Building Integrated Multi-Channel Operations in Retail

Cross-Channel and Multi-Channel Retail Analytics
In today's retail environment, a customer can browse catalogs for merchandise or research product information online. She can follow this up with a visit to a local store to get a "look and feel" of the product before opting to purchase it there or order it online.
UK-based retailer Marks & Spencer launched a mobile site in 2010 allowing customers to access its entire product range from their mobile devices. Major U.S. retailer JCPenney made its merchandise available for purchase on Facebook in 2010.
Evolving from simple catalog mailing lists and online shopping, multi-channel retailing today encompasses the latest in social networking and mobile applications as retailers engage with customers on their own turf in new and innovative ways. 
Multi-Channel Retailing: Business Challenges 
Multi-channel retailing involves a lot more than setting up operations on more than one channel. It entails integrating operations across channels and leveraging cross-channel data for decision support to synchronize assortment planning, pricing, inventory management and promotions across all channels. Or else, retailers stand the risk of having multiple channels that view each other as competition and hit at the same customer base. They tend to eventually "bleed at the bottom line," resulting in overall drop in sales and profitability and damaged brand value. 
As a critical first step towards a scalable and sustainable multi-channel strategy, retailers should invest in advanced business intelligence (BI) and analytical capabilities that provide decision support for multi-channel integration.
Best-of-breed retail BI vendors provide multi-channel operators with cross-channel visibility and analytics that can make sense of complex channel activity including order online and in-store pick up, cross-channel order management and fulfillment systems.
Multi-Channel Analytics: Multi-channel analytics can help retailers understand patterns that customers search for products online and carefully determine assortments for each channel based on these insights. They can leverage the strengths of different channels to reduce merchandising and inventory carrying costs while offering customer satisfaction.
Leading multi-channel retailer Macy's carries a smaller assortment in store but provides customers with the option of ordering additional sizes, colors and designs through in-store Internet kiosks or catalogs. Walmart carries a much wider assortment of products on its website, thereby limiting the inventory in its stores.
Advanced Customer Analytics: Multi-channel retail calls for an analytics culture that is totally customer-centric. Advanced analytics models bring together customer interaction and transaction data from across all channels and touch points to provide a unified vision of the customer from her search history to the factors that drive her final buying decision.
Key identifiers such as customer name or IDs, promotion codes, order numbers, payment identifiers (like credit cards) and cookies should be put in place to help retailers recognize their customers, follow their shopping process across channels and understand how they interact and buy.
Advanced customer analytics helps retailers to answer key questions such as:
• How do multi-channel customers plan or engage with their shopping?
• Do customers get the expected brand experience at every touch point?
• How do changes in pricing and promotion across channels affect customers?
Retailers pursuing long-term plans for multi-channel success such as JCPenney have introduced channel-wide changes in processes, roles and responsibilities to bring in cross-channel synergies and alignment of decision making across channels.
The success of multi-channel retailing lies in the retailer's commitment and ability to offer customers a seamless, synchronized and high quality shopping experience across multiple channels — from social networks and online to stores and mobile devices and beyond.

Ajith Nayar is associate director at Manthan, specializing in helping retailers use the power of analytics to make a difference in their business results.

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