The Current State of Cross-Channel Retailing: Part 1

Over the next couple of postings I'm going to review this years annual Retail Systems Research survey on the current state of multichannel retailing and some of the interesting stats the report uncovers.

This years survey results reinforce the analysts and many industry pundits views that multichannel customers are more profitable than single channel customers – 56% of the surveys respondents felt this was the case. However it appears that many retailers can't actually quantify this as 29% still don't know whether their multichannel customers are profitable or not!

The survey continues the growing trend in using the term 'cross-channel', including it in the title, “Cross-channel Retailing for the Anytime, Anywhere Consumer”. What's nice about this report is the use of the term in context, identifying cross-channel with the behaviours of the customer and multichannel with the underlying systems. It also highlights the focus on the brand, particularly with this great phrase – "the brand is the value, and the channel is how the value is delivered".

It would appear that the survey respondents are switching on to the importance of brand and that customers shop the brand not necessarily the channel these days – 76% of the respondents see creating a single brand identity across all channels as the most important opportunity to improve customer satisfaction.

However, only 20% believed it very important to explore new channels, e.g. mobile. This is probably an indicator of the current economic climate and the focus on strengthening foundation channels, or perceived barriers to entry for new channels. This is still quite a surprise, given that International should be considered an additional channel and with potential brand saturation in local markets, international expansion should be more appealing in their efforts to counter balance shrinking local revenues.

An interesting observation is that 40% of what the survey refers to as Retail Winners are fulfilling online orders from the stores. To me, this is not a scalable model – as volumes increase there's a serious risk of cannabilisation of store inventory, leading to dissatisfied local customers. Where's the incentives for that Store Manager to promote cross-channel behaviours and attributes?

The report uncovers some clear benefits to enabling cross-channel processes and behaviours. Here are some highlights below, I suggest downloading the report from RSRs website for the full picture.

- 40% report a 2-5% increase in eCommerce profitability
- 20% report a 5-10% decrease in warehouse space requirements
- 31% report a 5-10% improvement in gross margin percent
- 22% report a 10-25% sales lift on cross-channel promotions