Chapter 3

Pasig Catholic College

Multi-Channel Retailing

What is Retailing?

It is a high-tech, high-touch growth industry that offers opportunities for people to make profit and loss decisions early in their careers.

Multichannel Retailing Retailers that sell merchandise or

services through more than one channel.

Retailers can leverage the unique benefits provided by each to attract and satisfy more customers.

Questions:1. What are the unique customer benefits offered

by the three retail channels: stores, catalogs, and the Internet?

2. Why are retailers moving toward using all three channels?

3. How do Multichannel retailers provide more value to their customers?

4. What are the key success factors in Multichannel retailing?

5. How will technology might affect the future shopping experience?

Benefits Provided by Different Channels

Stores Catalogs InternetBrowsing Convenience Broad selection

Touching and feeling products

Safety Detailed problem-solving Information

Personal service Visual presentation Personalization

Cash payment

Entertainment & Social interactionImmediate gratification

Risk reduction

Stores Browsing Touching and feeling products Personal service Cash payment Entertainment & Social interaction Immediate gratification Risk reduction

Browsing Many consumers surf the Internet

and look through catalogs for ideas, though most consumers still prefer browsing in stores.

Touching and Feeling Products Opportunity for customers to use all

five of their senses – touching, smelling, tasting, seeing, and hearing.

Personal Service Sales associates still have the

capability of providing meaningful, personalized information.

Cash Payment Stores are the only channel that

accept cash payment.

Entertainment and Social Experience In-store shopping can be a

stimulating experience for some people. It provides a reality in their daily routine and enabling them to interact with friends.

Immediate Gratification Stores have the advantage of

allowing customers to get the merchandise immediately after they buy it.

Risk Reduction The store will be there to receive

defective or unsuitable merchandise and issue you a credit for it.

Catalog Channel Provides some benefits to customers

that are not available from the store or Internet channels.

ConvenienceSafetyVisual presentation

Convenience Consumers have the added

convenience of not being restricted to a place with Internet access and a computer;

They can look through a catalog on the beach or propped up in bed.

Safety Security in malls and shopping areas

is becoming an important concern for many shoppers, particularly with the elderly.

Quality of Visual Presentation The photographs of merchandise in

catalogs, while not as useful as in-store presentation, are superior to the visual information that can be displayed on a CRT screen.

INTERNET CHANNEL Provides convenience and safety benefits

offered by catalogs and other non-stores formats.

Has the potential to offer a greater selection of products and more personalized information about products and services.

Broad selection Detailed problem-solving Informatio

n Personalization

Broader Selection The vast number of alternatives

available to consumers.

Detailed Problem-Solving Information Provision of information to help

customers make better purchase decisions.

Customers can format the information so they can effectively use it when evaluating products.

Personalization Most significant potential benefit of

the internet channel is its ability to personalized the information for each customer economically.

Personalized Customer ServicePersonalized OfferingPersonalization in the Future

Personalized Customer Service Enables electronic retailers to

automatically send a proactive chat invitation to customers on the site.

Offering live, online chats. ONLINE CHAT – provides customers with the

opportunity to click a button at anytime and have an instant messaging e-mail or voice conversation with a customer service representative.

Personalized Offering Provides an opportunity for retailers

to personalized their offerings for each of their customers.

Recommendation of complimentary merchandise.

Personalization in the Future Benefits that will be available to

consumers’ shopping via the Internet in the future.

Access to more retailers and deeper merchandise assortments.

-Hesitate to buy.-Limited information-Offer little benefits

-Provides information about the consistency and quality of merchandise

-Provides information about the consistency and quality of merchandise.

-Limited information -Offer little benefits

-Limited information-Offer little benefits

-Using of 3D / zoom-Virtual models-digitized body

-Limited information -Offer little benefits-consume time & effort

-Limited information-saving time & effort

-Useful information-saving time & effort

-Limited information -Offer little benefits-consume time & effort

-Limited information -Offer little benefits-consume time & effort

-Useful information-saving time & effort-prefer by banks

Role of

Using

Gifts

Services

Store Catalogs Internet

Touch and Feel Attributes

Technology

Brands

Evolution Toward Multi-channel

Retailing

Four Reasons:1st –

Overcoming Limitations of an existing format

2nd – Expanding Market Presence

3rd – Increasing Share of Wallet

4th – Insights into Customer Shopping Behavior

Overcoming Limitations of an existing Format

The amount of merchandise that can be displayed and offered for sale in store is limited.

Limitation that store-based retailers face is inconsistent execution.

Expanding Market Presence Adding an electronic channel is particularly

attractive to firms with strong brand names but limited locations and distribution.

Store

Catalog Web Site

5%

19% 43%

11%

6%

16%

Increasing Share of Wallet Electronic and catalog channels drive

more purchases from the stores, and the stores drive more purchases from the Web site.

Store-based retailers can also leverage their stores to lower the cost of fulfilling orders and processing retuned merchandised if they use the stores as “warehouse” for gathering merchandise for delivery customers.

Insights into Customer Shopping Behavior

An electronic channel can provide valuable insights into how and why customers shop and are dissatisfied or satisfied with the experience.

Offers the opportunity to collect more detailed information about customer preferences.

Capabilities Needed for

Multichannel Retailing

Skills to operate and realize the benefits of Multi-channel retailing.

1. Developing assortments and managing inventory

2. Managing employees in distant locations3. Distributing merchandise efficiently from

distribution centers to stores4. Catalogs5. Web sites6. Processing orders electronically7. Efficiently distributing individual orders to

homes8. Operating communications and information

systems

Capabilities Needed for Multichannel Retailing

Develop assortments & manage inventory High High Low Low

Manage people in remote locations High Low Low Low

Efficiently distribute merchandise to store High Low Low High

Present merchandise effectively in a printed format & distribute catalogs

Med. High Low Low

Present merchandise effectively on a web site Med. High High Low

Process orders from individual customers electronically Med. High High Low

Efficiently distribute merchandise to homes & accept returns

Med. High Low Low

Integrate information systems to provide a seamless customer experience across channels

Low Med. High low

Store-Based RetailersCatalogs Retailers

Niche Electronic RetailersMerchandise Manufacturers

Issues in Multichannel

Retailing

Integrated Shopping ExperienceBrand ImageMerchandise AssortmentsPricing

Integrated Shopping Experience Many retailers are finding it easier to

offer integration one step at a time rather than trying to link everything from the start, which could be financially and technologically daunting for them and alienate consumers of things don’t go well.

Brand Image Multichannel retailers need to project

the same image to their customers across all channels.

Customers enter the Web site through an image of the red doors used in its stores and are greeted by the phrase,“Always classic, never closed.”

Merchandise Assortments Customers expect that everything

they seen in a retailer’s store will also be available on its Web site.

Many multi-channel retailers have tailored the assortments sold on their web site to include only products their customers are likely to buy over the Internet.

Pricing Represents another difficult decision

for a multi-channel retailer.

Retailers need to adjust their pricing strategy because of the competition they face in different channels.

Multichannel retailers are beginning to offer new types of pricing, like auctions, that take advantage of the unique properties of the Internet.

Summary- Retailing vs. Multi-Channel Retailing- Importance and contribution of

utilizing multi-channels- Benefits in adopting a multi-channel

strategy- Three basic channels and skills

needed to realize benefits of multi-channel retailing

- Issues in multi-channel retailing

ConclusionThe pervasiveness of information

and communication technologies has shifted economic power from retailers, which once could dictate the terms of purchase, to consumers, who can now change loyalties as easily as they send e-mail. Recapturing those consumers is the top priority, and success of this can be done if loyalty can be rebuild quickly, efficiently and without losing control of costs.

ConclusionAn effective and profitable

strategy for multi-channel retailing requires far more than simply bolting on a dot.com division or a telesales service center. A retailer’s retail channels must operate on an integrated whole. Channels must have no conflict between channels, no cannibalizing with each other.