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Another retailer in the multi-channel arena is fellow clothier Lands’ End, whose online sales represents 12% of total sales, according to Tracy Schmit, senior learning manager in the customer service division. Schmit says customer service is the key to making multiple channels work together. “No matter what channel the customer is in we want them to have a live human being to help with customer service issues, figure out how to place an order or even help them put an outfit together,” says Schmit, whose job involves training all service reps to handle customers across all channels. The training is one of Lands’ End’s first steps in integrating its channels. Lands’ End operates its call centers 24 hours a day, 364 days per year, including live Internet chat for online users and a call-back feature that allows a customer service rep to call a customer directly if the customer would rather speak to a live person.
While Lands’ End has been aggressive with putting its toll free order number and URL on all its advertising, marketing and packaging materials, it still is working on actually combining operations so it knows where its customers are shopping. “We’re working on connecting all the channels. We aren’t 100% web-enabled yet,” says Schmit, who adds that the retailer also is deploying PCs at all desktop work stations so personal shoppers can use the web site to help customers find items.
Outdoor gear and apparel retailer REI is another web veteran that saw the importance of multi-channel integration early on in web development. With 65 stores, a worldwide catalog business, as well as three web sites, REI has a real-time inventory warehouse system. REI operates only two warehouses, one in Japan and one in Sumner, Wash. “We set out to be a multi-channel retailer with the same products and pricing in all channels and to have the channels be seamless to the customer,” says an REI spokesperson.
A winning application
REI also has implemented in-store kiosks to help integrate shopping channels. One of the first retailers to roll out such technology, REI now has 115 kiosks in 60 stores, which generate sales equal to a 25,000-square-foot store. Providing kiosk access to the web also extends the sales opportunities for four of its smaller stores of 10,000 to 14,000 square feet. “Kiosks will be a key part of bridging between e-commerce and retail stores,” Okamura says. “How they influence the basket of goods that customers are leaving the store with is how retailers can see the payback.”
REI is integrating a POS Internet enabling system that will allow kiosk users to access real-time inventory information as well as allowing cashiers to order online from their checkout terminals. REI says the cashier is one place where every customer interacts. “If a customer says they couldn’t find something at checkout, the cashier can order it online during checkout,” says a spokesperson.
Electronics super store Circuit City is using delivery options as well as in-store kiosks to promote its multi-channel strategy. Half of the customers who buy merchandise at CircuitCity.com pick it up at a Circuit City store, George Barr, director of Internet merchandising, told attendees at the National Retail Federation Annual Convention in January. Even when Circuit City offers free shipping, as it did during the holidays, 30% of customers pick up the items at a store. Customers like to have control over the process and many like the notion of having the goods right away and on their own schedule.
“People don’t want to wait for UPS,” Barr said. “Store pickup has been a winning application from the start.” Circuit City launched its web site in July 1999. Although Circuit City is always happy to get customers coming into its stores, the company says it does not plan to upsell items or track the impulse buying that may occur when customers return or pick up items that they ordered online. The greatest benefit that Circuit City sees to its buy-on-web-pick-up-at-the-store policy is the convenience that customers perceive. Circuit City also is deploying web-enabled kiosks in new stores for customers to research and order items online that may not be in stock at the store.
Now that retailers are thinking strategically about tying in all three sales channels, and customers are starting to shop in multiple channels, retailers will need to integrate their business operations in all three divisions to truly become multi-channel.
A single source
To help retailers restructure their business, vendors such as Wakefield, Mass.-based MarketMAX offer integrated software solutions that combine merchandise planning and financial expectations across all channels so retailers can see where customers are shopping and tailor their buying based on the channel demands. For example, if a retailer sells more children’s clothes off-line and more women’s clothes online, that retailer cannot only analyze this trend via the MarketMAX software, based on POS data collected, but it can also plan those buys to meet the needs of the channel. The sales data are available from a single system that everyone from buyers to senior managers can access.
Such retailers as Spiegel and Staples are using MarketMAX. David Kardesh, chief information office at Downers Grove, Ill.-based Spiegel Group, says the company is making the business processes the same across all three of its companies and that its work with MarketMAX fills the important niche of merchandise planning. “MarketMAX will allow our companies to mix and match across channels to plan buys as well as to localize buys for an individual company,” Kardesh says. He says Spiegel hopes to have one of its three companies up and running with MarketMAX this year and the other two by late 2002 or early 2003.
Gene Gsell, chief marketing officer at MarketMAX, says retailers are relieved that it doesn’t look like the dot-coms are taking over their business on the Net. “But it’s also a wake-up call that retailers have to get this right,” he says, noting that, barring Amazon.com and a few other pure-plays, all the online players are brick-and-mortar retailers who realize they need a multi-channel strategy to engage customers wherever they want to shop. “Our booth was packed at the National Retail Federation’s Big Show conference in New York City,” he says. “Retailer’s information technology spending is not being cut this year-it’s the future.”