Chapter -3

Learning Objectives
• Learning Objective 3-1 Understand the
channels used by retailers.
• Learning Objective 3-2 Compare the relative
strengths of the major retail channels: stores;
Internet, mobile, and social; and catalog and
other nonstore channels.
• Learning Objective 3-3 Describe the
opportunities associated with a true omnichannel
strategy.
• Learning Objective 3-4 Analyze the challenges
facing multichannel and omnichannel retailers.
 The “Connected Store”

• A mirror with an interactive touch screen

allows the consumer to see the latest content
from the brand.

© Bebeto Matthews/AP Images

 Retail Channels
Learning Objective 3-1 Understand the channels used by retailers.

Retail channel
• The opportunity to complete a transaction
• Stores, Internet, mobile, social media, catalogs
Single-channel retailing
• Sell and deliver through only one channel
Multichannel retailing
• Cross-channel retailing
• Omnichannel retailing
Exhibit 3-1 Progression from Single-
Channel to Omnichannel Retailing

Jump to long description in appendix

Relative Strengths of Retail Channels 1 of 5
Learning Objective 3-2 Compare the relative strengths of the major retail channel stores:
Internet, mobile, and social; and other nonstore channels.

In-Store Retailing
• Touch and smell of products
• Personal service
• Risk reduction
• Immediate gratification
• Entertainment and social experience
• Cash payment
EXHIBIT 3-2 U.S. Retail Sales by Type of Retailing

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ndix
Sources: U.S. Census Bureau; [Link].
Relative Strengths of Retail Channels 2 of 5
• Internet Retailing
– Mobile retailing, mobile commerce, m-commerce
• Deeper and broader selection
• More information for evaluating merchandise
• Personalization
– Live chats
• Expanded market presence
• Information to improve shopping experience across channels
• Perceived risks in Internet shopping
Retailers Expand Presence by Adding an Internet Channel

• L.L. Bean has relatively few stores, but

has a vast catalog and Internet presence that
significantly expands its market.

© Robert F. Bukaty/AP Images

Relative Strengths of Retail Channels 3 of 5

• Mobile Retailing
– Customers access retail sites from anywhere
– Location sensitive
– Biggest disadvantage is smaller viewing screen
– Some retailers design distinct websites and apps for
different devices
Relative Strengths of Retail Channels 4 of 5
• Social Retailing
– S-retailing involves conducting purchase transactions
through social media sites
– Twitter, Pinterest, Instagram have “buy buttons”
Relative Strengths of Retail Channels 5 of 5
• Catalog and Other Nonstore Channels
– Catalog channel
• Place an order from anywhere
• Can access catalog anytime
• Can be easier to browse than website
– Direct Selling
• Face-to-face interaction with customer at home or work
– Automated Retailing
• Vending machines
EXHIBIT 3-3 Benefits Provided by Major Channels

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endix
 Opportunities Facing Multichannel and
Omnichannel Retailers
Learning Objective 3-3 Describe the opportunities associated with a true omnichannel strategy.

Multiple channels to build competitive advantage

Consumers want to be recognized
Retailer must facilitate finding, picking-up
merchandise
Various channels need to be consistent
Retailers can use channels to stimulate store visits
 Challenges Facing Multichannel and
Omnichannel Retailers 1 of 3
Learning Objective 3-4 Analyze the challenges facing multichannel and omnichannel retailers.

Multichannel and Omnichannel Supply Chains and

Information Systems
• Struggle to provide an integrated experience
Consistent Brand Image across Channels
• All channels should present a consistent image and
each channel reinforces the image
EXHIBIT 3-4 Percentage of Multichannel Retailers
Offering Cross-Channel Fulfillment

Cross-Channel Fulfillment High-Performance Others

Activities Retailers
Buy online, return in store 70% 59%
Buy in store, fulfill through online 70 41
Buy online, pick up in store 50 52
Buy via mobile 35 48
Buy via social media source 30 11
Buy online, fulfill through any stop 30 30

Source: Omni-Channel 2012: Cross-Channel Comes of Age, 2012 Benchmark, RSR, June 2012.
Challenges Facing Multichannel and Omnichannel Retailers 2 of 3

• Merchandise Assortment
– Internet channel offers broader, deeper merchandise
assortment
– Store channel better suited for “touch-and-feel”
products
• Pricing
– Retailers adjust prices based on competition in
different channels
Challenges Facing Multichannel and Omnichannel Retailers 3 of 3

• Reduction of Channel Migration

– Showrooming can be reduced by
• Providing better customer service
• Offering unique relevant information based on customer data
• Promoting private-label merchandise
 Key Terms 1 of 4
• automated retailing A retail channel that stores merchandise or services in
a machine, then dispenses them to customers who provide cash or a credit
card.
• catalog channel A nonstore retailer that communicates directly with
customers using catalogs sent through the mail.
• channel migration A customer practice in which customers search for
information from a retailer’s channel, then purchase in a different channel
maintained by a competitor.
• cross-channel retailing A type of marketing channel in which customers
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 store to
redeem the coupon and buy the product.
 Key Terms 2 of 4
• direct selling A retail format in which a salesperson, frequently an
independent distributor, contacts a customer directly in a convenient
location (either at a customer’s home or at work), demonstrates
merchandise benefits, takes an order, and delivers the merchandise to the
customer.
• Internet retailing A retail format in which retailers communicate with
customers and offer products and services for sale over the Internet.
• live chat Technology that enables online customers to access an instant
messaging or voice conversation with a sales representative in real time.
• m-commerce Internet channels accessed through tablets, smartphones, or
other handheld devices. Also known as mobile marketing, mobile
commerce, or mobile retailing.
 Key Terms 3 of 4
• mobile commerce Internet channels accessed through tablets,
smartphones, or other handheld devices. Also known as mobile marketing,
m-commerce, or mobile retailing.
• mobile retailing Internet channels accessed through tablets, smartphones,
or other handheld devices. Also known as mobile marketing, mobile
commerce, or m-commerce.
• multichannel retailing Selling merchandise or services through more than
one channel.
• omnichannel retailing Coordinated multichannel retail offering that
ensures a seamless customer experience across all the retailer’s channels.
• retail channel The means by which a retailer sells and delivers
merchandise to customers.
 Key Terms 4 of 4
• showrooming A practice in which customers visit stores to interact with a
physical product and receive sales assistance, then purchase it through a
less expensive channel, such as online.
• single-channel retailing Selling merchandise or services through only one
channel.
• social retailing Conducting purchase transactions through a social media
site. Also called s-retailing.
• s-retailing Conducting purchase transactions through a social media site.
Also called social retailing.
• vending machine A nonstore format in which merchandise or services are
stored in a machine and dispensed to customers when they deposit cash or
use a credit card.