Multichannel Retailing Myths Debunked

Discussion
Feb 08, 2013

With multichannel retailing the rage, we thought it would be interesting to look at a report released by PwC this week, based on a study of 11,000 shoppers globally, which attempts to debunk what it claims are common myths. These include:

  1. Social media is to become an indispensable channel soon. Although not likely to be an important channel on its own, social will drive additional shopping through all channels.
  2. Stores will become showrooms. Physical stores will remain the centerpiece of the purchase journey for most companies.
  3. Tablets will overtake PCs for shopping use. This is not likely, as tablets are used at the end of the purchase journey, especially in-store, while shopping.
  4. Global consumers are becoming more similar. Consumers still need to be catered to on a local level, as wide ranges in behavior still exist.
  5. China is the model for future online retail. China’s multichannel and online model is unique to its culture, which includes dramatically different shopping habits.
  6. Domestic retailers enjoy a "home field" advantage. Some foreign retailers are becoming favorites of domestic shoppers.
  7. Global online pure players enjoy a scale advantage over domestic online pure players. Domestic retailers may have better local market knowledge.
  8. Retailers are better positioned than brands because they are closest to customers. Consumers now shop directly with manufacturers and may not differentiate between favorite retailers and brands.
  9. Online retailing cannibalizes sales from other channels. Consumers spend more with favorite multichannel retailers vs. just shifting spend.
  10. Low price is the main spend driver. Shoppers oftentimes value quality and innovation over price.

Lisa Feigen Dugal, PwC US’ retail & consumer sector advisory leader, said in a statement, "The more minutely retailers can identify how consumers are utilizing the different channels, the more success they will have."

The bottom line seems to be that shoppers have access to multiple channels as they shop, so they use various resources before deciding what/whether to purchase. The study found, for example, that 49 percent of respondents use social media every day and 59 percent use social media to follow and give feedback to brands and retailers. However, only 12 percent use social platforms to shop. PwC US’ retail & consumer sector leader Susan McPartlin said, "Shopping trends may not change drastically and social media and tablets are likely not taking over any time soon."

Which of the ten myths do you think is the most wrongheaded and why? Are there other retail myths that you would add to this list?

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19 Comments on "Multichannel Retailing Myths Debunked"

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Joan Treistman
BrainTrust

As for the debunking…the commentary is worthy of discussion in general (here) and during strategy sessions. It underscores the need to understand the relevant market place for retailers and the brands at that time.

Social media is the big question mark. How are consumer buying decisions influenced by social media? Everyone wants to debug the mystery. In reality this medium is still evolving. Staying alert, engaged and ready to act is probably the best strategy for most. Those who can get on top of the trends and anticipate how to master social media as a tool for their organization are going to make one great Harvard Business Review case study. But we don’t yet know if social media is to be the defining path to revenue and profit.

Phil Rubin
BrainTrust
4 years 1 month ago

PwC should be applauded for taking on these myths and putting them both in context and reality. Clearly the myth that is the most wrongheaded—and lethal—is that low price is a main driver of spend. If anything, it’s a main driver of lowering profits, eroding brand equity and giving customers reason to shop around (including elsewhere).

Dick Seesel
BrainTrust

Myth number 9 (“Online retailing cannibalizes sales from other channels”) is probably the most harmful to retailers’ development of true omnichannel strategies. As long as your retail business builds an artificial wall between your bricks-and-mortar business and your e-commerce business, you will not maximize either one.

Macy’s and many other high-profile retailers have figured this out: They are enjoying synergies that are driving traffic to stores and websites as well as making their inventory more productive.

Adrian Weidmann
BrainTrust

This is great insight and necessary to keep our perspectives in context and aligned with reality. The only ‘myth’ that caught me by surprise was that China is the model for online retailing. Debunking a myth I didn’t know was a myth is fortunate.

I do believe that social media is rapidly becoming an indispensable channel for brands and retailers alike. Not as a e-commerce or transactional channel, but the one channel that ‘flattens the world’ in terms of transparency, control, and size. Brands and retailers cannot control this channel, but may be the most powerful to reward those brands—regardless of their size and fiscal clout, that provide relevant value, quality and personal attention. Brands need to respect this channel and force them to meet shopper and customer expectations or suffer the consequences of instantaneous global communication.

Nikki Baird
BrainTrust
I probably take issue the most with #1, but it may come down to semantics. Social media may not be a SELLING channel per se, but it is an important ENGAGEMENT channel. If retailers examine its value only in its ability to sell stuff—or drive consumers to other channels where they can be sold stuff—then retailers will miss out on a lot. And from a customer service perspective, if a consumer gets to the point where the only way they feel they can get your attention is to tweet it or put it on your Facebook page—you got bigger problems than selling stuff. The other one that makes me uncomfortable is #2, not because I disagree, but because despite the fact that they won’t crumble to dust tomorrow, stores definitely are in trouble. If retailers buy too much into the idea that the store is here to stay, then they might not prioritize the changes they need to make to fix their store problems. The store may continue to be the centerpiece of customer shopping, but that will only remain true as long retailers adapt stores to remain relevant in an omni-channel environment. And given how long it takes to… Read more »
Giacinta Shidler
Guest
Giacinta Shidler
4 years 1 month ago

I mistrust the value of portions of this report. People self-reporting are notoriously off base when it comes to predicting their own behavior or the reasons for it. I am especially skeptical of number 2 and 10.

Mark Heckman
BrainTrust

Among others, my comments pertain to Myth #10. Low price still drives the majority of decisions when it comes to commodity items, especially those sold online. Very little differentiation available to the online retailer, unless they offer points, free shipping or some other incentive.

In addition, the so-called economic recovery could arguably become Myth #11. Given emerging federal policies and practices, we are destined to live in a “price-conscious” economy for the foreseeable future. Unless there are remarkable value-adds to a product or service, the price better be right.

Jason Goldberg
BrainTrust
I’ll start with my usual caveat, that this research methodology is totally flawed. Asking shoppers how they do behave (and even worse, how they plan to behave in the future) is not a useful tool for understanding mostly subconscious shopping behaviors. Using the same methodology, most alcoholics have a couple drinks a day, and will stop drinking in the near future. That being said, I love riffing on omni-channel themes, as much as the next guy. So I’ll play. Social isn’t a “channel” at all. The term “channel” is largely obsolete at this point, but when it was relevant, it never applied to Facebook or Twitter 🙂 Today for “most” segments, social isn’t a huge source of direct traffic to e-commerce websites, and of course for “most” segments trying to sell stuff on social networks directly is just plain silly. Never the less, “Social” is critical to selling. Of the 42 brands that ran ads during the Super Bowl, 20 used a twitter hash tag as the call to action. Peer reviews (i.e. social) drive a huge amount of online sales on e-com sites. Peer reviews of stores and sites (e.g. Yelp) drive a huge amount of traffic to stores.… Read more »
Ralph Jacobson
BrainTrust

I am actually not entirely comfortable with a “black and white,” “right or wrong” determination about most any of these statements. There is truth in many aspects to most of them, at least to a degree. For instance, if merchants look at this list and think that the world is not getting smaller, and consumers are not becoming similar in their shopping habits, I believe they will miss huge global growth opportunities, even if they are a smaller regional player.

I have similar challenges with other “myths” stated here. My beliefs are based upon actual consumer research across the globe. Growth markets are becoming more “Westernized” in their shopping cultures. They are skipping some steps in shopper evolution, and are becoming leaders in trends, compared to the US, for example.

Martin Mehalchin
BrainTrust

#8 – About retailers being better positioned than brands. With branded retail more prevalent than ever, it’s hard to even unpack what that’s supposed to mean. But general merchandise retailers certainly don’t enjoy a systemic advantage over brands. Just ask Best Buy about that one.

Craig Sundstrom
Guest

One doesn’t need to read far on this list to get a winner (if that’s the right word). Tired of hearing the word Facebook? See it as just two four-letter words put together? Score!
At the other end—both figuratively and literally (whether coincidentally or not), the LEAST mythical idea is #10. Indeed, it isn’t even “debunked” here. Just because price isn’t your ONLY driver doesn’t mean it isn’t your MAIN one.

Tom Redd
BrainTrust

Wow, lot’s of thinking and a great survey and snapshot. In short—I agree the store is here to stay. Shopping will always be an “experience.” An experience for many is a form of entertainment and there are many shoppers that will always want the experience of shopping.

Social will carry a level of influence for certain markets, but will not be a core channel. Some recent news about Facebook; more stories are rolling out. Social peaks, and drops.
Bottom line is that retail is still retail—just changing in shape for the different age groups, regions, and zone.

Have a great shopping weekend!

Ed Dunn
Guest
4 years 1 month ago

I agree this list has issues. Every item on this list is not a myth, but reality from our research; every item.

Stores are becoming showrooms, they have to and this is not a choice. Tablets will overtake PCs for shopping due to merchant adoption of tablets (JC Penney), not consumer adoption of tablets. Global consumerism—everybody worldwide loved Korean rapper Psy and Gangnam style. China is not only the model for online retail, they are the driver right now due to their billion-consumer base.

How is it said in one statement that domestic retailers do not enjoy a home field advantage, but in another statement that global online pure players have an advantage over domestic retailers? Retailers are better positioned as they can customize arrangement and assortments through store layout and display layout.

Online retailers have cannibalized sales from other channels and there are a lot of closed bookstores and record stores that can testify to this. In this economy, low price will continue to be the main spend driver.

Chris Langway
Guest
Chris Langway
4 years 1 month ago

Re: #8 As someone who ran eCommerce for six different brands, I’ll tell you first hand that consumers embrace having that direct relationship with the brands they love. And many will, in fact, pay more than they have to because they trust and respect that brand so much. However, many brands are still not optimizing direct to consumer commerce. They are:

  1. Too busy chasing the latest digital shiny object while under-funding ROI-generating digital marketing.
  2. Still running scared on channel conflict. “Yes I know that Amazon sells it cheaper, but what if Nordstrom complains about our email this week?”
  3. Trying to shoe-horn a direct-to-consumer retail business into their existing wholesale driven systems and processes.

Leading brands are investing and transforming their business models, but others are just happy to inch along.

David Potts
Guest
David Potts
4 years 1 month ago

I think #4, “Consumers are becoming more similar” is a dangerous myth in the industry.

It’s clear that clever retailers with more to offer than low prices can capture an increasing “diverse” customer base and use multi-channel to their advantage. Going global only opens the door wider for these retailers.

Shep Hyken
BrainTrust

#10 – Price is the main spend driver. If that were the case then all of the higher priced, value-focused, retailers would be out of business. Zappos.com, Nordstrom, Whole Foods and many more quality and value-focused companies would be out of business. There are stores for low prices, and people go there when it is appropriate for them. But the customer recognizes that sometimes value and customer service cost a little more—and it’s worth it.

Kai Clarke
BrainTrust

China is not the model for future online retailing. This is such a poor statement, that it was clearly written by someone who has not spent any time in China. As someone who lives in China over 50% of the time, I personally know the disarray that China retailing is in, and how poor, confusing and bad it is.

Another is that Low Price is the main spend driver. All of the car companies can attest to this being wrong. Their best selling (and most profitable) products are trucks (which are not their lowest cost offering) and these frequently start above $30K. I would add the presence that customer service will continue to play to add to the “consumer experience” and how this will become a key factor that all retailers will stretch to improve as our media messages become more fragmented.

Christopher P. Ramey
BrainTrust

Number 8 should be wake-up call to everyone reading RetailWire. Our research tells us that consumers prefer to buy direct from the manufacturer.

#2 is one of my pet peeves. We need to change the terminology from ‘Showroom’ to ‘Sellroom.’ Otherwise the term will become self-fulfilling.

Alexander Rink
BrainTrust
4 years 1 month ago

All else being equal, price will be the key driving factor of where to make your purchases, with the operative words being “all else being equal.” We all know that in retail, this is rarely the case and that a lot of other factors such as immediate availability, customer service, return policy, warranties, price matches, after-sales service and support, unique experience, and others all provide customers with compelling reasons to purchase from a particular retailer/channel rather than going with the cheapest option.

Success in our price-transparent world will depend on retailers being able to identify their own unique proposition and differentiators, determining how much those are worth to the shopper, and ensuring they are right-priced based on their visibility into market pricing.

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