Multichannel Retailing

 Retailersthat sell merchandise or services

through more than one channel.

 Retailerscan leverage the unique benefits

provided by each to attract and satisfy
more customers.
Internet Channel
 Also called as online retailing, electronic
retailing and e-tailing.
 Offering of products and services for sale is
communicated to customers over the
internet.
 Internet sales are forecasted to grow at
about 10% annually.
 Still, it is expected to represent less than
10% of retail sales.
 Facilitates rather than revolutionize retailing.
Catalog Channel
 Non-store retail channel in which the retail
offering is communicated to the customers
through a catalog mailed to customers.
 About half of U.S consumers shop through
catalog each year.
 Merchandise categories include- drugs and
beauty aids, computers and software,
clothing and accessories, furniture and
housewares, books, music and magazines.
Television Home Shopping
 Retail channel in which customers watch a
television program that demonstrates
merchandise and then place orders for that
merchandise, usually by telephone.
 Three forms of TV home shopping are:
1. Cable channels dedicated to TV shopping.
2. Infomercials
3. Direct response advertising.
 Only about 1.3% of the catalog mailed
generate a direct sale.
 Under attack from consumer groups that
believe catalogs are an unnecessary waste
of natural resources.
 Catalogs share of sales is declining relative
to internet.
 Role shifting fro generating sales to driving
traffic to the internet and physical stores.
Automated Retailing
 Retail channel in which merchandise or
services are stored in a machine and
dispensed to customers when they deposit
cash or use a credit card.
 Also known as Vending machines, are
typically placed at convenient, high traffic
locations, such as workplaces or on
university campuses
 Automated retailing sales are from cold
beverages, candy and snacks.
Direct selling
 Retail channel in which salespeople interact
with customers face-to-face in a convenient
location. ( Customer’s home or at work).
 Demonstrate merchandise benefits and
explain a service, take an order and deliver
merchandise.
 Highly interactive retail channel in which
considerable information is conveyed.
 Expensive.
 Benefits offered by the Retail channels

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

 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
 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

Broad selection
1

Detailed problem-solving Information

2

Personalization
3
Broader Selection
The vast number of alternatives
available to consumers.

Merchandise carried by the websites

is huge.

Variety and assortments

The number of SKU’s available in a

store is limited by the store’s size.
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
personalize 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.
 Benefits in Summary
Electronic channel gives
Providing a multi channel
retailers an opportunity to
offering increases
overcome the limitations
customer satisfaction and
of primary existing
loyalty
channels

Electronic channel
enables retailers to gain Using an electronic or
insights into their catalog channel, retailers
customers’ shopping can economically enter
behavior new markets

A multi channel offering

provides the bases for building
a strategic advantage
Overcoming the Limitations of an existing
format

1. Increased Assortments
By using a combination of channels retailers
can better satisfy their consumer’s needs by
exploiting the benefits and overcoming the
deficiencies of each channel.
2. Low cost, Consistent Execution
Another limitation of the store is its costly but
inconsistent execution.
3. Gaining insights into Consumer
Shopping behaviour:

 An electronic channel provides valuable

insights into how and why customers
shop and are satisfied or dissatisfied with
their experiences.
4. Expanding market presence :The market for
store based retailers is limited to consumers
living in close proximity to the retailer’s
stores.
5. Building a strategic advantage: Multichannel
retailers have the opportunity to develop a
strategic advantage over single channel
competitors.
6. Current Information :Catalog retailers also use
electronic channel to overcome the limitations of
their catalog.

7. Increasing Customer Satisfaction and Loyalty :

Introducing an electronic channel may lead to
some cannibalization. Customers who formerly
made purchases in retailer’s store now make the
same purchases through the retailer’s internet
channel.
Other multichannel retailing issues
 Which channel has the lowest costs?
1) Electronic channel perceived to incur less
cost than store channel.
2) Internet retailers incur significant costs to
design , maintain and refresh a website;
attract customers to the site, maintain
distribution system and warehouses.
3) Overhead costs greater than the costs of
operating physical stores.
 Will manufacturers bypass Retailers and sell
directly to Customers?
1. Disintegration occurs when a manufacturer
sells directly to the consumers bypassing the
retailers.
2. Manufacturers can get direct access to
consumers by establishing a retail site on the
internet.
3. However, most manufacturers lack the skills
to sell directly to the consumers.
Challenges of effective multi channel
retailing
 Providing an integrated shopping
experience.
 Supporting M-Commerce
 Organising for multichannel retailing
 Centralised customer base
 Brand image
 Merchandise assortment
 Pricing
 Reduction of channel migration
Providing an integrated shopping experience
 Multi channel retailers are still struggling to
provide an integrated shopping experience
across all their channels because unique skills
and resources are needed to manage each
channel.

 Marketing activities may be different as

objectives are different.

 Information systems for managing store or

nonstore also differ.
 Supporting M-Commerce
 Customers can access a retailer’s
internet channel using a variety of
devices ranging from a desktop
computer to a mobile phone.

 Consumers worldwide are forecasted to

purchase $120 million worth of goods
and services from their mobile phones
by 2015. ( Accounting for about 8% of
the e-commerce market.
Organizing for Multichannel retailing
 Critical decision facing multichannel
retailers is the degree to which they should
integrate the operations of the channels or
have different organisations for each
channel.
 Complete integration or different
organisation to manage each channel.
 Several issues have to be addressed-
centralized, common customer database,
consistency in brand image, pricing and
assortments across channels.
 Centralized Customer database
 Need to establish a centralized
customer data warehouse with a
complete history of each customer’s
interaction with the retailer.

 Necessary to provide a seamless

experience for customers when they
interact with the retailer through multiple
channels.
 Brand Image

 Retailers need to provide a consistent

brand image of themselves and their
private labels across all channels.

 Conflicts in the positioning the brand in

different channels costs the retailer
revenues and the brand image.
 Merchandise Assortment
 Different assortments are appropriate for
different channels.
Ex: Multichannel retailer offer a broader and
deeper assortment in the internet channel
than the store channel.
Differ in terms of their effectiveness in
generating sales for types of merchandise.

Ref: Build a bear workshop.

 Pricing
 Customers expect pricing consistency across
channels.

 Retailers need to adjust their pricing strategy

because of competition in different channels.

 Retailers with stores in multiple markets often

set different prices for the same merchandise to
deal with differences in local competition.

 Multichannel retailers will have difficulties

sustaining regional price differences when
customer can easily check prices on the
internet.
 Reduction of Channel migration
 Browsing on the internet channel and
purchasing the merchandise at a store is the
most common use of multiple channels
during a shopping episode.

 This pattern was used by over 78% of U S

consumers surveyed, while only 8% used the
second most widely used pattern, browsing
in a store and buying online.