Gaps across the channels

May 01, 2006 9:30 PM  By

My recent shopping trip to apparel merchant The Gap reinforced just how far we have to go in terms of fully realizing multichannel customer benefits at most retailers. A seemingly simple task of returning an online purchase to a Gap store proved to be much more challenging than it should be, and several other cross-channel selling opportunities were wasted.

I don’t mean to pick on The Gap. In fact, the San Francisco-based company is one of the more admired multichannel merchants for many of its industry-leading initiatives. Yet my shopping experience was fairly typical of the multichannel challenges facing many retailers today.

We have spent almost a decade focusing on multichannel retailing strategies and tactics, ever since we made the decision during the heart of the Internet boom that it would be the traditional retailers who would eventually win the battle for the customers’ dollar. We have seen fads come and go (does anyone remember general merchant J.C. Penney’s in-store Internet lounge?) and excessive dollars frittered away (Webvan, Boo.com), but as an industry we have become much more knowledgeable, with underlying business models driving multichannel successes.

Multichannel successes manifest themselves in many ways. Some are easily experienced and scrutinized by any shopper; others occur largely behind the scenes, away from the customer’s view. But all are characterized as being ahead of the curve for their ability to engage the customer in a solution that builds a relationship across all channels, rather than one that simply sells him a product.

When we stop to think about why multichannel marketing has become a high strategic priority for many organizations, we have to consider the macro power shift toward customers. The rapid fragmentation of lifestyles, media, and consumption choices in today’s fast-paced world has resulted in consumers demanding, and receiving, solutions that we couldn’t have imagined a decade ago. For example, think of custom-built, personalized product (Nike ID, Jones Soda, Lands’ End Custom) and the groundswell driven by consumers’ power to dictate what they want.

While we can’t attribute all of these customer-driven solutions to our definition of multichannel retailing, we can claim many. After all, our definition of successful multichannel retailing is to provide seamless channel choice to customers, allowing them to interact with stores, catalogs, Websites, and other touchpoints in whatever manner suits them in the moment.

Saying it is easy for most merchants; executing it well is the challenge. In a recent study where we at J.C. Williams Group interviewed leading multichannel retailers across the country, we found that most felt that they are only just starting to understand the complexity of their multichannel challenges.

Most of you should consider this good news. That even best-in-class multichannel merchants feel they’re just getting started should provide some solace to the many smaller marketers who fear that they have fallen behind the curve. But this news also means that now is the time to take action if you feel that multichannel leverage will be an important part of your company’s future success.

So how do you determine your own strategic priorities to create a seamless multichannel experience for your customers? Let’s return to our example with The Gap. When we audit retailers on their multichannel capabilities, we’re typically judging 15-20 touchpoints and solutions, but I’ll highlight a few that stood out for me from a cross-channel experience audit of The Gap.

Good to excellent touchpoints and services

  • In-store signage promoting expanded Website assortments was well located on full-length mirror.

  • Able to handle online returns at any register.

  • Able to complete an online order from the store’s point-of-sale (POS) terminal for out-of-stock items.

  • Free shipping on the online item ordered from the store

  • Friendly cross-channel service, although somewhat inexperienced in handling the cross-channel transactions.

Touchpoints and services lacking or needing improvement

  • Lack of in-store signage to communicate where we should take our return.

  • The store associate fumbled through the return process. It took too long (roughly 10 minutes, whereas our benchmark is no more than five minutes). And she had to ask a supervisor for help, showing her inexperience.

  • The associate didn’t promote online-ordering capabilities in store to buy out-of-stock sizes. We had to ask whether this was possible (although she did know and communicate the free shipping offer).

  • When we returned our online order, the associate didn’t encourage us to shop while we were in the store. One of the more tangible proof points of multichannel leverage is getting add-on sales from store traffic driven from the direct channels.

  • The slow return process caused a queue to form at checkout. This inadequate operational process frustrated other store customers.

Our assessment above was the result of critically evaluating just the store’s capabilities from our multichannel shopping experience. (In a complete assessment we would need to audit Website, contact center, and catalog capabilities.) It demonstrates some of the cross-channel capabilities we admire with The Gap, yet it shows just how much room for improvement exists. And this is just a partial list of capabilities for you to choose from to decide what is right for your customers and your company.

Consider some of the following questions regarding multichannel capabilities and whether they should be high priority for your company, if they aren’t already. Most of the following were high-priority issues that leading multichannel retailers shared with us in our best practice research:

  • Do you make the brand experience seamless for customers, regardless of which channel they are shopping? How do you manage the numerous brand touchpoints to ensure each channel is “on brand”?

  • Do you effectively communicate multichannel shopping benefits of selection, edited assortments, convenience, and sometimes price? Does your in-store signage explain benefits of shopping your catalog or Web channel? Do your e-mails communicate why the customer should shop the store? Does your Website and catalog encourage customers to browse in one channel and buy in another?

  • Have you considered certain cross-channel capabilities? Looking at it another way, how well do you execute any of the following: in-store returns of direct channel orders; in-store pick-up of online orders; integrated gift registry online and offline; online access in-store to leverage content and e-commerce; phone centers in-store to place catalog orders. Some cross-channel capabilities, such as store returns of direct channel purchases, are considered the price of entry. Others are most challenging to implement, such as in-store ordering from the Website.

  • Have you considered tailoring the merchandise assortments to suit the strengths of each channel? For example, do you have catalog- and Internet-only merchandise? Are you investigating the potential of new products or categories in the direct channels that may become growth drivers in the stores (think of gourmet cooking products merchant Williams-Sonoma’s expanded Food Hall assortments).

  • What actions are you taking to build your customer data from all channels? Do you collect customer data in store, and if so, are you doing so in the least intrusive way? What tools are you deploying to increase your “sightline” of multichannel shoppers (for instance, loyalty programs or private-label credit cards)? Do you have a single, integrated customer database of customer activity from all channels? And how will your multichannel programs feed into, or converge with your customer-centric (CRM) future?

All of the questions above, plus many others that we do not have time to cover in this article, are intended to provide a glimpse of multichannel best practices that we observe in working with and studying leading retailers. No one retailer has mastered all elements of its multichannel strategy, yet some have clearly pulled away from their direct competitors.

Multichannel merchants we admire include (but are not limited to) REI, Williams-Sonoma, Crate & Barrel, J.C. Penney, Coldwater Creek, and Best Buy. If you study these retailers, you’ll see that they can answer the affirmative to most of the above questions, and they should feel as if they are ahead of their direct competitors in terms of their execution of multichannel commerce. In other words, they have developed multichannel capabilities as a competitive advantage.

Some multichannel capabilities require more capital than others (Website ordering from in-store POS systems, for instance, tends to be costly). Some require a close examination of the core culture of the company (superior multichannel customer service, say, or overcoming resistance within a powerful store operations division). Some, such as in-store return capability for direct channel orders, have already become a standard that consumers expect; others, such as tailoring merchandise assortments to the strengths of each channel, have the potential to be key differentiators in a competitive market.

There is no clear formula that applies to all multichannel retailers. Rather, determining which capabilities and initiatives are right for your organization is the result of a planning process that considers brand, core strategy, and market and competitive forces and that requires an internal assessment of top management commitment to drive multichannel change as a strategic priority.

As we look forward, we are fairly certain that more retailer executive committees will demand a clearly articulated multichannel vision and strategy. As we exit the “early adopter” phase and enter the “early maturity” phase of multichannel strategies, we will improve upon our position to evaluate the success of multichannel decisions made by various retailers.


Jim Okamura is a senior partner managing of the Chicago office of J.C. Williams Group, a consulting firm specializing in multichannel retailing, strategic planning, branding, and research.