Research Identifies Powerful New Retail Model
Professors Dale Achabal and Kirthi Kalyanam, Retail Management Institute.
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A new, superior retailing model is emerging. This model provides the retailer with powerful new capabilities based on cross-channel optimization. It is not simply about executing the same activities in multiple, separate channels. Nor does it focus simply on integrating or synchronizing channels to support cross-channel shopping. Instead, it requires a systematic approach to exploit the strengths of one channel to complement the relative weaknesses of other channels. It involves the migration of costly activities in one channel to a lower cost basis in another.
In many organizations, however, there remains a general lack of a vision or a systematic approach to achieve what this new model entails—developing multiple points of cross-channel leverage and ultimately optimizing resource allocation.
The recently released whitepaper "Cross-channel Optimization: A Strategic Roadmap for Retailers" is based on a multiyear research study by Professors Dale Achabal and Kirthi Kalyanam at the Retail Management Institute, in collaboration with Julian Chu and Melody Badgett at IBM's Institute for Business Value. The research effort was conducted with senior retail executives across a wide range of industry segments, including several distinguished members of the RMI Advisory Board.
The paper elaborates on the theoretical basis for cross-channel optimization and describes a four-stage iterative framework that retailers can use to harness its power:
Stage 1: Align fundamentals
Stage 2: Achieve proficiency
Stage 3: Leverage across channels
Stage 4: Optimize the operating model.
Further, the authors identify four major strategic opportunities for driving cross-channel optimization and illustrate these areas with case studies from leading retailers:
- Trend and growth mining
- Efficient marketing communications
- Improved merchandise utilization
- Enhanced customer learning.
To be successful at cross-channel optimization, retailers will need to proactively address key factors that can help (or hinder) their progress. The charge must be led from the top of the organization, treating multichannel retailing as an enterprisewide, strategic issue. Internal objectives and incentives must be aligned. The performance and costs of specific activities in each channel should be measured to identify the most promising opportunities for optimization.
Because this process involves fundamental change of the retail operating model, it will be neither easy nor quick. But companies that learn how to make the shift will build a strong platform for continued, profitable growth in revenues and market share. They will develop the capabilities for sustained market leadership in the 21st century.
To learn more, download the complete paper at http://www.scu.edu/rmi or contact the Institute to receive hard copies (408.554.4960).
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