The Digital Point of Sale (Svenja Scholl)
The digital point of sale. Since 2019, Svenja Scholl has been a project officer at the SME 4.0 Competence Center for Trade at IFH Cologne, which is funded by the German Federal Ministry of Economics and Technology.
Impulses to digitalization and many questions she will now answer and present in her lecture. We look forward to it have fun Ms. Scholl! Thank you very much. As I said, my name is Svenja Scholl. I'm a project consultant at the Mittelstand 4.0 Competence Center for Retail and I'm pleased
to be able to say a few words today about digitization at the point of sale. Why is this so important? Digitization at the point of sale is, of course, very much interwoven with the fact that digitization is changing a great deal in the retail landscape in general. Corona has made us aware of this, which is why we want to focus on this topic in order to make stationary retail fit for digitization.
I would like to get straight into the first topic at the beginning. I would like to tell you a bit about the current challenges and what is changing in retail. On the one hand, we are dealing with a growing customer need. In other words, digitization is ensuring that customers have ever higher expectations of the retail industry itself. This is due to the online players. This is due to strong competitors, which naturally means that a lot is changing in this landscape.
The second major challenge that retailers are facing is also the simultaneous increase or actually rather an increasing lack of customer loyalty. This means that customer loyalty to a specific company is no longer as strong as it once was; instead, customers are always looking for the best offer. The one that the customers like best, i.e., the one that is just on the wok there and that one would like to have measured against the standard there. This is not always the case with one company. There are many different companies that play a role in the relevant set.
The next point is the increasing competition. This means that we no longer have only stationary retailers that visit each other here in competition, but also the online players that come along. Platforms like Amazon, eBay and so on and so forth. Asian providers are also coming in here, and that is of course also a focus that retailers should concentrate on once again. Small and medium-sized German retailers now have the challenge of really helping to shape this change and position themselves more strongly digitally.
The new information channels are also changing, of course. This means that we no longer have only the pure trade or specialized trade, in which we inform ourselves about certain topics or products, but we can also search for information directly online. We have social networks where we can find information. A lot is happening there as well. Information channels are very diverse, and retailers must also try to find new ways to provide their customers with the appropriate resources. The last point I would like to address briefly in this context is the issue of new digital technologies.
This means that in this digital environment and in this digital transformation that is taking place in everyday life, people are used to using mobile devices in their daily lives. These technologies are burning themselves into the customer mindset, so to speak. If retailers also use these opportunities to make themselves more digital in their business, then they can also see these digital challenges as an opportunity, and I would like to talk about this in a little more detail today. Now we have the topic of online versus offline, but here of course the question also arises, is it really a counterpart or can't we understand it much more as a mutual relationship? The demands on brick-and-mortar retailing are growing due to the online channel, but you still can grow further with digitization, so to speak. At the IFH in Cologne, we asked consumers what they expect from retail.
There was very clear agreement with the statement. I expect purchases in stores to be just as good and uncomplicated and simple as they are in online retail. For brick-and-mortar retailers, this means that amenities must be implemented in the same way as, for example, very strongly customer-centric companies such as Amazon.
So here, retailers must look at how this problem, which customers have, can be solved. That's exactly the approach we want to take. Because basically, of course, digital technologies look great.
They are initially something interesting and perhaps also something new that people are not yet familiar with. That's a bit attractive at first, but retailers shouldn't fall into this trap. So, to say, I'll put a technology in the store and that's that. Then I'll have technologies in the store, and it'll be a no-brainer and the customers will come all by themselves. That's not how it is. As Steve Jobs said, we must start with a customer experience and then work our way back to the technology.
This means that we don't see technology as a self-runner, but that we see technology as a problem solver, so to speak. To do this, however, we first have to know what customers actually want and what can create an experience. Then we can select the right technology for our store and our business. And that's exactly where we can start to inspire our customers. Why is the topic of digital technologies so prevalent now and how can employees perhaps also deal with it in stationary business? That's perhaps an exciting question, and one way of addressing it is to say that digital technologies can also help in sales, i.e., in active sales talks, to provide customers with the best information and the complete information they expect.
Because nowadays, customers come into a store, even a specialty store, and expect to receive better advice and even more information than they already have. The challenge here is, of course, that people can obtain a great deal of information in advance online or in other channels about a particular product or product range that they have selected. When you then go to the store, which may be a store with a huge and very wide range of products, it is of course difficult for the specialist retailer or the local salesperson to have all this knowledge directly available. This is exactly why digital technologies can help to push this knowledge even further with the employee during the sales talk. So, if we look at this in application, it could be that a person comes into a specialty store and says: I would like to have the latest Lego technology car.
I'm not doing any advertising here, but I just need a little anchor example. The latest Lego technology car is supposed to be something great. My nephew, he would like that. But I do not know exactly what I want now actually. But I have already looked at online and there is this and that and that.
So, he has seller the challenge that there are of course insanely many different vehicles. Maybe a toy car and so on and so forth. Now exactly this person wants to know in detail about this product or about three products perhaps, in comparison, what is better or worse there now. What are the values? You can give the sales employee a technology, such as a tablet or smartphone, with additional information so that he or she can have exactly this information about the product ready during the conversation.
The only important thing here is to discuss this openly with the customer. In other words, it should not come across as if the employees are not sufficiently trained, but should be understood as these employees creating an additional offer for the customers to inform themselves. So that is very important. That is one way in which this can be implemented, for example in the store, in the advisory service. In principle, retailers know their customers' routes into the store. This is known as the customer journey.
We always look at this customer journey when we want to understand how customers interact with us as a company in our store and at which points we can also interact with these customers. That means we try to identify the touchpoints that we have and get in touch with the customers. These are quite diverse. But we have certain stations on this customer journey that we map. At the very beginning, for example, this is the first impulse that is awakened, so to speak, in order to first understand as a customer that there is something that I want. I would like to get more information about this.
Now, of course, that also comes to this information phase, that is, to the visit, perhaps in the online store or in the store. Then, in the best case, you buy the product, and if everything has gone really well, then as a company you still have the opportunity to retain these customers. These are precisely the touchpoints that need to be identified and perhaps even new touchpoints or touchpoints of your own created, because these are the places where you can get in touch with customers and clients with information and things worth knowing about your own company and product range. At these points, digital technologies can be linked to many touchpoints because we have the opportunity to simply support them once again. Now there is a kind of digital roadmap.
That is, there is a certain process that the implementation of a digital technology goes through if we want to integrate it at the stationary point of sale. At the very beginning, retailers should always first ask themselves, where do I actually stand with my company? Have I already reached the point where I can really bring digital technologies in abundance into my business, or are there perhaps other building blocks that I should devote myself to first, to build up the digitization pyramid, so to speak? I can say that digitization is part of the stationary point of sale, i.e., it really is part of the basic requirements in a certain way in the stationary business. Not all technologies, of course, but it does include a sensible merchandise management system, for example, and a checkout that links this merchandise management system. These are the basic requirements that make further digitization possible in the first place, because it will be very difficult to operate an online store without a digital merchandise management system. But you notice that when you climb up this pyramid a little further.
Here you can see the various stations in this digitization pyramid, to which, of course, various things will be taken up during this event here. It is incredibly important for retailers to understand that digitization is much more than just one of these building blocks, but that in the end it is of course important to link these things together. I've just talked about this process of implementing digital technologies, and this process looks exactly like what they see there. That means the whole topic starts with setting goals. So, we first ask ourselves, what do I as a retailer actually want to achieve with this digital technology or with this digital solution? What should this solution mean for me in the end? What do I want it to do for my employees? What can it also bring to the customers? So, you have to ask yourself that in order to be able to select the right equipment or the right technologies for you.
Each technology can be used differently, but there are also digital helpers that address very specific problems. The next step is planning. That means we first try to understand what prerequisites I have to create in order to be able to use this here and how I might also have to take my employees along at this point in order to make them open to the change in the first place.
Training in the use of these digital technologies is also a point of implementation, of course. Then it's also a matter of monitoring the impact. That means we check whether the whole thing is working as it should.
In the best case, we start with just a few technologies and feel our way along. If the impact control works well and we realize that this is exactly what we wanted to do and this is exactly what we wanted to achieve with this technology, then the whole thing can be rolled out on a larger scale. Before that, it's a kind of soft launch. That means you first try it out a bit and see whether the customers accept these technologies, whether the employees can do something with it, and whether it really pays off in terms of my goals.
Then, if necessary, you have to start planning again, or you are so well advanced that you can work with new technologies, or you first take a closer look at the whole topic. Now I've brought you a few more concrete advantages that digital technologies can actually bring to brick-and-mortar retail. First, on the customer side, we can provide information and services via digital technologies.
Then we create an improved overview of product ranges and offers. This means, for example, that we can integrate digital posters that reflect our own range of products and services. We expand our product range by integrating a digital shelf. There are things like that, for example. I'll show you a few examples in a moment. It is also possible to individualize products.
Let's imagine that with building blocks, for example, you can say, I want to have a set of building blocks and it should have so and so many parts, which and which colors. You might not be able to buy that in stores, but you can do that by creating an individual offer and putting it on sale in a digital place in the store, for example. So, something like that is also possible. You can then, for example, show it on site as a small sample so that people can imagine what's in it at the end. But solutions like that are also conceivable, and that's exactly what online retailing provides, and digitization technologies can also play a role here in moving brick-and-mortar retailing in this direction. The next topic is product availability, which is once again closely linked to the merchandise management system.
Then let's imagine that we are a retailer who sells stationary. But maybe he also offers his own products online at the same time, then of course an interface has to be created to show that this product is also available online. It is very bad for customers and also for the retailer in the end when it turns out that a product was ordered that I no longer have available. This cannot be delivered at all, which is why it is so important. This product availability can be mapped using digital technologies and ensure that there is transparency at all points. The next thing is that the customer also feels an increased loyalty to the business.
In the best case, this is only because it creates an additional offering, which is perhaps not yet the absolute standard in stationary retail. This is not yet the case in many areas, especially in Germany. That is something else where retailers can expect a plus point with their customers.
All of this pays off in terms of convenience. That is, the convenience of customers and what they expect from stationary retail. Shopping becomes an experience, and here, too, you could say that gamification plays a major role. This is also a big factor for children and toys, which becomes even more interesting. Children are already growing up with digitalization, they are digital natives, they simply don't know any different.
They are handed a tablet as children and know exactly how to use it. That's also the target group that we want to inspire here in the end. Parents, too, of course. There are many age groups that play a role here, but you also have to look at them a bit, especially in this industry. For the companies, this ultimately means that they get support from their staff. I have already explained this.
They gain visibility and findability. So especially on the web, we're looking at digital visibility, though, for example, a website, through Google my business, and through social media. These play a very big role in order to be found in the first place and to be able to initiate the customer journey in the first place.
The targeted and flexible presentation of goods is also a topic where retailers naturally gain a great deal of advantage because customers stay in the store longer as a result. They know exactly where they need to go and perhaps take another look around. So that is also an issue.
In the end, it's also improved process efficiency, because you can work much more efficiently in the warehouse if the warehouse employee knows how many products, he has available here thanks to digital technologies. That's where these products are. So, it's not just the things that are actually in business with the customers and clients that play a role, but also what has been stored downstream. I say invisible process steps can be supported by digital helpers. At the end of the day, it also helps with marketing and addressing customers through digital technologies, such as digital posters in shop windows.
You can imagine that, but as I said, I'll show you a few nice examples in a moment. What do you have to consider in an implementation process like this? There are various things. I won't go into each of them in detail because that would be too broad, but what you must take into account is that you have to allow a certain amount of time to move this whole issue forward.
I've already mentioned the various steps there, and this process takes time, depending on how individualized the solution is to be on site, or whether it's just a few tablets that are put there. That is done relatively quickly. Whether it is an individualized, highly complex technology device that is then used there. You have to weigh all that up and see how much time the whole thing needs in order to be able to plan it sensibly. Another topic that is relevant here is not only acquisition costs, but also running costs, such as maintenance costs. Responsibilities are of course important, i.e. who wears the hat and who is the contact
person. Who also drives the whole issue forward? It's always best if it comes from the top. That means when the CEO says we're going to do it now, you should never do it without your own employees. They play a very important role, which means you should go through this process together, but the willingness to initiate this process must come from the top. Competencies also play a role, because not everyone is equally digitally savvy.
When you look at your own company, which employees do I actually have here and are they willing to go down this path with me, in what form do we perhaps need outside help? That's also something you should think about very carefully when planning. Just like the content and messages. Who prepares the material? Who will play it? All of that is an issue.
Now, if you have a marketing department, that's not a problem. But for a small company with maybe 5 or 10 employees, it's a completely different question. Small and medium-sized companies have to look at where they can get these resources and where they can get the content and messages behind them.
But that is actually for every advertising material, the same issue. That means a company that does advertising always has to consider where it comes from and who produces it. The technology itself is of course a question. As I said, technologies are not self-perpetuating, so you must look very carefully at what you want to use. Prerequisites must be created, such as a stable Internet connection in the store.
Can I connect it to my power circuit here? So that's also something you must pay attention to. Then there is the pilot phase, where you start this test. You work with a prototype, for example, and see how it can be further developed and where it might need to be adapted. So, these are also topics that you have to deal with. Then it comes down to the right implementation, because on the one hand, of course, the placement plays a role here.
Do I use this technology at the beginning of the store, i.e. at the entrance, or do I perhaps use it at the exit, or is it located somewhere near the cash register? There are different solutions for very different technologies. So, there are various strategies that you can pursue, but that's also a process to find out where the right place is, also with the service providers with whom you implement the whole thing.
For example, they might be able to help you a little bit. It is very important that not only the employees are picked up, but also the customers must have the feeling that they are allowed to interact with these technologies. In other words, we should avoid providing technologies that give the impression that they are not there to be used or that we are perhaps creating an obstacle. In other words, we need to create an opportunity to use integrated intuitive activation. That's very important, especially for technologies that depend on people interacting with them. This also applies to these inhibition thresholds, such as a tablet lying on the counter.
Who takes that now? Does the employee take it? Is that what the customer is supposed to use? That's not so clear, so you should avoid scenarios like that. Topics such as fire protection, system security and data protection are also topics that you really have to address. That's not something you like to do as a rule, it's more of a nagging issue, but you really shouldn't forget that, because that also plays a very big role in the technologies that you can then use on site. Now I have shown you the customer journey again. We've already seen it before, but we've simply listed a few examples of how you can implement digitization at the stationary point of sale, or with which tools.
There are countless, but I have brought you a small selection here. I would now like to briefly show you a few of them. On the one hand, we have a digital poster here, for example. This has the advantage, especially since we have just heard something about sustainability, that it is of course also a factor in avoiding raw materials.
If you have a digital poster that you can use for several years, then you save on printing costs. You can use it over and over again individually. You can also adjust it according to the time of day, the season, the season, or the product range. So, you have a lot of flexibility here and can react very quickly to certain environments and situations with your own marketing material, even to the outside world. Then we have the topic of visibility, that's not a technology now, but that's just here again to show that this transfer from the online channel to the stationary trade is so important, because you can use this information channel.
This red arrow at the top is the arrow that is important for brick-and-mortar retailers, because you can see here that 58% of consumers actually get information online, but then buy brick-and-mortar. This is a relevant channel, and that's why it's so important to create appropriate information offerings. It is precisely at this point in the customer journey, namely the impulse to visit and the search for information, that this topic ties in with another topic that can be addressed. In digital technologies, this one is. This is live chat and digital price tags.
Now this is an example from Düsseldorf from Foto Koch. But of course, this can be wonderfully transferred to the toy industry. It's simply a way of digitizing the price tags and thus also providing maximum flexibility.
You can very quickly play out individual product offers. If, for example, you say at the end of the day that you would like to offer products at a discount, then you press a button, and it adds 10% to the price everywhere. Then you can do it very quickly.
No employee has to change the price tags. So this is also something that happens a bit in the background. Most of the time, the customer doesn't even notice whether it's a digital price tag or an analog price tag. But it simply makes the process on site much easier. Live chat is another topic that ties in with the customer journey. Because live chats are also something that virtually open up the way to stationary stores, because it gives you the opportunity to create an information channel on your own website or in the online store, for example, which symbolizes to the customer that someone is taking care of your concerns.
So that's a bit broader than a Q&A page on a website. You really have someone here with whom you can interact, and whether that's an actual employee or whether it ends up being a chatbot, that's not so important at first, as long as it works. That's also part of digital technologies. I've already mentioned the topic of digital signage, with the digital posters in the shop window, so to speak. But now, of course, it's also possible in the store itself. According to the same principle, you can say that it's a bit of an orientation aid.
You can pick up the atmosphere a bit in the store and it also helps a bit with the design in the store. So, it's also a nice way to incorporate digitization here. I personally find the multi-sensory shopping experience very exciting. This is something that stimulates all the customers' senses. You can work with a variety of tools here, including audio content, for example, nice music and pleasant sounds, depending on the context in which we're dealing with toys. These are then perhaps songs that the children also know and where you then feel a bit at home and just want to linger in the store.
This is then supported, for example, by fragrances that work very subtly in the background. They are not perceived directly by the customers. But they also support the entire atmosphere and create a pleasant feeling in the store.
This helps enormously with customer loyalty in the end, because it creates a very nice third place for customers, so to speak, where they simply like to be when all sensory possibilities are included here. Then we have the issue of shelf expansion. This is especially nice for stores that have a very well-known store area.
This means that you can display products that you don't have in the store itself, but which you can order, and expand your own counter with additional products, so to speak. This is very interesting, especially for inner city locations. For very small stores, as I said.
So that's another nice way to incorporate the whole topic there as well. That's exactly what we see here again that it's also a shelf extension. Excitingly, we had a Pater noster shelf on board here in our Whitebox, the showroom of the Mittelstand 4.0 Competence Center Retail. Unfortunately, we no longer have it, but it was a very nice solution that allowed us to see how the whole thing can work in practice.
So, you combine shopfitting with digitization. A very exciting story. If necessary, this can also be looked at again in other places, because it cancels out the gamification character a bit. The digital receipt is also something very exciting because it creates an additional offer that also contributes to sustainability. You don't have to hand out a paper receipt anymore, so to speak, but you have the option of simply giving customers a QR code on site, where all the details of the purchase are recorded once again.
That is also an exciting possibility. This is exactly where you can tie in, and above all it helps customers to keep track of their purchases. A nice additional offer and also a feedback terminal is very important. This closes the circle a bit, because it allows you to evaluate once again what I have actually done well in my business and which services are accepted? What do customers like and where can I perhaps build on this? In other words, through feedback terminals where you actively ask customers after they have made a purchase. How did you actually like it? What else would you like to see? You can learn a great deal here and should also use this knowledge to develop further as a company. The whole topic is accompanied by social networks, which we also have here to promote digital visibility.
This is another way of addressing the various touchpoints and supporting the topic of digitalization on the ground in the digital space. So that's also something that you should deal with, and there will also be another presentation on tiktok. You will see me there again if you are interested. So, I'm very curious to see if they'll stick with it. The whole thing will be exciting again. In the same way, you can see that there are a lot of digital possibilities that you can offer here.
I'd like to give them something to take away: be opened to change and simply dare to try things out, even if they fail. If you go through this process, by taking this pilot phase seriously and not yet doing the big rollout, there is really not much that can go wrong. That's why I would like to encourage them once again to really dare to do things like this. Digital solutions are not a matter of course.
You must actively take care of them. You must prepare and plan it well, and then it can succeed. Finally, get feedback from your customers.
Take what your customers say seriously and ask your employees from time to time how the whole process with digital technologies is going. Are things accepted in the store or not and how do customers deal with it? Does a tablet like this help with the sales pitch or not? These are important questions. Exactly, and that brings me to the end of my presentation. I would like to recommend the services offered by the Mittelstand 4.0 Center of Excellence for Retail to you, and you are welcome to take another look at our website. We have various things that complement each other.
It's all free of charge and fully funded by the German Federal Ministry for Economic Affairs and Climate Protection. All I can really say is thank you very much for your attention, and if you have any questions, you can ask them now. I will be happy to answer them, and otherwise you are welcome to do so again afterwards. Take another look at our website. It is exciting. With that, I would like to say thank you and I am curious to see if any questions have come in.
Thank you, very much dear Ms. Scholl, for coming here to Toy businessforum 2022, that was a super great presentation. Thank you very much for the presentation and we even have a question here. There are sure to be many more afterwards, not that they haven't already been answered enough, but I'm sure there are many who are very interested.
Here's the question in a nutshell: at what store size does digital technology make sense? Horatio Vargas Morandi's question is an intriguing one. The fact is that you can't pin it down to the size of the store. It depends on what kind of technology you have in mind.
I wouldn't say that a digital wayfinding system is of any use for a small store with, say, 100 square meters, because you can organize yourself relatively quickly and know relatively quickly where to find what. But if we imagine that you have very little space, and that's what I just said, then you can consider, for example, taking only the absolute top sellers that are currently in vogue and expanding my store counter digitally, for example by offering products on a digital sales shelf, or you can take it a bit further. But I think it's worthwhile for small stores to consider how they can get even more out of it. So, I think that I would not limit at all.
Then I thank you very much and I think this question is more than answered. I wish your health and all the best and then also look forward to the further contributions from them. Thank you very much and we'll see you right back here.