Retail Marketing
Magic Solutions
Lecture16MultichannelorOmnichannelRetailing2019.pptxMultichannel / Omnichannel Retailing
NBS7030B
Retail Marketing & Management
Ratula Chakraborty
Professor of Business Management
Director MSc Programmes
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Lecture Outline
Global Trends in Online Retailing/Shopping
Challenges Facing Internet Retailing
Multi-Channel Retailing
Wider Implications of internet retailing
Case Study: Apple reimagined Bricks and Mortar retail
Purpose: to understand the major trends in multi-channel retailing and shopping and the changed retail environment
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Questions for Discussion #1
Which is your favourite web-based retailer for online shopping? Why is it good? How could it improve?
What most annoys or frustrates you about internet shopping?
What goods would you never buy online? Why?
Is the growth potential for Internet retailing slowing down? Will High Street sales make a come back?
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1. Global Trends in Online Shopping
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Online retailing is now a global phenomenon, countries around the world witnessing a rapid growth with the aid of technology
Retail 2020: Ways we will shop… https :// www.youtube.com/watch?v=iRvaWHk3A8k
However, differences exist across countries due to different internet penetration rates and consumer purchasing habits
The US leads in online shopping sales
Lecture begins with a global perspective, then looks at regional differences around the world
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On Line Shopping – ON THE UP !
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The internet has become an increasingly effective tool for shoppers looking to save money and the use of price comparison sites increased since 2012.
Significant growth of Smart phones and Tablets has been a catalyst to change, offering retailers and brands communication with shoppers `on the move`.
Social networking has become the dialect of a third of shoppers, increasing the pressure on retailers to communicate in this space.
Most UK Supermarkets use 'Home Delivery` but `Click and Collect` is the next development and will be critical to the success and profitability of this channel.
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Global Trends in Online Shopping
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Last decade of online shopping taking off around the world
United Kingdom – “UK internet economy 'worth billions‘” BBC News (1:30 min) - http://www.bbc.co.uk/news/uk-11641859
China – https:// www.youtube.com/watch?v=336YkwayCD4
Middle East – BBC News 17/1/2012 (3:30 min) - http://www.bbc.co.uk/news/business-16581983
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Global Internet Penetration Rates
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Internet Penetration Rates Vary Across Geographic Regions
| Internet users by region | |||
| 2005 | 2010 | 2017a | |
| Africa | 2% | 10% | 21.8% |
| Americas | 36% | 49% | 65.9% |
| Arab States | 8% | 26% | 43.7% |
| Asia and Pacific | 9% | 23% | 43.9% |
| Commonwealth of Independent States | 10% | 34% | 67.7% |
| Europe | 46% | 67% | 79.6% |
| a Estimate. Source: International Telecommunication Union.[8] |
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Global Trends in Online Shopping
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Source: Nielsen Global Trends in Online Shopping 2010
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Online Shopping: Opinion Matters
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Source: Nielsen Global Trends in Online Shopping 2010
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2. Internet Retailing in the UK
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Internet
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2. Internet Retailing in the UK
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Internet connectivity is high in the UK – with increasing fast broadband, Wifi, and mobile phone access
Internet use varies considerably in terms of activities. Shoppers use the internet to make price comparisons as well as for online purchasing
The most popular Internet retailers tend to be multi-channel retailers, but there are leading “pure play” internet retailers
Internet retailing is growing rapidly in the UK, particularly in clothing, electricals, books, music, videos, and travel
(BCG predicts that the UK’s Internet-based economy will grow to £219 billion by 2016, faster than the overall economy to make up 12.4% of the nation’s GDP.
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Internet Retailing in the UK
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http :// www.retailresearch.org/onlineretailing.php
Source: Office for National Statistics, Aug 2011
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Internet Retailing in the UK
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Internet Retailing in the UK
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UK Online Retail Sector Value Shares (%)
Source: Datamonitor
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Questions for Discussion #2
Why do you think there are such notable differences in the extent of Internet purchases for different product types across different age groups and across men and women?
What products would you prefer to buy in shops instead of through the Internet? Why?
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3. Challenges Facing Internet Retailing
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Online shopping has advantages for consumers when it offers convenience, a better service, more choice, and/or lower prices than store-based shopping
However, there are limitations with online shopping that deter consumers – notably security risk, lack of customer service, non-instant delivery, and not being able to see and touch the goods
Internet retailers need to find ways to overcome or side step these limitations and enhance the advantages of online shopping
Some goods are better suited to physical store retailing, but over time Internet retailers are finding more effective ways to sell a wider range and different types of goods
Check this out - https :// yourstory.com/2017/04/common-problems-online-shopping
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Challenges Facing Internet Retailing
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Advantages of Internet Shopping
Compared to store-based shopping there are 4 advantages for consumers with internet shopping in having:
More alternatives – with a wider product range
More information – frequently updated and available 24/7
Personalisation – tailored to needs and purchasing history
Problem solutions – combining added-value ancillary services (e.g. information sharing, networking) to complement the product offering
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Challenges Facing Internet Retailing
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Limitations of Internet Shopping
Compared to store-based shopping there are 8 limitations for consumers with internet shopping in how to:
browse through the retail offering
locate information needed to evaluate merchandise
use all five senses – touching, smelling, tasting, seeing, and hearing – when evaluating merchandise
receive personal attention
have their privacy protected
provide a stimulating experience that can be shared with others
purchase merchandise with cash
get the merchandise when they buy it
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Challenges Facing Internet Retailing
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Factors Affecting Growth of Internet Shopping #1
Internet access – now billions across the globe
Addressing the limitations and exploiting the benefits of electronic retailing best practices:
Overcoming security concerns (e.g. spam, fraud, identity theft, fly-by-night e-retailers)
Improving browsing, navigation and intelligent search functions
Providing sufficient information and customer service (e.g. online chat instant messaging for quick responses)
Providing personalisation (e.g. Amazon’s personalised greeting and product suggestions based on purchasing & search history)
...to be continued
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Challenges Facing Internet Retailing
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Factors Affecting Growth of Internet Shopping #2
Addressing the limitations and exploiting the benefits of electronic retailing best practices (continued):
Facilitating cash purchases equivalent (e.g. pre-set limits backed by parents’ credit card for children to shop)
Increasing speed of delivery (e.g. same day or next day delivery)
Easy, convenient and safe returns policy (e.g. ASOS’s no quibble free returns policy)
“Online sites 'breaking rules on returns‘”, BBC News, (3min) http://news.bbc.co.uk/1/hi/business/8422053.stm
...to be continued
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Challenges Facing Internet Retailing
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Factors Affecting Growth of Internet Shopping #3
Addressing the limitations and exploiting the benefits of electronic retailing best practices (continued):
Protecting consumers’ privacy
Overcoming the need for sensory information (e.g. virtual models and 3D/zoom imaging to convert “touch-and-feel” into “look-and-see” information)
“Online clothes shopping lures people from the high street”
BBC News (2min) – http://www.bbc.co.uk/news/business-11161723
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Challenges Facing Internet Retailing
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Which products work well for Internet retailing and which are better suited to physical store retailing?
Internet retailing suited
Commodities (e.g. basic, repeat purchased packaged foods)
Search goods with simple “look and see” features (e.g. books)
Gift items (for convenient ordering and delivery)
Goods with otherwise limited distribution or availability (e.g. rare books and collectables, ethnic goods not stocked locally)
Physical store suited
Immediate consumption goods (e.g. sandwiches, drinks)
Distress purchases (e.g. medicine, car tyres, feminine hygiene)
“Feel and touch” goods (e.g. clothes, jewellery, furnishings)
Experience goods related to “taste” (e.g. delicatessen goods) or “smell” (e.g. perfume)
Goods requiring demonstration (e.g. cars, health & beauty)
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Multi-Channel Retailing
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Specialist (“pure play”) internet retailers have been successful – most notably Amazon – but many have failed
Notable spectacular dotcom disasters include boo.com
Business Nightmares (13 min) - http://www.youtube.com/watch?v=n9kgZqbCJiM
Increasingly, the most successful internet retailers are those that combine a virtual with a physical store presence: i.e. multi-channel (“bricks and clicks”) retailers
What are the critical success factors for internet retailing?
Why are multi-channel retailers well positioned for success?
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Questions for Discussion #3
What are the lessons from the collapse of Boo.com?
Could Boo.com have worked in different circumstances, e.g. with the backing and expertise of a major store retailer?
Play.com (as a dedicated internet retailer selling films, music, games and books) is seeing declining sales in the UK, squeezed by the continuing success of Amazon and the growing presence of big multi-channel retailers. Will such smaller specialist internet retailers in time suffer the same fate as specialist “bricks and mortar” retailers that have been driven out of business (like Borders)?
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Success factors…
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Critical resources for successful internet retailing
Well-known brand and trustworthy image to attract customers and reduce customer uncertainty in purchasing information
Retail skills for developing assortments and managing inventory
Customer information to personalise merchandise presentations
Complementary merchandise and services to provide a one-stop shopping experience
Unique merchandise to reduce price competition
Information systems for effectively presenting information on web pages and managing the fulfilment process
A fulfilment system to efficiently ship merchandise to homes and receive and process returns
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Multi-Channel Retailing
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Which retailers are best placed to have the critical resources needed for internet retail success?
Source: B.A. Weitz chapter in Retailing in the 21st Century
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Multi-Channel Retailing
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What Motivates Store-Based Retailers to Evolve into Multi-channel Retailers?
Electronic channel provides an opportunity to reach new markets, beyond existing store locations
Gearing up skills and assets to grow revenues and profits
Electronic channel offers convenience of 24/7 shopping from home
Electronic channel enables retailers to gain valuable insights into their customers’ shopping behaviour
Multi-channel builds “share of wallet” and customer loyalty
Store and online synergy - “click and collect”
BBC News (2min) - http://www.bbc.co.uk/news/business-16008132
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Multi-Channel Retailing
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Examples of the benefits of multi-channel retailing
Adding an electronic channel is particularly attractive to firms with strong brand names but limited locations and distribution (e.g. upmarket retailers like Tiffany’s, Harrod’s, Saks Fifth Avenue, Bloomingdale’s)
Store-based retailers can utilise their stores to lower the cost of fulfilling orders and processing returned merchandise by acting as “warehouses” for gathering merchandise for delivery to customers
Internet-enable kiosks in-store can dramatically expand the merchandise assortment that stores can offer (e.g. Tesco)
Collecting data as customers navigate through a website provides valuable insights into how and why customers shop (e.g. whether customers shop by brand, size, colour, or price point)
Multi-channel retailing offers the possibility of cross-selling synergies through stores promoting the internet site and vice versa
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Success factors…
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Retailers that join up their various customer touchpoints and provide great customer service and brand experience across these touchpoints are on to a winning strategy
Some of the data and trends from the fashion industry:
Click & collect boosts on-line orders by at least 10% with some retailers achieving >30% uplift. This is incremental to year-on-year increases in web sales typically in excess of 20%
Best in class retailers are seeing >60% upsell once a customer is in-store to collect their order
Transactions through Mobile and Social touchpoints, whilst still low, are increasing at an exponential rate.
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Global Trends in cross-channel category
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| Rank | Retailer | % |
| 1 | Apple | 77.4 |
| 2 | Marks & Spencer | 76.1 |
| 3 | Boots | 70.6 |
| 4 | Topshop | 70.3 |
| 5 | House of Fraser | 69.4 |
| 6 | Argos | 63.3 |
| 7 | John Lewis | 57.8 |
| 8 | Burberry | 57.5 |
| 9 | Zara | 56.9 |
| 10 | Go Outdoors | 56.6 |
| 11 | Schuh | 56.0 |
| 12 | JD Sports | 55.0 |
Top 12 leading retailers in the cross-channel category
Click and collect has gradually become engrained in customers’ shopping habits, providing convenience for shoppers and an opportunity for retailers to drive additional purchases in-store.
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Questions for Discussion #4
Some successful bricks-and-mortar retailers (e.g. Morrisons) have been slow in developing internet retail operations. Have they left it too late, or could they have an advantage over early movers?
Is it better to specialise as a “pure play” Internet retailer or operate as a multichannel “bricks-and-clicks” retailer? What are their respective advantages?
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5. Wider Implications of Internet Retailing
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Success of Internet retailing and shift to online shopping has profound economic and social implications
Economic benefits for industry are lowered costs from not operating physical stores and having leaner supply chains
Economic benefits for consumers are greater product choice and lower retail prices when industry cost savings are passed on
Nevertheless, these benefits come with some downsides:
Closure of physical stores, the decline of the High Street, and retail job losses
Loss of shopping as a social activity, shared with family and friends, and interacting with shop employees
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Wider Implications of Internet Retailing
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Examples of the Hidden Costs of Internet Retailing
An example on the hidden costs for workers and consumers in the internet shopping age:
Hidden cost of the online shopping boom – the pay and conditions for couriers – BBC News http://news.bbc.co.uk/1/hi/programmes/newsnight/9260103.stm
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Case Study: Apple
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Apple reimagined bricks and mortar retail
No tills and high numbers of store staff
Destination stores – ‘Do Rooms’ rather than ‘Show Rooms’
Service and staff sets the stores apart
No divide between store teams and online teams…seamless
Click and collect or third party
(Research Apple)
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Case Study: Apple
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Apple statistics https://www.statista.com/topics/847/apple /
Future of Apple?
Stratospheric growth over… why? (do some research…)
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References
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Varley, R. and Rafiq, M. (2014), Principles of Retail Management, Palgrave MacMillan.
Berman, B. and Evans, J.R. (2010), Retail Management: A Strategic Approach, 11th edition, Prentice-Hall.
Krafft, M. and Mantrala, M.K. (2006), Retailing in the 21st Century, Springer (http://myreports.yolasite.com/resources/Retailing%20in%20the%2021st%20Century.pdf#page=99)
Useful websites:
http://www.internetretailing.net
http://www.retaileconomics.co.uk
http://www.experian.com/hitwise/
Thank You!
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