Will Media Markt and Saturn soon disappear from the electronics retail landscape? An economist sees failures and worries regarding their future.
Munich – Media Markt and Saturn are only competitors at first glance. Because they both belong since 2017 as MediaMarktSaturn Retail Group alongside Deutsche Technikberatung to the Ceconomy group. The change in consumer behavior is more of a problem for them than just existing side by side. Next to Global players like the online giant Amazon or the new market entrant Coolblue the group is finding it increasingly difficult to secure its place in the consumer electronics market.
Economist Gerrit Heinemann, who teaches business administration and trade at the Niederrhein University of Applied Sciences, explained in an interview Business Insider, what the future of the more than a thousand branches is like. And why it at Media Markt Saturn is now “regarding mere survival”..
Media Markt Saturn: The group faces existential problems in the market for consumer electronics
Things seemed to be looking up for Media Markt Saturn. During the wedding of Corona-pandemic, sales in their branches fell noticeably. A slight recovery of 18 percent only became visible in the second quarter of the 2021/22 financial year. However, the current economic crisis might possibly soon bring the group to its knees. Ceconomy has already reacted in the recent past by closing branches. According to Heinemann, the end for the electronics store chains founded in 1961 (Saturn-Hansa) and 1979 (Media Markt) is now a serious risk.
According to Heinemann, “Sales will increase less and less across the board, this affects trade in almost all product groups“. However, the electronics sector has two disadvantages compared to other sectors. On the one hand, most of the products sold come from third-party manufacturers. Customer loyalty to own brands is therefore hardly possible. On the other hand, the competition is immense. If you are looking for a smartphone, for example, you can buy it from thousands of suppliers worldwide.
The comparison creates a tough price war, with stationary shops measuring themselves once morest online trade have to. Above all applies here Amazon as the fiercest competitor. The e-commerce giant is not only able to offer customers completely different conditions because of its sheer size. As a result of the branchless business model, Amazon also saves a lot of costs that would arise in area retail.
Media Markt Saturn: Expert complains regarding omissions in e-commerce and core competencies
However, as Heinemann emphasizes, Media Markt Saturn is not just a victim of the circumstances. Rather, the group failed to adapt to the changed consumer behavior. On the one hand, according to the professor, the well-founded step into e-commerce been missed. “With the arrogance of the market leader” they rejected advice from Amazon-Germany in 2003, discontinued an online shop that had been opened for a short time – and then put it online once more in 2012 without any changes. Since “seven years in e-commerce [aber] like 100 years in brick-and-mortar retail”, you have “shot yourself in the foot” with this approach, which has left you lagging behind the competition ever since.
Beside that Feature with which stationary retailers can score – namely the advice – been completely neglected. The competition in retail is doing “significantly better” here, while Media Markt Saturn with the – albeit financially relieved – subletting of retail space to manufacturers undermine the independence of customer service. “Of course, a Sony consultant would also like to sell me a Sony television,” Heinemann outlines an example. “As a customer, I no longer feel like I’m being given independent advice.”
Economist Heinemann: Media Markt Saturn must now take these measures
In view of all these points of criticism, it is also clear to Heinemann what needs to change at Media Markt Saturn so that the group has a future in the electronics industry. “It is quite obvious that the problem is that the area is far too large,” says the economist. The immense Area costs too much money and is not being used to advantage rather it makes the branches “too confusing and therefore de[n] Purchasing is too time-consuming.” The shortage of skilled workers can also be counteracted with downsizing.
Furthermore, e-commerce must be established and generate at least 50 percent of sales in order to remain competitive. This requires a centralization of the markets in order to be able to set the course uniformly and implement it promptly. Marketing should also take a back seat to the analysis of customer behavior, since it only makes sense to adapt it accordingly. (askl)
