Germany: the leading market in Europe
Germany has around 80 million inhabitants and is the largest economy in Europe. Germans have an eye for quality and have in general good spending power. The market has good opportunities for exports but requires a dedicated approach.
How to find your agent or distributor?
Germany has three major economic regions that are around 4 hours drive apart: The Ruhrgebiet with Frankfurt, Cologne and Düsseldorf, the Munich area and Berlin. Especially for services it would be good to have representation in each of these regions. For retail a denser distribution network is necessary.
Working with local agents or distributors helps you overcome the language barrier: Germans speak German. Also finding these agents or distributors requires promotion materials in German and preferably a German intermediate to make the first contact.
Alliance experts can find the right agent or distributor within 3 months
Alliance experts helps companies with entering new markets profitably. In Germany we work from Cologne and Frankfurt with experienced business development specialists.
We have a clear and structured approach to find the best partner
We first want to know what kind of partner you are looking for. Based on your information, we make a long-list of 15-20 potential partners that fit your description. After your approval we find the right decision maker, approach him or her personally and share your business profile with them. This mostly leads to 3-5 companies who are suitable as your partner and interested in working with you. Once we have found these companies, we plan your meetings and accompany you during the first visits.
More about German distribution channels
Germany's distribution structure is characterised by:
- a large number of small independent shops
- low levels of concentration, other other countries have much more retail chains
- the predominance of distribution in city centers and urban areas
- few "hypermarket" style stores
This forces any new supplier to work through mostly regional distributors, in order to get sufficient penetration. An agent or importer may be needed to service them all.
It may be wise to focus first on one region in Germany, or to concentrate with more high-end products in the major cities of the country. This requires a sound distribution strategy.
The German retail sector
According tot the Federal Statistics Office, the German distribution is divided between traditional retail trade (24.8%), specialised hypermarkets (22%), non-food chain stores (13%), DIY hypermarkets (11.7%), discounters (11%), supermarkets (7.9%), distance selling (5.8%) and department stores (3.8%).
There are three leading distributor groups when it comes to FMCG: Metro, Rewe and Edeka/Ava. Discounters such as Lidl or Aldi, who also have a strong market share, put a lot of price pressure on all kind of consumption goods. This means that your product really have to stand out and have an added value in terms of attracting consumers, otherwise your margins will be under heavy pressure.
Trade shows in Germany
Germany has many trade shows which are an excellent way to showcase your products and to orient yourself on the market. However, due to the sheer size of these shows chances are small that a purchasing manager of a major chain will accidentally visit your booth. A dedicated distributor search, preferably in another moment of the year, may yield more results for substantially less than the costs of a booth.
If you decide to have your booth at a German trade show, be well prepared and have your message tailored to the European and especially German visitors. It might be a good idea to contact relevant distribution channels in advance and invite them to your booth. Also see our article How to double the results of your trade show presence?
Suggestions for further reading
- International business in Germany: how to sell to the Germans?
- Best tips on export to Germany (and what does Germany import?)
- Things you should know about contract law in Germany
- Difference between an agent, distributor and a franchise
- Your international sales agent: what margin or percentage to pay as fee?
- International distribution strategy: managing your foreign distribution channels
- Typical costs for international transport and global distribution