From Bricks to Clicks?
When you walk through the city center of Groningen at the end of the year, you will see big and colorful lightings, you will hear Christmas music and you will see many other decorations in and around the shops. Who would not like that? First up, Saint Nicholas, followed by three weeks leading up to Christmas. Mainly during the weekends around this time, it is quite busy in the heart of Groningen. And whether you like walking in big crowds of people or not, you have to admit that the atmosphere is quite cozy. Walking through the city, you can conclude that everybody is looking forward to Christmas. Yes, of course, the shop owners’ main goal is to sell more and therefore earn more money. Furthermore, you also have to get out of your comfort zone to move yourself to the city, but you get the amazing atmosphere for free! Or do people not care about that anymore? When you ask this question to the chiefs of Bol.com, Amazon or Zalando, they would say that they do not care about the cozy city centers, but that is because of their profits gained from online shopping. Unfortunately, today, in 2017, if you ask a few random people we think more and more would agree with these chiefs. Furthermore, fewer people go into the city for their purchases in particular. Why? Laziness? Comfort? And what are the consequences?
Ease of online shopping
There are a few things to think about when we are discussing why fewer people go to the city over the past few years. Ease of use is, of course, the most prominent reason for people to use the ever-growing web shops. Not having to leave your house, but still having access to almost unlimited products is something that is appealing to everyone. Recently, even supermarkets started offering its products online to be delivered at your convenience. The webshops also support a more modern way of living. People accustomed and appreciative of a more modern lifestyle, a quickly expanding group, will choose a webshop over going to a retail store as it fits more to their daily flow of living. The time they save by simply having their required products delivered, can be used to socialize, work or do other things they enjoy.
Not having to leave your house, but still having access to almost unlimited products is something that is appealing to everyone.
Since online shopping is something of the last decade, a great number of older people will not use it because they are not familiar with it. Younger people, however, who are now growing up with the concept of online shopping and the ease of them, will easily prefer an online store over a retail store. Since many big companies choose to focus their advertising on the young adults of today, many of them will think an online store is the way to go.
Even though the advantages mentioned form a great case to support the rise of Web shops, there are several arguments against it as well. Starting with emptier cities. As more companies will choose for web shops, the big malls and shopping centers will get increasingly emptier; this might take away the charm from the cities. All the decorations and the atmosphere, as described before, and the busyness of the city, make it a place that is considered enjoyable by many. However, the success of the webshops and its rise in popularity make is so, that the amount of people who choose the city for shopping is dwindling. This creates a downward spiral in which more and more people will choose webshops over retail stores since the city will lose its characteristic liveliness. After all, the loss in popularity of the cities means bad news for the smaller local businesses that rely on the city-shoppers. They may not have the technological expertise or the recourses to set-up a webshop. Most of their customers will be the ones who just happen to stumble across their store during a day of shopping. The American economic and columnist Paul Krugman did a great job of describing this in a single quote: “In a webshop you will find what you are looking for, but in a retail shop you will also find what you are not looking for”.
In a webshop you will find what you are looking for, but in a retail shop you will also find what you are not looking for
Profitability of web shops
Now, let’s take a closer look at the rise of webshops. In doing so, we would find that the profits are not as large as one would expect. Today, the competition is fierce. Moreover, foreign multinationals, such as Amazon, export its products to the Netherlands. In response, Dutch firms decided to decrease or to ban the postage and package costs for clients and take it into their own account. When one firm set the example, others followed, what resulted in a decrease in profits for all Dutch firms. Additionally, another nice detail for the consumers is that usually, products can be returned if the customer is not satisfied. This is costless too, while it normally is a high cost for retail shops. All this combined, the online business is not as lucrative as it seems to be. To solve that problem, some of the online firms have already decided to go back to the cities and open a shop in the center. They try to divert consumers more and more to the shops in the city, because there they can offer some extra services and advice. It is cheaper for businesses too, as it can use its shops for distribution. So, in consequence, the costs of sending and retour-questions will decrease.
All in all, can we conclude that younger people generally choose for ease instead of atmosphere and that older people choose to go to the city? It would be hard to say. However, it seems to be quite interesting to follow the decisions of important firms with shops in the city, but also webshops. How will they anticipate the following ten years? Unfortunately, the smaller local shops will have to wait and see if the future is profitable enough for them, unless they have the recourses to exploit these new developments. But whatever the future holds, we can impossibly predict this. We only can say, do what you think is best and do not be afraid to take chances if it might save your company.
Do what you think is best and do not be afraid to take chances if it might save your company
Coen Wolters & Max Kanne 23-11-2017
Onbekend. (2017, 01 18). Meeste omzetgroei bij webwinkels zonder winkelpand. Opgehaald van Website van CBS: https://www.cbs.nl/nl-nl/nieuws/2017/03/meeste-omzetgroei-bij-webwinkels-zonder-winkelpand
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