MIND THE GAP! Are Local Retailers misinterpreting customer expectations regarding digital services?

Local owner operated retail outlets (LOORO) are in a phase of intense transformation. Digitalization and e-commerce are questioning the traditional retail business models. A survey conducted in a mid-sized German city points out that local retailers are aware of the importance of digitalization for their businesses in future, but nonetheless do not think that their customers actually expect sophisticated digital services by them. In contrast to these findings, another recent study for the same city just revealed that 45% of all asked customers have already changed their buying behavior towards online retail. Shopping-convenience (e.g. time saving) is a known key factor for the buying decision and for the channel choice of customers, but local retailers do not seem to be fully aware about the opportunities of digital shopping convenience for their own business. If so, they run the risk of losing sight of the continuously developing digitalization-based business model innovations and the accordingly changing customer expectations, which would inevitably weaken their competitive position. In this context, this paper uses the SERVQUAL Gap-Model by Zeithaml et al. (1985) to classify and interpret these observations and offers examples of digital capabilities for LOORO to facilitate the Customer Journey.