In an increasingly digital environment, German retailers can now take advantage of digitization offerings. New processes, tools, and strategies can help meet customer expectations, work more efficiently, and take advantage of new market opportunities. In this article, you will learn what digitization means and how digital German retail is currently. We also explain which business processes retailers can chiefly benefit from with digitization, how they can develop a strategy, and what advantages a digital update can afford them.

What is this article about?

• What does digitization in retail mean?
  
• How digital is German retail?
  
• Which business processes can retailers benefit from with digitization?
  
• How can retailers develop a digitization strategy?
  
• What are the advantages of digitization for retailers?
  

What does digitization in retail mean?

The Federal Ministry for Economic Affairs and Climate Action (BMWK) defines digitization as “the utilization of data and algorithmic systems for developing new or enhancing existing processes, products, and business models.” Data and data models are not subject to physical wear and tear and can be used multiple times and by different people simultaneously, thus offering companies scalability. We can distinguish between four areas for digitization:

• Digital products: This means data-based, usually automated, non-physical services such as software or web applications that are used on their own or integrated into physical goods.
  
• Digital processes: This includes representations of reality based on data used for organizing and controlling operations.
  
• Digital networking: This describes the extent of internal and external company processes in total digital systems.
  
• Digital business model: These are digital products that companies provide to customers for a fee.
  

How digital is German retail?

In 2023, Bitkom—the industry association for Germany’s information and telecommunications sector—published the results of a survey of companies from the wholesale, retail, and automotive industries with at least 10 employees under the title “How digital is retail?” Seventy-one percent of those surveyed confirmed that traditional brick-and-mortar retail needs to reinvent itself. The answers to the question “Where does your company sell products or services?” show that the digital transformation is already in full swing: in 2019, a quarter of retailers still stated that they sold exclusively from stationary retail locations, while two-thirds relied on a combination of brick and mortar and online sales. In 2023, only 8% still offered their goods and services exclusively in brick-and-mortar stores, while 85% sold both from brick-and-mortar stores and online.

Despite the advancement of digitization in the retail sector, more than two-thirds of retailers saw themselves as digital latecomers in 2023. Only 23% described themselves as “pioneers” in using digital technologies. The biggest challenges for companies are searching for employees with digital expertise (75%) and digitizing existing business processes (57%).

In summary, the degree of digitization in German retail could vary greatly. Significant progress has been made in recent years, but there is still considerable potential for improvement.

Which business processes can retailers benefit from with digitization?

Many retail business areas and processes can be optimized with the help of digital concepts. Here are some examples:

• Payment processing: Retailers can digitize their sales processes to offer customers modern ways to pay. With Stripe Payments, for example, merchants gain access to more than 100 payment methods, making it easy to accept and manage all transactions.
  
• Online stores: Retailers also have the option of setting up their own online store through which they can sell their products and services.
  
• Cashless payment at the point of sale: In traditional brick-and-mortar retail, companies can offer cashless payments with card readers or on mobile devices. Via the Stripe Terminal, merchants can get pre-certified card readers such as the Stripe Reader S700 or mobile devices such as the BBPOS WisePad 3 to enable card payments. Tap to Pay enables cashless payments without needing an additional device. Retailers can then use an iPhone or Android device to accept payments and implement them into their accounting system.
  
• Automated accounting and invoicing: Digitization in retail can also mean optimizing internal processes, for example, to save resources or get a better overview of finances. Stripe Invoicing supports retailers in creating and sending legally compliant invoices, and can also be used to simplify and automate invoicing to speed up your accounting operations. If you are looking for support with recurring invoicing, Stripe Billing can help by increasing efficiency and automating your workflows and reducing manual processes. On top of that, detailed financial and sales reports can be accessed directly in the dashboard.
  
• Personnel management: Retailers can facilitate the administration of employee data, performance evaluations, or further training measures by using personnel management software. You can also use digital platforms to make recruiting and onboarding processes more efficient.
  
• Communication: Retailers can optimize both internal and external communications through the use of digital meetings. This saves travel time and costs for everyone involved.
  
• Collaboration: Retail businesses can also improve collaboration between employees using digital tools. Cloud-based tools make it possible to edit documents in real time, regardless of location.
  
• Marketing and sales: Digitization in retail also includes improved online visibility and a targeted approach to potential customers. This is possible through SEO, search engine, email, and social media marketing, among other things. Retailers can use CRM systems to carry out personalized marketing campaigns and efficiently manage customer interactions.
  
• Logistics: You are also able to optimize logistics processes through digitization. Appropriate software can simplify the traceability of deliveries as well as inventory and warehouse management.
  

How can retailers develop a digitization strategy?

Retailers need to base all digitization measures on a corresponding strategy. This is key so individual measures can work together and achieve synergy.

• Analyzing the initial situation: As in other areas, digitization in retail must first involve analyzing and evaluating the current situation. On the one hand, checking which processes are already digitized is important. On the other, retailers will also want to identify the areas and workflows that offer potential for optimization. It is also recommended to think outside the box: which new business models and areas can you address through digitization measures?
  
• Defining the goals: Once the status quo is clear, it is possible to look to the future—define specific objectives of the digitization strategy. This means identifying goals for digitizing processes and particular areas of the business, and determining the expected effects. These goals can, for instance, be increased sales or customer satisfaction.
  
• Identifying relevant technologies: In the third step, as a retailer, you need to find out which technologies and tools are necessary to achieve your goals.
  
• Prioritization and budgeting: Prioritize the planned measures based on your wishes and the given urgency. The budget available to you must also be included in the considerations. Familiarize yourself with the specific costs of each measure you plan to take. Finally, you determine the order that you want and can implement the desired measures.
  
• Training: All employees need to be involved with the new technologies and processes. Therefore, you need to offer internal or external training to ensure smooth implementation.
  
• Monitoring and adaptation: To evaluate the success of your digitization strategy, you must implement appropriate monitoring and evaluation systems. Only by reliably assessing whether a specific measure is achieving the desired effects can you adapt it in line with your objectives. By adapting your digitization strategy, you need to also follow up on new findings and market requirements.
  

Roadmap for developing a digitization strategy for retailers

What are the advantages of digitization for retailers?

In the Bitkom study, “How digital is retail?,” the companies surveyed cited simplified communication with business partners and efficient ordering options as the most important benefits. Additionally, the fact that digital technologies can bring independence from opening hours was also rated positively, among other things, since customers can order goods and services around the clock. In the study, respondents cited other advantages, such as an individualized approach, simplified communication, and improved service for customers. Finally, the digitization of retail is also associated with a possible business model expansion.

Beyond the advantages mentioned in the study, we have discovered further benefits of digitization for retailers: automated processes can reduce operating costs and save time in business operations. Furthermore, by collecting and analyzing customer data, merchants can make informed business decisions and, ideally, identify trends early on in order to optimize their product range and increase sales with the help of targeted marketing strategies. Digital solutions can also improve transparency and traceability in the supply chain. This allows retailers to monitor where their goods are in real time and manage stock levels more efficiently. All of these benefits lead to improved competitiveness.