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ePaper created 2014-04-29, 17:58:02 | version 1.30.00
Following “big data” and “same day/hour delivery”, “dynamic pricing” is the latest battle cry. Future prices will be adjusted to reflect the competitive situation in an effort to topple old pricing schemes and maximise profit margins. If traffic is high but sales are low, prices will drop. If money is rolling in, products will become more expensive. With the business climate becoming harsher, whether or not these giants will continue their triumphal march is uncertain: A harmonisation of e-commerce laws is pending in the USA, which will close lucrative tax loop- holes; in Great Britain, citizens’ initiatives are demand- ing the same be done in Europe. In mid-2013, the giant retailer yielded to the German competition authority. Marketplace merchants no longer have to offer their wares at the lowest price. And the competition authority is also looking into whether DHL delivers under cost for certain key account customers. N Large pure players have proven that huge budgets can buy market share.What they have yet to prove is whether this makes sense from an economic, environmental or social perspective. Bustling cities doomed to obsolescence? Michael Groschek, the Transport Minister for North Rhine-Westphalia, recently declared “sofa shopping” to be the new greenfield destroying city centres. Communities were complaining more and more about declining numbers of pedestrians walking through city centres and increased congestion due to delivery traffic. “Shoes ordered online aren’t sent through the Internet, they travel our real-world streets to get to peoples’ homes,” explains this politician from Germany’s Social Democratic Party (SPD). While Amazon and DHL are already contem- plating out loud the use of delivery drones, politicians are busy finding ways of easing the urban traffic situation, whether this solution in- volves presorting in city logistics centres, a parcel toll or even local access restrictions. But what about pedestrian traffic? Footfall, a com- pany that performs ongoing measurements of the number of people entering its customers’ shops, recorded a total decline of 2.6% in 2013. “Prime locations remain prime. Pres- sure on mid-range locations is increas- ing. Action needs to be taken in rural areas,” is how the German Retail Fed- eration (HDE) sums up the different sit- uations faced in city centres. Yet, even in locations with consistently high lev- els of pedestrian traffic, this transfor- mation is leaving its marks: “Tenants in prime locations are changing, and retail spaces are becoming more like showrooms. Particularly retailers with weak concepts are unable to withstand the massive pressure on margins. Instead, the future will bring even more vertical concepts, manufacturers’ stores offering their own brand or even retailers with strong private labels,” summarises Elab- oratum’s retail and multi-channel expert, Stefan Mues. What remains unsaid is that the competitive situation is un- dergoing a shift. In the past, cities once fought against greenfield projects and traditional retailers against shop- ping malls. While it might hold true that communities still protect their city centres against overly ambitious special- ist store projects, they let logistics centres sprout up almost unchecked. And that despite the fact that a delivery person is indifferent to whether his or her deliveries might include products that could negatively impact local sales or goods ordered after closing time. In Retail Real Estate Report No. 166, Prof. Wolfgang Christ of the Urban Index Institute sums up the competitive situation as follows: Today, it is high street vs. high tech or, in other words, the locations in a city where customers can walk or drive to vs. the omni- present online locations of the pure players. With an eye to successful efforts to prevent urban decay in Bath, Bristol and Liverpool, he pleads the case for urban transformation as a way of dealing with the retail transformation. Locations that have proven attractive are those that blend the According to a representative of the German E-Commerce and Distance Selling Trade Association (BVH), e-commerce already hit this mark last year when it generated €39.1 billion in sales. DEUTSCHEEUROSHOPANNUALREPORT2013/SHOPPING 026