Two Out of Five Retailers Don't Have a Store

by Jack Loechner, Jan 29, 2008, 8:15 AM

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Two Out of Five Retailers Don't Have a Store

According to a recent report by the Direct Marketing Association (DMA), entitled "Channel Integration and Benchmarks in the Retail Industry," to be successful, retailers need to merge and synchronize all channels in terms of consistent brand message, timing, creativity of promotions, loyalty programs, and fulfillment. Quite a few retail businesses are still apprentices when it comes to cross-channel integration, concludes the study.

In 2007, notes the report, commercial and nonprofit marketers spent $173.2 billion on direct marketing in the United States.  Measured against total US sales, these advertising expenditures generated approximately $2.025 trillion in incremental sales.  In 2007, direct marketing accounted for 10.2 percent of total US gross domestic product.  Also in 2007, there were 1.6 million direct marketing employees in the US.  Their collective sales efforts directly supported nearly 9.0 million other jobs, accounting for a total of 10.6 million US jobs.

The DMA report provides data on steps that retailers may take toward channel integration, the challenges that they meet, and strategies that they can use to address the challenges. Key findings include:

• The absence of a brick-and-mortar store is becoming prevalent among retailers, since 41 percent of survey respondents don't have a physical store.
• The website is the most consistently used direct marketing channel, followed by email and direct mail.
• Mobile is the direct marketing channel retailers are least likely to use.
• Among the survey respondents, 66 percent gather customer information from direct mail, and 65 percent gather it from the Internet.
• About 83 percent of respondents segment their customers based on demographics, 77 percent do so based on purchasing frequency, and 76 percent on products purchased.
• Only 33 percent of respondents provide cross-channel order fulfillment.
• Discounts remain the most popular loyalty program, with 80 percent of respondents using them.
• Brick-and-mortar stores (20 percent) and websites (22 percent) produced the highest level of revenue in 2007.

Eugenia Steingold, Ph.D., DMA senior research manager and the report's chief author, concludes that "To be successful, retailers need to merge and synchronize all channels in terms of consistent brand message, timing, creativity of promotions, loyalty programs, and fulfillment.  To achieve such a level of integration, organizational support and restructuring might be necessary." 

For additional information from the DMA, please visit here.

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