Stationary retail on the way to becoming a multichannel provider?

Stationary retail on the way to becoming a multichannel provider?

Written by Editorial

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February 9, 2023

Online retail sales increased significantly as a result of the Corona crisis. Compared with the previous year, the increase was around 17 percent. The growth was strongest among the well-known large online retailers, which recorded more than 20 percent growth. Nevertheless, the real winners of the crisis could be smaller stores in the long term if they consistently exploit their opportunities now.

Opportunities for new online providers

Compared with the more than 20 percent increase in sales achieved by the major retailers, the roughly five percent gain achieved by bricks-and-mortar retailers on their online platforms is modest.

Nevertheless, these brick-and-mortar retail platforms could be the real winners of the crisis in the long term. For example, 35 percent of shoppers surveyed in a study said they had tried one of these small online stores for the first time. In addition, more than half said they would pay more attention to offers from retailers in their own region in the future.

Many of these small retailers decided to use alternative distribution channels during the lockdown. For example, customers could order items over the phone or via mail, which were then delivered to their doorstep. Some of these small retailers had probably never heard the term "multichannel provider" before - but they had suddenly become multichannel providers.

What was originally intended as an improvisation during the crisis could develop into a permanent solution. At least that's what the majority of customers want. Online orders from the neighborhood retailer could therefore become a trend that outlasts the Corona crisis.

And this is precisely the reason why the brief boom during the crisis could prove to be a Pyrrhic victory for the major providers. After all, even before the crisis, a frequently observed discrepancy between the results of customer surveys and the actual behavior of customers was also evident on this issue.

The expressed willingness to support local retail was always great. However, the temptation of convenient shopping from the sofa was apparently greater. If local retailers can resolve this contradiction by offering suitable online services, they will be able to wrest market share from the big players.

In any case, Corona has given many retailers the idea to give it a try. They also have little choice. The strongest sales growth in online retailing in the second quarter was in food, at 91 percent (!). So it seems there really is no sector in which established retailers don't have to think about additional online offerings.

Stationary retail on the way to becoming a multichannel provider?

Emphasize the regional character in marketing

There is a blueprint for a successful strategy to compete with the big players as a regional supplier. In many regions of Germany, individual farms or producer groups have succeeded in establishing regional brands.

Some elements of this strategy are very specific to agricultural products and are difficult to copy, while others are not. Support for the regional economy and the associated safeguarding of jobs in the region are regularly emphasized. These arguments are easily transferable to trade.

The second pillar of these campaigns is the offensive differentiation of producer farms from the large-scale operations of industrial agriculture. Regional retailers can also successfully copy this argument. The numerous media reports about the conditions in the logistics centers of the online giants offer enough starting points to offensively distance themselves from them.

Concrete starting points for an online strategy

In many cities, there are already advertising associations of retailers from the individual district centers. This idea can be transferred to the online world relatively easily by retailers joining forces to form a virtual shopping center.

This has already happened in isolated cases. One simple question should not be ignored here: What are the wishes of the customer who is specifically looking for offers from the neighborhood for his online orders? He is certainly not looking for the cheapest offer on the net. Rather, he is looking for confirmation that he is doing the right thing by supporting the small, medium-sized retailer in the competition against large international corporations.

Once again, the parallel with the agricultural sector suggests itself, where more and more customers are choosing organic products not only because they assume that the quality of the food there is better. But of course there is nothing to stop us also emphasizing the very practical advantages of buying online from a local retailer. Wherever necessary, online purchasing can also be combined with personal advice.

The sales model of ordering on the Internet and picking up the goods on site is also becoming increasingly popular. Food retailers in particular are already doing this quite successfully, although this model is more widespread in other countries than in Germany. Last but not least, complaints or returns are of course much easier if the retailer is based in the neighborhood.

A challenge for Internet agencies

Stationary retailers will demand simple solutions to enable their customers to order online. The nationwide chain stores will rely on professional solutions based on familiar patterns - they are mostly already doing this today.

For the countless small retailers with a narrow local catchment area, other solutions are needed. The number of page views and orders is low, single-digit daily traffic is not uncommon. To enable every retailer to go this route, minimalist web designs for very tight budgets will be required.

A brief conclusion

During the Corona crisis, the willingness to support retailers and service providers from their own region increased.

Surveys indicate that this willingness will outlast the crisis. The decisive factor will be whether local retailers succeed in enabling their customers to shop regionally without sacrificing the familiar convenience of online shopping.

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