As shopping continues to become increasingly hybrid, its future will be a combination of online and brick-and-mortar trade.
That is according to a representative survey of over 500 retail companies in Germany with 10 or more employees, which was carried out on behalf of the digital association Bitkom.
It found that 85% of German retail companies offer their products and services both online and in stationary stores. Before the pandemic in 2019, 66% were selling in a hybrid manner. That rose to 77% in 2021 with the latest figures representing a sustained upward trend in recent years.
Only 8% of German retailers are currently active exclusively in stationary stores. In 2021, 16% were active and in 2019 this figure was as high as one in four German retailers.
“The corona pandemic has given online trading a significant boost and permanently changed the shopping behavior of customers,” said Bitkom Managing Director Dr. Bernhard Rohleder.
“This trend is now continuing, more and more retailers are expanding their online activities – but also continuing to operate their business on site,” he added.
The survey also revealed that of companies that use both sales channels, the online segment accounted for at least half of total sales in 30% of businesses. In 2018, this was only 8% before rising to 19% in 2020.
Interestingly, although there has been a boom in online selling in recent years, there has, in fact, been little change in the proportion of retailers that sell exclusively online. In 2023, only 5 percent of retailers will sell exclusively online, compared to 6 percent in 2021 and 2019, the survey found.
Of the hybrid retailers, 29% can imagine only selling online in the future, yet only 12% of retail companies say that stationary retail has no future. For most (71%), stationary needs to reinvent itself to better compete in a world of online retail. The key challenges noted included keeping up with low prices on the Internet and competing with virtual shopping experiences as a result of AR and VR.
“Stationary retail is under pressure. It is still an important pillar for companies in Germany, but it urgently needs innovative ideas. Digital services can be a building block to keep brick-and-mortar retail attractive for consumers and to combine the advantages of both sales channels,” Rohleder added.
Cashless payments are now standard
The vast majority of retail companies have long been relying on digital technologies in their business. 88% of brick-and-mortar retailers can accept cashless payments via smartphone or smartwatch. Click&Collect is now also a widespread service. Almost three out of four stationary retailers offer this to their customers while 10% of stationary retailers are discussing it, the survey said.
At least half also use tablet or smartphone-based systems at the checkout. One in three retailers use tablet PCs and interactive screens in stores, for example to access product information, while the same number also use digital price tags.
Concerns over driving AI forward
Artificial intelligence is currently being discussed across all industries. In retail too, over half of retailers assumed that the use of AI will be crucial for competitiveness even though only 4% of German retail companies currently use AI technologies, the survey found.
For the majority of retailers, finding the right employees in the AI area to drive integration forward is a challenge. 61% of retailers said they currently lack expertise in this area.
“Wait and see is rarely a good strategy. The barriers to entry for using AI are currently lower than ever before. From customer service to advertising campaigns, from purchasing planning to product launches – AI can be used sensibly almost everywhere in retail,” Rohleder said.
But there are also concerns associated with the new technology: three quarters of retail companies fear that the use of AI in customer service will alienate customers while 72% are worried that large numbers of AI-generated fake reviews could harm their company.