How retailers are driving growth in a tough market
The need for retailers to innovate in today’s market was highlighted by Harvey Nichols chief executive Joseph Wan just last week, when he revealed to Retail Week plans to open a standalone beauty-only fascia called Beauty Bazaar. Even the most upmarket shoppers are watching their spending more in today’s troubled economic climate, but Wan believes there is a gap in the market for such an offer. Harvey Nichols, which is also considering other standalone models including fashion-only stores and an eatery, is not the only retailer taking imaginative steps in order to grow. And it is not just new formats. New categories and new international markets are also on the agenda – increasingly facilitated by multichannel business models – and online sales continue to grow for many despite the high street slowdown.
Bellwether Next is one of the retailers chasing growth online. Despite its like-for-likes dropping 4% in its full year to January 29, Next’s total sales rose by 1.4%, driven by its booming Directory business, which was up 7.1%.
John Lewis commercial director Andrea O’Donnell agrees that bricks-and-mortar sales are proving challenging but online continues to grow. She says: “The two don’t exist in isolation. Customers are cross-channel, not multichannel, they increasingly use multiple channels to make their purchase, be it researching online to buy in-store or vice versa. “We’re looking at how we can differentiate from our competitors. Both convenience and technology are stimulating innovations.”
“Customers are cross-channel, they increasingly use multiple channels to make their purchase”
Andrea O’Donnell, John Lewis Customer Demand
Deloitte head of multichannel Colin Jeffrey believes retailers must focus on convenience in order to cultivate the consumer loyalty that can help retailers maintain sales and grow. “The customer is more price-conscious, so adding value through the addition of delivery options means the customer is prepared to pay more,” he says. “Customers have become more demanding, more impatient and more promiscuous. They want immediate access to both purchase and delivery too.” As retailers strive for that convenience, how they adapt in-store space to their multiple channels is changing. Whether it is computer kiosks or collection points to pick up internet purchases, the increased visibility of purchase and delivery options is another spur to spend. O’Donnell describes John Lewis’s kiosks, which are installed in all of its stores, as a “silent salesperson”. As well as allowing customers to order products that are not in stock, or purchase bulky items for delivery, the service has brought in more multichannel customers. “It’s been a vital tool to acquire new multichannel customers,” she says. “Often customers’ first experience of shopping on John Lewis online is in-store. It’s low-cost to roll out the kiosks and they are all paying back.” The kiosks have proved so successful that the retailer is considering making the service available in fitting rooms and waiting areas for shoppers’ friends and bored boyfriends. Click-and-collect is increasingly being adopted to maximise sales. 14 of the top 20 UK retailers operate an in-store collection service. For click-and-collect pioneer Argos online contributes 36% of overall sales, compared with the industry average of 8%.
Department store House of Fraser is considering taking the service one step further and opening a series of small click-and-collect only stores. “It makes sense,” says O’Donnell. “We’ve looked at it but the overall economics didn’t stack up when you look at rents in comparison to footfall. But then we have Waitrose as part of the group, which benefits from high footfall, and customers can collect John Lewis products there.”
Bill James, partner at management consultancy Transform, agrees convenience is critical. “It’s about fulfilling the shopping need and finding a way to fit in with the consumer’s busy life,” he says. “Being able to deliver at a place and timeslot that is convenient is critical. Retailers are becoming more precise with delivery times so customers can plan around it.”
John Lewis is even considering developing collection points in petrol stations to make its service as convenient as possible. O’Donnell says: “We’re thinking about it. What could be more convenient for customers? Research showed that customers considered the petrol station the third most convenient location to pick up and return purchases. There are lots of locations and they have frequent footfall.” The quest for convenience shopping is also stimulating innovation in other ways. Asos became the first retailer to have a fully transactional Facebook store last year and Argos’s full catalogue is available on its Facebook and Twitter pages. Sales via smartphones are also growing – 13 of the top 20 retailers now have mobile apps or mobile-enabled sites.
But it is the iPad that PricewaterhouseCoopers Diamond partner David Oliver thinks is going to transform retail. He says: “The move from the laptop to the tablet will have some interesting implications for retail. It will change browsability of the internet. It’s very efficient for transacting, whereas the mobile screen is not. “A lot of customers would still use the Argos catalogue to select the item before buying online or on their phone. The tablet could change that. It could become the catalogue of the 21st century, which could save enormous costs for catalogue-reliant retailers.” House of Fraser’s plan to open click-and-collect stores is a realisation that the role of the store is changing, according to Oliver. He says: “Retailers adapt how they use their space, partly because the awful truth is they have too many stores. If we use the example of consumer electronics, research is undertaken online with stores merely acting as pick-up points.” What’s in store? Consultancy Javelin predicts that retailers will have 25% fewer stores by 2020 as they restructure their portfolios in the face of rising operating costs and growing online sales. But O’Donnell believes the store will always be fundamental to UK retail, although it may need to adapt. “The vast majority of sales will always come from in-store. It’s a leisure activity and they act as centres for socialising,” she says. “Retailers have to focus on making sure they have the best shop online but also make sure people have a compelling reason to come in-store.” O’Donnell uses the example of John Lewis’s soon-to-open in-store spas as an innovative use of space to attract customers to shops.
The initiative is one of several emerging at present. As well as Harvey Nichols’ Beauty Bazaar, specialist retailerPets at Home is launching a new format. It has identified potential for 100 mini-stores, enabling it to expand its reach to shoppers who do not or cannot visit its big-box stores.Laura Ashley is also considering new formats, such as standalone fashion and kidswear stores. The grocers are also targeting smaller-format growth this year. Morrisons, Asda and Waitrose are piloting or rolling out convenience or smaller-store formats, while Sainsbury’s is piloting a sandwich shop – Fresh Kitchen – in London, which may be followed by a roll-out nationwide. Colin Turner, partner and group head of retail at surveyor EC Harris, says: “Food-on-the-go is one of the few categories that is growing domestically. All the big grocers are fighting for a slice of the growing market.” But there are not that many domestic markets that are experiencing such growth, which is why many are setting their sights further afield and targeting international expansion to offset harsh domestic conditions. Tesco intends to develop more retail space in China in the next five years than it has in the UK in the past 30. Mothercare, which has warned on the profitability of its UK business, is planning to open 150 international stores per year and Next is looking to increase four-fold its overseas Directory sales in the next two years as it launches across Asia and Russia. Marks & Spencer has detailed plans to re-enter France, with three to five stores opening in and around Paris, Simply Food stores run by franchise partner SSP and, crucially, a local transactional site covering the whole country.
Turner says: “Multichannel is growing faster internationally than in the UK. UK retailers are of course targeting international markets with high growth levels – it’s essential in these times.” So while conditions for retailers remain harsh – as starkly illustrated by Tuesday’s BRC data for March – opportunities remain both at home and abroad. And retailers are determined to make the most of them.
This report is from Retail Week April 15 2011 | By Gemma Goldfingle
Social as a metric, from a grumpy old man
This interesting link caught my eye because it uses simple infograpics to show what was big a recent tech event in the US. Always keen to stay abreast of what the trends are in mobile & social tech I dutifully clicked though to explore. Once there what caught my imagination more than the data visualisation was the nature of that data i.e. top tech = most tweeted about tech!
So, in a world where popularity trumps quality, where charts beat reports, where 140 characters beats deep analysis,and where other peoples opinions are more important than the expert’s view this is where we find ourselves; a set of pie charts showing what attendees were tweeting about!
And before I descend deeper into grumpy old man-dom I have to accept that I fell right into this little trend trap…
So that’s what bank branches are for, Click and Collect…
My bank has let me down in a way I would never have anticipated!
I’ve been a loyal personal banking customer with this particular bank, in fact I’ve been an advocate, for years now – in the general run of things they meet my needs simply and effectively and the fact that they don’t have a branch network has been more of a benefit than a problem. I say this because I’ve been doing all my personal banking online and on the phone for a long time now and I’ve only used a branch (different bank) for business banking interactions. So what changed my view?
Recently I started having some trouble with my personal account debit card, it failed to read at chip and PIN terminals and then it stopped working at ATM’s. That doesn’t sound like much of a problem although it is quite inconvenient because I’ve been using a credit card more often than usual and at the ATM this attracts a fee that the debit card doesn’t. So I rang my friendly, efficient bank and as usual I got a lovely agent to listen to my little problem. She advised me that there must have been a security issue and I would need to reset the PIN at an ATM, that sounded quite logical and even felt like something designed for my security benefit so I left the call quite happy with the solution in my head.
However, I then spent days trying to access PIN services on a variety of ATM’s all over London, and a couple out of town whilst travelling on business, none of them would even let me get to the option I apparently needed. So a week later and now feeling rather frustrated I called the bank again, after speaking to another lovely lady and being on hold for a bit I was advised that my debit card transaction records showed (and presumably would have showed a week earlier if someone had looked) an error on the card when chip and PIN terminals tried to read it. So she says the right solution is to issue a new debit card to me.
This is actually where my problem with the bank begins – I guess I’ve come to accept that all banks can make the kind of customer service mistake I’ve explained above and that isn’t enough on it’s own to make me consider a move to another bank – but the rest of the story does make me consider it.
Because my bank doesn’t have branches they needed to arrange a secure delivery of the new card to me. Sounds fine doesn’t it?
Well no it’s not fine actually, the whole reason I use a bank without branches is because I’m a busy and mobile person, basically it works better for me to call them or go to their website when it suits me and when I have a suitable gap in my schedule. So the whole idea of arranging to be either at home or in the office on a particular day (for a whole day by the way) is a nightmare. In fact at the time of writing I’ve already missed one delivery to the office because I had to go out for a client meeting, and now I don’t know when or if my card will be re-delivered.
So now I understand what bank branches are for – I would happily have popped into a branch near my office to show my ID and pick up my new card at my convenience. In fact if the bank were truly multi-channel I would be able to order a replacement card on their website and arrange to pick it up in a branch of my choice during that web transaction – Click and Collect it’s called in multi-channel retailing.
So actually my ideal bank will be rather like Argos – let me do my simple transactions online, offer me a Click and Collect service when I need it and don’t have lots of staff wandering around in branch trying to sell stuff to me.
Future TV, not so far away
For my generation the television has had pride of place in the living room as far as home entertainment is concerned.
In fact families have spent the last ten years or more keeping up wth the Joneses with flat screen, big screen, multi screen and every other TV development the market has thrown at us.
But more recently there is a new challenge to TV’s dominance, and it’s been coming from computers, the Internet, and mobile phones. So where is this challenge taking us?
TV service providers have rushed to make content available over the Internet to computers and mobile devices, and we could argue this has actually just accelerated the challenge to TV viewing especially in the younger generation who have grown up with laptop and mobile at the heart of their life and the TV taken much more for granted than any previous generation.
But TV manufacturers are fighting back by integrating Internet based services to bring us back to our television set and whilst just being able to browse websites on a bigger screen whilst sitting further away might sound pretty dull the real power of all this comes when broadcast or video content gets dynamically connected through to interactive services like shopping and gaming.
This is no longer a futuristic dream but an imminent reality – read more about that discussion here.
Figuring out channel shift in banking
Retail banks around the world are experiencing channel shift as customers adopt digital services for managing their money, this leaves the banks trying to work out what is the role of the branch & what does the branch of the future look like.
That is a valid question but just part of the challenge if it means leaving digital and branch bank development in the organisational silos that they are today.
Banks may be organised that way but customers don’t think and act that way – so in a world of channel shift the real question is how do the banks deliver integrated multi-channel banking?
As Brett King says: ‘Getting to the bank of tomorrow seems daunting. For banks that are entrenched in physical elements such as branch distribution networks, long-held conventions around paper-led compliance procedures, embedded silos and P&L (that are more likely to collapse completely than change) – how can a change to a better bank be navigated? How are you going to issue credit cards when there is no plastic? What will checking accounts be called when you don’t issue check books anymore? The challenges facing the banking sector today are extreme…‘
There are some smart ideas emerging and these are picking up interesting new names like Engagement Banking & Bank 2.0. These are useful monikers if only because they are designed to draw a line under traditional banking approaches and set out some thinking on future banking.
Meanwhile we have some talented commentators helping to map out some of these ideas for the future of banking and the innovation required to deliver the vision. I’ll mention three here whose experience and whose commitment to starting with an understanding of customers make them worth a read…
- Brett King is very insightful in Bank 2.0 rightly starting with the evolution of customer behaviour before covering improvements within channels and then onto emerging trends and technologies
- James Gardner offers an innovation challenge in Innovation and the Future Proof Bank setting a blueprint for wannabe innovators in the banks
- Chris Skinner with his globetrotting observations in his excellent blog The Finanser which is constantly looking for good practice and challenging bad practice to gives us clues on the future of banking
There are good ideas and innovations to draw on including one that brings branch and digital closer together - it’s a nice customer-led innovation – the ATM that brings a more human experience
There are some interesting efforts to bring together relevant and interesting examples of innovation like this one that has a go at tracking the shift and linking to some of the innovations.
All good stuff to check out in the quest for multi-channel banking, lots of good stuff on channel innovations but many don’t really address the big question of integrating the channels to make it all work for the customer.
Having been on a similar journey with retailers for the last 14 years I’m excited about making it happen in banking.
Bumper online spend again for Christmas 2010
£6.4 billion expected to be spent online this Christmas
Christmas shopping lived up to the hype last year and it’s now being hyped up again…
Based on 2010 Index results, year-to-date growth of 16%, IMRG have generated a new set of forecasts for Q4 2010:
- Total online spend in the fourth quarter will reach an estimated £17.4 billion, up from £15 billion in Q4 2009.
- In December 2010 it is predicted that £6.4 billion will be spent online, up from £5.5 billion in December 2009.
- The estimated total-spend for 2010 is £57.8 billion, up 16% from £49.8 billion in 2009.
This bullish Q4 forecast comes after the latest results from the IMRG Capgemini e-Retail Sales Index reveal that British shoppers spent a total of £4.8 billion online during September. That means year-on-year growth of 24%, equivalent to £79 per person and bucking the recent fall in sales on the high street.
I thought one trend that stood out in the report was the over-indexing of online sales growth for clothing, footwear and accessories – up 28% from September 2009. Two interesting soundbites hit me from the IMRG/Capgemini press release:
“Despite a continuing decline in consumer confidence, the online retail market is growing ahead of our expectations, with a double-digit rise in yearly sales recorded in each quarter of 2010″
“ The rise in online spending is at the expense of high street sales and we may even see an early peak with shoppers looking to spread the cost of Christmas over several pay cheques.”
Cyber Monday: last year it was 7th December, this year I’ve seen it being predicted as 29th November – I’m going for 6th December in my annual wager.
B2B Digital – the channel shift challenge
There has been a big gap between the growth of consumer e-Commerce and the take-up for B2B. But the signs are that’s changing, we will see the gap start to close as B2B picks up the digital gauntlet – let’s call it the channel shift challenge.
I recently had the pleasure of facilitating the B2B Digital Forum, a roundtable session of like-minded senior digital marketers and heads of ecommerce from businesses focused primarily on marketing, selling and servicing the needs of other businesses. This is a group that came together eighteen months ago frustrated by the mainstream focus on B2C digital and keen to share experience and improve performance in digital for B2B.
What really struck me at the most recent session (the sixth so far) was the real appetite for distilling down what are the key factors in driving success through digital in a B2B situation. It reminded me of other attitudinal tipping points I’ve seen at different stages over my 14 years in the online world. It feels like a wave of determination to make stuff happen that retailers saw more than five years ago, that consumer brands, media businesses and telecoms firms have been forced to follow. So why has B2B been slower in the drive to digital?
Well firstly there are exceptions and there have been good examples in B2B but let’s come back to that. We should remind ourselves that consumer behaviour has changed dramatically in recent years to the point where it’s difficult to remember the days when we didn’t rely on the web for so many parts of our life. Of course consumer facing businesses have helped drive that change and many have been alive to the opportunities created for riding that wave.
In B2B it can be complicated to identify and differentiate the roles of buyers and users of products and services in order to get the online experience working successfully. But that is fixable and there is one thing we must bear in mind in a B2B digital challenge – most of these now web-savvy consumers have jobs or run businesses and so for a big part of their life they are also buyers or users of our business products and services.
But it’s a simple reality that when we are at work our online expectations don’t change, they are influenced by the best of our experiences online as consumers. So, if I’m used to using eBay, Amazon and Facebook in my personal life I’m going to be disappointed if the trading platform, procurement website and company intranet I’m asked to use at work don’t match their functionality and usability.
Driving the required change in large organisations is complex; you will need strategic clarity, well informed investment, unswerving leadership, service/technology innovation and customer insight to deliver great experiences that lock in customers to your business rather your competitors.
I’m looking forward to working with the B2B Digital Forum in 2011 as we focus on their channel shift challenge.
TV wars
The charge towards next generation TV is hotting up and it looks like a number of factors new to TV companies will be important in the battle.
The battlefield is shaping up as we speak:
- Adoption of Internet TV is predicted to grow very rapidly now
- BSkyB launched its Anytime+ Video On Demand service last week
- Youview’s VoD venture received approval from Ofcom
In light of all this it will feel to consumers like the amount of content choice is exploding. The role of the EPG will become more important than ever and we will also see a new issue achieving prominence - the importance of search?
As I understand the situation so far: YouView is creating a backward scrolling EPG, allowing viewers to encounter on-demand content within the traditional broadcast schedule. Whilst Sky has answered this challenge by highlighting editorially chosen content and search tools in a separate space of their EPG. These two different approaches are like troop movements approaching consumers from either flank while we are looking straight ahead (at our TV screen presumably)!
YouView, backed by TV channels, is looking to retain a channel-centric approach, where linear TV dominates and video on demand augments traditional TV. Conversely, Sky is looking to cut across channels, making programming the key differentiator between services. As this battle is played out in our living rooms, the user experience will inevitably become more complicated: de-facto standardisation on the EPG grid will be replaced by different, competing interfaces, and it’s likely that viewers will need to learn many different ways to access content on their TV.
Both Sky and YouView are gambling that viewers are willing to change their habits and learn new tools in order to get more choice, and more relevant content. Bringing the most relevant content to the front is the extremely complex problem that involves both accurate search and relevant recommendations. Yet all of these new user interfaces will have to rely on an effective back-end to index the mountains of content that they need to process in order to surface the most relevant items to viewers.
Some material sourced from TV Genius: take a look at their white paper here.
Can bankers make like a swan?
What Retail Banks have spotted is that Retailers have moved way ahead of them in offering multi-channel customer experiences that are increasingly working smoothly and seamlessly. But that smooth appearance often hides some frantic and undignified paddling under the surface.
There is often an assumption in the regulated and security concious world of banking that the way to emulate this is with massive and complex systems integration. But some of these Retailers didn’t get where they are by starting with that view, sure there has been (and will continue to be) big IT and operational investment but the focus starts with the customer experience first and then identifying the options for making it work.
The wise guys will make like a swan!
Like the Retailers before them the big Retail Banks have been concentrating hard on developing their online channel, their ability to attract and retain customers on the web being seen as critical to a healthy future in a digital world. But what Retailers have learned is that multi-channel is growing faster than online, that customers don’t fit neatly into a silo’d channel approach and that multi-channel customers are more valuable than single channel customers. So, can bankers learn from retailers – can bankers make like Swans?
If so they will need to start with a view of customers before they apply the channels lens – just having multiple channels does not mean you are offering a multi-channel service. That comes when the customer journey and experience is joined up, for sales and for service – moving on the surface smoothly, like a swan!
Best ever social media campaigns – Blair Witch beats Old Spice to #1
This slideshow summarises beautifully the recent Forbes magazine article entitled Best Ever Social Media Campaigns
I like the way they’ve acknowledged that viral marketing campaigns have been having a big impact since pre-2000 by recognising The Blair Witch Project as the winner.
I hadn’t realised that this low budget movie made $249m and that the interest in this strange movie about a bunch of young documentary makers was promoted by some clever viral campaign activity.
Today we get excited by the sheer creativity behind campaigns such as Old Spice: Smell Like a Man, Man
But on the social journey to this we have seen many successful campaigns; one of my personal favourites from Christmas 1996 was the Office Max ‘Elf Yourself’ campaign which comes in at #7. But probably more famous and noteworthy is the wonderful Blendtec: Will it Blend? which sets the bar high in product repositioning.
Let me know your favourites, and any you think Forbes missed.
