The Multi-Channel Retailing Imperative
By Steven Kramer
Consumer adoption of multi-channel shopping practices has reached the mainstream. According to a recent study commissioned by hybris
, while shopping in brick-and-mortar stores, consumers refer to digital channels, with 19% reporting that they browse their mobile device while in-store. The majority does so to compare prices (66%), with others using mobile to compare product choices (27%) and read online recommendations (7%).
Retailers are moving quickly to try and integrate their physical stores and online channels to create greater synergies, improve store-level economics, increase sales productivity, and better leverage both in-store and warehouse inventories. There are proven cross-channel fulfillment strategies that provide these benefits to retailers – as well as benefits to consumers. Consider the following:
Buy Online, Pick up from Store Inventory
When asked to rank desired features in a multi-channel retail experience, 45% of hybris' survey respondents indicated that in-store pickup options for online purchases were most important. The value to consumers is obvious yet powerful. They can research purchases online at their leisure and on their preferred electronic device without being actively "sold"; they can choose when to purchase a product; they are able to save money by not shipping products to their houses; and they can see and touch the merchandise in-store before final acceptance.
Benefits to the retailer are significant. In addition to creating an improved customer experience, the retailer builds more store traffic and greater opportunities for in-store impulse purchases. On the way to the customer pickup desk, consumers are exposed to in-store merchandising and special offers.
Buy Online, Return in Store
This is often considered an obligatory strategy for brick-and-mortar retailers with a strong online presence or catalog. However, it does present many benefits. For consumers, they can return an item in a way that works best for them; they get their refund faster by returning their unwanted purchase in-store; and they are able to resolve a minor problem quickly and efficiently.
The benefits to the retailer are compelling. Again, the retailer gains an opportunity to upsell consumers when they visit the store to make a return. A sales clerk has a higher likelihood of convincing consumers to consider an exchange instead of a return.
At a more strategic level, the business will appear easier to interact with and provide a better chance of increasing satisfaction (or decreasing dissatisfaction) with a potentially contentious segment of their customer base.
Store-Based, Out-of-Stock Fulfillment
Here's a common example of how retailers apply the principles of multi-channel retailing to prevent lost sales due to out-of-stock items: A consumer visits a local store but can't find the exact item she saw online or in a catalog. Even though the item is not in stock at that store, the staff is able to ring up the sale and have the item shipped to the consumer's home from another store or a central warehouse. The consumer is happy because she is getting exactly what she wants.
Value to the retailer includes that it is able to turn inventory faster and boost return on invested capital; it is able to shift inventory across different locations to fulfill demand across a broad geographic area, resulting in full price sales that otherwise might have become discounted deals; and it can increase sales while satisfying a diverse customer base and prompting loyalty.
Endless Aisle Kiosks
This strategy allows retailers to offer an extended catalog of slower moving items. Retailers who carry odd sizes of shoes, for example, often end up with a surplus, and are forced to mark them down or push them into an outlet channel. Instead of absorbing the risk of stocking odd sizes in-store, retailers can offer an "endless aisle" kiosk or order point in-store to allow consumers to view a wide selection of inventory housed outside the store, place an order and have it shipped to their home.
Consumer benefits include the opportunity to see an item not found in-store; the ability to order a product if they like it; and the convenience of shopping at one physical location that offers everything they need.
Retailer value includes the ability to serve customers that might otherwise go to a niche online player; the opportunity to profitably carry slow moving items; and the option to provide a wider selection of variations, colors, sizes, applications and choices.
Buyers who use more than one channel are showing greater brand loyalty and spending up to 30% more with merchants who offer a smoothly integrated experience across online and offline channels. Thus, implementing coherent cross-channel strategies, like those mentioned above, should be an urgent priority for multi-channel retailers.