[MUSIC] Widespread access to and the use of the internet has significantly changed shopping behavior and the retail industry. More than 80% of US retailers send merchandise through multiple channels. According to Levy and Wright, multichannel retailers are retailers that sell merchandise or services through more than one channel. And a retail channel is a way a retailer sells and delivers merchandise and services to its customers. The most used channels by retailers is the store. But there are also other type of channels, including the Internet, catalogs and direct mail, direct selling, television home shopping, and automated retailing. The majority of sales are still made through the store channel. Also, Internet has grown exponentially. I will explain you the main ones. Internet channel also called online retailing, e-tailing, is a channel in which the offering of product and services for sale is communicated to customer over the Internet. We will cover it in more depth in the following lessons. Amazon and Alibaba are good examples. The catalog channel, the retail offering is communicated to customers through a catalog mailed to customers. We have the example of Otto, La Redoute. And more or less about 50% of the US consumer shop through catalogues. The merchandise category with the greatest sales now in these channels are, drugs and beauty aids, computers and software, clothing and accessory, books, music. Do you know that, on average, only 1.3% of these mail catalogs generate a direct sale? The role now is shifting from generating sales to driving traffic to the Internet and to the physical store. A third channel, direct selling. If salespeople interact with a customer face to face in a convenient location, either at the customer home or at work. These direct sales people demonstrate the merchandise benefits or explain a service, take an order, and deliver the merchandise. You may know, for example, Avon, Mary Kay, Naturel in Brazil. The largest category sold through these channels are personally care like cosmetics and fragrances. Home and family care, like cooking and kitchenware. Wellness, like vitamins, weight loss products, and of course, leisure and educational items. We refer to books, videos, toys and most of these salespeople are independent distributors. And it's especially effective in the less developed countries. Forth channel, the television home shopping. Have you done it? No? Customer watch a television program that demonstrates a merchandise and then place orders for the merchandise, by phone, Internet, or the TV remote. And the final one is the automated retailing. Merchandise or services are in a store in a machine, and dispense to customer when they deposit cash or a credit card. Automatic retailing machines are also known as vending machines. By using a combination of channels, multi channel retailers can leverage benefits. And overcome the limitation of each channel, to attract and satisfy more customers. For traditional store-based and catalogue retailers, using multiple channels usually placing more emphasis on electronic channels, have five reasons. One is overcoming the limitation of the existing format with increased assortment and low cost consistent execution. In addition to being able to provide current or real time information. Second benefit, increasing customer satisfaction and loyalty. Because it's able to increase the share of the customer world. The third one is that gaining insights into a consumers shopping behavior. How and why they shop and if they are satisfied or dissatisfied with their experience. Fourth would be expanding market presence without having to build a new store. And final one would be building a strategic advantage compared to a single channel retailer. Shifting from the store focus approach to a multi channel mindset requires retailers to change their traditional frames of reference and ways of working. The brick and mortar store is not dead, it just plays a different role. Click and collect is providing a popular and efficient means of serving the customers. For example, more than 50% of Walmart online sales, and around 40% of Best Buy, are pick up in the store. Consumers desire a seamless experience when interacting with multi-channel retailers. They want to be recognized, whatever channel they use to contact with the brand. This means being omni-channel. Providing a seamless experience is challenging. The main challenges of effective multichannel, now called omni-channel retailing are providing an integrated shopping experience. Traditional retailers are bringing digital channels into stores to tap consumer preferences. And both traditional stores and online retailers are working toward the same goal, create a highly personalized, consistent, and integrated shopping experience across all points of contact between retailers and customers. Another challenge is supporting m-commerce. Customers can access a retailer's Internet channel using a variety of devices. There is an increasing use of mobile phones. So retailers are very interested in developing m-commerce or purchase of products and services through mobile device. However, usually their website is not designed to accommodate the mobile device's small screen and the slower download speeds. The final challenge is organizing for multichannel retailing. Since each channel offers a unique set of benefits, the profiles of a retailer's customers who use the different channels are not the same. To become an omni-channel retailer, it should target complete channel integration. And to do so, retailers have to address several issues. Need to establish a centralized customer database with a complete history of each customer's introduction with the retailer. To provide a consistent brand image. Offer different merchandise assortments for each of the channels and apply pricing consistency across channels. As you have seen, shifting from a store focus approach to a multi-channel mindset requires retailer to change the traditional frames of reference and ways of working. In the next class, we will have a very interesting interview with Eduard Samacula he's the general manager of Neck and Neck. He's one of the leading children fashion houses in Spain. And he's also president of ACOTEX, it's an organization, a business organization for the textile and complements trade. I hope to see you there. [MUSIC]
