Evolving Customer Expectations: The Retailer's Dilemma

Customers enthusiastically embraced the added convenience, speed to value and lower costs that in-store pick up and return afforded them. Their merchandise was reserved for them, they got instant gratification, they could return products with greater convenience, and they didn't have to pay shipping charges to receive or return the merchandise. In fact for some retailers, the addition of in-store pick-up alone has grown to represent 15-25 percent of their total business and continues to grow rapidly.

Since the dawn of this new retail paradigm, those who have embarked upon the path of cross-channel retailing are enjoying the fruits of their labor:

• Additional in-store sales from in-store pickup of online orders REI, which rolled out a program for in-store pickup of online purchases, reported that "one out of every three people who buy something online will spend an additional $90 in the store when they come to pick something up." That tendency translates into a healthy 1 percent increase in store sales.
• Larger online market basket because of no shipping charges 67 percent of consumers indicated shipping costs are the top reason preventing more online purchasing.
• Heightened customer satisfaction 58 percent of consumers surveyed considered it important to be able pick up online purchases at a store.
• Increased sales from multi-channel shoppers Multi-channel shoppers generate 20-25 percent more profit than the average customer.
• Opportunity to convert returns into in-store purchases when merchandise is returned to the store An impressive 90 percent of consumers surveyed considered it important to be able return online or catalog purchases to a store. And 78 percent indicated they are likely to buy additional items while in the store.

Cross-channel Is Becoming the Norm

The cross-channel experience has created today's "spoiled consumer," and it raises the bar for every retailer. Having tasted the convenience and cost savings that a seamless customer experience delivers, consumers now expect that they should be able to complete the transaction any time, anywhere and in any way. And they expect the brand experience with any given retailer to maintain its integrity regardless of how they shop or across how many channels they shop.

As you assess your readiness as a cross-channel retailer, consider the capabilities you offer your customers:

• Can they order online and pick up the product in the store?
• Can they order via the catalog call center but check the shipment status via the Web site…or vice versa?
• Can they place a special order at one store and check that order's status at another store, via the Web site or by calling customer service?
• Can they expect regular proactive notification about the status of their order (e.g., from order confirmation through to delivery)?
• Can they receive their online purchase at home but return it to the store?

In short, can your customers research anywhere, buy anywhere, inquire on order/shipment status anywhere, receive/pick up the product anywhere, and return it anywhere? If not, you may be multi-channel, but you are most certainly not cross-channel. And the problem with this is that today's consumer increasingly expects that wherever they see your logo they will have a unified experience. A fragmented shopping experience (i.e., dealing with several disjointed entities) is unacceptable and ultimately leads to lost sales and eventually lost customers.

Become Customer-driven Now

Retailers are constantly looking for the next competitive advantage. Historically, store layout and ambience, product mix, and value-added services have been the classic levers that retailers continually tweak looking for the next competitive edge. With the advent of so many new sales channels, multi-channel retailing has proven a very rewarding next step for retailers.

But now consumers have come to know the convenience and economy of a seamless cross-channel experience. And increasingly, they expect it from all their retailers. They don't care that each of your many channels runs a different application or that it's managed by a separate department or division. They see your logo and expect a seamless experience.

More and more retailers are becoming customer-driven in delivering this unified experience to their customers. And these consumers have become spoiled by the taste of how it can be. Even though multi-channel is better than single-channel, it pales in comparison to the unified customer experience that is only possible with cross-channel retailing. And what should be most troubling is that consumers now know the difference.