A silent revolution right on the shop's doorstep
Smartphones play the leading role
Shopping behaviour in the Netherlands has changed over the past few years. Smartphones are becoming more important to consumers than window displays on the high street. This means that shop owners have to think about retail in a whole new way. Rabobank supports this innovation.
There are more than 100,000 physical stores in the Netherlands — shops with a real front door that you can walk through. Many of these shops have seen a decrease in turnover and profitability in recent years. There has also been a decrease in the number of shops and this is clearly visible in shopping areas. The national vacancy rate is 7% and as much as twice that percentage in some places. In the meantime, the number of online stores has grown to several tens of thousands. Nevertheless, 90% of consumer spending continues to take place in physical shops.
A major change in consumer behaviour means that shops are fulfilling a different role than say 10 or 20 years ago, and that requires a completely new approach. The retail sector will never go back to how it was before the crisis of the past few years. Alexander Heijkamp is well aware of this. He is sector manager retail at Rabobank in the Netherlands, where more than half of all Dutch shop owners do their banking. These are food and non-food shops; retailers who own their own property and business premises owned by real estate companies.
When it comes to where and how they choose to do their shopping, Dutch people have developed into what Heijkamp calls the ‘hybrid consumer’. One moment, the consumer consciously shops in the low-price segment, while the next – or for certain types of products – they seek out high-quality vendors. This all happens at the expense of the stores in the middle segment.
Consumers go through a different purchase process
The rise of internet technology and the smartphone has meant that consumers now go through a different purchasing process than they used to. A growing number of consumers no longer want to be restricted to regular opening hours or shops that have a real front door. ‘Purchasing decisions increasingly take place at around 21:00, by consumers at home with a tablet or smartphone on their lap. And people want to make those purchases right away. They do not have the patience to visit another shop for more information’, says Heijkamp. ‘The retailers’ response is offering combinations of part-online and part-physical shopping.’
'In their choice of shop, the Dutch consumer has developed into a ‘hybrid consumer’.'
The smartphone plays a key role in this new consumer behaviour. For visitors to a physical shop or a shopping area, the smartphone is more important than the shop's signs and window displays. The smartphone tells them exactly what is to be found behind each door, how much things cost and what the atmosphere and the customer service is like in any particular shop. Once the customer has crossed the threshold, the smartphone can help the retailer recognise the customer and direct their attention to interesting products in a targeted way. Not every consumer or retailer is taking this approach yet. However, this is a vision of the future which, more and more, is becoming a reality, even if clients have to indicate that they wish to be approached in such a way. And thus, a silent revolution is taking place right on the shop's doorstep.
New methods of attracting customers
‘There's a schism between the retailers and shopping areas that have responded to these changes and those that claim that all we've been dealing with over the past few years is a dip that's lasted a bit longer than usual’, says Alexander Heijkamp. ‘Retailers really do need to change their approach. The retailer who can most quickly learn from his environment and his clients and innovate based on that, will be the one with the best chance of survival.’
‘The retailer who can most quickly learn from his environment and his clients and innovate based on that, will be the one with the best chance of survival.’
Rabobank is supporting shop owners in exploring new ways to attract customers, as well as new payment methods. Take, for example, the use of the smartphone. The MyOrder app, which allows customers to order products, pay and make savings, has been developed for this purpose. Consumers can take advantage of special promotions, with the app bringing together reduced parking fees, a free cappuccino in the shopping area and store discounts. Rabobank is also hard at work developing other forms of contactless payment. Shop owners who have an online store can use Rabo OmniRegister as a ‘one-stop’ platform for all transactions, supporting a wide range of national and international payment methods.
The new high street
To help make shopping areas more attractive again, 25 local Rabobanks launched a project entitled ‘The new high street’ in late 2014. Local Rabobanks liaise with local businesses, business associations, property owners and government authorities as part of this. Heijkamp: ‘The goal is to bring insights and schemes that exist at the local level together into one joint action plan, including a description of the problem, the end goal on the horizon and a step-by-step plan for getting there with quick wins along the way. Examples of the sort of measures that could be implemented are free parking for the first two hours, clear walking routes with signposting, retailers working together as in a department store, and in some cases, possibly even the appointment of a city-centre manager.’
Urban reparcelling to reshape shopping areas
In addition to concrete improvements in the short term, ‘The new high street’ is also about working on more complicated issues that will take a lot more time. Take for example vacancy, as a result of a shopping area that is not functioning well. This has to do with the attractiveness and profitability of shops, but also with the square footage of shopping areas. A more compact shopping area results in lower vacancy rates, but that does require that stores situated on the outskirts are able to move into the centre and that new uses are found for the periphery. This type of ‘clustering, repurposing and reparcelling’ requires the involvement of both property owners and government agencies.
Cooperation between all the parties involved is essential. ‘That can be tricky, especially as everyone's individual interests can be very divergent’, says Heijkamp. ‘I know for sure that besides the individual interests, there’s also a mutual interest to be found. The economic significance to shop owners is self-evident and the same applies to property owners, who benefit from thriving retail outlets. That means property retains its value, which is also in the interest of local governments. And of course, shopping has an important social function. That’s why working on improving shopping areas brings positive energy.’