The e-retailer puts out a fulfillment call that could, by one estimate, increase its warehouse workforce by 10%.
For all the attention that multi-channel retailing gets, itís a phenomenon that many in the industry still donít fully understand and few retailers are equipped to exploit to the max, said panelists at last monthís National Retail Federation annual convention.
For all the ink and retail attention that multi-channel retailing gets, it’s a phenomenon that many in the industry still don’t fully understand and that few retailers are equipped to exploit to the max. That was the assessment of panelists in the Multi-Channel Retailing Update session at last month’s National Retail Federation’s Big Show annual convention in New York City. Panel moderator Krishnan Menon, executive vice president, global business development of Carlson Marketing, told an early-morning audience that little is known about why customers shop across channels and what it takes to entice them to shop multiple channels.
For retailers who have been barraged with statistics about the value of multi-channel shoppers, Menon presented some surprising observations:
- Little is known about what drives the multi-channel shopper
- Retail IS systems do not move fast enough to make a true multi-channel presence felt
- Online operations have huge interface, performance and reliability issues. “E-commerce software is second only to Microsoft Windows in software put out with bugs,” he said.
A recipe for a multi-channel strategy, Menon said, should include order online/pick up at store; ability to return purchases to any channel; online catalog quick shop; cross-channel customer i.d.; brand consistency; and integrated communications-the same offer in all channels.
The panel also featured Shelley Nandkeolyar, vice president of interactive marketing and e-business for The Home Depot Inc., and Susan Neal, vice president of business development for children’s clothing retailer The Gymboree Corp. They told attendees that more retailers haven’t adopted a unified multi-channel strategy because of competing priorities and the lack of a clear understanding of the value of a consistent multi-channel approach. “It’s important, but it takes resources, investment and commitment across the board,” Neal said. Added Nandkeolyar: “It’s still early and it’s difficult to understand the feedback from customers. There are still a lot of trials going on.”
Menon also told the audience that the cost of failing to adopt multi-channel integration is in lost income. He cited the case of a large, national retail chain, which he could not name, that had opted not to participate in a $43 million project to integrate its POS system with other systems, a $24.5 million project to create a system to allow buying online and picking up in the store, and a $6.4 million investment in a loyalty project. The company commissioned a study to find out the consequences of the decisions. That study showed that in three and a half years, the retailer gave up $540 million in income as a result of failing to make those investments.
In spite of the telling numbers, which elicited a gasp from attendees when Menon stressed that he was talking about income and not revenue, public companies planning a multi-channel strategy better be prepared to justify their expenditures to a skeptical investment community. “The Street still does not consider huge integration budgets for multi-channel projects necessary,” Menon said.
Menon’s observations were echoed later by Phil Kowalczyk, managing director of consumer products division at retail consultants Kurt Salmon Associates. Kurt Salmon polled investment analysts about their approach to evaluating retail stocks. “Wall Street is obsessed with short-term earnings,” he told the audience at the What Consumers Want, What Retailers Deliver and What Wall Street Rewards Super Session. “Wall Street focuses on same-store sales and month-to-month growth.”