The retail industry has undergone sweeping changes over the past few decades, with new sales channels opening up, including self-service stores, discount stores, specialist outlets, DIY stores, cash and carry outlets, shopping malls – to name just a few. Simultaneously, huge outlets have emerged. Many of the major sales outlets now promote heavily on price, leveraging their purchasing power. The breakneck speed of the market and tremendous price pressures were too much for many smaller retailers who have now been squeezed out of the market. New kinds of hybrid shoppers have emerged, who are becoming more and more difficult to comprehend and tend to "drive their Porsche to Aldi before buying French foie gras at the delicatessen." As part of his Ph.D. studies at Steinbeis University Berlin, Klaus Hacker is researching the options open to small, service-intensive retailers to focus more on market needs and gain competitive edge.
The upturn in the German economy after the Second World War has changed a sellers’ market into a buyers’ market. Consumers’ perceptions of small, service-intensive retailers now largely depend on the quality of the retail employees. Their skills and market knowledge shape the image of the company they work for, and thus have an impact on business success. But at the same time, there has been a shift in Germany toward post-materialism. This shift in values, hand in hand with higher levels of education, has had a major influence on purchasing behavior. In turn, this has had a strong impact on retailing. New sales channels have intensified the levels of competition and expanded the variety on offer. Green-field sites, encompassing whole villages of outlets, entice shoppers with free parking and convenient access.
The danger with these developments is that inner city areas lie fallow. Many large retailers now promote heavily on low price, while standalone retail outlets and their purchasing cooperatives struggle to find ways just to hold their own in the increasingly competitive market. There has been little scientific research into small, service-intensive retailers and, in general, smaller companies do not have the financial resources to carry out their own research. In addition to this, many retailers are skeptical about marketing as they feel they have sufficient exposure every day to consumers and can still compete simply on price.
Nonetheless, focusing on market needs can improve the standing of a company, motivate workers and encourage staff members to acquire new skills. One aim of companies should be to convert the 69% of "unmotivated" shop workers into "motivated" workers (source of statistics: Gallup Germany). At the same time, market orientation – focusing more closely on market needs – can be turned into a business USP. But what exactly is market orientation? This was a debate set firmly underway by Shapiro in an article titled "What the Hell is ‘Market Oriented’?" In 1990, Kohli and Jaworski (1990) finally came up with a definition for it:
Klaus Hacker hopes his research project will answer a number of questions. On the one hand, he is examining what can be done to improve market orientation among employees. On the other, he is analyzing which key factors make sense in the first place when it comes to improving market orientation. Based on his two postulations, the ultimate aim of his study is to derive recommended actions for businesses.
Hacker conducted interviews with external and internal experts. Based on an evaluation of key literature, plus the results of his expert interviews, he then developed a questionnaire which he made available online to 943 companies working in the retail industry. The 141 usable responses that came back provide a number of descriptive and model-specific findings. 91% of respondents have 30 or fewer employees. 75% run 1, 2 or 3 retail outlets. 94% of the companies provide consumer services. 93% of respondents are involved in cross-selling. Some companies have certain shortcomings in terms of Internet use, raising their profile and providing customer information: Only 35% use the Internet for offers, customer information or social media, and only 45% offer specialist training or instruction on using products in order to generate customer loyalty or raise the profile of their company.
Purchasing cooperatives have plenty of potential to provide cooperative members with suitable instruments to raise their company profile, especially when it comes to the Internet, customer training and customer loyalty. Model-based analysis should now examine the influence of the following factors on market orientation:
An initial analysis of the results has confirmed that there are indeed ways for companies to improve their competitive standing in markets by enhancing their market orientation. And, for the first time, there are now research findings on small, service-intensive retailers. This makes it possible for the 35,000 small, service-intensive retailers (in Germany) to work out key actions and identify ways to motivate workers more and improve their company’s competitiveness. As such, it would not be a stretch to say this represents a paradigm shift in company marketing for small, service-intensive retail businesses, and their purchasing cooperatives.