There is no single strategic answer for retailers striving to evolve in a multichannel world. Caroline Parry looks at what retailers can do to work out the best route, and how to prioritise investment.

Mobile multichannel

Whether it is launching click-and-collect, opening destination showroom stores or creating a suite of mobile applications, there is no single solution for adapting a retail business for the multichannel world.

Multichannel forms the central plank of many retailers’ strategies but the route to success is different for retailers in every category. For Home Retail-owned Argos it means downplaying the famous paper catalogue as stores become collection points for goods bought or ordered online.

For DIY retailer Wickes it is about shifting away from larger stores to smaller formats as online sales have taken off, while Aurora Fashions, owner of Oasis and Warehouse, has stated it will need fewer stores to achieve national coverage as sales spread across various channels.

Wickes has focused on smaller format stores

Wickes has focused on smaller format stores

Meanwhile, department store group John Lewis is focusing on offering innovative options through its click-and-collect service, and last month grocer Asda revealed a £700m investment in same-day delivery and click-and-collect, alongside new store openings.

Customer focus

Navigating the right route and how to prioritise the necessary investment presents a challenge to retailers as they seek to increase sales in the short term, while at the same time protecting future growth. For Karen Dracou, head of omnichannel development at John Lewis, it all begins with the customer.

“Our customers are at the heart of our strategy,” she says. “We recognise their mission has changed. Click-and-collect might meet one need during the week but, at the weekend, they might want a day out so they come to the store. Our challenge is to invest across all touchpoints.”

Jeremy Fennell, UK ecommerce director at Dixons, owner of Currys and PC World, echoes Dracou’s stance.

“When you’ve got a capital expenditure pot that has to be prioritised, it has to start with the customer. That’s the main investment issue.”

Dixons has invested in data and analytics

Dixons has invested in data and analytics

It is essential to understand the impact of new consumer behaviour on the business. Data and analytics, and particularly geolocation data, are becoming an increasingly important source of information. Graham Wallace, retail analyst at geolocation specialist Esri, explains: “The first thing we need is a clear picture of the customer decision-making process - research, comparing prices and going to look in store - by capturing data at each point of contact, all of which needs to be analysed.”

While retailers have always collected geolocation data to build up local customer and cost profiles around store openings, such information in the context of multichannel means a much larger amount of data, which Wallace admits is a challenge. “Retailers need to be sure of the integrity, quality and safety of their data, that it is geocoded accurately and then it needs to be shared across channels and good tools are needed to analyse it.

“Only when all that is in place can it be used to work out what is commercially viable. To build up delivery options, to tie in social media, and to leverage each channel to really maximise pull-through of the proposition.”

Data and analytics has been a big area of investment for Dixons, says Fennell. “It can show us so much about browsing behaviour, about how customers move through the site and how they are transacting, and how they are taking delivery of goods.” But he warns: “It can feed the capex decision but it is incredibly important to decide what you want to know from that data, before you invest in it.”

Data is not the only type of back-end investment that multichannel retailers may need to make. Dan Mortimer, chief executive of digital consultancy Red Ant, which recently worked with fashion giant Arcadia on the launch of its mobile apps, explains: “Multichannel is all about the convergence of data, technology and customer
experience, and the real challenge is to define what systems you have in place, and what data you have available.”

Speaking at John Lewis’ group results in January, chairman Charlie Mayfield outlined the retailer’s “quiet revolution” - a raft of investments made in supply chain, IT and support functions and a £40m investment in a new web platform for Johnlewis.com. He described the investment as “central” to remaining at the forefront of the changes in retail today and in the future.

For Martin Smethurst, general manager for UK and Ireland at information technology specialist Wincor Nixdorf, the past 10 years have brought so much investment in online and, later, multichannel, that it’s the store experience that is now in need of a cash injection.

“Customers are used to a great experience online but that needs to be brought into stores,” he says. “High street retailers need to realise that you have to bring the two parts together. A store can only stock a limited amount of products but by investing in the technology to bring stock in stores, a retailer can offer an endless number
of products.”

For Currys and PC World, bringing multichannel into stores has, among other initiatives, meant investing in developing the mobile channel. Fennell explains: “If you see customers in store with mobiles, chances are they want to use them in their shopping. How can you help with that? Make broadband and wi-fi available in all of your stores.”

The websites of both brands have also been revamped using responsive web design, which means Dixons’ sites are optimised for whatever screen they are viewed on. It avoids the need for a number of mobile-optimised sites for different platforms and, as Fennell adds, it means “the website is the website”. And it is paying off. In June 2011, about 8% of Dixons’ online traffic was via mobile devices but, by last month, it had grown to 25%.

While bringing online in store has allowed Currys and PC World to offer access to three times more products, via third parties, than its stores would allow, Fennell is considering availability and logistics, and is looking at its range of delivery options. He hopes to introduce same-day delivery, with significant national coverage in the next few months.

“I think some people will talk about the ‘whizzy’ technology out there,” says Fennell. “But for us, multichannel has been about coming back to the core of what we do - investing in price, in range and in availability. That has implications for the systems we have in place and processes we use - on and off the website.”

Just as there is no one winning formula for multichannel success, there is no single method for retailers to prioritise where to place their investment. Getting the basics right internally and understanding changing customer behaviours, however, are a good basis to build on.

Focus on John Lewis

John Lewis Click and Collect

John Lewis Click and Collect

The department store group has been busy extending its brand reach through click-and-collect. The decision to pilot the service was led by a combination of customer demand and assessment of wider industry trends, such as convenience, says John Lewis head of omnichannel development Karen Dracou.

“[Click-and-collect] is very simple and extremely effective. It now accounts for 25% of our online orders.

The key was trailing it and then listening to the feedback and taking comments on board. If something doesn’t work, you have to be honest with yourself and pull it.”

John Lewis offers click-and-collect in 234 locations, including Waitrose stores and through the Collect+ network of local convenience stores.

From autumn, customers will be able to return goods via the latter too.

Dracou also has her eye on a number of emerging trends, particularly mobile, which is a growing area for John Lewis but has yet to receive any significant investment, augmented reality, mobile payments and personalisation. “Some investments are really costly and you have to really understand what they will deliver - top-line growth and greater efficiency, or just the latter.”