Today I have come across an interesting study by McKinsey & Company where they stress the benefits and importance of multichannel retailing (paying a special attention to e-commerce, in particular), pointing out that at present very “few retailers actually get it right”.
Referencing the US Census Bureau, McKinsey points out that while in the course of 2009 “sales have generally fallen”, the online-trading retailers have been registering a sales increase. Just yesterday, speaking with a Manhattan-based store owner, I’ve heard him point out exactly the same thing: his brick-n-mortar business hasn’t been growing much, but because of the steady increase in online orders, his overall business has grown by some 19% in the course of the past year. This has convinced him to look more thoroughly into the online marketing channels, and reallocate his budget to support e-marketing in a more aggressive way.
Add to the above-quoted fact the reality that “more and more consumers are using the Internet to investigate products they later buy in stores”, and we also have a whole array of opportunities for affiliates as well.
By 2011, we believe the Internet will play a role in more than 45 percent of US retail sales, as either a research tool or a sales channel. What’s more, consumers who shop across a number of channels — physical stores, the Internet, and catalogs — spend about four times more annually than those who shop in just one (exhibit). Companies that get multichannel retailing right can enjoy larger profit margins and yearly revenue growth more than 100 basis points higher than companies that don’t [bold font mine].
Taking the apparel vertical as an example, McKinsey uses following graph to illustrate not only the spend distribution, but also the integral role of channel intertwining:
While there certainly exists no one-size-fits-all solution that retailers could use, McKinsey outlines the following 5 steps that are substantially contributing to the successful use of multiple channels:
- Understanding “how consumer, technology, and competitive trends are evolving”
- Developing a “sense of the growth pockets being targeted”
- Selling “the right products through the right channels” by being sensitive to each channel’s economics
- Understanding “the value of growth options” through a systematic analysis of them in light of “potential returns and relative difficulty”
- Defining goals, measuring performance, and capturing successes.
The above steps can be easily (and effectively) used in crafting any marketing strategy, online included.
Both electronic and mobile commerce are mentioned as the underused channels. Social media, and specific channels of online marketing are not even brought up.
Very few companies are following JCPenney’s pioneering example in the use of the Web, but those that do, obviously only win.