One of the largest German banks recently published an extensive study which came to the conclusion that the story about the holdup in consumption is just a “fairy tale”. The perception of many that a stimulation of consumption, a dissolution of this ominous holdup in consumption would jumpstart the economy, has to be put off into the land of dreams.

Even if there should be a dramatic rebound on the job market, creating purchasing power through new jobs on the job market, it would not really change the current situation, because in a strict sense, the level of consumption in Germany is not low, meaning there is more complaining going on than is actually called for.

Our point of view is known to our readers from BriefLetter and Synesis. We can only speak highly of Germans in regard to their propensity to consume. Lasting problems we see in the extermination of margins for retail which is still being increased by manufacturers going overboard on rebates.

Inevitably, sinking retail prices do not let the sales figures look very good and therefore the statistics of the consumer goods industry. While mass consumption is still satisfactory, the sales figures are falling due to the margin and price development.

The reason nothing crucial is going to change on the general situation in the upcoming two to three years is because people are involved in changing their current habits of consumption. The purchasing behavior is oriented on the price. The conventional center of the range of products is dead. The formerly fast-selling premium segment is losing ground and the demand for luxury goods is thinning out. There is still a lot of want, but when it comes to brands, they are concentrated on a few big brands. And on the large field of needs, there are the “Economy products”, where solely the price determines the demand. And then there is the segment “PremiumEconomy”, where premium quality is being offered at very closely calculated prices. Nowadays, the knowledge society has a very sensitive sense for the price/cost ratio.

This has nothing to do with stinginess. It’s also not excessive economizing. It is simply the knowledge, what a product may cost. And at that time the quality plays a positive role.

We should not misjudge that people have a new scope of duties, which they did not have to take care of in the past. I would like to point out the biggest one: the costs for provision; provision for health, provision for one’s old age, provision for the unexpected.

And then there is the rapidly growing transfer of costs back to the people, costs that used to be covered by the government for its citizens, because the funds simply aren’t available anymore. Due to this new scope of duties, people are faced with a redistribution of their income, in the short term a problem, in the long-term to be seen positively, because growing independence from the government reduces the paternalism through politics and strengthens the freedom of the individual.

No holdup in consumption, no prospect for golden times like we enjoyed them in the 70’s and 80’s of the past century. We have no reason to complain; rather we should instead welcome the situation, because it offers us a chance to newly position.

Whoever focuses on the PremiumEconomy segment can be successful in Germany. We were first to discover this new organization of the consumer goods market, explained and pictured in the Waisted Rectangle©. With our knowledge we can help to occupy the correct position on the market.