29 May 2009Working Paper Summaries

Crafting Integrated Multichannel Retailing Strategies

by Jie Zhang, Paul Farris, Tarun Kushwaha, John Irvin, Thomas J. Steenburgh and Barton Weitz
The past fifteen years has been a period of rapid growth in the practice of multichannel retailing, mirroring the rise of the Internet as a nearly ubiquitous tool that firms use to interact with customers. More than 80 percent of a broad cross-section of U.S. retailers now report that they sell merchandise through multiple channels. This practice seems to be on the cusp of a new era in which firms start demanding even more from their investments, with particular emphasis being given to financial performance in light of the current economic crisis. These circumstances present a great opportunity both to firms that are looking to gain a competitive advantage through multichannel retailing and to researchers who are interested in helping them make more informed decisions. This article provides a broad discussion of these issues, synthesizes current knowledge, and suggests directions for future research. Key concepts include:
  • The ability of the multichannel marketers to discover, develop, and exploit fully the potential synergies among multiple channels may depend on the degree of commitment to the new channels. Commitment is likely to depend on early results.
  • Use caution in evaluating the effectiveness of a multichannel retailing program on the basis of short-term results alone. The effects of opening a new channel can be multi-faceted, and the benefits from embarking on a multichannel strategy can take time to develop.
  • Over time, new organizational forms may emerge as the potential for new channels becomes clearer.

Author Abstract

The past fifteen years has been a period of rapid growth in the practice of multichannel retailing, mirroring the rise of the Internet as a nearly ubiquitous tool that firms use to interact with customers. More than 80 percent of a broad cross-section of U.S. retailers now report that they sell merchandise through multiple channels. This practice seems to be on the cusp of a new era in which firms start demanding even more from their investments, with particular emphasis being given to financial performance in light of the current economic crisis. These circumstances present a great opportunity both to firms that are looking to gain a competitive advantage through multichannel retailing and to researchers who are interested in helping them make more informed decisions. This article provides a broad discussion of these issues, synthesizes current knowledge, and suggests directions for future research. 28 pages.

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