Retailers to benefit from shifting shopper behaviour
The inaugural meeting of the new Cross-Channel Consortium Think Tank focused on ways in which retailers will be able to create a more compelling cross-channel customer experience where multiple selling, sourcing, distribution, and fulfilment channels work together to create a seamless shopping experience.
According to Jim Bengier, global retail executive for AT&T subsidiary Sterling Commerce, 2009 is expected to be the year of cross-channel retailing: "Although the concept is far more complex than simply operating multiple channels, consumer expectations are high and retailers must respond if they want to maintain and grow their customer base."
The consortium think tank, led by Jim Bengier and Kasey Lobaugh (a principal with Deloitte Consulting), included representatives from retailers such as Borders Group, Best Buy, and Victoria's Secret, along with many industry analysts and other retail thought leaders.
The consortium observed that cross-channel represents a significant change in how retailers think about retailing and how they interact with their customers. In order to grasp the changes that cross-channel retailing is bringing to the fore, the think tank concluded that a complete "re-wiring of retail" must come about in the near future.
The changes that are needed through e-commerce, merchandising, marketing, store operations, supply chain, and IT functions will require a shift from "channel first" thinking (i.e. adapting what already works for stores to the e-commerce environment) to "customer first" thinking (i.e. how customers would like to engage with the retailer, and which channels need to be worked on to help make that possible).
Another key observation made by the think tank was that this process of retail transformation will probably never end, mainly because consumer expectations are always changing. But retailers that can successfully manage such a transformation are likely to benefit from increased customer loyalty and higher revenue per customer.
The findings report outlines the main challenges involved, and how retailers should respond to them, including:
- There's a difference between commodity products and commodity access to products. Retailers may not be able to prevent their product selection from becoming commoditized, but they do have the power to control the experience around acquiring those products.
- The biggest way that a retailer can demonstrate true cross-channel transparency to a customer is through fulfilment processes - the various ways that a retailer could potentially fulfil an order for a customer.
- Integration is the barrier. Cross-channel processes cannot be simply tacked on to existing functions, and the IT department will play a critical role in providing the integration needed to deliver the seamless cross- channel customer experience while still improving operational efficiency.
"Cross-channel, to me, is one of the most important trends to impact retail so far this century," concluded Nikki Baird, managing partner for consortium participant Retail Systems Research. "It is forcing retailers that have historically been technology laggards to embrace new technology to help them adapt to shifts in consumer behaviour and to implement new customer-facing strategies."
The full findings of the think tank have been made available for free download from the Sterling Commerce web site - click here.