The True Multichannel Retailer

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The True Multichannel Retailer

• Summary of Findings

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Hypothesis and Expected Results

• Retailers efforts to integrate all channels are
  causing them to need to re-work merchandising
  planning and control practices for quicker
  decision cycles- from quarters weeks to weeks
  days.
• Retailers who started out with a catalog channel
  in addition to stores have a leg up on their
  competition, in terms of understanding how to
  forecast multi-channel consumer demand
• Multichannel customers drive more sales at a
  higher gross profit, and customers tend to be
  more loyal
• Multichannel customers are less tolerant of
  mistakes, therefore, it is critical for all
  channels to be in synch.
• Integrated multi-channel retailing is causing
  retailers to need to re-tool their systems for
  real-time inventory control, new demand
  forecasting capabilities, new logistics, supply
  chain handling of eaches, a single view of
  customer, consistent application of business
  rules across all channels (eg. customer returns),
  new BI capabilities

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Actual Results

• Hypothesis Retailers efforts to integrate all
  channels are causing them to need to re-work
  merchandising planning and control practices for
  quicker decision cycles- from quarters weeks
  to weeks days. Results Retailers have not
  altered their decision cycles.
• Hypothesis Retailers who started out with a
  catalog channel in addition to stores have a leg
  up on their competition, in terms of
  understanding how to forecast multi-channel
  consumer demand. Results Most respondents
  started as brick and mortar retailers. Fear of
  cannibalization still prevents information
  sharing 32 of the time between channels.
• Hypothesis Multichannel customers drive more
  sales at a higher gross profit, and customers
  tend to be more loyal. Results For those who
  actually measure it, multichannel customers
  clearly are more profitable. While the best in
  class recognize the need for a seamless cross
  channel experience, retailers are blissfully
  unaware of customers intolerance for mistakes.
• Hypothesis Multichannel customers are less
  tolerant of mistakes, therefore, it is critical
  for all channels to be in synch. Results
  Retailers know it is important for channels to be
  in synch, but do not realize how intolerant
  customers are.
• Hypothesis Integrated multi-channel retailing
  is causing retailers to need to re-tool their
  systems to get to the seamless experience.
  Results Retailers are bruting their way to a
  seamless experience. They are leaving bottom
  line dollars on the table because they do not
  have single views of inventory or customers. The
  good news is they are prioritizing initiatives to
  improve the situation.

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Challenges
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Responses
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Pressures
Note the incongruity between greatest and least
pressure
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Actions (Strategies)
Lack of clarity around value of customer service
initiatives still evident
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Capabilities
Best in Class are acutely aware of the importance
of consistency
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Enablers
Only 16 do it right. Another 31 are in the
ballgame. All others disaster waiting to
happen.
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How Do We Define Best-In-Class?

• Best in class multichannel retailers have better
  year-over-year sales improvements than their
  peers.

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Traits of the Best in Class

• Recognize the value of consistent brand identity
  across channels
• Are relatively better at sharing data and
  otherwise integrating across channels (even
  though they identify channel conflicts as a
  significant challenge)
• Less prone to bring in outsiders to change
  business process
• More inclined to outsource programming
• Have more consistent performance metrics across
  channels
• Have better analytics and understand the value
• Are at risk laggards have significant
  initiatives planned in the next 12 months
• ALWAYS know the relative profitability of
  multichannel customers.

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