Sales channels in the fashion industry: all for one and one for all

Entering the world of omni-channel retailing: experiences in fashion from the success stories of Manor Fashion and THELOOK.COM.

The balance of power between brands, merchants and the consumer has changed radically in the past few years: supported by a technical shift, there has been a transfer of power to the customer. The customer journey is more individualised than ever before. On the journey from inspiration, evaluation and purchase all the way to after-sales, there is a wide range of user patterns consisting of sales channels and information sources. The term now being used is channel-hopping: customers switch between different channels and sometimes even use them in parallel (see Figure 1). Some may look at what’s on offer in a shop, use mobile technology to look at alternatives while they are there, and then order the product at home later on in an online shop. Others may go online for inspiration and information, but prefer to use a stationary point of sale (POS) for the actual purchase. Consumers can no longer be categorised as pure online or offline shoppers. The choice of information and shopping channels depends on the situation and the product. The multi-optional consumer uses the sales channel on which they can best satisfy their requirements in a particular buying situation and phase.

The new multi-channel study by ECC Cologne in collaboration with hybris illustrates the interaction of the individual sales channels: while research in online shops preceded 23% of stationary purchases in 2011, today the figure stands at around a third. These purchases account for around 50% of sales in stationary shops. Conversely, around 11% of purchases in online shops are preceded by a stationary information search.

The reason why the consumer uses different channels is obvious: convenience. According to their needs, they choose the best sales and information channel. The benefits for fashion companies in setting up different channels are also clear: they can tap new sales potential and reach out to new target groups. The interactive presentation of the product range also gives fashion boutiques the opportunity to provide customers with a novel buying experience.

However, setting up additional channels also has its downsides for many companies. Because often separate processes such as logistics, stock holding, customer information and returns management must be defined for each channel, there is an increase in complexity within the company. The results are redundant process landscapes, inefficiency and high costs.

To be able to profit from the opportunities provided by multiple sales channels, companies must fundamentally rethink their long-established processes for branch logistics and procurement, as well as the management of product information. This usually requires enormous effort, as mature structures have to be broken down and processes redefined. This task is not made easier by the fact that the trigger for this change is an area of the company that often only makes a marginal contribution to company sales, at least in the short term.

Opportunity profile for each channel

A central task for companies that operate multiple sales channels is to conceive a consistent, cross-sales channel shopping experience for the customer. In the process, the specific properties and specific opportunities for every channel must be taken into consideration (see Table 1). Creating an opportunity profile for each channel can support companies in defining the strategic focus of every sales channel.

The opportunities for a stationary point of sale lie in the ability to have direct contact with the product and benefit from expert advice on site. For fashion articles in particular, trying on the selected wares is crucial for many customers. On the other hand, the online channel has the advantage of a long tail and opening hours around the clock. The mobile sales channel provides a wealth of information regardless of the customer’s location.

It is crucial not to position the sales channel alongside or against each other, as otherwise there will be tension and competitiveness between individual sales channels. The idea is rather to optimally exploit the channels with their specific properties and orchestrate their interaction systematically. For this we use the expression omni-channel approach.

The success stories of THELOOK.com and Manor Fashion illustrate the challenges that must be met when conceiving the omni-channel approach.

Challenge 1: creating a seamless shopping experience

The core of omni-channel management is to provide the customer with a seamless shopping experience – the customer uses each channel instinctively. Daniel Risch, head of sales & consulting at Unic, describes the ideal situation as follows: “Successful omni-channel management is when the customer doesn’t notice all the different channels and ‘simply’ shops.” Instead of a silo-oriented arrangement of the channels, the orientation is based on the customer and their needs. On the one hand, standardised business processes are the central requirement here, and on the other a single-source-of-data concept for product and customer data.

PKZ Burger-Kehl & Co. AG (PKZ Group) recognised the importance of a seamless customer experience across the different sales channels. For this purpose, the company introduced a central customer database and standardised logistics and stocking processes for all sales channels. A cornerstone of the standardised business processes at PKZ is the returns management: customers can return articles purchased online to a PKZ, FELDPAUSCH, BLUE DOG or BURGER shop of their choice at no charge.

Manor Fashion also wants to remove the boundaries between the different channels. The company is linking the opportunities of online trade with the advantages of stationary outlets by using, among other things, the Click&Collect concept: customers have the option to collect products that they order online at a local shop. The customer saves the shipping costs and also benefits from the shop infrastructure, in that they can try on the selected clothes and accessories and, if necessary, exchange them right away. At present, around 40% of online orders are collected at stationary outlets.

Vanessa Delplace, manager of e-commerce at the Manor shopping group, emphasises that: “The online shop is not taking customers away from stationary outlets. Our idea is to use the online POS to increase customer frequency in the outlets. Conversely, we can refer customers to the online shop in the outlets if a specific product is out of stock or has been discontinued at the outlet. This helps our smaller outlets in particular. We want to optimise our customer’s shopping experience. But to do this, we have to be good on all channels.”

Challenge 2: informing all staff involved

For sales channels to work hand-in-hand and not see each other as competitors, all members of staff must be fully informed, especially when setting up online channels contradicts the traditional incentive system of the company. They must be shown the benefits and opportunities of all channels and the advantages of successful interaction, in order to generate understanding and break down any barriers.

Nicolas Schibler, manager of e-commerce at the PKZ Group, has this advice for fashion companies that want to move from traditional trade into omni-channel commerce: “Take desires and concerns from the sales front seriously and create a platform on which staff from stationary trade can enter their ideas and misgivings. You can create additional trust by giving the e-commerce department a face.” Most valuable are arguments that come directly from the customer – for example, when they go shopping in a stationary outlet with a shopping list printed from the internet.

The Manor store chain sees its multi-channel project as a transversal, cross-sectional undertaking that encompasses all areas of the company. As Vanessa Delplace sees it, the success factor lies in the definition of joint processes and the arrangement of the internal organisation for the multi-channel approach.

Challenge 3: creating management commitment

To break down mature structures, management must be fully committed to the multi-channel approach. Even minor doubts will lead to blockades throughout the company.

The management commitment at Manor Fashion was ensured by placing the responsibility for e-commerce at company management level.

Philippe Olivier Burger, CEO and president of the supervisory board of the PKZ Group, identifies multi-channel commerce as a lighthouse project. With his great physical presence and abundant personal, charismatic persuasiveness, he illustrates again and again the significance that consolidating the different channels has had for this traditional company. He has learned from the project that the clear definition of goals, far-sighted assessment of the situation, a strong internal team with a highly-skilled project manager, cost controls and a time budget are decisive. But his most important finding: keep it as simple as possible. Don’t expect too much too soon, but rather learn by doing. And: multi-channel is top-priority.

Finally, the following lesson can be learned from both success stories: “All for one, and one for all”. Only if the channels support each other and use the other’s strengths for its own benefit can omni-channel management be successful.

Key data for THELOOK.COM

The owner-managed PKZ Group is the leader for quality fashion in Switzerland. In October 2011, the company launched THELOOK.COM as its online point of sale. Every month, the online shop has around 150,000 visitors. On 15 May, 2013, THELOOK.com was named Multi-channel Champion at the Swiss e-commerce Awards 2013. The jury praised the multi-channel processes and functions, which incorporate a high level of detail and give the customer real added value when shopping online for fashion. The level of fulfilment was also remarkable and the jury was highly impressed by the company’s logistics.

> To THELOOK.com

Key data for Manor Fashion

Manor AG is the biggest store chain in Switzerland. Manor.ch started in 2002 by selling wine. Other sectors were gradually added, with Manor Fashion starting in 2012.

> To Manor Fashion Shop

2017 – Trends, business cases and strategic steps

Customer expectations are higher than ever before: In the course of purchase decisions, the experience factor is becoming more important than the price or specific product characteristics (Customer 2020, Walker). Therefore, we are convinced that in 2017, in order to increase commitment to their brand, companies will have to take a closer look at how they inspire their customers in the digital world.