J.D. Associates Retail POS Solutions Blog

Swimming Across the Retail Multichannel - Part I

  

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Today, almost all merchants have a multichannel strategy or at least are seriously thinking about one.   Multichannel initiatives vary from retailer to retailer with some choosing one additional channel while others may choose three or four.  A good rule of thumb is to bite off only as much as you can chew.  While multichannels can and should complement each other, one unsuccessful channel can have adverse effects on the rest of the channels including the original brick and mortar store.  The other consideration to keep in mind when choosing to pursue additional channels is to hire an expert advisor.  Each channel has different ways of enhancing the customer experience and choosing inexperience can and will prove to be a very costly mistake across all your channels.

BRICK & MORTAR

Although some merchants like QVC and HSN may never open brick and mortar locations, by and large, brick and mortar has been the primary method by which most retailers market their goods to the public.  There can be many advantages as well as pitfalls to consider when opening a brick and mortar location.  The following are just a few of the primary considerations that should be taken into account when opening a physical store.

• Location is a primary concern for any brick and mortar store.  The store must be easily accessible and the demographics should demonstrate sufficient demand for the merchandise.  For example, you might not want to open a teen apparel store in the middle of a retirement community.  Then again……?
• Is there an adequate and competent workforce in the surrounding geography to ensure exceptional customer service?   When customers require assistance, they are usually looking for well informed, friendly people.  Hiring friendly and intelligent sales people is only half of the equation; training them properly is the other half.  Attracting and retaining talent means creating and maintaining a positive work environment as well as providing very competitive reimbursement.   Generally speaking, personnel turnover in retail is exceptionally high and costly.
• Is the store attractively merchandised?  Because brick and mortar locations ask more of the customer than any other channel in terms of travel expense and time, customers need to want to make the extra effort.  If a store is disorganized, unkempt and generally a difficult and unpleasant place to shop, most customers will choose to shop elsewhere or will shop online or through a catalog.
• Does the store frequently freshen its merchandise?  It doesn’t take long for customers to get bored with stale merchandise.   Don’t be afraid to get rid of SKUs that aren’t moving and free up some cash for new merchandise.  New merchandise generates curiosity and excitement resulting in more frequent visits.  If new merchandise isn’t readily available, moving merchandise around in the store will often generate the same excitement.
• Is the store adequately capitalized?  Brick and mortar stores require considerable expense.  Unlike other multichannel initiatives, a physical location usually involves a long-term commitment.  Leases need to be negotiated and signed, build-out can be costly, store fixtures are not inexpensive and merchandise needs to be paid for usually before it’s sold.

All of the considerations of brick and mortar cause many retailers to look into multichannel alternatives when looking to expand.  Retailers who consider multichannel expansion generally want to increase their revenue and their visibility while controlling many of the expenses associated with brick and mortar expansion.

Next week, we’ll look at Multichannel Expansion. What does the term mean and what does it take to be a successful multichannel retailer?

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