Multi-Channel Management: Should Retailers Integrate Strategies?

Consumers now they have the option of online purchases, catalogue as well as shopping online and picking up in-store, so to remain competitive, retailers must accommodate these changes and augment their traditional retailing strategies. Before with our Eddie Bauer case, we struggled with the question whether or not there should be different strategies for each channel. However, I do think having an integrated multi-channel system will enable bundling as well as cross-selling opportunities for most retailers.

Wal-Mart and Target are among the most heavily trafficked e-commerce Web sites. Retail chains accounted for about 40% of online sales in 2004 compared to just over 25% for pure-play Internet retailers. One reason traditional retailers are going online in droves is the shift in consumer spending from stores to the Internet. In 2000, Internet sales represented 0.9% of total retail sales, according to the US Department of Commerce.

Personally, I do a lot of my research online whenever I have a big purchase to ensure high product knowledge before I even step in the store. That is why I believe retailers should closely match their on-line marketing to their in-store marketing. However this strategy will widely differ on the nature of the retailer. An example would be a technology store that sells computers, it is a product that requires a lot of emotional and time investment, and most people would probably be more comfortable researching it online and comparison shopping before they enter the store. However, in clothing such as the success of Victoria Secret, different merchandise is purchased through catalogue/online than in store. The concept of researching online first is not gender related, BIGresearch polled over 7,300 US consumers and 74% of both males and females say they occasionally or regularly research one or more products online. Retailers who focus only on in-store shopping risk losing incremental sales opportunities as both men and women are equally engaged in this dynamic.

I also believe there is this big push for retailers to integrate their online shopping channel with in-store because it enhances their RVP. The convenience aspect is greatly enhanced when retailers utilize cross channel techniques such as allowing customers to buy online and pick up in store because now the customer knows their product is in the store and does not have to worry about delivery dates/shipping costs. This eliminates the inconvenient consequence of arriving at a store and the product being out of stock as well as solves the dilemma of lost in mail products or being at home to sign a delivered package.

Sophisticated online shoppers, many of whom are also the biggest spenders, expect their favorite retailers to offer a satisfying cross-channel shopping experience, whether it is to browse print catalogs before buying from e-catalogs, order goods online followed by in-store pickup or research online prior to making store purchases. Cross-channel shoppers spend, on average, 14% more than single-channel shoppers, according to Jupiter Research. And Web research influences 20% of store sales, says Forrester Research.

Without integration, the needs of these cross-channel shoppers would be unserved and retailers could lose this highly profitable target market. Will every retailer integrate? We’ll have to wait and see.

Links:

Retail Firms Treat Web Customers Best

Online Research, Offline Buy

Online Retailers Choose Between Everywhere to Nowhere

Multi-Channel Shopping: The Rise of the Retail Chains