Single channel – Multi channel –

Omni channel
A Retail Classification
1

MULTICHANNEL RETAIL
STRATEGY
SESSION 2 A

Dr. Ashis Mishra, IIMB 08/22/2020

 Retail Channels - 1
2

We are aware of marketing strategy

 4Ps / 7Ps and 5Cs
 We define STP and develop strategy to match it
 Channel strategy is a part of it where it provides time, place
and convenience utility to the target consumer
 It is part of value delivery process
 Functional value
 Economic value
 Experiential value
 Social value
 Which of these values can be provided by appropriate channels
selection and implementation?

Dr. Ashis Mishra, IIMB 08/22/2020

 Retail Channels - 2
3

To summarize
 For development of marketing strategy, we choose
a target segment and choose a channel that suits
the target segment optimally – Single channel
strategy
 Traditional retail forms where there is a
neighbourhood store for the local customers is an
example of this
 Luxury retail / specialty products etc. also follow
single channel to ensure experiential value

Dr. Ashis Mishra, IIMB 08/22/2020

 Retail Channels - 3
4

If we target multiple segments

 Selective specialization / product specialization / market
specialization etc.
 The underlying assumption is that each type of
consumer would like to purchase from one type of
retail store
 So, different types of retail formats are chosen for different
consumer segments – Multichannel strategy
 Mom and pop (Kirana) stores for older generation
 Supermarkets for families
 Online channels for younger generation

Dr. Ashis Mishra, IIMB 08/22/2020

 Retail Channels - 4
5

If we continue targeting multiple segments; but the

consumer segments have changed
 They don’t prefer a single store format for all the purchases:
they are not store loyal
 Instead, they are category loyal – they prefer to purchase
specific types of items from specific type of stores (channels)
 Bread and milk from kirana; electronics online; apparel hybrid
 Or they are loyal to the values – say economic; whichever
channel provides the best economic value during any purchase
situation, they patronize that channel (store) during that
duration
 Physical store gives discount; online store flash sale etc.

Dr. Ashis Mishra, IIMB 08/22/2020

 Retail Channels - 5
6

This could happen due to gradual change in

consumers or excessive competition among retailers
where every one of them offers / tries to offer
everything to all
So, potentially, each consumer (segment) can
patronize different types of stores (channels) on
different occasions / situation
Retailers must appreciate this change and have their
presence in different formats / channels to attract /
retain the same consumer

Dr. Ashis Mishra, IIMB 08/22/2020

 Retail Channels - 6
7

More importantly, they must identify the same

customer across multiple channels / formats
to provide them with the same / seamless
experience across formats
Hence, there has to be dynamic integration and
synthesis of data across formats / channels
Dynamic and targeted pricing / promotion
This is omni-channel retailing (Retail 4.0)

Dr. Ashis Mishra, IIMB 08/22/2020

 8

• Independent
• Chain
Ownership • Vertical Marketing System
• Franchise
• Consumer Cooperative

Dr. Ashis Mishra, IIMB 08/22/2020

 Complex Classifications
9

Retail strategy and Classification of consumer

goods
Journal of Marketing 1963
Louis P. Bucklin
The author draws his basic input from the Melvin
T. Copeland 1923 HBR paper of consumer goods
classification (Convenience, Shopping and
specialty) based on consumer buying process

Dr. Ashis Mishra, IIMB 08/22/2020

 Complex Classification
10

He examines the patronage motives of

consumers towards retail stores and
categorizes the retail stores based on their
patronage motives
 Convenience store : Those stores for which the
consumer, before his need for some product
arises, possesses a preference map that indicates
the willingness to buy from the most accessible
store

Dr. Ashis Mishra, IIMB 08/22/2020

 Complex Classification
11

Shopping Stores : The stores for which the

consumer has not developed a complete preference
map relative to the product he wishes to buy,
requiring him to undertake a search to construct
such a map before purchase
Specialty store : Stores for which the consumer,
before his need for some product arises, possesses
a preference map that indicates the willingness to
buy the item form a particular establishment even
though it may not be the most accessible

Dr. Ashis Mishra, IIMB 08/22/2020

 Complex Classification
12

He then cross - classifies the product motive with the

retail patronage image representing 9 possible types
of consumer shopping behavior and the consequent
strategic alternatives

Dr. Ashis Mishra, IIMB 08/22/2020

 Product Patronage Matrix

Name Patronage Product Strategy

1. Convenience Convenience Buys most readily available brand from

2. Convenience Shopping Selects his purchase from among the assortments carried
by the most accessible

3. Convenience Specialty Purchases his favorite brand from the most accessible
store which has the item in stock

4. Shopping Convenience Indifferent to the brand of product, Shops among the

different stores for better service / price etc.

5. Shopping Shopping Compares among both retail controlled factors and the
brand related factors

6. Shopping Specialty Strong preference w.r.t brands, but shops among no. of
stores

7. Specialty Convenience Consumer trades in a specific store; but indifferent to the

brands he purchases

8. Specialty Shopping Consumer trades in a particular store, compares brands

with store’s assortment

9. Specialty Specialty Preference for a particular store and brand

 Application
14

Researcher maps the model with the population

distribution of the city and picks up the most
significant segments
Then the researcher identifies suitable strategies for
each chosen segment

Dr. Ashis Mishra, IIMB 08/22/2020

 Another complex Classification
15

As per Onkvisit and Shaw (Academy of Marketing

Science – 1981), there could be ten parameters of
classification for retail stores
1. Gross margin (over all cost – final selling price)/ mark up
(wholesale price – selling price) or unit value
2. Significance of a purchase
3. Searching time and effort
4. Style change
5. Technical complexity
6. Service required
7. Intangibility of the product purchased (level of abstraction)

Dr. Ashis Mishra, IIMB 08/22/2020

 Another complex Classification
16

8. Selection
9. Trading area
10. Stock turn ratio/ Turnover/ frequency of purchase
or rapidity of consumption
These ten characteristics can be used to categorize
retail stores into five distinct categories based on the
varying degrees of the ten parameters

Dr. Ashis Mishra, IIMB 08/22/2020

 Retail Characteristics and Classification
17

Basically Mostly Half and Mostly Basically

tangible tangible Half intangible intangible
Gross Very low Low Medium High Very High
Margin
Purchase Very low Low Medium High Very High
Significance
Searching Very low Low Medium High Very High
time
Style Very low Low Medium High Very High
change
Technical Very low Low Medium High Very High
Complexity
Service Very low Low Medium High Very High
Required

Dr. Ashis Mishra, IIMB 08/22/2020

 Retail Characteristics and Classification
18

Basically Mostly Half and Mostly Basically

tangible tangible Half intangible intangible
Intangibility Very low Low Medium High Very High
of product
Selection Very low Low Medium High Very High
Trading Very Small Small Medium Large Very Large
Area
Stock Very High High Medium Low Very Low
Turnover
Examples Convenience Chain Department Appliance & Doctors,
Store, department store, Automobile Lawyers,
Supermarket, store, Gas Specialty repair shop, University,
Mail order, Stations, store Travel Dentists,
Vending Discount agents, insurance
machine stores, Beauty
Catalogue Parlors
Showroom

Dr. Ashis Mishra, IIMB 08/22/2020

 Retail classification used most often
19

This is a smaller version of Onkvisit & Shaw Model

Retail classification based on store level strategy
mix depends upon
 Assortment (Depth), variety (Breadth)
 Variety is the number of merchandise categories offered
 Assortment is the number of different items in a merchandise
category (SKUs)
 Services offered
 Price

 Sq. Ft. area

Dr. Ashis Mishra, IIMB 08/22/2020

 Food based Retailers

Formats Area Merchandise Price Service

Properties
Sq. Ft SKUs
Convenience 2000 – Low assortment High Very low
3000
Low variety
Super Stores 20,000 – Low assortment High ~ Low Low
50,000 EDLP
90% food
Super 150,000 – 100,000 – 150,000 SKU Low Medium
30% - 40% Food
Centers 200,000 Rest Gen. Merchandise

Hypermarket 100,000 – 40,000 – 60,000 SKU Low Medium

s 300,000 60% - 70% Food

Warehouse 100,000 – Low assortment Low Low

Stores 150,000
50% Food
 General Merchandiser
21

Formats Area Merchandise Price Service

Properties
Specialty Medium Low Variety High High High
Assortment
Discount Large Medium Variety Low Low
Low Assortment
Department Largest High Variety Medium High Medium
store Assortment
Factory outlet Small / Low Variety Medium Low Low
Medium Assortment
Membership Medium Medium Variety Low Low
Club Medium Assortment

Dr. Ashis Mishra, IIMB 08/22/2020

 Online Formats
22

Pure online retail

 Aggregators like Amazon, Flipkart etc.
Brick and click models
 Retailers (Future group, Shopper’s stop, Spar etc.)
 Manufacturers / brands (Nike, Levi, Apple, Samsung etc.)

Dr. Ashis Mishra, IIMB 08/22/2020