In the age of digitalization, retailers are facing profound changes: new overwhelming global competitors (geopolitical changes), increasing urbanization, resulting in declining population and customer numbers in small and medium-sized cities (urban policy changes), increasing aging in customer structure and changes in purchasing behavior (customer-side changes), new, changed supplier-dealer relationships (manufacturer-related changes) and new technologies (technological changes). Electronic forms of trade in particular put pressure on small and medium-sized retail companies, in particular local stationary retailers. In view of the almost limitless range and availability of products and services outside traditional shopping streets, but also in view of the increasing maturity of products and consumers, the space and added value that expertise and specialization in local retailers are increasingly in demand. After Crafts, Such as Shoemakers, Had to Give Way to Industrial Production, Intermediary Organizations and Businesses, Such as Local Stationary Retail, Are Now Threatened by Digital Transformation. And it is also clear that the massive phenomena that have occurred on the Internet in the last decade are just the beginning of further technological developments.

It is clear that in order to survive successfully in retail, you must use the Internet and other digital opportunities. However, despite the fact that the consulting industry, market research institutes, associations and initial scientific institutions postulate the significance and general recommendations for action with regard to digitization, the variables, influencing factors and their concrete connections are unclear. Depending on the geographical location, customer access to goods is different, depending on the industry and product, different process elements can be digitized for the benefit of the customer, depending on the industry, there may be simple “running boards” to the Internet, depending on the sector and asset, human contact and trust is very relevant, depending on the phase of the decision a consumer is in, does this require different types of support, depending on the size of the city and the Proportion of chain stores, it is a different requirement online forms of cooperation approach, depending on age of the target group, digital applications play a different role in daily use — the list could be continued. In reality, the stationary world can only protect itself with digital services that connect both worlds: customer proximity, authentic communication, an extensive selection and continuous availability.

There is no Panacea for local stationary retailers, which they simply have to adapt in order to regain sales sovereignty. Nevertheless, omnichanneling and local online marketplaces are activities that at least provide the opportunity to satisfy the needs of customers on various channels and at various points of contact more than that a pure Internet retailer or a national chain store can. Be it needs such as time savings, status, self-presentation, experience, trial and error, curiosity, price-performance ratio or need for advice. At some points along the process of searching, making decisions or completing the purchase process, local stationary retailers can compensate for the disadvantages of their (stationary) system using the Internet. Almost all successful companies in the online world have always copied elements from the offline world in this way. However, omnichanneling and local online marketplaces only promise to be successful if numerous factors are taken into account in the implementation. Under no circumstances will such approaches be implemented “as if by itself,” “as a matter of course,” or even in the sense of “plug and play].”

“OFFLINE ONLINE can do more than copy.”

Online shops offer shopping around the clock, without searching for parking, without queues at the cash register, without heavy shopping bags, almost no product range limits (in every variant, size and color) and with price transparency within seconds. In this way, specific disadvantages of traditional shopping trips in the city are systematically addressed in order to convince customers of the advantage of e-commerce. Even classic stationary characteristics such as experiential orientation and a feel-good atmosphere are now also an online topic and are no longer limited to stationary retail. Think of the emotionalization of messages through integrated videos or advice in video chats with real people. But stationary retailers are also able to compensate for or even exceed the disadvantages of brick-and-mortar business through digital options. There is a lack of product availability in the shop in special sizes or along the color palette; a digital “shelf extension” can help. The customer complains about loss of time due to searching for a parking space and queuing, same-day local delivery, parking reservation via app or pre-ordering to pick up at the passable pick-up station can remedy the situation. And even customers who are looking for the best price can be helped locally with a low price guarantee. Comparing offers together with the customer gives retailers at least valuable advice in this way. The use of simple payment systems can also be used in stores as a “mobile check-out” — if customers prefer this in addition to the option of buying anonymously and paying in cash.

“Strengthen strengths.”

Outstanding advice and first-class service with human contact in business are much more important than the question of online presence. The strengths of local customer service are and will remain an important influence on consumers' decisions as to when to use which shopping opportunities. The Focus on Customer Needs, Tangible Products and a Perfect Shopping Atmosphere are basic components of local stationary channel excellence.
When local stationary retailers offer such a service locally, (only) a portion of settlement and repeat purchases remains threatened by online competitors. But this competition can also be countered by having your own (process-optimized) online shop and local delivery for appropriate purchase transactions.

“Data usage is a must.”

Can it be deduced from this that every local stationary retailer needs an online shop? No, expenses here are often out of proportion to commercial potential, not least due to market concentration in online retail. What every local stationary retailer needs is an IT system that digitally records the entire range of products. Whether it's a product or service, a description, a photo, the status — digitization as complete as possible should be achieved by every retailer as quickly as possible and economically viable. Only on this basis can retailer platforms, industry platforms, omnichannel services and social networks be used in a commercially successful way.
“Digital-local retail.”

There is no alternative to the decision to use digital opportunities and is essential for survival. Those local brick-and-mortar retailers that become digital-local retailers will survive. This means those that offer customers tangible and relevant added value through digital applications and integrate them with traditional strengths in local business. Digital and physical characteristics complement each other without competing.
It is about local stationary retailers reviewing and deciding to further develop business models in order to pick up the digital customer of today and tomorrow at any contact point of their choice, i.e. to effectively address and inspire. Retailers should say goodbye to the question of whether they are present in-store or online; rather, they must understand how they can inspire customers today who decide for themselves which products they want to get to know, buy or return on which channel and at what time. And this without copying e-commerce, but in a smart, integrative way, in the sense of a hybrid retail strategy.

About the author

Professor Dr. Andreas Hesse works as a professor representative in the Department of Economics at Koblenz University of Applied Sciences. His research focuses on the effects of digitization on organizations and systems. His research on digitalization and local retail received broad feedback in 2018 in business media such as Harvard Business Manager, Food Newspaper, Technology Review and Wirtschaftswoche Online. The text here is a summary of a recent comprehensive contribution by the author to the scientific publications of the Department of Economics at Koblenz University of Applied Sciences, which can be requested free of charge from the author (ahesse@hs-koblenz.de). In addition to his teaching and research activities, he advises companies and institutions, in particular with regard to the implementation of digitization options.
Dr. Andreas Hesse received his doctorate from the EBS University of Economics and Law, Oestrich-Winkel and is a business graduate from the University of Trier. He has 17 years of professional experience in the private sector, including 12 years in leading management positions in sales and marketing.

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