As a retail expert, you monitor and analyse what is happening on the market very closely. Can you tell us what the future has in store for us?

CORDULA CERHA: Predicting the future is – I don’t know if you are familiar with the phrase – not an exact science. But things are always changing to some degree in the retail industry. That has always been the case and is set to stay that way for ever. I have the feeling that digitalisation in particular leads people to say that everything will be different in the near future.

So it won’t be all change then?

CORDULA CERHA: In 1996 I wrote my dissertation, which was all about the early days of the internet and the first online stores. Even then, there were predictions saying that there wouldn’t be any bricks-and-mortar grocery stores left at all by 2019, as we would only be ordering online. I think that technology sometimes leads us to look at all of the possibilities. But those are possibilities, and not always what is going to chime with consumers or makes sense from a commercial point of view. Which is why Amazon’s drones still haven’t taken off. We’re still a long way from putting the necessary legal frameworks in place.

But are there any developments emerging and do they have the potential to stir up the market?

CORDULA CERHA: My basic hypothesis is that change is driven by consumers. As soon as consumers change their behaviour because they can do something more efficiently or something adds more value for them personally, it will gain traction in the market. The way that we use information and the media has changed immeasurably and that is an example of something that we are seeing in retail. Consumers – younger generations in particular – are socialised on smartphones and used to accessing information by simply swiping their mobile phones rather than having to go to any great lengths to find out what they need to know.

What does that mean for retailers?

CORDULA CERHA: Consumers’ decision-making processes are changing. Consumers are no longer prepared to traipse around town to check ten different stores because they are looking for something special. If they know what they want, they can whip out their phones, find it quickly and start narrowing down their choices. Where is it available, what does it cost and where will I find the best price? But that is just one side of retail, pure supply. The other function that retail had is the role of a social meeting place. Here, consumers compare notes. It is a marketplace and customers want to an experience.

How can retailers respond to that?

CORDULA CERHA: It is difficult to speak for every segment, but let’s take electronic goods as our example. I have to assume that a customer these days can compare and search for everything in advance and comes to the store with very different needs than before. They have high expectations of the sales staff. And as a retailer I have to adapt to that. I have to offer the customer some form of added value. I either have to explain things better or – and this is where I see the real opportunity – offer some guidance. After all, the deluge of information and products can be hard to navigate for the customer. So they are happy when they walk into a store that has three different models of a product and can assume that the retailer has whittled the selection down properly beforehand. And that the three variants on show are all good and offer something different. And that is where a well-prepared retailer can stand out. It is precisely these areas where retailers can expect consumers to be ready to pay more – pre-selection and professional consultation.

You mentioned a second function earlier: bricks-and-mortar retail as a social marketplace where customers come to experience something. To what extent does that still apply?

 CORDULA CERHA: Well, I’m certain that bricks-and-mortar retail will still be relevant in the future. We keep reading that so and so many Austrians shop online. But you can also turn it around and say that even more of them still shop offline. 95 percent of all Austrian retail sales are attributable to physical stores. But I think that bricks-and-mortar retail will have to make more of an effort and offer greater flexibility and more entertainment. It will increasingly tie in with the F&B segment. This multi-segment experience is intriguing and will be successful. I think that Eataly in Italy is a great example: a place where I can shop and eat, and the boundaries between the two are blurred.

What other trend that you are currently monitoring has significant potential over the long term?

CORDULA CERHA: I wouldn’t like to rule anything out at this point – provided that it benefits customers in some way. One thing that is definitely an important topic is voice technology. Anything that makes it easier to find things. Why should I make the effort to type something in when I can just say it instead? Otherwise, what appear to be trends are in actual fact great PR campaigns designed to grab attention. Even the Amazon drones mentioned earlier should be seen as more of a PR stunt.

But is it possible to say in principle that there is a great deal going on in the field of new technologies which will bring advantages – and not just challenges – to the retail sector?

CORDULA CERHA: Of course. Retail is benefiting from new technology, particularly when it comes to logistics. As far as process efficiency is concerned, there has been an enormous amount of progress. One clear opportunity for retail is that it can gear itself towards the customer’s needs more effectively through better networking and documentation of the buyer decision process.

Where and how does this manifest itself?

CORDULA CERHA: Innovative formats – particularly in bricks-and-mortar retail – that meet consumers’ needs while coalescing with certain values often generate substantial growth in a short space of time. For me, Rituals is a particularly good example of this. They have grown unbelievably quickly in Europe. Why? Because their offering taps into the zeitgeist, and the entire experience blueprint – branches and care products – resonates extremely well with what new consumers want. Innovations like this gain a foothold in the market incredibly quickly, to the extent that you think to yourself: ‘Aha, so bricks-and-mortar retail isn’t quite dead after all.’

You touched on it earlier, but what is the consumer’s role in all of these different current and future scenarios?

 CORDULA CERHA: I can’t think of a single development right now that can’t ultimately be traced back to the customer. But I need to be a little bit careful here, since customers do not think long-term. You can see that with local grocers. The protests only come once the last local store shuts. And then it will be difficult, if not impossible to reinstate that structure. But if customers had kept on shopping there, then they would have survived. Sometimes customers exhibit highly ambivalent and opportunistic behaviours, like wanting structures to be in place that they do not actually ever use. On the other hand, retailers need to listen to consumers and learn to tune into their needs. As a retailer, you need to have a certain feel for what it is that consumers need. A healthy dose of common sense goes a long way in retail when it comes to finding out what the advantages of a specific development are for consumers. After all, they decide with their wallets whether something will make the breakthrough or not.

Talking of breaking through: would you be prepared to hazard a forecast of sorts, even if you are sceptical of predictions?

CORDULA CERHA: I really am cautious. People rush ahead far too often, proclaiming that nothing will be the same as before. Simply because it is something interesting that can be reported on. But people and their basic needs won’t change all that quickly – so consumers’ behaviour is the be all and end all. I believe that once consumers change, the market will follow. And that is not something that’ll happen overnight.

Profile: Cordula Cerha works at the Vienna University of Economics and Business Institute for Retailing & Marketing. Her research activities focus on market analysis, consumer research and retail marketing.