Online and retail integration needed for holiday rush

After last year’s turbulent online holiday shopping season, retailers are battening down their hatches to weather the expected 2000 storm, according to a new survey by LakeWest Group. Yet the steps retailers are taking may not be enough, the Cleveland-based consulting firm said.

LakeWest’s survey, released Monday, indicated that retailers are adopting Integrated Channel Retailing, merging their online and brick-and-mortar sales channels for better customer service and lower overall costs, but retailers also need to focus on pricing and fulfillment, which are very important to the customer.

Integrated Channel Retailing, according to LakeWest, requires the combination of operating processes and the leveraging of data on the back-end to support the customer-facing processes. Examples of back-end activities that can be integrated into this mix include inventory management, inter-store and cross-channel communications and merchandise planning. On the customer-facing side of the equation, returns processing, customer services and delivering a brand message can all be utilized in Integrated Channel Retailing, and pricing and fulfillment span both the front and back ends, the company said in a statement.

Retailers have been taking steps toward integration for 2000, LakeWest said, and out of 164 retailers surveyed, 74 per cent of those with both electronic commerce and brick-and-mortar channels offer customers the ability to return online purchases to a physical location. In addition, more than 60 per cent have indicated that their inventory management model is integrated across these channels.

Yet customers will not be entering into a shopping Utopia this season. Inconsistent pricing, fulfillment and merchandise selection will plague the shopping season, LakeWest said. Only 25 per cent of their surveyed multichannel retailers have indicated that they have uniform pricing across all of their channels – although this may be a strategic decision, LakeWest speculated in their statement.

Additionally, while almost 75 per cent of the multichannel retailers said that online purchases can be returned to a store location, only nine per cent said that online purchases can be picked up from a physical store, LakeWest said. Less than four per cent of these retailers said that they have the capabilities for customers to verify in-store inventory while shopping online, LakeWest added.

LakeWest also found that 52 per cent of the retailers surveyed still do not have an e-commerce channel; that, of those that do have an e-commerce channel, 14 per cent operate their e-commerce channel through a separately owned organization; that less than nine per cent of retailers offer customers the ability to purchase online what is available in stores; that 46 per cent indicated that their merchandise comes from the same distribution center, regardless of the purchasing channel; and that 34 per cent of retailers’ inventory is not dedicated to a specific channel.

Retailers that achieve a greater integration with their electronic and brick-and-mortar operations have the most potential for success this holiday season, LakeWest said.

LakeWest evaluated the top 164 U.S. retailers, based on revenue as identified in the August 2000 issue of Stores magazine. Of these 164 retailers, 78 of them, or 47.6 per cent, were identified as having both an Internet and a brick-and-mortar presence. LakeWest then surveyed 57 randomly selected retailers from these 78 multichannel shops, which provided a 95 percent confidence level and a margin error of +/- 2.5 to 5.9 points.