Multichannel isn’t the answer for struggling retailers
Comets fall into administration highlights the challenges that classic retailers are facing. The answer – according to just about every link, event and article I see – is multichannel.
I don’t think it is.
Recent research by Tealeaf showed channel usage by different age groups and genders. I’ve summarised this for the benefits of this post into the following matrix.
Multichannel Usage Matrix: Purchase vs Research
Click for large version
Bricks and mortar stores and websites are used by the majority of customers whereas mobile apps are barely touched. Printed catalogues are still well used for research purposes although not for purchasing (perhaps a major catalogue using retailer may want to reconsider their recently announced sole focus on digital). Likewise website access via smartphone is more popular for research than purchasing.
So what? Well it shows that multichannel can add something to sales revenue. But once you’ve accounted for cannibalisation of sales from one channel to another, it’s not going to be a huge amount. Certainly not the kind of money that will make you the next Amazon/Apple.
To be clear, my statement is that multichannel alone is not a strategy that will provide long-term competitive advantage. It may also be a point of semantics, but multichannel is a tactical implementation of the business’ overall strategy and brand.
What is the answer?
I think the answer is for the C suite to drop into the circles of marketing a little further.
I’ve not heard anyone say about Comet – “well it doesn’t surprise me that they’ve gone bust – their mobile app was terrible”. It came down to price (Amazon, websites and supermarkets could beat them) and support (their proposition didn’t provide customers with extra value). There are also questions over operational structure, financial management and stock selection.
I could be accused of biting the hand that feeds me here so I think it’s important that I conclude well. Multichannel is an important attribute of retailers who will grow and evolve. The matrix above didn’t show movement and includes data taken this year so does have limitations. I strongly believe mobile will increase in importance as highlighted in my recent post on multichannel retail and zero moments of truth.
However multichannel won’t solve every woe of the retailer. Unless retail brands can develop a product or service that gives customers a purpose for using them again they’re in trouble. This requires a return to customer centricity. Don’t put channel at the centre of your strategy. Make it about me.