Top retailers at channel crossroads

The very foundations of retailing are being shaken as consumers demand service via an increasing array of channels. But it seems that many businesses are dragging their feet when it comes to making the necessary changes to serve these customers or they simply don’t know where to start, according to research by consultancy Ebeltoft Group, seen by Marketing Week.

The retailers that are best at connecting sales channels by country are Debenhams in the UK, Walmart in the US and electricals retailer Suning in China, judged by all the ways consumers can access and interact with them (see Methodology, below).

The research analyses 144 retailers across 17 countries, including China, the US and European states, measuring features such as whether brands use click and collect, sell via smartphone or have in-store kiosks where consumers can order additional items. The study looks at department stores, DIY retailers, fashion shops and electricals retailers.

Despite good feedback for Debenhams, department stores do poorly when it comes to having floor staff know about their particular retailer’s website, scoring only 24 per cent on this measure. Meanwhile, they only score 39 per cent when it comes to promoting in-store events on their pages online.

It is all very well being able to communicate and sell to consumers in a variety of ways but retailers must look to be cross-channel, rather than simply multi-channel, to make things easier for customers, according to Monica Lucas, president and research director at Ebeltoft UK member Pragma.

“Multi-channel is yesterday’s news,” she says. “Cross-channel is about integrating channels so that, for the customer, it’s seamless. You can buy in one store; return in another; use mobile – wherever you are, you can access the brand.”

Brands are picking up on this, with fashion retailer Oasis now using the term cross-channel instead of multi-channel in job descriptions and M&S elevating the responsibility to board level, hiring Laura Wade-Gery as executive director of multichannel ecommerce last July.

However, cross-channel skills among speciality fashion retailers lag behind other categories in the study despite the fact that “among department stores, apparel and shoe categories are the very ones to have benefited most from more advanced cross-channel capabilities”, according to the report. Fashion shops overall score 35 per cent when it comes to buying online and collecting in store, but do better when it comes to gift voucher redemption, scoring 48 per cent for being able to use them both online and offline.

Oasis, one of the more forward-thinking fashion brands in terms of cross-channel, has armed its frontline sales staff with iPads and enabled super-fast delivery in key cities (see The Frontline, below). The inventory system has been integrated to create a single stock pool and customers can request different sizes, colours or styles and even use mobile technology to pay in the changing room, bypassing queues.

C&A in Brazil has been experimenting with digital readers on clothes hangers that display how many items of a particular design have been sold online. While it is known that people love ratings and reviews, knowing how many consumers bought a certain item online might not be such a game-changer in-store.

It seems that electrical goods retailers are winning the race to ensure their brands are visible and usable across channels. They have had to do this due to thin margins and a move by consumers towards buying these goods through online-only shops such as Amazon, suggests the report.

The US is the most advanced market in this regard, with electricals shops scoring 90 per cent for their overall cross-channel capabilities, while the UK scores 46 per cent. Comet is ranked top of the electricals retailers here, yet it is an ongoing battle to be consistent online and offline, according to chief executive officer Bob Darke.

“The pace of movement is increasing because – and this is partly why the US and the UK are at the forefront – the margin for effort in retail is getting slimmer,” he says. “We don’t live in the era of non-inflationary growth any more.” (See The Frontline, below)

And, according to Pragma’s Lucas, the commercial imperative to be cross-channel has been acknowledged but, hampered by widespread confusion, the present situation is something of a landgrab. “Everybody feels they must do it, but nobody knows the value of it – and it costs money,” she says.

Ebeltoft suggests that consumer expectations will “continually” be ahead of retailers’ capabilities, but this is no reason to be despondent. Instead, retailers should think about which cross-channel capabilities they need and which they can do without. Very few – if any – will be able to do everything.

Although “foundational” capabilities such as click and collect are becoming standard in the US and the UK, it is in the execution and attention to detail that retailers will be judged by consumers, says Lucas.

So, many are pioneering innovative approaches while others are taking more of a wait and see approach. “A lot is driven by technological availability, but we need to ask – what do people actually need or want?” she warns.

“It’s important not to take your management eye off the ball with too many expensive technical experiments.”

Smaller or newer businesses may, in fact, have an advantage here over larger or more established retailers, as older brands may have legacy infrastructures or historic silos.

“If you have only a few stores, an online presence and a customer service team on Facebook or on the phone you can tie it all together at less cost and effort,” argues Lucas. “It’s possible to offer as good a service as a brand with more firepower.”

Despite this it is the more established retailers that top the charts in terms of overall cross-channel capabilities. Walmart was founded in 1962 and Debenhams in 1813.

“Walmart has quietly built digital retailing foundations on a global scale, which should concern most other retailers,” the study states, although other retailers may draw some comfort from the fact that the retail behemoth was not necessarily an early adopter – its success lay in the effective execution of cross-channel initiatives, the report suggests.

Moreover, it is often possible to develop cross-channel initiatives by taking small steps as well as huge leaps. At the centre of this, there needs to be clear communication throughout the business, says Lucas.

“Whatever you’re doing, communicate – whether that be through in-store signage, pointers on the website or training for staff.”

One fact in the debate surrounding cross-channel is clear: it’s not going to go away. The increasing penetration of smartphones and tablets is no passing fad.

The modern shopper will continue to use technology and trusted communities to enhance, simplify and customise the shopping journey. Businesses that display a willingness to dance to the customer’s tune will engender loyalty and trust – those that don’t may watch as customers go elsewhere.