How do you shop these days?
Do you go to the store and try to find the item first – say, a pair of shoes or a new mobile phone – and inspect it closely? Do you chat with a shop assistant and ask for more information about the product? Do you later go online to read the reviews to find out what others are saying about it? How much weight do you put into the information you find on the web? Do you ask your friends or family for their opinion? When you are finally ready to make a purchase, do you return to the shop? Or will you try to locate the item on the Internet from your computer and order it from home?
These are fascinating questions that marketers and retailers in Germany and certainly elsewhere, too, are asking themselves in a bid to understand today’s consumer better. The newly released German Digitalization Consumer Report 2014 - written by Jonas vor dem Esche and Prof. Thorsten Hennig-Thurau from the Digitalization Think:Lab at the University of Muenster and published by Prof. Björn Bloching, Ralf Kiene, and this author from Roland Berger Strategy Consultants – seeks to answer these and more.
What we have found out is that digitalization is changing the way Germans make their purchasing decisions inasmuch as it is changing the way they shop.
Digital Information Affects Decisions
Nineteen industries were closely studied in this report, which is based on the findings of a representative survey of 2,493 participants, all of whom were Internet users in Germany. Here are some of the eye-opening findings about today’s German consumer:
- The Consumer Report found that 41% of all information relevant to purchase decisions came from digital sources, such as the Internet, mobile devices, digital television, digital newspapers, digital radio, telephone, etc.
- Digital information was most important for choosing retailers (44%) and services (43%), and only slightly less important for product purchases (39%).
- Digital sources had the most influence over German consumers’ decisions in travel, entertainment electronics and public utility services. For these three industries, the share of digitally-sourced information was over 60% of all purchase-relevant information.
- Meanwhile, digital sources figured less in information about groceries (14%) and services from small or local businesses (19%).
- Going online to research, read reviews and compare prices is developing into a habit among would-be shoppers, as 25% of all decision-relevant shopping information is obtained through the Internet and social media.
- 28% of German consumers considered shopping information from online sources “Important” or “Very Important”.
The Consumer Report distinguishes between two types of information: digital and online. Digital information includes all types of digital sources, which are not necessarily related to the Internet. This may include digital television, digital cinemas, digital newspapers and magazines, which many can access through smartphones, computers, tablet devices and other means; digital phones, and digital sources, such as digital billboards and vending machines, among others. Meanwhile, online information refers to the Internet and social media.
Online, Offline – and Both
Another fascinating finding from the Consumer Report is about the three primary sources of information that German consumers use to make their purchasing decisions, all of which are equally influential. These sources are:
- Stationary information “on site”, namely point-of-sale information and personal salesmanship;
- Online information collected on Internet sites or social media networks; and
- “Offline” recommendations from family and friends
The Consumer Report also revealed that 59% of consumers rely on both online and offline information when they make purchasing decisions, while 51% do their research online prior to visiting a store and making an actual purchase.
The industries that are particularly affected by this combination are automotive, communications services, public utilities and entertainment electronics. For all four industries, more than 60% of consumers first visit a store and then do further research online. For consumers of recreational services, banking and insurance, travel, home appliances, sporting goods and leisure wear, and furniture and home decoration industries it is more than 50%.
I believe that here lies the challenge for German retailers. Many tend to have strengths in either offline or online retailing, but only a small number have demonstrated they can manage both equally well. The lines between online and offline shopping are blurring and those forward-thinking retailers who realize this stand to benefit the most.
What these figures suggest to German retailers is that an effective retail strategy should consist of a well-designed, convenient and coherent interplay between online and offline environments. This should guide business owners and managers in deciding in which channel to invest their resources, which one needs to catch up with the other. Web assets should be used to drive consumers into stores, while the in-store experience should blend with online offerings seamlessly.
Digital technology and the Internet have changed shoppers’ expectations completely. As they grow more confident and empowered by information, consumers are looking for harmonized offline and online interaction. It has become a factor for loyalty among consumers at a time of fierce retail competition – and a clear indication that the brands and shops that they support know how to give them what they want.
Download the German Digitalization Consumer Report 2014 here.
by Egbert Wege