Multichannel

The opportunity of digitalisation

Optimised processes, smart outlets and multichannel retail: Experts explore the second phase of digitisation and predict a significant increase in sales for the bricks-and-mortar retail trade – provided the opportunities are exploited correctly.

By Sabrina Waffenschmidt

64 % of shoppers research online before buying in store.
62 % of German consumers research in store before buying online.

There’s good news and there’s bad news. First, the bad news. The insecurity of retailers when it comes to digitalisation has not yet been overcome. Susanne Arnoldy, digital retail consultant at PwC states that the ‘unknown future’ is at the root of their worries: “Retailers need to prepare their businesses, processes and IT for something as yet unknown. They must come to terms with technologies without knowing which of these technologies will still be relevant in five years’ time. That frightens many of them.”

But the good news is: The retail trade is booming – not despite but because of digitisation, the importance of which most organisations have now understood. In 2017, the willingness of retailers to invest was higher than in the previous five years. Processes and stores are becoming ever smarter, and the Internet is rapidly being developed into a sales channel. The multichannel approach in particular is seeing considerable growth in sales. According to the German Federal Association for E-Commerce and Mail Order Business, bricks-and-mortar retailers have performed particularly well in recent years with a 31 % increase in sales.

40.2% of Germans would probably visit shops more often if they offered an »order and pick-up« service.
Source: IFH Cologne, 2017

The second digitalisation of the retail trade

Experts talk of the second digitalisation of the retail trade. “In the first phase, many retailers built up their e-commerce offer in parallel with their highstreet business,” says Arnoldy. “In this second phase, the aim is no longer to look at the various business models separately, but to intelligently combine and design the complete customer experience and journey from beginning to end across all channels and contact points.” Each retailer needs to know their customers in detail and address them in a highly personalised and emotional way. This applies to all sizes of business from small boutique to superstore. The keyword here is “big data”. However, the majority of retailers do not fully exploit their potential. According to a recent study by Bitkom Research, companies analyse only 35% of the possible data generated by digital contact with customers. Susanne Arnoldy can confirm this: “I often see the wide range of data that exists but is not analysed. It would take relatively little effort to optimise some small things to achieve significant results. For example, by analysing what customers like to buy in which combination, how this differs across different age groups, and when which customer is active on which channels.” 

In its Retail Report 2018, the Zukunftsinstitut (Future Institute) defines four other major trends: Retail Recruiting, Dash Delivery, RoboRetail and Voice Commerce. To remain fit for the future, retailers must firstly recruit young digital talent, secondly master the challenge of the last mile, thirdly automate processes and fourthly expand their e-commerce offering for digital voice assistants. The report also shows that those who see digitalisation simply as a technical tool to enable them to continue as before will not succeed. Only those companies that use technological advances to serve people will be successful. And in a digitalised world, retailers are becoming facilitators of human desires and retail outlets are becoming creative living spaces that offer sensory and personal experiences.

40.4% of Germans would like to be able to check online the in-store availability of goods.
Source: IFH Cologne, 2017

This offers excellent opportunities to bricksand-mortar retailers once they have learned how to make use of digital technologies. Customers are now used to seemingly endless choice, detailed product information, clear statements on availability and delivery dates as well as personalised suggestions with suitable additions or alternatives to a product. All this can also be offered through simple or complex in-store technologies.

In the fashion world, mirrors can display digital information and show the garment on the body in different colours and sizes. In the furniture and furnishings sector, augmented reality is becoming increasingly important. Customers can now view sofas or shelves in their own virtual spaces instead of having to imagine them. RFID tags are currently experiencing a renaissance, making it easier and faster to locate products in stores. One of the pioneers is the Alexander Black concept store in Milan. Here, visitors can try on clothes and have themselves filmed on a catwalk. They can then watch themselves on a monitor or ask their friends for their opinions via social media. And when the customer places their product on a counter with an integrated touch screen, they automatically receive a wealth of information about the product – its origin, the materials used, the available colours, care instructions and further product recommendations.

Logistics concepts: the last mile

The growing online retail trade makes it necessary to adapt logistics processes. Goods need to reach the customer more quickly, more flexibly and more efficiently and increasing attention is focusing on the “last mile”. Below are the most significant logistics innovations that are currently being tried out:

Delivery robots:

In some towns, small autonomous
delivery robots are already making their way down the street – although still accompanied by a human being. The pioneer here is Starship from Estonia whose robots can deliver medium-sized packages weighing up to ten kilograms within a radius of 1.5 km. Equipped with GPS and sensors, they seek out the recipient who unlocks the delivery robot using an app or code.

Car trunk deliveries:

In pilot projects carried out by DHL/Volkswagen, for example, an app is used to send the delivery agent the location of the customer’s vehicle as well as a code for opening the trunk. Returns can also be collected in this way. ‘Smart locks’ are at the heart of this system.

Autonomous delivery vehicles:

Autonomous delivery vehicles are being tried out across the globe and are part of a networked delivery process all the way from distribution centre to the recipient. Daimler’s “Vision Van”, for instance, has an automatic package dispensing system that hands over the correct packages at each stop to the driver, a delivery robot or a drone.

Drone deliveries:

Major logistics companies such as Deutsche Post, online retailers such as Amazon and vehicle manufacturers such as Mercedes-Benz have been testing out the new possibilities of drones for some time now: Once an order is received, the retailer loads the drone in its warehouse. It then flies to a parcel delivery firm, a car trunk or directly to the recipient. However, since the skies are currently strictly regulated, the future of drone deliveries is still very much up in the air.

New professions

E-Commerce Administrators

For many years, online traders have not been able to train apprentices. Offering apprenticeships in the retail sector was unthinkable without having your own bricks-and-mortar shop. From August 2018, Germany will have its first apprenticed profession for the digital economy with the title of E-Commerce Administrator.

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Type of apprenticeship:

Twin-track vocational training, 3 years

 

Training content:

The apprenticeship offers a commercial qualification geared to digital business models and which raises the trainee’s awareness of economic, technical and legal developments in e-commerce. E-Commerce Administrators select and evaluate sales and communication channels and are responsible for formulating the range of products or services. They shape customer communication, carry out customer value assessments and analyse purchasing statistics. They process contracts for goods and services and design online marketing measures such as the planning of the customer journey.

 

Companies able to offer apprenticeships:

Any company that uses online channels to sell their goods and services can run apprenticeship programmes. These particularly include the retail, wholesale and import/export sectors as well as tourism and service companies, logistics and mobility service providers, financial service providers and manufacturers that sell their products online. Companies interested in this new apprenticeship can find out more and register here:

 

www.ecommerce-ausbilden.de

Showrooming

“Often there’s a lack of basic information”

For years, retailers have been complaining about showrooming: i.e. customers coming into a high-street shop for advice and then in the end buying from an online retailer. But the problem often lies elsewhere, explains Sabine Risse from IFH Cologne.

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Sabine Risse, IFH Köln

“Showrooming – less common
than many people imagine.”

How often does showrooming actually occur?

Less often than many people imagine. Only 14 % of all current online purchases start by checking out products in high-street shops. The reverse is actually much more common: In the case of 45 % of all purchases in highstreet shops, an online search for information was carried out beforehand – and the trend is rising. Highstreet retailers must therefore be prepared for the fact that their customers are well informed when they enter the shop.

 

How can dealers counteract showrooming?

Often there’s a lack of basic information: Our studies show that retailers lose many consumers within the store itself. More than three-quarters of consumers who gained information about a product within the store and were still undecided about which purchasing channel to use, only made the decision to order online there and then. In these cases, the high-street retailer did not manage to keep the customer in their store. There can be many reasons for this. Perhaps the right product was not in stock, the advice was not convincing, or the employee was simply disagreeable. Retailers need to act in this area.

 

What do you think of a so-called consulting fee?

Charging for a completely normal consultation in a retail store is in my opinion the wrong way to win out over online traders – in fact, quite the reverse: Such charges would drive consumers even further into the arms of their major digital competitors.

Tendence Academy

Knowledge exchange!

tendence-academy-preview

The Tendence Academy programme on the stage in Hall 9.1 once again provides practical knowledge for the bricks-and-mortar and digital retail sectors. On each day of the fair there will be six expert lectures covering all relevant areas of the consumer goods trade.

 

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