GfK releases white paper on the challenges posed to stationary retail by the continuing growth of the online segment
A new white paper by GfK retail expert Manuel Jahn discusses the retail branches especially impacted by the growth of online retail and also offers suggestions for how stationary retail can effectively position itself vis-à-vis online retail. Jahn argues that it's crucial for retailers to adopt an overall brand strategy that is customer-oriented and attuned to the realities of the market. He also contends that conventional brick-and-mortar stores will remain the most important component of a multi-channel strategy. Even so, location and network planning that successfully combines online and offline elements will become ever more essential.
Mail-order retail – consisting of catalog retail along with online retail – achieved a 2012 market share of approximately 9 percent of Germany's total retail turnover of approximately €410 bil. "It was only due to the robust increase in total retail expenditures that Germany's stationary retail was able to grow by around 0.5 percent in 2012," writes GfK retail expert Jahn in the white paper.
Jahn contends that there is no end in sight to the online boom – in fact, the "attack" on stationary retail has only just begun. GfK studies also show that the growth curve for online retail is becoming flatter in branches for which it is already very high. This is particularly true for clothing. However, online retail is currently rapidly gaining ground in branches that were previously little affected, such as the furniture trade.
Brand image and the shopping experience
Jahn points out that consumers only rarely make conscious decisions for or against stationary and online retail. In most cases, practical considerations dictate the chosen type of purchase. "This has consequences when it comes to expansion planning," explains Jahn. "On the one hand, it's crucial to convey a unified and coherent brand image irrespective of the various sales channels under consideration; on the other hand, consumers should never be put in a position of having to choose for or against stationary retail. Consumers should be encouraged to regard stationary and online retail forms as a 'both/and' rather than an 'either/or' proposition. Only then can retail achieve the maximum possible customer potential."
Jahn remains confident that retail real estate will maintain its status as the most significant component of a multi-channel strategy. He argues that this is because customer interactions with brands and products are most effective and long-lasting when they're not exclusively virtual.
Network planning 2.0: Managing and coordinating location types
According to Jahn, determining which role or function a given site should play with respect to the total brand image is one of the most important questions when selecting a location: "We predict that in most consumer-oriented branches, the branch network planning practices of the future will embrace multiple store types. This could include venues such as showrooms, flagship stores, traditional shops and pick-up locations. Each store type has its own clearly defined task and profile. This must be supplemented by additional detailed considerations regarding the suitability of the sales area and location."
Multi-channel approach not the only criterion of success
Even amidst the online boom, stationary retail enjoys certain advantages over online retail that should be seized upon. When choosing locations, Jahn recommends that retailers secure sites that have good transport network connections and synergies with other retailers. He additionally stresses that the retail space layout should be attractive enough to create a pleasurable shopping experience and support the overall brand image.
About Manuel Jahn
Manuel Jahn heads GfK’s real estate consulting division. He has been with GfK since 2004 and has extensive knowledge of the retail real estate branch thanks to carrying out location and real estate object appraisals throughout Europe. He was previously employed by Westdeutschen ImmobilienBank, where he was active in the project development of shopping centers. Jahn represents the retail segment in his capacity as a board member of the Germany-based Real Estate Magazine (Immobilien Zeitung).
For additional information
and to download the white paper, visit http://www.gfk.com/solutions/geo-marketing/Pages/Landingpages/online_vs_stationary_retail.aspx
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