Multi-channel retailing as a growth strategy for SMME retail businesses in South Africa

Abstract

As the retail industry remains persistently competitive, progressive retailers tend to adopt multi-channel retailing (MGR) to gain competitive advantage and to achieve other potential benefits. Many experts argue that MGR widens the retailer's target market and operations to satisfy the needs of a wide range of customers and, subsequently, eam the retailer potential benefits (Dawson, 2002:5; Berman & Thelen, 2004:148-149; Ghanesh, 2004:140; Sotgiu & Ancarani,2004:128). According to Dawson (2002:5), MGR is being used extensively by large retail outlets worldwide to complement their traditional operations, thereby providing the most convenient means for customers to shop while the outlets gain competitive advantage. However, the benefits of MGR are not achieved by retail small, micro and medium enterprises (SMMEs), OWing to the fact that there are low levels of MGR adoption in retail SMMEs. This therefore limits their market opportunities. The research reported here examines how MGR could become a growth strategy for retail SMMEs. The study necessitated an extensive literature review of retailing and multi-channel retailing, multi-channel strategy and the multi-channel customer. Both qualitative and quantitative data was collected through personal interviews and questionnaires, and from large and small retail outlets and their customers in the Gape Town region. The stUdy found that the large retail outlets studied are doing well with MGR, without having to build concrete multi-channel strategies to integrate their different channels. What contributes to that achievement is their ability to harmonise their channels to achieve channel inter-dependency. The study also revealed that there is not much difference between large and small retailers when it comes to the potential benefits of MGR; therefore size is not a major issue. The differences lie in the different sectors, and with different target markets and different product categories, as these require different mixes of channels. Moreover, retail transactions in an MGR environment are found to follow a cycle of steps within the overall process, in which a customer's visit to one channel often becomes just one step in the purchase process. The study provides a useful guide for retail SMMEs to successfully adopt MeR for their profitability and growth.