grass roots

MarketLoop #13, April 2001

Multi-channel retail- what comes next?

Recent years have seen the development of multi-channel formats by a number of retailers to enable them to target different types of consumer, different consumer moods and time states. For example, a number of operators have created different store models for the high street, city centre, out-of-town, convenience and on-line or other homeshopping options. This is intended to offer the consumer the ultimate choice of shopping opportunities, either targeting consumers with a specific format or addressing the various types of shopping occasion that may arise. The construct of time is an important issue here and was covered in ConsumerLoop #9 in February 2001.

However, the retail environment is highly dynamic with previous examples of best retailing practice now experiencing difficulties. Through the Loop tracks retail developments on an ongoing basis and reasons for retail success in the current and immediate future environment are becoming evident.

Why the different formats?

Retailers have recognised that the development of different store formats enables them to reach more consumers and with more appropriate offers. While there is the recognition that there are different types of consumer, these stores are also an indication of the delineation between chore and leisure shopping.

Shopping as a leisure activity

This refers to when consumers have more opportunity to browse, are looking for something for special occasions or are just passing time. Shopping may not be viewed as relaxed or enjoyable when time is short. Consequently the consumer’s mood should be more relaxed. They are more likely to travel some distance to reach the shop or an out-of-town shopping centre. Once there, different products can be compared, advice can be given and added value will be sought. In this case the consumer has more time to undertake the shopping and will view the whole experience differently from those in a rush.

Furthermore, the leisure aspect will encourage the development of services to suit this market and can offer opportunities for leisure companies and retailers to work together to target a shared market. Recent examples of this include the opening of Starbucks outlets within Sainsbury’s stores as well as coffee shops within bookstores and inside the Abbey National bank.

Shopping as a chore

This could refer either to where consumers are rushed and want to choose a product as quickly as possible or where they are purchasing low-interest items such as household staples. Here speed and convenience are the most important. There will be little deliberation as to what to buy and often it will be a repeat purchase. In addition, Harris International Marketing highlights the role played by time in recent research. This shows that consumers are choosing stores for their proximity more than three years ago. The same research shows that price is becoming less important suggesting either that a price saving is less important than convenience.

Convenience stores are in this category as are Web-based shopping services that make selection and ordering simple and quick for the consumer. However, price may not necessarily be an issue. Consumers may be prepared to pay for the convenience if it saves them time. However, retailers that offer 24-hour shopping on-line may not yet have solved the convenience problem. Quite simply, the delivery is not yet at the required level. Retailers have to be able to deliver when the consumer wants, not just during office hours. This remains a major barrier to the development of on-line shopping. Here there are major opportunities for delivery companies to offer premium services to retailers and, ultimately, to the consumer.

The rise of the specialist

While some retailers are trying to be more generalist, either in terms of product or consumer type, the specialists are arriving. These retailers are highly focused on one particular product group, consumer occasion or channel. This gives them a major advantage over the generalists and so they are able to approach individual market sectors and gain share almost unnoticed.

The Gap is been one of the retailers that have taken share away from Marks & Spencer through its strong focus on particular customer segments with stores designed for that market, such as GapKids, BabyGap, or for a consumer occasion such as casual wear. Gap achieved this through developing a unique casual clothing offer, using high quality fabrics. The stores have a simple layout that emphasises the quality of the clothes. French Connection has created a highly-focused fashion offer, delivering quality products. Its FCUK communications have enabled it to have a very strong profile. The company is now moving into overseas markets.

An example of consumer occasion is Starbucks which has focused on the coffee experience, especially the cup of coffee on the way to work. This has not only differentiated the offer from the previous competition by creating a whole coffee drinking culture but has attracted imitators of the format, transforming the drinking culture wherever it has gone.

Within the toiletries and cosmetics sector, for example, Sephora has transformed the fragrance and cosmetics sectors by opening up the retail space and making the whole offer more exciting.

Similarly the retailer can focus on a particular channel such as on-line. The specialisation here is not consumer group or product line but delivery method. While the speed at which has moved into new categories may be questioned, the company’s experience and expertise in selling on-line are reported to have attracted Wal-Mart. A strategic alliance between the two companies would give Wal-Mart access to’s expertise in managing the e-commerce supply chain.


Retailers have been tending towards looking to reach a larger share of the customer universe through developing a series of offers that can reach different types of consumers at different times. However, there are now clear signs that highly focused retail offers may become increasingly important. For a retailer this means that the offer, whatever the store format, has to be very specialised. A number of high profile retailers have found that you can’t please all the people all the time.

Leading-edge marketing is less about products and services and more about consumers and the creation of specific and highly targeted offers. For a general retailer this means more than developing different offers in stores but developing stores that are driven by consumer typology and values. These should be able to focus directly on this consumer group, possibly operating as individual profit centres within the organisation to ensure independence of thought and clarity of focus.

However, this does not mean that specialisation is a guaranteed formula. It is still necessary to continually update the brand to keep it fresh. Even the Gap has been accused of looking passé and has experienced problems. Arcadia has announced that it will sell off a number of its retail brands in order to be able to focus more on the remainder. A low-priced orientation will also require revision when the economy is stronger and value-based retailers will be stronger during times of recession or economic uncertainty. The “Brands, Many Lives” principle clearly should be applied in the retail sector. This was covered in detail in BrandLoop #10 in August 2000.

Action points

  • How should the retail offer be defined?
  • Is the focus consumer typology and values or process?
  • Is the focus functional or experiential?
  • How can uniqueness be sustained in a hyper-competitive environment?
company | knowledge | services | grass roots | contact
Brand | Market | Consumer | Conferences | Brand Positive 

Legal Disclaimer

© Through the Loop Consulting Ltd 1996-2001