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Unit 6: Retail Planning and Environment

6.7 Integrated Marketing System Forgoing Relationships for Notes
Success in Retail

Multi-channel capability is currently in the forefront of retailers’ minds as a “must have” for
driving customer loyalty and sales. And though many retailers are selling through more than
one channel, those channels are often not linked cohesively to create a competitive multi-
channel advantage.
Customers have increasingly high expectations: They want to move among channels throughout
the sales journey and have consistent customer service and product offerings as they do so. At
the same time, retailers are beginning to realize that when channels are implemented in silos
rather than as an integrated whole they fail to deliver on these expectations, with predictable
consequences in terms of lost sales.
To capitalize on these growing customer expectations and the market share that can be gained as
a result, retailers must rethink their approach: They need a customer-focused integrated multi-
channel strategy covering all aspects of their operations and technology. This paper offers a
framework within which to develop such a strategy for Integrated Multi-Channel Retailing.

Individual Channels are not Enough

An integrated multi-channel approach is essential for retail survival; individual channels are
not enough. With online sales growth at 25% to 40% and predicted to keep growing at this pace,
retailers that ignore the online channel will see their market share eroded. Yet simply offering
an additional channel is not sufficient to realize the full advantages of multi-channel retailing.

Customers want more from retailers than they are currently getting

Consumers expect retailers to offer increasingly sophisticated multi-channel capabilities. For
example, consumers want to be able to research a product in one channel before buying it
through another; to order it online and then collect it from a store. They expect to see consistent
product, range, promotions and customer service across channels and have their loyalty cards
and vouchers recognized in all channels. Not only are they starting to expect the retailer to
personalize their shopping experience for them, consumers also play an increasingly important
role in the design and marketing of products and services through their growing use of Web 2.0
technologies.
Siloed channels mean the retailer will fail to meet customer expectations

If channels operate in isolation from one another they will lack linkage with regard to people,
processes and technology, making it difficult for the business to sustain an overall strategic
vision. When each channel has its own data silo, the retailer can take only a single-channel view
of customers. New channels implemented in silos are often viewed internally as competitive to
existing channels, with resulting anxieties about “cannibalization.”
Handled incorrectly, additional channels can also increase an organization’s complexity and
decrease profit. As retailers expand to multiple channels, their organization needs to be set up
with consideration for how processes should work together. Without this forethought an
additional channel “tagged on the side” of the current operation significantly increases the
complexity involved in supply chain, procurement, IT and marketing and will bring rising costs
along with it. The future supply chain model will demand closer coordination with suppliers
and third-party logistics providers.

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