Multi-channel heralds big winners and even bigger losers

For some years having a multi-channel presence has been recognised as the way to drive extra sales from your customers.

It has been proven many times over that if they shop across multiple channels then they will be massively more valuable shoppers.

The big guns like Marks & Spencer, Tesco, and John Lewis have long advocated the multi-channel route because shoppers who buy across more than one channel can be anything up to four times more valuable than a customer that only uses a store or the internet to buy through.

At the recent Retail Week Conference 2012 Charlie Mayfield, chairman of John Lewis, was again highlighting this very point [click here for details]. Actually, the reality is you can’t go to a retail conference without a presenter making this case.

He was suggesting that in these tough times merchants should look at the good old 80:20 rule and focus on the most valuable 20% of customers, which in its case would be its multi-channel shoppers. Retaining these should be the key aim.

This sounds very sensible and if you extrapolate such thinking across the whole retail industry – whereby the more successful multi-channel players grab and retain their fair share of these valuable shoppers who then inevitably spend less at other retailers – then we will likely end up with a modest number of very successful multi-channel operators and a lot of businesses that have lost their customers.

This all rings true at Debenhams. The multi-channel shopper is worth double that of a store-only shopper and is three times more valuable than an online-only customer.

Its marketing director Richard Cristofoli suggested at the recent British Retail Consortium Multi-channel Retailing 2012 conference that customers are using the ability to shop multi-channel as a way of “editing their destinations”. [Click here for a review of the event]

He therefore foresees fewer merchants providing an ever-broader array of products across multi-channels to very loyal customers who choose to shop with only a small number of operators.

The result of this is that we will see some very big success stories but equally there will inevitably be a lot of losers who fail to adapt to the changing marketplace. Multi-channel will have a seriously polarising effect.

The most sensible thing retailers can do therefore is to get their acts together and develop their multi-channel capabilities because if they don’t then somebody else will be eating their lunch very soon. Actually, they probably already are…

My suspicions are that this topic may well crop up again at the forthcoming eTail Europe Conference June 25-27. If it doesn’t then more people are deluded than we think.