Digitalisation at brick and mortar retailers in the sporting goods industry

The digital transformation is currently affecting the economy like never before. The process, in which business models, products and services, as well as corporate structures are being redefined in order to incorporate digitalisation, is also part of everyday life in the sports business. The key issue here is expansion of the digital user experience to cater more effectively to the requirements of the respective target groups. For those looking to increase revenue through the digital transformation, it is essential to support and extend the sales process with digital elements. The sports industry is taking advantage of precisely this potential. "Networked technology is shifting the focus from products to customers – something that consumers are now demanding. It is therefore down to merchants to unite the worlds of brick and mortar retail and digital commerce in a genuine omnichannel approach." Niv Liran, Chief Product Officer at Unzer. The traditional retail trade simply cannot afford to rest on its laurels. After all, the shopping experience for many customers already starts while sitting at home on the sofa. Customers today prefer to get in touch with companies digitally via the Internet and apps. Retailers are therefore seeking to combine the advantages traditionally enjoyed by brick and mortar shops with a world of digital experiences. This offers customers benefits in the form of greater convenience and additional services – for example through mobile payment via apps or click & collect options. Large volumes of data are captured here and can be used by sports companies as a valuable resource.

The technologies used, particularly in brick and mortar shops, play an important part for the sporting goods industry here. They support consumers during their time in the shop - for example with indoor navigation, yet also virtual shopping consultants that employ augmented reality to provide customers with additional product information. In other words, they integrate virtual objects into the real world. This can also take place via smartphone, whereby customers film their selected product, for example running shoes, with their camera and then have corresponding information brought up on the display. These examples lead to a so-called "seamless buying experience" and can also include magic mirrors or digital changing rooms. "The data we have been collecting for years shows that customers are increasingly demanding cashless payment options. Not only that, they generally also expect to pay at their convenience – whether online or directly in the business. Retailers that fail to cater to these requirements will leave revenue on the table." Boris Bongartz, Director Sales Key Account. Another topic is of key importance here, not least due to the coronavirus pandemic, is the trend towards cashless payment solutions. The fact that more and more well-known big players are fuelling this trend with services is a major advantage for the retailer landscape. It generates trust and promotes both integration and acceptance of the new means of payment. With a white label solution from Unzer, payment types can also be visually matched to the look and feel of a merchant's brand. Third-party providers, such as a payment provider, are then no longer visible for customers. In-store solutions help retailers secure customer loyalty at the POS and create a positive customer payment journey. Consumers then feel in good hands, as well as securely and efficiently supported here.

Having a powerful partner at your side with reliable risk management also helps prevent payment defaults, particularly for the retail trade. Unzer also offers an intelligent risk management system that is highly effective without jeopardising valuable sales. Tools that also make use of the benefits associated with digitalisation in 2021 include real-time credit checks. At digital sales locations, these are implemented in such a way that they do not slow down the checkout process and therefore have no negative impact on the conversion rate. The changes are being driven primarily by the mobile payment trend. Self-checkout stations also reduce waiting times for customers who are in a hurry and do not wish to wait in a queue. Here, products are already scanned when placed into the shopping trolley. Customers are then free to choose when and where they wish to complete electronic payment in the shop.

In the field of sports, in-store technologies for example allow a customer's running style to be analysed or their feet measured. This in turn makes it possible either to recommend a specific running shoe that matches the customer's recorded movements or even to produce a custom shoe that is tailored specifically to their sporting activities. Options for designing sports shoes individually in the online shop are also provided. After all, more and more customers are now demanding personalised sporting goods. Another aspect of digitalisation in the sporting goods industry is linking hardware with digital services. For example, customers can purchase running shirts that record information on the posture of the wearer. The phenomenon of self-optimisation, which is trending among both professional and amateur athletes, is a powerful driver of digitalisation in the industry. Whether activity trackers, digital training programmes, digital nutrition coaches, health apps, nutritional protocols, pulse measurements, sleep monitoring or speed measurements – smart products are in demand.

Empirical studies¹ have shown that consumers are displaying a preference for hybrid shopping models. Sports retailers are therefore combining the benefits of brick and mortar businesses with digital services, such as cross-channel and omnichannel shopping. An integrated omnichannel business model can help a sports retailer remain competitive. This for example includes enabling customers to call up additional product information on their smartphone, as well as do their shopping in the actual shop and then have the products delivered to their home. However, it also allows them to do their shopping online and have it delivered to their local shop, make online product reservations and use classic online payment types at the point of sale. “Now is the perfect time for sporting goods retailers to establish themselves as full-scope operations that combine both digital and analogue processes. We then offer support as payment provider and partner. The data we collect in the background enables retailers to establish the correct focus and draw the right conclusions. Adopting this approach also helps merchants increase their conversion rate. This is one way in which we help them achieve increased revenue." Boris Bongartz, Director Sales Key Account. The hard boundary that used to exist between online and offline business is therefore becoming increasingly blurred.

As already described, customers are increasingly moving away from the role of passive users and becoming active ‘prosumers’ as the process of digitalisation advances. Customers also influence the opinions of other potential shoppers on social media platforms with respect to products and offers, thereby helping to shape the product development process. Through customer segmentation methods that are based on analytics, big data analyses help businesses get to know and understand their customers better. This in turn helps them derive corresponding personalisation measures. Sports goods manufacturers also support their communities directly on social media platforms. This helps them establish customer loyalty, gain detailed insights and receive precisely this kind of continuous feedback on products and services. There can be no doubt that digitalisation has greatly simplified access to this kind of information.

The sports industry is more in demand than ever before, as underlined by a statistic from leading statistics portal Statista² that presents the revenue generated by specialist German sports retailers on a year-by-year basis. For example, revenue in 2019 topped the €8 billion mark for the first time. The sports sector is also acquiring more and more customers from companies that encourage their own employees to engage in fitness activities as a way of staying fit and healthy for work. The social relevance of health and fitness is rising, which is leading to growth in the respective market segments. Indeed, sport has now become a lifestyle. It is often also difficult to describe certain products adequately online. This is particularly true of higher-priced goods with special requirements in terms of their look and feel or highly technical products - which motivates customers to visit a physical shop in future to get a more accurate picture. The key in the sports industry is to promote emotional products and help shoppers find like-minded people to engage in sports activities together. The trend is increasingly moving in the direction of defining sport as a part of the leisure and recreation industry, whereby the shops are developing into leisure destinations. As part of the digital disruption, the point of sale is increasingly also being framed as a world filled with authentic sporting experiences.