CHAPTER 3 MULTICHANNEL RETAILING

BY KAYLA GIGGEE AND KYLE KIENZLE

RETAIL CHANNEL• MOST COMMON CHANNEL• WAY RETAILER’S SELL + DELIVER MERCHANDISE + SERVICES TO ITS CUSTOMERS.

• THEY ALSO USE A VARIETY OF NONSTORE CHANNELS WHICH ARE LISTED BELOW:• INTERNET TELEVISION HOME SHOPPING• MOBILE DIRECT-RESPONSE TV• CATALOGS AND DIRECT MAIL AUTOMATED RETAILING (VENDING

MACHINES)• DIRECT SELLING

CHANNELS

• OPPORTUNITY TO COMPLETE A TRANSACTION- SELL + DELIVER MERCHANDISE• PRIMARY OBJECTIVE IS TO COMPLETE TRANSACTIONS

• MEDIUM• PRIMARILY USED TO COMMUNICATE INFO TO CONSUMERS

MULTICHANNEL RETAILING

• ABILITY TO USE MORE THEN ONE CHANNEL TO SELL + DELIVER MERCHANDISE + SERVICES TO CONSUMERS• OMNI RETAILING• COORDINATED MULTICHANNEL RETAIL OFFERING THAT PROVIDES A SEAMLESS

CUSTOMER EXPERIENCE WHEN USING ALL OF THE RETAILER’S SHOPPING CHANNELS

THE BIRTH OF MULTICHANNEL RETAILING

• 1925- SEARS OPENED ITS FIRST STORE, 33 YEARS AFTER IT LAUNCHED ITS CATALOG OFFERING MERCHANDISE PREVIOUSLY UNAVAILABLE TO THE AMERICAN POPULATION AS A WHOLE.

INTERNET RETAILING

• RETAILING INTERACTING WITH CONSUMERS THROUGH THE INTERNET• ELECTRONIC CHANNEL- USING INTERNET THROUGH A TRADITIONAL COMPUTER• MOBILE CHANNEL- USING THE INTERNET THROUGH A SMART PHONE

CATALOG CHANNEL

• NON-STORE RETAIL CHANNEL OFFERING COMMUNICATION THROUGH CATALOGS MAILED TO CUSTOMERS

DIRECT- RESPONSE TV CHANNEL• CUSTOMERS WATCH TV AD’S THAT DEMONSTRATES THE MERCHANDISE +

THEN GIVES A WAY FOR CUSTOMERS TO PLACE ORDERS FOR THAT MERCHANDISE• INFOMERCIAL- 30 TO 60 MINUTES LONG MIXING ENTERTAINMENT WITH PRODUCT

DEMONSTRATIONS• COMMERCIAL- 1 TO 2 MINUTES IN LENGTH GIVING A BRIEF OVERVIEW OF THE

PRODUCT

TELEVISION HOME SHOPPING CHANNEL• RETAIL CHANNEL WHICH THE CUSTOMERS WATCH THE TV NETWORK WITH

PROGRAMS THAT DEMONSTRATE MERCHANDISE + THEN PLACE ORDERS FOR THAT MERCHANDISE USUALLY BY PHONE OR THE INTERNET• HSN + QVC• ANNUAL SALES ABOUT $20 BILLION• ADVANTAGE- ALLOWS CUSTOMER TO SEE HOW THE PRODUCT WORKS AND

DEMONSTRATIONS THAT PERSUADE THE CUSTOMER TO BUY IT.

DIRECT SELLING CHANNEL• SALESPEOPLE INTERACT WITH CUSTOMER FACE- TO – FACE IN A CONVENIENT LOCATION • AT THEIR HOME• AT THEIR WORK

• PARTY PLAN SYSTEM• PARTY TO TRY THE PRODUCT AND SEE WHAT IT LOOKS LIKE• EXAMPLE: AVON, 31, PARTY LIGHT,

• MULTILEVEL SYSTEM• INDEPENDENT BUSINESS PEOPLE SERVER AS DISTRIBUTORS • EXAMPLES: THRIVE, SCENTSY

• PYRAMID SCHEME• FIRM AND PROGRAM ARE DESIGNED TO SELL MERCHANDISE + SERVICES TO OTHER DISTRIBUTORS, RATHER

THAN END-USERS

PYRAMID SCHEME

AUTOMATED RETAILING (VENDING MACHINES) CHANNEL

• MERCHANDISE OR SERVICES ARE STORED IN A MACHINE + DISPENSED TO CUSTOMERS WHEN THEY DEPOSIT CASH OR USE A CREDIT CARD• PLACED AT CONVENIENT, HIGH TRAFFIC LOCATIONS• SLOWLY DYING AND SOON WILL BE DECEASED

BENEFITS OF THE STORE CHANNEL• TOUCHING AND FEELING PRODUCTS• PERSONAL SERVICE• RISK REDUCTION• IMMEDIATE GRATIFICATION• ENTERTAINMENT AND SOCIAL EXPERIENCE• BROWSING• CASH PAYMENT

BENEFITS OF CATALOG CHANNEL

• SAFETY AND CONVENIENCE• BROWSE AND ORDER MERCHANDISE 24/7• EASY REFERENCE

BENEFITS OF INTERNET CHANNEL• DEEPER AND BROADER SELECTION• MORE INFORMATION FOR EVALUATING MERCHANDISE• PERSONALIZATION• EXPAND MARKET PRESENCE• PROVIDE INFORMATION TO COMPARE SHOPPING EXPERIENCE ACROSS

CHANNELS• PERCEIVED RISKS IN INTERNET SHOPPING

COMPARISON OF ELECTRONIC AND MOBILE PHONE CHANNELS

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CHALLENGES: MULTICHANNEL SUPPLY CHAINS AND INFORMATION SYSTEMS

• STRUGGLE TO PROVIDE AN INTEGRATED SHOPPING EXPERIENCE• DISTRIBUTION SEPARATE FROM RETAIL

• PUTTING TOGETHER A GOOD SYSTEM

CENTRALIZED VS. DECENTRALIZED MULTICHANNEL RETAILING

• CENTRALIZED: SAME ALL AROUND• DECENTRALIZED: TAILORING TO DIFFERENT TARGET MARKETS

CONSISTENT BRAND IMAGE ACROSS CHANNELS

• THE MESSAGE IN THE STORE, ADS, AND WEB/OTHER RETAIL CHANNELS SHOULD BE THE SAME• EXAMPLE: LIBERTY TAX, MICHELIN TIRES, GRANITE, ECT.

MERCHANDISE ASSORTMENT

• NARROW ASSORTMENT IN STORE, BROAD ONLINE• STORE CHANNELS BETTER SUITED FOR TOUCH AND FEEL• EXAMPLES: TRY STUFF USING THE 5 SENSES

• INTERNET CHANNEL IS MORE FOR LOOK AND SEE• EXAMPLE: PRICE AND COLOR

PRICING

• EXPECT PRICES TO BE THE SAME ACROSS THE BOARD• SOMETIMES PRICE ADJUST FOR COMPLETION• EXAMPLE: BARNS AND NOBLE

REDUCTION OF CHANNEL MIGRATION• CHANNEL MIGRATION• CONSUMER GATHERS INFORMATION ON IDEAS FROM ONE CHANNEL AND

PURCHASE THE PRODUCT FROM A COMPETITORS CHANNEL

• MOST COMMON IS SEARCH ONLINE FOLLOWED BY PURCHASE IN STORE• 78% OF PEOPLE DO THIS

• SHOWROOMING• GOES TO STORE TO LEARN ABOUT BRAND OR PRODUCT THEN SEARCH INTERNET

FOR THE SAME PRODUCT WITH A LOWER PRICE.

HOW A RETAILER CAN REDUCE SHOWROOMING

• 1. PROVIDE BETTER CUSTOMER SERVICE• 2. OFFER RELEVANT INFORMATION BASED ON DATA THE RETAILER HAS

COLLECTED ABOUT THE CUSTOMERS• 3. PROMOTING PRIVATE-LABEL MERCHANDISE THAT CAN BE PURCHASED

ONLY FROM THE RETAILER

THE FUTURE OF MULTICHANNEL RETAILING