The shifting retail market

On the surface, brick-and-mortar retailers are at a disadvantage compared to online competitors due to the associated costs of space and human resources, infrastructure problems such as parking space, and limited opening hours. But it also has a significant advantage. Most people still prefer to browse through physical shopping environments instead of virtual catalogues. They also like to touch, test and try products before purchasing, and then immediately take them home once they have made the decision to buy. In addition to this, automated avatars or live chats can’t replace advice from person to person.

However, the real, traditional shopping experience at a store is no longer sufficient on its own. According to the recent Oracle study “Retail Without Limits – A Modern Commercial Society“, 57 percent of those surveyed would like to see stronger integration of online concepts and brick-and-mortar retailers. In Germany, it is even 70 percent. Consumers are demanding increased interaction between the digital and physical worlds. They don’t want to have to decide for a single way of shopping, but have the greatest possible amount of flexibility and all the advantages of online shopping. These include fast product research with detailed information, independent price comparisons, current availability, fast delivery and convenience.

Modern shopping starts online in one of the popular search engines or the Amazon product search. Those who cannot be found online are simply not joining the competition. That’s why presence on the internet with a dedicated website is essential for every supplier. Depending on the strategy, the online presence also has to include a web shop or product sales via popular marketplaces like eBay and Amazon. This brings revenue and significant buying impetus for the store. According to a study on the future and potential of location-based services for the brick-and-mortar retail market conducted by the German trade association HDE among others, 39 percent of German customers research products online first before buying the product in a store.

Customers should receive a comprehensive overview of the offering, prices and services. Brick-and-mortar retailers could gain a competitive edge especially when it comes to the last point by connecting their offerings with on-site services such as a customization and repair service, immediate pick-up, fast replacement, etc. These factors have such great potential that even big players in the online world like Amazon, Zalando or Mymuesli are looking into setting up their own physical shops in shopping districts.

Linking offline and online shopping also includes creating new concepts for physical stores. These could include faster, more user-friendly check-outs and payment processes without long queues, which resemble the online shopping experience. Augmented reality also offers several opportunities. Customers can use mobile devices (and goggles in the future) to interact with physical reality, navigate through shopping malls, and try on virtual garments in showrooms. When they look at product packaging, they can automatically obtain information about the contents, including allergy information and origin as well as always up-to-date (individual) discounts and availability information. LEGO implemented a similar feature years ago with its Digital Box – a kiosk system that allows customers at all the LEGO stores around the world to scan product boxes without even using a smartphone, and see an animated view of the fully assembled product before purchasing.

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