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 selectionTouching and feeling Safety Detailed problem-products solving InformationPersonal service Visual presentation PersonalizationCash paymentEntertainment & SocialinteractionImmediate gratificationRisk 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 Opportunityfor 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 Providessome benefits to customers that are not available from the store or Internet channels. Convenience Safety Visual 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 Securityin 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 Information 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 Service Personalized Offering Personalization 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.
Touch and Feel Attributes Store Catalogs Internet -Hesitate to buy. -Provides information -Provides Role of -Limited information about the consistency information about and quality of the consistency Brands -Offer little benefits merchandise and quality of merchandise. -Limited information -Limited information -Using of 3D / -Offer little benefits -Offer little benefits zoom Using -Virtual modelsTechnology -digitized body -Limited information -Limited information -Useful information -Offer little benefits -saving time & effort -saving time & -consume time & effort Gifts effort -Limited information -Limited information -Useful information -Offer little benefits -Offer little benefits -saving time & Services -consume time & effort -consume time & effort effort -prefer by banks
Evolution Toward Multi- channel Retailing
Four Reasons:1st – Overcoming Limitations of an existing2nd – Expanding Market Presence3rd – Increasing Share of Wallet4th – 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 5% 16% 19% 43% 11% Catalog Web Site 6%
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. Offersthe opportunity to collect more detailed information about customer preferences.
Capabilities Needed forMultichannel Retailing
Skills to operate and realize thebenefits of Multi-channel retailing.1. Developing assortments and managing inventory2. 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 RetailingDevelop assortments & manage inventory High High Low LowManage people in remote locations High Low Low LowEfficiently distribute merchandise to store High Low Low HighPresent merchandise effectively in a printed format & Med. High Low Lowdistribute catalogsPresent merchandise effectively on a web site Med. High High LowProcess orders from individual customers electronically Med. High High LowEfficiently distribute merchandise to homes & accept Med. High Low LowreturnsIntegrate information systems to provide a seamless Low Med. High lowcustomer experience across channels Store-Based Retailers Niche Electronic Retailers Catalogs Retailers Merchandise Manufacturers
Issues in Multichannel RetailingIntegratedShopping 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. Retailersneed 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
Conclusion The pervasiveness of informationand communication technologies hasshifted economic power from retailers,which once could dictate the terms ofpurchase, to consumers, who can nowchange loyalties as easily as they sende-mail. Recapturing those consumersis the top priority, and success of thiscan be done if loyalty can be rebuildquickly, efficiently and without losingcontrol of costs.
Conclusion An effective and profitablestrategy for multi-channel retailingrequires far more than simply boltingon a dot.com division or a telesalesservice center. A retailer’s retailchannels must operate on anintegrated whole. Channels must haveno conflict between channels, nocannibalizing with each other.