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Bernd Wagner

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Digitalization in retail: If you snooze, you lose!

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By Bernd Wagner, Head of Sales Germany at T-Systems International GmbH.

180815-Bernd-Wagner-en

Bricks-and-mortar retailers are fully aware of the importance of digitalization, but many of them have yet to overcome all their inhibitions. Everyone is talking about the digital transformation, omnichannel and multichannel marketing, and even shopping as a connected experience. But what tools can local retailers use to stand up to the online behemoths?

My new barbecue was delivered last week. I don't know how you do it when you treat yourself to something, but I conduct thorough research beforehand. I checked out the barbecue on numerous websites on the web and read countless reviews. I then visited a specialist retailer in Frankfurt, where I examined the barbecue more closely, and also took part in a barbecue event. Although I could have saved a euro or two by ordering from the Internet, I ultimately decided to buy the new jewel of my garden from an actual store. If I had bought it online, I wouldn't have received any instructions. Nor a barbecue that was assembled and ready to use. And they gave me a free cover, too. Online retailers have custom-fit offers, but personal consulting isn't available on the internet. Store-based retailers have to play this card even better in future. And with the help of digital solutions, they can also tailor their offers to fit specific customers.

Digitalization gives stores a second wind

One example of successful digitalization is the former Marktkauf hypermarket in Adendorf, which has now become an EDEKA.  In front of the market, the shopping carts are lined up like pearls on a string. Nothing unusual so far. But small Bluetooth transmitters on every shopping cart ring in the age of digitalization for the EDEKA supermarket. The goal: to serve customers perfectly. To achieve this, however, the market first has to get to know its customers better. 

While online retailers know nearly everything about their customers – from their names and shopping habits to their previous orders – customers of store-based retailers remain largely anonymous. But knowledge of consumer needs is essential to making custom-tailored offers and generating more revenue. Supermarkets, for example, have to figure out exactly where to place their merchandise to generate maximum customer awareness. By installing Bluetooth transmitters – beacons – on shopping carts, the Adendorf EDEKA store has the answer to this very question. The retailer now knows exactly where in the store its customers are – and how long they stay there. As a result, they can identify blind spots where customers might never pass by, for example. 

The shopping carts can also be retrofitted with displays. When a customer connects to the shopping cart via the bar code scanner in the store, the cart directs them to their desired products and displays customized offers. With this approach, the retailer can analyze customer behavior based on anonymized data. Smart platforms enable the central consolidation of all data on sales, inventories, and customers – to generate personal offers across all channels.

I encounter many retailers who still have inhibitions about digitalizing their business. And they're right! Digitalization is a major feat. It isn't easy and it demands a major rethink. Particularly in smaller stores, the major question is where to start. This question becomes much easier to answer if you put yourself in the customer's shoes. You have to listen to them, to find out what they need and what can help them. Remember: the bait must attract the fish, not the fisherman. That means it isn't about implementing every new technology that comes around. Instead, it's about taking a close look at what the customers expect: more information about products? Additional services for convenient shopping? Individual discounts? When you know what your customers need, you can determine which digital solution will be a good fit. Only then does the technology come into play.

Digital price tags make pricing like online shops possible

One thing is clear: digital solutions not only let retailers get to know their customers better, but also offer them features that customers appreciate from online shopping. Take price comparison, for example: customers already use their smartphones to compare store prices with prices on the internet. The cheapest outlet closes the deal. And in many cases, store-based retailers can't keep up, even if the lower price is offered by the same retailer's online shop. The reason: analog price tags. Up to three weeks can pass until price changes hit the retail floors. With digital price tags, in contrast, customers of store-based retailers can benefit from the same discounts and promotions as when using the web shop. Thanks to direct communication with the retailer's ERP system, the in-store prices can be adapted automatically to the online prices – without anyone having to lift a finger. Flexibly and at any time.

More convenient shopping through connected stores 

When it comes to convenience, bricks-and-mortar stores have a lot of ground to make up: when online shopping can be done on the couch with just a few clicks, store-based retailers have to come up with a strategy for making shopping more convenient for their customers.

Thanks to digital price tags, retailers can also make the payment process much more pleasant. Customers can pay for their goods directly at the digital price tag, using their smartphones and NFC/bar codes. The tag then indicates that the article was paid for and the customer can exit the store through a "fast lane". No more lines at the cashiers!

The technology can also generate value. Instead of exchanging loyalty points for the umpteenth set of cookware, they could be exchanged for a full charge at the car-charging station in the store's parking garage. And instead of making them spend time searching for a parking space, top customers could be given access to reserved VIP spaces – opened using the retailer's app.

The IT is the foundation 

In addition to focusing on the customers' needs, an examination of the IT is a fundamental question. Without smart networks and bandwidth, no content can reach the store. Without the underlying technology, prices cannot be sent from the retail system to the digital price tags. It's true that implementing the technology isn't always easy. The networks, cloud solutions, data analytics, and IT security have to be integrated as an end-to-end system. But these requirements are easy to master with the right partner at your side. 

Bernd Wagner, Head of Sales Germany at T-Systems International GmbH

Bernd Wagner

Head of Sales Germany at T-Systems International GmbH

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