October 31, 2002, 12:00 AM

Multi-channel retailing and the Internet

Anyone who has watched—even from afar—the developments in retailing in the past several years understands that the dominant theme for retailers in the 21st Century is the importance of operating and integrating multiple channels of merchandising.

Anyone who has watched-even from afar-the developments in retailing in the past several years understands that the dominant theme for retailers in the 21st Century is the importance of operating and integrating multiple channels of merchandising. Maintaining multiple merchandising channels reinforces the retailer’s brand, responds to the consumer’s desire to shop when and how it suits her, and rewards retailers with increased sales and customer loyalty.

But merely operating multiple sales channels does not constitute multi-channel retailing as the phrase is now being defined. Sears, the venerable merchant featured in this month’s cover article, has long maintained multiple retailing channels-stores, catalogs, call centers and now the web-and many other retail chains can trace their multi-channel roots back several generations of management.

What is clearly different about today’s definition of the phrase is the notion that all of a retailer’s sales channels must be seamlessly linked and present the same marketing face to the customer. Pricing, merchandise selection, promotions, frequent-shopper incentives, coupons, product availability, and all the rest must be the same from one channel to the next and equally accessible no matter which channel the customer chooses. Telling a customer that the store is out of the sweater she is looking for and to check with the catalog people to see if they have the product simply will not cut it today. Nor is it acceptable for a retailer’s catalog to offer a promotional sale that isn’t available in the store and vice versa. And whenever a retailer comes in contact with a customer, it better know at that instant which of the retailer’s channels that customer has shopped recently, what the customer bought, how the customer prefers to pay, how frequently she shops each channel, and so on. That is the type of multi-channel integration that tells the customer two very important things about you the retailer: one, you’ve got your multi-channel act together, and two, you understand your customers’ preferences and shopping patterns and care about meeting their needs.

Not many chains have anything near this level of channel integration yet and even the leaders of this movement acknowledge there is considerable room for improvement. Achieving the level of channel integration that consumers want today requires nothing less than a complete retail systems overhaul, and that does not happen overnight.

Nonetheless it will happen, and the Internet is the reason why it will happen. Only the Internet makes it possible for retailers to economically connect all sales channels and all suppliers to those channels into a single real-time transaction processing and reporting system. Without the Internet, multi-channel retailing, as now defined by the industry, is a fantasy. Kelly Mooney, whose Ten/Resource consulting firm counsels retailers on interactive marketing, put it quite nicely in her keynote speech at the recent Shop.org Annual Summit. “The Internet is only one piece of the (multi-channel retailing) pie,” she said. “But it’s the one piece that connects all the other pieces and makes the customer’s experience at each channel better.”

There are still some people who tell me that our magazine is too narrow in focusing on just one retailing channel. I respond that Internet Retailer covers a lot more than merchandising on the web, although we cover that more than anyone else. Still, our primary mission is reporting on how the Internet is linking and transforming all retailing channels. As such it is the only multi-channel retailing magazine on the market. Not everyone accepts this view just yet. But time is on my side, and in time they will.

Jack@verticalwebmedia.com

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