-
ter all, DVD’s under the Christmas tree are be-
coming more and more popular.
To an even greater extent than the video sales
market, the rental market is dependent on ti-
tles that are strong at the box-office. For that
reason, the rental market has suffered more
highly than average in the first half of the year
from the weakness of the films on offer from
the year 2005. In addition the lovely summer
weather and of course the soccer World Cup
affected the video rental business negatively.
The market for recording media is character-
ized by the “extinction” of the traditional
blank media (audio and video blank cassettes,
minidisks). In the area of the “new” storage
media (CD and DVD blanks), the successive
changeover from CD to DVD blanks is becom-
ing more and more apparent. DVD blanks are
becoming increasingly attractive in terms of
price and already account for just under 40
percent of sales.
 Media*Scope
Newsletter – Autumn 2006
■ The cinema market: After the
ice age into the new age?
Is the “ice age” in the German cinema market
finally coming to an end? “Ice Age 2 – The
Meltdown” significantly enough is the name
of the most successful film of the first six
months. But also “The Da Vinci Code” from
the novel by Dan Brown and the musical dra-
ma “Walk the Line” saw to it that German
movie theaters sold eight percent more tickets
and even had nine percent more turnover. Al-
together at the box-office in Germany in the
first half of 2006 64.6 million movie tickets
were sold accounting for 381.7 million euros in
value sales.
That is a pleasant development after the signi-
ficant losses in the past (half) years. It doesn’t
necessarily mean that German cinema is over
the hump, but in the film industry isn’t there
an encouraging slogan that says: Dreaming is
allowed?
Soccer World Cup: Powerful “kick” for sports books
1st Half 2006 : 2005
Sales in mill. euros
Books on soccer World Cup
Sports advice
GfK Media*Scope
10
■ The book market:
“Kickoff” for the advice segment
No other book project is planned and staged
with such military precision as the publication
of a book on soccer after a World Cup. Just a
few hours after the final whistle of the final
game the printing machines are started up and
just two days later the first books are in the
bookstores. The motto here is: only the fastest
get the three points in this business.
And so it came to pass that a multitude of soc-
cer books livened up the advice market in the
second quarter of 2006, although between the
final game and the end of the quarter lay an
interval of only three weeks. In the sub-cate-
gory of sports books, books on the World Cup
of soccer account for almost one-third of vol-
ume sales. They are responsible for seeing to it
that sports books increased sales by more than
50 percent.
Propelled by the success of sports books, sales of
advice and utilitarian nonfiction books grew by
five percent compared to the corresponding peri-
+52%
4,9
0,2
10,3 11,1
© GfK Panel Services Deutschland
 Media*Scope
Newsletter – Autumn 2006

Book market continues positive trend

1st Half 2006 : 2005, Total book market

Total book market 1st half 2006 = 1.602 bill. €

Fiction

+ 4%
Other

+ 12%
Reference books
+ 1%
Atlases and travel
literature + 11% - 1% - 11% Scientific nonfiction

Classic travel guides* +5%

and coffee-table books
+ 5%
Children’s and
youth books Advice and
utilitarian nonfiction

GfK Media*Scope * incl. sports and active travel, hotel and restaurant guides © GfK Panel Services Deutschland

od of the previous year. That is quite a lot when
one considers that for the past few years this
segment has suffered greatly from the increas-
ing competition from the internet. Fortunately,
however, in addition to the sports books, books
offering advice on health and body care as well
as on the subjects of gardens, plants, nature
and animals were also more frequently bought
in the first six months of the current year.
As in the advice segment, children’s and youth
books also grew by five percent in terms of
value sales in the first half of 2006. Reference
works brought a good 12 percent more into
the cash registers, whereas scientific nonfiction
books lost an almost equivalent amount (-11
percent). In this case the internet has grown
into a mighty competitor.
The situation is completely different in the
realm of fiction. If need be, fiction is also in-
creasingly bought via the internet. Electronic
books, however, have not caught on. On the
contrary, fiction has developed into a solid
mainstay of the book market. In the first six
months of 2006 consumers again spent four
percent more money on literature, books that
the reader could also listen to, just for a change.

Strong growth in value sales for audiobooks

1st Half 2006 : 2005

Change in percent Shares in percent

Men 37
Volume sales + 5,7

Value sales + 16,7 63 Women

GfK Media*Scope © GfK Panel Services Deutschland

11
 Media*Scope
Newsletter – Autumn 2006

Men prefer to order through the internet

1st Half 2006

Value shares in % Men Women

Bookstore
39 51

Book club

Department store
1
4
Mail-order business 13 2

6 10
Hypermarket / Supermarket / Discounter
14

Internet 28 3
13
Other outlets 9 7

GfK Media*Scope © GfK Panel Services Deutschland

A growing market in the large area of fiction
(43 percent market share of the total book
market) and in the youth segment (12 percent
of total books) are the audiobooks. Over 90 per-
cent of these books have literary content in the
broadest sense. At four percent the share of
audiobooks on the total market is still relative-
ly small, but its growth is sustained and above
all valuable. While demand in the first half of
2006 grew by just under six percent, value sales
of audiobooks increased by 17 percent.
As with fiction in general, audiobooks are
bought primarily by women. They account for
almost two-thirds of all expenditures. Whereas
women purchase every second audiobook in
classic bookshops, men avail themselves of this
sales channel for just under 40 percent of pur-
chases. On the other hand, more than twice as
many men (28 percent) as women (13 percent)
buy their audiobooks on the internet. Both
sales channels taken together thus account for
some two-thirds of total audiobook turnover.

Contact: Christoph Freier Contact: Viola Löhle

(Music/video) (Mobile/download)
Phone: ++49 (0) 911 / 395-2257 Phone: ++49 (0) 911 / 395-3448
Fax: ++49 (0) 911 / 395-4022 Fax: ++49 (0) 911 / 395-4022
E-Mail: christoph.freier@gfk.com E-Mail: viola.loehle@gfk.com

Contact: Christoph Zeh Contact: Grit Patzig (Books/audio books/

(Games/software/cinema) calendar)
Phone: ++49 (0) 911 / 395-3359 Phone: ++49 (0) 911 / 395-3013
Fax: ++49 (0) 911 / 395-4022 Fax: ++49 (0) 911 / 395-4022
E-Mail: christoph.zeh@gfk.com E-Mail: grit.patzig@gfk.com

12
 Electro*Scope
Newsletter – Autumn 2006

Issue 3/2006

Major appliances regain lost ground

Ten percent more turnover than in the previous year – something about which
others can only dream. But only at first glance is the great leap in value sales of
major domestic appliances in the first half of 2006 a dream result. Behind the
scenes a certain last-minute panic on the part of consumers and the increasing scar-
city of raw materials play a decisive role. Fortunately, manufacturers and retailers
have been able to integrate the higher costs (also those pending) at least in part
into the prices without throttling demand. This compensates for the bitter losses of
the past years.

Whoever looks with a little envy at the opulent
increases in value sales of major domestic appli-
ances should also, to be fair, cast a glance into
the past. For five long years demand has been
declining constantly, and because prices were
actually in free fall the balance-sheet in terms
of value sales looked even worse. Due to press-
ing financial considerations and / or for fear of
losing one’s job, many households have for a
long time been postponing new or replacement
purchases of refrigerators and freezers, washing
machines and tumble dryers. Now they feel that
the right time has come to catch up on neces-
sary or even unavoidable purchases.
The decisive argument for this position has
been provided by the minister of finance. Just
under three percent of private German house-
holds have already bought major domestic ap-
pliances in advance of the coming increase in
the value-added tax, or are planning to in the
remaining months of the year 2006 (see chart
on the following page). It is true that a washing
machine that can be bought today for 800 eu-
ros will only cost just under 20 euros more after
January 1, 2006, but the psychological effect is
apparently stronger than the purely financial.
It is also encouraging that consumers are
following up on their intentions to purchase
major domestic appliances by actually buying,
as the increase in volume sales amounting to a
good three percent underscores. That may not
be the case in all product ranges. It is true, for

Development of demand for electric appliances

1st Half 2006 : 2005

Figures in % Volume Value

Small domestic
- 1,5 + 1,8
appliances*

8 major domestic
+ 3,3 + 10,0
appliances

* Incl. direct sales

GfK Electro*Scope © GfK Panel Services Deutschland

13
 Electro*Scope
Newsletter – Autumn 2006
Influence of increase in value-added tax on intention to buy 2006
Households that have already made an advance purchase due to the increase in the
VAT or yet intend to in 2006 in the following product ranges
Shares in %
Renovations
Automobiles
Consumer electronics
Furniture
Automotive accessories
Computers / PC’s
Home textiles
Upholstered furniture
Mattresses
Built-in kitchen appliances
Other major domestic appliances
Bathroom fixtures
Household goods
Kitchen furniture
Electrical appliances household
Small domestic appliances kitchen
Electric devices personal care
Source: GfK ConsumerScope; survey of 14,000 panel households
example, that more value-added tax is saved
when purchasing an automobile, but the acqui-
sition runs into considerably more money. And
so it is that, according to the automobile indus-
try association, private car registrations as of
the end of August are up only one percent
compared to the corresponding figures of a
year ago. With renovations, too, consumers
have not as yet grabbed the initiative. To be
more precise, almost 10 percent of households
do intend to carry out planned renovations in
advance, but in fact the core categories at
building supplies stores have recorded value
sales that are almost nine percent minus as of
the middle of 2006. In this case, too, there is a
yawning gap between expectations and reality.
Nevertheless, with the major domestic appli-
ances there is a pleasantly large difference be-
tween a good trend in demand and an even
better one in value sales. Manufacturers and
retailers have managed in part to successively
incorporate into their prices the increase in the
14
9,7
6,1
5,5
5,3
4,6
4,1
4,1
4,0
3,2
2,8
2,5
2,3
1,8
1,7
1,4
1,4
1,2
© GfK Panel Services Deutschland
value-added tax of the coming year already in
this year. Consumers are thus spared an abrupt
increase in price in January 2007, and suppliers
are spared the possibility that they will be sad-
dled with higher consumption taxes.
The special demand situation makes it possible
to transfer the increased prices for raw materi-
als and the higher transportation and energy
costs at least partially onto the fixed retail
prices. The products are also made more expen-
sive not least by the fee for the disposal of old
appliances. And so the prices for major domes-
tic appliances in the first half of 2006 have in-
creased for the first time after having been
more or less in free fall for the past several
years. For tumble dryers, dishwashers and elec-
tric ovens consumers currently have to put
about as much money on the counter as they
did in the year 2002; washing machines on the
other hand still cost about as much as they did
in the reference year. Only cooker hoods, as
already previously, have benefited price-wise
 Electro*Scope
Newsletter – Autumn 2006
Increasing orientation to quality / affinity to “leading” brands
1st Half 2006 : 2005, Top Boxes 6+7 (applies / applies fully and completely); shares in %
Question for buyers of major domestic appliances*: “Why did you ultimately decide in favor of the brand purchased?”
59 60
56
2004 2005 2006
* 6 major domestic appliances: washing machines, clothes dryers, dishwashers, refrigerators and freezers, electric stoves, stove filter hoods
GfK Electro*Scope
from technical improvements and lively de-
mand. In general, fully developed technology
and qualitative aspects are increasingly playing
a role in the decision to purchase major domestic
appliances. Because as a rule it is a question of
long-term purchases, consumers take more than
just a favorable price into consideration. They
also pay attention to performance and quality.
This has been shown by a survey conducted by
GfK among buyers of major domestic appliances.
To the question of what ultimately was the de-
cisive factor in favor of the brand purchased,
currently 60 percent of respondents stated
that quality was a decisive buying criterion.
That’s four percentage points more than two
years ago. Thirty percent of purchasers decided
on a particular appliance because it was the
leading brand. The number of these brand
buyers also increased by five percentage points
in the two-year period. The so-called “A”
brands like Miele, Bosch, Liebherr and others
are the ones that are especially in consumers’
good graces. All of these brands were able to
expand their market share, both in volume as
well as in value sales, in the first six months of
the current year.
15
“This brand offers solid, reliable quality.”
28 30
“This brand is the leader 25
in this category.”
1st half-year respectively 2004 2005 2006
© GfK Panel Services Deutschland
■ Small domestic appliances
come off worse than the majors
Consumers’ current focus on the necessary new
and replacement purchase of major domestic
appliances has relegated the small domestic ap-
pliances somewhat into the background. For
years now the technically demanding and func-
tionally ever more sophisticated household
helpers lay ahead of their “big brothers”, but in
the first six months of the current year they
couldn’t hold a candle to the major appliances.
Volume sales of small domestic appliances (in-
cluding direct sales) declined in the first half of
2006 compared to the corresponding period of
the previous year by 1.5 percent. After the first
quarter, demand still lay a good three percent
above the previous year’s figure. Value sales,
on the other hand, were still on the plus side
in the first half of 2006 with 1.8 percent
growth. However, even in terms of value sales,
the result for the first half of the year lay be-
hind that of the first quarter (+4.0%).
The growth in value sales is distributed among
various segments and categories such as electric
 Electro*Scope
Newsletter – Autumn 2006
Share of special offers of total small domestic appliances*
1st Half 2006 : 2005
Question for buyers of small domestic appliances: “Was this price a special offer?”
46
45
43
40
1997 1999 2001 2002
* 25 small domestic appliances. Basis: Volume
GfK Electro*Scope
men’s shavers, electric toothbrushes and depila-
tion devices (new products in the premium seg-
ment) as well as hairstyling appliances, particu-
larly high-grade and comparatively high-priced
hair straightening devices. But also coffee pad
and espresso machines (fully automatic), again
contributed to the growth in value sales.
The higher emphasis on quality among consum-
ers across the board has also led among the
small domestic appliances to a strengthening of
the specialty trade. The volume sales market
share of the specialty stores increased in the
first half of the year 2006 compared to the cor-
responding period of the previous year by 1.5
percentage points to 29.5 percent. The market
share in terms of value sales rose to 42.9 per-
cent; that correlates to an increase of three per-
centage points compared to 2005. Losers in the
buyers’ estimation were above all the discount-
ers, whose market share (volume) declined by
3.5 percentage points to 13.2 percent. Analo-
gous to that development is the declining
share of appliances that are bought at bargain
prices. Nevertheless, it is still the case that only
every second appliance is purchased for the
regular price.
16
51 51
49 50 50
2003 2004 2005 2005 2006
1st Half 1st Half
© GfK Panel Services Deutschland
■ Digital cameras: More and more
often a search on the internet
The consumer is confronted with an ever-in-
creasing variety of consumer electronics from
which to choose. New models are constantly
coming onto the market and the life cycles of
the devices are becoming shorter and shorter.
In order to find the right product it is therefore
becoming more and more important for con-
sumers to inform themselves thoroughly about
what is on the market before making a pur-
chase. The reverse is true also, that manufactur-
ers and retailers can optimize their marketing if
they accommodate the specific information re-
quirements of the target groups Using digital
cameras as an example, GfK Panel Services
shows how young and old, man and woman
differ in their information-seeking behavior.
Now as before the most important source of
information before purchasing comes from
poking around in the store. About 50 percent
of buyers of digital cameras look intensively or
very intensively (top boxes 6+7) at the cameras
being offered before the purchase and com-
 Electro*Scope
Newsletter – Autumn 2006

Information-gathering behavior relating to purchase of digital cameras

Where did you inform yourself before buying your digital camera?
Top Boxes 6+7 (intensive / very intensive)

Share of sources of information in % Sex According to age group

m / f <35 35-44 45-54 55+

Product comparison in store 50 50 47 54 49 43 49

Internet 46 48 39 53 47 47 35

Advice from salesperson 46 45 42 40 44 39 51

Test reports 40 46 27 40 41 39 38

Relatives / friends 35 31 43 40 35 29 36

Advertisements / inserts newspapers 32 31 29 34 31 26 30

Manufacturers’ brochures 27 28 23 25 25 25 30

Advertisements / inserts magazines 25 25 23 24 27 20 24

Mail-order catalogues 16 17 15 16 17 15 15

Direct mail 8 9 5 8 8 6 8

TV and radio advertising 3 2 5 3 3 4 3

Customer service consultation 2 2 2 1 2 1 3

Quelle: GfK Electro*Scope © GfK Panel Services Deutschland

pare features and functions of the different ■ Vital markets, lucrative niches:
products. Study on electro-products 2006

The internet has gained significantly in impor-
tance and in the meantime has become the
second most important source of information,
almost at the same level as the advice received
from the salesperson. However, whereas the
internet is mainly used by young buyers and
men as a source of information, older consum-
ers tend to rely more heavily on the advice re-
ceived from sales personnel.
This year once again GfK Panel Services con-
ducted a market study on various electronics
products. The cutoff date was August 1st.
Information was gathered on health and
beauty care products and other electrical
household appliances by way or a written
survey of 15,000 households in Germany.
The results are representative for all 34.3
million private households in Germany.

The reading of test reports occupies fourth On the one hand, the study provides infor-
place in the ranking of the most important mation on the degree of ownership among
sources of information before making a pur- the households, but it also contains other
chase, whereby this is distinctly more a special- relevant information such as:
ty of men than of women. For women, on the u Market volume 2005: 2006 (first half-year)
other hand, the opinion of relatives, acquaint- u Brand structure
ances and friends plays a greater role. About u Year of purchase
43 percent of women inform themselves in this u Sales outlet structure
way before they buy a digital camera.

17
 Electro*Scope
Newsletter – Autumn 2006
u Average prices
u Sociodemographic profiles of
owning households, etc.
This information can be helpful in answering
the following questions relevant to market-
ing:
u How strong are the individual brands?
u How is the retail environment set up?
u What prices are there on the market?
u How can the target groups be described?
u Further questions
The results from previous years show that
the markets surrounding health, beauty and
wellness offer interesting niches for manu-
facturers and retailers:
u The undisputed number one among 13
selected product groups in 2005 was the
bathroom scale, which is present in 25.5
million households (market saturation:
75%). In second place were the fever
thermometers of all types (market satu-
ration: 64%), whereby the traditional
digital thermometer is especially wide-
spread. Under the Top 5 followed electri-
cal massage devices (19.3%), devices for
manicures / pedicures (11.4%) and electric
inhalators (10%).
u The market saturation for step counters
(4.5%) and body fat measuring instru-
ments (1.9%) on the other hand is very
low. These devices are just beginning
their diffusion among households.
18
u The most important sales outlet in the
area of health and beauty care products
in the past year was still the pharmacy,
particularly due to the demand for
blood-sugar measuring instruments and
inhalators. But discounters and coffee
outlets occupied a relative important
position. The medical supplies outlet as a
source of supply with two percent lay at
the bottom of the standings.
Categories in the study
u Electric steam cleaners
u Weather stations / radio weather stations
u Binoculars
u Beer tap systems
u Electric bread bakers
u Charcoal / fireplace grills
u Gas grills
u Electric barbecue grills
u Hearing aids
u Electric heart frequency measuring
watches (pulse watches)
u Electric step counters
u Electric massage devices
u Electric inhalators
u Electric steam therapy devices
u Electric whirlpool baths
u Electric manicure / pedicure devices
u Electric humidifiers
u Electric air conditioners
u Body fat measuring instruments
u Bathroom skales
u Electric fireplaces
 Electro*Scope
Newsletter – Autumn 2006

■ Consumer Study Eastern Europe The study also examines the sociodemographic
2006: Results now available structure of the owner households, how satis-
fied the consumers are with their appliances,
In January 2006 GfK Electro*Scope conducted how frequently they use them, and much more.
another consumer study on various electric ap-
pliance categories (small / major domestic appli- A part of the study relates to blood pressure
ances, consumer electronics) in nine eastern monitors and their distribution in eastern Eu-
European countries, namely: rope. While the level of ownership in Hungary
u Russia is already very high, in Russia, Poland and the
u Poland Czech Republic there is a considerable amount
u Czech Republic of accumulated demand. At the bottom of the
u Slovakia standings, in the Czech Republic, market satu-
u Hungary ration is just above 14 percent. One also finds
u Bulgaria big differences in model preference: whereas
u Romania consumers in Russia almost exclusively take the
u The Ukraine upper-arm models (91 %), the trend in Poland
u Croatia is moving towards the more user-friendly wrist
appliances (58 %).
The study collects data in more than 23,000
representatively selected households on levels In Poland, the preferred sales outlets for pur-
of ownership of electric appliances as well as chasing blood pressure monitors are similar to
the volume of private demand, and provides Germany: discounters and supermarkets are
information on, among other things: gaining increasingly in importance (volume
u Brands share: 44 %). One reason for this is the fact
u Types that the average prices in the last two years
u Sales outlets have fallen by more than half to 30 euros. In
u Retail prices Hungary, Russia and the Czech Republic,
u Purchase years though, when it comes to purchasing blood
u First / replacement / pressure monitors consumers tend to place
additional purchases, etc. their trust more in the specialty outlets (vol-
ume share for pharmacies in Russia: 71 %).

Blood pressure monitors in eastern Europe:

Market saturation and model shares
1st Half 2006 : 2005

Market saturation in % Model shares in %

Wrist model Upper-arm model

34,6 9

42 58
91
14,3

Hungary Czech Rep. Russia Poland

GfK Electro*Scope © GfK Panel Services Deutschland

19
 Electro*Scope
Newsletter – Autumn 2006

■ Consumer Study u Target groups for different categories

Western Europe 2007 Sociodemographic profiles of owning
households, core target groups
GfK Panel Services is planning for January u Product features decisive for purchase
2007 (preceding study: 2003) another consu-
mer study on various major and small dome-
stic appliances in nine western European Categories covered:
countries (Germany, France, Spain, Italy, UK,
the Netherlands, Sweden, Switzerland, Aus- u Major domestic appliances:
tria). By way of a survey of 51,000 represen- Washing machines
tatively selected households the study will Tumble dryers
investigate the following topics: Dishwashers
u Ownership levels in the households Electric / gas ovens
u Purchases in the last two years Cooker hoods
u Brand and manufacturer Microwave ovens
u When was the appliance purchased? Refrigerators
u What product features played a role in Freezers
making the purchase?
u Satisfaction with the appliance, etc. u Small domestic appliances:
Coffee and espresso machines
The study will provide valuable marketing Vacuum cleaners of all types
information and answers to questions such Irons of all types
as the following: Electric oral care devices
u Where is there potential in the market? Bathroom scales
Market saturation, pent-up and replace- Blood pressure monitors
ment demand Electric tools
u How strong are the individual brands?
Positioning of individual brands in the
market and competitors’ positions

Contact: Göran Seil (Major domestic applian- Contact: Stefan Nigg (Consumer electronics,
ces and small domestic appliances) IT, telecommunications)
Phone: ++49 (0) 911 / 395-4403 Phone: ++49 (0) 911 / 395-3117
Fax: ++49 (0) 911 / 395-4022 Fax: ++49 (0) 911 / 395-4022
E-Mail: goeran.seil@gfk.com E-Mail: stefan.nigg@gfk.com

Contact: Uwe Broeske (MDA/SDA, national

and international ownership studies)
Phone: ++49 (0) 911 / 395-4214
Fax: ++49 (0) 911 / 395-4022
E-Mail: uwe.broeske@gfk.com

20
 Living
Newsletter – Autumn 2006

Issue 3/2006

Jazzed up but not ritzy

German consumers are using the finance minister’s “tax present” as a reason to
revamp their household furnishings. Before the higher value-added tax in the coming
year makes purchases for home and garden more expensive (although not a must),
consumers are buying furniture in comparatively high volume. With the amount of
money spent, however, they are for the most part keeping their feet on the ground.

The market for furniture in Germany, after a
long hard slog, has improved overall in the
first half of 2006. The basis for that is the no-
ticeably improved consumption atmosphere
among consumers and the propensity to con-
sume that goes along with it, which, according
to the GfK Consumption Climate Index is cur-
rently better than it has been in years. Ag-
gressive advertising on the part of retailers
and advance effects due to the upcoming in-
crease in the value-added tax are taking care
of the rest and contributing to considerable
growth in volume sales of furniture.
Compared to that, growth in expenditures is
definitely lower, which can be attributed to
the numerous discount promotions with which
furniture is sold for throwaway prices. This ap-
plies particularly to the lower-priced furniture
categories such as small pieces of furniture or
baby / children’s furniture and youth furniture.
In this case, despite higher demand, expendi-
tures are distinctly on the minus side.
In general, consumers stocked up on furniture
without at the same time investing in large
sets of furniture. Small pieces of furniture es-
pecially were purchased en masse at discount
prices without bringing decidedly more money
into retailers’ cash registers.

The furniture market in the first half of 2006

Basis: 20,000 households from the GfK Furniture Panel (in %)

Change in expenditures (value) of private households in the 1st half 2006 : 1st half 2005 in %

Bedroom + 2,0
Living room case furniture + 3,9
Upholstered furniture + 6,1

Baby / children’s / youth rooms - 8,0

Home office - 3,5
Garden furniture + 0,2
Dining room - 2,4
Small pieces of furniture - 5,9
Total market* + 1,7

www.gfk-living.com * without kitchen furniture © GfK Panel Services Deutschland

21
 Living
Newsletter – Autumn 2006
■ The GfK FurniturePanel –
Not off-the-shelf information
Within the framework of the GfK household
panel, 20,000 representatively selected Ger-
man households are surveyed on a monthly
basis on their monthly (furniture) purchases
and reasons for purchasing as well as on
their information-gathering and buying be-
havior. This is accomplished using specific
and detailed questionnaires for each sepa-
rate product range.
In that way, GfK Living is in a position to pro-
ject all relevant market information – ranging
from market volume to demand development
to price information – for the total furniture
market and for each individual product range.
These valuable aids to decision-making are
available to furniture manufacturers and fur-
niture retailers, but also to subcontractors, in
four different performance packages.
Your GfK consultant would be happy to in-
form you of purchase options and costs in-
volved. You can also find further information
at www.gfk-living.com.
The kitchen market 2006: Ownership of the household before purchase
1st Half 2006 : 2005
Did you have another kitchen
before buying a new one?
Yes: 81
No: 19
www.gfk-living.com
22
■ Kitchen market under pressure:
Old furnishings harbor enormous
potential
The way things are in German kitchens are sim-
ilar to the way things are in German society:
they are on the average very old – too old! Ac-
cording to figures from the GfK KitchenPanel,
kitchens in Germany reach an average age of
18 years before they are replaced.
Looked at from today’s perspective, the time
of purchase for a kitchen of average “age” lies
in the ‘80s of the previous century. In some
cases it would appear as if they came from the
“middle ages”: over half of all kitchens that
were replaced by a new purchase a short time
ago, were more than 15 years old; a third had
even been in service in the kitchen for longer
than 20 years.
There is a world of difference both in the func-
tionality and the design of a kitchen between
then and now. And so it is that the most fre-
quent motive for the purchase of a new kitch-
en is for the replacement of old, used-up and
more or less worn-out furniture. This reason
was given by more than one-third of kitchen
Approx. how old was your previous kitchen?
10 up to 5 years
19 up to 10 years
17
up to 15 years
22 up to 20 years
21 years and more
31
1 no response
© GfK Panel Services Deutschland
 Living
Newsletter – Autumn 2006

The kitchen market 2006: Reasons for buying kitchen furniture

1st Half 2006 : 2005; basis: volume / value in %

What was the reason for buying your kitchen furniture?

Volume Replacement of old used-up / Value

(slightly) worn-out furniture

Move to another house /

another apartment (own home)
30
36
Move to another house /
another apartment (rental)

Replacement of old furniture

18
(for newer design)

Supplement existing furnishings 22

23
Establishment of household / furni- 13
10 shing one’s own first apartment
11
4 Present / addition to the family / 1
8 other reason 9
8 6
1 No response 1

www.gfk-living.com © GfK Panel Services Deutschland

buyers surveyed by GfK. A further 11 percent
stated that they had purchased their kitchen
for reasons of design. Just under one-quarter
of all kitchens are bought in order to equip a
new home or condominium. That also possibly
explains why 10 percent of all households
bought a new kitchen although the old one
was not even five years old.
The fact that about half of all kitchens are re-
placed because they are worn out or for rea-
sons of design, and the high average age of
German kitchens in general, harbors great po-
tential for turnover for the coming years. This
enormous potential for replacement purchases
and renovations is just waiting to be awakened.
What is more, in addition to kitchen furniture,

The kitchen market 2006: Electric appliances in the kitchen

1st Half 2006 : 2005; basis: volume in %

Which electric appliances did you acquire along with the kitchen?

Cooker hood 68
Electric oven 66
Dishwasher 58

Refrigerator 34
Refrigerator / freezer combination 27
Microwave oven 14
Freezer 7
Gas stove with gas / electric oven 2

www.gfk-living.com © GfK Panel Services Deutschland

23
 Living
Newsletter – Autumn 2006

The kitchen market 2006: Deliberation before the purchase

1st Half 2006 : 2005

How much time lay between the first thought of buying a new kitchen and the actual purchase?

Volume Less than a month Value

1 month 12
19
9
14 2 months 12
12
3 – 6 months 22
19
7 – 12 months 11
10
More than a year 35
24
2 No response

www.gfk-living.com © GfK Panel Services Deutschland

in some two-thirds of all cases stove filter
hoods, electric stoves and dishwashers will also
be bought.
In the meantime, overhasty kitchen purchases
have become seldom. Especially when it comes
to purchasing a higher quality kitchen, it can
sometimes take up to a year before the buying
decision is finally made. In actual fact, for
more than half of all purchases at least three
months pass before the households finally
make up their minds to buy a new kitchen.
In this connection, the higher the planned in-
vestment, the more information the interested
buyers gather in advance. Two-thirds of poten-
tial customers go to up to three different
stores and obtain offers with concrete price
calculations.

The kitchen market 2006: Number of stores visited with price quotation
1st Half 2006 : 2005

In how many stores did you have a price calculated for you on the basis of a personal consultation?

Volume 1 store Value

2 – 3 stores
19 20
4 – 5 stores
39
6 stores 47

11 No other store
1 12
No response 1
28 20
2

www.gfk-living.com © GfK Panel Services Deutschland

24
 Living
Newsletter – Autumn 2006

■ Trend towards “better cooking” –
Higher quality cooking utensils
in demand
The level of ownership of pots and pans for
cooking and frying in Germany is without a
doubt very high and for each culinary dish
cooks have their own special pots or their own
particular pans. In the strong cooking utensils
categories “pots and pans” the market is with-
out a doubt on the upswing. It is true that GfK
Living is observing a decline in volume sales in
the pots category of the nonmetallic / micro-
wave dishes sort, but the trend – as with the
other two categories as well – is moving clearly
in the direction of quality and thus to products
of higher value.
In the first half of 2006 the total market
achieved volume sales of a good 7.6 million
units thereby almost reaching the same level
of demand as the corresponding period of the
previous year. The expenditure side was much
more pleasing: with about 183.7 million euros
in the first half of 2006 value sales surpassed
the previous year’s results by 2.2 percent.
The trend towards products of higher quality is
apparent in all market segments. For this reason
the development of value sales in the first half
of 2006 was generally better than volume devel-
opment, no matter whether demand in the re-
spective segment increased too or declined.
Metallic pots
Demand among private German households in
the first six months of the current year reached
a volume of just under 3.1 million items. That
corresponds to a plus of 1.4 percent compared
to the first half of 2005. With 87.0 million euros

Stove and cooking utensils market in Germany

Basis: volume / value

1st Half 2006 : 2005

Total stove and Nonmetallic pots/

Pots (metal) Pans Pressure cookers
cooking utensils microwave dishes

7,712 7,625
+ 1,4
+ 4,0
- 9,3
- 1,1 3,046 3,088
2,237 2,328 - 7,7
2,039 1,849
390 360

Value in mill. euros

Volume in mill. units

179,1 183,7 + 3,4

+ 5,1
+ 2,2 84,1 87,0 - 3,8
±0
51,2 53,8
17,8 26,0 25,0
17,8

2005 2006 2005 2006 2005 2006 2005 2006 2005 2006
1st half-year 1st half-year 1st half-year 1st half-year 1st half-year

Quelle: GfK Living © GfK Panel Services Deutschland

25
 Living
Newsletter – Autumn 2006
consumer expenditures of the previous year’s
period were surpassed by 3.4 percent.
Pans
The positive development in the pan market
was also encouraging. In the first half of 2006
consumers purchased a good 2.3 million pans.
That is about four percent more than in the
first half of 2005. On the value side the market
even booked a plus of a good five percent.
Pots nonmetallic / microwave dishes
With approximately 1.85 million units, private
demand lay about nine percent below that of
the comparison period, but value sales with
17.8 million euros reached the level of the pre-
vious year. On balance this means: consumers
bought products of distinctly higher quality.
Pressure-cookers
In the pressure-cooker segment, both pots and
pans, the comparison of the half-year periods
shows that volume sales dropped by 30,000
items to about 360 thousand units purchased (-
7.7%). In comparison, value sales of pressure-
cookers declined by “only” 3.8 percent. That
Sanitary fixtures markets 2006: Development of volume sales
1st Half 2006 : 2005
Rates of change in %
Fittings
Showers
Bathroom furniture
Toilet flushing systems
Washbasins
Bathtubs
Shower tubs 0,3
Toilet bowls 0,3
Shower partitions ±0
Total market
www.gfk-living.com
26
corresponds to a nominal decrease of one mil-
lion euros. In this case, too, average prices lay
distinctly above those of the previous year. In
view of this trend one is justified in talking
about an upswing in the market for cooking
utensils, especially for pots and pans. The most
differing influencing factors – such as the con-
spicuously improved consumer mood and a rel-
atively high propensity to purchase in view of
the upcoming increase in the value-added tax
next year – should lend further wings to de-
mand in the second half-year. That would com-
pensate manufacturers and retailers for the
losses of the past – the gift-giving period
around Christmas especially should lead to in-
creased sales.
■ Sanitary facilities markets:
Relaxation under a “warm shower”
For many years, the area of building and reno-
vations has not been pampered by the eco-
nomic situation. But now, finally, the building
industry is sending positive signals for (build-
ing) business.
2,5
2,4
1,5
1,4
0,9
0,8
1,6
© GfK Panel Services Deutschland
 Living
Newsletter – Autumn 2006
Sanitary fixtures markets 2006: Development of value sales
1st Half 2006 : 2005
Rates of change in %
Fittings
Showers
Shower tubs
Washbasins
Toilet flushing systems
Bathroom furniture
Shower partitions
Bathtubs - 5,5
Toilet bowls - 6,4
Total market
www.gfk-living.com
Although one can hear a slight sigh of relief in
the sanitation branch, skepticism still domi-
nates the picture. Sanitary fittings and showers
have suffered too much in the last years from
the weak economy and hesitant demand. But
now, with the upswing in Germany gaining
strength and consumers’ propensity to pur-
chase downright euphoric, better times should
be ahead for sanitation products as well. And
actually there are signs that most of the sani-
tary facilities markets in the first half of 2006
have already more or less recovered, especially
in terms of value sales.
In the first half of 2006, private German house-
holds acquired a good 2.8 million new sanitary
fittings. In that connection, in terms of volume
growth sanitary fittings lie slightly ahead of
showers. Both markets were able to improve
by about two and a half percent up till now in
the current year compared to the correspond-
ing period of the previous year. But bathroom
furniture and toilet flushing systems as well as
washbasins and bathtubs also achieved re-
spectable volume growth at the level of the
total market or slightly lower. Fortunately, no
27
8,2
5,5
4,7
4,7
4,6
2,7
- 0,9
2,2
© GfK Panel Services Deutschland
single segment finished the first six months
with losses in demand.
As in the other GfK Living markets, in the sani-
tary area too value sales developed better
than volume sales. This does not apply to all
market segments though.
The list of top winners is longer for value sales
than for volume sales. Out in front were the sani-
tary fittings which experienced an increase in val-
ue sales of 8.2 percent since more brand-name
products were purchased and the discounters
didn’t have any promotions. Whereas the higher
prices consumers paid saw to it that the winners
experienced growth, among bathtubs and toilet
bowls discount promotions led to heavy losses.
In the coming months it is safe to assume that
advance effects due to the increase in the value-
added tax and the (limited) tax deductibility of
craftsmen’s invoices for private households will
provide further stimulus to the sanitary facilities
markets. And the continuing wellness trend could
also contribute to making manufacturers and re-
tailers of sanitary fittings soon feel better again.
 Living

Contact: Peter Bittner (heating, stove Contact: Oliver Schmitz (construction,

and cooking utensils, sanitary/ renovation, furnishing, DIY/
bathroom) garden, watches)
Phone: ++49 (0) 911 / 395-3665 Phone: ++49 (0) 911 / 395-4469
Fax: ++49 (0) 911 / 395-4092 Fax: ++49 (0) 911 / 395-5-4469
E-Mail: peter.bittner@gfk.com E-Mail: oliver.schmitz@gfk.com
Internet: www.gfk-living.com

28