Karlsruher Institute for Technology: Shop online or on site – an individual choice
The hurdles associated with the purchase, such as shipping costs or the time it takes to get to the store, are central to the individual choice of the source of purchase. When deciding between online shop and local retail, the personal assessment of purchase security, environmental protection aspects and working conditions also play a role. This is shown by a study using microeconometric models at the Karlsruhe Institute of Technology (KIT). Partial results of the representative study funded by the Deutsche Forschungsgemeinschaft are published in the publications Papers in Applied Geography and Raumforschung und Raumordnung.
The data collection for the evaluations now available took place in 2019 – i.e. before the pandemic-related restrictions on stationary shopping. “During the lockdown, stationary retail establishments for non-daily needs were and are closed. In addition, there are voluntary changes in behavior in the population. Of course, that shifts purchasing power to online retailing, ”explains Dr. Thomas Wieland, head of the project “On the spatial effectiveness of online trading”, started in 2018 at the Institute for Geography and Geoecology (IfGG) of KIT. In its second phase, which began in April 2021, the project, which will run until 2022, will therefore examine, in addition to the previous goals, whether the temporary lockdown has led to a sustained shift in favor of online trading.
Variety of analog and digital shopping channels
The digitization of retail is increasingly influencing city centers. Consumers can choose from a large number of analog and digital shopping channels (multi-channel) from online shops to local specialty shops to cross-channel retail, which links the stationary shop with an online shop. “Most customers buy both ways, but have certain personal inclinations, where the place of residence and subjective attitudes play a role,” says Dr. Thomas Wieland, head of the project “On the spatial effectiveness of online trading”, started in 2018 at the Institute for Geography and Geoecology (IfGG) of KIT. “Younger people tend to buy online more often than older people,” says the scientist. The preference for a certain shopping channel depends at least as much on subjective attitudes, such as skepticism as to whether one’s own data is protected when buying online or whether the product is actually delivered as requested. Wieland also cites the individual personal assessment of whether online trading has a negative impact on the environment or whether the suppliers’ working conditions are poor as “one of the many adjusting screws”.
Obstacles in the purchasing process are crucial
“The transaction costs, ie the various hurdles that have to be overcome in the purchasing process, are central to the purchasing decision,” emphasizes the economic geographer. Whether the next stationary electronics store can be reached in five or 25 minutes, whether shipping costs three or six euros, but also whether it is raining and the desire to get wet on the bike ride to the store – all this influences the weighing up between online and offline purchases, although not all of these explanatory variables can be investigated. “In the food trade, good accessibility is a decisive factor,” says Wieland.
For its study related to the electrical and food retailing, Wieland and his team questioned a total of 1,400 consumers in the more urban region of the Middle Upper Rhine with the regional center of Karlsruhe and in the more rural southern Lower Saxony with the regional center of Göttingen. The answers were evaluated with the help of microeconometric models. “The models operate at the level of the individual consumer and the individual online or offline purchasing source,” explains the expert. “So far, there has been a lack of studies that combine various possible explanations for the behavior.”
Integrated online shop strengthens the retail sector
Two thirds of the respondents stated that they found out about products and compared prices on the Internet, regardless of whether they ultimately buy online or offline. The model analyzes showed that providers who have an integrated online shop have significantly higher customer flows. “Cross-channel integration can be a good opportunity for owner-managed stationary retailers to improve their own market position,” emphasizes Wieland. Information about availability is an important parameter: “Anyone who sees online that the desired smartphone is in stock in their own city center may immediately set off to buy it there”. However, some medium-sized companies cannot be found online. “Cooperatives such as in the electronics trade or city management can provide support here and make companies visible online,” says the scientist. He emphasizes that it is important to think about online trading in spatial planning and town planning and also to include it in business location and expansion planning.
Click and Collect: Little asked about before the lockdowns
The study also shows that city dwellers are still more inclined to buy online. The study for the Click and Collect service showed only a very small effect – however, the data collection in 2019 took place before the pandemic-related restrictions on stationary shopping. In its second phase, which began in April 2021, the project includes a further study area in Saxony-Anhalt and, in addition to the previous goals, examines whether the temporary lockdown has led to a sustained shift in favor of online trading.
The German Research Foundation (DFG) finances the project “On the spatial effectiveness of online trading” with around 200,000 euros for personnel and material resources.