BrainTrust Query: When (if ever) are 'web exclusives' a wise strategy for multi-channel retailers?

By Dr. Roger Selbert, Editor & Publisher, Integrated Retailing
(www.integratedretailing.com)

Multi-channel integration is increasingly recognized as a desired goal for retailers with stores and web sites. But must web and store strategies relating to marketing, merchandising and pricing always remain consistent, even identical? If not, then where, and how much should web and store strategies differ?

According to a Gartner report, only one-fourth of multi-channel retailers fully coordinate their brand marketing across channels. Three-quarters of multi-channel retailers, in other words, either fail to share customer information across channels, don't coordinate marketing activities and/or don't align promotional activities.

Yet 68 percent of all shoppers now move interchangeably between physical stores, online stores and catalogs (Adjoined Research). Consumers increasingly see a retailer as a single, seamless entity. They don't distinguish between or among channels, even if the retailer does so itself, and they expect any part of the service and delivery chain to have the same products, policies and knowledge as any other part of the operation.

In certain areas, however, it may be strategically advantageous for some retailers to have different products, promotion and pricing in different channels - aka "web exclusives." Several upscale apparel retailers, for example, have started displaying trendier merchandise on their online web sites than they offer in their stores. Among such retailers featuring web exclusives are Neiman Marcus, Nordstrom, Saks Fifth Avenue, Talbot's, Macy's and J. Crew.

There are several reasons for differentiating products, pricing and promotions in different channels. For one thing, it's logistics: stores don't have room to stock everything they carry online. But it's also strategic: retailers are using online exclusives to try to attract shoppers who don't usually frequent their stores. If they can convert them online, there is the potential of converting them into loyal multi-channel customers.

There's also the fact that online shoppers and multi-channel shoppers do tend to skew toward the younger, trendier, more affluent, better educated and more technologically savvy. They also spend more and are more profitable customers, and so are logically worth targeting with special treatment.

Discussion Question: When (if ever) are "web exclusives" a wise strategy for multi-channel retailers?

Offering web exclusives is a risky strategy for retailers. With over 80 percent of shoppers now browsing online before visiting stores, a web exclusive strategy risks disappointing and thus alienating consumers, losing not just immediate sales but also lifetime sales. Smart multi-channel retailers recognize this, and place in-store kiosks where customers can order merchandise from the store's web site and catalog.

The ultimate strategic goal, it seems to us, is customer-centricity. Being customer-centric means centering your company's goals, growth strategies and tactical operations around attracting, winning and keeping profitable customers. Implementing customer centricity starts by taking a unified view of customer relationships. This means overlaying data from across multiple sources to create multidimensional customer profiles, and then translating the data into actionable insights.

The challenge for the multi-channel retailer is to understand which channel the customer prefers for which merchandise and which channel is most profitable per unique customer. A unified view of every customer across channels is difficult to achieve, but ultimately, will prove financially rewarding.