By Brian Kilcourse, Managing Partner
5/13/2008
Last month, we published a report entitled Finding the Integrated Multi-Channel Retailer: Benchmark Study 2008. Thirty-two of our survey respondents were European retailers (27 of which were from the UK), and so we decided to compare and contrast how businesses in EMEA and North America markets approach the multi-channel retailing challenge. In its other research, RSR has found that competencies differ in various parts of the world. It shouldn’t surprise anyone that there are indeed differences in how EMEA retailers and North American retailers approach the challenges and opportunities of multi-channel retailing.
Fast Followers
Responses from our EMEA survey participants show that more of these retailers have made the “e-channel” available to consumers for a long time, compared to many North American retailers. Whereas 59% of EMEA retailers report that they have operated multiple channels more than 5 years, 50% of North American retailers say the same. In fact, more North American retailers were very early adopters of the e-channel (more than 10 years ago), but EMEA retailers were quick to catch the wave, and the second wave of EMEA multi-channel retailers were more aggressive in providing consumers this option than many of their North American counterparts.
Multi-channel Customers are More Profitable, but EMEA Retailers aren’t Satisfied
When we asked our 2008 survey respondents to identify the top business challenges that they seek to address with their multi-channel strategy, improving operational efficiencies ranked as a high priority for all retailers. In fact, EMEA retailers are much more concerned about reducing the expense of multi-channel sales and delivery than their North American counterparts. EMEA retailers’ desire for more efficiencies doesn’t mean that their multi-channel customers aren’t less profitable than traditional “single channel” customers. These retailers can report that their multi-channel customers are “significantly more profitable” than can their North American counterparts, and far less “don’t know/can’t say.” On the other hand, over 40% of North American retailers aren’t sure about the profitability of their multi-channels customers, which speaks to a pressing need for new metrics to measure “same customer sales.”
The Opportunity
EMEA retailers, like their North American counterparts, see the greatest opportunity in their ability to present a single brand identity to their customers across all channels. However, EMEA retailers have a far more focused understanding of what that opportunity means. Seventy eight percent of those survey respondents indicate that “allowing customers to purchase, take delivery, or return a product through the channels of their choice” is important to a consistent brand identity, compared to 57% of North American retailers. With that focus, EMEA retailers have done a good job at using “alternate” channels such as the Internet to drive customer traffic to the stores. These retailers are encouraging cross-channel shopping on the part of their customers. EMEA retailers are much more likely to make it easy for their customers to buy online for store pickup (59% compared to 24% of North American retailers), and they also are more likely to enable customers to order in the store for delivery via another channel (55% compared to 36% for North American retailers). To support in-store ordering for non-store delivery, EMEA retailers are more likely to enable the consumer or the store associate to view inventory for non-store fulfillment (48% compared to 27% for North American retailers).
U.S. and Canadian retailers tend to see cross channel fulfillment is a “future” prospect than a current capability, according to our survey results. Whereas 69% of EMEA retailers say that “enabling cross channel fulfillment” is an initiative that has had impact, only 48% of North American retailers make that claim.
You Can’t Change It if You Can’t Measure It
Among the differences between EMEA and North American retailers that we measured in the survey, few were more curious than in how retailers measure cross-channel synergies. As mentioned earlier, there is a pressing need to develop metrics that help retailers understand if their multi-channel initiatives are delivering on their promise. EMEA retailers are more confident than the general response group that their multi-channel customers are significantly more profitable than their single channel customers. Digging into why these retailers are so confident, differences clearly emerge between EMEA and North American retailers. Although no particular measure received a majority of responses, one particular measure, “sales conversion rates,” separates EMEA and North American retailers. EMEA retailers are much more interested in this metric than their North American counterparts.
“Customer satisfaction” is important to all retailers, but beyond that, retailers tend to fall back on traditional measures such as “gross margin” and “average transaction value.” “Multi-channel customer profitability,” which implies the notion of “same customer sales” (customers’ total business with the retailer regardless of channel) is down the list of potential metrics for retailers to develop and use. Clearly, retailers on both sides of the Atlantic need guidance when it comes to which metrics to use. That task may fall to solutions providers or the investment community, since there is no consensus among retailers.
Technology: Today’s Inhibitor, Tomorrow’s Enabler
Most retailers who responded to our survey believe that “real time inventory and customer updates,” “cross channel content and product information management,” and “a central customer facing order management system across all channels” are important. Indeed, these technical capabilities are important to support a single brand identity across all channels to the consumer (retailers’ #1 opportunity). However, EMEA retailers differ from their North American counterparts in indicating “how” they hope to make acquire these capabilities. EMEA retailers stand out with their desire to find “a modern eCommerce platform” (84% rate this choice “very important” compared to 53% North American respondents and 71% of “retail winners”).
No Matter where you Operate, The Customer is King
EMEA retailers are more focused on gaining a better understanding on consumers’ cross-channel behaviors in order to prioritize opportunities, than their North American counterparts. They also have a clearer understanding that multi-channel initiatives need to be tied to overall corporate strategy. RSR research consistently shows that those who outperform their competition do so by staying focused on what the customer wants, in order to drive their internal priorities. It is often said, but never as true as now in the multi-channel world, that “the customer is king.”
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