Retail prepares for multi-channel – but when will they step out of their comfort zone?

Jens Hultman (photo: Magnus Nilsson)

How should physical retail –  stores – face the fact that customers switch between digital and physical as naturally as they breathe? We are many who are interested in an answer, and Jens Hultman is researching just that.

Jens Hultman is Assistant Professor at the The School of Economics and Management at Lund University in Sweden, and after having devoted himself to the auto industry, now is involved in retail research. Yesterday he presented some of his research during a breakfast seminar at HUI Research and The Swedish Retail and Wholesale Development Council, where he spoke about Retail prepares for multi-channel.

It is – to say the least – an intriguing world. And Jens Hultman has been involved in the area since e-commerce’s first, faltering steps in the latter half of the 1990s.

“What has changed from the 90s is the technology and customer maturation. But e-commerce today is mostly about the fact that the gap between the digital and the physical contact with the customer is being erased.”

Local traders’ concerns can be turned into opportunities

In his research, Jens Hultman meets many local shop owners, who are worried about the future. Their concerns are focused on the establishment of shopping malls outside city centers and e-commerce. Many of them have a negative image of the future. But Jens says that local commerce are able to adapt in the opposite direction, widening to the outside world.

“There’s a number of examples where local traders, who must adapt, has expanded by offering e-trade. This can be seen, not the least, in furniture stores and interior design.”

British trade ahead of the Swedish

Jens Hultman shows some examples from Swedish retail chains, including Hemtex and Stadium. And he compares with the UK trade:

“When you walk around in Britain today, almost every shop offers click and collect. Among the larger chains, it is really only H&M that doesn’t. My impression is that trade development in Sweden is quite far away from that in the UK.”

“I was inside a pharmacy, where almost the entire store was devoted to picking up packages. The customer prepared her purchase at home and collected the prepackaged goods when she came to the shop.”

Trade must understand that customers do not think in channels

Naturally, Jens Hultman didn’t want to paint an overly gloomy picture of the Swedish trade’s opportunities to adapt to the “new world”, but he still pointed out some big challenges for those who runs physical stores.

“The customer doesn’t make much difference between the physical interface and the digital. And he or she moves between them without major concerns. The consumer chooses what’s most suitable in a specific situation. Retailers must realize that customers do not think in channels.”

“Physical and digital is mixed all the time. The customer can stand in the physical store, and – with the help of the cell phone – compare with another physical store.”

“It is also true that ‘technology fear’ is reduced among the elderly. When technology and trust is in place, it goes fast. I think – no, I know – that is what we see today!”

The question is no longer whether trade will change

Today, the turnover of retail trade in Sweden is about 600 billion Swedish krona (around 72 billion dollars). And of these, 40 billion krona is e-trade. So far, the difference is big. Jens, and several in the audience, described the traditional retail as a slow-moving, conservative industry. But everyone realizes that a change is necessary to allow retail to be competitive. The only question is how and when it will happen.

“We know that different customers have different needs. What is important to them can vary, for example, between the speed of delivery, variety and the opportunity to have an experience when shopping. The integration of digital and physical makes it possible to develop all these parts.”

Physical trade must embrace the client’s digital world

Jens Hultman mentions some details that indicate why the physical trade should be digitized.

  • You can build a stronger loyalty to the client. The digital footprint means that you as a merchant know your customer better than the anonymous person at the checkout in the store.
  • You can bring down inventory levels in the store through better product flow. Have better matching between what the store’s customers want to buy and what you have on the shelves, pure and simple.
  • You can allow people to subscribe to your products and services. Jens mention his own family’s household purchases as an example. Every week, they make a list of what to shop, which after the purchase is thrown away. But what they purchase is actually identical over time. Allow customers to subscribe to what’s recurrent and cancel the deviant.

Systems and delivery is a weak point in Swedish retail

Since Jens Hultman is a researcher, he will keep a low profile when it comes to drawing overconfident conclusions of his research. But one thing seems beyond doubt; Swedish retail fail to deliver on one particular point – delivery.

“I myself is at that age who shop the most online, we who are 30-40 years. We do it to save time. In my eyes, a store is as much a pickup point. This Monday, I order and payed a couple of running socks from one of the big chains. The goods should be delivered to the local store, and it should take 5 days. After 5 days, the product has not arrived. The problem is that the system probably didn’t do a comparison with the status of the store. Perhaps the socks were already in the shop?

In Sweden, we have long lived with the notion that we are very far ahead in terms of technology. But today? No, I don’t think so.”

Digitized trade improves the entire customer experience

“In order to plan my purchases, I as a consumer need to see which products are actually in a specific store. If this really works, it is a considerable improvement of the customer experience.”

But what should retailers do to not only survive, but to adapt and prosper in a time when both digital and analog are components? What is best practice?

“We will see more of combinations”, says Jens Hultman. “Customer reviews, for example. That is something we see all the time in e-commerce and that is lacking in the physical store.”

“Best practice can be found in pure e-commerce, rather than in physical stores going digital. Retail is moving slowly. You are afraid to fail, afraid to lose the customer loyalty that you have achieved. I think it is a very important piece of the puzzle, that the systems work. If that’s in place, we can build a better customer experience.”

Disclaimer: Any misunderstanding and language errors are my responsibility. Thanks for your understanding.

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