The digital dimension of local commerce: The experience of RetailLink
Local commerce has been under attack from many sides: changing patterns of consumption, newly built commercial centres and online shopping all have put an increasing pressure on traditional retail. The impact of this transformation goes beyond retail jobs and shopping options – retail is at the heart of the tissue of European cities and plays an important role in social cohesion and local economy as well. What are the ways to rethink retail? How can digital tools enhance the competitiveness of local commerce?
RetailLink is an URBACT Action Planning Network that aims at enhancing the competitiveness of small and/or independent retail businesses. Like other networks of the URBACT programme, RetailLink focuses on perspectives of the governance of resources, communication, community building and the interaction between different stakeholders, with an approach and methodology that can bring a new light to the challenges of retail as well as to the potentials of digitalisation, social media, marketing and the internet.
While local commerce is deeply embedded in physical space, it is strongly impacted by digital tools and the internet. Therefore digitalisation is one of the perspectives RetailLink explores. “There is discontinuum between online and offline,” explains Mireia Sanabria, the RetailLink network’s lead expert. “From the retail point of view, this is wrong: retailers should have the same online and offline strategy, to make people come to their shop both online and offline. This is the full retail experience that can guarantee the success of a shop. That is the first idea.”
Retail is different in the city centre and in neighbourhoods. In a city centre on Saturday, for instance, where people have their lunch and spend their afternoon, go to the cinema and look for other options of culture, retail is part of this leisure experience and is often dominated by large commercial chains. In contrast, in local neighbourhoods, another kind of retail is rooted: small retailers instead of chains. In both cases the challenge is to compact the areas, ensure different functionalities. But these areas play different roles at different times of the day that implies totally different strategies. Compared to larger cities and metropolitan areas of leisure shopping, independent retailers in smaller towns or neighbourhoods are often struggling to survive. How can they use digital technologies to become more competitive and to create a stronger economic tissue with their local counterparts?
Just like in other sectors, digital tools can serve many uses in retail. There are tools to monitor customers by detecting their smartphones, apps that customers can download, register and get rewarded as well as provide information on their consumer behaviour. Other tools can support the internal management of a shop, providing overview of the merchandise to buy and to sell, or help the marketing of one’s business. Digitalisation in retail does not only allow expanding the visibility of shops but also helps them accommodate new functions. Many bookshops or record stores across Europe have become delivery points for online shopping: shopkeepers thus accommodate competitors in their own business model. Other shops extend their business and offer leisure activities outside the traditional opening hours, organising events for which shops serve as points of departure, combining retail with hospitality or other ventures. There are restaurants where you can buy all the furniture and utensils – and there are new online platforms that allow restaurants to turn into co-working spaces during the day when their space is not used.
Using most of these tools requires specialised training. “Engaging retailers in trainings is very important”, explains Mireia Sanabria. “It is very difficult for a shop owner to see the importance or interest of going online, because they have too much to do during the day. They take care of finding the products, selling them, coordinate the shop assistants – all the everyday things that a shop entails.”
However, potentially there are important gains in getting a training and digitalising one’s local shop. While creating one’s shop online in parallel with a physical shop is expensive, time consuming and needs specific resources, in exchange, it does develop strong links between a group of shopkeepers and their consumers. These links can be enhanced by platforms that bring together a group of retailers in a neighbourhood or a city centre. Such platforms, particularly in smaller towns, can include various types of businesses and services, offering an integrated online space where neighbours and residents can access and find the different offers. Such a platform can cover the everyday convenience shopping needs, including groceries, food shops, pharmacies, municipal services, depending on the needs of the city or the neighbourhood. The underlying idea is that many smaller retailers can come together to form one joint online strategy, and this strategy – with the help of the local government – can also give them a stronger presence, more visibility and a higher level of interactivity. As Mireia Sanabria suggests, “when single retailers are not capable of undertaking their own online strategies alone, joining forces can be a solution.”
While traditionally, guilds and chambers of commerce provided a union for the merchants of specific goods, the platforms that can help retailers join a shared strategy and amplify their voice are usually place-based: shop owners and other service providers in a street or a neighbourhood come together in a shared network. There are many ways in which such networks can help individual retailers: a shared wifi network, for instance, can intensify digital communication in a given area, and therefore can bring more online traffic to the local shops’ websites and social media pages.
For shopkeepers, joining a digital platform is not exclusively for selling their products and reaching a new audience: it also serves to coordinate their use of amenities, as in the Costo programme of Semaest, the public company of the Paris Municipality, that brings together shopkeepers also to share services such as delivery and storage. But this level of coordination in the digital sphere is rare. As for the partners of RetailLink, they see this “more as a collaborative work, agreeing on times for delivering in the city centre and adaptability.” Digital solutions can be an additional layer to this work: the way shopping centres have common services can be also replicated in city centres.
In order to enable a digital platform in the city centre or a specific neighbourhood and have retailers engaged and be part of this marketing offer, they need to have the capacity to contribute. For Mireia Sanabria, the digitalisation of an area has to be preceded by building local networks and capacities in different stages: ”First you need to convince them, to make them understand that their capacities and skills need to be improved. You need to engage them by different means, for example by offering personalised custom tools. Then you need to create resources tailored to the local needs: you can go to the local college or university that may have a pool of experts that can address the shopkeepers’ needs. If a retailer wants to participate in a training course or wants to develop some skills like social media, you need to engage the corresponding expertise and support the training as some cities have done.”
After engaging the retailers and having them trained, a joined digital strategy can be created and municipalities can provide resources for this: they can enable the platform hardware and the connectivity between the local stakeholders. To promote such endeavours, the WiFi4EU initiative, for instance, gives economic support to enable the installation of the hardware that helps digitalising urban areas such as city centres, hospitals, libraries that can gain additional connectivity. This is one of the resources local authorities can access.
A joint digital strategy has to correspond to a single marketing strategy for the whole area. In some areas, particularly in the city centres, there are various content management structures: retailer associations, business improvement districts and municipalities usually have different online strategies, different websites for different services, interacting with their own stakeholders. Similarly to the municipality of Basingstoke, a member of the RetailLink network, that has been working on linking the different websites of the business improvement district, the retailers and the public administration, municipalities may want to link these different websites together, developing the digital marketing strategy towards one single platform including different services and retail offers, for a single online experience of the city centre.
Besides advertising one’s products, coordinating offers and connecting stakeholders of a specific area, digitalisation can also serve bi-directional communication between vendors and customers. In this perspective, technology can function as a kind of a polling device, crowdsourcing needs and ideas for new services in a given neighbourhood. While the mapping of residents’ needs is undertaken by municipal agencies (like Semaest in Paris), this intermediary role between local commerce and community is not limited to public organisations. In cities like Budapest it is indeed NGOs and banks that collect feedback from local communities, gathering support to social enterprises, or looking for sustainable and community-backed investment opportunities.
Banks are indeed important actors in city centres. One of the municipalities of the RetailLink network in the North of the Netherlands has engaged a local bank to support property owners and businesses with loans and financial help. In a wide, deregulated area where commercial activities were spread across the city, retail was in decay. As a response to this, the municipality began to compact the city centre and to redistribute the core retail area, through negotiating with property owners, retailers and involving other stakeholders including the theatre.
Despite all innovation in the retail-led urban regeneration, the influence of intermediaries and public agencies on the success of local retail is limited: “it is difficult for an area to attract a business that won’t ensure the viability of the business, so the conditions need to be there. We can not attract retail activity to an area where the business person won’t see the return of the investment.”
Not all municipalities see their role clear in helping retail. As in every URBACT network, some participating cities of the RetailLink project are very advanced in integrated city centre retail revitalisation, others are still exploring their potential role in the process. Some participating cities, in particular the British and Dutch municipalities have their business improvement districts or zones. In other cities, particularly across the Mediterranean, it is more retailers themselves who organise themselves as private actors like retailers’ associations and eventually ask resources from the municipalities. In Eastern Central Europe – Hungary, Czech Republic or Romania – various urban actors are not so used to interact with each other and create these types of partnerships: in these regions, retailers are not even organised, usually they individually interact in a vertical manner with their Chamber of Commerce but they do not have joint initiatives.
One of the key messages of RetailLink is to make municipal officers see that they can address the challenges of their city centres together with local actors and shop owners. In Mireia Sanabria’s experience, partners from the Eastern countries “were initially hesitant, they did not see the use of such an approach, but once they started to witness the success of stakeholder cooperation in different cities, they began to create their own stakeholder groups to discuss what are the local challenges.”
Similarly to local cooperation, cities of RetailLink are at different stages of digitalisation. While North-Western cities often have existing digital strategies for retail, the emergence of such strategies is slower in Southern and Eastern Europe. One of the key obstacles to digitalisation is the attitude of retailers themselves: they are seen as “among the toughest people to train in these new technologies.”
For many cities, digitalisation is not seen as the most important instrument to strengthen local retail. Within RetailLink, a network of 10 cities, only 2 or 3 cities will address digitalisation as a core or important component of their plans. As the network’s lead expert observes, most of the participating cities are “still considering what is the role of retail within the new context. Because for many of them retail is something that has been in decay in their cities in the last decade, they see that e-commerce is an important factor in this, they see that most shopping centres are out of town, and bigger cites attract more people. What they realised through the RetailLink project is that retail needs to be more of an experience than a buying and selling business. So once they integrate this idea of changing the retail proposal in their cities, they will come easier way to this need of digitalising.”
Municipalities gradually realise that the digital experience of retail is important and has to go along with a new retail proposition for the whole city, that suits the city and which is attractive to people. Municipal officers need to think about new instruments, new services, new ideas to support shopkeepers and other stakeholders of the local commerce ecosystem. However, digitalisation has to support physical locations. While everything is going online and people increasingly access shops in form of websites, people still need direct experiences, they need to walk around in city centres and find culture, cinemas or concerts in the city; and this experience includes going around shops that are welcoming, have music, attractive products that can be touched and tried on. Online experience is 90% entertainment and 10% shopping. This is is an important reason to open shops, to make them attractive and it is the experience that will make people go there. The tangibility of this experience cannot be replaced by the internet, this is why internet giants like Amazon are also buying shops and this is why in the Boxpark of Croydon, London, online retailers were offered a location to display and sell their products in a physical place, surrounded by restaurants and bars. Using containers and establishing a wifi network they could attract visitors and discuss with them about their products. It is an important complementary service for online shops, explains Sanabria: “You can sell anything online but if you have presence in the city, you allow people to go there and feel the experience, and then you are known in a different way. You have the complete purchasing experience.”
- Go online: having an online presence can help small retailers reach broader audiences.
- Experiment with new uses: digital communication allows small retailers to diversify their services.
- Find the time and resources for training: the investment in new skills will pay back exponentially.
- Join forces: platforms bringing together retailers can help them share resources and services.
- Collect ideas from the neighbourhood: digital tools allow shopkeepers monitor their customers needs.