Tuesday, 13 May 2008

Multi-Channel Challenges for Retailers

I'd argue that the underlying success factor in multi-channel retail from an external perspective is a seamless customer experience, and from an internal perspective is a single customer view - different sides of the same coin. Most of the challenges to any retailer appear to stem from attempting to achieve this.

The two key areas of impact here are technological and organizational dependent on retailer age and size. The older the organization, the more likely they are to have legacy systems, and the larger they are, they more likely they are to face resistance to change. Multi-channel may therefore require integration of disparate technologies, while also needing a complete review of structure, skills, staff incentivisation, and a host of other business and marketing processes.

The 5 main issues faced by large retailers entering the multi-channel space are as follows:

  1. Evaluating cost of investment in development of cost effective, secure, scalable environments and systems integration against probable short term impact on bottom line
  2. Pricing across different channels - Store channels have higher cost structures than web channels for example, and price competition is higher on web, but consumers can be put off by different pricing for the same product
  3. Channel synchronisation i.e. ensuring brand, customer experience and customer information consistency across channels while avoiding the 3E trap i.e. trying to provide ‘everything to everyone everywhere’
  4. Problems in merging and standardising customer data i.e. unifying different systems which may have very different data models
  5. Difficulties in reducing or abolishing organisational boundaries to cope with new channels

In summary, customers for whom a multi-channel approach will yield the most benefits are often those for whom achieving it the most problematic – they have the largest customer bases, most complex lines, and longest histories of systems development, with many business critical systems that supply old CRM processes.

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