Retail

Portrait of Dorothée Fritsch

Stationary retail must evolve from a place of shopping to a place of experience. No other industry is currently reinventing itself in such a fundamental way – and that is what makes it so exciting.

Dorothée Fritsch

Dorothée Fritsch

Head of Business Development & Strategy

Back to the future

The back to office trend, increased work in office buildings, has a positive effect on visitor frequencies in inner cities – and thus on stationary trade. But high inflation and the cost of living crisis continue to dampen the mood to buy. And a structural problem also remains: too often, retail still acts as a "warehouse" with an immediate take-away option. This makes it increasingly difficult for retailers to compete successfully alongside growing online retailers and strong brands with their own marketing. Stationary stores have to become a place of experience to make the visit relevant (again) – and they have to become more successful online. New business models and store concepts are needed.

Current situation in the industry

01

Real experiences

Rarely has a structural change taken place with such force as that of the retail sector during the COVID-19-pandemic. The transparency of online shopping, the comfort of doing so enjoying the comfort of one's own sofa, the high variety and availability of goods as well as the familiarisation with online payment processes have transformed even convinced shop visitors into online shoppers. The goal of new store concepts that offer a real shopping experience is to attract these customers back to the store.

Store concepts of the future are characterised by a seamless customer experience that takes place both online and offline. Innovative approaches in the field of online marketing use synergies with the stationary shop. In-store experiences can be implemented on site and should reflect the values of the respective brand as well as concrete product benefits, for example. This strengthens brand image and customer loyalty.

Mike Zöller

Mike Zöller

Senior Partner & Member of the Board
02

"Who am I? And if so, how many?"

The question of in which cities and at which locations retailers want – or need – to be present has always been of central relevance for stationary retailers. The evaluation of individual locations has changed significantly: While B and C locations have become significantly less attractive, flagship locations in A locations are even more fiercely contested. What applies across the board, however, varies greatly depending on the city/region: local suppliers and "local heroes" are doing much better than the top dogs in prime locations in some places – but are also falling significantly in others.

The location issue is also playing an increasingly important role online: The presence on online marketplaces and e-commerce platforms has clear advantages, but also disadvantages that must be weighed against each other. Cooperations between traders of stationary origin and online specialists should also be considered and critically examined.

How large and close-meshed should the branch network (still) be? What criteria should be used to evaluate and optimise locations in the future? Does the business model favour expansion through partners or will the company rely more on its own brand stores in the future? These questions are clearly gaining relevance in the course of the transformation of stores into "places of experience" and are now being viewed from a new angle.

But it is not only in the stationary sector that the question arises: 'Where do I want to be, where do I have to be present? Many retailers are reaching growth limits with their own online shop, as customer access and traffic are often channelled through e-commerce platforms. This form of intermediary trade may or may not be profitable – especially because direct access to customer data is often lacking.

We support retailers in evaluating these issues.

Dorothée Fritsch

Dorothée Fritsch

Head of Business Development & Strategy
03

Changing consumer behaviour

Even before the COVID 19 pandemic, a change in purchasing behaviour could be observed – beyond the channel shift. In particular, the relevance of the topic of sustainability has developed a new dynamic – with implications for the entire supply chain, from production to POS. The future competitiveness and creditworthiness of (verticalized) producers and retailers also depend on whether sustainability is strategically integrated, operationally implemented and credibly communicated.

At the same time, the increasing popularity of customisable products ("co-creation") poses new challenges for retailers. The shift from "push" based business models to a stronger integration of "pull" elements increases the need for transformation, but also offers new opportunities for customer interaction and loyalty.

What role does sustainability play along the value chain and in the product range strategy? What do customers and financiers demand? How can retailers develop sustainability as an opportunity for differentiation?

We support companies in reflecting on the current situation and identifying new potential. Digital technologies can be part of the solution by increasing transparency along the supply chain. At the same time, they facilitate reporting, for example in the context of ESG. Likewise, the question comes up: 'How do we realise a stronger involvement of our customers?' The creation of in-store experiences plays a central role here; at the same time, however, the integration of 'pull' elements also calls for measures to transform the operating model.

Lukas Thesker

Lukas Thesker

Partner

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Expert Interview

What future options does stationary retail have, Dorothée Fritsch?

The share of online retail sales has grown continuously over many years. Will stationary trade as we know it today still exist in a few years?

Absolutely. After all, the question of stationary or online presence can often only be answered with "both" – and structural challenges remain: Despite a recovery, visitor frequency is unlikely to reach pre-COVID levels. In order to remain competitive against online pure players, which have grown strongly in recent years, brick-and-mortar retailers in particular need to develop their unique selling points. It should be noted that the experience in the physical store can also contribute to stronger customer loyalty online, meaning that both channels ideally benefit from each other.

Can you elaborate a little on this?

In practice, we are constantly encountering new, creative approaches that encourage customers to visit the store. These can be approaches by retailers as well as shops by brand owners. In the best case, a store not only manages to send its own (brand) messages and arouse desires, but also to pick up on current trends and customer needs. These insights can be actively used in collection design and communication. Therefore, direct access to customers and user data is more important today than ever before.

What and where did you shop last?

I became aware of a manufacturer of sustainable fashion through social media advertising. Over several days, the ad caught my eye again and again in various forms. Finally, I became weak and bought a sweatshirt that I had previously looked at several times in the online store. You know how successful online marketing works – and yet you are susceptible to it yourself...

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