The Intersport store in Berlin’s Alexanderplatz shopping district is eight hours’ drive from the Alps. But by donning a virtual reality headset in the store, customers can schussboom down a black diamond ski slope, steer a kayak through whitewater rapids or chill out by an Alpine campfire.
The shop’s computer-augmented reality may hold the key to the future of retailing in Germany, which like malls in the US and elsewhere in Europe, is plagued by the migration of shoppers to online websites like Amazon and its German copycat, Zalando. The grim result is that some 50,000 stores in Germany are now expected to be shuttered by 2020.
“Over the next 10 years, we will see a change in retail greater than in the past four decades,” said Moritz Hagenmüller, a retail expert at consultants Accenture Strategy. “The entire retail business is being transformed by computer technology and fundamentally changing the sector’s business models.”
We must find a way to attract young people. Kim Roether, Intersport CEO
Most retailers recognize the crisis that confronts them and are scrambling to adopt new strategies to regain lost shoppers. One way is to upgrade their offerings in stores, much like Intersport is doing for its customers.
A display of what is already technically possible has been established at a so-called Experience Store, which has been unveiled on a shopping boulevard in Düsseldorf. Created by industry consultants Tailorit, the store’s window displays are interactive, allowing passersby to select clothes from a carousel at the push of a button. Pushing another button allows a T-shirt in the background to slide closer into view.
Once inside the Experience store, customers are handed special computer glasses which can magically change the color of a shoe held in the hand. A tablet computer scans RFID tags on clothing and provides size and color details, while a robot equipped with artificial intelligence makes product suggestions based on a customer’s response to a series of questions.
Accenture sees these kinds of experiments as the future. An annual report by the consulting firm about retail practices, done in cooperation with the World Economic Forum in Switzerland, carries a warning for shopowners. “The key drivers of success over the next decade will be centered on building a deep understanding of and connection to the empowered consumer,” Accenture said in the study. “With this transformation, there will also be challenges to solve by pro-actively readying organizations for change and implementing the required technologies to address issues related to store closures, employment (job loss/reskilling) and potential adverse environmental impacts."
But Germany faces a particular problem in adopting the proposed retail innovations, because many people in the country are reluctant to share personal data with strangers, especially big corporations. Whereas the French supermarket chain Carrefour has had a great success with a smartphone app that sends customers offers when their phone detects a beacon from a Carrefour store nearby, Germans are reluctant to give away such information.
According to an unpublished Accenture poll, only 26 percent of German consumers are willing to divulge personal information, compared with 36 percent globally. While 28 percent of global consumers think innovations like Carrefour’s beacons are a good thing, in Germany just 12 percent like the idea. And only 11 percent of Germans are willing to subscribe to services that automatically reorder frequently used items.
That leaves German stores with a dilemma: “We don’t want to scare away customers,” said Intersport CEO Kim Roether. “But we must find a way to attract young people.”
Florian Kolf leads a team of correspondents who cover the retail and consumer sectors for Handelsblatt and Georg Weishaupt covers the newest developments in the construction, solar and wind energy industries. Charles Wallace, an editor for Handelsblatt Global in New York, adapted this article into English. To contact the authors: [email protected] and [email protected].