The Retail Bulletin Multi-channel Summit 2011
Dealing with organisational changes is the biggest challenge facing retailers as they continue to grapple with developing their businesses into multi-channel operations. By Glynn Davis
A capacity-packed room of retailers and vendors brought together for the Retail Bulletin Multi-channel Summit 2011, sponsored by k3, voted organisational changes as the main challenge (63%), compared with investment (19%), and technology (14%) when looking to move towards a multi-channel model.
Simon Forster, director at Debenhams, suggested to delegates that the changes they had so far faced when developing their multiple-channel offerings was “nothing compared with going forward” and what they now had to overcome.
Tony Bryant, business development manager for multi-channel at K3 Retail, highlighted how there are myriad challenges facing retailers today, including increased complexity caused by fluid shoppers across multiple channels and global supply chains becoming more prominent. In addition, technology advances through mobile devices, the growth of social media, increased data-driven environments, and the emergence of the cloud were all adding to the considerations.
Against this backdrop, Forster says retailers must have board level support for their strategy of embracing a multi-channel model. Only then will it be possible to get the whole organisation onboard and engage with them: “You need to make sure everybody comes along so speak the businesses language and not technology-speak with lots of acronyms.”
To help this process he believes it is essential that some credit for sales is given to stores that are involved in any part of the transaction with customers. This has become increasingly important with the rise of Click & Collect type services.
Joanna Brazier, multi-channel programme director at John Lewis, says her business has implemented a system whereby regardless of the channel that a customer shops across within a specific catchment area of a store then it is this shop that gets the sale.
She agrees that this is necessary in order to achieve what is the “biggest cross-functional programme John Lewis has ever done”. “It’s a massive cultural change and the integration of the systems is a big headache. The multi-channel vision is joining everything up and getting the branch staff to understand this and to buy into it,” suggests Brazier.
The joining-up aspect is all encompassing: “Customer information, stock information, and order information must all be joined up and be visible throughout the company. Not until all three are joined up do retailers have a multi-channel business. We’re not there and we doubt whether any other retailer is.”
Stock availability is certainly one cause of major headaches for retailers as they seek to create a multi-channel proposition, with Derek Eccleston, research director at eDigitalResearch, suggesting RFID will likely one day provide the bullet-proof solution for tracking products.
Chris Corbin, head of multi-channel at Halfords, recognises this issue as Halfords has grown its Click & Collect and Order & Collect services: “In-store stock accuracy is critical. We’re not there yet but we’ve made great strides.”
One way to overcome the deficiencies in the stock accuracy level is to communicate with the customer so they are made aware of non-availability of products for Click & Collect orders. This could prompt their collection to be delayed 24 hours: “A phone call to the customer can be difference between them collecting or not.”
This customer service role of stores in the multi-channel model is a big element of the strategy at Halfords. “Customer satisfaction is largely dependent on the last element [in the customer’s journey] – and that is in-store,” he says.
Bryant says this is an example of how the role of stores in the multi-channel model will change over time. “Store life will still be around in 2015 but will customers make a selection and then walk away? There will be a form of transaction made but maybe we will not need a Point-of-Sale in-store. There is this big question of what to do with the existing store space,” he says.
Adding to the challenge for retailers is the fact customers are changing faster than retail organisations and this is a key driver of them developing into multi-channel businesses. Forster says: “We don’t own our customers. No retailer can say their customers only respond to what they do. With Amazon’s one-click checkout, everybody has had to consider [replicating] it. Customers are developing quicker than any organisation.”
For high street retailers in particular, he says “we are adapting to customer expectations more than before...as the danger is that the high street will be playing catch-up and where the customers are ahead”.
One area where customers are definitely ahead of the curve, and are proving especially demanding of retailers, is with mobile commerce. And retailers cannot ignore it as the growth trends are extremely powerful.
Jonathan Wall, group e-commerce director at Shop Direct Group, says the group has enjoyed a four-fold increase over the past six months, with “hockey stick growth” being experienced.
“The buzzword in our business is mobile. We’ve a non mobile-optimised site and we are getting three per cent of sales on it. We’ll be launching a mobile-optimised site and expect sales to ramp up,” he says.
For Wall, mobile will be the “connecting point for multi-channel” especially when location-based services start to kick-in and image recognition via mobile devices replaces the barcode-like QR codes that have been appearing.
This is all impacting on how Shop Direct Group communicates with its customers. Since they are increasingly receiving emails on their mobile phone, and reacting to them on the device, Wall says this has led to a six per cent decline in email usage on PCs compared with 36 per cent growth in email usage on mobile devices.
With so much happening in the mobile area Giles Delafeld, newly-appointed e-commerce director of Alexon, says it is essential for retailers to determine what their ROI aims are. “There is a big question of investment in the various mobile platforms – such as Apple and Android. It depends on the ROI and the size of your business. Mobilising your website should absolutely be your first step. People get excited by apps but what about when you do it and there is no return!”
Another area where events are moving almost too quickly for retailers to keep up is with social media. Delegates at the Summit heard Naomi Paget, head of customer relationship marketing at TM Lewin, describe how TM Lewin uses the likes of Twitter and Facebook to be pro-active on certain issues.
It has used its blog to convey a specific message (such as highlighting forthcoming cotton price increases) and to then distribute this through social media channels. The one-to-one nature of the engagement has also helped TM Lewin get closer to those customers that are unable to visit its stores – such as its many overseas buyers.
Although this can seem like a lot of work, Simon Harrow, technology officer at Kiddicare, says: “Retailers expect social media to be bigger than it is. He cites the Kiddicare site as receiving up to 60,000 visitors per day but there are only around 30 postings per day made on it. “Retailers suddenly expect an explosion but it doesn’t happen. It’s far more manageable,” he says.
However, retailers should be prepared for the unexpected as Fergus Boyd, acting head of ebusiness at Virgin Atlantic Airways, recalls part of his team responding to thousands of communications each day during the Heathrow Airport closure over the Christmas period.
But regardless of the levels of customer interactions with retailers, Paget believes it is only a question of time before social media is fully embedded within retailers’ businesses and she predicts that “we won’t be talking about it later this year”.
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