JTW Blog

The Duality of Retail: Managing Multi-Channel

Posted by Brit Nowacki on Jun 27, 2017 12:51:00 PM
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 Nearly every week there is a catchy headline or an analyst’s insight on the future of retail and the death of brick and mortar. With a common discourse of the Amazon effect being to blame, it’s about time there was a conversation around the value of both brick and mortar and online channels. They both have value and attract a similar audience, and yet they offer different and uniquely valuable experiences. The question remains, ‘how do I leverage maximum value from each channel and how do they work with each other?'

 In today’s retail world, revenues may come from many channels including brick and mortar direct sales, wholesale, and online retail. Typically, brands have adopted all channels to maximize transactions and revenues. However, this strategy is potentially flawed since when channels marry each other, for example e-comm and direct sales, and offer identical products or services, one of the channels typically suffers. Successful retail strategies must employ the power and synergistic effects of specific and unique multi-channels.

Although it goes against traditional wisdom, different channels must offer different products, services, and experiences. This is largely due to their harmonious nature, with each channel providing an entry point for the other and each channel also offering a different range of products and experiences. The challenge is to create these unique offerings to prevent one channel taking away from others, a process known as retail cannibalization. This synergistic effect works because brands can expect a customer to use its online channel and then shop in its brick and mortar channel, increasing the overall revenue generated since those different channels offer unique products and experiences.

Just as important is to create channel uniqueness within the brand’s marketing communication group evaluating all the current sales channels, noting areas of product line redundancy. The multi-channel approach allows the brand to understand customer transactions and experiences and, furthermore, inquire about their preferences. For example, direct customers can fill out a short online survey noting how frequently they shop and the transaction quality of each of those various channels after the transaction has occurred.

This process is, in fact, nothing new. Williams-Sonoma have been doing this for years. “When we started, I was very fortunate in that we had a company that was 50 percent, their revenues came with a catalog, and 50 percent came with stores… We observed other retailers who did the same thing, had catalogs and stores, but their catalogs were mirror images of their stores.  And when that happened, one of them dried up, either the catalog or the store.  More often the catalog suffered.” - The late Howard Lester, former Williams-Sonoma CEO

The same concept can be applied to today’s marketplace, replacing the catalog with online channels, and making multi-channel transaction analytics a critical component for success. This information empowers every member of the team charged with building new channels and keeps a multi-channel approach at the forefront of strategic retail planning.

It is also further emphasized by the fact that direct-to-consumer brands such as Warby Parker and Bonobos have ventured beyond their online channel presence to open direct sales channels. Even Amazon, the poster child and global leader in online channels, is making a large investment in brick-and-mortar. They have opened several bookstores, dozens of pop-up shops, and are currently working on launching Amazon Go, a grocery store chain with no cashiers or checkouts. They are even considering opening augmented reality furniture stores. All with unique experiences.

The multi-channel approach is important because online and in-store channels can create greater value as unique experiences. One is a transaction environment and one is a brand experience environment, and both need to complement each other to offer fit and color experience and a safe and convenient transaction. Imagine for a moment if you visited Levis.com, felt the brand look was in line with your preferences, visited a transaction-less Levi’s store, explored the product line’s look and feel, tried on your fit, size and color, found a head-to-toe look that worked, made a cash-less transaction connecting to the online channel via your smartphone and had the product delivered to your home within the hour. Convenient, painless and excellent use of both channels. Apple, Amazon and others are already beginning to move this direction. Now imagine if Best Buy would price match any online price but offer a showroom experience in its stores with no inventory, but delivered to your door within 2 hours from a logistics location.

It is important that all channels have a unique experience for the customer, because your best customers will shop all channels. Whether brands will adopt this in time or continue to replicate brand experience and store experience has yet to be determined. What is for sure, is that the duality of retail is yet to be fully realized and that, for some retail giants, may be far too late. So, is the end of retail as we know it, the death of brick and mortar and the end for traditional retailers? Absolutely not, it’s the opportunity for a brand to evolve with the consumer and provide experiences and convenience in ways that reflect their lifestyle and buying behaviors. We are witnessing an evolution of retail, where traditional views of retail and digital experiences must be left behind. For those that can evolve, it’s an exciting time rife with opportunity. And about time too.

Topics: Marketing Strategy, e-Commerce, Brick & Mortar, Multi-Channel