Merchandising 2.0

As much as we hear these days about Web 2.0, e-commerce isn't the only facet of multichannel marketing to advance. The best retailers are taking their merchandising strategies to new and higher levels — a sort of multichannel merchandising 2.0 — in which channels neither mirror nor compete with one another, but support one another in driving company objectives.

Your merchandising strategy is at the heart of your company's growth and profitability. Without strong merchandise, you don't have a business. While great marketing can radically improve the sales, it cannot compensate for the lack of good product.

But you can't look at merchandising in a vacuum — to be effective, it has to go hand in glove with marketing in the retail, catalog, and e-commerce channels. Each has different strengths, and those in turn affect not only how well the channels sell merchandise, but just how they enhance the customer's total experience.

Achieving a customer-centric focus among all channels goes well beyond the old concepts of appearing seamless and merely showing the same products in multiple sales outlets. It's about how to gain synergy that results in greater sales than if the channels operate separately.

Let's take a look at some the best practices for merchandising retail, e-commerce, and catalog product — and how your company can implement those strategies.

Tri-channel excellence

Multichannel retailers need to provide a consistent image in every sales channel. This makes it easier for shoppers to find and buy goods. When customers know they can rely on a merchant to offer a positive experience in any channel, they are more likely to shop in any or all channels.

How well does one channel support the others? You need to provide consistency in part by look and feel, as expressed by the company name, logo, mission statement, slogan, color schemes, label, shopping bags, gift wrap, and general design scheme — online, in the catalog, in stores. Synergy, however, cuts a lot deeper.

Cabela's, a marketer of hunting, fishing, and outdoor gear, does a great job of multichannel merchandising. Though Cabela's started as a cataloger and then migrated to e-commerce, it's rapidly becoming retail-driven.

For instance, in fiscal 2006, the merchant's direct sales (catalog and e-commerce) increased 4.2% to $1.06 billion, primarily from e-commerce growth. Cabela's boasted a retail revenue increase of 32.3% to $820.3 million, led by four new stores and a 1.3% increase in comparable store sales.

What is Cabela's doing right? It dominates its merchandise niche in all three channels. When someone shops the stores, for instance, the product assortment looks to be several hundred thousand SKUs.

The $2.06 billion company has also mastered the concept of “experiential retailing,” as its stores themselves are as near an outdoor experience as shopping can be. Many locationsrange in size up to 250,000 sq. ft. and sport taxidermy mounts of various game, amid landscapes, while freshwater aquariums house regional species.

As for the print channel, the merchant's fall 2007 master catalog is about as close as you can get to a department store in print. The 1,392-page, hardbound catalog (which weighs about 4 lbs. mailed in a box) goes to its best customers. Cabela's also mails dozens of specialty catalogs, such as Waterfowl and Summer's Best Clothing and Footwear, throughout the year.

The master catalog is a good example of cross-channel marketing and merchandising. It promotes the in-store and online Gun Library of world-class firearms and sporting collectibles, field test reports, and customer ratings and reviews, which are on the Website.

The catalog also offers comparison charts, buyers guides, and the online and in-store Bargain Cave (10,000 products that are overstock, returns not restocked, special buys, and clearance items). Customers and employees appear throughout the book with their hunting and fishing trophies and testimonials about Cabela's products. The back cover of the master catalog promotes its existing 19 store locations and the eight new stores scheduled for 2007.

Cabela's has developed a high level of constant interplay between events and sales that are happening at its stores and on the Website, and between marketing and merchandising as well. In many ways, the company makes it hard to separate one channel from another. Maintaining synergy between the three channels is more important to Cabela's than looking at each unit as an isolated part of the business.

When merchandising and marketing work in concert, the total sales will be higher than if channels work independently. Still, some multichannel businesses continue to fear channel cannibalism, and allow different channels to compete with one another rather than concentrate on serving the customer. Retailers that neglect potential cross-channel synergy and consistency often end up with a Website, stores, and catalog that appear to be separate businesses.