Striking Gold in the Multichannel Retail Rush

For retailers, there is nothing more sacred, outside of the holiday shopping season, than a successful multichannel operation.

Same-store multichannel buyers -- that is, those who shop both in a retail store and online -- spend 14 percent more annually than single channel buyers do, according to JupiterResearch.

Also, there is small cadre within the multichannel group, 6 percent, Jupiter estimates, who are serious shoppers -- that is, who make purchases at least once a month and spend more than US$800 per year at the same store.

'They Really Like You'

"There are a lot of numbers about how multichannel shoppers are more valuable" than typical shoppers, Patti Freeman Evans, senior analyst with JupiterResearch, told CRM Buyer.

Retailers cite various numbers showing how much multichannel customers spend compared to their single channel counterparts, she added, usually from two to nine times more.

It makes sense, says Mark H. Goldstein, CEO of Loyalty Lab, an on-demand CRM application. Single channel buyers are more likely to base their shopping decisions on convenience or special pricing, he suggested.

"If someone is a multichannel customer , that means that they really like you," he told CRM Buyer.

It's too bad, then, that so few retailers have gotten the multichannel concept right.

Acting Like a Multichannel Operation

Though this may be stating the obvious, a retailer can have multiple channels without being a true multichannel retailer. There are many stores whose products have only a passing similarity to those they offer on the Web.

Catalogs, in particular, can be difficult for retailers to integrate, Jupiter's Freeman Evans said. "A catalog might have a 7 percent crossover with a store -- which is not an integrated approach."

As for the 360-degree view of the customer across all channels -- a Web site knows when a retail store shopper visits the Web and vice versa -- that is still a rarity.

The reason retailers have not done better to date, she said, is that, simply put, it is difficult and can be very expensive to implement a multichannel operation.

Blending operations, different systems and multiple data formats are all challenges, she said -- problems common in any systems integration effort, but made painfully obvious when a multichannel project tries to go live.

"Getting the systems and the data to talk together, to synch across channels -- that can be very difficult to achieve," Freeman Evans remarked.

Internet Access

Over the last five years, retailers have come to grips with the fact that consumers increasingly are interfacing with stores across multiple channels, although they are still not necessarily buying across channels from the same retailer, Freeman Evans noted.

What has developed, though, is that consumers have developed the expectation that they will have the same experience across every channel, she pointed out -- the same visual branding, the same product mix, the same promotion pricing.

In addition, consumers expect the online operation to have even more products available then the retail store, she continued. "That is because of the perceived ease of operating online."

A Second Round

There is no doubt that the multichannel concept is starting to take hold. Of course, there is a select group of retailers that, after spending a considerable sum, already have mastered the multichannel concept.

Now, though, the lessons learned from these early adopters -- plus a new round of tech developments -- are pushing this concept to smaller retailers.

For instance, companies that have successfully made the jump from single channel to multichannel customer service have learned never to force their preferred channel on a customer, Kenneth Landoline, an analyst with the Yankee Group said. "The end-user tends to push back by leaving," he told CRM Buyer.

The technology, too, is starting to change. The biggest pain point currently is the point of sale, Freeman Evans said. Most POS systems work well in the store -- that, of course, is what they were designed to do. A POS application that tells a sales associate the customer standing at the counter just spent $300 at the store's Web site? That is much harder to accomplish.

That is because many retailers' point-of-sale applications were implemented before Internet retailing really took off, so they do not have the capability to handle much more than collecting e-mail addresses, according to Freeman Evans. Right now, many retailers are either considering or implementing new POS systems designed to accommodate the online environment, she said.

Who's More Valuable?

The Software as a Service model has not escaped vendors in this niche either. Loyalty Lab, for example, is targeting retailers that want to be multichannel operators with the relatively inexpensive SaaS value proposition, Goldstein said.

Like CRM applications that are delivered online, "we can mimic what the larger retailers do," he said -- for instance, by ensuring that the same prices that are displayed online are also honored in the store, and vice versa.

Indeed, companies are bypassing technology and applications that are siloed by channel, says Anandan Jayaraman, director of industry solutions for SSA Global, an enterprise suite provider.

"Companies are talking about a seamless customer dialogue -- marketing to them across many channels," he told CRM Buyer. "Mid-sized companies, in particular, are investing in single applications or suites that are affordable."

They want to implement more accurate customer differentiation strategies. "Determining who the most valuable customers are is still a huge challenge for many companies," Jayaraman said -- even, or especially, if that customer is active on more than one channel.