The corona pandemic serves as a driver of digitization in retail. Although many companies still have hurdles to overcome; Ultimately, you can benefit from e-commerce, cross-channel approaches, greater reach, and new organizational and analysis concepts. In this article, we will tell you what opportunities and challenges digitization brings to stationary retail and how you can implement them in concrete terms.
State of Digitization in Retail
A glance at the statistics is somewhat surprising: across the industry, online trade sometimes plays a significantly subordinate role compared to brick-and-mortar shops. But there are differences.
In smaller companies, on the other hand, the digitization of brick-and-mortar retail is less advanced. Only 34 percent also use online sales opportunities. According to the study, one reason for this is their own insecurity. Smaller retailers rate their digitalization expertise as significantly lower than their larger competitors. Accordingly, they use a smaller range of digital platforms such as GoogleMyBusiness or merchandise management systems.
Corona is accelerating digitization in stationary retail
At the same time, the Corona crisis is noticeably driving digitization in retail. In particular, the either/or between brick-and-mortar stores and e-commerce is rapidly disappearing. Due to the temporary loss of the former as a sales platform, more and more smaller retailers are finding access to online markets – be it through their own online shops, marketplaces of large tech companies such as Amazon and eBay or other marketplace platforms.
More reach and new sales concepts
Retailers are now expanding their digital portfolio. Through various social media channels, they increase their virtual visibility and thus reach potential new customers. In addition, digitization enables retailers to create click-and-collect concepts that allow them to sell their goods from the store even when the lockdown prohibits normal shopping.
Such prospects and benefits are accelerating the merging of online and offline sales. Especially since customers have already developed a trend away from the inner cities towards online shopping in recent years.
Challenges of Digitization in Stationary Retail
The prerequisites for promptly digitizing your own trade are currently particularly favorable. At the same time, there are a few things to keep in mind. For example, if you open an online shop, be sure to consider the legal requirements regarding data protection and information obligations. Both create a time problem, especially for small retailers. Just one reason why, according to a survey by the digital association Bitkom, Retail companies suspect that they are lagging behind when it comes to digitization. Especially since 71 percent stated that they had difficulties in finding specialists from digital areas.
You will also encounter new logistical challenges in the course of the digitization process. The fastest possible shipping of goods is a decisive criterion for customers when shopping online. In order to be able to keep up, you may have to hire new staff and thus make advance investments before the advantages of digitization take hold.
Less direct customer contact through digitization
On a personal level, the relocation of part of your business to the virtual space also has an effect: If you process your business partially automatically in your online shop or via an external marketplace platform, a part of the direct customer contact is lost. In the long term, this can reduce customer loyalty, but it doesn’t have to.
Customer retention challenge for digitizing retailers
Customer loyalty also works digitally. Keeping them intense requires further investment (of time) as well as solving smaller problems that digitization brings to retail:
- You can only make the digital shopping experience interactive with a “round” online presence around your website and social media channels.
- The individual design of your stationary retail trade must harmonize with your digital presence.
- It is essential to meet the high demands of customers in terms of communication, service, and offers both offline and online.
- You determine a target group and tailor your concept to them – both visually and in terms of content.
- They also offer digital advice, for example in the form of a contact form on the website, FAQs, or a chat function. This costs additional time.
Customers inform themselves in advance via smartphone or tablet about products and services that are of interest to them. Accordingly, you must be well prepared for the existing prior knowledge and specific questions in order to be able to really give advice.
What Opportunities does Digitization offer in Retail?
The corona pandemic has accelerated various trends in retail. Customers who already make many of their purchases via smartphone are now relying even more on the multichannel approach. They appreciate it all the more when a retailer offers a digital shopping option in addition to the stationary shop. Especially since the pandemic sharpens the sense for smaller shops in the region.
At the same time, you expand your circle of potential customers if you also ship your goods. Especially if you take full advantage of digitization for retail and increase visibility across multiple channels and also offer virtual tours through your real shop. With innovative concepts you can set yourself apart from the competition and make the shopping experience even more spacious.
Save rental costs through digitization and use cross-channel
A small shop may even suffice – precisely when you use the shop space in the city primarily as a showroom, as the face of your trade, so to speak, where you display your best pieces, but store the majority of the goods in a cheaper place.
Through your digital channels, you can help shape the shopping experience yourself and present your goods and services digitally in such a way that customers are happy to come to your store or buy directly online; maybe even do both. Because the Corona crisis has taught us one thing: cross-channel brings benefits. Customers can view your range online, buy goods, pay, and then pick them up in-store. Digitization thus creates an additional channel for retailers, as well as the possibility of more precise price calculations.
Expand without renting more retail space and simplify accounting
You can also use your online shop to offer goods there that would no longer have a place in the brick-and-mortar store. This is all the more worthwhile because customers like to do showrooming, i.e. get advice in the shop in order to buy online later. Through digitization, you can create an interface here that binds at least some customers to you.
Especially since you can specifically address new target groups via your social media channels and thus digitally expand your customer base in addition to your range. Digital checkout systems not only allow contactless payment, they also make billing easier and automated. The industry in which you work also decides whether an online shop is really worthwhile. For example, online retail plays a less important role in the gardening and DIY segment than in fashion.
Digitization in Retail: 9 Application Examples
The guidelines for stationary retail by the Darmstadt Chamber of Industry and Commerce describe digitization as an opportunity for retail. Before you take appropriate measures, however, get an idea of your business. You are considering whether to enter online trading, and what resources you can and want to provide for this. They check the status of your online marketing, also via social networks, as well as possible networking options if they are in your interest. Depending on the company, the following application examples for digitization in retail are advantageous:
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Show the availability of products in store on the website
The tendency to shop online or at least to choose your favorite products can be used wonderfully in retail, even with a permanent shop. Customers browse through the range on the website so that they can then visit your store if they find something. This is practical for any type of sale. However, it is particularly useful in the clothing segment. Customers can see digitally whether, for example, the sneaker is still available in the preferred size. They try it in the store to see if it really fits. In this way, the store develops into an extension of the online shop – and vice versa.
The function can be combined with a contact form, which customers can use to make inquiries about possible subsequent deliveries. It is important that you have the necessary resources to keep the website up to date at all times and to respond to inquiries in a timely manner. In this way, you prevent customers from looking for an item online that has long been out of stock in the retail store. At the same time, you can offer the option of reserving items online via click-and-collect so that you can then pick them up in the shop. All of these options keep customers more loyal to your trade while also attracting more people to you online.
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Online appointment booking
Busying the phone all the time takes time. Only being able to reply at certain times limits customers. Hairdressers, spas or cosmetic studios in particular can therefore use digitization by having appointments selected and assigned online. In this way, customers can conveniently arrange an appointment in the evening after work.
At the same time, online booking encourages spontaneous visits to the studio: if you look at your website in the morning and see that there is still an appointment available for the early afternoon, this encourages you to book quickly. This prevents gaps in the appointment calendar. The only important thing is reliable software that you can use to make appointments online. However, the acquisition costs are quickly offset by the additional income gained thanks to better organization.
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Marketing Measures
If you only concentrate on the shop window of your shop or studio, the radius is limited. They depend on passing customers and the immediate environment. Thanks to digitization, the retail trade is expanding its marketing measures. Even beyond the newspaper ad. You can launch social media campaigns and target audiences. To do this in a targeted manner, invest small amounts that are quickly outweighed by the potential benefits.
You can also send newsletters to distributors in a targeted manner and thus draw attention to special campaigns. This allows you to gradually build up a base of people who are fundamentally interested in your shop or your services.
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Optimize the website & the right social media strategy
The website is on the Internet while the physical store is in the city: both provide insights into your company. You should optimize your website accordingly, and above all design it personally so that it fits the shop or beauty salon and describes the character aptly. Personal things attract people. You can achieve this with images and the right text – for which it can also be worth hiring professional photographers, designers, and copywriters.
You can reinforce the effect with the right social media presence, which increases digital visibility: You can address target groups personally and at the same time significantly increase your reach. All the more so since the financial outlay is limited. Once set up, present yourself and your business in a contemporary and personal way. It is only important that you always check the legal framework, for example, if you use pictures that you did not take yourself.
You should also make sure that you provide users with real added value, otherwise, they will quickly lose interest. This in turn requires a lot of time. The visual language must also fit, as with the website. Both channels should also be tailored to the stationery store’s appearance and translated perfectly into the web.
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Interactive displays in the shop
Digitization in retail is not limited to the Internet. It can also be used in the store itself to offer customers an interactive experience. If you enter the point of sale, for example, the shop or your spa, which also offers cosmetic products, you signal interest. Retailers can drive interest with interactive displays. Their customers can either read about special discounts or information about the most important products. Maybe they just say a few nice words of welcome or an explanatory video about certain products running. Both create trust or interest.
In any case, they bind customers to the shop. Touch displays are also suitable for small games that children can play with. The possibilities are varied. Accordingly, the purchase is worthwhile for retailers who only sell, as well as for cosmetic studios or hairdressers. Entertainment always works. It is only important that the messages and videos are visually prepared in such a way that they fit the store design and the entire company.
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Data mining
Knowing which products and services are particularly popular gives you an advantage in costing, purchasing, and planning. Here, too, digitization is helping brick-and-mortar retailers. Data mining enables entrepreneurs to identify patterns and react accordingly by analyzing large data sets. For the retail trade, this means above all getting to know customer wishes better in order to tailor their own business to them.
There are different methods. For example, classification allows you to discover affinities for specific products while analyzing shopping carts using something called dependency discovery. In e-commerce, data mining helps with price optimization, sales and demand forecasts, and the optimization of different campaigns. The basic requirements for this are special data mining tools and, of course, an understanding of how to use the data correctly.
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Digital payment solutions
Not only because of the corona pandemic, cashless payment is becoming more and more important. But it speeds up the process. Thanks to digitization, retailers have long had a variety of options for allowing customers to pay with EC cards, credit cards, and mobile payments (Apple Pay, Google Pay, Alipay). Also contactless.
