CHAPTER 3

Multichannel
& Omnichannel
Retailing
H r in

CHAPTER 03

Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Learning Objectives
LO 3-1 Understand the channels used by retailers.
LO 3-2 Compare the relative strengths of the major
retail channels: stores; Internet, mobile, and social; and
catalog and other nonstore channels.
LO 3-3 Describe the opportunities associated with a
true omnichannel strategy.
LO 3-4 Analyze the challenges facing multichannel and
omnichannel retailers.

3-2
 AR examples in retailing
Link video: https://youtu.be/UudV1VdFtuQ
Robotic Restaurant in Shanghai

https://youtu.be/g53Bx2IPYsg?si=mmNkCSC9j
XHfR9th
Amazon Go

https://youtu.be/NrmMk1Myrxc?si=VMWwZi2IXkryxcMb
 What is Multichannel Retailing?
• Retailers offer more than one channel to sell and deliver
merchandise and services to consumers.
• Channels operate without integrating operations between them.

Retailer Steve Cole/Getty Images

The McGraw-Hill Companies,

Inc./Andrew Resek, photographer Digital Vision / Getty Images

3-7
 Why are store-based retailersevolving
into multichannel retailers?
• Sales through an electronic
channel are growing at over 20%
per year
• Adding an electronic channel
creates immediate possession
utility
• Multichannel retailers can attract
more customers and satisfy
existing customers better

3-8
Why are Retailers Using Multiple
Channels to Interact withCustomers?
• Customers want what they
want, when they want it.
• Customers want new ways
customer
to engage with retailers.

store kiosk catalog call center web/e-mail mobile

3-9
What is Cross-channel Retailing?
• A type of marketing channel in which customers use
multiple channels to make purchases
• For example: 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.

3-10
Rebecca Minkoff Connected Store Demo
Retail Hero: Rebecca Minkoff, SVP ECommerce & Omnichannel Marketing
What is Omnichannel Retailing?
• A coordinated multichannel retail offering that provides a
seamless and synchronized customer experience, using
all of the retailer’s shopping channels.

• These various channels run in collaboration and

effectively ensure that the customer (and customer data)
is the center of the retail management processes.

3-12
Progression from Single-Channel to
Omnichannel Retailing
 In-Store Retailing

• Stores offer a number of benefits to

customers that they cannot get when
shopping through nonstore channels
• These benefits include:
Ø touch and smell of products
Ø personal service
Ø risk reduction
Ø immediate gratification
Ø entertainment & social experience
Ø cash payment.

3-14
H&M: Looop
Internet Retailing

Deeper and broader selection

• A vast number of alternatives available to

consumers.

More tools for evaluating merchandise

Personalization

• Information is tailored to individual

consumers to help them make quicker and
better purchase decisions
• Customized information -- side by side
comparisons
• Virtual try on
Information for solving problems, not just
merchandise characteristics
• Virtual Communities
 Internet Retailing

Expanded Market Presence

• Can expand their market without having

to build new stores or incur the high cost
of additional catalogs

Information to Improve Shopping

Experience across Channels
• Customer information (purchase
history, search behavior, etc)

Perceived Risks in Internet

Shopping
Mobile Retailing
• Mobile
• Portable
• Location sensitive
• Push notifications
• Touchscreen
• Smaller screen size
• Apps

3-19
Sephora: Ensuring Mobile Dominance
through In-Store Promotions
Beacon technology
provide real-time, customized
alerts to customers’ phones,
whether about updated loyalty
program points, upcoming in-
store events, or promotions
for some frequently purchased
items.

Sephora To Go App

3-20
Social Retailing
Social retailing involves conducting purchase transactions
through a social media site

3-21
Catalog & Other Nonstore Channels
Catalog channel is a
nonstore retail channel in
which the retail offering is
communicated to
customers through a
catalog mailed to customers

3-22
 Catalog Channel
• Convenience. Catalogs, like all
nonstore formats, offer the convenience
of looking at merchandising and placing
an order any day at any time from
almost anywhere.

• Safety. Nonstore retail formats have an

advantage over store-based retailers by
enabling customers to review
merchandise and place orders from a
safe environment – their homes.

• Quality of Visual Presentation. The

photographs of merchandise in
catalogs, while not as useful as in-store
presentations, are superior to the visual
information that can be displayed on a
CRT screen.

3-23
Direct Selling
Direct selling is a retail channel in which salespeople
interact with customers face-to-face in a convenient
location, either at the customer’s home or at work

3-24
Automated Retailing
Automated retailing is a retail channel in which merchandise
or services are stored in a machine and dispensed to
customers when they deposit cash or use a credit card

3-25
Benefits Provided by DifferentChannels

3-26
Opportunities of multichannel and
omnichannel strategy

3-27
Opportunities of omnichannel strategy
Good omnichannel retailers
also use each channel to
promote the other
• highlight their web address
on bags that customers
carry from their stores.

3-29
 Challenges of Effective Multichannel Retailing
• Multichannel supply chains and
information systems
• Struggle to provide an integrated
experience

• Reduction of Channel Migration

•Showrooming can be reduced by:
1. providing better customer service
2. offering uniquely relevant information
based on customer data
3. promoting private-label merchandise

3-30
Challenges of Effective MultichannelRetailing

• Consistent Brand Image

• Merchandise assortment
• Internet channels offer larger
assortment
• Store channels better suited
for “touch-and-feel” products
• Pricing strategies
• Retailers adjust prices based
on competition in different
channels

3-31
Keywords
• catalog retailing Nonstore retail format in which the retail offering is
communicated to a customer through a catalog.
• channel migration When consumers’ collect information about products on
one company’s channel and then buys the product from another competitor.
• 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.
• electronic retailing A retail format in which the retailers communicate with
customers and offer products and services for sale over the Internet.
• Internet channel, Internet retailing, E-channel See electronic retailing.
• multichannel retailer Retailer that sells merchandise or services through
more than one channel.

3-33