Retailers shift their ad spending from TV, radio and print ads to digital ads.
Few chains integrate catalog, web and store merchandising more thoroughly than REI. That integration begins with top management buy-in and recognizes that customers want multi-channel integration.
“I’ve been asked to talk about the secrets of integrated multi-channel success,” observed Joan Broughton as she began her presentation at this week’s eTail 2002 conference in San Jose. “But as it’s quite obvious from all the sessions at this show, there are no secrets.” The vice president of online and direct sales at the nation’s largest outdoor gear and apparel chain was referring to the fact that channel integration was an extremely popular topic at this year’s eTail conference, one that many speakers touched on. Yet, it was clear after listening to Broughton why that was her assigned topic-few chains integrate catalog, web and store merchandising more thoroughly than REI.
That integration, said Broughton, begins with top management buy-in of the strategy and is driven by the recognition of the fact that customers want multi-channel integration and they reward retailers who offer it by spending much more with the chain than single-channel shoppers. The 64-year-old retailing co-op operates 60 stores nationwide and is accelerating its new store development. It has operated at catalog business almost as long as its has operated stores, and the first of its two web sites, REI.com, became one of the pioneers in web retailing when it launched in 1996. A second site, REI-Outlet.com, was developed later to offer discounted merchandise normally found at outlet stores. Together, the two sites outsell REI’s more established catalog operation, and about 50% of their shoppers are new to REI.
Broughton provided attendees with a series of examples that indicate just how completely REI integrates the web with other channels. They included:
Marketing: “Our marketing mantra is to let the multi-channel customers shop the way they want to shop, and therefore, all of our marketing promotes the catalog, the stores and the web at the same time,” Broughton said.
Replicate the shopping experience: Broughton noted that sales associates in the stores are experts in the outdoor gear the chain sells, and they eagerly provide advice and product demonstrations. “They love to talk about our merchandise, and we’d be foolish not to replicate this on our web sites,” she declared. Thus, REI.com offers a live chat function that allows online shoppers to ask the same product questions on the site as they would at the store, and hundreds of “Learn and Share” articles are posted on the site to provide shoppers with tips on using outdoor gear safely. “Our retail stores are fun and informative,” Broughton said. “We can’t suddenly treat our customers on the web as cyborgs.”
Promotions: All sales promotions for store products are duplicated on the web, from discounted pricing, to promotional language and even graphic displays. The same is true with special store promotions, such as the chain’s popular Friends and Family promotions, through which sales associates at the store mail invitations to relatives and friends to attend a discount shopping event after the stores close for regular business. Those receiving the invitation but unable to visit the store can log onto to the web version of the event, using a code on the invitation they receive in the mail.
Kiosks: Most REI stores have web-enabled kiosks and sales associates are pressing management to install more of these machines. “They work well as a bridge between the channels, and they’re a great source of information for employees, who may be experts on kayaks, for example, but who need to brush up on snowboarding,” Broughton said. Customers in the store can use the kiosks to order online desired merchandise that is not in stock at the store. Though they are processed online, such sales are credited to the store that has the kiosk. “If we didn’t do that, these machines would be collecting dust,” she said.
Customer information: Most of REI’s customers are members of the cooperative, and customer data files “present a single view of the customer’s shopping history” no matter which channel they shop.
The results of this heavy emphasis on channel integration are clear, said Broughton. Multi-channel shoppers spend more money with the chain than single-channel customers. In the case of REI, she said, store-only customers who add REI.com to their shopping patterns on average spend 31% more at the chain.
Not all of REI’s initiatives at multi-channel integration have gone smoothly, however, and Broughton freely admitted some errors the chain has made. In 2000, for example, it made the decision to suspend publication of its spring catalog, presumably because it saw the web as a replacement for it. “We learned immediately that catalogs are not obsolete,” Broughton told her audience. “When we didn’t publish the spring catalog, sales dropped across all channels.” When publication of the spring catalog resumed last year, the chain experienced a 13% sales lift across all channels.
Similarly, when the chain decided to develop an on-line gift registry to complement the store-based registry, it turned to an outside vendor because its online merchandising group believed it was not able to handle the task. The vendor developed a web-based registry that was different from the store-based version in various respects, including payment and promotional components. “The customer let us know they weren’t pleased with it,” said Broughton. “When we don’t properly integrate sales channels, we hear about it from our customers.” Now, the online registry is being revamped to make it consistent with the store-based offering.