UK: Multi-Channel Retailing Just A Click Away

Last Updated: 11 September 2009
Article by Deloitte Consumer Business Group

Most Read Contributor in UK, August 2017

Deloitte provides dynamic and cost effective solutions to retailers who seek to drive revenue, reduce costs and provide a seamless customer experience across multiple channels.

What is Multi-Channel retailing?

The ultimate goal of Multi-Channel retailing is to provide a flexible and seamless shopping experience, regardless of whether the customer walks into a store, visits the website or orders over the phone and mobile. This is becoming increasingly important as market pressures continue to mount and retailers turn to the high growth rates of online and direct channels to maintain and improve market share. Customer expectations are rising fast and retailers are investing heavily in becoming Multi- Channel. Given the current economic environment and cash strapped times, retailers need to focus their investments on immediate priorities and ensure an acceptable return, whilst also preparing for the future by building long term capabilities.

The starting point varies, but essentially retailers fall into two categories:

1) a retailer who only has a single channel (typically stores) and is looking to extend into new channels; or

2) a retailer who has already extended into new channels but needs to optimise.

Either way, to offer a seamless experience, retailers need flexibility at each stage of the purchase process, whilst providing a consistent service across all channels.

A high level purchase process is described in Figure 1 below.

However, many retailers are struggling with the cost and complexity that Multi-Channel brings. For example, a retailer with 3 channels faces over 700 possible permutations of customer interactions, with customers expecting a seamless experience at each touch point. See Figure 2.

Growth is driving the need to become Multi-Channel

Online retail continues its upward movement unabated. The UK online market increased to £17.5 billion in 2008 compared to just £3.9 billion in the year 2002. Online retail is now growing at a rate eight times that of the overall retail market. Although still a small part of the overall retail market in £ terms, making up 5.1% of all retail sales, the influence of online is much more far reaching. Customers have become far more price sensitive and are more likely to carry out online research before committing to a purchase, regardless of channel.

Factors affecting future growth

In the coming years, the online retail sector will continue to grow significantly and will be affected by a variety of developments in the technology sector:

  • In 2008, the number of UK households with internet continues to increase and currently stands at nearly 15 million or 61% of all households (Office of National Statistics). Of this number, 84% had a broadband connection (51% of all UK households) and advances in broadband technology together with falling prices and bundled packages have all played an important role in encouraging uptake. Internet penetration was historically biased towards ABC1 categories. However, price and availability is driving a substantial increase in the number of C2DEs.
  • Web 2.0 refers to emerging web technologies and the next phase of the evolution of the internet such as price comparison sites and other user generated content such as discussion boards and forums. In the longer term, this will have a significant impact on retailers. However, developing these services for retailers will be expensive when only a minor part of the customer base will be utilising the new tools.
  • With faster broadband speeds in the coming years, retailers will be able to display and demonstrate merchandise and content online much more effectively and the ability to use high quality video will increase and drive marketing and advertising online.
  • Increasing proliferation of Wi-Fi wireless services is playing an increasingly significant role. As well as simplifying the prospect of multiple access in a home, the facility is progressively being rolled out in public areas such as pubs, cafes, hotels and trains, either for free or a nominal charge.
  • Based on available research, a clear majority of internet shoppers use the internet as a research tool before buying in-store. They have become very price savvy and have far superior product knowledge than before. However, convenience continues to be the most important factor in online shopping and this is set to continue.
  • Novice online shoppers are getting more comfortable with making purchases online and providing personal information such as credit card details due to improved security features. Retailers are now providing more secure methods of payment, advertising which credit verification engine's are being used, information on protecting personal information, streamlined checkout procedures etc. which boost consumer confidence.
  • We are increasingly seeing the roll out and uptake of mobile technology for the purpose of purchasing products and services. This is coupled with companies delivering marketing messages through mobile devices to further push their products and increase market share.

    Various mobile payments are being used such as premium SMS (Short Message Service) based transactional payments, direct mobile billing, mobile web payments (WAP) and contactless NFC (near field communications) to purchase a wide range of products and services such as music, ring tones, transportation fares (bus/train), parking meters, books, tickets etc. Mobile technology is quickly becoming the next wave for ordering products and services and making payments.

The evolution of Multi-Channel retailing

The Deloitte Multi-Channel Maturity Model depicts where a typical retailer may be positioned based on the number of channels a customer can shop through, the breadth of offer and level of service available through those channels. The ultimate destination for many of the UK's major retailers is to reach the top right quadrant and become a 'truly Multi-Channel retailer'.

In terms of Multi-Channel evolution, the UK is approximately one to two years behind the US for online transactions and behind Japan for mobile retailing. Key insights from the US market show that the significance of cross-channel shopping will continue to accelerate, pushing further the need to become truly Multi-Channel. In 2007, cross-channel shopping accounted for $510B or 20% of total US retail sales. By 2012, this is set to almost double to 38%, corresponding to $1,122B. Combined cross-channel and online retail is set to become almost 50% of all total retail sales. Therefore, UK retailers need to act now in order to succeed in what will become an increasingly competitive market.

Becoming truly Multi-Channel

There are four key requirements to becoming truly Multi-Channel. Firstly, the online channel needs to be developed to offer a full and compelling proposition in terms of product range, price, promotion, availability, service and delivery proposition. Secondly, the online channel needs to be closely integrated with stores in terms of click and collect, order management, stock visibility and returns. Thirdly, the business infrastructure needs to be improved to deliver all capabilities in a repeatable and cost effective way. Finally the first three need to integrate with mobile technology developments and usage. However, this evolution is posing significant challenges to retailers. These vary depending on the maturity of the business and the specific strategy being adopted. Key barriers are emerging that retailers need to overcome, and they essentially break down into six areas:

  • Inflexible organisation structures and processes that are based on channel and not brand.
  • Lack of a single view of the customer across all channels due to disparate customer databases. "
  • Inconsistent and/or limited product offer across channels in terms of range, price, promotion and availability.
  • Lack of end-to-end systems support and poor functionality for master data, inventory and order management.
  • Supply chain complexity and variable availability across channels, with increasing cost to serve.
  • Implementing the required cultural shift and changes to measures and incentives in the 'traditional' channels.

In summary, the goal is to provide visibility and consistency across all channels. To achieve this, retailers are investing in a number of responses that have implications for almost every function and internal capability. However, they can often be discrete activities targeted at fixing a specific problem or operational gap and not aligned to deliver the overall goal.

The Deloitte point of view

Deloitte offers clients a broad range of fully integrated services in areas that include Consulting, Tax, Corporate Finance and Audit (and Enterprise Risk Services).

Our global, integrated approach combines insight and innovation from multiple disciplines with business and industry knowledge to help our clients excel anywhere in the world. Each of our services gives you the depth, dimension and experience you need to create and innovate.

Becoming Multi-Channel Becoming truly Multi-Channel requires an overall strategy that describes what a retailer wants to be famous for, and an operating model that describes the capabilities required to deliver the strategy. In addition, it also needs to be supported by a robust commercial case that describes what needs to be done, when, and what it will be worth. The required programme of work needs to be integrated across all business functions and structured in such a way that targets the highest value areas quickly (especially important in today's environment), whilst building the underlying capabilities and infrastructure to ensure longer term objectives can be delivered.

Deloitte has the capabilities, experience, and tools to help our clients develop their Multi-Channel Retailing Strategy and Operating Model, and skills required to ensure it is implemented successfully. We use our tried and tested Multi-Channel Retail Framework to ensure we have a clear articulation of the strategy. Based on this strategy, we can use our capability map to define the operating model and ensure alignment across people, process and technology.

Tax efficient Multi-Channel

Effectively managing the impact of tax throughout the supply chain from the acquisition of the product to the customer interaction at the till is a key element of becoming an effective Multi-Channel retailer. Failure to do this can result in increased costs and reduced operational revenue. Our team is well placed to provide the expertise to help you manage business and indirect taxes in your UK, cross-boarder and overseas operations.

Accelerating Multi-Channel

It is often possible to accelerate the transformation to genuine Multi-Channel retailing by way of carefully targeted acquisition. Deloitte is able to provide a multi-disciplinary team to identify and appraise suitable targets and then successfully conclude a transaction. Our corporate finance team has extensive experience in this field and as such is ideally placed to advise you on your M&A strategy in these circumstances.

Risk, Regulation and Compliance

Some of the key enterprise and audit risks have been categorised into data, security and controls.

Data

The management and governance of data between each of the channels is a key driver in the success of a Multi-Channel project. Multiple applications between channels, disparate data sources, inadequate validation and poor change and data management processes can cause significant problems in the management and governance of data between channels. Deloitte has extensive experience in evaluating the quality, reliability and integrity of data which too often can be impaired by these issues.

Security

Maintaining appropriate security over the storage, sharing and management of confidential information is an essential component in developing a Multi-Channel operating model. The complexity of data security multiplies with the number of channels, but Deloitte have a wealth of knowledge and experience of performing customer information flow analysis and controls reviews.

Our experience covers the breadth of issues faced by organisations including understanding where their customer information is, performing detailed security assessments, reviewing third-party controls, understanding the regulatory environment and getting to the bottom of cultural issues that could impact business processes.

Controls

In working towards being truly Multi-Channel, companies must ensure that the interaction between each of the channels is well controlled. In order to achieve maximum efficiencies, we recognise that the controls in each channel must be risk-aligned, sustainable and effective. Deloitte can work with each of the channels to understand how the processes, applications, infrastructure and culture can interact to deliver an efficient and effective cross-channel control environment.

In addition, Deloitte can provide more targeted advice in many of the areas impacted by Multi-Channel operations such as:

Why Deloitte?

Deloitte brings a deep understanding of Multi-Channel retailing resulting from significant experience with many large retailers. We focus on creating a scalable Multi-Channel business and transforming the retailer to compete in today's competitive, fast-moving retail environment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.