Harnessing the Power of Cross-Channel Retail

Cross-channel retail opportunities are helping companies improve the customer experience and streamline operations besides improving profitability and optimizing inventory. Apart from this, in cross channel retailing, customer acquisition and stickiness increases. Reaching out to the right customer – targeted sales – is possible in cross-channel retail solutions. Cross-selling of different merchandise, promotion sales which help in reducing inventory are possible through customer tracking across channels in retailing. Also, since retailers have a holistic view of customers, it gives a better bargaining power with merchandisers and other campaigners for database. “Cross-channel retailing helps in increasing top-line through increased sales, cross-selling and promotions. It increases the bottom-line through focused selling, reducing inventory and cost-effective service to customers. It also increases customer satisfaction,” says Narayanan Ramaswamy, Executive Director, KPMG Advisory Services Private Limited.

Innovative retailers are breaking new ground through the use of cross-channel technologies. These companies are setting the stage for a new retail playing field where cross-channel techniques cannot be ignored. So, what exactly is cross-channel retail? Cross-channel retail is all about delivering a seamless customer experience across multiple sales channels. It is the strategy of sharing and selling products across different channels through to the same customer. It's critically important because cross-channel shoppers -- those shopping online, in your store and by phone -- are your best customers. These customers typically spend up to 30 percent more than single-channel shoppers.

Online spending is now a significant percentage, representing more than 20 percent of overall retail revenue in 2008. Consumer expectations for seamless cross-channel shopping have increased in parallel, according to a recent AMR Research  report. Retailers, however, are facing two major obstacles: a lack of cross-channel operational efficiencies and lingering technical shortfalls.

Redefining the Customer Experience

New cross-channel solutions allow retailers to redefine the customer experience, improve merchandising, overcome inventory challenges, capture lost opportunities, take advantage of real-time demand information and achieve operational efficiencies never before possible. Many new solutions include cross-channel business intelligence and e-marketing systems, guided selling and endless aisle capabilities by accessing inventory across the retail chain and by generating online transactions from the store via the point-of-sale (POS), kiosk or handheld devices as well as order management.

By creating a seamless cross-channel environment, retailers are able to realize inventory optimization, achieve more effective assortment planning based on accurate cross-channel demand, create greater inventory turn across the chain, increase sales, improve profitability and experience higher levels of customer satisfaction. It is an established fact that the same target customer segment is being addressed by multiple channels. Customer looks at company as an aggregation of their experiences from various channels. “Hence if there is an integrated view of customer, there is an opportunity to increase customer satisfaction,” says KPMG’s Ramaswamy.

The value of recovering lost sales using effective cross-channel e-commerce can be immense for a retail organization. In fact, retailers have been shown to experience the capture of more than two lost opportunities per day per store.

The Benefits of Cross-Channel Retailing

Through the implementation of cross-channel retail solutions, which will allow retailers to consolidate their multiple sales channels and inventories, retailers will see numerous benefits such as:

• Increased revenues by using multiple cross-channel capabilities to effectively capture lost sales opportunities.
• Cross-sell and up-sell opportunities during customer in-store pickup.
• Improved overall customer satisfaction by offering more services in-store and online.
• Better customer contact, communications and marketing through improved service options, enhanced personalization and business intelligence.
• Lower order and fulfillment costs by improving merchandising and inventory management, streamlining fulfillment processes through distributed fulfillment capabilities, implementing intelligent order routing and shipping cost optimization and by lowering costly store-to-store transfers.
• Extended capabilities of existing POS and WMS (warehouse management systems).
• Superior merchandising decision making by obtaining new demand and forecasting information never previously available.

What Is Required for Success?

To effectively implement cross-channel retail e-commerce, several prerequisites are necessary to ensure success:

Accurate inventory information is a critical enabler for many of the key cross-channel solutions. The e-commerce platform can play an important role by managing the trickle polling across the entire retail chain to track chain-wide inventory information. However, this information is useful only if there are strong in-store inventory data management processes and systems in place.

For real-time cross-channel information to flow throughout the chain, it is necessary for the retailer to install secure high-speed Internet access throughout all store locations.

In addition to the cross-channel e-commerce technology, often the biggest factor affecting the success of cross-channel retail is the change which must occur within the organization. Retailers need to effectively train personnel on new cross-channel capabilities being offered by the chain. New cross-channel metrics need to become an important part of the overall business.

The way the retailer views and manages e-commerce must shift from a self-governing part of the business to a more integrated component of the retailer's overall operations. New incentives must be strategically implemented to ensure that salespeople and store managers embrace these new cross-channel capabilities and understand their benefits. “A unified approach across channels is essential. The entire customer interaction process – marketing, promotion, sales, delivery, service, cross-sell etc. should be looked as a continuous and inter-linked process across retail channels,” says Ramaswamy. Also the sales process should also be flexible enough to span across channels. For example, a combination like marketing through campaign, promotions through sales outlets, payment through web, and delivery at the door should be made possible. To make this happen. a strong IT backbone, built on such unified channel processes is crucial. Also, people should be trained to look at customers through multiple channels. Category management, promotion, forecast etc. should be made with this approach in view.