The blurring of the lines between bricks and mortar and pure play retailers is continuing into 2010. Customers are shopping via many different touchpoints: in-store, online and via mobile phone, to name just a few. But, asks Scott Thompson, are retailers keeping pace with their customers' lofty expectations?

In January, Verdict announced its latest annual list of the UK's favourite retailers, based on a consumer poll. John Lewis came top, with two e-tailers, Amazon and Play.com in second and third. An overriding theme of the poll was that pure play outfits are ahead of their multi-channel competitors when it comes to customer service for online shoppers. No great surprise there as very few traditional retailers have created the integrated infrastructure that would fuel the ideal multi-channel model - one where there is a major focus on the cross channel landscape and the value of having a single customer view and a consistent experience across all touchpoints.

Retailers are continuing to find the going tough but are increasingly looking to other opportunities to maximise trade in-store, whether it be enabling customers to place orders through web kiosks or store staff to place orders for customers through an in-store order system. This drives incremental revenue by enabling customers to order products out of stock in-store, sizes not available in-store as well as providing the convenience of having their order delivered to their home.

Consumer demand for 'commerce anywhere' is on the rise. Whether shopping on the move using a smartphone, in-store or via a call centre, shoppers want and expect retailers to offer a consistent high quality level of service across channels. "While most retailers are gradually adjusting, those that will achieve most success will take the time to really understand how shoppers want to engage through different channels," says Frank Lord, VP EMEA at e-commerce software solutions provider, ATG. "For example, when shopping using a mobile application the speed at which products can be found is crucial as consumers are likely to be on the move with little time for browsing. When it comes to a main retail website, however, comprehensive product information and personalised homepages are more in demand. Ensuring the approach to each channel is adapted accordingly to customer preferences is very important and is something that retailers can improve on in the year ahead."

But how close are retailers to integrating across channels to provide a seamless customer experience? It's a state of affairs that is some way off, it would seem. "The problem is that the systems lying behind multi-channel capabilities were designed for single channel use," says Chris Barling, CEO at EPoS and e-commerce specialist, Actinic. "As a result, these capabilities have only been achieved with the use of string and chewing gum. Until new systems emerge, designed from the ground up for multi-channel, there's going to be a problem here."

Huw Thomas, managing director at Paul Mason Consulting (PMC) agrees that integration remains in many cases a long way away. Many retailers remain comfortable with multiple channels rather than aiming for an integrated multi-channel environment, he argues. This is because multi-channel is both hard and expensive to achieve, particularly if you start with multiple channels. Integrating later is a time consuming and costly exercise that will initially not yield a great return. It's easier to rely on what you have rather than develop a single set of data across an entire system.

"Some online sites present an integrated front to the customer but they are often glued together by several 'business-to-business' sites behind them. Their offer reaches the customer through a raft of different sellers and distributors. These may work together but there is the potential for a less than excellent online experience waiting in the background," says Thomas. "Despite striving for a multi-channel customer proposition, it's wrong to do nothing and wait for that 'golden moment' to integrate your offline and online business. This is fundamentally flawed thinking. The right time to move on multi-channel is now. The question should be: 'How fast can we build our proposition?' Rather than: 'Should we do it?' or 'Are we content with what we have?'"

For this to happen, the thinking around structure, strategy, business intelligence and technology needs to change. "Finding a solution does not lie in going through the same old motions. It means taking new approaches and thinking in new ways. It's dangerous to see online and in-store as independent shopping arms; they must be part of an overall integrated multi-channel experience. Customers expect the bricks and mortar, catalogues and online store environments to 'know' them. They expect their details to be recognised across all channels - retailers who fail to deliver that may find their customer base being eroded by their competitors in the future," he adds.

Multi-channel winners

There are, of course, retailers who are succeeding in this area and valuable lessons that can be learned from their success. "There are retailers out there that are doing a great multi-channel job. Argos is an obvious example, where you can order online and pick up in-store within an hour. Comet also offer this service. Co-op Electrical, a customer of ours, allows customers to choose the day of the delivery when placing the order and then sends an email the evening before the delivery with a two hour time slot when the delivery will take place - this can only be achieved through tight integration between the e-commerce and fulfilment elements of the system," says Russell Dorset, sales and marketing director at multi-channel software specialist, Maginus.

PMC's Thomas gives a nod towards the top 10 UK retailers. "You'll always see the same people. They may move up and down the list but broadly speaking it's the same retailers week-on-week. Fundamentally, they are the ones offering the best integrated channel solutions. Even those that do not offer a true multi-channel experience are closer than most," he notes.

A quick look at the Hitwise Top 20 for the week ending 2 January 2010, for instance, shows that 11 multi-channel retailers made the list, of which six were in the top 10 - Argos, Marks and Spencer, John Lewis, Next, Currys and Tesco. Between them they sell everything online from food to fashion. So what do these retailers have in common? And what can others can learn from them?

"They are great brands with long bricks and mortar heritage, and high levels of customer trust. They have a long-term track record of consistent, strategic and significant investment in the web channel. There's a commitment to getting their channels working in harmony for their customers - a multi-channel rather than multiple channel approach. They show the confidence to innovate, trial, learn, scale up fast what works and quickly dispense with what doesn't."

The message to other retailers with strong brands is clear. Think big, invest on a scale consistent with how you invest in the growth of your store base. Accept that multi-channel is a long-term ball game. Think about your multi-channel business from the customer's perspective. And have the confidence to innovate.

Technology

There's no shortage of retail technology solutions available to multi-channel retailers. But are all the technology components in place to create a cross channel business, addressing the store, online, call centre and fulfilment? Actinic's Barling believes not. "A new class of application is required which will provide seamless integration across all channels. It needs to provide the ability for buyers to investigate, order and return products through any combination of channels, and for the retailer to service and fulfil that capability. But multi-channel consumers also need to experience every part of the retailer's offering in a holistic way. For example, reward schemes should work smoothly wherever an order is placed," he says.

PMC's Thomas takes a slightly different tack. Much of the technology may be in place but is it being applied in the most efficient and effective way? Many retailers fail to use solutions and systems properly, he believes, and in the online environment it's the design and application of the technology that makes the difference. If a site expects a customer to do something illogical - such as registering before they can add a product to their basket - then customers are likely to abandon their basket. Retailers don't take a customer's address before allowing them into the High Street store, so why force it online?

"They have lost 'trial and error' time. They no longer have the luxury of trying options and modifying them when they fail. Customers are driving multi-channel retailing at an increasing pace and if they feel that your business does not offer what they are looking for they will likely shop elsewhere - because one of your competitors will," he comments. "One challenge for technology providers is integrating the basic multi-channel components - marketing, e-commerce, delivery. Many of those elements are still delivered by different organisations. Four or five years ago many technology providers bought PoS retailers to offer their customers integrated solutions - yet today we're no further forward. It's easy to complain about the non-arrival of true multi-channel but while retailers still have to buy their best-of-breed solutions from disparate providers it's hard to achieve. I don't believe that there's one robust product that has online, PoS system, warehousing and distribution available as a single solution."

The future

The multi-channel retail landscape is fast moving and there will be plenty of challenges facing retailers in the next few years. There will also be plenty of opportunities. All of which will depend on the knowledge or origins of the individual retailer, observes Simon Hughes, senior customer insight consultant, business analytics leader at SAS.

"Retailers that started as pure play e-tailers have the agility and flexibility to react quicker than traditional bricks and mortar retailers because their supply chains and buying processes were designed with flexibility in mind. But scaling such flexibility cost-effectively is still a challenge," he says.

Hughes adds that retailers of mail order or catalogue origin are often best placed to understand the vagaries of consumer demand because they have many years experience of collecting "absolute" consumer demand from orders whether or not they were in a position to satisfy it. They have a large distribution network honed to deliver individual products to customers. However, the fast pace of many internet-based channels is a challenge for these large long-established organisations. Meanwhile, traditional bricks and mortar companies have the processes and the ability to scale to massive volumes of product and outlets, but these were often designed with longer response times than are acceptable in the multi-channel environment. "Changing these systems and processes which have been developed over a number of years and are often inflexible can be problematical."

In terms of opportunities, new channels will continue to develop. Maginus is finding that customers are increasingly interested in introducing kiosks to their stores or concessions. "It's a great way of allowing customers to order out-of-stock items for home delivery or collection from store or to offer a wider stock range than can be held in store. Either way it ensures customers are buying from you rather than a competitor. But there will be other channels too - obviously mobile is increasingly important. In fact, I believe that mobile phone commerce will very quickly compete with PC based e-commerce," says Dorset.
"All the leading 'internet' vendors are creating platforms for software specialists like us to create innovative applications to exploit this, i.e. Microsoft and their smartphone platform, Apple with iPhone and now Google with Android and their Nexus One phone. Multi-channel organisations need robust, proven technology to exploit this or they will be left behind in the technology savvy consumer world. In addition, I believe that we'll soon be able to buy via the Xbox and who knows what other new channels in the future. The trick is to ensure that retailers have systems in place that are flexible and can integrate with the new channels as they emerge," he adds.

This is another 'year of decision' for retail, observes PMC's Thomas. With the outlook much brighter than a year ago and Christmas a success for many, the hope is that more capital will be available and multi-channel will be high on the agenda for extra investment. Even if the technology for a true multi-channel solution eludes most companies, then the way forward is to make it as easy and seamless for your customers as you can. It's also vital to make your channels look and feel the same. Whether online, catalogue browsing, talking to the call centre, or in-store, retailers must build a consistent brand. Unfortunately, many have not. Sometimes the channels sell different products, sometimes for different prices. It's an approach which ultimately dilutes the brand.

"If you buy a product in a store, you pay, you leave and apart from the remote possibility of someone opening the door as you leave, that's it. You're satisfied and you'll probably return, or not. With an online transaction, paying for the goods is a long way from the final point of the transaction. Retailers must understand that the final point is delivery to the doorstep. And that final few yards of delivery is regularly the point where it all falls down," Thomas says.
"Then there's the way you get treated. Most stores take pride in their customer treatment and then online or through the call centre it all goes wrong. Once the 'customer view' of the retailer is jaundiced - through any channel - that view may never change. Retailers must identify and understand how their brand translates consistently online and offline. If breadth of range is a key reason for visiting your store on the High Street, then customers expect that same breadth to be available online. If customer service is your grail then do not allow it to fall apart online," he adds. "Going forward, online retailers must invest in the last few yards. It is not difficult to plan for co-ordinated deliveries to a greater accuracy than a 12 hour window and ensure that deliveries are provided by a professional delivery organisation. It's more than getting it there - it's how it gets there and that means right into the customer's hand."

Multi-channel has changed everything. The likes of Marks and Spencer, Argos and Comet are proof that some companies are rising to the challenge. But until new systems and new approaches are put in place, it would seem that retail as a whole will fail to keep pace with its customers' expectations, forcing many organisations to retire early from the race, at great financial cost.

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