Challenges of
Multi-Channel
Retail
Although retail may be everywhere a
transaction happens, the same is not true
of the retailer’s brand experience.
Today’s digital mobile media gives time-
pressed consumers the ability to shop on
the fly. So going to the store is rarely the
event it used to be, if it happens at all.
Shopping is now more often a spontane-
ous reaction to requests from socially
networked family and friends. Combine
that with high fuel prices and it’s clear why
retailers need multiple distribution chan-
nels to get into this real-time market and
capture demand with combinations of in-
store, catalog and e-commerce. But these
are three very different worlds and brands
are still learning how to live in them in a
way that leverages their strong suits.
In reaction to the demand for location-
free shopping and the need to give the
consumer more control, brands are trying
to become less static while still pursuing
the retail shopping ideal in all their chan-
nels: a unique experience that leads to a
deeper involvement between the brand
and the shopper.
“We all understand that you can create a
meaningful, relevant brand experience in
the store. You’re immersing the shopper
in an environment with the opportunity
for all kinds of sensory cues and emotional
connotations that connect,” says Lynn
Gonsior, executive vice president and CMO
at Interbrand Design Forurm. “As for print,
in the past catalogs like Frontgate, Land’s
End, Cabela’s and J. Peterman have done
a great job engaging our imaginations to
bring the brand to life as much as possible
with only the visual cues.
“Online has been more elusive. Despite its
24/7 accessibility, in terms of brand experi-
ence it’s a value-subtract medium. So
you make up for it in customer-centricity.
Online, everyone is in the service business.
At the very least, merchandise and returns
should be integrated across channels.
Anything you can do to solve customer
problems will help you engage the shop-
per and encourage them to return.”
The most successful retailers across all
channels are those that began in the
catalog business, perhaps because they
understand all the nuances of the long-
distance transaction. The Land’s End
boutique in Sears feels right, with the
same traditionally fashioned, cleanly
presented aesthetic that appears in print
and on screen.
Brands that have built communities
through consistency of approach and
attitude across the store and the web-
site include Apple, IKEA, and surprisingly
Chipotle. All continue to be so distinctive,
if the name didn’t appear on their real and
virtual sites, you would still recognize
them immediately. They share a distinct
understanding of their customer’s sensi-
bilities. However, Pink, is the bomb.
Victoria’s Secret brand of sweats and jam-
mies targets a very slim segment, college
women 18–22. Original expectations of
$300 million in yearly sales have exploded
to $1 billion. Pink built a unique consumer
community in a very short time. How did
Pink do it? By their own account, it took a
vision for continuity and an understand-
ing of how events threaded cohesively
through online, catalog and store displays.
It is currently the largest retail presence
on Facebook.
Why should retailers even worry about
giving shoppers an online brand experi-
ence beyond basic e-commerce functions?
Because people become loyal to experi-
ences as much as, sometimes more
than, products.
“When they can rely on a company to
offer a great experience across channels,
they’re more likely to shop that merchant
anywhere,” says Gonsior. “But the
Internet channel is where many retailers
look stalled.”
There are numerous examples of retailers
that haven’t yet figured out how to weave
the brand experience into their e-com-
merce business. Stores like Sephora are
challenged to deliver their magic online,
as well as Target.
Ideations
A Retail Publication
August/September 2008
“Each channel has weaknesses that really
can’t be overcome,” says Gonsior. “Not
only in how well it sells merchandise but
just how it is able to enhance the cus-
tomer’s total brand experience. But those
problems may not need solving because
you can compensate for them with the
other channels.”
One way to compensate is to integrate,
starting with the merchandise teams,
which are less effective when separated
by channel.
Next, bring online into the store, and
design the store to give the retailer credit
for “endless aisles.” Add the opportunity for
two-way conversation with the ability to
post reviews, or offer a greater depth of in-
formation about the products than could
ever be provided on the sales floor. Sales
associates aren’t always able to show how
products solve customer problems. With
all our digital advances, in shopping there
is still no substitute for looking, smelling,
touching, testing and physically compar-
ing. So it’s a natural to put in-store and
online side by side.
Expectations keep getting higher for all
channels, for immediacy, functionality and
service. If brands let you dress your avatar
or build your dream car online, you expect
it all to be in the store when you get there.
That won’t happen until the channels
are integrated.
“Rather than have their channels com-
pete, or merely mimic one another, the
best retailers are taking their brand and
merchandising strategies to a higher level
so they can support one another holisti-
cally in driving company objectives,” says
Gonsior. “That kind of retail brand strategy
is at the heart of your company’s growth
and profitability.”
Chairman’s Commentary
Design Forum has changed its name…
sort of.
When we became part of Interbrand in
2002, we kept the name of the company
that I founded in 1978. Since then, we’ve
evolved from a pure design entity into
a multi-disciplined consultancy with a
deep pool of talent, including a lot of
brand expertise.
“Design Forum” contains valuable brand-
ing in its own right. Our name has touched
hundreds of success stories and a lot of
people who’ve become our friends during
thirty years in business.
Anyone who’s been through a company
name change is aware of all the ramifica-
tions, from switching the sign on the front
door to the logo on the coffee cups. And
the risk, of course, that customers will
assume there’s been a change in leader-
ship—in our case there has not.
The time has come to take on the new
Interbrand Design Forum identity in
order to focus more precisely on what our
business does—global retail design that
incorporates brand strategy, shopper
analytics, architecture, retail-sensitive
implementation—and to stress our ability
to draw on resources from around the
world: 1,249 creative minds in 36 offices
and 22 countries.
This month, Interbrand publishes the
annual Best Global Brands in conjunction
with BusinessWeek. It’s one of the top three
For more information or to be placed on our mailing list, visit our website: www.interbranddesignforum.com
and complete the contact form. Reprints of articles or excerpts without the express written permission of Interbrand
Design Forum is prohibited. Ideations is printed bimonthly. Subscriptions: $125 annually in the U.S.; $150 elsewhere.
The Value of Brands
published business rankings in the world.
If you think your business is a potential
leader, here’s where you can find out what
it takes. And of these 100 brands, you’ll see
who the top riser and faller were this year.
(Spoiler alert: Google and Merrill Lynch.)
Brand value is a simple idea. If brand plays
a role in choice, and shoppers must choose
between competing products, then brand
must contribute to earnings and profit. It
then follows that brand must be quantifi-
able and valuable to its owner.
By using brand valuation as a diagnostic
tool, we understand the precise economic
benefit that brand has on every aspect of
business. Insights into which brand attri-
butes are relevant at each step in the cus-
tomer journey tell us exactly what must be
changed to make the brand perform bet-
ter. You can then invest in the touchpoints
that generate the most demand.
The topic of brand management has
been generating more interest every year
in the face of proof that strong brands,
consistently managed, are more resilient
in shifting economic climates. A study of
Best Global Brands versus the S&P 500
conducted by Harvard and USC showed
they outperform the market.
Yet, business pundits say we’re living
in a post-branded world and that tra-
ditional branding is outdated. Perhaps
that shouldn’t surprise me. Although the
concept of brand value has been evolving
since the ‘80s, it’s still misunderstood.
Brand is not an advertising gimmick. It’s a
set of attributes and a promise: the attri-
butes consumers have ascribed to store or
product, and a promise made by the com-
pany to deliver those attributes through
the way it does business. Ideally, the brand
idea shapes the company and directs the
behavior of everyone in it. That’s why we
believe brands have the power to change
the world.
There are some interesting new names on
the list this year. BlackBerry makes its way
onto the global brand stage. We’ll see if it
can outperform the iPhone. Luxury brand
Ferrari zooms onto list. The debut of H&M
is a great example of a retailer understand-
ing consumer demands, as is the entrance
of Marriott.
Our longtime client Honda still ranks high;
also new to Best Global Brands is our
client FedEx, whose promise we’re
bringing to life in the FedEx Office stores
(formerly Kinkos). Like all the leaders, they
have managed to strike a clear note of
differentiation that we have translated
into retail environments.
Although we can understand nervous-
ness in a results-oriented world, we’re
hoping the current slowdown will push
retailers to change. The world is becom-
ing one global economy. Competing in
it demands a connected and holistic ap-
proach to brand management, not siloed
20th century corporate habits. In order to
stand out from the crowd and engage our
associates and customers, our businesses
must become branding communities,
resilient and flexible. Because—particu-
larly in retail—there are always new and
unknown challenges ahead.
Thoughtfully,
D. Lee Carpenter
Ideations
A Retail Publication by
7575 Paragon Road, Dayton, Ohio 45459
P +1 937 439 4400
F +1 937 439 4340
retail@designforum.com
D. Lee Carpenter, Chairman & CEO
Jill Davis, Editor
Mike England, Design/Production
© August/September 2008

The Merits of Zero
There is a limited supply of reputation
and attention. It’s a form of currency.
Thanks to King Gillette, the idea that you
can make money by giving something
away is no longer radical. But until recently,
practically everything “free” was really just
the result of what economists would call
a cross-subsidy: You’d get one thing free if
you bought another.
Over the past decade, however, a different
sort of free has emerged. The new model is
based not on cross-subsidies—the shifting
of costs from one product to another—but
on the fact that the cost of products them-
selves is falling fast.
It’s as if the price of steel had dropped so
close to zero that King Gillette could give
away both razor and blade, and make his
money on something else entirely. Shaving
cream? You know this freaky land of free as
the Web. A decade and a half into the great
online experiment, the last debates over
free-versus-pay online are ending. In 2007
The New York Times went free; this year, so
will much of The Wall Street Journal.
The rise of “freeconomics” is being driven
by the underlying technologies that power
the Web. Once a marketing gimmick, free
has emerged as a full-fledged economy.
Digital technology does more and more for
less and less, bringing the marginal costs
of the units that we individuals consume
closer to zero. Anything that touches digital
networks quickly feels the effect of falling
costs. For everything from banking to gam-
bling, the moment a company’s primary
expenses become things based in silicon,
free becomes not just an option but the
inevitable destination.
Technology is also giving companies
greater flexibility in how broadly they can
define their markets, allowing them more
freedom to give away products or services
to one set of customers while selling to
another set. Between the new ways com-
panies have found to subsidize products
and the falling cost of doing business in
a digital age, the opportunities to adopt
a free business model of some sort have
never been greater.
Ads on the subway? That’s so 20th century.
By sponsoring the whole line and making
Guest Feature
by Chris Anderson
Manhattan’s 6th Avenue local free, the East
Village Merchants association brings grate-
ful commuters to neighborhood shops.
Low-cost digital distribution will make the
summer blockbuster free. Free movie with
popcorn purchase! At an electronics store: Chris Anderson
Free second-gen Wii! But only if you buy Editor, Wired
the deluxe version of Rock Band. Free air
travel? Ryanair is defining itself more as a
As editor of Wired magazine,
full-service travel agency than a seller of
Chris Anderson explores
airline seats.
media, culture, technology
From the consumer’s perspective, there is
a huge difference between cheap and free. and change. He spent seven
Charge a single cent for it and you’re claw- years at The Economist editing
ing and scratching for every customer. Give the technology and business
a product away and it can go viral. Offering
sections. He holds a degree
free music proved successful for a swarm
in physics, has conducted
of bands on MySpace that grasped the
audience-building merits of zero. They use research at the Los Alamos
the product to market the performance. National Laboratory, and has
Just because products are free doesn’t written for Nature and Science.
mean that someone, somewhere, isn’t He’s perhaps most famous
making huge gobs of money. Google is the
for authoring the best-seller,
prime example. To follow the money, you
The Long Tail: Why the Future
have to shift from a basic view of a market
as a matching of two parties—buyers and of Business is Selling Less
sellers—to a broader sense of an ecosystem of More. Find more of his
with many parties, only some of which
provocative thoughts on
exchange cash.
www.longtail.com.
From Freecycle (free secondhand goods for
anyone who will take them away) to Wiki-
pedia, we are discovering that money isn’t
the only motivator. Altruism has always ex-
isted, but the Web gives it a platform where real at the heart of both. Thanks to Google,
the actions of individuals can have global we now have a handy way to convert from
impact. In a sense, zero-cost distribution reputation (PageRank) to attention (traffic)
has turned sharing into an industry. In to money (ads). Anything you can consis-
the monetary economy it all looks free— tently convert to cash is a form of currency
indeed, in the monetary economy it looks itself, and Google plays the role of central
like unfair competition—but that says more banker for these new economies.
about our shortsighted ways of measur-
There is, presumably, a limited supply of
ing value than it does about the worth of
reputation and attention in the world at
what’s created.
any point in time. The world of free exists
“Externalities” is a concept that holds mostly to acquire these valuable assets
that money is not the only scarcity in the for the sake of a business model to be
world. Your time and respect are the new identified later. “Free” shifts the economy
scarcities. from a focus on only that which can be
quantified in dollars and cents to a more
The “attention economy” and “reputation
realistic accounting of all the things we
economy” are too fuzzy to merit an aca-
truly value today.
demic department, but there’s something
www.interbranddesignforum.com Ideations