Demanding Retail Environments
Most retailers today allow their customers to shop via multiple channels, offering some in combination of traditional stores, catalog/call centers, and ecommerce sites. However,
due to the disparate infrastructures that typically underlie these individual channels, consumers who "channel hop" as part of their shopping behavior often face an experience that is fragmented, inconsistent, and inflexible.
This situation presents a significant opportunity for forward-looking retailers. Those who can make the transition from their current multichannel infrastructures to a fully integrated, cross-channel retail environment stand to gain many rewards. These include greater visibility into their customers and operations, enhanced revenue, and the customer loyalty that comes from providing time-starved consumers with the convenient, consistent and flexible shopping experience they increasingly expect.
This paper explores what cross-channel transparency looks like through the consumer's eyes, the costs retailers incur by maintaining the status quo, and key steps retailers need to consider as they undertake cross-channel initiatives.
" The Internet boom has morphed into the multichannel phenomenon and that phenomenon has brought new challenges to global retailers. " - Aberdeen Group
The Evolution of Multichannel Retailing:
From a Pitched Battle to an Arranged Marriage in Just 10 Years
In hindsight, the predictions that online commerce would one day supplant bricks-and-mortar stores and well-established direct merchants now seem laughably naive. While ecommerce continues to grow at an annual compounded rate of 25% to 35%, it still only accounts for about 2.5% of total retail sales; retail stores remain the predominant sales channel.
In fact, what initially looked like a pitched battle between "bricks and clicks" has come to resemble an arranged and sometimes bumpy marriage between the two, with leading retailers pursuing multichannel strategies that encompass some combination of stores, catalog/call centers, and ecommerce sites. Reflecting this trend, most traditional retailers now supplement their store locations with an ecommerce site. Leading direct merchants, such as Lands' End and L.L. Bean, were early adopters of ecommerce and more recently have opened or greatly expanded their store locations.
While multichannel selling is not a guarantee of success, it does appear to be a prerequisite. In a study conducted by Aberdeen Group, 64% of respondents who were categorized as best-in-class retailers reported that they sell through all three channels, and 27% sell in stores and on the Internet. Only 9% of those best-in-class retailers sell through stores only and none of them sell through the Internet only.
Understanding the Difference Between Multichannel and Cross-Channel Environments
Now, the next stage in retail's evolution is under way as retailers strive to make the transition from today's multichannel environments to fully integrated, cross-channel environments. The distinction is a vital one. Multichannel environments typically consist of disparate, channel-specific technology infrastructures and business processes that were developed over a number of years. Often, there is extensive focus on processes within a channel but minimal integration across channels. As a result of this situation, the retailer has a fragmented view of its customers, limited visibility into its operations, and a lack of flexibility when it comes to implementing customer-friendly policies.
Mirroring this state of affairs, customers who use more than one channel to shop - as millions now do - have an equally fragmented and inflexible experience.
- Though they are ostensibly dealing with one organization, they often encounter different inventory, pricing, policies and merchandising, depending on the channel being used.
- The person they speak to at the call center seems to know a great deal about them; the clerk in the store checkout line knows almost nothing about them.
- Over the lifecycle of any particular transaction, they must "stay in channel", even if it's inconvenient to do so, because the retailer's own personnel have no way to view or modify the transaction from another channel.
- Once an order is confirmed, it is cumbersome to immediately change or cancel the order because the transaction may not be posted to the system for hours - and therefore is not visible to customer service representatives.
