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The real meaning of a merged channel strategy

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There has been a wide range of thoughts about the meaning of physical store closings, coming from some major retail thinkers and various major media news outlets. But the underlying assumptions in almost all of these arguments are flawed. They cast physical stores and online sites as distinct entities, even rivals. The reality, though, is that these “rivals” are in the overwhelming number of cases owned by the same companies (Walmart vs. Walmart.com, for example). Bottom line: The very concept of what a merged channel strategy looks like has eluded all those thinkers.

Let’s start by defining some terms. For years, I have used the term “merged channel” to describe what is usually dubbed — misleadingly — “multichannel,” or the dreaded “omnichannel” (which I still believe sounds like a cable channel for the long-defunct Omni magazine). The prefixes “multi” and “omni” mean “many” and “all.” Both reinforce the false image of a bunch of distinct channels. “Merged channel” is closer to the truth, since the ideal retail strategy is that a brand (Macy’s, Target, Costco, etc.) offers shoppers a lengthy list of ways to buy (mobile, in-store, online, call center, catalogue, etc.), depending on the product/service desired and the convenience factor.

A chain executive who favors in-store versus mobile, for example, is as wrongheaded as a physical store manager who favors customers who walk in via the south entrance versus the east entrance. How the customer enters the shopping experience should be irrelevant. At the risk of going buzzword-heavy, a merged channel strategy is really the ultimate in a customer-centric strategy. And that brings us back to those store closings and what they really mean.

Let’s set up some factual foundations. Yes, the vast majority of today’s transactions happen in-store, and the trends all point to a steadily decreasing percentage of purchases from physical locations, going to mobile and other online interactions. Those two details are not in dispute. But online and in-store are not distinct. More precisely, when executed properly, they shouldn’t be distinct.

One of the most popular online site features is “find a store.” That alone tells you quite a bit. And if you look at shoppers inside brick-and-mortars today, you will see that a mammoth percentage of them are looking at their mobile devices. Online helps in-store sales (often when the item is needed immediately), and in-store helps online (such as when the store is out of stock). Heck, with today’s online same-day deliveries, even some of those distinctions are starting to melt.

That all said, no retailer is alone. Major online-only operations such as Amazon.com are there to keep retailers honest on pricing and availability. As this column has argued many times, any retailer that is losing to Amazon needs to refocus on the many things that physical stores can do that online simply can’t. Focus on the experience and customer service, and Amazon can’t compete. Does that mean surrendering many sales to Amazon where experience and customer service can’t help? No, because your online operation should be able to match Amazon’s offerings. That’s what merged channel means. You need to figure out the strengths and weaknesses of your many channels and work them all to make a seamless and cost-effective shopping experience for your customers.

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