Retailing is in crisis to a large extent — and not just since the pandemic. Although the majority of sales are still generated in local stores, the online share continues to grow and the frequency in stores is falling, especially in less exclusive locations. According to the German Trade Association (HDE), online grew by 1.6 percentage points last year to a total of 12.4 percent — a record growth. Corona and the associated restrictions for retailers are an additional catalyst and are further reinforcing change. The forecasts for stationary retail are therefore alarming. The HDE expects that up to 50,000 stores will disappear from Germany in the post-corona era. On the other hand, more and more former pure online retailers are pushing into inner cities with new concepts. Examples include Zalando with its outlets and 11Teamsports with its adventure stores. A remarkable development with large chain stores in crisis and online retailers looking for new ways to retain their target groups. Retailers are facing massive challenges and changes — but what will they look like?
Six theses on retail development
Online shopping is here and won't disappear again - no one will doubt that. Social shopping, same-day delivery and other innovations make online shopping even easier and faster. Instead of asking yourself “How can we stand up against e-commerce?” Companies should therefore ask themselves the question “How can we combine online and stationary for the greatest possible success?” Comprehensive omnichannel concepts, in which local business plays a new role, will increasingly increase. From a place of purchase, stores will develop into a place of experience and inspiration that triggers or strengthens the buying impulse.
The traditional shops and department stores that still dominate our inner cities need not only a new coat of paint, but also a general overhaul of their content. Customers don't want huge stores with assortments from A-Z, they can also find them online. There is much more demand for store concepts that focus on advice, experience and speed in specialized areas — also in combination with digital offerings. Click & Collect, personalized shopping (as Click & Meet anticipates during the pandemic), showrooms for the general public or pop-up stores with an event character will continue to prevail and change the motivation to visit the store — towards more inspiration and a genuine shopping “experience”.
Companies such as Nike and Adidas have been among the most popular companies in the world for years and are also considered the ultimate in marketing. Accordingly, the two companies are increasingly turning away from wholesaling and moving ever further towards direct-to-consumer (D2C). In addition to the increased focus on their own online shops and apps, the concept of the sporting goods giants also includes stores and experience locations in selected key cities. An example is the Adidas Sports Base in Berlin, which creates a point of contact for the community and thus a very special brand experience.
The paying customer will continue to be the largest direct source of income for stores in the future, but the share will fall. Store-in-store concepts and large-scale WKZ collaborations (advertising subsidy) are already part of the standard repertoire of many retailers today and will be much more concentrated in suitable stores in the future due to the loss of many stores. The rise of retail media will provide additional income. In e-commerce, platforms such as Amazon, eBay or Zalando have been offering the option of placing advertising within the shop or marketplace for a long time. With new digital spaces within stores, the topic is now also becoming exciting for brick-and-mortar retailers. Multi-brand stores and niche retailers in particular can monetize their direct customer loyalty and create an additional source of income.
What has already been said in the previous theses also deserves its own thesis: The eventization of purchasing will increase significantly. For brands and retailers, it will be increasingly important in the future to offer the target group experiences in order to retain them in the long term through positive emotions. In the end, it is secondary which channel the sales are made through. The focus is on corporate success through customer loyalty across all channels. Joint training groups of sporting goods, tasting tours by spirits and confectionery manufacturers or a canoe test in an outdoor retailer's artificial water channel. The trends to offer customers more than just the product and some advice are set and will increase rapidly. Otherwise, more and more customers will prefer online shopping - and may choose the competition for price reasons, as no emotional connection to the actually better product could arise.
There will also be no “keep it up” when it comes to marketing. Like retailers themselves, marketing strategies are also evolving. Campaigns are becoming more personal and almost all platforms are digitized. Communication channels such as digital-out-of-home, programmatic audio or connected TV (CTV), special digital solutions for brochures or drive-to-store ads are becoming increasingly important. This makes it possible to implement comprehensive digital 360° campaigns that reflect a consistent customer experience. Of course, there are still marketing campaigns such as promoters or the like, but the big campaigns will soon be completely digital.
The big change
Brick-and-mortar retail is not over, but it is undoubtedly on the verge of major change. The characteristic department stores will disappear in the long term, but new store concepts with a different focus will follow suit. Innovation and agile action are rewarded. Impressive brand experiences and long-term customer loyalty across all channels ensure — with the integration of groundbreaking digital solutions — that purchases are recurring — both stationary and digital. In the course of our “Retail Marketing” special topic, we want to provide you with inspiration, tips and tricks to actively shape the necessary change from a marketing perspective.
