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Digitization in retail: 5 benefits of online advertising for brick-and-mortar retailers

Digitization in retail: 5 benefits of online advertising for brick-and-mortar retailers

Andreas Kraus
Andreas Kraus
published at March 23, 2022   
updated at May 3, 2022

Digitization in retail – The most important in a nutshell

  • The Corona pandemic has given a strong boost to online retailing.

  • There is a clear shift toward online shopping, especially for apparel and electronics items.

  • Online advertising offers stationary retailers many decisive advantages.

  • The first steps toward digitization can be implemented promptly and cost-effectively for SMEs.

The attractiveness of city centers is due in no small part to the retail sector, because who doesn’t like to go on a shopping spree? However, the pandemic has shown that more and more people in Germany are taking advantage of the opportunity to shop online. The e-commerce sector is definitely one of the winners of the Corona crisis – a reason to rejoice for everyone involved in online retailing. But what about local businesses? How well are retailers positioned online and how open are they to the topic of digitization in retail?

 

Current state of digitization in retail sector in Germany

Covid-19 as a driver of online retail?

In its Online Monitor 2021, the German Retail Association shows that the development of digitization in the retail sector was already steadily increasing a few years ago. But in 2020 – mainly due to the pandemic – the turnover of online retail has increased significantly, by almost 23% compared to the previous year.

Development of online sales in Germany from 2001 to 2021
Development of online sales in Germany from 2001 to 2021

Due to the Corona crisis, retailers suddenly found themselves forced to adapt accordingly to the changed circumstances. Whether large chains or local retailers – appropriate measures had to be taken. In order to remain attractive to customers in the current Corona period, visibility on the Internet can be enormously valuable for retailers. But is a good online presence of equal importance for every industry, or are there differences digitization in retail?
 

Digitization in retail – a comparison of the different industries

The buying behavior of customers differs depending on the industry. In some business sectors, online purchases already predominate, while in others purchases are still made predominantly offline in the store. In the HDE Online Monitor 2021, a clear shift toward online purchasing is evident, particularly in apparel and electronics. Overall, the online share of retail in 2020 was already 12.6%, excluding groceries 18%. Groceries in particular are still purchased locally. However, digitization in the retail sector is expected to grow toward online sales in all sectors without exception within the next 5 years.

Share of sectors in total online volume in 2020
Share of sectors in total online volume in 2020

 

Best practices: Digitization in retail based on two specific examples

We would like to illustrate the successful implementation of digital measures with two concrete examples:

Hugo Boss

The Hugo Boss company, just like other retailers, placed its focus on online business due to the Corona pandemic and continued to expand it. The group saw sales drop by 31% in 2020 due to the crisis. To increase brand awareness, millions were invested in digitalization to drive growth across all brands, product groups, sales channels and regions. A completely new brand identity was designed through new logos and marketing strategies. In doing so, Hugo Boss is focusing on separating local retail and online business, but the focus is on digital media and cooperations.
 
Hugo Boss is investing heavily in identifying key trends and digital product development, and is focusing on AI-powered pricing and the global rollout of digital showrooms. A digital campus has even been established at the Metzingen site and in Portugal for this purpose. With its new brand identity, the company also wants to appeal to the younger and more globally oriented target group in particular, and is working with internationally renowned fashion photographers and models as well as TikTok influencers to achieve this. The results prove the company and its marketing strategy right: The TikTok Challenge #BOSSMOVES, for example, brought 3 billion views after one week and even Instagram interactions on the Boss account increased by almost 1600%. The company knows how to use social media for its own benefit like no other and is hitting the mark. This helps to attract new and younger customers.
 
Online shopping at Hugo Boss is possible not only in the online store, but also via the Hugo Boss app. In this app, products can even be “tried on virtually,” which helps customers make their purchasing decisions. Hugo Boss is also using the possibilities of digital marketing very specifically to position itself internationally. In 2020, the portfolio was expanded by a total of 32 markets. Customers can now purchase the latest BOSS and HUGO collections online in a total of 59 countries.

BikeVilla

Even companies that don’t have as much budget as Hugo Boss have the opportunity to successfully establish themselves in e-commerce. A good example is the stationary bike store BikeVilla from Limburg. The company was hit hard by the Corona closures, but focused on retail digitization measures instead of waiting for relaxations.
 
Since BikeVilla is sure that there is no way around an online presence anyway and they wanted to sell their bikes to customers online as quickly as possible, the company decided to work with a suitable platform. The choice fell on the bicycle marketplace Bike-Angebot.de. This solution meant that the company did not have to create its own online store; instead, the products were posted on the platform and sales could start immediately. Even the logistics are handled by Bike-Angebot, so BikeVilla only has to take care of the final assembly and packaging.
 
After a few days, so much was sold that the products had to be taken offline to meet shipping deadlines. By opting for this digital route, good sales figures were achieved despite Corona, as well as expanding the target audience.

 

5 Advantages of online advertising for brick-and-mortar retailers

Digital measures not only offer advantages for online product sales, ads via social media and Google can also be used optimally for stationary trade. This type of online advertising offers several advantages over traditional offline media such as print (flyers, newspaper ads, brochures) or TV commercials:

1. Quick accessibility of information

Suppose you see a Facebook Ad that interests you – what do you do? It’s simple: you click on it. And are automatically redirected to a page that gives you more information about the product and the company, and possibly gives you the opportunity to purchase the product right away. This is exactly one of the great strengths of online advertising: you get all the information you need within seconds. As a result, the bounce rate is much lower and the probability of buying something is higher.

2. Secific targeting with little wastage

Unlike traditional marketing efforts, social media or Google ads allow you to target the exact audience you want, resulting in significantly lower wastage. Online advertising not only reaches local customers who already know your business, but can also help you tap into new customer bases.
 
The algorithm of popular social media platforms has a supporting effect here, as users are shown exactly what they might be interested in based on their consumption behavior. Let’s assume that you sell a lot of products that carry a “vegan” or “organic” label. Then you can assume that mainly people who are interested in these kinds of products will buy from you. Facebook offers you so-called interest targeting for this and plays your ad only to users who are interested in these topics.

3. Better measurability of your advertising

Using concrete key figures such as impressions, conversions, CPC (= cost-per-click) or the CTR (= click-through-rate), you can evaluate the efficiency of individual campaigns. You can collect these clearly in a dashboard such as Google Data Studio and compare them regularly. In the case of advertising via flyers or newspaper ads, it is difficult to evaluate the success of the measures.

Digitization in retail: 5 benefits of online advertising for brick-and-mortar retailers
We’ll tell you how you can also measure the success of your online campaigns in-store in another blog post.

4. Constant optimization possible

Not only can the ads be measured and evaluated in terms of their success, you can also continuously optimize them to use the available budget as efficiently as possible.

5. Less budget needed

Ads via social media or Google are a lot cheaper than advertising via traditional media. With just a few euros, you can already reach thousands of potential customers. The advantage here is that you only pay for ads that your target group actually sees and don’t “waste” budget on people who see your ad but are not enthusiastic about these product categories. For a small ad in the newspaper, on the other hand, you pay several hundred euros and also accept high wastage.

 

4 tips for SMEs: Getting started with digitization in retail

We will show you how to position yourself online and thus digitize your business.

1. Create your own website

Having your own website gives customers the opportunity to find out more about the company and products. Nowadays, a website does not have to be programmed expensively. You can also create it yourself inexpensively, for example with the help of a modular system. In a next step, you can also integrate an online store directly via the same system. Always make sure here that your website is mobile-friendly, because many users prefer to surf the Internet with their smartphone rather than with a computer.

2. Create Google My Business entry

All you need to set up Google My Business is a Google account. Set up your Google My Business profile and use the free opportunity to inform existing or new customers about your location, opening hours as well as offers, such as a delivery service. The information will be displayed in your business profile in Google Search and on Google Maps.

Digitization in retail: 5 benefits of online advertising for brick-and-mortar retailers
Learn how to create a Google My Business listing and what features are available to interact with potential customers.

3. Establish a social media presence

Social media channels like Facebook and Instagram are perfect for doing organic marketing as well as running ads. Create a profile for your business and build your social media presence. This will help you increase brand awareness, as well as attract new customers and build customer loyalty. For recognition, make sure you have consistent branding between your website and social media presence.

4. LocalUp software for social media ads

Place ads on social media and Google. Our software is perfect for successfully setting up local marketing campaigns while keeping the manual effort of your campaigns to a minimum.
LocalUp is ideal for product promotions, social recruitment and lead generation. Especially companies and brands with many point-of-sales benefit from individual ads per location and the automation of complex campaigns.

Digitization in retail: 5 benefits of online advertising for brick-and-mortar retailers
Learn more about LocalUp’s marketing automation and how you can use individualized social media ads for your business.

Conclusion: Digitization in retail is enormously important

Digitization is unstoppable and in order to be able to survive on the market with your company in the future, you should rely on digital marketing measures as soon as possible. Companies that have taken care of their online presence are emerging from the Corona crisis as winners.
 
One thing is clear: Online advertising can be a good complement to traditional marketing via print or TV, as campaign targets can be targeted more specifically and potential prospects can be addressed more directly. The best practice examples already show how valuable digitization is for stationary companies and that it pays to be open to change and new marketing strategies.
 
Do you need help implementing your online advertising measures? We are your partner when it comes to digitization in retail. Get in touch with us and we will support you with your social media and Google campaigns.

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