14 SCS:SUPPLY CHAIN TRANSFORMATION OCTOBER 2008 SUPPLY CHAIN STANDARD
IN ASSOCIATION WITH UNIPART LOGISTICS
www.supplychainstandard.com
RETAILING
THE MULTI–CHANNEL
CHALLENGE
People want the product, at a low price, but they really don't
want the hassle. But what does it take to provide
convenience and control in a multi-channel environment?
PAUL BROOKS
When multi-channel retailing first became a
reality, many companies saw this as a way of
gaining new customers or keeping their
existing customers by adding an online service. Almost
all of these early services were set up as entirely
separate solutions away from the traditional bricks and
mortar retailing. Some retailers started using retail
stores to pick internet orders, but the majority of these
failed to delight their customers.
In trialing in this way, retailers failed to grasp the fact
that the customer experience is far more than just
paying the cost and having the product. There is a
whole customer experience 'package' which involves
how the product information is presented, how
products are purchased (the promise), and even more
importantly how customers acquire the product itself,
either through collection or delivery. And increasingly,
this total end to end continuum is more reliant on
convenience and allowing the customer to feel in
control of their purchase experience.
People want the product (at a low price), but they
really don't want the hassle. More and more,
consumers want the product on their terms. They
want it delivered to their home or work when they are
there, or to pick it up at a convenient location and
time. The winners are organisations who can deliver
this whole convenience package as a standard service.
Prediction
There is so much research and prediction about the
growth and rosy future for online business that we can
take this as given, and multi channel is an increasingly
important part of this retail landscape. Yet focusing on
these headline figures alone misses the driving force
towards multi channel convenience. Some research is
rather more revealing, including a hint at the potential
pitfalls waiting to trap the unwary e-tailer.
The general assumption that the ability to buy
things at the lowest available price is one of the key
drivers behind internet shopping and is fuelled by
search engines and the many price comparison sites
such as pricegrabber and moneysupermarket.
However recent Verdict research has shown clearly
that this is the number two attraction of internet
shopping rather than the main driving force.
Convenience, it turns out, is what we really want;
across a variety of sectors from grocery to clothing and
DIY. An initial view of the figures shows that just over
half of us think the convenience of internet shopping
is important. However when you also add in 'saves
time' and 'shop at any time', both also measures of the
convenience of the overall experience, the figure hits
79 per cent.
Convenience is also a significant potential
differentiator, indeed Verdict research shows that
'deliverywhenIwantit'isbehind10percentof
shoppers choosing one site over another. As delivery
time slots are offered by some internet retailers, more
customers see it as possible and they demand it.
Again, convenience wins.
Although 20 per cent of online shoppers claim their
purchasewouldnothavebeenmadeat
all through another retail channel,
with over a third of shoppers
stating their online purchase
wasattheexpenseofatrip
to the High Street and 14
per cent instead of a retail
park, the convenience of
ordering from home or
office and delivery when
wanted is evident.
Some retailers have
been early adopters of a
convenience approach to
online retailing, and multi
channel operations in general.
Tesco and Woolworths, for example,
developed sophisticated offerings where
customers can order online or in store, then collect in
store or have convenient home delivery. Argos with a
'click and collect' service to bring together online
ordering and store pick up, added both convenience
and gave control (options) to their customers.
Customers are now in charge of the overall package
and are enjoying the experience.
So the rise of convenience in this sector should not
be a surprise. One of the main growth areas for retail,
apart from the internet, is the convenience store; places
which are easy for the customer to get to and open
when they want. This also represents an opportunity to
roll out the convenience of multi channel business with
order or collection through such local outlets.
Lean business guru Professor Dan Jones of the Lean
Enterprise Academy states that 'Lean is about
developing new capabilities of serving customers in
new ways...' including multi channel and online
retailing. The internet allows retailers to present clear
product information and measure real demand for
items, as well as showing the high level of
substitutions made in store. Online business puts more
pressure on retailers to actually deliver what the
customer wants, as well as providing this where and
whentheywantit.
Retail experts, the Javelin Group, suggest that we
are in the grip of a new revolution, something that
happens every 30 years. Following on from the
ascendancy of out of town superstores, 'multi channel,
multi format multiples' are going to take centre stage.
And convenience of the whole customer experience is
adrivingforceforthis.
Expectations
Consumer expectations of convenience are increasing
according to Nick Robertson, Chief Executive of
successful online fashion retailer ASOS.com. Every year
the bar is being raised. Customers expect more and
get more and ASOS.com are looking at same day and
hourly delivery slots. At the heart of this is service
excellence and customer delight. According to Nick
Robertson, logistics is fifty per cent of the picture for
both control and convenience. If a customer places
and order and doesn't get it, that's 100 per cent failure!
Justplacinganordermeansthatthereisan
expectation it will be delivered. In full, accurately and
when we want it. Indeed we recognise that taking
orders 24/7 is the easy task. Delivering
orders in a totally convenient
package is rather more difficult.
Integrated multi channel
retailing, providing a wealth
of information on
innovative products and
services to a variety of
customers, adds to the
supply chain complexity.
It blurs the distinction
between bulk product
flowstostoresandpicking
individual units to customer
order. Some distribution centres,
equipped with advanced systems
and business processes are already
capable of picking down to single products for
multiple channel destinations. In our era of credit
crunch, the successful multi channel businesses are
looking for solutions that will drive down supply chain
costs, giving service enhancements of both control
and convenience.
People, processes and systems must work together
to deliver a seamless service that supports an all round
product proposition that customers desire. Fulfilment
partners need to deliver solutions from existing (and
flexible) infrastructure to gain an advantage in today’s
fiercely competitive retail environment. As Robertson
of ASOS puts it “being first in retail fashion is good,
being first, fast and fantastic is a combination that
delights our customers and makes them shop more
regularly with more confidence”.
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