Across multiple channels of retail

The evolution of retail is now directing itself to multi-channel retailing or cross channel retailing. Besides brick & mortar stores retail is making ways to other channels like Internet, mobile phones, TV and print to cross over the boundaries of usual form of retailing. In today’s markets, retailers have realised the importance of innovation which only can ensure customers’ patronage. The focus is no more only on the products and the brand awareness but more on customers’ changing lifestyle and their preferences, and modification of retail to fit in the changing pattern.   

The four walls of a retail store restrict the availability of products causing customer dissatisfaction and lost sales. The other retail platforms make up this loss by creating endless aisle environment.

Why cross channel retailing?

The growing success of retail comes from the changing consumer behavioural pattern, triggered by changing demands. The marketers too have realised that simple brand information cannot spur better sales. For consumers’ loyalty a retailer’s communication has to be multi-focused in sync with the convenience of consumers. The power of mass media, radio and TV showed retailers various ways to reach out to the customers through customer-focused approach. The marketing strategy is also framed from this perspective. Ms Vivette D’Cruz, Senior Professional, Retail & Consumer Product Practice, Ernst & Young says, “The consumer behaviour and purchase patterns and influencers are key inputs while formulating a marketing strategy.  However, there are other inputs as well which are taken into account such as the product attributes, pricing and positioning of the product, etc.” However the retail or marketing strategies have to be multifaceted to cater to the different segments of customers. “We use demographic and socio-economic factors for customer segmentation studies across most product categories. Within each customer segment we map the buying patterns. The weightage of these parameters differs on the basis of the utility of the product (necessity to luxury)”, confirms Ms D’Cruz.

A recent survey by Sterling Commerce in US reveals that 80 per cent of shoppers feel the importance of shopping online. The fact indicates the importance of cross channel retailing.  In the US a cross channel retailer spend 30 per cent more than a single channel counterpart, suggested AMR Research Report in 2006. Forrester Research Report informed that 55 per cent of online consumers research a product online and then pick the same in the store. Also, the cross channel shoppers are better educated with higher income.

Benefits of cross channel retailing

The benefits are multi-fold which include higher revenue generation and more cross-selling and up-selling opportunities. Also, cross channel retailing demands better implementation of customer services, which are achieved through better customer contact, communications and marketing. The improved merchandising and inventory management, which are the primary clauses for cross channel retailing, lower down order and fulfilment costs.

Cross channel retailing often implements retail survey systems for better understanding of consumer behaviour, evaluate customer experience and store performance. This system is integrated at the POS and with e-commerce operation. This can help in creating new demands and improved merchandising assortment. “People from all the walks of life prefer virtual medium for buying, specially people living in tier II and III cities because they are less accessible to all the brands”, opines Mr Sandeep Mehta, CEO of HomeShop18. Apart from 24*7 TV, HomeShop18 is also using the channels like dial-a call in 28 news papers and online.

ONLINE RETAILING

Worldwide online retailing is growing exponentially. In US, with the popularity of this channel of retailing, print and TV advertisements declined from 70 per cent in 2006 to 57 per cent in 2007. A survey also reveals on average there’s a web transaction between $200 and $299 and the average number of items involved per transaction is three and four. This is an interface between retailers and consumers where retailers get an instant connection with online registered customers, while customers can get great deals.

In India too online retailing is proving its efficacy. “The benefits of an online retail website are not limited to incremental revenues on the website, but this is also a powerful medium for a retailer to influence in-store sales. By introducing new arrivals in fashion on the website, the customer can actually pre-view new collections even if they do not find the time to visit the stores, and this can predispose the customer to purchasing from our stores”,  Mr Vivek Mathur, Customer Care Associate & Vice-President, Corporate Planning & e-commerce, Shoppers’ Stop Ltd.

Ebay is one such company selling through two mediums online and dial a deal for phone shopping. “According to IAMAI (Internet And Mobile Association of India), e-commerce market in India is of Rs 9800 crore out of which Rs 115 crore is online retail market and its growing year on year. Consumer response is really good, there are almost 3.3 million registered users on eBay India”, informs Ms Deepa Thomas, Senior Manager - Corporate Communications and Pop Culture, eBay India.

Product features

The wide spectrum of display is the main attraction for e-commerce. Convenience, range and variety of product are main characteristics of eBay’s products offerings. “At any given day there are around about 3 lakh items on display. Then we give great deals to our customers like we auction our products and many a time consumers get discount of around about 20-40 per cent. We sell more fast moving tech products”, confirms Ms Thomas.

“We currently offer a limited, pre-selected assortment online, which is drawn from the best sellers and new arrivals in each category. Some categories like Men’s Suits, which necessarily require trial prior to purchase are not offered online,” informs Mr Mathur.

Who are the customers?

Ms Thomas informs, “Surprisingly small time people prefer buying from us more, because penetration of brands in these markets is not very good. So it becomes more feasible for them to buy online or through phone.

“Our online customers are largely of a similar demographic profile as in our stores, with a predominance of the 25-35 year age band. Both men and women shop equally on the website. We are also able to reach out to customers in smaller cities that do not have a store yet, and our website is also popular with NRIs for gifting to friends and relatives in India”, shares Mr Mathur

Make up for the touch and feel shopping experience

Gift vouchers and also deals like discounts, auctioning, and plethora of payment choices to the customer make up for the touch & feel ambience of a store. Shoppers Stop provides high quality images, with multiple views per product where these are required, along with detailed product descriptions and size charts so customers can obtain the required information for their purchase decision. For additional information they can contact the retailer via email or phone. And if they are not satisfied with their purchase, Shoppers Stop has a flexible exchange and returns policy, which they can avail from their homes, or in the stores.

Challenges faced

“There are many problems that online retailers face. One of them is that only 40 million people in India access the Internet and out of them only 6-8 million go through online shopping site. Out of these also only 3-4 million people buy online. Second problem is expensive and inaccessible broadband scenario in India. While dial up connection is more common in India, it’s not a good medium to do online shopping, third and the biggest problem is logistics in India”, rues Ms Thomas.

TV SHOPPING

Currently, TV shopping accounts for 8 per cent of American’s total retail sales, while the figure is only 0.2 per cent in China. The trend is setting in India too. The product offerings are plenty and the show time on TV becomes attractive with interesting demonstration of unusual products. This virtual mode of retailing is gradually gaining ground.  The domain has the players like Network 18 group’s HomeShop 18, a 24*7 shopping channel. Recently, Star TV has plunged in TV shopping signing a 50:50 joint venture with Korea-based CJ Home Shopping to set up 24*7 hour shopping channel. The retail portal Indiatimes shopping in alliance with Zoom Entertainment Network recently launched “Lowest Price Shop” on Zoom TV.

In 2008 1.4 million Internet users made retail transactions through e-commerce which includes transactions on online portal for TV shopping channels, suggests a survey by I-Cube.

Mr Malhotra of HomeShop 18, informs, “We are just 15 months old company but still I can see a lot of potential in it. Response from the consumer is really encouraging, everyday we are selling products worth Rs1 crore.

Characteristics of Product Offerings

On speaking about the special traits of the product offerings for TV shopping if any Mr Malhotra opines, “There are two basic triggers at that time that either sell something that is unique or give a unique value preposition to it.”

Challenges faced

These shopping channels require more organised operations such as enlisting as members of TAM (Television Audience Measurement). In their pursuit to penetrate remote towns they do access small towns which are not under the purview of TAM, thus they lose the track of exact number of viewership. Mr Malhotra tells that credibility of this channel of retailing is yet to be established.

CATALOGUE RETAILING

Though catalogue retailing in India is a new concept, this channel of retailing is a popular mode for buying products. In the US, between 1987 and 1992, catalogue retailing was the fastest growing single retail industry that clocked a growth rate of 9.9 per cent till the end of nineties. In the UK till 2007 mail-order retailing or catalogue retailing generated a transaction of £ 9 billion a year. However, with the advent of online retailing catalogue retailing has suffered. In India it is still struggling to find its foothold.

India’s first catalogue retailer HyperCity Argos suffered a setback and finally wound up the business on account of low sales. The reasons can be attributed to customers’ preference for online retailing over catalogue counterpart for its wider range of product display and greater penetration. The trend was started in early nineties by Otto Burlingto in the name of Catalogue Burlington. The venture was unsuccessful for the lack of proper infrastructure like multiple payment options, state-of-the art telecommunication system and structured distribution set up. However, the retailers like Elvy Lifestyle and Croma are noteworthy players in this channel of retailing. In catalogue retailing catalogues in print format are distributed in the areas with high footfalls like airports, malls and store premises. Both Croma and Elvy are present in bricks & mortar and catalogue retailing is a secondary channel to scale up revenue. The success lies in the clever application of cross channelling through in-store and catalogue retail as most of the shoppers prefer deriving product knowledge online and picking the same from the store itself. Also, their catalogues too have online version. Wielding Internet power has enabled these catalogue retailers to produce relevant retail propositions in today’s context. Mr Ajit Joshi, CEO & MD, Infiniti Retail Ltd., which owns Croma, explains, “It is primarily used to build brand awareness for the retailer in terms of size, range, brands, and offers that are available in-store. It helps the consumer set expectations from the retailer and make an informed decision in-store. Croma distributes printed catalogues through leading newspapers in all markets, and also an e-version of the same is available on their website.

Characteristics of product offerings

Describing the products usually featured in the catalogue, Mr Joshi comments, “The products featured in the catalogue are a mix of new launches, best buys, category recommendations and the Croma’s own brand of products. Select brands also use the catalogue to showcase their range in the form of advertisements.” He specifically mentions that Croma’s catalogue is not designed to generate revenue - it is a medium of generating awareness and showcasing the range or offers carried by them.

A promotional tool

Catalogue retailing perfectly works as promotional tool, concurs Mr Joshi. Croma’s catalogues are distributed at the store catchment areas to tap the local consumers.

Make up for touch & feel experience

The information-rich content on product offerings with technological details enables a customer to compare, understand the offerings better. This definitely makes up for the in-store ambience

Benefits

The benefits are many. For the products with high shelf life, the catalogue is used as a ready reckoner for the electronics purchases for many households. “As a single tool we showcase the range\ brands available at our stores and also the offers that the customer can expect in store”, admits Mr Joshi.

Challenges faced

Like other channels, catalogue retailing has its own challenges. “The primary is proper distribution in this tool and gaps need to be plugged constantly”, admits Mr Joshi.

MOBILE RETAILING

Mobile phone as a retail channel is gradually gaining importance. It is predicted that globally 1 billion of mobile phone users will browse internet on their mobiles. The use of mobile phone in retail will arm more consumers with product knowledge and there will be surge in demanding consumers. Though in India the trend has not started, the future looks bright considering its potentiality and its popularity in other developed countries like the US.

Various modes of payments and favoured products

Mobile phone retailing too offers various modes of payments which include SMS based transactional payments, direct mobile billing, mobile web payments (WAP) and contactless NFC (Near Field Communications). The products mostly retailed through this channel are music, ring tones, transportation fares (bus/train), parking meters, books, tickets, etc.

Target audience

Mostly the teens, the avid users of mobile phones, are tapped by the retailers to explore this retail channel. The psyche of the teens, who are mostly driven by impulsive buying, is cleverly used by Mobibucks, a leading retailer through mobile phone in US, whose $2 free coupon is quite a rage among the teens. The company encourages them to message the offer to another five mobile phone users to avail this offer.