Interview • 05.10.2011

Piggy-backing on customer service from brick-and mortar stores was around even before online shops came around

Interview with university professor Dr. Hendrik Schröder, Marketing & Retailing Chair at the University of Duisburg-Essen, Germany

© Hendrik Schröder
© Hendrik Schröder

Category management is an essential field of research for Professor Hendrik Schröder. Since 1996, he holds a Chair at the University of Duisburg-Essen. He does not think much of trendy terms such as omni-channel marketing. Customers have always wanted to be served through all possible respective channels. They have always looked for good consulting service and then still bought the product where it was the cheapest. And social networks are also nothing new: recommendations of friends were also important before Twitter and Facebook came along. What’s changed is the technology, and here retailers have to keep up with changing trends, says Schröder in our EuroCIS interview.

The latest demand is called omni-channel marketing: serving customers through all channels. What do you think about that?

In the more recent past, time and again new terms have popped up to describe the phenomenon of a vendor offering his goods and services through several channels. There is for instance talk about multiple channel marketing, multi-channel marketing and cross-channel marketing. It is not important what something is called, but rather what the content is. Too many terms that mean the same thing are just irritating. That’s why a term like omni-channel marketing does not make me happy.

How do you calculate ROI when new channels are introduced? After all it is hard to say who would have drifted away without the new measure.

The desire to predict the success of a channel is easy to understand. For that matter it is difficult to anticipate to what extent new customers can be acquired and to what extent customer churn can be avoided when a new channel is being introduced. However, the more competitors choose to offer their goods and services through several channels, the more you will be forced to follow this trend. Incidentally, you should reflect some time on not measuring the success of channels, but rather the success of customers and customer groups, respectively.

Nobody talks about second life anymore; everybody wants Facebook, Twitter and YouTube. Why is social media not a new, brief hype, but really a big change?

Second life and social media are two completely different areas and can thus not be compared to each other. The desire to find new acquaintances and friends, to compare notes with each other, get their advice or give them suggestions has always been around. Today this version of maintaining relationships just happens electronically. Each participant of such a network will gain experiences and find out what acquaintance or friend they can trust and what acquaintances or friends are useful to him/her. Networks will develop accordingly where the number of participants and the intensity of the relationship are concerned.

Online activities are better not done halfheartedly by retailers. How do you calculate manpower requirements?

If you want to launch an online shop or “just“ want to do online communication, the person is faced with the question as to how much he wants to do this on his own or assign it to third parties. The already mentioned manpower requirements exist in a quantitative and qualitative respect. By taking on online activities, the retailer is faced with new jobs. These jobs need to be identified at first. The next step is to decide how extensively the individual activities are meant to be carried out. You can calculate man hours based on the quantity structure and timeframe. If the current associates have the corresponding skills available and have the time, they can be appointed to the new tasks. As a general rule you would be well advised to hire specialists.

Is outsourcing an alternative? There are partners for almost everything, from shop administration to logistics – particularly the time-consuming returns – all the way to online agencies.

That’s a classic question of business studies: make or buy. The pros of outsourcing generally are higher specialization and higher flexibility as far as changes in staff capacity are concerned. However, outsourcing generally also goes along with higher control costs and higher dependency. That’s why every retailer needs to decide for themselves which solution is best for them. My advice is: systematically take a look at the influencing factors to reach a decision.

Rewe, Marktkauf, Netto – many retailers are getting hacked. Are retailers not investing enough in Internet security?

I am not able to evaluate this, since I don’t know the safety systems. And I also don’t know the way that was used to gain access to the data.

Keyword food retailing: Due to the complex freshness logistics, online shops are having some difficulties in this area. What trend do you see?

First it is about having a good grasp on logistics processes for freshness. Local food retailers can build up the capacities for this on their own, or join forces with partners from online retail to build a strategic alliance, just like tegut has done with What’s crucial is probably whether the retailers are able to deliver fresh produce to the customer at the point in time they expect, and whether this is possible with reasonable costs and fees, respectively.

I see fewer technical problems for the delivery but rather issues as far as place of delivery and delivery times are concerned. Customer wishes are potentially so multifaceted that they cannot be realized based on cost-effectiveness considerations. The costs for this would be too high, so that a trip to the local store would be more worthwhile for many customers. But perhaps specialists might also emerge for the online sale of fresh produce. Conceivable for instance, is for a logistics specialist to work for different retailers. The end customers order the product at their retailer and the logistics service provider picks it up and delivers them to the end customers.

How can specialized trade fight against the piggy-backing on customer service from brick and mortar stores? Customers take advantage of the consulting service at the store and then turn around and buy the product cheaper online.

This kind of piggy-backing or theft if you will is an ancient topic in retailing, which has been around long before the introduction of online shops. Freeloading or piggy-backing emerged when new retail formats that relinquished all or most of the consulting services, were developed. Just like at that time customers started to look for advice in the specialty stores and then purchased the items at the discount store, today they do the same thing by including the online shops. This is a completely normal process in a functioning competitive environment. Every customer should consider though whether the advantage of buying at the online shop is really greater for them than purchasing the product at the local specialized retailer. There are a number of good reasons to buy at a specialized traditional retailer. They are undoubtedly on the one hand in the consulting service before the purchase, but in addition they are also in the post purchase phase. Just think about questions in the handling of products, exchanges and customer complaints. On the other hand you must not ignore the fact that online shops in part have extensive consulting services in text, photo and sound. Those who concern themselves with this in more detail, come to realize that the consulting services of an online shop definitely can be at a very advanced level.

Even though they could benefit from delivery services, many senior citizens are still not online. Is E-commerce not attractive to the aging society?

The aging society is getting younger and younger. This pertains to the 70-, 80- and 90-year olds of today in comparison with the corresponding age groups from several decades ago, and above all it concerns those who will have reached this age in 10 or 20 years. I think the debate on whether E-commerce is not suited for older people is redundant. Just like there are many young people today who love to go to the local brick-and-mortar retail store, by now there are many senior citizens who have looked for and found access to the Internet and feel comfortable there. Every time has its innovations. Some soon sink into oblivion and some will be long lasting. People will adapt to it.

As an E-commerce researcher are you also an eShopper in your private life? What do you order online and what will you continue to buy at a store in the future?

Yes, in many areas I use the opportunity to get informed online and also to purchase in online shops. At the same time it is important to me for certain products to have a good retailer on location, who serves me well before and after a purchase.

Interview by René Schellbach

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