Does multichannel retail still have a chance?

‘Is multichannel passé?’ asks a recent study of omnichannel, multichannel and cross-channel retail in Germany by EY Parthenon and Arvato. Compared to ‘pure players’ (online-only retailers), multichannel providers often have only a relatively low share of the e-commerce market. Besides that, in most product ranges, the leading online retailer is a pure player operating more profitably than its multichannel counterparts, according to the report entitled ‘The king is dead. Long live the king!’.

The German retail market has been stagnating for years, with consumer spending decreasing in several product categories. The textile market in Germany declined by 3.3% in just one year (2016 to 2017), for example, and spending on food and drinks fell from 14.4 to 13.9% between 2007 and 2015.

Despite this, online retail continues to grow at double-digit rates. The internet pure players make the most significant contribution to this dynamic growth, according to the report findings, while most brick-and-mortar retailers are struggling to defend their offline market share in the online world. The leading online retailers in most categories are pure players who only operate physical stores as a marketing tool, if at all.

Multichannel concepts doomed?

The study concludes that multichannel presence does not automatically create value for the client, plus that additional channels increase complexity, resulting in substantially costlier business systems. Nevertheless, the report refutes the claim that multichannel concepts are doomed. The key message is that, rather than clinging on to silo-based thinking, retailers should establish a model based on authentic customer requirements and selectively integrate processes, organizational and data worlds to achieve a higher system efficiency. That will enable them to generate true value.