With the development of e-business and web 2.0, the notion of territory exclusivity which mattered so much to retailers everywhere in Europe and even in the world over, has gradually turned into a thing of the past. However, retailers continue to defend their territories or more precisely their so-called catchment area. Are they not misleading?
A retailer asking one’s supplier to grant him or her some kind of territory exclusivity, in other words not to supply another shop located 10 miles or 20 kilometers away from one’s shop,
appears as a nonsense in the twenty-first century, as the notions of distances have been abolished by the development of smartphone. The French philosopher Michel Serres gives a good summary of this irremediable revolution on the occasion of the publication of his book about the « little pusher-girls », these very young girls of the XXIst century’s technology : « France has become a city whose high-speed train has now become the underground, whose motorways have turned into streets. »
There is no denying that smartphones have drastically changed the consumer behavior at the point of sales. Mobile phone is simply becoming the #1 source of information for the consumer enjoying shopping. He or she uses one’s smartphone within the store or the shop, not only to get info about the product or to have access to user’s comments but also to compare prices. Buying has to some extent become smartphone assisted.
Consumer behavior is much influenced by one’s community members before buying (via discussion forums, social web networks). One’s buying decision can eventually be questioned the negative feedback of one’s communities and social networks he or she belongs to. Statistics clearly show the impact of the revolution we slowly go through.
- 90% of people rely on their relationship before buying a product
- 50% of buying decisions were made on social media in 2011
- 68% consider it to be important to compare prices via their mobiles
- 67% rely on website informations before placing an order online on their smartphone.
- 96% of young people aged between 18 & 24 years are part of a social networks.
Sources : IFOP French survey – June 2012).
As a result, many retailers complain today that their shop has turned into a show-room for the benefit of their suppliers or their competitors. They argue that their customers visit their shop mainly for in situ assessment of products (touching, visual experience, fitting) they will end up buying online at more competing prices.
According to a study carried out by Perception Research Services, this trend would mostly affect the sales of electronics, consumer goods (such as baby products) and clothing.
This so-called phenomenon of « showrooming » has driven French department stores to reduce prices in order to slow down the expansion of this consumer behavior. Independant retailers have undoubtedly model their strategy on department stores since they have recorded a -3.3% decrease in their consumer prices for the first eight months of year 2012 (according to a survey from the French Institute for Fashion). This strategy is not a proper response to the current issue for all that. The survival of the independant retailer depends on one’s openmindness and interest towards e-business and social web. E-business can no longer be considered as a threat but as a new business opportunity. Should shopkeepers be willing to adapt ongoing changes in retail business, they have no other alternative but to connect to social networks and get closer to their clients : to promote their brand — ie the shop’s positioning and product assortment — at almost no cost, to widespread digital advertising as a virus, to maintain a permanent tie with their clients and canvas new ones.
As Doug Stephens explains in his article entitled The Future of Retail Stores, « It doesn’t matter (for brands) where purchases take place. What matters is that the consumer falls in LOVE with the brand and shares that love with others. The store maintains the potential to be that emotional center of gravity for the brand« . On the other hand, what matters to the retailer is precisely to promote one’s shop as a brand so that one’s customers may buy either online or within the point of sales. The challenge of retail business consists in turning the store into a must to get the ultimate emotional center. Technology such as connected objects is probably a way to make the buying experience richer but sharing content about the shop’s multibrand assortment and special services is definitely another way to bring added value to local retail.
Thanks to the quick development of smartphones, their catchment area no longer boils down to their village or a a district in the city. It goes beyond the local or national borders. German or British retailers now very often ship parcels to American webshoppers who place orders on Facebook pages or websites pages. The independant retailer must be eager to promote one’s shop and assortment (i.e one’s brand) on social networks far beyond local or national borders. Not only must a retailer be a good manager, a good marketer, a good buyer or a good salesman, he or she must also become a good community manager.
The multibrand independant retailer must redifine one’s job. The recent standardisation of use of Smartphones gave birth to a virtual catchment area (the online virtual community) which opens the way to new expectations for tomorrow’s independant retail.
Article written by Jean-Eric PONTHOU – February 26th 2013.