February 4, 2004, 12:00 AM

SPONSORED WHITE PAPER: Multi-channel integration

Multi-channel merchandising is emerging as a top-of-mind issue for merchants of all sizes. Whether they are local chains or national chains, catalogs or direct-response TV operations, most have a web component today. And so most are wrestling with the challenge of creating and integrating merchandising channels.

Tied together by a well-developed integration and e-commerce strategy, multiple retail channels build customer loyalty, increase sales and generate repeat business. 1-800-Flowers.com, for instance, is enjoying record sales and strong customer loyalty, thanks in large measure to an integrated merchandising strategy. “We’ve been aggressive in offering new and different ways to shop with us and as a result, we’ve increased repeat business from 30% of total sales to more than 40%,” says Chris McCann, president of 1-800-Flowers. “We give customers a total gifting solution. That’s made possible by our commitment to multi-channel retailing.”

1-800-Flowers was among the first to try new ways of retailing, pioneering the 1-800 concept to create a national market, then moving online with CompuShare in 1992. With help from Fry Inc., a leading e-commerce design, development and managed services provider, 1-800-Flowers opened the first store on America Online in 1995 and developed a wireless commerce strategy in 1998.

Still in early phases

While the Internet and web technology are helping 1-800-Flowers become an effective multi-channel retailer, the company is still an exception. Many retailers have merchandising channels that let customers shop through catalogs, call centers and the web, as well as in stores. But often those channels aren’t integrated, with merchandise, prices and customer service policies varying from channel to channel.

Merely operating multiple sales channels does not constitute multi-channel retailing. Multi-channel merchandising requires a well-thought-out strategy anchored by the effective use of e-commerce technology and Internet site design. “Building a true multi-channel retail program is evolutionary. Many merchants are still in the first and second phases in which they first optimize each channel, then develop strategies so all channels share creative values, product assortment and some business rules,” says David Fry, founder, president and CEO of Fry Inc. in Ann Arbor, Mich. “More advanced multi-channel retailers are developing synergy among all three channels by creating strategies that present a single view of who’s shopping with them.”

Many retailers begin channel integration with merchandising and branding techniques that encourage shoppers to use multiple venues. These techniques often take the form of gift certificates purchased online and redeemable in stores, or coupons for discounts in any channel.

Another strategy is a web-enabled gift registry linking a retailer’s fulfillment systems to a real-time inventory management database. Fry worked with Crate and Barrel to build an interactive gift registry at CrateandBarrel.com.

Before the electronic gift registry, engaged couples filled out forms at a Crate and Barrel store and used the catalog or relied on the advice of sales associates to select the gifts they wanted. When Crate and Barrel launched the online registry, couples could create a personalized gift list and browse Crate and Barrel`s housewares inventory. Wedding guests liked the registry because it allowed them to buy a present the couple truly wanted even if the buyer did not live near a Crate and Barrel store.

Crate and Barrel has continued to refine and enhance the online registry. Today, couples can edit the registry if their gift selections change and browse Crate and Barrel’s entire inventory of housewares and home furnishings. The convenience of an integrated multi-channel gift registry means that wedding guests buy fewer duplicate gifts that couples must exchange or, worse from the retailer’s point of view, return for a refund.

But more importantly for Crate and Barrel, the online gift registry helped facilitate the retailer’s multi-channel integration strategy. The web-enabled gift registry features merchandise priced the same at its web site, catalogs and stores. Crate and Barrel achieves better channel integration because order management, customer service and fulfillment systems are tied into a central database of real-time information. “The gift registry helps promote a seamless shopping experience for the customer who wants to buy a gift,” says Rudy Pataro, Fry’s vice president of information technology. “From the retailer’s perspective, it tells shoppers: ‘We have you covered.’”

Linking disparate systems

Features such as electronic gift registries help merchants create a unified brand, Pataro says. But before retailers add features and functions to promote channel integration, their top priority usually is linking disparate operating systems and databases. A large national chain may have as many as 15 supply chain, order management, inventory management, point-of-sale and e-commerce systems supporting store, catalog and web operations. These silos make channel integration difficult. “The payoff of multi-channel integration is having a single view of the customer and using an integrated stream of information to understand the shopper’s complete history of transactions, interactions and relationships,” Pataro says. “Systems issues can be a deal breaker for achieving channel integration.”

Many retailers` first experience with channel and systems integration comes in implementing an information management program to tie the entry of orders from web to legacy systems. When Eddie Bauer first launched its web site, its goal was to offer, via this new channel, the same levels of customer service for which it was known. In making the commitment to e-commerce it recognized that its customer service legacy was just as great an asset as its legacy IT systems.

Working with Fry, Eddie Bauer devised a way to integrate its legacy-based order entry system with orders placed at eddiebauer.com. This web order interface device is helping the retailer and other Spiegel Group companies to achieve better channel integration. An interface application stores all online orders in a web-enabled database where customer service representatives can view incoming order information on a common electronic order form. In the rare instances where data discrepancies occur, such as transposed numbers or incorrect merchandise codes, the customer service reps can easily fix one or two lines of information and the order is quickly uploaded to the legacy system.

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