Multi Channel Strategies - Department of Information Systems

Transcription

Wiirtsch
haftsiinform
matikk
Multi Channel Strategies:
Exploring Diversity in
Multi Channel Retailing
Stefan Klein
Claas Müller-Lankenau
Kai Wehmeyer
Dieter Kerkfeld
51_MultiChannelStrategy
2
Outline
A. Introduction
B. Multi Channel Strategies in Grocery Retailing
C Multi Channel Strategies in Consumer Electronics Retailing
C.
D. Conclusions and Outlook
3
The Promises of Multi Channel Integration
Retailers combine online and offline marketing channels in
order to offer hybrid
y
customer interfaces.
It is claimed that multi channel retailing is especially promising
if online and offline channel integration is extensive (i.e.
extended value proposition and transactional integration).
Online
Channel
Information
Negotiation
Fulfillment
After-Sales
Offline
Channel
Information
Negotiation
Fulfillment
After-Sales
4
The Promises of Multi Channel Integration
Multi channel customers are two to four times as profitable as and
more loyal than single channel customers
(OC&C Strategy Consultants)
„„An analysis
y […]
[ ] of customer spend
p
byy channels shows
that a well executed multi channel strategy
is exponential, not additive“
(
(Doubleclick
2004))
5
The Reality of Multi Channel Retailing
The missing (or broken) link (Steinfield et al. 2002)
Analysis of 985 Web sites of U.S. based retail firms
Full transactions could only be completed online in one third of the sampled
firms
Return items purchased online to retail outlets: 8%
Allow online order to be picked up in retail outlets: 6%
E-Business W@tch (European Commission 2004)
Survey of 504 retail companies in the EU in 2003
Only 8% of the companies in the sample are selling online
6
The Reality of Multi Channel Retailing
„There is no intuitive reason why the Internet, or any service based
thereon, will in and on itself cause consumers to spend more.“
(Peterson Balasubramanian
(Peterson,
Balasubramanian, Bronnenberg
Bronnenberg, 1997)
„Instead
Instead of focusing on an either-or-choice [[…]]
executives should be asking,
What degree of integration makes sense for our company?“
(Gulati, Garino, 2000)
7
The Multi Channel Strategy Gap
There seems to be a gap between
the
th recommendations
d ti
iin ffavour off apparently
tl beneficial
b
fi i l multi
lti channel
h
l
integration and
the actual multi channel strategies
g
followed by
y multi channel retailers.
Despite potential benefits, extensive multi channel integration
is not the dominant strategy followed by click & mortar
retailers.
t il
Multi channel retailers seem to follow diverse strategies
regarding the degree of integration and the different roles of
channels.
8
The Research Approach
Our study
aims to develop a better understanding and explanation of diversity
in multi channel strategies.
We capture and analyze the diversity of approaches of traditional
retailers
t il
iin combining
bi i physical
h i l and
d virtual
i t l channels
h
l
and explore the contingency factors which might explain the diversity
in multi channel strategies
g
.
We studied two industries with fundamentally different
product characteristics:
the grocery retail industry and
the consumer electronics retail industry
industry.
9
A. Introduction
C.
10
Grocery Retailing and the Internet
Groceries are low outlay, in many cases perishable, frequently
purchased, tangible products. Distribution costs for home delivery
are relatively high compared to purchase volume and profit
margin.
Many online
online-only
only retailers have gone out of business
business.
Internet-induced change in the grocery retail industry has
remained far below expectations.
Predictions and estimates for online grocery sales:
1998: $34 billion by 2003 (Paler et al., 2000)
More recent estimates: total sales of up
p to $
$3.5 billion in 2003
None of the retail chains expects the share of online sales to exceed 5% of
total sales in the long run. (Lee, 2003)
Considering the failure of pure Internet grocers, multi channel
strategies seem to be a promising approach to selling groceries
over the Internet
Internet.
11
Classification of Multi Channel Strategies
in Grocery Retailing: The Approach
Two main aspects of multi channel strategies:
How much of the traditional basis is put online?
Scope of online retailing activities:
Selling the same products online and offline and equal channel
configurations vs.
choosing a different scope of offerings online
How many additional services/ Internet-specific features
have been added?
Scope of value adding features:
The Internet has lowered technical barriers to offering diverse value
adding features online,
however choices might vary depending on general marketing strategy
12
in Grocery Retailing: Metrics
13
in Grocery Retailing: The Sample
14
Scope off value
S
l
adding features
online service center
extensive use
of value adding
features
A: -CH: Coop
D: Edeka, Real
F: (Casino,
E.Leclerc)*
UK: --
online information center
limited use of
value adding
features
A: Spar
S
CH: Denner
D: (Plus)*
F: -UK: Safeway
service-oriented mc grocer
A:
CH:
D:
F:
UK:
Billa
Migros
-Intermarché
--
service-oriented mc megastore
A: -CH: -D: -F: Auchan, Carrefour
UK: Sainsbury, Tesco
focused mc grocer
A: -CH: -D: -F: -UK: ASDA
online advertising
no value adding
features online
A: ADEG
ADEG, Hofer,
Hofer
Nah&Frisch
CH: Primo, Volg
D: Aldi, Lidl
F: -UK: Morrisons
no products
sold online
* Companies which do not offer online grocery
shopping, but market a limited number of other
goods/services online (partly via different Web sites)
only groceries
sold online
groceries and
additional products
sold online
Scope of online
retailing activities
15
Example: Online Advertising
16
Example: Online
Service Center
17
Example: Service Oriented Multi Channel Megastore
18
Understanding Diversity (1): The Impact of
General Marketing Strategy and Retail Formats
Underlying assumption: multi channel retailers align their online
activities with their general marketing strategy
strategy.
Common approach to capture the marketing strategies of grocery
retailers: categorization based on retail formats (mainly based on the
b dth and
breadth
dd
depth
th off assortment
t
t and
d store
t
size,
i
also
l iindicates
di t
activities in other areas contributing to strategic positioning)
Retail Format
Discounter
Description
Retailers that offer a variety of merchandise including both private
label and brand products. Private label products often make up for
a relative large share of the assortment and are typically less
“fashion-oriented” than brands in department stores. Prices are
low and service is very limited
limited.
Supermarket
Conventional supermarkets are self-service food stores offering
groceries, meat, and produce with limited sales of non-food items
like health and beauty aids, general merchandise. Many of them
g
pricing
p
g strategy,
gy, advertising
g temporarily
p
y low
follow a high-low
prices for some products on a regular basis to draw customers
into stores.
Hypermarket
Hypermarkets stock a large range of items including groceries and
a wide range of non-food items such as house wares, sports
equipment or electronics. It is said that the first hypermarkets were
created in France. They usually offer a wide range of services and
other customer retention measures.
19
The Impact of General
Marketing Strategy and Retail Formats
20
Understanding Diversity (2): The Impact of
National Market Structures
Previous studies have looked into the impact of the wider
(national) environment on e
e-commerce.
commerce
Although dominated by large international players, the grocery
retail industryy is still characterized byy national markets that
differ regarding
major players (see sample information in the appendix),
competitive structures and
average industry margins.
21
The Impact of National Market Structures
Switzerland
Scope of value
adding features
Coop
UK
Scope of value
adding features
Tesco
S i b
Sainsbury
Migros
Denner
Safeway
Primo
Volg
Morrisons
Plus
Aldi
Lidl
Scope of online
France
(Supercasino)*
(E.Leclerc)*
Intermarché
Edeka
R l
Real,-
ASDA
Scope of online
reatailing activities
Scope of value
adding features
Germany
Scope of value
adding features
Scope of online
Austria
Scope of value
adding features
Auchan
Carrefour
Billa
Spar
ADEG
Hofer
Nah&Frisch
Scope of online
Scope of online
22
A. Introduction
C.
23
Consumer Electronics Retailing on the Internet
Most consumer electronics products are high outlay,
infrequently
q
yp
purchased,, tangible
g
p
products.
Compared to grocery retailing, distribution costs for home
delivery compared to purchase volume and profit margin are
considerablyy lower.
Initially high expectations regarding online sales
(Ernst&Young, 2001) weren‘t met.
However,
However Internet sales only account for 2 to 3 percent of
industry revenue (Wirtschaftswoche 2004), which is the
average for retailing in general (NRW Medien, 2003).
Compared to grocery retailing, Internet pure-players have a
major impact on market structures in consumer electronics
retailing Traditional retailers face competition from new
retailing.
entrants and have to find a way of serving their customers
through online and offline channels.
24
in Consumer Electronics Retailing: Approach
Two aspects of multi channel strategies:
Similarity
y of channels:
The marketing mix of online and offline channels can either be configured similarly or
differently, leading to different potential benefits for a retailer. Design parameters
include
Assortment
A
t
t
Price Policy
Communication Policy
Distribution Policy
Service Policy
Support
S
t off customer
t
channel
h
l switching:
it hi
Diverse features can be used to support customer channel switching, Information on
physical stores, such
Information on product availability
Offline pick-up of online orders or reservations
Offline return of products that were purchased online
Customer loyalty scheme
25
Classification of Multi Channel Strategies in
Consumer Electronics Retailing: The Sample
G
Germany
France
Great
B it i
Britain
USA
Retail
Chain
Parent Company
M di Markt
Media
M kt
Saturn
Red Zac
Expert
EP
Karstadt
Darty
Carrefour
Conforama
FNAC
BUT
Gitem
Currys
C
Comet
t
Argos
Dixons
CIH
Powerhouse
Best Buy
Wal-Mart
Circuit City
Target
Radio Shack
Sam’s Club
M t AG
Metro
Metro AG
Euronics-Verbund
Expert AG
EP International
e
o
Karstadt-Quelle AG
Kesa Electricals Plc
Carrefour S. A.
Pinault-Printemps-Redoute S. A.
Pinault-Printemps-Redoute S. A.
Kesa Electricals Plc
Euronics-Verbund
Dixon Group Plc
K
Kesa
Electricals
El t i l Plc
Pl
Great Universal Stores Plc
Dixon Group Plc
Euronics-Verbund
Pacific Retail Group Ltd.
Best Buy Co., Inc.
Wal-Mart Corp.
Circuit City Stores, Inc.
Target Corp.
Radio Shack Corp.
Wal-Mart Corp.
Samplig
Data
Top 6 by
T
b
market
share
Six of the
largest
retailers by
market
share
Typ 6 by
market
k t
share
Top 6 by
sales
26
Similarity
of
channels
25
Integrated
Sam's / Circuit
Club City
Best Buy
Mirrored
e
Darty Conforama
Radio
Shack
Comet
15
Powerhouse
Argos
Dixons Currys
Target
EP
Wal- FNAC
Mart
Parallel Media Karstadt
Markt
BUT
Store using
Gitem
Expert
Carrefour
Red
Zac
Saturn
Store
supporting
CIH
5
5
15
Support
pp of
channel
switching 27
25
Example: Supporting the Store
28
Example: Mirrored
29
Example: Integrated
30
Understanding Diversity: The Impact of
General Marketing Strategy and Retail Formats
Underlying assumption: multi channel retailers align their
online activities with their general marketing strategy
strategy.
Follows the previously used approach to capture the
marketing
g strategies
g
by
y retail formats,, although
g different retail
formats differ:
Cooperation of dealer-owned stores
General merchandise retailers
Specialized markets
31
The Impact of General
Marketing Strategy and Retail Formats
General merchandise stores
Cooperations
Sam'ss Club
Sam
Target
Radio Shack
Argos
EP
Karstadt
Gitem
G
e
Wal- FNAC
Mart
Carrefour
Expert Red Zac
CIH
Specialized
Circuit City
Best Buy
Currys
Darty Conforama
Dixons
Comet
Powerhouse
Media
Markt
Saturn
BUT
Similarity
Channel
switching
32
The Impact of
National Market Structures
USA
Sam's Club /
Circuit City
France
Best Buy
Radio
Shack
Darty Conforama
Target
FNAC
Wal-Mart
BUT
Carrefour
Gitem
Ähnlich
keit
der
K äl
Kanäle
Unterstützung
des Kanalwechsels
GB
Germany
Currys
Dixons
EP
Comet
Media Karstadt
Markt
Argos
Powerhouse
Expert
Red Zac
Saturn
CIH
33
A. Introduction
C.
34
Summary
High diversity in multi channel retailing irrespective of
product and market characteristics.
characteristics
National market structures don‘t appear to determine, but
rather as a constrain the strategy: on the German market,
which
hich is very
er price
price-sensitive
sensiti e and characteri
characterized
ed b
by high
competition, none of the larger retailers has implemented
extensive online activities so far.
It rather seems that the choice of multi channel strategies
depends on a company‘s general marketing strategy,
although this is sometime difficult to capture (supermarkets,
specialized markets).
35
Implications
The classification and visualization of multi channel strategies provides
insights that enable an analysis of competitors‘ activities as well as a
reflection of a retail company‘s
company s own positioning.
positioning
The wide variety of approaches to multi channel retailing shows that
strategic choices are not simple and easy to find
find. However
However, following a
multi channel strategy that is well-aligned with the general marketing
strategy as well as the national market environment seems to be
important.
It seems that the current approaches to multi channel retailing are
relatively stable. However, the ongoing adoption of the Internet and
mobile
bil technologies
t h l i will
ill probably
b bl contribute
t ib t tto ffuture
t
d
dynamics.
i
The results for consumer electronics retailers suggest that more
extensive
t
i online
li activities
ti iti h
have tto b
be supported
t db
by adequate
d
t
communications. Customers have to be enabled to handle the impersonal
online self-service interface. This can be e.g. be achieved by high
similarity of channels,
channels which grows with more extensive online activities in
our sample.
36

Multi Channel Strategies - Department of Information Systems

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