This document is for information purposes only.
eDigitalResearch, Portaltech and IMRG make no warrenited, expressed or implied, in this document.
With the introduction of fCommece, the increasing popularity of smartphones, and the continued rise of online shopping, multichannel strategies are becoming more and more important for retailers across the industry.
For the first time ever, eDigitalResearch, Portaltech and IMRG are now surveying retailers in an effort to better understand the demands and issues that they are facing as they attempt to make their channels coherent to customers.
With the results, we will be able to gain a true picture of multichannel operations as they currently stand and fully understand what suppliers and partners across the board need to be doing to help retailers improve their services across customer touch points.
• To gain an in-depth understanding of the challenges that retailers feel they are facing in trying to achieve a true multichannel vision
• To gain insight into how the retail industry expects to change and evolve over the next two years
• To understand what partners and suppliers need to be doing to help retailers make all their channels coherent to customers.
Retailers of all sizes and sectors were asked to complete an online survey between August 18th and September 16th 2011. The survey was available on various websites (including through an external panel provider) as well as
being emailed to retail contacts throughout the three organisations involved in the study (eDigitalResearch, Portaltech and IMRG). 152 responses were collected in total.
• 86.1% of retailers surveyed are already multichannel, operating a multitude of customer touchpoints and channels, from stores and websites to mobile and social media.
• 29.6% of retailers already have 5 or more channels in place.
• Mobile is a continuingly growing channel, with mCommerce revenues from smartphones set to double in the next two years.
• 46.4% of respondents said that they were either ‘not aware’ or ‘not aware at all’ of how many visits a customer makes, or how many of their channels they touch, before making a purchase decision.
• Nearly half of those surveyed felt that their customer channels are well integrated.
• 100% of retailers ranked multichannel system replacement as one of their top priorities in the coming months.
• Other top investment priorities include developing or improving mobile site or apps (62.2%), as well as better integration of current systems (76.8%).
• 31.7% of retailers feel that the biggest challenge they face in meeting their multichannel vision is their internal technology capacity, with another 23.2% stating that their current systems could not technically support their vision.
• In terms of improving their overall customer experience, 34.5% of retailers felt that their vision is constrained by a lack of budget, whilst 30.4% felt that a lack of resources was their main obstacle.
A multitude of channels
86.1% of retailers surveyed are already multichannel, operating a multitude of channels and customer touchpoints, with 29.6% of retailers already having five or more sales channels. As expected, larger organisations tend to have more sales channels as they continue to invest in alternative revenue streams. 13.3% of smaller organisations (with a turnover below £20million a year) have five or more customer channels, whilst almost half (45.7%) of larger companies (over £1billion turnover a year) are currently operating five or more channels.
Unsurprisingly, channels currently with the biggest presence are websites and stores, mirroring the popularity amongst UK consumers and their related shopping behaviour. Of all retailers surveyed, 84.2% currently have a website, whilst 79.6% have a store presence, compared with much lower figures for mobile, print and mail order catalogues, call centres, social media sites and pop up stores.
The results also demonstrate the increasing popularity of new and emerging channels, such as mCommerce and fCommerce. Results show that 36.8% of retailers surveyed are currently operating a mobile channel, having caught up with the popularity of print and mail order catalogues, with 35.5% of retailers currently running a catalogue customer channel.
Unsurprisingly, larger organisations (revenues of £1billion and over) have more of presence across all customer touchpoints, with exactly 50% of those surveyed already operating a transactional mobile channel, as well as investing in, and experimenting with, new and emerging channels.
Almost one in three retailers surveyed (30.2%) are also running a social media customer touchpoint, with both smaller and larger organisations taking advantage of the opportunities and the potential that social platforms have
Visions for the future
Retailers expect to become increasingly multichannel over the coming two years, with companies seeing more revenue come from a broader range of channels, rather than from their established touchpoints as it currently stands now.
As results show, retailers expect to diversify their customer touchpoints within the next two years, in an attempt to reach more potential customers and operate more in their social spaces. Store, mail order and call centre revenues are all projected to drop across the board in two years time, whilst revenues from new and emerging channels looks set to increase over the next twenty four months. Revenues generated from social media platforms will increase to almost twice its current size to 3.7%, whilst mobile revenue from smartphone shopping will double from 3.3% to 6.6% in 2013.
Online revenue is also set to grow over the next twenty four months. Overall, retailers are expecting to see growth of 6% from their website, taking their online earnings to almost one third (30.5%) of their total revenues, as retailers attempt to mirror the buying behaviour of their customers as more and more move to online shopping
For all respondents, store revenues look set to drop below 50% by 2013. However, larger companies (with a turnover of over £1billion a year) still expect to have a larger revenue emphasis on their established high street stores than other sized retailers, with 47.6% of their total revenues coming from in store purchases. Smaller retailers (with revenues under £20 million a year) expect to have a more even spread of revenue across all of their operational customer channels than their bigger counterparts.
Half way there to understanding what customers want
Despite retailers currently operating an array of channels, and with plenty of plans in place to introduce further customer touchpoints and increase revenue streams in the future, almost half of all respondents (46.4%) said that they were either ‘not aware’ or ‘not aware at all’ of how many visits a customer makes across their channels before making a purchase decision.
This represents a severe lack of knowledge in the retail industry of customers and a limited general understanding of consumer behaviour. As more and more customer channels enter the mix, it is essential for retailers to improve
their basic understanding of consumers and ensure they are providing the kind of experience a typical shopper in today’s environment has come to expect. Currently only 16% of retailers said that they were ‘very aware’ of how many channels a typical customer touches before they make a purchase.
Encouragingly, most respondents do seem aware that consumer behaviour is changing and the need to understand their own customer behaviour. Comments from a variety of respondents show to some extent an understanding of consumer behaviour in general, if not their own customers.
“We’re about half way to the level of understanding we want to have”.
“We know that customers move between channels between the initial browsing / research stage through to shortlisting a product, comparing prices and placing an order. It is, however, difficult to measure the non-PC based behaviour as we don’t have a seamlessly joined up single view across all channels ahead of the purchase stage”.
“A lot more customers now use online comparators to allow them to get the best price for a product, so for large ticket items especially it’s important to give the customer as much information on the shop floor as they would be able to get online”.
As comments suggest, some retailers with limited knowledge of their own customer are taking general consumer findings and applying them to their business model in an attempt to make sure they are beginning to reach higher levels of customer satisfaction. Even more encouragingly, some are already using research and insight to begin to understand their customer journey across channels, especially the relationship between online and in store visits and purchases.
“Our analysis shows that 70% of in-store customers research our site (and presumably others) before buying in-store”.
“Fairly good internal understanding at a high level of the relationship between store, web and telesales. The introduction of mobile will expand that understanding dramatically.”
However, the introduction of more customer channels is inevitably going to change customer behaviour. As one respondents points out, the introduction of mobile, as well as other emerging channels, will not only change current understanding, but also dramatically expand it, reinstating the need to constantly stay a breadth of customer views and opinions.
The challenges of integration
Nearly half (48.3%) of those surveyed felt that their customer channels are well integrated in terms of their sales and marketing message, with 44.1% retailers keeping all of their marketing in house.
However when it comes to back end systems and technology, many more feel that there is a long way to go in properly integrating all of their operational channels, including those planed to grow in the near future.
Results show that 82.1% of respondents have more than one technology application running their front office operations, whilst 29.1% of those surveyed have five or more, making full integration difficult. Running that many different systems, it is unsurprising then that over half (54.3%) of survey respondents said that their current systems make it challenging to integrate their multiple channels.
Overall, 31.7% of retailers felt that the biggest challenge they faced in meeting their multichannel vision is their internal technology capacity, with another 23.1% finding that they systems cannot currently technically support their current vision. Encouragingly, only 12.6% felt that their lack of budget was holding them back, suggesting that there is support for multichannel visions throughout retail organisations.
For smaller sized organisations, with revenue under £100million a year, exactly one in four (25%) felt that they needed to spend more time properly defining their visions before making drastic changes or committing spend to areas for development. For their larger counterparts, with revenue above £100million a year, internal and external technologies are the main limiting factors, affecting 37.6% and 23.6% of retailers respectively.
All retailers, big and small, must place short term investment into key area’s for development to help drive business forward and achieve a true multichannel vision within the near future, or risk losing customers to their closest competitors. Results show that on average, retailers will invest an extra £3million over the next two years in achieving their multichannel vision. Between them, respondents have already invested around £37million in developing and supporting their key systems, whilst they will invest around £40million between them in the next two years.
Of the retailers surveyed, almost one in five (19.5%) have already invested over £5million to help reach their multichannel vision; whilst around another one in five (19.5%) will invest another £5million over the next two years. Of course, larger organisations with the budget to invest more into achieving their vision have spent more to achieve their multichannel vision, with 70% of smaller organisations (with a total revenue of under £20million) planning on investing just £100,000 or under in the coming twenty four months. For suppliers, it is essential that they offer a range of cost effective solutions to suit all budgets and requirements.
Given the amount of systems currently running retail operations throughout organisations of all shapes and sizes, it is not surprising that 100% of respondents said that a multichannel system replacement was one of three top priorities over the coming twenty four months. Another 76.8% said that better integration of their current systems was a possible solution that they will prioritise, as well as 73.1% looking at store based system replacements or upgrades, with larger organisations focusing more of their budget and efforts on system replacement. 62.2% of retailers also said that developing or improving mobile sites and apps was also one of their top three priorities for the next two years, especially smaller organisations where 91% of retailers will be prioritising their mCommerce strategies to help compete with larger organisations and competitors.
Of those surveyed, only 4% indicated that their web and/or mobile team would be getting smaller in the next two years, indicating a resounding belief and confidence from retailers in multichannel strategies to help them to boost revenues and widen their customer base.
If retailers are to invest in putting into place the systems and structure they need to achieve their multichannel vision for the future, it is important that they maintain the levels of customer service that consumers have come to expect, and even need to take steps to improve their customer experience. Of those retailers surveyed, 92% felt that they had the knowledge of how to improve this customer experience.
Web, stores and call centres are the biggest channels that respondents feel require the most support to improve their overall customer experience, as well as the individual channel experience, with 34.2%, 32.8% and 15.7% of retailers respectively needing more advice and guidance around these channels.
However, almost half of respondents (47.3%) felt that their budget is limited to introduce any of the necessary changes to their customer experience, with 34.5% stating that this was their biggest single challenge when it came to improving their customer experience. Another 30.4% felt that their biggest challenge was their limited internal resource to help introduce the changes needed, suggesting that budget and resource needs to be increased throughout the industry if retailers are too meet customers’ expectations when it comes to a multichannel offering.
There is no doubt in anyone’s mind that the retail world is becoming increasingly multichannel. As a result, retailers are expecting less and less revenue to come from more established channels, such as stores, and more and more revenue to come from new and emerging channels, including mobile and social media platforms.
However, whilst there is a clear desire from retailers to make more of their channels accessible to all customers,there are a range of challenges that they face in the immediate future if they are to keep up with rapidly changing consumer behaviour.
It is clear from the results that technology is becoming one of the biggest limitations and obstacles for retailers of all shapes and sizes as they attempt to put their multichannel visions into place and make all their channels coherent to their customers. It seems that as more and more customer channels are emerging, separate and disparate technologies are making it difficult for retailers to offer a truly multichannel and joined up experience.
However, with the increased popularity with consumers of new technologies to browse and buy set to continue to gain momentum, it is essential that retailers put into place the necessary changes and developments to ensure that they offer their customers a seamless customer journey. It is up to technology suppliers and partners to empower retailers with the solution, technologies and tools to achieve these visions, providing multichannel system replacements to all retailers, better integration of technology and the platform to develop new customer technologies.
Mark Adams, Director at Portaltech conceptualised the research as it was important to gain a thorough understanding of the issues that are impacting retailers implementing a multichannel vision. Mark said “This is the most interesting piece of research we have undertaken to date, not least because it confirms our thoughts that actually, technology is the main constraining factor in allowing retailers to execute their multi-channel strategy. One of the most surprising statistics and best takeaways however is that almost half of the retailers surveyed do not actually know or have access to the information necessary to understand how consumers are moving between their channels in a purchasing journey. This data is absolutely critical in order to define and optimse any strategy and warrant the investment that is required in technology change”.
Derek Eccleston, Research Director at eDigitalResearch, comments,
“This is a really exciting time for the retail world. Our research is consistently showing that more and more consumers are beginning to embrace new technologies, using their mobiles and Facebook pages to browse and buy.However, this piece of industry research shows that retailers aren’t ready to truly achieve their multichannel vision and most currently do not have the tools they need to reach their goals. We sought to enable partners and suppliers to fully understand what they need to be providing their retail clients to help them drive business into the future, and what we have found is that retailers of all shapes and sizes need a cost effective multichannel system, technology platform and insight programme that is flexible enough to fit all budgets and objectives”.
David J Smith, Chief Marketing & Communications Officer at IMRG, commented,
“The number of customer touch-points available now offer so many opportunities for engagement, but getting the multichannel strategy right is a complex process. The challenge for retailers is deciding which channels to focus on in order to engage their customer base and get the best return on investment. The key to getting this decision right is understanding the customer journey, which platforms they use and how they complement each other, to gain a true picture of the sale attribution. What this research highlights is that many retailers are finding it difficult to keep up with the pace of change in the industry and the influence that technology has on retail”.
For more information please visit www.edigitalresearch.com
To learn more about Portaltech or hybris, contact Mark Adams, at
or calling on 0207 401 0982
For more information please visit http://www.imrg.org/ or email