CHAPTER 3

MULTICHANNEL AND
OMNICHANNEL RETAILING
RETAIL CHANNEL

• Defines the way a retailer sells and delivers merchandise and services to its customers.
The most common channel used by retailers is stores, but retailers also use a variety of
nonstore channels, including the Internet, mobile, social media, and catalogs. This
definition highlights the distinction be- tween a channel and a medium, such as television
advertising.
• A channel involves the opportunity to complete a transaction to sell and deliver
merchandise-while a medium is primarily used to communicate information to
consumers.
SINGLE-CHANNEL RETAILING

• is when retailers sell and deliver merchandise and services to their customers through
only one channel.

MULTICHANNEL RETAILING
• is when retailers offer more than one channel to sell and deliver merchandise and services to
consumers.
CROSS-CHANNEL RETAILING

• customers actually use multiple channels to make purchases, such as when they receive
an e-mailed coupon, download it onto their smartphone, and then go to a brick-and-
mortar store to redeem the coupon and buy the product.

OMNICHANNEL RETAILING
• refers to a coordinated multichannel retail offering that provides a seamless and synchronized
customer experience, using all of the retailer’s shopping channel.
IN-STORE RETAILING

• Touch and Smell of Products

Perhaps the greatest benefit offered by stores is the opportunity for customers to
use all five senses-touching, smelling, tasting, seeing, and hearing-when examining and
evaluating products.
• Personal Service
Although consumers are often critical of the personal service they get in stores,
sales associates still have the unique ability to provide meaningful, personalized
information.
• Risk Reduction
The physical presence of the store reduces perceived risk and increases customers'
confidence that any problems with a purchase will be corrected.
• Immediate Gratification
Customers can use merchandise immediately after they buy it in stores.
• Entertainment and Social
Experience In-store shopping can be a stimulating experience for some people,
providing a break in their daily routine and enabling them to interact with friends. For
retailers that emphasize the store experience, like Bass Pro Shops, the shopping trip is
equivalent to a trip to a carnival, with a laser arcade, rock climbing, pistol shooting range,
massive indoor waterfalls, and aquariums for fishing.
• Cash Payment
Stores are the only channel through which consumers can make cash payments.
Some customers prefer to pay with cash because it is quicker, resolves the transaction
immediately, and does not result in potential interest payments or excessive debt.
INTERNET RETAILING

• Internet Retailing involves retailers interacting with consumers via the Internet, whether
they use a traditional computer or a laptop, a variety of sizes of tablets, or a smartphone.
We refer to the channel that involves accessing the Internet through a traditional computer
as the electronic channel.
• The mobile channel (also called mobile retailing, mobile commerce, or m-commerce)
implies accessing the Internet using a tablet or smartphone.
More and more traditional brick-and-mortar and catalog retailers of all sizes continue to add
Internet channels to improve their ability to serve their customers and build a competitive
advantage in several ways:

1. The addition of the Internet channels has the potential to offer a greater selection of
products.
2. They allow retailers to provide more information.
3. They enable retailers to give customers more personalized information about products
and services.
4. They offer sellers the unique opportunity to collect information about consumer
shopping.
5. Internet channels provide an opportunity for retailers to enter new markets economically.
6. They provide information that they can use to improve the shopping experience across all
channels.
7. Because of the information they gather, Internet channels also may increase consumer
risk, which represents a potential threat that retailers must address to ensure their
competitive advantage.
• Deeper and Broader Selection
One benefit of adding Internet channels is the vast number of alternatives
retailers can make available to consumers without crowding their aisles or increasing
their square footage. Stores and catalogs are limited by their size. By shopping on the
Internet, consumers can easily "visit" and select merchandise from a broader array of
retailers. Individual retailers' websites typically offer deeper assortments of merchandise
(more colors, brands, and sizes) than are available in stores or catalogs.
• More Information for Evaluating
Merchandise An important service offered by retailers is providing information
that helps consumers make better buying decisions. Retail channels differ in terms of how
much information customers can access. The amount of information available through the
store channel is limited by the number and training of sales associates and the space
allocated to informative signage. Similarly, the information available through a catalog
channel is limited by the number of pages in the catalog.
• Personalization
Due to the Internet's interactive nature, the most significant potential benefit of
Internet channels is their ability to personalize merchandise offerings and information, in
an economical way, for each customer.

• Expanded Market Presence

The market for customers who shop in stores is typically limited to consumers
living in relatively close proximity to those stores. The market for catalogs is limited by the
high cost of printing and mailing them and in- creasing consumer interest in
environmentally friendly practices.
• Information to Improve Shopping Experience across Channels
It is difficult for most store-based retailers to develop extensive purchase
histories of their customers, because those retailers cannot link individual transactions to
customers who pay cash or use third-party credit cards.
• Perceived Risks in Internet Shopping
Some consumers are concerned about buying products through an Internet
channel. Specifically, some believe that the security of credit card transactions is greater in
stores than online, and they also worry about the potential for privacy violations.
MOBILE RETAILING

• Due to the rapid growth of domestic and international broadband access through
handheld devices, such as tablets and mobile phones, retailers are very interested in
developing this channel's potential.
SOCIAL RETAILING

• Social retailing, also known as s-retailing, involves conducting purchase transactions

through a social media site. This expanded channel is steadily evolving and picking up
steam. In particular, social media powerhouses such as Twitter, Pinterest, and Instagram
have incorporated "buy buttons" that enable users to click on a featured post or picture to
initiate a sales process.
CATALOG AND OTHER NONSTORE CHANNELS

• The catalog channel is a nonstore retail channel in which the retail offering is
communicated to customers through a catalog mailed to customers. About half of U.S.
consumers shop through catalogs each year. The merchandise categories with the greatest
catalog sales are drugs, beauty aids, computers, software, clothing, accessories, furniture,
and housewares.
DIRECT SELLING

• Another nonstore channel is 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
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.
Automated retailing machines, also known as vending machines, are typically placed at
convenient, high-traffic locations.
CONSISTENT BRAND IMAGE ACROSS CHANNELS

• Retailers need to provide a consistent brand image of themselves and their merchandise
across all channels

MERCHANDISE ASSORTMENT
• Typically, different assortments are found for each of the channels.
PRICING

• Pricing represents another difficult decision for multichannel and omnichannel retailers.
Many customers expect prices to be the same across channels. However, in some cases,
retailers need to adjust their pricing strategy because of the competition they face in
different channels.
REDUCTION OF CHANNEL MIGRATION

• An Internet channel helps customers search for information about products and prices.
The most common multichannel and omnichannel usage involves an initial search on-
line, followed by a purchase in stores.
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