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How to make the most of multi-channel retailing

How to make the most of multi-channel retailing

By Doug Hargrove, Chief Marketing Officer, Torex

Following the raft of bankruptcies and closures over the past few months, and considering customers’ financial uncertainty for the months ahead, trading conditions are undeniably tough for retailers in 2009. However, recent figures indicate that resilient online and non-store sales can help support retailers facing difficult conditions on the high street.

Accordingly, stores looking to maintain a competitive advantage in a tough market must ensure they are exploiting all the customer touch points at their disposal, offering a consistent shopping experience across all transactions.

There is now a diverse selection of ways in which retailers are able to interact with their customers.

These range from taking orders online, either for delivery or in-store collection and return,  to selling goods through interactive TV services, mobile phones, printed catalogues and self-service kiosks - the latter of which are becoming increasingly common in UK stores.

While each of these touch points may be managed by a different department and involve different methods of transaction, retailers must consider all channels as part of their unified brand, rather than as separate entities. For instance, customers now expect to be able to purchase goods online and return them to a store and technology has an integral role in implementing this unified approach to a multi-channel operation.

Retailers should therefore work closely with their suppliers to ensure they have the technology in place to assess demand, offer consistent promotions and maintain high levels of customer service across all channels, in order to preserve the integrity of their brand’s identity regardless of the touch point a customer chooses to shop from.

The goal for stores is to offer customers a simple, quick and easy-to-use shopping experience across all channels.

The first stage in harnessing the power of a multi-channel approach involves recognising and respecting the different nature of each channel you intend to use. Online shopping sites, for instance, give consumers a platform from which to communicate their product views to a retailer or members of the general public on web forums, message boards and social networking sites.

If retailers intend to branch into this area it is important that they monitor customers’ responses to their products and services, responding to requests, rather than pursuing the traditional retail model of ‘pushing’ products onto the customer. Brands should take advantage of the opportunity this presents to gather customer feedback, and use it to their advantage.

This can range from links from their website to a positive review on an independent forum, all the way to directly implementing customer feedback in the product development process.

Websites also offer retailers valuable information about their customers’ shopping habits that can be used to improve the shopping experience. Like a store manager can observe the aisles a customer stops at, online retailers can track the movements of visitors to their website and use the insights this information provides to improve the functionality of the site and the choice of products that are offered to customers.

Understanding customer demand effectively is clearly important, and retailers need the right tools to help them achieve this. To arrive at an accurate estimate of demand, business analysis tools can use historic performance data as well as other information such as customer profiles gathered from loyalty schemes to target products at the stores and channels that are most likely to respond well to them, and determine the quantities needed to cater for those markets.

For example, customers who frequent a fashion retailer’s website may have different preferences, or be of a different average age or size group, to those who tend to visit the flagship London store. It is important to ensure these customers are catered for, rather than assuming they will have the same needs as the high street shoppers.

By pooling insights gained from basket analysis, collating information about the shopping behaviour of consumers in a particular demographic, and constructing individual profiles of customers through a loyalty scheme, stores can target products and promotions at shoppers accurately, ensuring they appeal to the customer whichever touch point they choose.

While demand can be accurately forecast, with a set amount of stock available, a retailer with operations spread across a number of channels needs to decide which ones to prioritise.

This decision needs to be based on the aim of minimising customer inconvenience and disappointment. Traditionally, retailers offering multiple touch points plan to fulfil catalogue orders first, then those placed over the internet, before replenishing stock in stores. The reason for this is that a customer who has ordered a product via a catalogue or the internet can be counted as a ‘definite’ sale – whereas stock delivered to shops runs the risk of not being bought.

This minimises customer disappointment – an in-store customer will not see the product they can’t buy, whereas a catalogue shopper will have decided they are interested before being told that it is out of stock.

By integrating warehouse management systems with POS and website technology, retailers can ensure customers are kept fully informed about an item’s availability, by displaying stock levels in real time online and offering this information through in-store displays, for example.

The level of product returns from online sales is something that can take high street retailers who are looking to implement a cross-channel returns policy by surprise.

Evidently, in the clothing industry this is higher as a result of customers not being able to accurately assess the suitability or fit of an item from the information provided online.

High street fashion retailers typically experience a returns rate of approximately 5%, whereas online retailers can expect to see up to around 30% of the products they sell come back to them.

Processing returns can be a time-consuming and expensive procedure, but by integrating the technology used across the different channels, businesses can help reduce the costs and complexities involved.

By enabling customers to return items bought online to stores, through the use of POS technology that can link with a retailer’s e-commerce and warehouse management systems, the outlay associated with sending delivery vans to collect unwanted purchases from customers’ homes can be reduced. Gains in efficiency can also be made by involving in-store staff with the inspection and repackaging of returned products.

These items can then either be used to replenish in-store stock, or sent back to a depot to fulfil online orders. In order to do this, a point of service system that can integrate with the other systems a retailer uses is essential.

Retailers looking to use a multi-channel approach to reach their customers also need to ensure a consistent shopping experience by offering a coherent pricing and promotions strategy across all platforms.

Retailers can strengthen their brand’s image by allowing customers to pay the same price for an item regardless of which touch point they choose, unless a conscious decision is made to offer different prices across different channels.

Either way, a store’s loyalty scheme and the promotions offered to customers need to be fully consistent across all touch points. With the right technology, the same discounts and customer loyalty schemes can be applied whichever channel a customer uses. By making it as easy as possible for shoppers to benefit from a promotion, retailers can increase sales and benefit from improved customer loyalty, as well as supporting a unified brand image.

To encourage customer loyalty across all channels, a consistently high level of customer service is essential. A customer who has had a bad experience with a retailer’s website is less likely to shop at their stores. As well as offering cross-channel promotions and loyalty schemes, technology becomes critical to ensure a fast and efficient level of service.

In-store, this means providing staff with easy-to-use POS technology to reduce queuing time. Online or through a catalogue order, this could mean ensuring the back office is linked in real time to the order so that there is no delay with sending items out.

In the current trading climate, retailers that can successfully exploit all available sales channels stand the best chance of maintaining profits.

By using technology to ensure a consistent level of customer service and efficiency across all customer touch points, stores can boost customer loyalty, maximise cash flow, revenue and profits and prepare themselves for future growth.


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