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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
Electronic MobileStationary PortableLarge Display Small DisplayNon-location aware Location awareHit and Miss with technology Touch technology
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