Evolving Customer Expectations: The Retailer's Dilemma

Multi-channel is not enough as savvy consumers look for a cross-channel experience


By Jim Bengier and John Stelzer

Retail has undergone many transformations driven by customer expectations. As customers routinely look for new ways to research, shop, purchase, monitor and return merchandise, retailers have had to continually adjust their business model. What used to be "value add" is rapidly becoming the minimum ante to the game. No longer satisfied with just having the right product at the right price in the right place at the right time, customers now expect a unified shopping experience wherever they see the retailer's logo…whether it's on the store, the Web site, the catalog or the special order kiosk.

Customer experience has evolved to include a new set of expectations, and these expectations are forcing retailers to rethink strategies and tune up execution. Single-channel retailers are adding channels to secure customer loyalty and grow share of wallet. Multi-channel retailers are seeing that bet and upping the ante with cross-channel execution as a new competitive differentiator.

The Customer Experience Has Evolved

The multi-channel experience grew out of a means to increase customer count and expand assortment. Even with the introduction of the automobile, a traditional retail outlet could only draw customers from a limited radius, thereby limiting growth. In order to expand the customer base, the catalog was born.

In 1888, the first catalog issued by Richard Sears and the R.W. Sears Watch Co. and it featured watches and jewelry. Not only did this catalog increase customer awareness, it also took a high margin commodity and made it readily available to new customers. The first multi-channel customer experience was established.

The next evolution of the multi-channel customer experience occurred with the creation of Web sites. Retailers once again, found that customers' expectations had changed. The customer now required the retailer to have a Web site where they could shop and purchase merchandise easily. Retailers found that they had a huge opportunity to expand brand awareness while meeting customers' expectations.

But, as Internet shopping grew so did customer expectations. Customers were no longer satisfied with all aspects of their shopping experience (e.g., research, shop, purchase, receive and return) in a given channel being restricted to that same channel. They looked for more convenience and flexibility from retailers.

With the number of channels through which they could interact with retailers expanding (e.g., in-store, online, catalog/call center, kiosk, special order, TV, mobile, etc.), consumers began to expect a more unified experience regardless of the type of channel or the number of channels accessed. It was no longer good enough for a retailer to present its offer in a multitude of ways. The new expectation was that the experience be seamless, whether interacting with the retailer over the Web, via its catalog call center, in stores, via the retailer's special order kiosk, through a delivery and installation service partner, or wherever the retailer's brand leads them. Cross-channel retailing was the new requirement.

Retailers Answered the Bell

Once again, retailers modified their business model…this time, to offer in-store returns of purchases made via the Web or call center. The new service meant that consumers avoided the return shipping charges and could easily drop the returned merchandise off at their local store. Retailers benefited as well. They were boosting customer satisfaction by giving consumers a more positive and convenient return experience. And, by getting the customer into the store to make the return, retailers also were increasing the likelihood that the customer would spend the refunded money while there in the store.

The retail business model evolution didn't stop there. Recognizing that cross-channel execution could be mutually beneficial for the retailer and their customers, retailers also saw the opportunity to offer in-store pick up of orders placed via other channels.

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