White Paper: Multi-Channel Retailing: Are You Up To The Challenge

By Vivek Sehgal

Multi-channel retailers enjoy several differentiators over web-only retailers that provide them specific advantages to manage costs and leverage their infrastructure for more efficient operations. They must develop their capabilities to manage processes across channels, specifically in the functions relating to merchandise and assortments planning, supply chain and logistics, and store and customer service operations.

Almost all large retailers today will consider themselves as a multi-channel retail company. Web-commerce has taken a strong hold on the retail landscape and emerging user habits continue to point to an ever increasing share of retail- spend on the web.

Retail is one of the largest sectors in the US economy. The U.S. Bureau of Economic Analysis reported the 2007 GDP of the country to be $14,000B, out of which $4,041B was retail (see census bureau's numbers at http://www.census.gov/mrts/www/data/html/08Q1.html). That makes retail account for almost a third of the total economic activity in the nation. Within retail, the compound annual growth rate (CAGR) for conventional retail is approximately 4.8%, while the online retail sector has grown at a CAGR of 25.4%. While the online growth must plateau out with time, it is still reported to be anywhere between 11 to 17%, with Forrester Research estimating the online retail to cross $200B this year. The point is, online retail is here to stay; most retailers have invested heavily in the technology to support online retail channels; and will continue to so as this is the most logical growth channel at present time.

Having the ability to sell through multiple channels is simply the start. Multi-channel retailing offers so many potential opportunities for the traditional retailer to create synergy, enhance operational efficiencies, reduce costs, and enhance user experience that it is an obvious choice to implement these changes that would allow a retailer to achieve most of the above.