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Study reveals need for action

How well are online and in-store businesses linked in the German fashion industry? How smoothly do omnichannel models like click & collect work? And how satisfactory is this for consumers? These questions were addressed by the Cologne-based company fulfillmenttools as part of its study "Click & Collect in the German Fashion Industry".

For the study, around 80 of the largest fashion retailers in Germany were examined in the first and second quarters of 2022. Of these, 22 companies in the sample offered Click & Collect as part of their service portfolio and could be analyzed in detail as part of test purchases. The mystery shoppers focused on how Click & Collect orders are processed via the retailers' online stores, the shopping experience when picking up the merchandise at the stores, and the handling of the returns process. The result: there is a clear need for optimization in all steps. According to the study, none of the retailers analyzed is currently in a position to offer its customers a consistent and convenient omnichannel experience.

In the fashion industry in particular, Click & Collect allows customers to benefit from on-site service and the convenience of online shopping. Immediate fitting, simple returns and no shipping costs are just a selection of the many advantages. Last but not least, the restrictions imposed in the wake of the Corona pandemic have accelerated the spread of Click & Collect in the retail sector. But how well does it work and how is it perceived by customers? "There is currently still a lack of data in operational practice that illustrates how well Click & Collect is implemented in reality from the customer's point of view. That's why we took a closer look at the status quo of Click & Collect models in the German fashion industry," says project manager Marleen Ratert.

In the study of around 80 of the largest fashion retailers in Germany, it was initially surprising that only 22 of the 80 (27%) retailers surveyed offer Click & Collect as an option for their customers in their service portfolio.

In analyzing and evaluating the companies that offer Click & Collect, the focus was on the entire journey of a customer order: ordering process, communication, pickup, returns processing and refunding.

According to the study's authors, a positive aspect is that the ordering process in the online store runs smoothly at most fashion retailers. However, customer communication before, during and after the click & collect order process was generally deficient. Missing order confirmations and non-existent information about delivery time and pick-up time were particularly negative.

he German fashion retailers performed worst in the area of the collection process. In particular, long delivery times, a lack of service points at the point of sale, and forms that have to be filled out by hand are the main reasons for dissatisfaction with the pickup process. In the area of returns processing, it was primarily the lack of digitization of the process that stood out: A large proportion still work with manual forms. However, the majority of fashion retailers in Germany have no problems processing the payment afterwards.

Monolithic IT structures, different solutions for many operational areas, traditional processes, missing interfaces - the reasons for the problems with the quick and easy introduction of omnichannel processes are numerous on the part of the companies. The demands of customers, on the other hand, have risen rapidly in recent years.

The checklist for successful omnichannel retailers provides tips and tricks for optimizing online and offline business in a process- and customer-oriented manner:

SIMPLIFY ONLINE ORDERS

• Prominently feature Click & Collect as a service in the online store in order to draw customers' attention to it more quickly and fully exploit sales potentials
• Improve availability of Click & Collect products

CREATE SEAMLESS IN-STORE EXPERIENCES

• Install service points for picking up orders and clearly mark them as such to avoid waiting times at the checkout and provide customers with better orientation
• Make store staff aware of upselling and cross-selling opportunities to encourage additional purchases

OPTIMIZE PROCESSES

• Pick online orders in the store to significantly speed up delivery times and easily meet delivery promises
• Digitize handover and return processes to make store operations more efficient and reduce the workload on staff
• Regularly test omnichannel processes to identify gaps in communication and potential for optimization

IMPROVE SERVICE QUALITY

• Implement end-to-end communication throughout the process to keep customers informed about the status of their order at all times
• Offer various return options to best meet customer expectations

Modular software-as-a-service solutions for fulfillment processes are available to simplify complex processes for retailers, reduce the workload of employees and prevent errors in order picking. The entire study (in German) is available for download here.

Rogator / exeo investigate for the second time the purchasing behavior during the Corona crisis in Germany, Austria, Switzerland and Sweden ("OpinionTRAIN") and presented the results:

• Declining frequency of visits to discounters and more visits to hypermarkets
• Significant shift in consumer behavior: More spending on groceries
• Dynamic pricing is rejected by consumers
• Online retail: The crisis winner (especially among younger consumers)

Supermarkets and hypermarkets have benefited from the Corona crisis in multiple ways. Firstly, the spending on groceries by German households has risen significantly (more home office, less traveling, more time spent with family and on cooking). Secondly, in 2020, the sales market share of discounters fell by around 1 percentage point to 42.1%, while full-range retailers gained 1.5 percentage points (to 34.8% market share).

“With the continuously growing competition and the existing distribution struggles, it is not surprising if the news on the grocery trade increasingly contain the tenor price war again in the new year. The increase in VAT at the beginning of the year has speeded up the price competition”, says Johannes Hercher, CEO of Rogator AG and co-author of the OpinionTRAIN study

An overview of the results:

Declining frequency of visits to discounters and more visits to hypermarkets
While shopping in all four countries surveyed most frequently took place in supermarkets in the past 2 months (Visits in the past 2 months: Germany 81%, Austria 86%, Switzerland 79%, and Sweden 79%), Germany has the highest percentage of respondents (71%), compared to other countries, who purchased groceries at discounters. Against all expectations, the leading discounters such as Aldi and Lidl have performed relatively worse than the full-range retailers during the Corona crisis. Compared to the first data collection (Apr./May2020), the share of consumers with purchases in discounters in Germany decreased from 74% to currently 71%, the share of shoppers in supermarkets remained unchanged (81%), and the consumer rate for hypermarkets (e.g. Real, Kaufland) increased significantly (from 34% to 44%). While especially older consumers are staying more loyal to the discounter, the consumer rate in the <30 age group is particularly low at 53%. Instead, online grocery shopping shows a high relevance among younger consumers. Almost one in three respondents said, that they had ordered groceries online in the past 2 months.

Significant shift in consumer behavior: More spending on groceries
The crisis situation is leading to massive changes in purchasing behavior. In almost all types of grocery shops, the frequency of visits has decreased, except for online shopping and organic food stores. The reaction patterns of the consumers are becoming increasingly entrenched. As already observed in Apr./May 2020, consumers are going less frequently to grocery stores, but are purchasing more items per visit. In many cases, the discounters do not meet the consumers' need for complete purchases. This is bitter in many respects. In Germany, for example, around a quarter of respondents say, that their spending on food increased during the Corona crisis (5 % are assuming a decrease), while this is the exact opposite (8% increase and 21% decrease in expenses) for clothing (textile, without sports). These figures reflect a massive shift in consumption. This is an indicator that Corona has also changed the statistical market basket. For 2020, the inflation rate for groceries is reported at 2.4%. In this case, most of the change in spending habits can be explained by a quantity effect.

Dynamic pricing is rejected by consumers
Since price flexibility is being discussed in retail as the new "silver bullet to increase margins," the OpinionTRAIN study took a closer look at consumers' views on dynamic pricing ("when demand goes up, the price goes up; when demand goes down, the price goes down"). Results: The consumers' enthusiasm for dynamic pricing in retailing is rather limited. This is not a German phenomenon. In all four countries, the rejection of dynamic pricing is greater than the approval. For retail companies, the "total rejection" segment presents a major threat in particular. This group includes about one-third of consumers and rejects flexible pricing in all 20 product categories presented. Many consumers clearly long for continuity, especially in times of significant changes in terms of retail prices. Although consumers who have already had experience of dynamic pricing (prices can change every hour) in online retailing are more relaxed about the issue, the implementation of dynamic pricing nevertheless involves a significant risk of damage to the customer relationship and a lasting loss of trust.

Online retail: The crisis winner (especially among younger consumers)
The reinforcement of online sales observed in recent years is receiving a new boost due to Corona. The shift in purchasing in favor of online retailing is evident in all four countries, with the strongest showing in Sweden. Here, 40% of consumers say that they ordered more online during the Corona crisis (8% less). Similar results, slightly more moderate, are also seen in Germany (29% more, 9% less ordered online). The demand shift in favor of online purchasing is particularly strong among younger consumers under the age of 30, while it is relatively weak among the age group of 60+.

“It is becoming increasingly apparent, that Corona will also have a medium-term impact on demand behavior. For instance, consumer preferences also seem to diverge more along age segments: On the one hand, the younger consumers are directing towards omnichannel shopping, where even fluctuating prices are not a major problem. And on the other hand, the older consumers prefer in-store shopping and have a strong desire for stable and reliable prices”, summarizes Prof. Dr. Andreas Krämer, CEO of exeo Strategic Consulting AG and professor at the University of Applied Sciences in Iserlohn as co-author of the OpinionTRAIN study.