In early February, the Finnish retail trade company Kesko announced that it will boost its cost-saving measures and close down one third of its Anttila department stores. The most significant reason for this was stated to be the increase in online shopping, as well as increased competition. To compensate for the closing down of its department stores, Kesko will expand the selection of products available in its online stores.
Another Finnish retailer, Stockmann, announced that it will centralize its warehouses in a new distribution center primarily to support the growth of its online store. What comes across from all this is that online stores are seen as an evil bugbear and people feel that there is nothing else to be done but grab the creature by the hair and take it for a waltz.
Since I work in a team of specialists in the field of eCommerce, I should probably welcome this as good news. But the joy would be short-lived.
You would only fool yourself by thinking that we could beat the global online store giants at their own game with local resources and local market volumes. The bubbles in your glass would quickly go flat while waiting for the Zalandos and Amazons of this world to run out of finances for their massive advertising campaigns or free deliveries and returns.
What do we have, then, that the Zalandos don’t?
We have what’s here and near. Brick-and-mortar stores and their loyal customers. You should never give them up. You should be able to tap into their potential much more effectively in the new market situation. We have the home advantage. Let’s not give it away but act smarter instead.
In my opinion, you shouldn’t close down every third Anttila department store – even if it may be that in terms of brand and product selection Anttila has reached the stage where it might benefit from rebranding. In any case, you shouldn’t leave the customers on their own, trusting that they will make the right decisions online.
In my opinion, you shouldn’t centralize warehouses for online store purposes, either. It might be a sensible move if you want to achieve cost savings, but in order to really make it in the eCommerce sector you should know how to operate in a decentralized environment.
The department store of tomorrow doesn’t need to be a stories high horn of plenty, but it should fit inside the walls of a regular-sized store. It should display a wide range of products and yet maintain a minimal stock – just big enough so that the customer can get a feel of the products or try them on.
Popular campaign products that are bound to sell may be made immediately available to the customer from the shelf of the brick-and-mortar store, but the majority of products should be delivered to the customer’s home address after the purchase. This way the rate of product returns will also remain lower than with the global online competitors, as the customer has had the opportunity to see and experience the product before making the purchase.
When the closing down of Anttila department stores hit the news in February, two elderly ladies interviewed for television lamented that once the department stores close their doors, they will have nowhere to shop. They didn’t have a computer and hence no internet access. And they didn’t have the urge to learn about them, either.
If you ask me, the user interface of an online store should be the good old brick-and-mortar store. The customers don’t need to know that they are ordering the products online. What they want is high-quality products and high-quality service. The rest is about domestic retail expertise that helps turning the bugbear into your closest friend.