Review - The Retail Bulletin Multi-Channel Summit 2010
Developing an integrated multi-channel capability remains one of the most important issues affecting retailers as the value of reaching customers down multiple channels continues to rise. By Glynn Davis
The Retail Bulletin brought together a large number of leading retailers and vendors at its Multi-Channel Summit 2010 this week to discuss this important topic and attempt to point the way forward for delegates. The event, sponsored by k3, was full to capacity.
Among the heavy-hitters delivering thought-provoking presentations was Doug Gurr, executive development director at Asda-Walmart, who attempted the tough task of looking into the future and coming up with some potential “mega-trends”.
Chief among these was his belief that the big four supermarkets will continue to aggressively target non-food and that the only way to do this in the UK – where there are big issues over planning regulations – is to take a multi-channel approach.
With the internet effectively stripping away the constraints to compete, and enabling retailers to sell pretty much everything to everybody, Gurr predicts consolidation will take place with the end-game being a “significantly smaller number of big retailers”.
Although this might provoke fear among smaller operators he admits that Asda is very much “finding its way” in the multi-channel world like almost everybody else and continues to make many mistakes as it grapples with the task within its stores of putting all its goods into a small constrained space.
This currently involves it playing around with an Argos-like model for its non-food categories whereby it displays certain products on the shop floor, places others in a back-room, and offers an ordering service for the remainder. This is being performed alongside the development of its web operations.
Such experimentation is absolutely essential, according to Richard Burrell, director of media operations at QVC, who cited a text message experiment he undertook to target non-core shoppers. It was expected to deliver little benefit but confounded the sceptics in QVC and is still in operation today. His message to delegates was therefore: “If you see another channel coming then try it, and experiment”.
This is much easier said than done as a number of speakers highlighted how the biggest issue when developing new channels and creating a multi-channel business is getting buy-in from employees.
Darren Gardner, head of new business, multi-channel and future strategy at The Carphone Warehouse, detailed how the different divisions within his business – web, retail and direct – all have their own P&L’s and that this makes it very tough to get different channels to work together.
“When we tell the retail people to push customers online, then there’s a problem. When you use individual P&L’s it’s a nightmare. You can’t underestimate the depth of feeling people have for their channels,” he says.
At Carphone there is recognition that education is critical and incentivising employees to embrace the channels is essential. Gardner is selling multi-channel into the business through the use of statistics such as those that show cross-channel shoppers have 23 per cent higher average transaction values than single-channel customers.
Going through such pain to create a multi-channel business is regarded as very much worth it by Tony Stockil, chief executive of Javelin Group, who highlighted how shopper journeys are no longer linear, down a single channel, but criss-cross various channels.
For DIY, he says only 1 or 2 per cent of sales are transacted online but as much as 50 per cent of in-store sales are influenced by the internet. For consumer electronics, Stockil says 15 per cent of sales are typically online but as much as 80 per cent of in-store sales are influenced by the web. And for clothing the numbers are 5 to 8 per cent online sales and 25 per cent in-store being influenced by the web.
He also believes the development of multi-channel businesses is particularly important for UK retailers because the country is in a “sweet spot”, having an attractive market for the internet based on four criteria. These being: many affluent people; a strong legacy of home delivery; a large concentrated population; and a historically centralised retail infrastructure.
Furniture retailer Dwell is fortunate in having avoided much of the pain of developing its multi-channel capability as its managing director Aamir Ahmad told delegates at the Summit that he chose to set the business up as a multiple-channel operation from the outset.
Although this has made life significantly easier (not having had to face changing the culture within the organisation and dealing with legacy systems and structures) he says he has also sought to remove other pressure points by taking certain decisions, which he recommends to other retailers.
These include incentivising employees to regard the business as multi-channel so they do not worry about where the ultimate order is received, implementing metrics and KPIs that are cross-channel, having the same prices across all channels, and using one stock file for the whole business.
Tony Bryant, business sector manager at K3 Retail Business Solutions, is also an advocate of adopting the latter: “Those retailers that are successful have a single view of stock and of customer spending across channels. Over the next two years we need to see a focus on this by retailers.”
While retailers have significantly improved stock availability in their stores over recent years, he reckons it would be a serious mistake for them to now risk “spreading their stock across channels” and under-delivering to consumers. Instead, Bryant calls for retailers to look at changing the rhythms between replenishment and fulfilment in their organisations, to better adapt to operating down multiple channels.
He also predicts that mobile commerce will have a big impact on the retail sector over the next decade but pointed to some specific challenges that retailers must overcome if they are to be successful in this new world. He recommends: developing a user-friendly proposition; having a mobile specific website; diverting consumers to an m-commerce site; and successfully managing payments.
Tamer Ozmen, vice president of online at Orange, agrees there are challenges to be met and that these must be faced against a backdrop of a big fight currently taking place over who controls the mobile content and m-commerce area. “The phone operators, Google and Microsoft all want a stake in this area and it is like the Wild West now with Apple in the front,” he says.
The impact that Apple is having on the market and how big its future influence could be cannot be underestimated as almost every presentation given during the Summit included a slide featuring the Apple iPhone.
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