Is digitality a threat, challenge or opportunity for brick and mortar retailers? We asked Juhani Pekkala, Managing Director of the Finnish Commerce Federation, for his thoughts on the matter.

Digitality is spreading to brick and mortar shops. It can be used to improve service and create new types of customer experiences, even in brick and mortar shops.
The increasing significance of digitality is an inescapable fact. Industries, including retail, simply must adapt to it. It may involve threats, but it is more important to focus on the opportunities it brings. After all, the opportunities clearly outweigh the threats.

The growth of online retailing is significant, but it is not the main reason behind the problems of the retail industry. According to the media, the Finnish retail sector is lagging behind in the development of online retail, and Finland is no longer at the forefront of digital development in other sectors either.
The main reason behind the problems of the retail industry is weak domestic demand, or purchasing power. Online retail also has an effect, but its significance varies from one retail sector to the next.

Finland may not have been at the leading edge of development in online retail, but a lot has nevertheless been achieved. The collapse of the Nokia cluster has robbed Finland of its position of leadership in the area of digital business, but now we need new moves in new directions. Finland still has the know-how and the technology.

According to a forecast by the Finnish Commerce Federation, the retail sector will not bottom out and turn to growth until next year. Meanwhile, the employment rate continues to fall.
If the economy does not recover and taxes are increased, the retail and service sectors will employ fewer people in the future than they do today. There is a risk of jobs in online retail draining overseas, and the number of people employed in this industry in Finland appears to be on the decline.

To the consumer, digitalisation is manifested in the form of various online services. The consumer can use the Internet to find content such as information, ideas and instruction. Making actual purchases online is only a small part of Internet usage. The brick and mortar retail industry is also undergoing a process of digitalisation, which presents opportunities for developing various services that make shopping in physical retail locations more convenient.
A tremendous range of interesting and entertaining digital services can be developed for the brick and mortar store environment. The digital brick and mortar store of the future is an appealing place that offers rich experiences. Consumers simply feel they must visit it in person.

Text: Nina Garlo-Melkas

Published

20.5.2014
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