Online vs multichannel

Why is this relevant now?

House of Fraser is launching a new 1,500 sq ft store in Aberdeen next month, which will be used predominantly for click-and-collect. It’s the first time a large-format retailer has opened a smaller store to fulfil predominantly online orders.

How is multichannel performing against pure-play?

After years of watching pure-play etailers lead the way in online, over the past couple of years bricks-and-mortar retailers have started to fight back in earnest. High street stalwarts are working hard to make sure their stores promote their online offering, with carrier bags and signage directing customers to their website.

Etail industry association IMRG says store-based retailers’ greater visibility and brand awareness is in many cases helping them do better than their pure-play competitors. IMRG reported that in the first half of 2011, multichannel retailers’ online sales grew 24%, compared to 11% for their pure-play counterparts.

Store-based retailers often have the edge over etailers in order fulfilment too. While etailers see a spike in activity in the run-up to Christmas, retailers with a physical presence can come into their own in the crucial festive period, particularly for those customers who do not trust they will get sent their order in time.

Are store-based retailers leading the way in multichannel?

So far, high street retailers have taken the lead in multichannel, with the vast majority of store-based retailers operating transaction websites, while few etail outfits have taken the step of opening shops.

However, home shopping group N Brown is breaking the mould, opening its first shops for its Simply Be womenswear brand in Liverpool and Bury in the autumn.

With business booming at some other online brands, it seems logical that at some stage others will take the plunge, says David Hogg, retail industry marketing director at IBM. “If I was at Asos, I would perhaps be looking at setting up a fixed number of stores,” he says.

What is the outlook for growth in multichannel and online?

Both are looking healthy – the BRC expects the two areas to continue growing, even in a difficult market. But with multichannel retailers enjoying so many advantages in terms of order fulfilment and brand visibility, some would argue they have the edge over pure-play etailers.

Ultimately, says Hogg, what matters is having a great customer proposition – whichever channel is used. A strong offer is one thing successful store and online retailers always have in common.