Report: 2009 to be 'the year of cross-channel retailing'

COLUMBUS, Ohio — Sterling Commerce, an AT&T company, today announced the findings from the inaugural meeting of the Cross-Channel Consortium Think Tank, held at the Shop.org Annual Summit this fall. The Think Tank focused on how retailers can create a compelling cross-channel customer experience — one where multiple selling, sourcing, distribution, and fulfillment channels work together to create a seamless and valuable shopping experience.

"We expect 2009 to be the year of cross-channel retailing," said Jim Bengier, global retail executive from Sterling Commerce. "Though the concept is far more complex than simply operating multiple channels, consumer expectations are there and retailers must respond if they want to maintain their current customer base and capture new sales. This consortium is providing a platform to help retailers embrace the revolution."

The consortium, led by Jim Bengier and Kasey Lobaugh, a principal at Deloitte Consulting LLP and Deloitte's US Multi-Channel Retail Leader, consisted of representatives from leading retailers such as Borders Group, Best Buy, and Victoria's Secret; industry analysts; and other retail thought leaders.

For consortium members, cross-channel is a revolutionary change in how retailers think about retail and their customers. In order to really grasp the changes that cross-channel retailing is bringing to the fore, a complete "re-wiring" of retail must happen. The changes that need to be made cross e-commerce, merchandising, marketing, store operations, supply chain, and IT departments and require a shift from "channel first" thinking (i.e., what works for stores and then adapt it for e-commerce) to "customer first" thinking (i.e., how do our customers want to engage with us and which channels will we need to pull in to make that happen). This transformation will never end because consumer expectations are always changing.

The retailers that can successfully navigate this transformation will gain increased customer loyalty and revenue per customer, but only by excelling at process innovation, not just product or brand innovation. The findings outline the top lessons learned and how retailers can respond. These include:

• There's a difference between commodity products and commodity access to products. Retailers may not be able to prevent their product selection from becoming commoditized, but they do have the power to control the experience around acquiring those products.
• The biggest way that a retailer can demonstrate true cross-channel transparency to a customer is through fulfillment processes — the various ways that a retailer could potentially fulfill an order for a customer.
• Integration is the barrier. Cross-channel processes cannot be simply tacked on to existing functions, and the IT department will play a critical role in providing the integration needed to deliver the seamless cross-channel customer experience while still improving operational efficiency.

"Cross-channel, to me, is one of the most important trends to impact retail so far this century," said Nikki Baird, managing partner at Retail Systems Research and Consortium participant. "It is forcing retailers, who have historically been technology laggards, to embrace technology to help them adapt to the shifts in consumer behavior with new customer-facing strategies."