From Offline To Online And Back Again?

Ralf Kern

Isn’t it beyond cynical that, after killing many traditional bookstores, Amazon is now opening physical bookstores? Maybe. Yet, it makes a lot of sense for the company. It is also very likely only an initial step in redefining shopping once again. Who would be surprised if Amazon opens stores for different categories as well?

Isn’t it beyond cynical that Amazon, Alibaba, and the like are the main reason why many pure-play online retailers are opening stores as well?

Why? Simply because they know that they won’t be able to compete with Amazon in the long run. In fact, research company IFH assumes that 90% of the pure-play online retailers will have disappeared from the market again in a few years from now.

Online retailer Shoes of Prey started opening stores. After all, many customers look at (customized) shoes as a lifestyle article and want to see the colours and touch the materials. Looking at consumer electronics, we observe the same. Shopping at Apple or Bang & Olufsen is much more a lifestyle experience than a consumer electronics purchase. Consequently, many online electronics retailers (e.g. Cyberport) are opening physical stores in prime city locations. Online furniture retailer Fashion for Home also opened showrooms to showcase quality and design.

Indeed, physical stores come with a lot of benefits and new opportunities. They serve as consulting, “try before you buy” options, as well as fulfillment locations. They help tackle critical shipping and return costs challenges. They also serve as demand generation, trust building, and customer experience hubs. Without any doubt, stores are contributing hugely to the perceived value of a brand.

We can see a growing desire for online retailers to expose themselves in real-world stores. Should traditional retailers sigh with relief now? Not at all. The pressure might even increase. Online retailers will redefine the physical store in the context of digital retail.

Latest trends show more than ever: that the store is not dead. But, its role will significantly differ from the traditional one in a mono-channel world. Intelligently merging insights from the online world with the physical store will define success.

No matter whether a retailer’s origin has been online or offline, an agile digitization framework, connecting stores and digital with the complete retail value network, is vital for sustainable success along the digitization journey.

Such a hugely simplified IT framework will be the prerequisite to ask and react upon the fundamental question of the digital age.

The question: What would a company need to do to destroy your business model.

Your reaction: Do exactly that. Yourself.

Think about it. Jeff Bezos might have asked himself this question and, as a consequence, opened physical stores. Cab companies did not ask themselves this question. Uber did it for them.

Learn more about digital transformation in retail.

Ralf Kern

About Ralf Kern

Ralf Kern is the Global Vice President, Business Unit Retail, at SAP, responsible for the future direction of SAP’s solution and global Go-to-Market strategy for Omnicommerce Retail, leading them into today’s digital reality.