Errors and opportunities of brick-and-mortar retailing in digital times

Winning Online, Losing Offline – Over the past decade, this image has been burned into the minds of those who make their living from shopping in the field. Although the annual growth rates in e-commerce – around 10 percent in 2017 – speak a clear language, yet the fight of the retail trade against Amazon & Co. is by no means as hopeless as the augurs like to portray it. For that you have to understand some backgrounds.

Online as frequency generator for the area

When it comes to omnichannel, the impression quickly arises that the stationary retailer now has to operate an online shop in addition, and thus go into direct competition with the major Internet players. The motivation of a stationary trader is, according to experience, somewhat different. The new shop is primarily intended to attract new customers to the parent company as a source of value. With this one hopes to counteract the gradual decline in frequency on the surface.

So the strategic focus is on the stationary business, not on the online trade. Although the decision-makers know that they have to play in the online business, they usually do not know the rules. Omnichannel is quickly equated with the “flanking” of an online shop, including the latest technical gimmicks. Because one believes, the more cross-channel functions (for example Click & Collect) are used, the better for the differentiation in the on-line range. A fallacy, because according to current study of the ECC Cologne on the cross-channel behavior of consumers, make just 6 percent and really cross-channel purchases. In addition, all other competitors usually offer these functions long ago. The motivation behind it: to achieve long-term customer loyalty via new shop functions.

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Two-worlds thinking hampers multichannel

In any case, the technically feasible has a major impact on how the merging between and online and offline business works in practice. Especially regional brands with a long tradition have a hard time here. Because when working together between a newly founded e-commerce team and the classic marketing department in the core business, two worlds often collide. The different speeds of implementation in these two areas is a major reason why switching to online commerce is so difficult.

Stationary trade lacks experience and know-how

For many years, people in in-store sales focused their services, processes and assortments on the customer alone. With the advent of the online business, they are now almost overnight confronted in many areas with completely new laws. Understandably, the classic trade is once overwhelmed. Because he has neither the necessary experience, which and how much staff he must also hire for the online business, nor he knows the logistical challenges that must be considered in terms of flows of goods. Not to mention the technological understanding.

An example of a traditional dealer in the center of Munich shows the challenges that are specifically involved here. There you can send regular promotional leaflets by mail to your customers. This means that if the catalog is on the table at the customer’s home, the corresponding product must not only be available in the parent company, but at the same time also in the online shop. However, according to the e-commerce leader, it takes well over a week to prepare for the visualization of the products. So a coordination between flow of goods and marketing measure is for someone, who knows only stationary, so a real challenge.

Traders who want to move from tradition to modernity often misunderstand the complex interdependencies between departments when it comes to frontend or backend technology, inventory management, or the flow of information in real time. As mentioned in the beginning, their strategic focus, despite shop operation, is historically conditioned in the stationary business. There they know their way around and invest in new ranges and more staff. There, the customer should primarily find an exclusive assortment, which he can examine and touch. From their point of view, all online access should create access to information in order to strengthen the physical presence of the brand in the inner cities and to generate turnover on the site.

This still prevalent two-worlds thinking ultimately also prevents the corresponding online shops from being profitable. The reality is often that a traditional trader must counteract sinking sales on the floor, half-heartedly run a shop that costs him a lot but does not bring any appreciable return on investment.

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Improved external support

At this point I clearly see the e-commerce experts and providers in the duty. They should analyze in the right places and work with their client to develop a viable cross-channel strategy for holistic customer retention. Because trade alone can not accomplish this task. For him, the fast-paced online world is not familiar enough and it is difficult for him to carry out the transfer for his business.

In addition to the expansion of its omnichannel business, the classic dealer should, however, also pay attention to the ever faster changing buyer structures. Because the customer is ticking very differently. For him, the channel does not matter. The goods must be available and experienced online as well as stationary. These are the basics for his purchase decision. He has to come to the store and find the information from both areas perfectly coordinated. It does not matter which channel the information comes from, as long as he gets what he wants.

Stage service online

Retailers could answer these shopping habits with a kind of 360 degree brand experience. After all, in the end, it is always about binding him to a traditional brand. This is where the digital services come into play, which can then be staged online as an integral part of the brand’s core. After all, service is one of the strengths of the traditional trade.

Nowhere is this as good as in the textile trade. There, some retailers are working hard on effective omnichannel concepts that convert their traditional brands into the modern world by providing all-round customer service. The Munich-based dealer Sporthaus Schuster understands the online shop, for example, as a marketing and service tool in which the customer is served reliably and promptly at any time. This does not have to compromise on the physical service. To put together his personal ski equipment, he has the opportunity to activate a set configurator. Including digital advice is understood.

Even the noble brand Lodenfrey tries to stage itself in an exclusive manner online as on the physical sales area. Here, too, we are working on digital services connected to the distance business. The customer gets his designer goods individually presented on the net as well as in the core business. It’s not about just presenting online and only selling offline. Both must always go hand in hand.

Connecting all the contact points about good service to strengthen the brand is the motto.

Data analysis for more customer loyalty

Another hope on the way to a cross-channel shopping experience is the data-driven trade. Although the personal customer approach based on a previous data analysis in most regional traders is still a dream of the future. But greats like Zalando or Aboutyou already show just how much growth potential lies in knowing the customer’s interest. And so many traders should remember the good old days of Aunt Emma at the thought of this intelligent form of customer loyalty. She had all the preferences of her customers still in mind.

To the author: Dominik Haupt (34) is managing director and co-founder of norisk group GmbH, a leading enterprise commerce agency. Today, the norisk group counts traditional manufacturers such as Lodenfrey, Ludwig Beck, Bettenrid or Sporthaus Schuster among their customers. Haupt is a graduate in business administration and completed an apprenticeship as an IT system salesman.

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