On the future of inner cities: what digitization can achieve
Stationary retail has increasingly struggled in recent years: a shift towards e-commerce has resulted in fewer visitors and falling sales. This development reached its sad climax in the Corona lockdown. But not only since then have the voices calling for digitization to save retail become louder and louder. What future does stationary retail have? What potential does digitization hold? What kind of stores do customers want to see in inner cities?
Eva Gancarz, an expert in digitization in retail and experienced in projects with stationary retail and cities, gives her assessment in an interview.
How important is retail today in city centers? Does it still have a right to exist or has it outlived itself?
One thing is clear: the face of cities in Germany is changing. The triggers for this are new trends in customer shopping behavior, demographic change and booming online trade. However, retail is still important today. In addition to the place of residence and the place of work, it sees itself as a third place. With an attractive cultural offer, a modern infrastructure and an attractive inner city design, retail can become a place of experience again.
Even today, it still makes a fundamental contribution to vital inner cities and their preservation - although online trade is causing a shift in consumers towards the Internet. Without retail, visitors would no longer have a reason to come downtown. Retail is an important part of the branch mix, alongside gastronomy, doctors, the public library, work and living. Retail that is well integrated into the city structure also attracts shopping tourists, including those from outside Europe. As a visitor magnet, restaurateurs, hotels and cultural establishments also benefit from lively retail trade.
Not to be forgotten: The retail trade is the most important taxpayer in cities and communities, and finances the infrastructure through trade tax. It is the largest employer and third-largest economic sector in Germany.
What alternative scenarios are there to the typical pedestrian zones? What should “new inner cities” look like?
What is important is an interesting mix of branches, a variety of shops and attractions and events that live the regionality. Unfortunately, the number of branches in our cities is responsible for the fact that individuality has been lost and owner-managed shops have been driven out. Much is 0815 these days and that will no longer work in the future. We need new concepts, quarters with character!
Vacant shops have to be converted, for example as pick-up stations, co-working spaces or for creative projects at short notice. Working, living, culture and shopping must mix more. A possible approach would be to shorten shopping streets or make the city center car-free. Nevertheless, it must be easily accessible, for example through the expansion of park-and-ride offers, modern parking guidance systems, the expansion of public transport and a bicycle-friendly infrastructure. In addition, modernization of the facades is necessary in many places. Greening of the inner cities, cleanliness, coordinated Christmas lights and floral decorations also make the stay in the city center more beautiful. There should also be free Wi-Fi in the central city area, after all, people nowadays want to be able to use their smartphone conveniently anywhere.
The history of a city is also an added value - let's let people experience it via virtual reality. We have to show consumers that a visit to the city center is worthwhile and enjoyable. In short: we need places of experience.
What role does digitization play in this? And what do consumers want?
A recent study report by the industry association Bitkom underscores once again how important it is for local businesses to become more professional when it comes to digitization. The July 2020 report considers the impact of the pandemic on purchasing behavior. 66 percent of the consumers surveyed stated that they wanted to continue shopping locally – “remaining loyal” to the retailer – provided that the retailer has an online presence in the region.
The first step to success is that retailers and restaurateurs can actually be found in the inner cities - and digital visibility is essential for this today. Take a look at your own search behavior. The smartphone is always ready to hand and thanks to Google and Google Maps, questions can be answered quickly.
It is important that inner city actors address their consumers directly so that they have a reason for visiting the city centre. To do this, stationary retail must get to know its customers better and catch up with online trade. A lot of customer data is usually known there and newsletters, campaigns and discounts can be played out in a targeted and personalized manner. This must also work stationary in the future.
And the consumers themselves must also be brought on board, for example through public participation or in the implementation of local online marketplaces and customer loyalty programs. Because otherwise we will experience the chicken-and-egg problem: where there is no retailer, there are no customers and vice versa.
What other solutions make sense for digitizing the business? What are basics?
Google My Business is a mandatory requirement for any business. As Katharina Birkholz of Online Solutions Group stated, “People who use their smartphone or tablet to find a service are 57% more likely to visit the store, make 40% more calls, and 51% more likely to make an appointment make a purchase.”
Retailers should also use business directory entries such as Yellow Pages or Trip Advisor and other local citations. With your own website, the visibility should be increased through search engine optimization. When building a social media presence, quality comes before quantity - so it should be carefully considered how and with what content I appear. Advertisements in social media or Google Ads can be useful to address a larger group of customers.
In addition, local online marketplaces and local customer loyalty programs, perhaps even under the umbrella of a smart city, should be given high priority as community projects. A nice example of a local online marketplace can be found in Luxembourg. On letzshop.lu, local traders can present their offers online and become digitally visible. During the lockdown, it was even possible to establish emergency care for risk groups.
Which actors do you see as having a duty to digitize retail?
First of all, retailers have to take action themselves. But business development agencies, advertising groups and chambers of commerce also have a responsibility. Every location should have a "caretaker" who centrally drives the path of retail to digitization and has an eye on the big picture. This also includes vacancy management, city festivals or Christmas campaigns. Access to an IT infrastructure must be made easier for local shops in order to map e-commerce functions for local sales. This is a cost-effective alternative to company-owned online shops, which involve additional expenses such as search engine optimization, and an opportunity to increase frequency in city centers.
What is wrong with the implementation?
The reasons are varied. New concepts often fail due to a lack of awareness of the problem. Some dealers are unmotivated, others lack time or human resources. The willingness to cooperate and the communication between the stakeholders sometimes leaves a lot to be desired. However, it is important that they work together and coordinate their work to make the entire inner city retail offering more attractive and also to make it successfully accessible online.
Inner cities must distinguish themselves more, it is about a multifunctional offer, quality of stay, ambience and flair. So far, there has been no “carer” who drives, coordinates and strengthens city management and marketing. I also see it as a major challenge that there are not enough change managers in our cities who sensitize local traders and train them in digital know-how.
Eva Gancarz has a degree in business development and has been dealing with the topic of digitization in retail for over ten years. She has been working as a consultant and project manager at cima.digital since 2019. There she works together with cities, municipalities and stationary retailers on sustainable solutions.