Communication and sales promotion 2.0 – stationary retailers sit back and watch

Traditional retailers miss opportunities which good online communication and online sales promotions provides. Online retailers leverage this space for their own growth. Already small differences in the details can have an appreciable impact.

The evolution of online food draws an interesting picture. Emerging online retailers, often Internet pure-players (IPP), typically offer a very selective assortment like tea and coffee or muesli. They conquer a specific market segment, establish themselves and expand their range of products. Of course they show recognizable strengths in their execution of online communication and online sales promotions. At the same time they successively enhance their logistic as the business growths. Meanwhile traditional retailers work on closing gaps in the assortment, increase online-investments and start integrating their different sales and communication channels.

Stationary food retailers retain price leadership in food retailing

Traditional German food retailers still continue to lead the price competition in our observation. Their challenge is to transfer their efficient merchandize management and logistic processes into the online world, where they inevitably have to offer more services and still want to make profit. Store processes, that have been transferred onto the customer since decades, have to be done by the retailer again, like the physical picking of items during the shopping process. By introducing self-service supermarkets back in the 1960's, this was no longer done by the merchant behind the counter, but by the customer himself via pushing his shopping cart through the store. The gain in efficiency was for instance reflected in lower prices. But online retailing means to add services like picking and packing or a comfortable home delivery. Especially customer oriented fulfilment services became an important competitive advantage during last years. As it is very hard to charge extra fees for additional services in the German grocery market, retailers need to scale this business and find new approaches for making it viable. Established retailers will find ways to handle such challenges.

Make better use of online options for communication and sales promotion

However, we often notice that traditional food retailers neglect their online communication and sales promotion in the course of the effort described above. For example, a young online retailer advertises a key value item,  JACOBS Krönung 500g, for 6,59 EUR using Google. At the same time, a stationary retailer runs a price promotion for the same item at 4,29 EUR - a difference of 2,30 EUR or 35 percent. As the Google search result does not bring up this promotion, the potential customer will not be informed about this offer and probably shop the coffee for 6,59 EUR.

Example: JACOBS Krönung 500g - price advantage and customer approach

In this example, the stationary retailer could render his promotion interpretable for search engines by utilizing the shared markup vocabulary (http://schema.org). He could explicitly bring up the promotion price, product availability and customer feedback. The algorithms of popular search engines reward and typically use such kind of information when preparing search results.

Approach customers online at the right time and stage in their buying process

The retailer gains a digital version of the popular weekly hand-out without having to place a Google ad. The customer is already targeted during his Google search, long before visiting the online shop when the buying decision was already made. Additionally, a consumer will hardly buy the coffee online for 6,59 EUR if he only has to spend 4,29 EUR during the next shopping trip in the store or online. The retailer can add such kind of online activities as added value to the regular dialogs and negotiations with his suppliers.

Reliable master data is the basis

There are many ways to be more present online and expand the business. The basis for us is reliable master data. We love to help you to properly set up your master data and leverage business value.