Multichannel Retailing: Definition, Benefits & Challenges

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  • 0:03 What Is Multichannel…
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  • 3:22 Drawbacks of…
  • 4:10 An Example
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Lesson Transcript
Instructor
Beth Loy

Dr. Loy has a Ph.D. in Resource Economics; master's degrees in economics, human resources, and safety; and has taught masters and doctorate level courses in statistics, research methods, economics, and management.

Expert Contributor
Steven Scalia

Steven completed a Graduate Degree is Chartered Accountancy at Concordia University. He has performed as Teacher's Assistant and Assistant Lecturer in University.

This lesson will identify the benefits of multichannel retailing, such as customer loyalty and improved analytics. We will also look at challenges, such as information security and personnel time. Examples of multichannel retailing will be given.

What Is Multichannel Retailing?

Have you ever seen something you wanted to buy right then and there? When you go to the store, do you want to know if another store has the same product at a lower price? What about sitting on your couch and seeing a product advertised on television that you'd like to buy right away? If you like ordering goodies from your couch, car, or deck, you're a fan of multichannel retailing.

Multichannel retailing is when a company provides numerous ways for customers to purchase goods and services. This marketing strategy could include selling through traditional outlets such as catalogs, brick-and-mortar stores, mail, and telephone. But, it also includes nontraditional electronic and mobile outlets like websites, chats, emails, apps, and social networks.

Multichannel retailing is a way to build a brand and reach a lot of consumers. You want to target channels that give you the most return on your investment. Let's review the benefits of multichannel retailing and look at Sears as an example.

Benefits of Multichannel Retailing

Multichannel retailing is a marketing concept that is always evolving. The bottom line is that most companies these days are expected to give customers a variety of ways to shop. Customers want convenience, and they want things done immediately. Multichannel retailing offers the following benefits:

  • Flexibility for consumers when purchasing and paying for goods and services
  • More opportunities to build a brand among diverse audiences
  • Additional chances to solicit and use consumer testimonials
  • 24-hour access to customers to build brand loyalty
  • A greater degree of visibility among various demographics
  • Improved analytics to help understand consumer behaviors

Sears was one of the first companies to use a multichannel retailing model. Established in 1886, Sears started as a traditional outlet, a mail order catalog store. By the 1950s, the company built several brick-and-mortar stores. After expanding its Kenmore, Craftsman, and Diehard brands, it was acquired by Kmart in 2004. Sears continued its multichannel transformation.

Combined with Kmart, Sears has turned itself into a diversified, online behemoth. The company not only owns familiar brands such as Discover and Allstate, but it has dramatically improved convenience for customers wanting their brands. Now consumers can buy something in the store and have it shipped home or vice versa. Interestingly enough, Sears continues to invest in different types of brick-and-mortar stores, including outlets and discount stores.

The company has improved its retail sales with a large investment in online marketing channels and changes. For example, Sears became a part of the the Shop Your Way rewards program, which is an online platform that builds shopping around a social network. The company also expanded its app, Sears2go, which allows you the convenience of shopping with your mobile phone.

Sears even offers an electronic personal shopper from its website while giving store customers the flexibility to use a kiosk in its stores. By offering multiple shopping, payment, and shipping methods, Sears looks to continue shifting its business model to more of an online retailer. Now that we know the benefits of multichannel retailing, let's look at the drawbacks.

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Additional Activities

Multichannel Retailing - a Business Case:

The following business case is designed to allow you to apply your knowledge in Multichannel Retailing, specifically by combining your understanding and case facts in order to form a thorough response.

Context:

You are the Chief Marketing Officer at Lady Purse Plus, a retail company that specializes in handmade, high-end purses made from fine Italian leather. Lady Purse Plus has stores all over the United States, setting a rule that it must have a store in every market with over 1,000,000 people.

Lady Purse Plus has long depended on its retail store experience to sell its products. In the past year, however, there has been a drop in sales. This has not happened in the 23 years of the company's existence. The company's management consultant performed a study and determined that Lady Purse Plus' competitors were gaining ground due to e-commerce strategies.

Given the drop in sales, the President asked that you write a report studying the pros and cons of creating a mobile application for online sales. Your assistant compiled the following notes:

  • Lady Purse Plus has never considered selling its purses online because it believes that customers need to physically feel the purses that they want to purchase.
  • Many of the company's customers want longer store hours so that they can shop for purses at night after work. The company currently closes its stores at 8 PM.
  • Lady Purse Plus has a limited budget for new sales channels since it is tight on cash.
  • The company's target market is generally narrow, and the company has had difficulty attracting other demographics to its brand.
  • The company's staff has no experience developing or selling through online or mobile channels.
  • The President has complained in recent meetings that there is a lack of customer data to help create future models of purses.

Required:

Write an email in a short essay format (150 words minimum) explaining the pros and cons of Lady Purse Plus setting up a mobile application as a Multichannel Retailed strategy. (Hint: Use the case facts and tie them in with the content of your lesson!)

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