How well are retailers delivering on their cross-channel promise to customers? Okamura Consulting, in conjunction with its global Ebeltoft Group partners, set out to answer just that question, and recently released a cross-channel benchmarking study of 144 large multi-channel retailers in 17 markets. We’re excited to launch today a blog post series querying Jim Okamura, one of the study’s lead authors, about some of the findings from this deep review. We asked Okamura for some background on the study overall, as well as findings around how consistently retailers around the world deliver services to customers across multiple channels.
In the recently released “Global Cross-Channel Retailing Report: The (Un)Connected Store”, you and your Ebeltoft Group colleagues have finished a truly monumental review of retail cross-channel functionality in multiple markets around the world. Give us some perspective on why you undertook this study: What were your goals, and why now?
The decision to do this study was initiated by our French chairman of Ebeltoft Group, Cedric Ducrocq. We were pleased to hear how cross-channel had become such a strategic topic among retailers in mature European markets, and in emerging markets like China and Brazil. With cross-channel clearly on the minds of many U.S. retail executives, and with foreign retailers looking to benchmark against us, the timing appeared right. So the goal of the study was really quite simple: to provide operating benchmarks on cross-channel capabilities among leading retailers in each market surveyed (we audited 144 large retailer websites and stores, across 17 countries in total). In aggregate, the benchmarks provide strategic value to retailers of all kinds to compete in a retail environment where integrated digital strategies are more important than ever.
Tell us a bit about your top level findings. In which markets do consumers enjoy a high level of cross-channel consistency, and are there any clear retail leaders or retail categories that emerged as cross-channel champions?
For starters, one of the top findings will be no surprise to Shop.org veterans. Cross-channel is still in its infancy, even in the U.S. market – which the study shows is the most mature. We only wish consumers were enjoying cross-channel consistency on a regular basis, but our audits of leading retailers typically show how far we have to go before the industry can say cross-channel “best practice.”
That said, it was important for us to see which categories and which markets are developing at a faster rate in terms of cross-channel. Not surprisingly, electronics retailers in our global sample are most developed, as multi-channel retailers try to stay competitive with Amazon and other pure players. They were followed by general retailers (department stores and hypermarkets), D-I-Y (home improvement stores) and specialty fashion retailers. The global averages (i.e. in those markets outside the U.S. and U.K.) show minor differences by category, but the gap is quite pronounced when we look at the two leading markets, the U.S. and U.K. In both of these markets, we can see how cross-channel has been given priority by large, market share-leading retailers. On a more surprising note, it was good to see cross-channel retailing happening in emerging markets like Turkey, or with small retailers in the Singaporean market. On the other hand, Australia, which has been a hot market for cross border e-commerce, still underperforms on cross-channel among prominent retailers.
Let’s dive into the first of the five areas that this study examined, “Consistency of Services.” One of the immediate places that differences become evident is when it comes to returns and refunds. Are customers still in for cross-channel surprises when they try to return in a store an item they originally bought online? Are store associates better prepared to handle cross-channel returns and refunds by now?
In the U.S., consumers now expect a multi-channel retailer to offer store returns of online orders, but that does not guarantee the experience is yet pleasant or easy for customers. Our global findings remind us when store returns were not as commonplace. Only one-half of the global retailers had a convenient or easy store return process – a missed customer experience opportunity, in our opinion. On a positive note, U.S. and U.K. retailers combined scored almost perfectly in terms of ease of store returns.
Gift cards is another area where consumers have sometimes run into problems. How easy is it by now for them both buy and use or redeem a single gift card both online and in-store? Are there any examples of retailers making this a seamless process for their customers?
Gift cards have become ubiquitous in the U.S. market, and, given the strong demand and underlying business model, it was not surprising to see all of the U.S. retailers audited have the consistency to buy and redeem in stores and online. Nordstrom is a great example of a well developed gift card program, consistent across channels to make it convenient as possible for the shopper. However, outside of the U.S., gift cards are not as prevalent, and therefore the consistency of this service is spotty. But this is a good example where this particular cross-channel capability is not a priority, compared to other services. In some markets e.g., Brazil, many retailers have their own consumer financing capabilities as the means to buy big ticket items (for example, payment installment plans), so this becomes a more important measure of cross-channel consistency.
Last fall, U.S. pet supplies retailer PETCO migrated its in-store loyalty program to work online as well, and report that this program change is introducing store customers to the website and prompting those customers to start shopping online. How well are retailers servicing loyalty program members on their website such as program registration and benefits, personalized account information, and even the ability to use the program online in the first place?
Not to pick on Best Buy, as they are still one of our favorite cross-channel retailers, but the subject of loyalty programs across channels always reminds me of their early years in loyalty, and their inability at that time to let customers “earn and burn” points seamlessly online and in-store. The company quickly fixed that, but paid a price in customer outrage. In the U.S., consumers absolutely expect this capability, so it’s hard for a retailer to not devote the resources to be consistent. That said, a scan of our global data reminds us again how these capabilities change in retail, as we noted many well-known brands that have different loyalty benefits for store shoppers versus online shoppers, or store only programs – such as Uniqlo in China, Mango in Spain or Marks & Spencer in the U.K. In our data gathering we were mostly looking for personalization capabilities on the website to manage one’s loyalty account and were happy to see it quickly becoming the norm. Desigual, the Spanish apparel retailer, is a great example of a well promoted program.
There’s been some buzz lately about travel player Orbitz showing different types of hotels insearch results depending on whether the user is on a Mac or PC. What did you learn about pricing policies for retailers across channels – is pricing consistent, and to what extent do retailers you reviewed communicate one way or another about cross-channel pricing policies?
Pricing policies and tactics remain a contentious topic for many retailers, and is typically a strong indicator of a retailer’s web strategy: are they focused on aggressive e-commerce sales growth or on delivering a consistent cross-channel customer experience? We are often looking at retailers’ cross-channel pricing policies, and how well they communicate the differences to shoppers. Our findings show that it is most common to find price discrepancies between channels, but the problem arises when companies fail to communicate that to the store shopper. To be clear, this does not mean we’re advocating consistent pricing across channels. That may work in some cases, but that direction is specific to each retailer. What we admire is going the extra mile to inform the shopper of price differences in order to gain trust, as opposed to creating shopper wariness from a lack of communication. Some retailers have taken the initiative to tell shoppers that prices are different online and in-store. Examples include Mountain Equipment Co-op in Canada, Sears in the U.S., and B&Q in the U.K.
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