Even the giants in retail hit digitization with full force. For example H&M: The Swedish fashion group not only overslept fashion trends, but simply missed out on developing a viable online strategy. At the beginning of 2018, sales slumped, although new stores were constantly opening. Only then did H&M launch an online offensive. In a hurry. Chances of success: uncertain.
The H&M case shows that traditional retail with stationary stores no longer comes up against online retail. The industry association HDE estimates that the number of store locations has decreased by 11,000 to 450,000 in the past five years. While total retail sales in this period rose by around ten percent after adjustment for prices.
Gerrit Heinemann, trade and e-commerce expert from the Niederrhein University of Applied Sciences, is becoming increasingly clear. 2019 should be an extremely difficult year for small companies. "Except for Zalando & Co., German companies are treading water on the spot," he says. "Most of them will get down to business next year."
As early as 2017, Amazon, including its marketplace, accounted for 46 percent of online sales in Germany. In 2018, the US group should have expanded its share. It should continue to rise in 2019.
"The dealers are driving customers into the arms of Amazon with bad online shops," says industry expert Heinemann. "You have to invest heavily in online trading and not try to transform customers." Some retailers want to use high shipping costs to get customers to pick up their goods in the store themselves (Click & Collect). Amazon & Co. often do not charge any shipping costs.
Heinemann sees "customer orientation as in the 1950s". When it comes to service, Amazon is the yardstick by which German retailers have to measure themselves. "Step one must be an excellent online shop." To rely on advice in the shops is overestimated. "Customers inform themselves online and want a large selection." Heinemann advises that companies should tap potential with the help of customer data.
The trade association HDE expects the gap between large and small companies to widen further among the 300,000 retailers. "The retail sector is developing into a technology sector," says HDE managing director Kai Falk. "Small traders often cannot afford the necessary investments."
Ultimately, the overpowering giants Amazon and Ebay could be the salvation for local traders. Because small shops cannot afford to set up and maintain their own online shop, they are increasingly using the marketplaces of the large platforms instead. This brings sales growth to local dealers, but at the same time allows Amazon and Co. to continue growing.
With the large platforms, local retailers are exposed to international competition. But this also requires fair competitive conditions, the HDE demands. Politicians have to relieve traders of trade tax and quickly close the tax gaps on platforms such as Amazon and Ebay.
After all, from next year on, online platforms will be liable for the evasion of sales taxes by their marketplace traders from third countries. And the regulatory authorities are paying closer attention to fair competition: after numerous complaints, the Bundeskartellamt is investigating whether Amazon is misusing its market power against retailers.
The HDE demands that the platforms still have to be made responsible for consumer standards. Products that violate European regulations are offered in large quantities via Amazon.
In addition to digitalization, retailers could hit a completely different topic in the coming year: diesel driving bans. The HDE is afraid that even fewer customers will go to the cities, but buy online. It is high time for retailers to finally face digitization.