The main trends in the European retail sector are: expansion into Eastern Europe, defense against the invasion of American imports, and the specialization and diversification of foodstuffs manufacturers into non-food sectors, according to Gerard Hermet, member of the board of directors of GfK, Germany’s biggest market research company, which employs more than 5,000 people. He expects concentration in the Greek market to increase gradually but relatively quickly. Hermet gave an interview to Kathimerini while in Athens to speak at a conference held by GfK Market Analysis, his company’s Greek arm since 1999. «To begin with, it is difficult to separate the sector of foodstuffs from non-foodstuffs, as many groups, such as France’s Carrefour and Germany’s Metro, are active in both,» he says, noting that Carrefour sells about 300,000 television sets in France annually, accounting for 11-12 percent of the market. Facing an onslaught from the foodstuffs firms, traditional retailers are trying to increase their specializations, says Hermet. For instance, Britain’s Kingfisher is trying to focus on do-it-yourself (DIY) products, abandoning electronic consumer products where it used to be very strong. This decision was not coincidental, as DIY is potentially two to three times bigger than electronic products. Nevertheless, the sector is not as developed, in the sense that it does not have well-known commercial brands. Retailers are also expanding into Eastern Europe, where the market is still dominated by small shops and consumption is expected to receive a significant boost from European Union funds when the new members become fully integrated. «I would not say it is a new El Dorado for retailers but it is a growing area and most large groups have invested there, though they made some big mistakes in the beginning.» A characteristic example was in Poland, where the big hypermarket groups like Tesco, Wal-Mart and Carrefour began by selling older models of consumer goods, those they could not sell in Western Europe. «But they quickly learned that the mentality of Easterners is to acquire the latest technology, even to borrow funds for that purpose,» he says, noting that currently more flat-screen TV sets are being sold in Ukraine than in Germany. The reason is that in Germany most people already have color sets and the rate of replacement is lower, while the Ukrainian, buying a color TV for the first time, prefers the latest models.» The other basic strategy is to create a defense against the expansion of the big American chains, particularly Wal-Mart, by «blocking» the market via a strong position with suppliers. «This is the case in Germany, for instance, where Wal-Mart has a certain number of outlets but penetration is very difficult, especially in the non-food branches due to the traditional role of chains. To be cheaper than Aldi in Germany is really very difficult,» he insists. Commenting on the Greek market, he notes that it has certain strong characteristics but follows general trends very closely. The main peculiarity is that there are still many small shops trying to organize into suppliers’ cooperatives (as in other European countries in the past) which are estimated to account for about 40-50 percent of non-food retail sales. The introduction of the euro has brought greater transparency in price comparisons, both in relation to the supplier (an advantage) and to the customer (a disadvantage). He acknowledges that the new currency created a temptation among retailers to increase prices but, on the whole, competition prevented that. «After a certain period, the impact of the euro was really negligible,» Hermet says. «We did not see it in higher prices and we did not see it in consumption – consumers put off purchases due to confusion. The impression was that prices had gone up but in reality this did not occur.» Regarding the impact on the retailing of cheap imports from China, Hermet believes that the Chinese firms have had to knock on the door of the large retail groups in order to acquire any foothold in Western markets. These groups also need the established brands that invest in innovation and advertise their products, Hermet says. Finally, Hermet notes that consumer confidence may have seemed to be on a downward slide in surveys in recent years but that consumption did not fall appreciably. «Consumption was a segment of the economy that was hit rather mildly in the downturn,» he says. Income stringency The main characteristics of the Greek consumer are: income stringency, particularly in the lower social strata; unfavorable demographic trends; the maturation of the market in certain products which have been kept for a long time, and fewer opportunities for sales, Spyros Kamilieris, deputy general manager of GfK Market Analysis, told the conference in Vouliagmeni. According to a recent survey by GfK, 47 percent of consumers questioned said their income levels had remained unchanged in the last two years, while one in three stated a decline. Almost 29 percent, mostly in the higher social strata, said their incomes had risen; the demographic problem creates a more competitive environment. Greek consumers keep their durable goods longer before replacing them (5-10 years for video cameras, air conditioners and CD players, and 10-15 years for refrigerators, stoves, deep freezers, washing machines, videos and televisions); 59 percent prefer to buy in cash, 27 percent by credit card installments and 11 percent via shop installments.