Chapter 3

Multi-Channel Retailing

McGraw-Hill/Irwin
PPT 3-1
Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Today’s empowered consumers live in a multi-channel world -- Research

products online, buy offline, and demand service everywhere

Web & Email

Consumers buy • 24x7
• Visual
what they want,
when they want,
Call Center
wherever they want
• Convenient
• Immediate
Brick & Mortar
• Touch/Feel
• Experience driven

Kiosks
• Visual
• Convenient
Customer
Pervasive
• Immediate
• 24x7
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Unique Benefits Provided by Store Channel

• Browsing
• Touch and feel products
• Personal service
• Cash payment
• Immediate gratification
• Entertainment and social
interaction

PPT 3-3
 Benefits Provided by Catalog Channel

Convenience
Portability, easily accessible
Visual presentation
Safety

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Unique Benefits Provided by Internet

Channel
• Convenience
• Safety
• Broad selection
• Detailed information
• Personalization
• Problem-solving
information

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Positive Outlook for Future

Younger people are growing up with

computers view them as an appliance
55% of U.S. households have Internet access
now and more have access at work
Women use the Internet almost as much as
men now
40% of people buying cars go to the Internet
for info before seeing a dealer

PPT 3-6
 Impediments to Shopping On-Line

Technological concerns are

becoming less important
– Access to Internet
– Bandwidth
– Privacy, Security
concerns

Are the benefits of shopping on-line greater

than the benefits of going to a store?

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Internet Users Across the Globe

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Benefits of Electronic Channel

Increased Assortment
More Information to Evaluate Merchandise
Drill Down as Much as You Want
Full motion Video
Personalization
Fred, the Super Sales Associate
Try It On Virtually
Information for Solving Problems, Not Just
Merchandise Characteristics
Virtual Communities

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 Value Proposition to Members

Full range of resources available to solve problem

or satisfy from one source.
Integrate content and communication maximizing
value of the available resources
Generation and dissemination of member
generated information -- increases quality,
breadth and depth of information.

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Value Proposition for Members

Meaningful personal Fantasy and

relationships -- Entertainment
Opportunity to
interaction with other
people with common
interests draws
people to community.

Access to competing
vendors and publishers
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Value Proposition for

Commercial Organizer

• Reduce cost of locating and targeting

customers
• Reduce cost of motivating customers to
make purchase decisions
• Opportunity for tailoring products,
services,
• Lower capital investment – don’t have to
build store fronts.
• Broader geographic reach
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 Benefits for Community Manager

• Strengthen Brand Name, Reputation

• Build Customer Relationships
• Extend Database of Potential Customers
• Revenue Generation
– Sell Merchandise
– Sell Services to Members
• Membership fees (Annual Charge for
Access)
• Usage fee (Downloads, Time of Access)
• Advertising (Charge Advertisers)

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Sources of Revenue

Subscription fees – fixed monthly charge

Usage fee – charge based on usage
Membership fees
Content delivery fees – charge to download
information
Service fee – notification fee
Advertising
Transaction commissions
Sales of membership list or access to members
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What Merchandise Will Be Sold

Successfully Over the Internet
“Look and See” attributes vs. “Touch and Feel”
attributes (?)
Degree to which information can be used to
predict satisfaction prior to purchase
Gifts
Services
Might not need to “Touch and Feel”
- “Touch and Feel” not useful - Gifts
- Superior presentation of “Touch and Feel”
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 Why Did So Many e-tailers Fail?

Pure E- Catalog Store-Based Vendors

Tailer Retailers Retailers
Assortments Limited Limited Excellent Poor
Fulfillment Poor Excellent Good Poor
Customer Poor Excellent Good Poor
Information

Unique Poor Good Good Excellent

Merchandise

Brand Name Poor Some Some Some

Excellent Excellent Excellent

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Reasons for Becoming

a Multi-Channel Retailer
-Increase Share of Wallet

-Overcome Limitations of Existing Format

-Expand Market

-Leverage Existing Assets

-Brand Name, Inventory, Customer Database

-Develop Insights in Customer Shopping Behavior

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Illustration of Multi-Channel Integration

n Consumer does not find
desired item in the store.

o Consumer goes to
kiosk to search for
product

p Kiosk links to
chain’s web-site
allowing consumers
to find and
purchase item
q Consumer places
order online for
home delivery or
store pick-up at a
Source: Progressive Grocer, 01 Feb 00; Grocery Headquarters, 01 Feb 00.
later time
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