For retailers to become truly multichannel they need to ensure that both customers and staff see their different sales channels as complementary and not competing, argues Liz Morrell

Speak to any retailer with both bricks and mortar and online stores and they will try to convince you they are a multichannel business. But, in reality, few really live up to the label, with many retailers still treating the channels as competing for custom, rather than complementing each other.

According to Royal Mail’s Home Shopping Tracker Study, published last August, 62 per cent of adults now shop from home. They spend£1,502 a year online but continue to use multiple channels. Some 75 per cent use more than just a retailer’s bricks and mortar store base and 35 per cent use all three channels – online, catalogue and store.

The retailers that meet such shopping habits most successfully tend to be those that have built up a store base, catalogue and internet business consecutively. Of this, Argos is undoubtedly king. Head of multichannel Paul Emslie says: “Argos put a lot of emphasis on approaching online and multichannel from a customer perspective, providing customers with choice, not constraining them to a channel.”

Kitchenware retailer Lakeland began life as a catalogue business with a single store but has evolved into an online operation, catalogue business and 40-strong store network. It mails hundreds of thousands of catalogues on a regular basis and both the home shopping and store network have grown simultaneously. Lakeland marketing director Tony Preedy says: “We don’t regard them as separate channels. We simply regard ourselves as Lakeland. We have some customers that just use the web, some use both and some just use the catalogue and stores.”

When the internet boom happened many retailers assumed the traditional catalogue would die and that catalogue giants such as JD Williams and Littlewoods would vanish. Although the stores business of Shop Direct – formerly Littlewoods – may have gone, the catalogue businesses are still going strong and have transferred the skills and knowledge they have learnt from this area into their online offers.

Catalogues still key

Shop Direct Group marketing director Alison Broadhurst says: “Online is very important to us – about 50 per cent of our sales come from online and we expect that to rise to 70 per cent this year, but we still see the paper catalogue being important to us. It’s the prompt to shop but it’s also your brand in people’s homes. Of those shopping online, over half of them say the catalogue is an important part of their browsing.”

Royal Mail head of business development Antony Miller agrees: “They are not necessarily there for purchasing but for consideration and to be able to pick up and put down.” In fact, catalogues are as important a part of the marketing mix as ever, according to Preedy. “One of the best ways to drive people to a website is to send them a catalogue through the post,” he says.

The Catalogue Consultancy managing director Andrew Wilson says: “A catalogue is the only intrusive medium you have. People have to make up their mind to go to a store or go online; and email marketing only partly works because people can delete it without reading it, or it can be blocked by spam filters. The catalogue allows you to put a focused selection of products in front of the consumer that they may not find if they go to a website or store.”

Statistics from the Royal Mail study support this argument. They show that 54 per cent of customers use a catalogue to help them inform their purchases online and in store and those that consults a catalogue before buying online spend 13 per cent more than those that did not. According to the study, 75 per cent of shoppers keep the catalogues as a reference source, with 43 per cent keeping them for more than four months.

“The Argos catalogue is still at the heart of the multichannel shopping experience, and rightly so,” says Emslie. He says the catalogue is in two thirds of UK homes and continues to be a first point of reference for customers browsing for products, as well as allowing the retailer to display its products without taking up extensive floor space.

Catalogues drive traffic in stores too. Lakeland mails three different catalogues on a three-weekly rotational basis. “When we look at which products are shifting in-store it very much follows the pattern of the mailing programme,” says Preedy. And catalogues also drive more focused shopping. “Mailing catalogues not only drives web and store traffic but it drives inspired, informed traffic,” he adds.

One of the best illustrators of the importance of catalogues is the fact that traditional pure-play e-tailers – including Firebox, Asos and Net-a-Porter – all use catalogue print mailings to help drive their online sales. “There are many retailers who started online who have added paper catalogues to their offer,” says Broadhurst.

However, the medium is evolving. Asos’s catalogue is more akin to a customer magazine than a traditional catalogue, and Broadhurst says some of the brands in the Shop Direct Group portfolio are moving the same way. “We are thinking of catalogues differently – ie, should it be more hints and tips and editorial,” she says.

Catalogue retailers can have an easier time becoming multichannel because they already understand the cataloguing of product and logistics requirements that are common to both internet and traditional mail order. “The tough bit is to understand how to get the logistics right. Catalogue and web retailers can get a store guy in but bricks and mortars retailers have no understanding of the other two channels,” says Wilson.

Replicating the model

High street retailers have also tried to copy the model but have not necessarily been so successful. “It depends on the heritage of the business,” says Preedy. “Most British retailers are centred on the high street. Some have dallied with catalogues but the only one that has really done well is Next.”

One stumbling block for high street retailers has been their assumption that their success on the high street can be successfully applied to a multichannel strategy. “It’s often the big retailers who make the largest mistakes when they move into a new medium because they believe their breadth of knowledge will transfer,” says Wilson.

Instead, retailers have to be prepared to buy in such knowledge and to invest in professionally photographing and cataloguing every product. However, once that is done then both internet and catalogue production can be done.

The notion that catalogues are obsolete is nonsense, claims Preedy. “The argument that the internet will kill off catalogues is about as relevant as the argument years ago that TV would kill off newspapers,” he says.

Traditional channels to order – such as via post or telephone – also continue to exist. “There are a small number that use the post and we can still take orders like that. It’s tiny and there are no new customers that are choosing to shop that way but we’re not going to take it away,” says Broadhurst.

Likewise, electricals retailer Currys commercial director Carl Cowling says: “We’ve still got the call centre as well for people that want to ask a question in person or who just feel comfortable talking to someone rather than ordering over the web.”

Catalogues help to drive sales online and in stores but how does online affect retailers’ store bases? Retailers that assume they can trim their store base because of the success of online may be shooting themselves in the foot. Shoppers today really are shopping multichannel – browsing catalogues for inspiration, researching online for information and going to the store to experience. Getting rid of stores could lose you the sale.

But having a multichannel offer also allows you to sell different product through different channels – for example, offering ranges that would take up too much space in stores or are better suited to being delivered direct to a customer’s home. “The amount of stock you can put on an internet site is limitless,” says Wilson.

“We do edit the assortment in our smaller stores,” says Preedy. As a result some products – such as slow moving or bulky goods – are mail order only. “Cheaper products work better in-store because you tend not to buy them from a catalogue or website because of the delivery charge,” says Wilson.

The varying channels have in the past led to varied pricing. Electricals retailer Comet offers internet-only discount codes allowing the customer to effectively get cheaper prices online. At Halfords, shoppers can go online to reserve product in the store but pay a discounted online price when they get there.

However, it is a practice that many are moving away from. Currys parent company DSGi abandoned cheaper online pricing on Boxing Day 2007. “We were finding more and more customers were researching online and then coming into our stores,” says Cowling. “We felt we were just causing confusion and it caused issues for our customers and our staff. In a store you could lose a customer because you wouldn’t match your own online price. That’s a difficult conversation for your staff to have and we took the decision it was poor customer service,” he says.

John Lewis Direct managing director Robin Terrell is of a similar mind: “We have a policy that we don’t do differential pricing because we don’t want to undermine the stores. We try to have as consistent an approach as possible,” he explains.

Retailers are working hard on moving from being online to being truly multichannel but the trick is really understanding what they should be offering. “The Argos experience is that customers will mix and match channels as suits their mission and their habits, reinforcing the view that there is no such thing as a ‘multichannel’ customer-only customers who choose to shop multiple channels,” says Emslie.