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EXECUTIVE SUMMARY
- Market context
- High inflation has eased, but is still affecting consumer sentiment
- Income tax relief will quickly fizzle out in Germany’s social security system
- Opportunities
- Capitalise on Germans’ savings efforts
- Rely on AI assistance to engage with Value-Conscious Shoppers
- Make financial education a priority
- Offer budgeting support to address financial challenges
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MARKET DRIVERS
- The German economy
- 2024 remains challenging
- Graph 1: key economic data, in real terms, 2019-25
- Inflation
- Germany has seen unprecedented levels of inflation
- Graph 2: consumer price index, 1975-2024
- The inflation rate is bouncing back to more conventional levels…
- …but consumers do not yet feel the relief
- Income and household finances
- Real wages indicate a positive trend
- Graph 3: development of real and nominal earnings and consumer prices, 2020-24
- Consumers’ financial wellbeing has not yet reached pre-crisis level
- Graph 4: financial situation, 2022-24
- Financial confidence is on the path to recovery…
- Graph 5: financial confidence index, 2022-24
- …but Germans remain cautious
- Financial assets of German households continue to rise
- Graph 6: financial asset distribution of private households, 2024
- Proportion of over-indebted Germans is falling
- Regulatory and legislative changes
- The German government pushes income tax relief
- Social security contributions are likely to further increase the financial burden on Germans
- Changes to investment taxation bring slight relief
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WHAT CONSUMERS WANT AND WHY
- Financial lifestyles typologies
- German financial lifestyles typologies
- Group 1: Balanced Spenders (19%)
- Graph 7: financial lifestyles group, by age, 2024
- Help Balanced Spenders improve the balance between spending and saving
- Group 2: Frugal Savers (19%)
- Graph 8: financial lifestyles group, by age, 2024
- Support Frugal Savers in coping with their daily financial struggles
- Group 3: Money Managers (19%)
- Graph 9: financial lifestyles group, by age, 2024
- Astonish Money Managers with exceptional after sales services
- Group 4: Value-Conscious Shoppers (20%)
- Graph 10: financial lifestyles group, by age, 2024
- Trust in AI assistance to connect with Value-Conscious Shoppers
- Group 5: Financially Uninvolved (24%)
- Graph 11: financial lifestyles group, by age, 2024
- Entice Financially Uninvolved with extra convenience
- Financial literacy
- More than half of Germans are confident about their financial literacy…
- …but there is room for improvement
- Help lower earners improve their financial literacy with low-threshold educational offers
- Graph 12: consumer perception of own financial skills and knowledge, by net monthly household income, 2024
- Sparkassen Finanzgruppe positions itself as a reliable partner in improving money management skills
- Use and knowledge of financial products
- Germans’ use of financial products is limited
- Graph 13: use and knowledge of financial products, 2024
- Age and financial situation impact the use of multiple financial products
- Use of financial products testifies to Germans’ propensity to save
- Financial inclusion is not a given in Germany
- Encourage Germans in their savings efforts
- Examples of SNBL providers operating in the German market
- Tackle the gender gap and empower women to take control of their financial futures
- Advocate the responsible use of consumer loans among the young
- Graph 14: current use of consumer loans, by age, 2024
- Take inspiration from Cashee and support financial education of the youth
- Financial challenges
- Financial challenges are prevalent, but there are significant disparities in terms of financial situations
- Graph 15: biggest financial challenges, by financial situation, 2024
- Provide Germans with budgeting support
- Lidl entices consumers with free access to BILDplus
- Examples of brands investing in loyalty programs to win Germans over
- Help Germans overcome the hurdle of retirement planning
- Graph 16: consumers for whom saving for retirement is among their biggest financial challenges, by age, 2024
- Behaviours towards personal finances and financial habits
- Family is an important source of financial education…
- Graph 17: behaviours towards personal finances and financial habits, 2024
- …opening up chances for making financial education a family affair
- Finanzfluss provides tips for teaching children money-management skills
- Help older consumers justify spending within their monthly budget
- Play your part in providing Germans with financial peace of mind
- Graph 18: selected biggest financial challenges, by agreement that brands should take greater responsibility for helping people to manage their finances, 2024
- Take inspiration from Minu and support German workers in improving their financial wellbeing
- Tackle younger Germans’ financial insecurity with entertaining content
- Deka makes financial education fun
- Weigh up the opportunities of finfluencer partnerships
- Examples of reputable German finfluencers
- Attitudes towards money and finances
- High inflation has heightened the significance of budgeting
- Graph 19: attitudes towards money and finances, 2024
- Caution and bargain shopping have become the default
- Hornbach entices price-sensitive consumers
- A sweet spot for self-care purchases
- Graph 20: consumers who agree that spending on non-essentials is a way of treating yourself (NET), by consumer perception of own financial knowledge and skills (NET), 2024
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LAUNCH ACTIVITY AND INNOVATION
- Advertising and marketing campaigns in the financial services sector
- Commerzbank promotes confidence and self-determination
- Sparkassen Finanzgruppe celebrates the adventures of Gen Z
- Targobank focuses on its flexible credit offers
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APPENDIX
- Appendix – products covered, abbreviations, consumer research methodology and language usage
- Products covered in this Report
- Abbreviations
- Consumer research methodology
- A note on language
Only 27% of Germans agree that it is more satisfying to spend money than to save it for the long-term. This is characteristic of Germans’ savings culture, with a strong inclination towards financial stability.
Even though inflation has eased, many consumersdo not yet feel the relief. This goes along with a continued cautious approach to spending. In fact, 74% of Germans agree that the cost-of-living crisis has highlighted how important it is to know how to manage their finances.
While adding to their savings is the top priority for Germans in terms of additional discretionary spending priorities, “save now, buy later” (SNBL) services represent an innovative approach for brands looking to meet the needs of consumers who remain cautious with their spending. Cooperations with SNBL providers can even increase brand reputation, as consumers will perceive financially responsible brands as being reputable and trustworthy.
Tallying with the fact that 66% of Germans agree that shopping for bargains is fun, bargain shopping has also become the default. Brands across discretionary categories are well-positioned to embrace this and can target Value-Conscious Shoppers with the option to negotiate personalised prices (as seen at UK-based clothing retailer ASOS).
This report looks at the following areas:
- Financial lifestyles typologies; this section entails characterisations of and implications for targeting five identified groups of financial lifestyles during recovery from the cost-of-living crisis, namely Balanced Spenders, Frugal Savers, Money Managers, Value-Conscious Shoppers and Financially Uninvolved
- Consumer assessment of their knowledge and skills when it comes to making financial decisions
- Use and knowledge of financial products
- Consumers’ biggest financial challenges
- Behaviours towards personal finances and financial habits, including savings behaviour and the desire to learn how to manage one’s finances better
- Attitudes towards money and finances, including the impact of the cost-of-living crisis and consumers’ attitudes towards discretionary spending
The cost-of-living crisis has made many Germans realise how important it is to know how to manage their finances. Brands can support them to achieve both spending and saving without compromise (eg “save now, buy later” services, price negotiation offers).
Dr. Jennifer Hendricks, Senior Analyst – Consumer Lifestyles, Germany
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