Multi channel retailing is business speak for offering
customers more than one way to buy something be it a shop, mail order, online,
or through a mobile phone. The concept is further confused by defining
different types of shops as channels, so we have the convenience channel, the
discount channel, and the standard mainstream grocery shop.
The words multi channel strategy appear in most major
company reports and those not seen to be participating get criticised.
Morrisons supermarket has been lambasted because it is not
represented in the fast growing channels of on line retailing and convenience
stores, and this has led to a drop in sales and market share. On the other
hand, Ocado which is solely available on line has been criticised for missing
out on sales at peak periods because there are not enough hours in the day or
vans available to deliver the increased amounts people have ordered.
Large retailers are investing £millions into multi channel
development. Although trialling food
sale on line, and offering customers the opportunity to order online and
collect in store, Walmart is putting most of its emphasis on opening stores –
small ones in urban areas, medium sized stores for towns and more of the huge
supercentres for which they are famous. Marks and Spencer has said that whilst
web based channels are important they feel that stores will remain the core of
their business.
New and eye catching digital developments are announced
daily. At Gatwick airport Tesco has
built huge screens that look like a fridge and the idea is that holidaymakers
waiting for their flight can scan products from the screens on to their phone,
ping to Tesco, and have their groceries delivered immediately they arrive home
again, cutting out the need to make a stop at the shops after a long tiring
journey.
Certainly in today’s fast paced society there is something
compelling about the notion that consumers must have a quick and easy way to
purchase whatever time of day or night the urge strikes. The rapid growth of
food shopping online, said by the Office of National Statistics to be 14-15% per annum compared with 3%
for the market as a whole, and the explosion in ways to access the net whether
through smart phones or tablets or the standard computer, seem to suggest that
food retailers large and small should be seriously examining online retailing,
or risk getting left behind.
Nevertheless, there are question marks over all this multi
channel effort. It is noticeable that
whilst all retailers are keen to talk about sales growth, few mention profits, and indeed there is recognition among most retailers that online will
never be as profitable as shops. There is little discussion of the different
skills required to run different channels. And despite all the effort, the
proportion of food retailing done through the internet remains small – around 2
or 3% according to Mark Price of Waitrose. Even mighty Tesco is estimated to
have just 6% of sales made on line, and Sainsbury 4%. The fastest growing
retailer of them all, Aldi, avoids online shopping possibly because the costs
involved might mean they cannot continue offering the very low prices which
makes them the success they are.
Anyone deciding to experiment with a new channel may first
want to ensure that they are operating a secure, cash generative core business.
It will be important to have the requisite skills in place, to capture all the
costs associated with the new venture, to ring fence the investment and returns,
and to accept that it will take time to achieve success.
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