Multichannel Retailing: Value, Optimisation and Segmentation

Multichannel Retailing: Value, Optimisation and Segmentation
The 2010 Retail Thought Leadership Project

The information contained in this report remains the property of The Australian Centre for Retail
Studies and may not be reproduced without the permission of the Executive Director. Although
every effort has been made to ensure the information contained in this report is correct, the ACRS
assumes no responsibility for its accuracy, reliability, nor does it necessarily endorse the
organisations listed herein.
Contact: The Australian Centre for Retail Studies (ACRS)
Level 6, Building S
26 Sir John Monash Drive
Caulfield East VIC 3145
Australia
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Tel: (03) 9903 2455
Fax: (03) 9903 2099
Email: acrs@monash.edu
Website: www.buseco.monash.edu.au/centres/acrs
Twitter: http://twitter.com/MonashACRS
Blog: http://monashacrs.blogspot.com
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Foreword
Multichannel Retailing: Value, Optimisation and Segmentation
The ACRS is pleased to introduce its 2010 Retail Thought Leadership (RTL) project,
“Multichannel Retailing: Value, Optimisation and Segmentation”. The report provides an
overview of the research and the current multichannel retail environment, as well as future
directions in this regard.
Following ACRS’ 2009 RTL project, “Retail 2020”, identifying and effectively targeting
today’s multichannel consumer was the key issue facing the retail industry. This was
confirmed through discussions with some of Australia and New Zealand’s leading retail
CEO’s and retail supply and consulting leaders. In addressing this issue, the ACRS research
team conducted an online survey of 1,000 Australian consumers to develop a
comprehensive picture of their multichannel preferences and behaviour.
This report is structured around seven main sections. Section Two summarises the various
consumer purchase channels, including growth and trends, followed by a selection of best
practice case examples (Section Three). Section Four discusses the global multichannel
consumer at length, while Section Five encompasses an overview of ACRS’ Australian
multichannel consumer research, including a segmentation analysis of preferences and
behaviour. Key success factors and managerial implications are provided in Section Six,
with Section Seven concluding the report with the likely future directions of multichannel
retailing on a local and global scale.
The ACRS trusts that you will find the information insightful and helpful in shaping future
retail strategies. If you have any questions in relation to this report, please do not hesitate to
contact us.
The ACRS Research Team
Australian Centre for Retail Studies
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Executive Summary
Following on from ACRS’ 2009 inaugural Retail Thought Leadership (RTL) project, “Retail
2020”, the 2010 RTL research focused on multichannel retailing and the behaviour of
Australian consumers. Entitled “Multichannel Retailing: Value, Optimisation and
Segmentation”, this research addresses consumer usage of and preferences for different
channels in terms of their pre-purchase, purchase and after-sales behaviour; how different
multichannel models impact on consumer perceptions of shopping value and satisfaction; and
how consumers can be segmented to reflect their multichannel preferences and behaviour.
This report provides an overview of the multichannel context and the role and growth of
available channels, such as store, catalogue, online, call centres, kiosks, and mobile, within
the broader channel mix. In addition, best practice case studies are provided to showcase
leading retailers in this regard. A detailed profile of the multichannel consumer follows,
including the results of a survey of over 1,000 Australian consumers. The report concludes
with key success factors and implications for multichannel retailers and advertising strategy,
as well as the likely future of multichannel retailing.
In terms of survey results, overall channel usage was examined at each stage of the
purchase process. Responses revealed that stores (stand alone or within a shopping
centre), print catalogues, retailer websites, and online search engines are most important for
consumer pre-purchase research, while stores and retailer websites (if transactional) ranked
highest in making an actual purchase. Stores are also deemed an important channel in
seeking after-sales service. Further, the survey revealed that Australian consumers have high
expectations with regard to multichannel retailing, with the highest ratings in the ability to
return a product or make a warranty claim across channels and access to after-sales service
via any channel, as well as consistent promotions and product range, customer service and
pricing.
Four key Australian multichannel consumer segments also emerged from the research:
Store Loyals (34%), Traditional Multichannel Shoppers (21%), Channel Adopters (28%), and
Functional Shoppers (17%). Overall, a multichannel retail strategy including both traditional
and emerging channels (iPhone applications, social media, online catalogues, SMS and
online video) was found to have a direct and positive impact on perceived shopping value
and satisfaction for Australian consumers.
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of contents Corporate Partners
We would like to mention the following corporate partners of the 2010 RTL project, who
have made this research possible. We greatly value their industry knowledge and
contribution and appreciate their ongoing support of the ACRS, the Department of
Marketing, and the broader Monash University community.
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Table of Contents
1 INTRODUCTION .................................................................................................................................. 8
1.1 RTL RESEARCH APPROACH ............................................................................................................................. 8
1.2 WHY MULTICHANNEL RETAILING? ................................................................................................................... 9
1.3 WHAT IS MULTICHANNEL RETAILING? ............................................................................................................ 10
1.4 MULTICHANNEL GROWTH ............................................................................................................................ 11
2 MULTICHANNEL RETAILING OPTIONS ................................................................................................ 13
2.1 STORE ..................................................................................................................................................... 14
2.2 INTERNET ................................................................................................................................................. 15
2.2.1 Online purchasing ......................................................................................................................... 16
2.2.2 The online and pre‐purchase research ......................................................................................... 17
2.3 CATALOGUES ............................................................................................................................................ 20
2.4 CALL CENTRES ........................................................................................................................................... 21
2.5 SOCIAL MEDIA ........................................................................................................................................... 23
2.5.1 Social networking ......................................................................................................................... 25
2.5.2 Online community groups ............................................................................................................ 26
2.5.3 Blogs ............................................................................................................................................. 27
2.6 MOBILE ................................................................................................................................................... 28
2.7 INTERACTIVE, DIGITAL KIOSKS ....................................................................................................................... 31
2.8 DIGITAL SIGNAGE ....................................................................................................................................... 34
3 BEST PRACTICE CASE STUDIES ........................................................................................................... 37
3.1 SUPRÉ ..................................................................................................................................................... 37
3.2 THE WAREHOUSE ...................................................................................................................................... 41
3.3 ASOS ...................................................................................................................................................... 43
3.4 MULTICHANNEL RETAILING STRATEGY ............................................................................................................ 46
4 THE MULTICHANNEL CONSUMER ...................................................................................................... 48
4.1 MULTICHANNEL CUSTOMER VALUE ................................................................................................................ 49
4.2 MULTICHANNEL CUSTOMER CHARACTERISTICS ................................................................................................. 50
4.3 CROSS‐CHANNEL CONSUMER BEHAVIOUR ...................................................................................................... 52
5 AUSTRALIAN CONSUMER PERSPECTIVE ............................................................................................. 56
5.1 THE SAMPLE PROFILE ................................................................................................................................. 58
5.2 CONSUMER CROSS‐CHANNEL BEHAVIOUR ....................................................................................................... 59
5.3 CONSUMER EXPECTATIONS OF A MULTICHANNEL OFFER ..................................................................................... 61
5.4 RELATIVE CHANNEL IMPORTANCE .................................................................................................................. 62
5.5 CHANNEL MIX OPTIMISATION ....................................................................................................................... 64
5.6 MULTICHANNEL CONSUMER SEGMENTS.......................................................................................................... 66
5.6.1 Store Loyals .................................................................................................................................. 68
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Table of Contents
5.6.1.1 Functional Store Shoppers (18%) ......................................................................................................... 68
5.6.1.2 Tactile Shoppers (11%) ........................................................................................................................ 70
5.6.1.3 Inactive Multichannel Shoppers (5%) .................................................................................................. 72
5.6.2 Channel Adopters ......................................................................................................................... 74
5.6.2.1 Channel Neutrals (13%) ....................................................................................................................... 74
5.6.2.2 Cross‐channel Actives (11%) ............................................................................................................... 76
5.6.2.3 Cross‐channel Pioneers (4%) ............................................................................................................... 78
5.6.3 Traditional Multichannel Shoppers .............................................................................................. 80
5.6.3.1 Non‐ Emerging Channel Shoppers (19%) ............................................................................................ 80
5.6.3.2 Purchase Focused Shoppers (2%)........................................................................................................ 82
5.6.4 Functional Shoppers .................................................................................................................... 84
5.6.4.1 Shopping Independents (11%) ............................................................................................................ 84
5.6.4.2 Shopping Dependents (6%) ................................................................................................................. 86
6 KEY SUCCESS FACTORS & IMPLICATIONS ........................................................................................... 89
6.1 THE PRIZE ................................................................................................................................................ 90
6.2 THE EVOLVING RETAIL EQUATION .................................................................................................................. 90
6.3 LOSING CONTROL ...................................................................................................................................... 92
6.4 FROM MULTI TO CROSS‐CHANNEL ................................................................................................................. 92
6.4.1 Reducing Friction .......................................................................................................................... 93
6.4.2 Convenience ................................................................................................................................. 94
6.4.3 Transparency ................................................................................................................................ 94
6.4.4 Content ......................................................................................................................................... 95
6.4.5 Availability .................................................................................................................................... 96
6.4.6 Simplicity ...................................................................................................................................... 96
6.4.7 Consistency ................................................................................................................................... 97
6.4.8 Omnipresence ............................................................................................................................... 97
6.5 PLANNING MULTICHANNEL STRATEGY ............................................................................................................ 98
7 FUTURE OF MULTICHANNEL ............................................................................................................ 101
8 REFERENCES.................................................................................................................................... 104
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The ACRS
About the Australian Centre for Retail Studies
The Australian Centre for Retail Studies provides knowledge leadership to those
involved in the retail sector through broad based research and information
generation, management education programs and the promotion of retailing as a
career.
As a commercial centre within Monash University’s Faculty of Business and
Economics and Department of Marketing, the ACRS is a bridge between the
academic and the commercial retail worlds, enabling clients to access resources
and knowledge that may not be otherwise available to them.
The centre engages in the following areas of activity throughout Australia, New
Zealand, South East Asia, and Asia.
� Management development programs;
� Presentations, conferences and seminars;
� Retail research, reports and publications; and
� Study tours.
Given its unique retail focus, the ACRS imparts knowledge, skill, and
understanding to all levels of management from first line recruits to CEOs; offering
invaluable expertise over other general management training providers.
The ACRS Research Report Series
This report forms part of the ACRS primary research series, which addresses relevant
topics and issues facing the Australian and international retail industry. Published
throughout the year, these reports are intended to provide retailers, consultants and
service providers to the retail industry with insights to evaluate and address critical
strategic retailing issues.
© The Australian Centre for Retail Studies, 2010. 108 | P age

Report prepared by Carla Ferraro, Alana Jones, Selma Mehmedovic, Sean Sands, and Lisa
Tartaglia.
Contact. The Australian Centre for Retail Studies (ACRS)
Level 6, Building S
26 Sir John Monash Drive
Caulfield East VIC 3145
Australia
Tel. (03) 9903 2455
Fax. (03) 9903 2099
Email. acrs@buseco.monash.edu.au
Website. www.buseco.monash.edu.au/centres/acrs
Twitter: http://twitter.com/MonashACRS
© The information contained in this report remains entirely the property of The Australian Centre
for Retail Studies and may not be reproduced in any manner without the express permission of
the Executive Director.
© The Australian Centre for Retail Studies, 2010. 109 | P age