Multichannel retail is exciting for customers and quite scary for many retailers. It brings with it new opportunities and new threats. It is about change. Change in shopping habits. Yet it is vital for the retailer not to lose sight of the customer's fundamental needs, which actually haven't changed. This is the second in a series of articles looking at the pros and cons of multichannel retail, the potential pitfalls and risks and how it can boost profits for those who get it right.
How successful multichannel retailers focus on core values
John Lewis is widely seen as a leader in multichannel retail. Its online division has led the way for the whole group in the first half of 2010. The company saw sales from its website rise by 36% in the six months to July 31st compared to the same time last year. But John Lewis is basing its success by selling on price alone. Yes it is part of the mix, but they are aware that more consumers are now looking for a balance of service, convenience and value.
So why do people buy there? Well it is because consumers are now looking for more than just a bargain online. The internet has become a convenient way to shop for people. Consumers are looking to satisfy more traditional shopping values online.
How does a retailer like John Lewis meet the needs of their customers online? Here's how.
The John Lewis navigation acts like a sales agent. It is fantastic. I looked at the gifts section and chose 'For Her'. One click and I was straight into that section. I chose confectionery and all of the relevant gifts were displayed. Then their 'Refine By' menu allowed me to easily choose my preference from the 235 items. In two clicks I narrowed my choice by type and price and I was shown four items, from which it was easy to choose one. The experience really does have similarities to a sales person asking me about my preferences and taking me to the desired choice.
NOTE: By the way, I think an independent specialist could improve on the refine options in John Lewis by mimicking the questions asked in a typical shop sale, maybe they could include; recipient age range, traditional or contemporary style, etc.
When one of the products was selected we moved to the product page. On this page the emphasis on service is still in evidence. A function called alternatives shows some other items in my price range. They didn't show me any greeting cards, but they could have had related cards as well. At the bottom of the page a section shows all my recently viewed items for when I forget which is which, I can go back and choose my favourite from this smaller list. This shopping experience has been so well thought through.
Many customers like to shop at John Lewis because they feel they will be looked after. If there is a problem with a product John Lewis customers feel they will be able to return it or exchange it. They trust the retailer. They will be able to return it at multiple touch points, by mail or into one of the shops.
The website is of course available from anywhere, all day every day. It is all about convenience. The fact it is so easy to find John Lewis in Google helps. But the convenience of easily finding products must not be forgotten, it's an essential part of the shopping experience they offer. Also convenient is the fact John Lewis will deliver, or allow the customer to collect in store, i.e. to select the service that suits them.
Value For Money
Price is part of the deal, but there is more to value than price, including the brand relationship. John Lewis' customers feel good about the relationship they have with the company and enjoy buying there. For some it can be a feeling of affluence, like buying nice perfume or jewellery, it makes them feel special. For others it is about trust and the secure feeling of having the after sales customer service. There are other areas as well. But overall the value calculation stacks up in favour of John Lewis even though they sell at higher prices than internet only companies.
'Never Knowingly Undersold' underpins the John Lewis brand. Introduced 85 years ago this describes a commitment to giving their customers best value through great products, at great prices, supported by great service. They are very clear in stating that price is really important and they check and match the online and shop prices of their high street competitors but no mention of eCommerce only companies. They say that value is about much more than highly competitive prices, it's about all those extra things that are worth a lot - like expert and impartial advice, or feeling confident that the product you´ve just bought will last.
Independent Retailer's approach to multichannel
Whilst John Lewis has the size and brand, independent retailers have the personality and personal touch. Developing a relationship creates a brand connection between customer and retailer. In the future when the customer thinks of buying gift items this relationship can certainly come to mind and this is where the multichannel element comes in.
I am not saying that the internet isn't about price at all. Some customers want their value for money to be more price-centric than about service or brand. There are retailers still selling on price and that choice will always be there. But it's really important to see that now the internet is much more than just a way to buy things cheaply. Consumers clearly are more sophisticated in their online shopping habits now and want more than a cheap price.
As the internet comes of age, there is evidence to show that the pendulum that swung towards cheap prices is now returning to more traditional values; service, convenience and value. And that should be better news for independent retailers who can offer a multichannel experience to their customers.
The number of people now shopping online is according to research company Forrester, about half of the population (28 million people) and this will grow to 37 million by 2014. The Post Office conducted research with 4000 consumers and showed that only 17% shop in store only, the vast majority are multichannel shoppers, but more interesting, of the younger age group, 16-34, only 4% use store only. Consumers are clearly switching to multichannel shopping and it is interesting to see how the trade is responding to this change.
Next issue we will look at how even some of the eCommerce only companies are focussing on quality of service. customer values. We will examine an example of how one of the most successful multichannel retailers in the UK focuses on these core values and not on price. They maintain margins, deliver a high quality of service and are growing rapidly in doing so.
David Mackley MBA BSc is MD of Intelligent Retail - providers of Multichannel EPoS and eCommerce websites for independent retailers. If you have any questions you can contact David on 0845 680 0126 or firstname.lastname@example.org
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