CHAPTER 3

Multichannel
& Omnichannel
Retailing
H r in

CHAPTER 03

Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Learning Objectives
LO 3-1 Understand the channels used by retailers.
LO 3-2 Compare the relative strengths of the major
retail channels: stores; Internet, mobile, and social; and
catalog and other nonstore channels.
LO 3-3 Describe the opportunities associated with a
true omnichannel strategy.
LO 3-4 Analyze the challenges facing multichannel and
omnichannel retailers.

3-2
 What is Multichannel Retailing?
• Retailers offer more than one channel to sell and deliver
merchandise and services to consumers.
• Channels operate without integrating operations between them.

Retailer Steve Cole/Getty Images

The McGraw-Hill Companies,

Inc./Andrew Resek, photographer Digital Vision / Getty Images

3-3
 Why are store-based retailersevolving
into multichannel retailers?
• Sales through an electronic
channel are growing at over 20%
per year
• Adding an electronic channel
creates immediate possession
utility
• Multichannel retailers can attract
more customers and satisfy
existing customers better

3-4
Why are Retailers Using Multiple
Channels to Interact withCustomers?
• Customers want what they
want, when they want it.
• Customers want new ways
customer
to engage with retailers.

store kiosk catalog call center web/e-mail mobile

3-5
What is Cross-channel Retailing?
• A type of marketing channel in which customers use
multiple channels to make purchases
• For example: when they receive an e-mailed coupon,
download it onto their smartphone, and then go to a store
to redeem the coupon and buy the product.

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Rebecca Minkoff Connected Store Demo
Retail Hero: Rebecca Minkoff, SVP ECommerce & Omnichannel Marketing
What is Omnichannel Retailing?
• A coordinated multichannel retail offering that provides a
seamless and synchronized customer experience, using
all of the retailer’s shopping channels.

• These various channels run in collaboration and

effectively ensure that the customer (and customer data)
is the center of the retail management processes.

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Progression from Single-Channel to
Omnichannel Retailing
 In-Store Retailing

• Stores offer a number of benefits to

customers that they cannot get when
shopping through nonstore channels
• These benefits include:
Ø touch and smell of products
Ø personal service
Ø risk reduction
Ø immediate gratification
Ø entertainment & social experience
Ø cash payment.

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H&M: Looop
Internet Retailing

Deeper and broader selection

• A vast number of alternatives available to

consumers.

More tools for evaluating merchandise

Personalization

• Information is tailored to individual

consumers to help them make quicker and
better purchase decisions
• Customized information -- side by side
comparisons
• Virtual try on
Information for solving problems, not just
merchandise characteristics
• Virtual Communities
 Internet Retailing

Expanded Market Presence

• Can expand their market without having

to build new stores or incur the high cost
of additional catalogs

Information to Improve Shopping

Experience across Channels
• Customer information (purchase
history, search behavior, etc)

Perceived Risks in Internet

Shopping
Mobile Retailing
• Mobile
• Portable
• Location sensitive
• Push notifications
• Touchscreen
• Smaller screen size
• Apps

3-14
Sephora: Ensuring Mobile Dominance
through In-Store Promotions
Beacon technology
provide real-time, customized
alerts to customers’ phones,
whether about updated loyalty
program points, upcoming in-
store events, or promotions
for some frequently purchased
items.

Sephora To Go App

3-15
Social Retailing
Social retailing involves conducting purchase transactions
through a social media site

3-16
Catalog & Other Nonstore Channels
Catalog channel is a
nonstore retail channel in
which the retail offering is
communicated to
customers through a
catalog mailed to customers

3-17
 Catalog Channel
• Convenience. Catalogs, like all
nonstore formats, offer the convenience
of looking at merchandising and placing
an order any day at any time from
almost anywhere.

• Safety. Nonstore retail formats have an

advantage over store-based retailers by
enabling customers to review
merchandise and place orders from a
safe environment – their homes.

• Quality of Visual Presentation. The

photographs of merchandise in
catalogs, while not as useful as in-store
presentations, are superior to the visual
information that can be displayed on a
CRT screen.

3-18
Direct Selling
Direct selling is a retail channel in which salespeople
interact with customers face-to-face in a convenient
location, either at the customer’s home or at work

3-19
Automated Retailing
Automated retailing is a retail channel in which merchandise
or services are stored in a machine and dispensed to
customers when they deposit cash or use a credit card

3-20
Benefits Provided by DifferentChannels

3-21
Opportunities of omnichannel strategy
• Consumers like the idea of a seamless
experience, so an omnichannel approach appeals
better to customers.
• Omnichannel retailers can get their products to
consumers more cost-efficiently and in the
channel those consumers prefer.

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Apple, the Gold Standard of Omnichannel
Opportunities of omnichannel strategy
Good omnichannel retailers
also use each channel to
promote the others, such as
highlighting their web address
on bags that customers carry
from their stores.

3-24
 Challenges of Effective Multichannel Retailing

• Multichannel supply chains

and information systems
• Distribution and transportation
strategies for stores, catalog, and
Internet channels
• Multichannel supply chains and
information systems

• Reduction of Channel Migration

•Showrooming

3-25
Challenges of Effective MultichannelRetailing

• Consistent Brand Image

• Merchandise assortment
• Pricing strategies

3-26
Keywords
• catalog retailing Nonstore retail format in which the retail offering is
communicated to a customer through a catalog.
• channel migration When consumers’ collect information about products on
one company’s channel and then buys the product from another competitor.
• direct selling A retail format in which a salesperson, frequently an
independent distributor, contacts a customer directly in a convenient location
(either at a customer’s home or at work), demonstrates merchandise benefits,
takes an order, and delivers the merchandise to the customer.
• electronic retailing A retail format in which the retailers communicate with
customers and offer products and services for sale over the Internet.
• Internet channel, Internet retailing, E-channel See electronic retailing.
• multichannel retailer Retailer that sells merchandise or services through
more than one channel.

3-28