The retail playing field has changed significantly over the past 12 months and most likely will continue to do so.
As the dot-coms initially took their positions on the competitor list, consumers responded to the ease of purchasing along with, in some cases, deep price discounts. As competition among dot-coms began to get heated, many traditional retailers entered the online sales field, some with strategies and some without.
With the eventual demise of many pure plays, traditional retailers are now securing their positions. In the beginning, pure plays had the advantage of deep pockets for advertising and promotions that set the groundwork.
However, the rules have changed, and traditional retailers are setting them. Retailers and manufacturers are entering the playing field in droves, but are cautiously entering for the long term.
As the playing field changed, retailers were challenged with offering an additional tier of distribution.
Does being multichanneled result in cannibalization among the channels? Not necessarily. Research has shown that a large percentage of new and repeat customers use all channels. This is not a sign of cannibalization, but a sign of customer service. It is being available to your customers when and where they want you to be.
Each channel should complement each other, but function in a manner that optimizes that channel. Each channel should provide customers with a unique shopping experience.
Competition is no longer among the dot-coms, but with established traditional retailers competing for customers’ share of wallet. The playing field has stabilized with the same set of competitors, but in a new medium.
Do customer expectations differ among channels? Consumer expectations not only vary by channel, but also by product type and brand.
Though brand image should remain consistent among channels, each channel provides unique benefits to enrich the consumer experience.
The Internet provides a quick and relatively inexpensive platform in which to test new promotions, products and concepts, while in-store still provides the customer with the touch and feel experience.
For many traditional retailers, especially catalogers, entering the online marketplace is a logical expansion of their business. However, just building an online store does not secure success.
Unlike many of the dot-coms, traditional retailers have current systems that can be leveraged. And some do need to be modified or adjusted to meet the demands of the online marketplace.
Some of the processes that can be leveraged include merchandising, branding and, in some cases, fulfillment. The process that has had the most difficult transition for both click-and-mortars and dot-coms is fulfillment and returns. Multichannel retailers do have an advantage as they can accept returns in-store giving the consumer an additional customer service option.
In a world of vendor overload, what does the consumer really expect and does the experience need to be the same across all channels? The business model and long-term online strategy would be the key drivers in deciding whether to implement a certain solution.
In addition, it is not about having tons of bells and whistles on a site but what your consumers actually expect from your brand and their shopping experiences.
Consumers want a shopping experience that allows them to both find the product that they are looking for in a quick and efficient manner plus offers assistance when needed. Often, additional functionality and systems may be distracting and frustrating for the consumer. The bottom line is customer satisfaction and service. The retailers that can provide the best service channel to channel will be the true winners.
Now that the playing field has become level it is imperative that retailers continue their strategy and continue to find ways to distinguish themselves from other retailers whether it be online, in store or via catalog.
Long term this must be through distinctive product offerings, image and customer service — not price. Although online price promotions have been effective (and will most likely continue to be) retailers will have to offer special product offerings to continue to capitalize on all channels.
In order to capture the greatest share of wallet, retailers will need to segment promotions by channel to optimize the consumers shopping within those channels.
In addition to the difference in shopping experience, the channels lend themselves to different demographics. The overall marketing objective should be to determine which channel is used.
Depending on the business model, online advertising may be the most effective and efficient means for new customer acquisition while in-store may be the most effective way to increase the percentage of closed sales.
Traditional retailers will be best served in capitalizing on the strengths of each of the channels and market accordingly. If consumer expectations differ among channels, why shouldn’t their experiences?