This early summer I was lucky to get invitations for two sailing events. Looking back, they happened to be symbolic of the current economical situation in Germany.
In May, the beach sailing competition Junghans Carbon Cup took place in St. Peter Ording, a small town on Germany’s North Sea shore whose distinguishing mark is a long and incredibly wide sandy beach, an ideal place for wind driven racing cars. It was a nice weekend with warm and sunny weather – unusual for the region in that season. The multicoloured sails of the racing cars from France, Germany, Belgium and Denmark looked nice on the white sand with the blue sea shining in the background – but the most important sailing condition was missing. There was no wind, the race competitors had to face a boring lull and could do nothing about it.
In a figurative sense these circumstances are exemplary to the German watch and jewellery retailers. You see, retailers did everything they could to push sales - the latest watch models into their show cases, start promotional activities like special sales, direct mailings and prize-winning games. But in the end they wait - wait for customers not only to enter the shop but also to buy something.
Nowadays, inexpensive fashion watches and sport watches like Fossil, Casio, Esprit or DKNY are easy to sell in Germany. Also very expensive timepieces can be sold. “It is not difficult to sell an expensive watch in the appropriate ambience,” says Iris Messner-Teriet, managing director of Corum Germany. “But the sale of mid-price watches between 2,000 and 5,000 euros is especially suffering from the consumer’s reserve.”
Expressed in figures the outlook is simply disappointing: during the first four months of this year there was an overall decrease of turnover throughout the retail business in Germany of –1.1 %. Looking at the watch and jewellery branch, the decline is dramatic, an average of - 10 % in April 2004 compared to the same month last year. Small shops with a turnover of under 250.000 Euros per annum were especially affected with – 12 %.
At the end of June, I went up north again, this time heading for the shore of the Baltic Sea and Schleswig-Holstein, Germany’s northernmost state.
Corum’s German subsidiary had invited me for a two-day stay in Kiel, in order to attend one of the most famous sailing events, which lasts for one week and is therefore called the Kieler Woche. Hundreds of sailing teams with boats of several different classes from all over Europe come to the Schleswig-Holstein capital every year to compete in one of the numerous races that take place on the open sea as well as between the long beaches of the bay connecting Kiel with the Baltic Sea.
Everything was fine. A shuttle service of the latest BMW cars picked us up at the hotel to take us to wherever we wanted to go. I was invited for dinner in the exclusive yachting club and I could have become a guest crew member on one of the biggest racing boats if I had wanted to.
Actually, though I love sailing very much, I did not enter the high-tech yacht because the weather simply was the worst you can imagine for a sailing regatta. Temperature was round 12 degrees, the wind was too strong and gusty and it was raining cats and dogs. I hesitated about going sailing for a while, and then finally, I refused.
This situation can be compared to that of millions of German consumers: hesitation and refusal. People think carefully about whether to buy a new watch or not. They would like to spend money, especially those with middle-range income who undoubtedly have it (the saving rate in Germany is the highest ever). But they feel insecure about what might happen tomorrow. Maybe their employer will close down his company or subcontract the work they do. Or perhaps they might loose their job for other reasons - as more than 2,500 people do each day in Germany.
The worst thing is that nobody, neither the government nor the opposition parties, has a recipe for getting the economy running again. Everyone blames someone else for taking the wrong direction. More and more people are even refusing to go to elections because they are convinced that no politician has a solution to get them out of this mess.
But, as a German proverb says: ‘If you feel unable to find a way out, a small lantern comes up out of nowhere.’
GFK (Gesellschaft für Konsumforschung), a consumer survey company, has found that it is true ‘many consumers are still not willing to release the “consumer brake”. But the expectations for a positive economical development have risen by 6 % ... from minus 12 to minus 6.
Happy Sailing!

Source: August-September 2004 Issue

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