by Markus Thiel, unitcell, October 2015
We are all "omnichannel shoppers" by now. Therefore, large online retailers and retail platforms, but also brick-and-mortar retailers, are taking e-commerce pioneers to task from both sides. Long-term winners on the side of brick-and-mortar retail chains will be those who view "brick-and-mortar" and "online" business symbiotically. This also has a significant impact on their suppliers, who are thus strategically challenged to support the implementation of the strategy described above with their own expertise.
The symbiosis of online and stationary trade also offers new opportunities for suppliers.
As consumers, we welcome the increasing importance of the Internet as a trading platform for almost all goods, as many things are simply easier, faster and cheaper to procure there. Even if we are still overwhelmed by the technology here and there, need to gain confidence, or feel sorry for the small retailers on the protected species list, the advantages outweigh the disadvantages. We are all gradually developing into "omnichannel shoppers" and search for information, compare and buy online - even mobile - or stationary in the way that suits us best at the moment.
Erreichen einer neuen Balance zwischen stationärem und Online-Geschäft
Ultimately, it is our shopping behavior that will lead to a new product group-specific balance between stationary and Internet-based retail. Stationary forms of retail will therefore initially continue to give up market share to Internet-based retail, but will retain a significant role in the consumer's shopping mix, e.g., through the shopping experience, impulse buying, and immediate physical product availability.
Stationary retail outlets have long been in the process of developing new concepts to counter the online competition, which will enable them to compensate for their competitive disadvantages and to offer a more attractive shopping experience at the point of sale.
- provide broader and deeper information to the customer,
- ensure better specific product advice,
- reduce the customer's price risk (e.g., through price guarantees or ad-hoc Internet price comparisons), and/or
- virtually broaden and deepen their product ranges and services in order to be able to optimally serve all - even very individual - customer requirements.
At the same time, they are already marketing their products via the Internet - in many cases still organizationally separate - and engage in elaborate online marketing. The pure online retailers or marketplaces, such as Amazon, Rakuten, Baumarktdirekt, Zalando or eBay, have long since reached a size and importance that enables them to push small online specialists out of the independent perception of consumers. Thus, the marketing opportunities of the e-commerce pioneers are being squeezed from both sides and they are coming under considerable pressure.
The long-term winners of this development on the part of the retail chains will be those who no longer view the traditional "stationary" and "online" segments "separately" or possibly even "in competition", but who succeed in creating a symbiosis between them and thus creating synergies. The aim is not only to be optimally present on each channel, but also to combine the channels in the sense of customer needs to create an optimal customer journey. This understanding - depending on the acute economic threat to the merchandise group from Internet-based business - is now firmly established in many classic retail groups with a stationary focus.
New challenge for suppliers to the trade
This also has a significant impact on suppliers. Because now they are also strategically challenged to offer the retail groups competencies that support them in implementing the strategy described above. If the supplier already has online and corresponding logistics and process competencies, this not only offers the opportunity to achieve sales growth by playing on both channels of the sales partner. Symbiotic docking with the retailer's strategy offers the opportunity to create a strategic bond as part of this transformation process.
On the side of the suppliers and in particular the medium-sized companies, which either organize their distribution primarily on the basis of push* strategies with their retail customers, or which have so far only marketed via the Internet, the main focus is on the question:
"What is the impact of the increasing online importance on business models and strategies of brick-and-mortar distribution channels, and how can I sustainably benefit from their transformation and the whole customer journey?"
Here, business models that have a deep understanding of retail groups and combine this with proven online expertise have strategically better cards to become the new generation of suppliers than "old-school sales concepts" or the pure pioneers of e-commerce. This is confirmed by case studies from our current consulting practice.
*Push strategy: sales channel-oriented marketing focus (end customer approach via merchandise presence and sales promotion).