As Retail cautiously moves into the 2nd year of this decade, Retailers of all sizes increasingly understand that Multi Channel retailing is the optimum strategy for surviving and growing in a market driven by changing customer needs. Simply put, retailers need to be open for business whenever and wherever customers want to shop.

Despite this widely acknowledged perception, 55 percent of retailers still do not have an integrated Multi Channel operation. Those retailers without an integrated strategy are putting its business at risk and will lose out on the market share battlefront. Indeed, late entrants to the Multi Channel game may never regain that share. So with this backdrop K3 Retail and the Retail Insider have researched some of the Multi Channel problems both retailers and consumers are experiencing today.

Last Mile Delivery

One thing is clear there isn’t a great panacea for home delivery. There are instead a myriad of alternatives from ASOS offering same-day delivery, to Argos working with Shutl to provide 90-minute delivery windows, and single man deliveries, two-man deliveries, and even three-man delivery methods.

This last mile is complicated by the fact many retailers also offer specific services at customers’ homes as part of the delivery – including the fitting/plumbing-in of white goods, and the construction of items of furniture. These are often outsourced to third-party providers, which leads to the issue of how a retailers’ brand image is conveyed to the customer.

In-store Transactions

It is fair to say that customer transactions made in-store have increasingly played second fiddle to those received online. The hierarchy when picking from the warehouse gives priority to internet-based orders over those derived from the stores.

This has resulted in many customers being disappointed from stock not being available at their high street store – even if they have seen the goods available and in-stock online. To overcome this frequent frustration consumers should be able to order online and collect in-store through a ‘Click and Collect’ type service.

Such is the demand for Click and Collect that it is now a must-have and those retailers that fail to provide this option to their customers are undoubtedly committing a Multi Channel sin.

Impact on Personnel

Businesses have historically grown their Multi Channel propositions by simply having a transactional website and in many cases they have committed the sin of underestimating the impact that growing non-store sales will have on their overall organisations.

This problem has grown as the revenues from these non-store channels have climbed inexorably to become a meaningful slice of total turnover. One major impact has been on personnel, with the need for new department heads to be created.

We now have e-commerce bosses, Multi Channel directors, logistics and fulfilment executives with responsibility across complex multiple channels. There has also been the emergence of buyers who purchase for more than one channel.

Single View of Stock

As Multi Channel has grown in importance for retailers the issue of stock not being visible across all selling channels and throughout the supply chain has moved up the agenda.

It is no exaggeration to describe inventory as the lifeblood of retailers’ businesses and that without it being visible in all parts of their organisations it is likely to lead to lost sales.

An individual channel that is not fully integrated into the rest of the business, and therefore has limited stock visibility, can do untold damage to a retailer’s brand. The big sin is not to have a single view of the stock across the whole business.

Operating a Multi Channel business leads to different ways of managing the stock pool and replenishing the individual channels. In today’s world retailers should no longer replenish their stores-based business on in-store sales, and entirely separately fulfil against a web order. They should instead consider the customers’ journey where within a single day they could have used all four selling channels – web, call centre, stores, and mobile.

Over-complicating the Customer Journey

The two biggest properties on the web are indisputably Google and Facebook and they have both from day one been obsessed with having uncluttered, clean landing pages.

In contrast, retailers have traditionally failed badly in this respect as they have piled on the complexity of information on their front pages. To be fair, they have done this for a good reason, to get the whole of their catalogue online. And to date this has proved successful as they have enjoyed serious online sales growth over recent years.

The majority of retailers have attempted to reduce the amount of clicks it takes for consumers to reach the desired product, however, this has been offset with the introduction of video content, up-selling and cross-selling techniques, pricing and promotions opportunities, and product reviews.

The result is that it adds confusion before the actual transaction is made and is proving to be a major contributor to the significant issue of abandoned baskets. The IMRG has suggested that retailers lose about £1.7 billion a year through ‘delivery related’ cart abandonment and that at least £240 million a year is also lost from customers who choose not to return as a result of this poor experience.

Stores in the Multi Channel Model

Not many people know this but if the percentage of sales derived from the online channel were translated into physical square footage it would mean that over the past 10 years UK retailers have added 56 million sq ft of trading space, according to calculations from Deloitte.

This is a seriously high figure and one that puts great pressure on the existing physical store space as well as the planned expansion of trading space on the high street and in shopping centres. There is no doubt that the growth in online, call centres and mobile commerce will change the way that physical stores fit into the Multi Channel model and a failure to understand this is a sin.

Don’t Underestimate the Change Involved

A prediction is that in the future retailers will employ less people and that these employees will have more complex roles. This will be driven by a combination of the growth in Multi Channel, technology advances, and changes in the overall market.

Visit a retail store on a Saturday afternoon and ask a sales advisor a question and the likelihood of receiving the correct answer is small. This is a problem for the operability of stores in a Multi Channel model and suggests that the employees in-store need to have much greater information to hand – which goes well beyond that currently available to the average part-time 9-to-5 sales person.

There is no doubt that the way Multi Channel impacts on a retail business will make a major difference to the roles of many in-store employees. If, for instance, stores become hybrid distribution hubs then the sales advisors might become more involved with logistics and fulfilment activities.

In addition, when all the channels are joined up then the buying and merchandising functions will become roles that encompass different space allocations. This gives rise to numerous questions that will have to be answered by retailers including - how will the stores be merchandised, how will they be catalogued, how will stock availability across all channels be dealt with, and how will they merchandise locally and personally to customers?

There is no doubt that retailers have invested in the skills of their employees - especially among those focused on e-commerce - but the industry has quickly moved on from a transactional website being the sum-total of a retailers’ Multi Channel proposition.

Contradicting the BRC's  response are reports saying that small grocers support this move,  as  do the Scottish Grocers Federation. The SCF Chief Exective John Drummond said "I hope this announcement will introduce a culture change within the major supermarkets and an acknowledgment that they must be open and transparent in their supplier dealings."