There is a great deal of development work still to be done before totally integrated multi-channel retailing becomes a reality, by Penelope Ody

Retailing today, say the commentators, is "any3" or "Martini" - anytime, anyplace, anywhere: a marketplace where shoppers can browse the web, buy in store, order via the TV or deliver unwanted returns to the nearest real-world branch. That is the theory. But in practice, this sort of totally integrated "multi-channel retailing" is still some way off.

"No one has really cracked it yet," says Peter Willmot, principal with Kurt Salmon Associates. "No retail systems and logistics are yet fully multi-channel and companies are underestimating the amount of work that is needed to make that happen."

Not only are the information systems for real and e-world operations quite separate, but there is often wide variation in both the product assortment and prices offered in each channel.

Price variation is not always intentional: when Argos advertised televisions for £2.99 instead of £299 on its web site last year it was only the latest to fall victim to the sort of commonplace errors caused by diverse and standalone IT systems.

As well as product and price anomalies there is often little consistency in brand image, while shoppers inquiring about web-based promotions in a real world store are likely to be met with blank stares from sales staff.

"A number of retailers have gone to the web with a different range of products," says Jeff Rohr, director of store systems at Helzberg Diamonds which runs more than 200 jewellery stores in 31 states in the US, "but we didn't want to confuse customers with that. We also believe a consistent brand image is vital."

Helzberg already produces an upmarket paper catalogue and went to great lengths to maintain the same sort of imagery for its web site. "Our first version looked super but was a nightmare to maintain," says Mr Rohr. "We've now balanced creative needs with technical capabilities and switched to a database-driven model."

The new integrated solution means that a single price change in the central data warehouse updates not only the store Epos (electronic point of sale) system, but also the web site and mail-order call centre records as well. "We've had 85 years of selling in stores," adds Mr Rohr. "We're not going to throw that away to become a dotcom. The web site is not there to make us millions of dollars on the stock market. It's there to provide information and an alternative channel for customers and our existing stores make it easy for them to return unsuitable merchandise."

Those channel options are becoming constantly more complex with interactive television, "mobile-commerce" [m-commerce] via the latest generation of cellphones, and a growing assortment of personal organisers entering the arena. A problem for many existing operators is the speed of developments and the time it will take to upgrade existing operations.

"We were very early into call centres," says David Hallett, group IT director at Littlewoods, one of the UK's best examples of a multi-channel retailer, "So our call centre is not integrated with our web site and we'll need to upgrade the technology significantly before we can do this."

Littlewoods' existing package includes high street stores, mail order catalogues, the "Shop" TV channel and a web site, and Mr Hallett is currently working through a lengthy programme of IT upgrades that will eventually see full integration of group systems. He has an assortment of platforms and systems to contend with and it will be several years before there is, for example, a single data warehouse for the entire group.

"The Shop TV channel is going to be web-enabled later this year," he says, "and we'll also be putting our big 20,000-line catalogues on to the web over the next few months. We need to centralise and standardise IT resources to cope with this."

Software start-up Zygon has developed the concept of "product portfolio management" (PPM) to overcome some of these issues with a software tool which sits "like a control tower" on top of existing merchandising systems and uses a series of plug-on modules to extract information from the common central database to create offers for TV, web, CD-Rom, paper catalogues, Wap-telephones and any other avenues.

"Merchandisers need to create offers for each channel which are consistent, quick to compile and can adapt to different technologies." says James Dobree, Zygon's chief executive. "Currently, retailers need very different sorts of material for Open television or printed paper mail-order catalogues - and that all takes time to produce and leads to inconsistencies. With PPM, merchandisers can create offers and 'publish' the details in any channel, but the core information is always the same so you don't get pricing or product errors."

But while integrating IT and ensuring brand consistency are high priorities for multi-channel retailers, ensuring that the customer can use the available "any3" options they prefer is just as important. A study* by Deloitte Consulting examining consumer preferences across Europe suggests that about 84 per cent would opt for the telephone when making simple inquiries, with only 2.5 per cent currently specifying the internet as their first choice. However, within five years more than 44 per cent expect to use the internet while just 30 per cent would still pick up a telephone first.

Second-guessing just which channels shoppers will prefer to use in the years ahead is a big preoccupation for many retailers and a reason for much current hedging of bets to ensure that operations develop across the full spectrum of options. "We have a determined 'clicks and bricks' strategy," says Duncan Bell, e-commerce and IT director at HMV. Not only has the company integrated its web and high street operations but it is now introducing in-store web-enabled kiosks at its branches in Canada. These allow shoppers to use the web site as a self-service information tool, while physically in the branch, to search for artists, titles or catalogue numbers.

The kiosks also allow shoppers to listen to tracks and the company is investigating the practicalities of downloading digital music to Rio MP3 players via the kiosks. Currently most home PCs find this a slow and laborious task for anything more than a single track, but if the facility is offered in-store via high-speed links it could prove a significant value-added service.

"It's all about providing additional choices for customers," says Mr Bell. "Our stores give us a significant advantage over pure-play retailers, as customers can bring items back to the branches and talk to real people if they have queries. It also means that multi-channel retailers can make money out of e-tailing whereas the pure players still have some way to go to produce profits."

Not underestimating the importance of the various channels is also essential. Mr Willmot says: "We've come across at least two retailers who have put sophisticated search engines on their web sites for shoppers to look for products, only to find that 90 per cent of customers actually key in the product reference code directly from their paper-based mail-order catalogues. No-one has even started trying to calculate how channels interact and how customers use them and that is going to be a major challenge in future."

* Understanding your customer's customer: A consumer perspective on multi-channel marketing, available from Deloitte Consulting, tel: 0207 303 6568; www.dc.com.

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