In the digital age, customers feel omniscient and omnipotent, but also needy and insecure. This affords retailers opportunities, say Stephan Grünewald and Sebastian Buggert from the rheingold Institute in Cologne. A talk on fears of the future, circus tents, the monotony of the treadmill, and why everyone should not simply delegate their business to Amazon.
Mr. Grünewald, in your most recent book you refer to Germany as a country of restless, driven people who due to the influence of digital media constantly feel pressed to improve their lives and make decisions. Has the Internet made us lonely and exhausted?
GRÜNEWALD: Taking a look around us, we see that in Germany we are living in a virtual paradise. At the same time, we are surrounded by trouble spots that make us feel our paradise is acutely threatened. As a result, we are developing a longing for a permanent present. We no longer have future visions. By immersing ourselves in the insensate bustle of the treadmill, we repress our fears of the future and many unsolved problems. That is dangerous in the long run.
Is the Internet to blame?
GRÜNEWALD: The Internet poses the risk that we will have excessive expectations. On account of Facebook, we succumb to the illusion that we have thousands of friends and can change the world with our posts. If we believe this, we become exhausted quickly, soon realizing that we are neglecting our real friends, while our self-enactment falls flat on the Internet.
But one could also argue that Germans have never been as happy with digitalization as they are today. In this country, online shopping is the strongest motive for Internet usage. People wouldn’t do this if they didn’t enjoy shopping on the Internet.
BUGGERT: The Internet accompanies us everywhere today. On the one hand, it stabilizes us, because we are always connected to our community. On the other, it stresses us. People think they can’t do without it, yet they want to switch off and long for analog moments.
GRÜNEWALD: The Internet forces us to reconsider our conception of humankind. Today’s consumers are fused with their smartphone, as though it was a new body part. This body part gives them the feeling that they are all-powerful, that they can compare prices everywhere and punish or praise brands with the press of a button. Retailers used to want to make the customer king. Today they encounter people who are already kings because with their smartphones they are holding the scepter of power in their hands.
Have retailers and brands lost their sovereignty over their business?
BUGGERT: Retailers have to adapt to the fact that their customers today are very well informed, getting constant feedback on the Internet. In addition, the Internet gives customers alternative shopping options, which impacts stationary business.
GRÜNEWALD: Customers want to feel sovereign, and retailers are advised to confirm this feeling. This works wonderfully with apps, which like servile ghosts convey the feeling that consumers can see and control everything. On the other hand, retailers have to retain their sovereignty, for customers continually enter states in which they look for support and accompaniment like helpless children. If retailers succeed in supplying not only products but also meanings, then they will survive as stationary outlets.
What is the main difference between stationary and online shopping? Is it only a matter of convenience and low prices? Or are there hidden motives as well?
BUGGERT: We’ve analyzed this in depth. Take H&M, for example. Going to a downtown store means a lot of action, is an event. But it also means avoiding the bustle, standing in line, and so on. It’s a completely different experience from online shopping, where you lean back and get comfortable, as though reading a magazine. Customers use this to supplement stationary shopping, but also as an alternative to it.
Are Facebook and co. an adequate substitute for public space, downtown, the pedestrian area? You can discuss products excellently on the Internet, often even better than in the real world…
BUGGERT: It’s not that simple. Downtown shopping areas are full of young people, shopping there is an event. The Internet can’t replace this. They are two different shopping experiences that can be used alternatively, yet also complement one another to a large extent. For instance, when it comes to shopping processes where you consider for a long time. The shopping experience is prolonged due to the link between on- and offline, but also enhanced. Retailers should allude to this complementary relationship.
How do you view retail in the face of these challenges? Can retailers survive without sophisticated omnichannel concepts?
GRÜNEWALD: No, everyone agrees on this. In most industries, stores are becoming event forums where enthusiasm for brands is fueled. In the future, it will no longer be about goods transfer. Retailers are well advised to play the entire digital keyboard, all the way to digital goods procurement systems that customers can look at.
In many places, strengthening stationary trade is a proven way of defying the Internet. This ranges from enhancing inner cities by means of new architectural concepts to greater staging at the point of sale. Are these suitable approaches?
BUGGERT: I think they are. There is a longing for analog experiences. People want to escape the constant demands of the Internet sometimes. But then it has to be an event and an experience. Bigger cities have an advantage here because they offer more of an experiential character.
Should stores primarily be showrooms?
GRÜNEWALD: Showroom is an initial idea, but much too one-dimensional. Stores are becoming like modern circus tents, where customers are stimulated. That’s the philosophy that incited Hudson Bay to acquire a German department store chain. These stores will no longer function as warehouses based on the principle of “everything under one roof.” Instead, the question is: How can I create a multistory adventure course that attracts people?
Those who feel uncomfortable on the Internet imagine there will be a renaissance of the authentic in the near future. Since everything is becoming digital, they say, people will soon seek genuine, human, sensory experiences when shopping. Is this a justified hope or only a pipedream?
GRÜNEWALD: It is justified as a fact, but not as a hope. While this trend does exist, ironically it too is conveyed via the Internet. Consider a pioneering online area such as pornography. Today users are no longer satisfied with watching short films, but seek analog contacts. But that happens via the Internet too. If the authenticity that is longed for isn’t established digitally, it won’t be acknowledged at all.
In terms of mobile commerce: Is mobile shopping taking shopping to a new level?
BUGGERT: Our studies show that mobile shopping is growing enormously and increasingly taken for granted. Aside from the convenience aspect, people seem to enjoy dealing with shopping constantly and everywhere. The treadmill we spoke of at the beginning also serves the purpose of preventing people from coming to their senses and becoming aware of their fears. Shopping is an activity that distracts us from ourselves.
Due to rapid technological developments, 30-year-old digital natives no longer understand what 16-year-olds are doing on the Internet. How can we grasp young age groups’ use of the Internet?
BUGGERT: We have found that young customers have a completely different relationship to brands. They view them as their property, so to speak, design them themselves to a large extent, and demand interactivity. An example: A woman customer buys a T-shirt, takes a picture of it, and puts it on Instagram. The retailer gives the photo a “like” and posts that the customer looks good in it. There is a close connection between customer and retailer. Those who don’t do this won’t be able to attract young lifestyle customers any more.
GRÜNEWALD: We are also observing a shortening of time and space. The younger generation’s willingness to invest a lot of time in something is waning rapidly. The same is true regarding space. We speak of the World Wide Web, but the spatial radius is getting smaller and smaller. The Internet is a gigantic self-mirroring machine. Today people revolve only around their own interests, friends, and acquaintances. The big question will be: How can retailers enter these sealed-off, incestuous circles? They can only do so by applauding in the background and creating networks that are relevant.
Is the Internet a community of mental villagers?
BUGGERT: World events are becoming more and more complex. As a result, there is a need for simplicity and clarity. People look for this on the Internet by personalizing all content and thus privatizing it. This can provide opportunities to local retailers. Even small retailers can make a name for themselves on the Internet with scant resources.
It seems as though due to the Internet people reveal many of their own abilities unnecessarily and transfer them to the Net. A worrying development?
GRÜNEWALD: If I immerse myself in the Internet too much, that is of course problematic, but more a problem of personality than of technology. Things are different for companies that want to expand their online presence. The question arises as to whether they should to do this themselves or choose Amazon as a partner that will take over everything. In the latter case, there is the threat of a pact with the devil, which will enable the retailer to grow rapidly at first, but in the long run it will be devoured by the Amazon logarithm. Because Amazon will notice at some point that it’s a viable business model.
Better without Amazon?
GRÜNEWALD: If German retail is to survive in the long run, it will have to make itself independent of this.
In your book you recommend that the “exhausted society” dream more. Do closed eyes on the couch produce better ideas than Google research?
GRÜNEWALD: Creativity can only be generated if you treat yourself to dream time. The treadmill always turns in the same loop. But dreaming puts us in creative mode. We are not the land of bureaucrats and workaholics, but the land of poets, dreamers, and lateral thinkers. We can only be successful internationally if we are imaginative and develop new patents, and not by offering lower unit prices.
This Interview was printed in the Magazine "Handelsjournal" (Retail-Journal), August 2015, Germany