September 16, 2005, 12:00 AM

Big chains must take harder look at online sales, experts say

Big chain retailers can no longer overlook the value of integrating the web as part of an effective multi-channel strategy, a trend that has some of them investing in a new breed of e-commerce that can support large multi-channel operations, experts say.

Kurt Peters

Executive Editor

Big chain retailers can no longer overlook the value of integrating the web as part of an effective multi-channel strategy, a trend that has some of them investing in a new breed of e-commerce that can support large multi-channel operations, retail analysts say.

Paula Rosenblum, director of retail research at Aberdeen Group Inc., says that retail chains must realize that it’s their overall brand image that counts with consumers, and that consumers no longer shop primarily in stores alone.

“It’s all about mediocrity,” she says. “If consumers’ perception is that a retailer is bland, they’ll won’t shop that merchant online or offline.”

Adds Neil Stern, principal of retail consultants McMillan/Doolittle, “How your brand is perceived cuts across all channels. If your stores are suffering, then probably your online channel is going to suffer too. But if your brand is hot, that will drive sales across channels.”

The trick is to find a formula for developing each channel in a way that supports the entire multi-channel environment, analysts say.

Some big chains have gotten the message, as online sales have grown to the point where the web channel is commanding more respect as part of an integrated multi-channel strategy, says Jim Okamura, senior partner with retail consultants J.C. Williams Group.

Several major retail chains have started focusing more on the online channel as part of an integrated multi-channel strategy, he adds. “I’ve been impressed with major retailers in the last couple of years,” Okamura says. “They know where the critical mass is today, shopping online as well as in stores.”

Technology systems have also evolved in recent years to the point where they can better support big retailers in an integrated multi-channel environment, experts say.

“Two or three years ago, there were no technology products that could handle the e-commerce volumes of big retailers,” says Tricia Walker, partner in the retail and consumer goods practice at consultants Accenture Ltd. “But now e-commerce technology is getting more robust and able to handle larger volumes across multiple channels.”

But as some of the biggest retail chains improve their online channels as part of an integrated multi-channel strategy, the pressure will increase on other big chains, including second tier and regional merchants, to follow suit, analysts say.

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