THE INSECURE, HYBRID CONSUMER

Interview with Elsa Homann, Client Business Partner GfK

Demand for e-bikes remains consistently high, but there are numerous factors that could dampen the propensity to consume and others that will continue to fuel the hype. What does GfK, Germany's largest data analytics provider, have to say? We spoke to Elsa Homann, a mobility expert at GfK, ahead of the Bike Biz Revolution.

Ms. Homann, what will you be talking about at Bike Biz Revolution?

Elsa Homann: The presentation is called: "The State of Consumer Mobility and Technology". It's about the status quo of the bike industry and consumers today. And I think what many viewers will also be interested in is what our forecast is for the future. What are the trends for the current year?

There's a lot of uncertainty in the current situation. How does that affect the consumer market?


This is a current topic that is of course on everyone's mind. We have various reports and indicators to approach the issue. We updated our forecasts for this year in April. Global growth in technical consumer goods sectors will be only a quarter of what it was last year. The current situation is clouding the outlook.

We see prices rising - on the one hand because of the Ukraine war, on the other because of supply bottlenecks due to interrupted supply chains. Prices have already been rising since mid-2021, and there is no end in sight. Consumers are worried about further price increases and fear cuts in income.
We also see this in the GfK Consumer Confidence Index. Compared with May 2021, we have 21 points less in terms of propensity to consume. That is already a significant impact.

Inflation could also tempt people to buy a larger consumer good like an e-bike today rather than tomorrow.

It's hard to say at the moment. May is traditionally the most important month for the bike industry. How big an effect inflation will actually have on e-bikes remains to be seen. The typical e-bike owner in Western Europe has a higher income, we know that from our GfK Consumer Life survey. These are people who mostly have children and live in the city. They may be less affected by such concerns and the impact of inflation.

We have a tool that we use to predict the development of demand in individual markets. And we currently see a plus of three percent for the German e-bike market in 2022. When interpreting this, however, it is important to remember that the forecast is based on historical data and only takes special effects into account to a limited extent.
 
What perhaps speaks against the trend is the high propensity to save that we have. Before Corona, the savings rate was around 10 percent; today it's 15 to 16 percent. We are talking about a total of at least EUR 100 billion in disposable income that consumers have put aside in the last two years. However, savings are currently being devalued by inflation. As a result, only some people are likely to liquidate reserves and purchase an e-bike, for example.

If you define the e-bike as part of electromobility, then there are also the sharply rising energy prices and government subsidies. How does what work?


Last year in October, we took a closer look at the mobility behavior of German consumers. One result was that people in large cities in particular would accept rising gasoline prices because they are less dependent on cars than people who live in the countryside.

At the same time, the issue of sustainability has become more important during Corona. There is a very high focus on quality and sustainability of products and services, and according to findings from our GfK Sustainability Index, people are willing to pay more for it.

Personally, I could imagine that the war in Ukraine and the dependencies that have become visible as a result will further fuel the trend toward more electromobility. It will be exciting to see to what extent alternative drive concepts - including e-bikes - can benefit here.

What significance do subsidies have?

Price is of course a very important criterion, especially in the e-bike market. However, a study from France shows that over half of buyers would have purchased an e-bike even without subsidies.

 
When you say that price is an important criterion, does that mean that e-bike prices have to go down in order to attract more target groups? 


The average price in Germany is 2,100 euros, that in the Netherlands is 2,300 euros. And Germany is catching up with double-digit growth rates. So the average price is rising rather than falling. This also has to do, for example, with the waiting times that people currently have to put up with. The premium segment above EUR 3,000 has seen a very strong increase.


In general, we at GfK do not see any trend reversal toward the low-price segment. This applies to almost all consumption. The expected price increases, and also those that have already occurred, do not have as great an effect on price sensitivity as one might assume. Consumers are not paying more attention to price now than before, with the exception of very low-income consumers. Instead, we see a clear trend toward premiumization across all categories.

What explanation does GfK have for this? Does the e-bike seem cheap compared to the car?

The e-bike buyer does not make this comparison. We know anyway that most consumers buy the e-bike as a supplementary means of transportation, and thus they replace both car trips and trips they would make on foot. 
I see the reason for the premiumization more in a change in values. The results of our global GfK Consumer Life survey show that quality awareness is growing strongly. And this is true across all generations. The majority of customers who own an e-bike today are under forty years old. Among this group, the idea of sustainability is also firmly anchored in the value system.

Is the German e-bike market special?

No, not really. The rise in quality awareness can be seen everywhere, at least in Western Europe. Germany has a lot of purchasing power, and Germans simply like to ride bikes.

Does remote work have an impact on people's lives and on their mobility?

 What we do know is that there is a "new normal" in the long run. That is not returning to pre-Corona levels. In the short term, we see a trend toward urban flight because the importance of the domestic sphere has risen sharply. But that won't stop the long-term trend of rural exodus. People continue to be drawn to cities, and that's where e-bikes are most commonly ridden.

Another effect of the Corona crisis has been the continued growth of e-commerce. Will more and more people buy e-bikes online?

In any case, e-commerce was the big Corona winner. The future belongs to multi-channel. That's where both are included, the convenience of online shopping and the ability to touch products. Again, it's not going to go back to 2019 levels. We see this clearly in the travel industry, for example: more searches are being done online, even though travel agencies have reopened.
In any case, e-commerce was the big Corona winner. The future belongs to multi-channel. That's where both are included, the convenience of online shopping and the ability to touch products. Again, it's not going to go back to 2019 levels. We see this clearly in the travel industry, for example: more searches are beingThe future belongs to the hybrid consumer. There was also this year, for the first time, the Hybrid category as an award at the Best Brands Awards. It was given to the brand that best succeeded in seamlessly combining online and offline. done online, even though travel agencies have reopened.

 And who won?

That was DHL. Not only was the reach very good, but also the contact quality at the touchpoints.  But the transportation and travel industries are, of course, segments that are easy to digitize. It's a different story with hardware like bicycles. Only in part. The travel industry is heavily dependent on advice, on direct contact between people. That's just as true for advice on buying a bicycle. In fact, face-to-face contact remains very important, but buyers now also use digital channels such as social media, video streaming or chat. 

If we look at the issue of quality awareness, we can see that people not only want to test ride the product, but they also want to look at the service facilities. Here, at a certain point in the customer journey, physically visiting a store becomes important. But before that, people research online. And more intensively than before Corona.

Elsa Homann will be speaking at the Bike Biz Revolution on July 12, 2022, about the major trends in society and the economy and about the consequences for the bicycle industry, which are truly not small. She has been at GFK for five years, where she is primarily responsible for mobility topics. Before that, she worked at Philips for three years.