Channel Surfing

Children learn the importance of “sharing” as early as their kindergarten years. Industry experts agree that retailers that incorporate this concept into their multichannel integration strategies will gain processing efficiencies, cut operating costs and better serve shoppers in all purchasing channels.

The pace of technology innovation continues to quicken, and it is this rate of change that is contributing to a proliferation of new channels and the omni-channel shopper, or someone who uses a mix of retailing channels to make a purchase. Such shoppers are proving to be more profitable than customers who typically only shop brick-and-mortar channels.

According to the “The Cross-Channel Wake-up Call: Benchmark 2010,” a study from Miami-based Retail Systems Research, successful multichannel enterprises reported that cross-channel shoppers are 39% more profitable than single-channel customers. This is an 11% jump compared with 2009.

This puts chains in the hot seat to deliver a shopping experience that exceeds shopper expectations regardless of the touch point they use to connect with the retailer.

“Chains need to shed their reactionary ways and become more process-oriented and more nimble,” said Paula Rosenblum, managing partner for Retail Systems Research. “The big day-to-day player in achieving this is integration. Those chains that treat their multichannel operations as shared resources will be the big winners.”

While sharing and integration sound great in theory, too many chains shy away from the cumbersome transition due to the many data silos that exist behind-the-scenes. Fontana Sports Specialties, a Madison, Wis.-based sporting goods retailer, knows this pain firsthand. Besides having separate databases for its brick-and-mortar and e-commerce operations, the company also supported individual repositories for reporting, back-office functions, general ledger and accounting.

“All of these silos caused a lot of work to access and share accurate, timely data,” said Ryan Koechel, chief technology officer, Fontana Sports Specialties, which operates two locations in the Madison area. “We were burdened with duplicate data entry for both channels, a process that ate up to six months of our associates’ time. It was a huge waste of time and money.”

The multichannel specialty chain began its integration journey in 2006. After installing software from Celerant Technology, Staten Island, N.Y., the chain was operating a completely integrated enterprise by March 2008. The centralized software allows the chain to share inventory and customer data across channels and enterprise operations.

“We have solved many issues, including the time and costs we incurred by supporting separate operations and practices,” Koechel said.

Since sharing inventory across its enterprise, Fontana Sports has gained a 5% increase in sales per month, compared with two years ago when it was struggling to manage, as Koechel put it, “a warehouse filled with merchandise that we may or may not sell.”

“Managing inventory from an enterprise perspective has also provided extraordinary cost benefits,” he added.