Stationary retail has struggled more and more in recent years: a shift towards e-commerce resulted in decreasing visitor numbers and a drop in sales. This development reached a sad climax with the coronavirus lockdown. But voices calling for digitalisation to save the retail sector have been getting louder for some time. What is the future of stationary retail? What potential does digitalisation have? What kind of stores do customers want to see in city centres?
Eva Gancarz, retail digitalisation expert with experience in projects with stationary retail and cities, gives her assessment in an interview.
How important is retail in city centres these days? Does it still have a reason for being or is it past its time?
One thing is clear: the face of German cities is changing. The triggers for this are new trends in customers’ shopping behaviour, a demographic change and booming online trade. Nevertheless, retail is still important today. As well as being a place of residence and a place for work, it also represents a third place. With an attractive cultural offering, modern infrastructure and attractive inner city design, retail can become an experiential place again.
It is still making a fundamental contribution to vital city centres and how they are being preserved — even though online trading is causing consumers to shift towards the Internet. Without retail, visitors would no longer have a reason to come to the city centre. Retail is an important part of the industry mix, alongside hospitality, doctors, the public library, work and living. A retail trade that is well-integrated into the urban structure also attracts shopping tourists, including those from outside Europe. As a visitor magnet, restaurateurs, hotels and cultural businesses also benefit from a lively retail scene.
Not forgetting, retail is the most important taxpayer for cities and local authorities, and it finances the infrastructure through trade tax. It is the biggest employer and third-largest economic sector in Germany.
What alternative scenarios are there to typical pedestrian zones? What should ‘new city centres’ look like?
It is important to have an interesting mix of industries, a variety of shops, attractions and events that reflect the essence of the region. Unfortunately, the number of stores in our cities is the thing that is responsible for the fact that individuality has been lost and owner-managed shops have been sold. A lot is run-of-the-mill these days and that won’t work in the future. We need new concepts, quarters with character!
Empty shops have to be converted—into pick-up stations, co-working spaces or creative projects, for example—at short notice. Working, living, culture and shopping have to mix together better. One possible approach could be to shorten shopping streets or make the city centre car-free. Still, it has to be easily accessible, for example by expanding park-and-ride services, modern parking guidance systems, public transportation and bicycle-friendly infrastructure. Facades also need to be modernised in many places. Making city centres greener, cleanliness, coordinated Christmas lighting and flower arrangements also make staying in the city centre a more pleasant experience. There should also be free WiFi in inner city areas—after all, people want to be able to conveniently use their smartphones everywhere these days.
The history of a city is also added value—we should allow people to experience it through virtual reality. We have to show consumers that a visit to the city centre would be worthwhile and fun. In short: we need places that are an experience.
What role does digitalisation play here? And what do consumers want?
A current study report by the Bitkom digital association once again emphasises how important it is for local retailers to become more professional when it comes to digitalisation. The report from July 2020 takes into account the impact of the pandemic on buying behaviour. 66 per cent of consumers surveyed stated that they wanted to continue shopping locally — “to stay loyal to the retailer” — provided that the retailer had an online offering in the region.
The first step to success is for retailers and restaurateurs to actually be found in city centres — and for that, digital visibility is essential today. Take a look at your own searching behaviour. The smartphone is always at hand and questions are answered quickly thanks to Google and Google Maps.
It is important that the players in the city centre address their consumers directly so that they have a reason to visit the city centre. The stationary retail sector has to get to know its customers better and catch up with online retail. Online retail often has quite a lot of customer data, meaning newsletters, promotions and discounts can be targeted and personalised. In the future, this will also have to work in stationary retail.
And the consumers also have to be brought on board, for example, through public participation or when implementing local online marketplaces and customer loyalty programmes. Otherwise, it’d be a case of the chicken and the egg problem: if there are no retailers, there are no customers and vice versa.
What solutions are also helpful for digitalising business? What are the foundations?
Google My Business is a mandatory requirement for each business. As Katharina Birkholz from the Online Solutions Group reported: “People who use their smartphone or tablet to search for a service are 57% more likely to visit the store, make 40% more calls, and are 51% more likely to make a purchase.”
Retailers should also use directories like Yellow Pages or Trip Advisor and other local citations. If you have your own website, visibility should be increased through search engine optimisation. When setting up social media presence, quality takes precedence over quantity—so careful consideration should be made as to what sort of presence the business should have and with what content. Ads on social media or Google Ads can be useful to address a larger group of customers.
Local online marketplaces and local customer loyalty programmes, perhaps even under the umbrella of a smart city, should be top on the agenda for joint projects. Luxembourg is a nice example of a local online marketplace. Local tradespeople can present their offerings online and make them visible digitally on lastshop.lu. During the lockdown, they were even able to establish emergency care for risk groups.
Which players do you think have an obligation to digitalise retail?
First of all, retailers have to take action themselves. But business development agencies, advertising associations and chambers of industry and commerce also have a responsibility here. Each location should have a ‘caretaker’ who centrally drives retail’s path towards digitalisation and has the big picture in mind. This also includes vacancy management, city festivals and Christmas activities. Access to an IT infrastructure has to be made easier for local businesses to map e-commerce functions for local sales. This is a cost-effective alternative to company-owned online shops, which involve additional costs such as search engine optimisation, and a great way to increase the number of visitors in city centres.
What’s missing when it comes to implementation?
There are many reasons. Often, new concepts fail due to a lack of awareness of the problem. Some retailers are unmotivated, others lack time or human resources. A willingness to cooperate and communication between stakeholders sometimes leaves a lot to be desired. But it’s still important that they work together and coordinate their efforts in order to make the entire inner-city retail offering more attractive and also to be successful in making it available online.
City centres have to create a stronger profile — one with a multifunctional offering, quality of stay, ambience and flair. So far, there has been no ‘caretaker’ to drive, coordinate and strengthen city management and marketing. I also see the fact that too few change managers are out in our cities to sensitise local businesses and train them in digital expertise as a major challenge.
About Eva Gancarz
Eva Gancarz studied business development and has been dealing with the digitalisation in retail for over ten years. She has been working for cima.digital as a Consultant and Project Manager since 2019. She works there on future-proof solutions together with cities, local authorities and stationary retailers.