Multichannel retailing: The year of the mobile consumer

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The revolution in multichannel retailing has been a quiet one; so quiet that its arrival has crept up on some retailers. Despite years of being heralded as the business model of the future, it is the proliferation of mobile devices, in particular smart phones and tablets, and mobile commerce that has finally cemented multichannel retailing as the norm for many consumers.

Andrew Dalziel, Sales and Marketing Director at Kewill looks at how multichannel has bridged the gap between traditional retail and pure e‐retailers, with more stores now allowing customers to choose how, when and where they research, compare and purchase goods.

As well as traditional shopping websites, mobile optimised sites, mobile apps, catalogues, call centres and stores, multichannel retailing has enabled the increasing convergence of channels, for example through click‐and‐collect (in-store or from a chosen pick-up point) and online purchases in‐store via  a mobile device.

For many, 2012 was the year of the truly seamless multichannel retailing. Purchasing via smartphones and tablets grew throughout the year to reach an all-time high over the Christmas period. Whilst 'Cyber Monday' has become known as the December pinnacle of the annual online retailing calendar, Boxing Day saw the highest level of online sales in 2012 with 38% more mobile sales traffic.

According to the annual Online Christmas Activity survey from eDigitalResearch and IMRG, some 48% of all smartphone users did some pre-purchase research from their mobile device, an increase of about 9% on last year.

More consumers are also using their mobile devices as the primary method for making purchases. With 89% of 2,000 online consumers surveyed having gone online Christmas Day and Boxing Day, with around a third doing so via smartphones and another 21% from tablets, resulted in an increase of 8% and 13% respectively year-on-year – demonstrating the growing popularity of the mobile channel.

Even though the statistics paint the mobile channel as a success, there is still more that retailers can do to encourage this trend. Only 24% of mobile shoppers this Christmas rated their experience as 'very easy', indicating that more needs to be done to improve the mobile shopping journey. However, this is an increase of 6% on last year's customer satisfaction rating, suggesting that mobile developments are moving in the right direction.

Although improved site navigation and alternative payments are hot industry topics, the key focus in the short-term for retailers should be on the efficiency of logistics, whether in-house or outsourced. Home delivery volumes exploded in 2011/2012, reflecting the continued increase in online sales, resulting in some parcel companies seeing a 50% increase in goods handled. In turn, this has resulted in delivery services having to cater for not only significantly greater numbers of deliveries, but also additional service options as retailers increasingly differentiated themselves through offers such as next day delivery, all adding to the complexity of local logistics and impacting the rate of error in the retail to consumer supply chain.

A recent study from The Independent newspaper claimed that some 225,000 parcels a day failed to reach customers over Christmas. Quoted examples included; goods disappearing, packages being left at the wrong address, couriers claiming addresses didn't exist, days wasted waiting for non-existent deliveries, and customers angry over calling premium-rate telephone numbers to chase missing parcels. Whilst in 2012 as a whole, research conducted by consumer campaigners Which? found that 60% of people shopping online last year had problems with deliveries.

Both scenarios provide evidence that with channel expansion comes a new set of challenges for retailers to face and overcome. A complete picture of the scale of the situation has yet to emerge, but Citizens Advice said the number of people seeking online guidance about courier services had doubled in December 2012 compared with November. Whether the failures are endemic or due to peak period demand, it is clear that delivery firms will need to work hard to re-capture consumer confidence and meet the growing demand.

From a retailer's perspective, a joined-up strategy in their supply chain planning is required, offering consumers the chance to provide feedback in response to online experiences, so retailers can identify areas of strength and weakness. It's also important to inspire customers to search for products, compare prices, and then either visit stores to buy or to order goods online, directly or from in-store. While striving to meet the seemingly insatiable demand from consumers for lower prices and an increasingly wide choice of goods to be made immediately available, retailers will need to work hard to meet the challenge of streamlining processes. Increasing reliability for retailers will mean addressing a number of key issues around visibility, through better parcel tracking solutions and more consistent online user-interaction. One approach that multichannel retailers are increasingly favouring is the adoption of a 'direct despatch' model, where customer orders are sent directly to the retailer's supplier to despatch, effectively removing links in the supply chain. Indeed, many online only businesses have no warehousing facilities at all and have shaped their entire operations around this model. Direct despatch is essentially channel‐neutral and works in the same way for orders placed via any channel, providing a good degree of future‐proofing for retailers contemplating further investment in new channels, for example mobile and increasing collaboration between channels, with initiatives such as click‐and‐collect.

Protecting brand integrity can be a potential concern with this model, as retailers are effectively reliant on their suppliers to adhere to their processes, service guarantees and get tangible elements such as labels and delivery/returns documentation right. With the popularity of social media, customers who are unhappy, be that with delivery times, the service or the goods themselves, have many more ways of sharing that negativity. Before retailers know it news of delivery, small number of delayed delivery or being out of stock of a popular item, escalates from a minor inconvenience, spreading like wildfire and threatening a prized brand reputation.

In this circumstance, it is vital that retailers strive to provide accurate visibility of products stocked for confidence that customer promises are being met. This allows suppliers to develop a better understanding of customer demand and ensures that they are in a position to deliver, preventing customer dissatisfaction.

Whatever strategic approach retailers take to enhance their customer engagement, multichannel retailing is finally here and will no doubt dominate the future of consumer demands. Those retailers who position themselves now, will be in a much better position going forwards.