Multi-channel marketing may be the key to retail survival

Multi-channel marketing may be the key to retail survival

Multi-channel marketing plans are technically and strategically difficult to implement and maintain. However, they have become fundamental for the survival of retailing. It is enough to think that, nowadays, in the average, 1 purchase out of 5 is made online. Some functional models have already been implemented, though. It may be worth trying to analyze them so as to understand how they were set up and maybe draw inspiration from them.

An essay entitled The Next solution to ecommerce, issued by Enders Analysis, has taken Next as a case study. The British apparel retailer has stood out among all competitors by basing their 20-year-long marketing strategy on three main pillars: data collection, a consumer-oriented approach and a strong logistic network. Products can be ordered online, by phone or purchased in one of the brand stores and then delivered at home or in store in less than one hour. Returns can be taken to stores or picked up by a courier at the customer’s place. The whole process is smooth and well coordinated among the various online and offline channels, so that the rapport with clients is fluid, with no fragmentation whatsoever.

Stores are expensive

The most common objection to the fact of being active both online and offline is that physical stores have become increasingly expensive and less profitable. Brick-and-mortar spaces bring about several fixed expenses (rental fees, cleaning, electricity etc.), while e-shops costs are variable (delivery, returns and marketing). Furthermore, these latter are consistently taking market share away from the former, with a consequent decrease in physical sales. Nevertheless, physical stores are still important. On line competitors suffer from three main factors: no visibility in the real world (thus, less marketing); no advantage deriving from the possibility to handle returns in the stores (higher shipping costs); a higher impact from customers inconsistency and unpredictability.

Asos is a famous online marketplace. Since 2011 its sales have increased. Yet, it has been  affected by the abovementioned factors. On the contrary, Next has managed to boost its online sales together with its in-store sales by integrating the two systems, thus recording an overall increase in their turnover by 357% in the past five years.

Stores are hubs

Once again, multi-channel systems are not easy to implement since they bring about relevant costs, especially logistically speaking. However, advantages are such to compensate the effort.

First of all, a higher customers’ loyalty, with an increase of +23% of repeated in-store purchases  within the first 6 months (“A study of 46,000 shoppers shows that omnichannel retailing works”). Second, a higher and better on line and off line data collection which leads to a more efficient profiling process aimed at designing better targeted advs. And then, there is also the customer’s experience: people still search for products online but then buy them into physical stores.  Which means that the so called human touch is still important (Web To Influence More Than Half Of European Retail Sales By 2020). Finally, we shall consider that multi-channel customers spend up to 10% more online and 9% more offline, compared to those using one channel only.

Physical stores work as service hubs, or showrooms, which advertise products, inspire and attract customers. And, if added to a broader and more articulated integration plan concerning the search, purchase and sale of products, they don’t go bankrupt. Tesla for instance, allows its customers to buy cars online and collect them from any of their showrooms. Other brands allow customers to try/touch/test products in their stores and then receive them at home through online accounts.

The big tech brands are investing in multi-channel systems

The big players in the digital market, those who take advantage of the very same local physical businesses they are undermining, love channel integration. For instance, in the US, Amazon has taken over several bookshops which were previously forced to close down due to its existence. And it is also doing something similar with regard to food chains. Its multi-channel expansion is clearly visible in the new offering of Whole Foods, Amazon Bookstore and Amazon Go (Amazon eyes Sainsbury’s & Asda stores after merger).

Its Asian alter ego, Alibaba, has instead announced a investment of over 2,9 billion dollars in Sun Art, the first Chinese drugstores chain, and one of 9,3 billions in stores, to complement its food offer with Hema (Alibaba goes offline with $2.9 billion stake in China’s top grocer)

In the meantime, just to keep up, Next is trying to enhance its user experience. And has announced an increase of 25% of online investments aimed at developing a more tailor-made purchase experience for its customers.
Multi-channel marketing is indeed a work-in-progress: it can always be improved.

Have you ever shopped from a multi-channel retailer? Tell me what you liked or disliked, tweet @agostinellialdo

To find out more about the digital world, you may read my latest book entitled: “People Are Media” 

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