Status of digitalization in stationary retail using the example of Ku’damm & Tauentzienstraße

The digitalization of bricks-and-mortar retail is one of the most intensively discussed topics among retailers, real estate companies and municipalities to keep shopping streets attractive and competitive for customers. This promise is driven by the customer research projects referenced in a wide variety of studies, some of which are also referenced in this study, which confirm the relevance of the digitalization of bricks-and-mortar retail. However, it is noticeable that the level of digital maturity and status quo lags the intensity of discussion and known customer expectations. It can also be assumed that the level of digital maturity on less important shopping streets is even less pronounced than on Kurfürstendamm and Tauentzienstraße.

The online visibility of the stores and the brand and retail companies behind them is the most pronounced. Regarding the visibility of local product ranges and additional functionalities, this study has already identified major deficits. Most stores are currently not able to display local availability and thus appear in the funnel of online customers who are willing to buy or ultimately turn online searchers into visitors to their own store. This fundamentally ignores one of the most important paradigms shifts in digitalized retail, as customers are increasingly searching online first for the most important product and then for the best retailer to sell this product.

Electronics retailers are positive about the opportunities that a digital POS offers customers and sales staff. This is certainly also an inevitable reaction to the ever-improving online competition, particularly in terms of product information, comparison and advice, as well as the ease with which prices can be compared online. The low penetration of digital POS among fashion retailers is surprising. Here, digitalization has so far only taken place in the form of digital mood boards. Innovations such as smart mirrors, smart hangers or an AR/VR experience have not yet been offered, although they could be the basis for personalization and customer loyalty. In this respect, fashion retailers are also lagging cosmetics retailers, who can basically assume a similar customer loyalty potential as the fashion industry but are already tapping into this much more intensively. Another example of unaddressed customer expectations are the large department stores such as KaDeWe, where interactive navigation concepts, for example, are lacking.

In terms of customer loyalty, the focus is on classic loyalty card concepts, which may be combined with email-based customer communication, while innovative concepts were barely visible. Exceptions are sports brands such as Nike or Adidas, which use a variety of elements along the customer journey.

Although the reasons for the surprisingly low level of digitalization in brick-and-mortar retail were not investigated as part of this study, they are likely to be found in insufficiently clear customer expectations and business cases, infrastructural hurdles or roll-out complexities. It remains to be seen what impact the current discrepancy between the intensity of discussion and the degree of maturity will have on the medium to long-term competitiveness of the respective bricks-and-mortar retail sector.