Retail Marketing Chapter 3 Multi Channel Retailing

1. McGraw-Hill/Irwin
Retailing Management, 6/e Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 3
Multi-Channel Retailing

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6. • Khaadi: Khaadi is a popular Pakistani fashion brand with numerous
physical stores across the country. They offer a wide range of
clothing and accessories for men, women, and children.
• ChenOne: ChenOne is a Pakistani retail brand that specializes in
home textiles and fashion apparel. They have multiple brick-and-
mortar stores in various cities in Pakistan.
• Servis: Servis is one of Pakistan's largest footwear retailers, with a
network of physical stores selling shoes for men, women, and
children.
• Naheed Supermarket: Naheed Supermarket is a well-known
grocery and household goods retail chain with several stores in
Karachi, Pakistan.
• HBL Bank: Habib Bank Limited (HBL) is one of Pakistan's largest
banks with numerous brick-and-mortar branches throughout the
country, offering banking and financial services
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8. • Daraz.pk: Daraz.pk is one of the largest e-commerce platforms in Pakistan, offering
a wide range of products, including electronics, fashion, beauty, and home
appliances. It connects buyers and sellers, providing a convenient online shopping
experience.
• Telemart.pk: Telemart.pk is an online retail store in Pakistan that sells electronics,
gadgets, fashion, and other consumer goods. They offer a variety of products and
payment options for customers.
• Yayvo.com: Yayvo.com is an online shopping website in Pakistan that offers a
diverse range of products, including electronics, fashion, home appliances, and more.
It provides a platform for various brands and sellers to showcase their products.
• Symbios.pk: Symbios.pk is an online shopping platform known for offering
electronics, gadgets, mobile phones, and computer-related products. They cater to a
tech-savvy customer base.
• Shophive.com: Shophive.com is an e-commerce website that sells a wide variety of
products, including electronics, appliances, fashion items, and accessories. They
focus on providing a user-friendly online shopping experience.
• Kaymu.pk (Now Jumia): Kaymu.pk, which is now part of the Jumia Group, was an
online marketplace in Pakistan that connected buyers and sellers. It offered a range
of products from various categories.
• Foodpanda.pk: Foodpanda is an online food delivery platform in Pakistan. It allows
users to order food from local restaurants and have it delivered to their doorstep.
• Zameen.com: Zameen.com is an online real estate marketplace in Pakistan. It
connects property buyers, sellers, and renters, providing listings and information
about properties.
• OLX Pakistan: OLX is an online classifieds platform in Pakistan that allows users to
buy and sell various items, including electronics, vehicles, and household goods
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10. • IKEA (Sweden): While IKEA is primarily known for its brick-and-mortar
stores, it also offers a comprehensive catalog that allows customers to
browse and order furniture and home goods online, with international
shipping options.
• L.L.Bean (USA): L.L.Bean is a well-known American catalog retailer that
specializes in outdoor clothing and equipment. They produce seasonal
catalogs that showcase their products, and customers can order through
their website.
• Williams-Sonoma (USA): Williams-Sonoma is a catalog and e-commerce
retailer that focuses on high-end kitchenware, cookware, and home
furnishings. They send out catalogs featuring their products to customers
and offer online shopping.
• Victoria's Secret (USA): Victoria's Secret is a famous lingerie brand that
produces catalogs showcasing their intimate apparel and related products.
Customers can order from their catalog or shop online.
• Boden (UK): Boden is a British clothing retailer known for its stylish catalog
offerings. They produce catalogs for men, women, and children's clothing,
with international shipping options.
• Hammacher Schlemmer (USA): Hammacher Schlemmer is an American
catalog and online retailer that specializes in unique and innovative
products, including electronics, gadgets, and home good
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12. • Direct Selling Retailers in Pakistan:
• Herbalife Pakistan: Herbalife is a global nutrition and weight
management company that operates in Pakistan through a network
of independent distributors. These distributors sell Herbalife's
products directly to customers.
• Tupperware Pakistan: Tupperware is a well-known brand that sells
kitchen and household products through direct selling. Independent
consultants in Pakistan conduct Tupperware parties to demonstrate
and sell Tupperware products.
• Oriflame Pakistan: Oriflame is a Swedish cosmetics and skincare
company that uses direct selling as its primary distribution method in
Pakistan. Independent beauty consultants promote and sell Oriflame
products.
• Forever Living Products Pakistan: Forever Living is a global
wellness and health product company with a presence in Pakistan.
Independent distributors, often referred to as "Forever Business
Owners," sell a range of aloe vera-based products
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14. • TV Home Shopping Retailers in Pakistan:
• Home Shopping Pakistan: Home Shopping Pakistan is one of the
most prominent TV home shopping networks in Pakistan. They
broadcast 24/7 and offer a wide range of products, including
electronics, fashion, beauty, and kitchen appliances.
• QVC Pakistan: QVC is an international TV home shopping network,
and it has a presence in Pakistan. QVC Pakistan showcases various
products and allows viewers to place orders during live broadcasts.
• TV Home Shopping Retailers Abroad:
• QVC (USA): QVC is one of the largest and most well-known TV
home shopping networks in the world. It offers a wide range of
products, including fashion, jewelry, electronics, and home goods.
• HSN (Home Shopping Network) (USA): HSN is another major TV
home shopping network in the United States. It offers a variety of
products, including electronics, beauty, home decor, and more.
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16. • Coca-Cola (USA): Coca-Cola is a global beverage company that operates
vending machines worldwide, offering a range of carbonated and non-
carbonated beverages, including its signature Coca-Cola products.
• PepsiCo (USA): PepsiCo, another major beverage company, operates
vending machines internationally, providing a variety of PepsiCo products,
such as Pepsi, Gatorade, and snacks like chips and nuts.
• Redbox (USA): Redbox is known for its DVD and Blu-ray rental kiosks
located in various retail locations, allowing customers to rent movies and
video games.
• Uniqlo (Japan): Uniqlo, a Japanese clothing retailer, has vending machines
in various locations, offering items like heattech shirts, socks, and other
clothing basics.
• Lululemon (Canada): Lululemon, a Canadian athletic apparel brand, has
experimented with vending machines that dispense workout gear like yoga
pants and athletic accessories.
• Best Buy (USA): Best Buy has experimented with vending machines in
airports, offering small electronics and accessories to travelers.
• Häagen-Dazs (Various Countries): Häagen-Dazs has deployed vending
machines in several countries, providing customers with ice cream and
frozen dessert options
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17. Omni channel retailer
• An Omni channel retailer is a type of retail business that
provides a seamless and integrated shopping
experience for customers across multiple channels, both
online and offline. The goal of omnichannel retail is to
create a consistent and cohesive experience for
customers, regardless of how they choose to interact
with the retailer. This can include physical stores,
websites, mobile apps, social media, and more.
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18. • 1. Daraz (Pakistan): Daraz is one of Pakistan's largest e-commerce platforms and is
owned by the Alibaba Group. It offers customers a seamless shopping experience
across its website and mobile app, allowing them to browse and purchase a wide
range of products. Daraz also incorporates various payment options, including cash
on delivery, which is popular in Pakistan.
• 2. H&M (International): H&M, a global fashion retailer, is known for its strong
omnichannel presence. Customers can shop in physical stores, on the H&M website,
and through its mobile app. H&M offers services like in-store pickups for online
orders, returns in-store for online purchases, and even the ability to check in-store
product availability through their app.
• 3. Sephora (International): Sephora, a beauty and cosmetics retailer, has
successfully implemented omnichannel strategies. They have a strong online
presence, a mobile app, and physical stores. Sephora's Beauty Insider program, for
example, allows customers to earn and redeem rewards both online and in stores,
creating a seamless experience.
• 4. Khaadi (Pakistan): Khaadi is a Pakistani fashion retailer that has embraced
omnichannel retailing. Customers can shop for clothing, accessories, and home
decor on its website and mobile app. They also have the option to purchase products
in-store, and Khaadi often hosts events and promotions that bridge the online and
offline shopping experiences.
• 5. Walmart (International): Walmart, a multinational retail corporation, is a notable
example of omnichannel retailing. They offer online shopping, grocery pickup and
delivery, and have a vast network of physical stores. Walmart's app and website allow
customers to easily browse products, check prices, and place orders for both in-store
pickup and home delivery
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Why are Retailers Using Multiple
Channels to Interact with Customers?
• Customer Want to interact in different
ways
• Each channel offers a unique set of
benefits for Customers

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Resources Possessed by Different
Firm Types
EOnly Catalog Store-Based Manufacturers
Website Systems Excellent Poor Poor Poor
Retailing Skills Poor Good/Excel Excellent Poor
Fulfillment Poor Excellent Poor Poor
Brand Reputation Poor Good/Excel Excellent Good/Excel
Assortments Good Good/Excel Excellent Poor
Customer Data Poor Excellent Good/Excel Poor

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Unique Benefits Provided by Store Channel
• Browsing
• Touch and feel products
• Personal service
• Cash payment
• Immediate gratification
• Entertainment and social
interaction
• Risk Reduction
Royalty-Free/CORBIS
(c) Brand X Pictures/PunchStock

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Benefits Provided by Catalog Channel
Convenience
Portability, easily accessible
Visual presentation
Safety
Hoby Finn/Getty Images

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Unique Benefits Provided by Internet Channel
Convenience
Safety
Broad selection
Detailed information
Personalization
Virtual communities
Problem-solving information
More info to evaluate merchandise
The McGraw-Hill Companies, Inc./Jill Braaten, photographer

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Customization Benefits
Offered By Electronic Channel
• Information Tailored to Individual
Consumers to Help Them Make Quicker
and Better Purchase Decisions
– Fred is a Super Retail Salesperson
– Customized Information -- Side By Side
Comparisons, Full Motion Video

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Does The Electronic Channel Have
Lower Costs Than Stores?
Stores
• Bricks and Mortar,
Salespeople
• Attracting Customers
to Store
• Distribution Centers
• Restocking Returned
Merchandise
Electronic Retailers
• Building,Refreshing
Web Site
• Attracting Customers to
Web Site
• Picking, Packing,
Mailing Small Orders to
Home
• Restocking Returned
Merchandise

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What People Buy Over the Internet
Travel
PC/Electronics/Toys
Books/Software
Apparel
Home & Garden
Jewelry & Watches

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What Merchandise Will Be Sold
Successfully Through Electronic Channel?
• “Look and See” attributes vs. “Touch and Feel”
attributes (?)
• Degree to which information can be used to
predict satisfaction prior to purchase
Gifts
Services
• Might not need to “Touch and Feel”
“Touch and Feel” not useful - Gifts
Superior presentation of “Touch and Feel”
Branding

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Perceived Risks of Electronic Shopping
Security of credit card transaction – security
problems have not arisen in actual usage
Potential privacy violations – consumers are
concerned about retailers collecting their personal
information
Don Farrall/Getty Images

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When The Electronic Channel Provides
Superior Benefits
GIFTS
• Saves time
• Saves effort in packing
• Saves effort in delivery
SERVICES
• No Shipping Problems
• Examples
– Travel websites
– Banking
– Newspapers Janis Christie/Getty Images

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Resources Needed to Compete
Effectively in Internet Retailing
• Exciting, Easy to Use Web Site
• Management Information Systems
–Order processing and status
–Customer database
–Personalization software
But These Resources Were Not Enough!

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Resources Needed to Compete
Effectively in Internet Retailing
• Retailing Skills
– Managing inventory
– Editing assortment
• Efficient Fulfillment Systems
– Significant costs - last mile
– Picking and packing individual orders
– Handling returns - reverse distribution

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Resources Needed to Compete
Effectively in Internet Retailing
• Strong Brand Name and Image
– Build traffic
– Reduce customer perceived risk
• Complementary Merchandise
–One stop shopping
–Lower shipping costs
• Availability of Customer Information
–Tailored presentations -
personalization

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Why did Electronic-only Retailers Fail?
• They did not have skills in brand
recognition
• They did not have skills
necessary to build consumer
trust
• They did not have skills to build
assortments, manage inventory
and fulfill small orders to homes
Digital Vision/Getty Images
They had skills in web design
They had skills in systems to manage transactions

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Catalog Retailers can
Add Electronic Channel Easily
• Ready to take orders
• Able to pack merchandise
• Able to deliver
• Able to handle returned
merchandise
• Already have a database
• Visual merchandise for
catalog is the same for
electronic
Steve Cole/Getty Images

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Store-based Retailers vs.
Electronic Retail Entrepreneurs
• Knowledge of Retailing
– Assortment Planning
– Distribution Systems
• Reputation
• Customer Database
• Convenient Location for Picking Up, Returning
Merchandise, Warranty Service and Installation
• Vendor Relationships
Royalty-Free/CORBIS

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Advantages of Retailers
vs. Manufacturers
Distribute Merchandise Directly to Customers
Provide Assortments
Collect and Use Information about Customers
Widespread Disintermediation Unlikely

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Ecommerce Myths
• Low Cost of Entry
• Overestimate Importance of
Technology, Under Estimated Need
for Traditional Resources
• First Mover Wins
• Gets Rid of the Middleman

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Benefits of Multi-channel Retailing
• Electronic channel gives a way to
overcome limitations of existing format
• With electronic channel, retailers can
reach out to new markets
• Builds share of wallet
• E-channel enables retailers to give
insights into customers’ shopping
behaviors

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Overcoming Existing Format
Size of the store is the greatest constraint for stores
• By blending store with internet-enabled kiosks,
retailers expand assortments offered to shoppers.
Store based retailers face inconsistent execution
• Kiosks can be used by both sales associates and
customers for up-to-date product information, stock
information and price reduction on clearances.

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Percentage of Cross Channel Shoppers

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Capabilities for Multi-Channel Retailing
To effectively operate and realize the benefits of
multi-channel retailing, firms need to have skills in:
• Developing assortments and managing inventory
• Managing employees in distant locations
• Distribute merchandise efficiently from DCs to stores
• Present merchandise in catalogs
• Present merchandise on websites
• Process orders electronically
• Efficient distribution of individual orders to homes
• Operate information systems for all channels

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Capabilities for Multi-Channel Retailing

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Multi-channel Services and Features

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Issues Confronting a Multi-Channel Retailer
• Maintaining Brand Image Across
Channels
• Merchandise Assortment Offered in Each
Channel
• Pricing Across Channels

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Shopping in the Future

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Personalization Potential
Of Electronic Channel

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Integration – Key to Multi-Channel Retailing
Create a Seamless
Experience
Make it Easy Provide Support
Know thy
Customer
• Ordering
• Returns
• Refunds
• Call Center
• Shopping
Advice
• Customer
Service
• Needs and
preferences
• One to One
Marketing
• Synchronized &
consistent service
regardless
of channel