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Retailing Management 8e The McGraw-Hill Companies, All rights reserved. 3 - 1

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McGraw-Hill/IrwinCopyright 2012 by The McGraw-Hill Companies, Inc.

All rights reserved.

MultichannelRetailingCHAPTER 03

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The Multi-Channel Retailer

A retailer that sells merchandise or service through more than one channel. Byusing a combination of channels, retailers can exploit the unique benefits

provided by each channel.

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Steve Cole/Getty Images

The McGraw-Hill Companies,Inc./Andrew Resek, photographer

Retailer

http://www.ivillage.com/http://www.ivillage.com/http://www.ivillage.com/http://www.ivillage.com/http://www.ivillage.com/http://www.ivillage.com/http://www.ivillage.com/http://www.ivillage.com/http://www.flypaper.com/http://www.ivillage.com/

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Why are Retailers Using MultipleChannels to Interact with Customers?

customer

Consumers buy what they want,When they want,Wherever they want

store kiosk catalog Call center Web/E-mail mobile

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Benefits Provided by Different Channels

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Benefits Provided by Catalog Channel

ConvenienceInformation

Safety

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Whats the Big Deal About Shopping on the Internet?

$2.5 Trillion US Retail Sales $200 Billion Catalog and Direct Sales

$ 4 Billion TV Home Shopping $ 100 to 150 Billion Internet Retail Sales Just a drop in the bucket, but growing fast!

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Internet Channel

Broader Selection

More and Better Information to Evaluate Merchandise Drill Down as Much as You Want Full motion Video

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Internet Channel

Personalization Information is tailored to Individual consumers to help

them make quicker and better purchase decisions Customized Information -- Side By Side Comparisons,

Full Motion Video Try It On Virtually

Information for Solving Problems, Not Just MerchandiseCharacteristics

Virtual Communities

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Benefits of Multichannel Retailing

Traditional store-based and catalog retailers are placingmore emphasis on their electronic channels andevolving into multichannel retailers.

E-channel gives a way to overcome limitations of existingformat

With electronic channel, retailers can reach out to new markets Builds share of wallet E-channel enables retailers to give insights into customers

shopping behaviors

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Benefits of Multichannel Retailing

Overcoming theLimitations of an Existing

Format

Increased Assortments Low-Cost, ConsistentExecution Current Information

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Benefits of Multichannel Retailing

Gaining Insights into Consumer Shopping Behavior Expanding Market Presence

Building a Strategic Advantage

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Sales through an electronic channelare growing at over 20% per year

Adding an electronic channelcreates immediate possessionutility

Multi-channel retailers can attractmore customers and satisfy existingcustomers better

The growth of sales in stores isdeclining

Why are store-based retailers evolvinginto multi-channel retailers?

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Will Electronic Channels Low SearchCost Increase Price Competition?

Conventional Wisdom Greater Comparison Shopping

Offerings Easily Compared on Price Lower Search Costs => More Emphasis on Price

Empirical Evidence Substantial Price Dispersion Lower Search Costs for Quality Information=> Less

Price Sensitivity Lower Search Costs Lead to Better Decisions

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Will Manufacturers Bypass Retailersand Sell Directly to Consumers?

Advantages of Retailers vs. Manufacturers Distribute Merchandise Directly to Customers

Provide Assortments Collect and Use Information about Customers

Widespread Disintermediation Unlikely

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Integrated ShoppingExperience

Communicate withcustomers anytime,anywhere through multiplechannels

Website, Store, Kiosks,Handheld Devices

Integrating legacy systems forseamless customer interface

Challenges of EffectiveMultichannel Retailing

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Todays empowered consumers live in a multi -channel world research products online, buy offline, and demand service everywhere

Customer

Web & Email 24x7 Visual

Call Center Convenient

Immediate

Kiosks Visual Convenient

Handheld Devices Immediate

24x7

Brick & Mortar Touch/Feel Experience driven

Consumers buywhat they want,when they want,wherever they want

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Keywords

catalog retailing Nonstore retail format in which the retail offering is communicated toa customer through a catalog.

channel migration When consumers collect information about products on onecompanys channel and then buys the product from another competitor.

direct selling A retail format in which a salesperson, frequently an independentdistributor, contacts a customer directly in a convenient location (either at a customershome or at work), demonstrates merchandise benefits, takes an order, and delivers themerchandise to the customer.

disintermediation When a manufacturer sells directly to consumers, thus competingdirectly with its retailers.

electronic retailing A retail format in which the retailers communicate with customersand offer products and services for sale over the Internet.

Internet channel, Internet retailing, E-channel See electronic retailing. multichannel retailer Retailer that sells merchandise or services through more than one

channel.