Why a New Shopping Experience is Needed for European Retail

Yasmin Diekmann Yasmin Diekmann
minute read
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Is the brick and mortar retail trade in Europe inevitably doomed to failure?

On the retailer side in particular, fears of the repression, withdrawal or even complete extinction of the brick and mortar retail trade seem to be within reach in Europe these days. Possible indicators for a retail apocalypse are quickly identified: falling visitor rates in inner-city shopping zones, empty rows of shops or the closure of shops of well-known retail chains paint a gloomy picture of the future of traditional stationary retailing.

But where there are losers, there are winners: the triumph of online retailing continues. Once loyal customers of the stationary shops for their shopping tours seem to be finally and irrevocably migrating to digital shopping worlds. For many retailers (and also consumers), the responsibility for the crisis in stationary retailing lies with online providers. Because online shopping is easier, faster, there is more product choice, greater convenience (e.g. return items) and usually much cheaper offers.

Is the brick and mortar retail trade in Europe therefore inevitably doomed to failure? Fortunately not. But in order to insist on the changing European retail sector and to be successful in the near future, two things are needed, in my opinion:

1. Retailers Need Courage for Change Instead of Fear of Innovations

The fear of the extinction of the traditional stationary shops within Europe is great, but the fear of changes in the retail sector seems to be even greater. Yet the stationary retail sector in Europe is in a state of constant change, as is purchasing behaviour. About 10 years ago it was the traditional shops that worried about the retail chains in the city centres. Today it is the retail chains that are fighting for their stationary existence. The reality for retailers now is that only those who face up to changing shopping patterns, rather than perceiving themselves as victims of change or digital new players, have the best prospects of experiencing and shaping the next evolutionary step in European retailing.

2. The Complete Buyer Journey of Retail Customers Consists of the Interaction of Online and Offline Channels

Probably every trend brings with it a counter-trend. For example, as everyday shopping becomes more digital, consumers yearn for physical shopping experiences. According to a survey by smarterHQ, 50% of millennials still prefer to shop in stationary shops. But this is only half the truth.

Thanks to mobile devices, important steps in the buyer journey, such as price or product comparisons, take place in stationary shops before the purchase or in parallel to it. The actual product purchase can then be carried out on the way, in the shop or from home. Buyers only expect a convenient, fast and seamless shopping experience, regardless of the channel, device or location.

Because the boundaries between offline and online shopping worlds are becoming more and more blurred, retailers should act online and offline just like their customers. Those who therefore neglect the online shopping experiences, may be ignoring important aspects of the (future) Buyer Journey and leave valuable potential untapped.

A Rethink in the European Retail Sector is Needed

Large retail chains in Europe are closing branches because they are not proving to be lucrative and are concentrating instead on online business. For example, Hennes & Mauritz, one of the leading clothing manufacturers in Europe, decided at the beginning of this year to close 170 branches in Europe and focus more on networking the online and offline world. According to Joachim Stumpf, Managing Director of BBE Handelsberatung, the reason for this trend reversal is that H&M has already reached its growth limits when viewed from a brick and mortar perspective.

Whether growth limits or falling sales figures in unprofitable shop concepts - the signs that changes are urgently needed in the European retail sector are intensifying. The good news is that there is still undreamt-of potential in stationary retailing. These only have to be unleashed with new possibilities and concepts for shopping.

Exploiting the Potential of Stationary Retailing

While more and more traditional retail companies are beginning to orient themselves towards online players, they are developing in the opposite direction and expanding their online world to include stores in the city centre. With innovative technologies, they link online and offline shopping worlds and create a unified shopping experience for the customer with an omnichannel approach.

Example 1: Farfetch "An operating system for stationary retail".

The international e-commerce company Farfetch expands its online presence with stationary stores and describes them as an "operating system for physical retail".

This smart store offers:

  • Tracking systems with RFID in the clothings rails
  • Intelligent mirrors in the changing rooms with individual user login
  • Linking to the tablets of the area personnel for individual customer advice
  • A mobile app for the customer's smartphone to customize the shopping experience in the store itself.

This gives Farfetch access to valuable data about customer behavior and can optimize the assortment and shopping experience.

Click & Collect for More Visitors in the City

Farfetch offers the option of Click & Collect online. This means that customers must visit a store as soon as they want to pick up their product. The Click & Collect model proves that customers want to hold their purchased products in their hands immediately. This realization will always speak for the stationary trade, since delivery times for online orders will take longer than a short-term visit to a local shop until further notice.

Example 2: IKEA: Innovation Meets a New Store Concept

Swedish furniture retailer IKEA opts for a radical change: IKEA wants to take advantage of digitalisation. But instead of concentrating fully on online retailing, IKEA is increasingly focusing on new digital store concepts: smaller, smarter, slimmer and more central. Instead of new, spacious and decentralized furniture stores, IKEA will move into the city centers with innovative pop-up stores and showrooms. The products will be displayed on digital signatures, QR stations will reveal simple tricks on how to live in a more environmentally friendly way, and inspiration from conventional furniture stores will be made possible with the help of virtual reality. IKEA reinvents itself completely and creates an interactive customer experience in the city centre.

Smart, networked digital pop-up stores for a better POS shopping experience

The temporary use of empty sales areas with the help of pop-up stores is proving to be a trend in stationary retail and ensures fast, profitable sales of goods. If this concept is combined with the appropriate technology, an innovative customer experience is created in keeping with the digital age, because today's customers no longer simply shop functionally and pragmatically. Rather, they want to experience shopping and the products and ideally also be touched emotionally (e.g. "Shopping at XY is the most fun for me because it is so fast, easy and smooth").

Especially when it comes to the shopping experience, stationary retail offers a lot more possibilities to interact with the senses and emotions of the customers through personal contacts, physical experience and a direct view of the products. IKEA and Farfetch have already shown how the potential of stationary retail can be combined with online shopping.

It's Time for Change in the European Retail Sector

Although stationary retail in Europe faces major challenges in terms of price pressure, more demanding customer needs and economic and political changes, stationary retail in Europe has by no means reached its growth limit. After all, stationery retail is full of different possibilities for how new shopping can look, made possible by technologies such as QR, Click & Collect, which link the online and offline worlds. It is therefore up to the companies themselves to take advantage of the opportunities offered by digitization for the stationary retail trade in order to reinvent themselves.

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