The journey of a customer beginning with the emergence of his needs
The Head of the Walbusch Endowed Chair Prof. Dr. Stephan Zielke on Multi Channel Customer Behavior before, during and after the Pandemic
'Lange Samstag en d'r City - Pap un Mam die jon mem Titti - Tata, teita durch de Stadt - Weil et Jeld jejeben hat - …', sang the Bläck Fööss in 1977. Today, one thinks: long, long ago, since the pandemic effects presented us months of closed stores in the city centers. Consumption continued, however, albeit in a different way, and left retailers in the cities fearing for their customers. Stephan Zielke, economist and Head of the Walbusch Endowed Chair at University of Wuppertal, investigates why this is the case, and whether the freezing of the retail sector must really occur.
Multi Channel Management
Multi Channel Management is the magic word that could row brick-and-mortar retail out of the crisis. But what exactly is does this term mean? "A multi channel system is a sales structure in which, for example, a retailer sells products through brick-and-mortar stores, the online channel, or even through catalogs," says Zielke, "these are different channels through which the company sells the products." The fashion company Walbusch, based in Solingen, Germany, is an example of such a multi channel company. It operates an online store in addition to about 40 brick-and-mortar stores, as well as sending out catalogs. "And I deal with customer behavior in such systems. The customer journey is particularly interesting here, i.e., the journey of a customer beginning with the emergence of his need, to the information phase in which he finds out about the products, the purchase phase,up to the post purchase phase." The scientist explains that customers' buying behavior varies greatly, and that is the subject of his research. "One behavior, for example, is showrooming," he explains, meaning that "customers go to stores, get advice, explain there that they are having second thoughts and then order it cheaper from an online store." There is also the reverse behavior, in which customers find out online about brands and prices before going to a brick-and-mortar store in order to be better prepared. Therefore, a meaningful linking of the various purchase phases in favor of the company, by linking the channels in the best possible way, is important. For Zielke, switching between online and stationary offerings should not be viewed negatively, as long as the customer remains with the same provider. Technologies such as Click & Collect or Check & Reserve are playing an increasingly important role in this, "through which I can buy or reserve products online and then pick them up locally in the store." Shopping apps also offer new opportunities to link online and offline channels.
Main part of sales takes place in stationary retail
"The majority of sales take place in brick-and-mortar retail," says Zielke, adding that this is often overlooked. However, online retail is growing steadily, and there are differences between individual sectors. Online shares are stronger in electronics and fashion than in the grocery segment. Although, food and beverage delivery services also experienced a boost during the Corona-induced lockdown.
"It is interesting to take a look at which devices are being used to make purchases in the online sector. You can see that the mobile sector is growing strongly. Customers are moving away from desktop orders to orders via smartphone and tablet. And then shopping apps take on an important role as well," he explains. The pattern, according to which channels are used, i.e. offline search - online purchase or rather online search - offline purchase, suggest that today's customer use several options depending an the situation, the need, or the product group. Zielke emphasizes that this is an important development.
Certain shopping motives could influence channel-switching behavior in particular, as the scientist calls it. "What value do I prescribe to assortment? How important is a shopping experience to me? How important are low prices to me? How important is the haptic experience to me, or how open am I to new technologies?". These are just some of the questions he is asking. These questions are asked as part of a comparative analysis between German and Polish consumers in a still ongoing DFG project.
Retailers must upgrade digitally
The pandemic has crippled brick-and-mortar retail. But, differences among retailers have to be considered as well. "If we look at brick-and-mortar retail and walk through the local shopping streets... most retailers, at least the big chain stores, are already multi-channel retailers," Zielke explains, referring to perfume chains or shoe stores. "All of them already have an additional online store. In fact, those who also operate via online retail will surpass the crisis better, since customers can easily switch over. A timely digital upgrade at the beginning of the first lockdown would have made sense, although I also know about the low resources of many smaller retailers," he says and appeals, "But I don't think there is any way around serving the online channel in some form or the other. Service and counseling-oriented retailers, despite their skepticism of the online channel, must not overlook the fact that online retailing is a service for the customer as well." For the customer, Zielke stresses once again, online and offline are no competitors, but rather the opportunity to contact the retailer via multiple channels. "It is still important that I keep in touch with customers even, if I am not able to sell via brick-and-mortar at the moment. But, I need to be able to take up somewhere after the lockdown." This means, even in the state of closed stores, decorating store windows in an appealing and up-to-date way, since there are always walk-in customers to be inspired. The customers then stay in the conversation and say: 'Here, I am still here!', if the retailer tries to keep in touch with his customers via, e.g. social media, as well.
Local Commerce Platforms
But there are also many small businesses that do not have the possibilities of online commerce. So-called local commerce platforms such as Online City Wuppertal could offer an alternative there. "The problem with local commerce platforms is that they often do not have a huge budget," Zielke laments, "and that makes it difficult. Even individual advertising campaigns before Christmas have little lasting effect there. You have to think of other things there."
It is particularly important to create a high frequency on the platform, for example by expanding it into a city portal. In addition to local retail, customers can find offers and information on gastronomy, health, culture, administration, etc. in such a city portal. As a synergy effect, customers will also come across the retail product range, while browsing on topics such as health, gastronomy, local news or the weather. This would then be synonymous to a digital city stroll.
According to Zielke, alternative online sales via platforms such as eBay or Amazon are rather difficult for small, stationary retailers. In order to be competitive, they would have to offer significantly lower prices in comparison to mere online retailers. As a consequence they then may put off their stationary customers, who are no longer willing to pay the higher price in the store.
Fit-Finder and the possibilities of virtual try-on
Out of necessity, many people order products online during the lockdown. However, they miss the haptic possibilities that online retail cannot offer. They thus send products back again, for example, if they do not fit. "So returns are a big problem for online retailers," the scientist knows, but likewise, there are many developments to reduce those returns. He tells us that "fit finders," in the fashion sector are of particular interest. "They enter, for example, their body measurements, weight and age, as well as products that they already have and that fit them, i.e. pants brand XY and the size. And then, based on artificial intelligence, this fit finder suggests the right size for them, depending on what they are looking for. So it knows which size fits them with brand A, and if necessary changes the size if brand B is different. In the meantime, you can try this out quite nicely at some retailers. Zalando and H&M, for example, are also working on virtual try-ons for clothing. We already know this from eyeglasses. There, your body is scanned, and you try on fashion virtually."
The opportunity for stationary retail is called haptic
"You have to move with the times," Zielke postulates, "address the changing needs of customers and respond to them. You have to do something, you have to respond to digitalization since it is not going away."
However, despite this digital outlook, brick-and-mortar retail has very different advantages that will come back into full play once the lockdown ends, the researcher explains. "A key point of why people still go to retail is the experience and social aspects. Going downtown shopping with a boyfriend, girlfriend, wife, kids, or the whole family, maybe grabbing a bite to eat, or going to the movies in the evening, that is going to be the long-term benefit of brick-and-mortar retail." While the pandemic has taught many that online retail is easy and convenient, Zielke says people also miss the city and all it has to offer. "I am sure that we will see a lot of people in stores again once people can go back to risk-free shopping after the lockdown. However, the cities must offer a good sojourn quality, i.e. a good mix of retail, gastronomy and culture instead of boring pedestrian zones. Small retailers play a particularly important role with their individual product ranges. This brings people into the cities since they enjoy shopping and are being inspired by the displays."
Maybe it will then be said again: 'En d'r Stadt es Remmi Demmi - Alle Parkhüser sin voll - Üvverall nur Minschemasse - Un die kaufen hück wie doll - …'.
Uwe Blass (Interview on February 9, 2021)
Stephan Zielke studied business administration at the University of Cologne, where he obtained his doctorate at the Chair of Retailing and Distribution. After completing his habilitation in Göttingen, he was an associate professor at Rouen Business School (now NEOMA Business School, France) and Aarhus University (Denmark). In addition to his academic work, he initially worked in the field of management consulting after completing his doctorate. Since 2015, he has held the Walbusch Endowed Chair for Multi Channel Management at the University of Wuppertal.