CUSTOMERS WANT RELEVANT EXPERIENCES
Which product am I buying and at what price? What am I buying the product for? What emotions does it arouse in me? These questions are driving today's consumer behavior. In addition to integrating relevance, convenience, sustainability, and health, customers expect a shopping experience that is varied by using personalization, digitization, and gamification. Depending on the product category, the purchase decision in times of inflation and consumer restraint is easier if there is also an emotional connection to the company's products and values.In this context, creating a hyper-personalized shopping experience across all channels is one of the most important drivers for companies to leverage customer experiences across all touchpoints. Factors such as close monitoring of the offline customer journey through in-store movement measurement or app usage during the purchase process should be integrated to optimize all channels in a data-driven manner. A close look at current customer meta-trends can also be extremely helpful in order to be able to adapt to the market situation as sustainably as possible.
AMAZON HAS WON
The business model of amazon and other online players aims to fulfill existing and emerging customer needs in all their variety. Customer-centric innovation is at the heart of the decision-making process and has an almost magnetic effect on consumers. In addition, retail success factors have increasingly shifted toward technical expertise, such as rapid and intensive A/B testing of different options or layouts. E-commerce is still on the rise and will continue to play a crucial role in the development of the retail landscape. Companies like amazon are driving this development and are continuously benefiting from the increase in online share. For the remaining retailers, this means that razor-sharp positioning is required to keep up with the established platforms. For continued success, retailers need to find a suitable niche with medium-term potential.
The growth in online share is taking place across all sectors. Forecasts show that a 38% increase in consumer share will occur by 2025, with expectations for the largest percentage increase in food and beverage (although on a very small basis).
STATIONARY RETAIL STORES NEED TO INSPIRE
Stationary retail enables customers to experience products on site and to take advantage of additional services, e.g., consultation, repairs or exchange. The stores also serve as a source of inspiration for consumers. Companies make extensive investments such as flagship stores to meet the demands of customers. Smaller stores or boutiques far away from large shopping centers, in particular, have earned loyal customers through regular inspiration.
To make the associated costs worthwhile, the buying process should be completed with a successful transaction, if possible, in the store or online. But such a purchase does not always happen. Consumers see products they like on site but buy them online from a different supplier. In addition to maintaining a perceived maximum price delta offline versus online, retailers must optimize the shopping experience so that, as often as possible, a successful transaction completes the buying process. Linking online and offline services during the visit to a store will be essential in this regard.
In addition, transactions are increasingly being carried out via the consumer's own smartphone - in extreme cases even in the low-cost online store while trying out the goods in the stationary store. The use of QR codes to call up product-specific information or the integration of augmented reality into the purchasing process are promising ways of making the customer experience varied and animating. Internationally, we see very interesting examples of this integration.
TECH FIRST, RETAIL SECOND
A variety of companies are operating in the retail sector: traditional retailers, e-commerce providers, but also tech companies such as amazon. It is the latter group that is now defining the market with their offerings. For traditional retailers to succeed in this experience- and relationship-driven environment, they must also know how to leverage the underlying technologies for their own benefit. Direct access to capabilities such as the use of biometric data, the application of data science and the transformation of insights into valuable customer services is essential to help shape the shift from transactional to relational commerce. Services from partners can be used to support this transformation.
Start-ups have been continuously developing along the customer journey for several years now, such as Syte, a provider of visual AI technologies, which primarily provides support for product discovery by consumers. However, such offerings can only be used if there is a willingness to innovate and reorganize in the retail companies. Otherwise, the necessary infrastructure to implement digital options for differentiated services is generally not available.
THE CITY CENTER AS A PLACE OF EXPERIENCE STILL HAS A CHANCE
It is not only stationary retail that finds its place in city centers. In addition to stores, offices, cultural offerings, restaurants, public spaces and, increasingly, residential spaces are clustered in urban centers. But after the demise of Karstadt and many other spaces for rent, the future of the city center as a shopping destination is more unclear than ever before. Local retailers, among others, must evolve to keep up the opportunity to reinvent and improve downtown shopping. It is crucial to continue to offer consumers sufficient incentives to come to the stores.
There are diverse approaches to making downtowns more modern, sustainable, and efficient so as not to lose the consumer. The creation of an experience space, which in this form only exists in the city center, is central to this. We see the potential for this in building inspiring, customer-friendly, and intelligent shopping solutions such as facilitating the fitting process through 'digital twin' solutions that, on the one hand, include omnichannel logistics and integrate services on a multi-channel level on the other. For example, retailers could provide end-to-end information on the availability of goods in advance or offer a network of parcel stations with attractive opening hours in addition to sales areas.
So what?
- Customer-first with the help of data: Data mining and innovative analytics will continue to gain importance in terms of meeting customer needs. Used correctly, they can contribute significantly to customer loyalty. For omni-channel retailers, the key here is the optimal integration of online and offline, creating in the best case a platform business consisting of retail stores, online store and marketplace. Some retailers are already making intensive use of the possibilities offered by retail media, for example, which can be used to make additional use of customer contacts. Under the guiding principle of customer-first, stationary retail has advantages over pure e-commerce.
- Clear positioning in the omni-channel environment: E-commerce is and will remain highly relevant in the future. This change in the retail landscape means that clear positioning is of utmost relevance. A targeted conversion of the business model in the direction of omni-channel retailing is one way to do justice to this. But other positionings can also be promising if implemented consistently. These include, for example, scenarios in which the retailer focuses on the exclusive online sale of products and offers them at significantly lower prices than the competition.
- Inspiration on a stroll through the city: The city center is not dead, but it is currently in a coma and waiting to be revived. The challenge is to find new, innovative concepts for stores and the use of the possibilities of urban space for stationary retail in times of great competition and consumer restraint. We see opportunities e.g., through coordinated shopping events or shared infrastructure like parcel stations or automated 24/7 shopping. Urban centers could be just the right place to celebrate the party mentioned at the very beginning.