Chapter 1

Some things never change

Even though this book is, indeed, about online retailing, it is worth pausing and reflecting on some of the truths from the offline world that still hold true as we move online with our customers. At the end of the day, the fundamentals have not changed; the customer experiences a need, shops to satisfy the need and then consumes or uses the product purchased (I need a hat, I buy a hat, I wear it). Think of this chapter as a checklist before proceeding.

The advice

Truth 1: Look drop-dead gorgeous

Window dressing, or visual merchandising, is one of the most important tools in terms of communicating with your customers. What you display in your windows gives you not only an idea of what is sold inside, but it also allows customers to get a good understanding of brand values. As well as showcasing the products that they want to push, the store also takes the opportunity to show where they sit in the market – is it all about luxury or does it reflect a more typical domestic scenario? Is the company product-led, as Lakeland’s window displays, which include low-key collections of time-saving cook and bakeware, suggest? Or, does the company rely on lifestyle values, as with window displays in the House of Fraser? Whilst the brand sells everything from furniture to face cream, the message of buying a little bit of glamour usually spills forth from its window displays.

Window dressing serves not only to attract customers to one particular store, but also to pull them away from other retailers who may be in direct competition. Critically, when it comes to a little bit of retail therapy, the objective is to spend some money rather than to have a particular item in mind. This means that window dressing is crucial when it comes to pulling customers in through the doors so that they can make impulse purchases.

In some chain stores and in larger department stores, the job title has evolved from ‘window dresser’ to ‘visual merchandise manager’, with each display being strategically created and measured in terms of subsequent sales.

With the bigger retailer, there is a move towards emotionalisation. This is the concept of drawing the customer in via the window display whilst continuing the narrative throughout the store, across many departments. There are also occasions when a retailer takes the story of the window display on to social media, through the use of hash tags. Retail TouchPoints Social Commerce Survey highlights the fact that, whilst 79 per cent and 77 per cent of retailers promote their social presence via email and their website respectively, 24 per cent utilise the POS and 22 per cent do it through instore digital signage.

Truth 2: Offer a life-changing solution

One of the great secrets of selling is learning where your ‘in’ point is in terms of your customer and working out how to leverage that, in other words, what do they need and how can you fulfil their needs?

It is not a one size fits all, and a good sales person will know exactly when to change tact and morph their message to suit their prospect’s need. After all, there is a huge difference in selling a tin of paint that will be used to lighten up a dark room and a paint that is being bought to make a statement to anyone who sees the finished result. Both customers are looking for the same thing, but need different outcomes and are at different stages of the same DIY journey.

It is the same with clothing. Some buy luxury-clothing brands because they connect with the brand values of timeless chic and sharp tailoring, whilst the very next customer could be buying the very same item so that their friends can see they are financially buoyant. A great sales person will be able to identify each customer need and adjust their techniques accordingly. Not only will this result in a great opportunity for sale, but it will also be more likely that the customer leaves feeling positive, regardless of whether they purchased or not.

As well as making customers feel valued, demonstrating how your product can meet their needs is a critical element of the sales pipeline. Bringing a product’s benefits to life is an important way of reaching out to the customer via the product.

A kettle boils water. A kettle with a high wattage boils water in 60 seconds. A kettle with a glass jug and a blue light within brings a little bit of life to a reasonably boring appliance.

A hairdryer dries hair. An ionising hairdryer will remove flyaway frizz whilst another model will operate with less noise than others.

Picking apart the features of any products and transforming them into benefits is one of the cornerstones of retail. To work out the benefits for any given customer, you must first identify their needs and see your product in terms of the solution it will offer them. On a large scale, this is taken care of by market research.

To understand the leverage that your benefits have, the question to ask is ’so what?’ Stand in your customer’s shoes and query every benefit. Then make sure your answer fulfils their need and you swiftly move along the sales pipeline to the resolution stage, where you seal the deal.

Truth 3: Honesty is the best policy

Customers are not the wide-eyed and bewildered targets of decades gone by. Today’s customers are savvy enough to know when you are being honest with them. They also understand how it feels when they shop online and the only voice that they can hear is their own internal decision-making process. With the click & collect concept estimated to be utilised by 76 per cent of the shopping public in 2017, consumers are also leveraging the ability to shop from home whilst preferring to take advantage still of the instore customer service.

Over-egging your sales position can have the double impact effect of not only making customers leave empty-handed, but also ensuring that they will not make a return visit or give you another opportunity to freshly impress them.

It is ok to not know all the answers that your customer needs, but you do need to access an information source quickly and add the response to your own knowledge bank. In digital terms, this is a lot like a constantly evolving FAQ section and responding to reviews to show that you are engaged.

Whilst the universal retail truth of honesty still holds true, today’s retailer is up against a huge digital social space that can be hard to undo. Before the internet age, people may have made their excuses and left the store, mentioning their negative experience to a friend or two in the days following. Today, shoppers can leave the store, stop for a coffee and share their negative experience across the many friends and family members they connect with, across multiple social media accounts. Not only will their post circumnavigate the world in seconds, but there is a strong likelihood that it could impact connections who live locally and who may even be shopping in the same high street.

Truth 4: Go all out when it comes to consumer rights

A returned item is not always a lost cause. Carefully handled, a return can, instead, be the start of a long enduring customer relationship. To have a good returns policy or guarantee is a highly valued aspect of any brand for customers. Primarily, a returns policy is in place to protect the consumer from sub-standard goods, but, conversely, a store’s returns policy can, instead, give the customer the confidence to take a risk and purchase something they might otherwise not, because of the ease of bringing it back, particularly for online retailers. In a virtual retail environment, a returns policy may help to give customers that extra bit of confidence they need to make the purchase. It is estimated that 8–9 per cent of goods are returned on average, but this will, of course, vary by product type.

Making it simple for customers to access and understand a returns policy is an important step towards transparency. Display it throughout the store and ensure there are not a string of caveats attached. Reducing the fine print does not equate to stripping back the terms of the return. Let your customers know that you are happy for them to take time to think about their purchase outside of the sales environment and still have the ability to return something they later decide is not for them.

It is perfectly reasonable to try to minimise the chance of a return. A good brand will allow and encourage customers to interact with products before they bring them home. Installing comfortable and spacious changing rooms with a controlled climate will allow your customers to try things on in comfort and without turning into hot sweaty messes who will more likely feel worse about their appearance than better. In terms of technology, walking the customer through the features and benefits of the product is a great start – even if it means rocking out the store to let them hear the crystal clear sound from speakers or a television.

Truth 5: It is the little things

Maximising your transaction by increasing the value of the basket by using add-ons, upsells or cross-sell is an important retail methodology that means that you get the most from your instore customers.

These methods of leveraging your opportunity are not an attempt to undo all your good and honest work in securing the trust of your customer. Instead, it is about showing customers how you can add to the excellent value they already enjoy with you.

There are many cross-sells that feel much more like basic common sense.

How do things pair up? Make sure that you know your stock well enough to be able to suggest a tie that will complement a shirt. Customers may well begin to seek you out as a knowledgeable sales consultant that they can trust and from whom they know they can buy with confidence. It is a great technique that will help you add to customer satisfaction, whether it be finding the perfect pair of matching earrings or making sure that they have a king-size duvet to match the size of their new mattress. Just make sure to keep the cross-sells logical.

If there are complementary items and common pairings, then make sure that you are already displaying them clearly instore. Many customers do not believe that they have good taste in terms of pairings, so suggest an outfit or combination that knocks their socks off and display prominently. This stands as true for home furnishings as it does for haute couture and should be displayed prominently on the sales floor. Value points are important and your cross-sell should be less than a certain percentage of the first sale. A guide figure is around 25 per cent, but tailoring in situ is equally important.

Add-ons are another way of upping the transaction value. Rainproof spray for a pair of new shoes will ensure that the shoes stay looking fresher for longer and so give the product a longer lifespan. Whilst it does cost to buy the rainproof spray, its application actually will increase the value of the shoe purchase by months or years, therefore making them better value. Empowering your customer to say yes to extra cream and marshmallows on their hot chocolate can also add to a feeling of wellbeing and self-reward.

Lessons for you

Retail has undergone a massive evolution from its early days. From the opulent days of the very first department stores through the pile ’em high and sell ’em cheap days, to the chainstore takeover of the independent high streets, one element has never changed – smart retailers understand that people return in order to feel like they did last time they bought from you.

Recommended actions

  • Short term/quick win
    Add click & collect as a new delivery option.
  • Medium
    Redesign your website to give it an up-to-date look.
  • Long term
    Embrace omni-channel, make sure your customers can view and buy from you via their mobiles, too.

1.1 Expert commentary: from bricks to clicks

I met up with Professor Kim Cassidy, Dr Sheilagh Resnick, Dr Julie Lewis and Nelson Blackley, academics in the National Retail Research Knowledge Exchange Centre (NRRKEC) at Nottingham Business School (Nottingham Trent University) to discuss the transition from bricks to clicks.

We will look at how some UK and US retailers have successfully followed a clicks to bricks strategy and we will go on to identify and highlight three basic principles that appear to underpin the effective development of this channel strategy and so offer insights for independent retailers pondering the bricks to clicks or clicks to bricks dilemma.

The question for retailers is no longer whether to operate an omni-channel strategy, but how to implement it most effectively. Just a few years ago, in the face of the continuing and unstoppable rise of online retailing, developing a bricks and mortar presence might have been considered a high-risk strategy. However, as consumers now shop both online and offline, retailers have to be there, too. The goal for retailers is to fully integrate offline and online sales channels and so create a seamless ‘holistic’ customer experience.

The strategic response to this omni-channel challenge has been mixed. Some retailers have made few strategic adjustments, retained only a physical estate and, consequently, struggled to survive. Others (‘pureplay’ retailers), benefiting from a strong brand or niche product or service positioning, have chosen to maintain an online presence only with varying success. A third group, the majority, who have, historically, prospered through their physical estate, have reduced or maintained their store offer whilst simultaneously striving to develop an integrated online offer, i.e. followed a bricks to clicks strategy. A fourth group, and the focus of this white paper, are those who have adopted a clicks to bricks strategy – retailers who have a heritage in catalogue and/or online retail, but have now actively also developed a physical store presence.

As Zhang et al. (2010) point out, clicks to bricks in itself is not a ‘new’ strategy: Sears, for example, became a multi-channel retailer in 1925 when it opened its first store to complement its catalogue channel which was launched in 1886 (p. 168).1 However, it does appear to be a strategy being embraced by more and more retailers. In addition, a recent study of these clicks to bricks retailers suggests that not only are they performing particularly well in an increasingly competitive retail environment, but they appear to be doing so because this strategy allows them to focus on some basic principles of successful retailing that can be implemented by any retailer, irrespective of size.

First, they have an in-depth and personal understanding of the changing demands and behaviour of their consumers.

Extensive consumer databases, accessible through the catalogue operations, have given clicks to bricks operators a head start and ensured that decisions are customer-focused and market-driven. Powerful datasets and integrated data processing systems enable them to sense and rapidly respond to changes in consumer behaviour and expectations.

This is illustrated by Screwfix, part of the Kingfisher Group, and the UK’s largest direct and online supplier of trade tools, accessories and hardware products to tradesmen, handymen and serious DIY enthusiasts all over the UK.2 Screwfix started life in 1979 as a niche retailer called the Woodscrew Supply Company, selling screws to small tradespeople via a one-page catalogue.3 In 1992, the retailer launched its first catalogue under the name of Screwfix Direct, selling a wider range of hardware products, though still aimed at small tradespeople. Acquired by Kingfisher in 1999, Screwfix now operates over 450 stores across the UK and makes a significant contribution to the group, with total sales increasing 26.3 per cent to £1.05 billion for the year ending 31 January 2016 with like-for-like sales jumping 15.3 per cent versus Kingfisher Group in the UK and Ireland total sales increase of 5.6 per cent and like-for-like 4.5 per cent.4,5 This history has given Screwfix 37 years of customer data focusing on a relatively small segment of the market (i.e. small trade customers). They have been able to draw on this information to make effective, responsive marketing decisions. In addition, the company has adopted a holistic rather than channel-centric approach to data integration from the outset, generating and combining insights from all customer touchpoints. In 2011, the retailer rolled out its innovative Fusion Platform, a large-scale initiative developed to transform the company’s multi-channel ordering process.6 Fusion enables store staff, at the point of purchase, to view a customer’s purchase history across all channels, automatically generating product recommendations for staff to use to upsell and cross-sell products to customers.

Made.com is another example of a clicks to bricks operator who has focused on integrating customer data across all channels.7 The etailer (online retailer) was launched in 2010 and claims to offer unique design-led furniture at affordable prices. The company has opened three UK showrooms in addition to a pop-up showroom in Brighton and is seeking more ‘unusual locations’ to expand its European network.8 The company has joined forces with retail analytics company CloudTags to pilot the connected showroom in Brighton which uses tablets and beacon technology to capture the preferences of its shoppers.9 Using instore tablets to showcase Made’s full online offer, CloudTags’ technology gathers data on shoppers based on items they have looked at online, but did not buy. The pop-up store also houses an interactive wall featuring images from the retailer’s social media platform, Made X Unboxed. Shoppers can tap on the images to reveal product information. CloudTags combines beacon technology with data on products that shoppers have interacted with instore, allowing Made to send personalised marketing communications to individual customers based on the products that caught their eye in the showroom.

Clicks to bricks retailers clearly realise from consumer feedback that digital innovations have to be an integral part of the retail offer whether online or in a physical space. For this reason, many are maximising the potential of novel digital uses instore, taking advantage of the latest high-tech applications to interact with customers and gather data. Arguably, this is not simply about being able to access and use new technological innovations but being in tune with changes in customer behaviour. Consumers are using more and more technology in their daily lives and expect retailers to mirror this activity when shaping consumption experiences.

However, the use of technology needs to be underpinned by customer insight, highlighting that an understanding of customer behaviour remains, and always has been, a principle of successful retailing.

Second, clicks to bricks retailers appear to have a strong brand identity and positioning within the market and a clear view of the role stores play within their channel ‘mix’.

They have recognised that a physical presence offers the consumer different benefits and can be used strategically to reinforce a consistent brand image. The first most obvious benefit is that stores can be used to ’showroom’ products and give customers the opportunity to touch goods and assess the quality themselves prior to purchase. This is clearly more important for some product areas than others. Ocado, for example, is reportedly considering a move into bricks and mortar with the etailer eyeing a showroom for its health and beauty business.10 According to chief financial officer Duncan Tatton-Brown, ‘We don’t expect to add a physical presence in grocery but in health and beauty we would think of having a showroom to help the supply chain to showcase their products.’ Similarly, Sofa.com, established in 2005 as a bespoke furniture design service, has recognised how important it is for customers to be able to touch and feel fabric swatches and now has showrooms in Chelsea, Edinburgh and Bath for those reluctant to buy before they try.11 Stores have the potential to engage all of the customer’s five senses and so demonstrate how the brand looks, sounds, smells, feels and even tastes. This is not possible (at least at present) in the online world, which can appeal only to the visual and, sometimes, auditory senses. Sensory engagement has become even more important to retailers, given the empirical link to increased customer spending and dwell time.

The second related benefit is the opportunity to facilitate the ‘experiential’ or the ‘theatrical’ with a store setting. Many clicks to bricks operators are using the store presence to enable consumers to experience products in situ using innovative theatrical design principles to create realistic, interesting or dramatic settings. Stores are being developed as ‘destinations’ rather than simply places to see and collect product. The US clicks to bricks preppy ‘eyewear’ retailer Warby Parker, based in New York, illustrates this trend.12 With its unique ‘try five pairs of glasses for a week and keep the pair you like’ service, the company has moved from being exclusively online to include physical stores in 2013. Since then, the company has expanded its bricks and mortar presence and now has almost 30 stores across major US cities.13 Warby Parker’s retail stores have been designed to capture a sense of theatre and fun and include pneumatic tubes that shoot glasses from the stocking area to the sales floor. This fun environment aligns closely to the company’s mission, which stems from a belief that, ‘Buying glasses should be easy and fun. It should leave you happy and good-looking, with money in your pocket.’14 The use of theatrical installations to generate instore interest and excitement is certainly not new. Harry Selfridge was considered to be a pioneer of retail theatre and in 1909, after the first cross-Channel flight, Louis Blériot’s monoplane was put on display at Selfridges, in order to attract ‘new customers to Selfridges and thus generate both immediate and long-term sales’. What does appear to be new is the amount of thought being given to the strategic role of such installations within the retail promotional mix and the nature of the new customers that the retailer might attract. Armed with consumer data obtained from multiple contact points, retailers are in a much stronger position to evaluate the effectiveness of such initiatives, establish whether interest is generated amongst new or existing customers and the contribution it might play in reinforcing the company image and positioning.

Another example is furniture etailer Loaf, established in 2008.15 It is one of the fastest growing companies in the UK and has recently ventured into bricks and mortar, opening an 8,000 square foot store in Battersea called Loaf Shack. As well as beds and sofas, the company also sells gifts and accessories, including organic candles, tableware and cashmere blankets. As the name implies, the interior design focuses on helping consumers to relax and chill out with products showcased in realistic settings. The store features a Little Loafers corner for younger visitors as well as a traditional-style ice cream parlour. There are plans to develop a further 10 Loaf Shack stores across the southeast of England by 2018. According to Charlie Marshall, who founded Loaf under the original name of The Sleep Room in 2008, the focus is on, ‘getting the brand magic absolutely spot on. Our move to bricks and clicks is all about reaffirming our core values and giving customers a fantastic shopping experience.’16

The key here is that clicks to bricks retailers are using the physical space strategically to complement rather than compete with their online operations. They are acutely conscious of the potential dangers of cannibalising sales from existing online operations and carefully consider what role stores might play in reinforcing a clear brand message. This approach has always been regarded as part of good retail practice, i.e. making sure that all elements of the retail mix are working consistently to reinforce the message. John Lewis, for example, goes to great lengths to ensure that its sales staff reinforce its quality positioning through their interactions with customers on the shop floor whilst, at the same time, spending £7 million pounds on developing a high quality Christmas TV advertising campaign.

Third, and finally, our clicks to bricks retailers appear to have an entrepreneurial culture or leader.

This enables them to respond quickly and flexibly to change in the retail environment.

One of the best examples is Jason Bannister, founder of Oak Furniture Land.17 This is a business which began life as an eBay retailer in 2003, opened a website in 2006 and now operates a physical estate of 68 stores.

In April 2015, the company owner, Jason Bannister, was shortlisted in the London and South region of the Ernst & Young Entrepreneur of the Year Award.18 The development of the business demonstrates clearly Jason’s personal skills and expertise as an entrepreneur as well as an opportunistic approach to store development which capitalised on changes in the retail environment. Jason originally set up a business to sell a container of Mexican pine furniture he had bought for £10,000 from a wholesaler, instead of using the money to build an extension on his house.19

He realised that furniture sales represented a growing market opportunity and was aware of leasing deals available in the retail property space. He took a financial risk investing in a shed from which to operate his business. The gamble paid off because Oak Furniture Land became eBay’s largest retailer within three years.

By 2006, and with a turnover of £2.7million, it was time for Oak Furniture Land to move again. A 100,000 square foot aircraft hangar in Kemble, Gloucestershire, became the etailer’s home. Again, timing played its part as the economic downturn enabled Oak Furniture Land to get space at a cut-down rate. Bannister noticed there were 13,000 square feet of empty offices at the entrance to the airfield and he asked the landlord if they could trial these as a showroom and experiment with the first store.

The showroom at Kemble turned over £5 million in its first year, proving that customers wanted to see and feel the furniture first hand. Bannister realised that having a shop was growing the overall business and not, in fact, cannibalising online sales and so, from that recognition, came the short step to opening their first bespoke showroom in Cheltenham in 2010.

Whilst other large retailers have been reassessing the size of their store networks to reflect growing online sales, Oak Furniture Land bucked the trend by embarking on an aggressive store opening programme in 2010, opening 56 new stores over the next four years, adding close to 700,000 square feet of sales floor area.20

Screwfix is a company also known for having an entrepreneurial, fast-paced and dynamic culture. According to the Screwfix.com website, ‘The Screwfix Head Office in Yeovil is a dynamic, diverse and exciting place to work.’21 As a member of staff in the marketing department observes, ’screwfix is unlike any other business I have worked for; the fast pace and innovative outlook makes it a very refreshing environment.’22

Missguided is another etailer with plans to open standalone UK stores to enhance brand awareness and to complement existing online operations.23 Established in 2009 by Manchester-based entrepreneur Nitin Passi, the trendy own brand women’s wear etailer has embraced digital marketing and invested heavily in search engine optimisation (SEO) and pay-per-click services. The etailer has experienced seven years of rapid growth, with its founder attributing success to speed, reactivity, agility, value for consumers, a strong social media presence and a little luck in terms of timing.

To conclude, whether a retailer is bricks to clicks or clicks to bricks, the principles of successful retailing remain the same. To succeed, retailers need to understand customer behaviour across all channels, create and maintain a strong brand identity and a clear view of the role stores play in the channel mix and establish an entrepreneurial culture. As Simon Burke, director of the Co-operative Group, comments, ‘One important way of doing this is to be courageous about getting involved in new things that are happening in our space. Another is to make changes along with, or better still just ahead of, our customers. So, if you look around your business and see that everything is carrying on just as it used to, with the same people doing the same things, and your retail offer has been doing business the same way for generations, this is not a cause for quiet satisfaction. You should be worried.’24

1.2 Becoming omni-channel

Retail has come a long way since the birth of ecommerce in the 1990s, as have consumer expectations. Brands are now expected to give customers access to ‘infinite aisles’ that extend well beyond the four walls of the store. Shoppers expect an equally seamless experience whether they buy a product in person, pay for it online and collect it instore, or order it directly to their homes. In all these cases, the end result must be that they receive their purchase when and where they want it.

I met up with Mike Webster, senior vice-president and general manager, Oracle Retail and Oracle Hospitality, to discuss the move to omni-channel retailing. Webster is responsible for strategy, enablement, development, sales, service and support. Oracle provides retailers with business applications and server and storage solutions that are used by 20 of the largest retailers worldwide. For more information about Oracle, visit: www.oracle.com/industries/retail/index.html.

Key takeaway

It has been well established that ours is the age of customer-centricity, arguably more so in retail than in any other sector. What sets this industry apart is that shoppers’ habits change extremely fast, and retail merchants need to keep evolving even faster to stay ahead of the market.

There are many factors involved in getting it right, but three elements in particular are crucial to success when it comes to delivering ‘commerce anywhere’. These are:

  1. A single view of customers
    Customer data is widely viewed as one of a retailer’s most valuable assets. Being able to collate, analyse and then execute against customer data is an essential component of a successful sales approach. This information allows brands to deliver an individualised experience to every shopper that visits their website and, if used effectively, the insight retailers extract from this information improves the chance that a shopper’s visit ends with a purchase.
  2. A single view of stock
    Retailers require the confidence to deliver on their customers’ expectations regarding availability, but they also need to know where their stock has come from, where it is in the supply chain at all times, and how it can be optimised to deliver the greatest margin.
    Oracle research from 2014 found that 46 per cent of consumers are more likely to be loyal to a retailer that provides accurate information on the availability of goods, with 30 per cent of shoppers saying they would spend more, if that were the case. In fact, more than half (58 per cent) said the availability of a product was more important than its price.
  3. A single view of transactions
    Delivering a consistent purchasing experience across all channels requires that all transactions are treated equally. Customers are bound to get frustrated when they are told they cannot return something instore that they bought online, when a sales assistant is unable to look up their online transactions, or when a retailer’s pricing is different in a store from on its website.

The insight

Modern retail is about customers, not channels

Whilst it may seem counter-intuitive to start a chapter that is supposedly about omni-channel retail by suggesting retailers stop using the term ‘omni-channel’, it is worth reconsidering the vocabulary around this trend. Customers today do not think of the shopping experience in terms of channels or interactions; they consider their experience with a brand as a whole.

The term ‘commerce anywhere’ is, therefore, the more accurate way to describe a fully-formed omni-channel approach. Put simply, it is not about the number of platforms retailers use to service customers but, rather, about ensuring they can cater to shoppers' changing expectations at all times and on all devices in a seamless way. It is hardly surprising, then, that Oracle’s research found that nearly 60 per cent of consumers want retailers to deliver a converged commerce experience.

In the words of Roberto Merlini, group marketing & ecommerce director, Prénatal: ‘Retailers have to decide if they want to serve customers the old way and disappear or the way their customers want to be served – everywhere and anywhere.’

Retailers accept that shoppers have more choice and flexibility than ever in how they make purchases and understand that they need to adapt to this reality. However, many brands still cannot deliver a consistent experience across online, mobile and instore that brings all these platforms together harmoniously.

1. Culture

Innovations in technology, from new mobile services to cloud-based inventory systems, certainly have a vital role to play in building the future of retail, but getting the technology right is only one element of a larger evolution. Retailers must also embrace cultural change within their organisation if they are to break down the barriers that stand in the way of delivering ‘commerce anywhere’.

Ensuring a seamless flow of information internally is essential to delivering a seamless retail experience to shoppers. There is a distinction to be made between just selling across any and every channel and delivering an experience that is joined-up and consistent across all platforms. The latter is what retailers must aspire to.

Achieving this often requires a rethink of business processes, with a particular focus on working more quickly. Speed is critical to success and brands must promote a culture across their organisation that encourages faster decision making.

This requires them to abandon their notions of hierarchy, which includes putting an end to internal competition between online and offline sales. The time has come to move past a culture that puts instore on a pedestal as the company cash-cow, and onto one built around ensuring consumers get what they want, wherever and whenever they want it.

Leading UK retailer Shop Direct has seen first-hand how implementing cultural change can help retailers get more out of modern retail technologies. Speaking at an event in Amsterdam, Shop Direct’s head of ecommerce, Paul Hornby, said: ‘We’re moving away from the culture of the highest paid person as the only one making the call. We’re making decisions based on quantitative and qualitative customer data.’ The approach, alongside a new approach to mobile and click & collect orders, has been successful: Shop Direct saw its profits surge to a record high in 2015.

Retailers must also reexamine the physical store and rethink its purpose as part of a ‘commerce anywhere’ ecosystem. There is no doubt the store has, traditionally, been the place where retailers made the most money, but today they must also consider its role as a service centre, as a collection point, as a showroom and as a place where customers simply want to hang out.

In light of this shift, retailers should not penalise themselves when customers shop online rather than in their shops. Instead, they should find ways to enhance the instore experience to drive even more online sales. At the same time, they must focus on finding ways to make online purchases, product deliveries, after-sales service and returns equally convenient, regardless of which channel their customers use.

2. Convenience

True ‘commerce anywhere‘ also requires a new approach to customer service.

Shoppers have grown used to getting what they want, when they want it. The takeaway for retailers is that the more nimble and technologically savvy consumers become, the more selective they can afford to be when choosing from whom to buy.

People today expect zero friction, whether they buy an item online and collect it instore, purchase it instore and opt for home delivery, or use a voucher code instore that was issued online. In this environment, retailers must deliver a consistent experience that does not fall apart when the lines between online, mobile and instore are crossed in the course of a purchase.

From the pricing of goods to the availability of inventory to returns, every component of the retail experience must be developed with convenience in mind. Even a single barrier can prove insurmountable for time-stretched consumers in a world where the competition is only a click away.

To that end, it is worth reiterating, yet again, that the physical store is far from dead. If a customer wants to try on an item of clothing or test a television’s picture quality for themselves before committing to payment, they will do so. In fact, they often prefer to. Oracle’s research found that 62 per cent of consumers still prefer to visit a store as part of their shopping experience.25

What retailers must realise is that serving customers instore is no longer just about making a sale right away, although that will remain the initial reflex, but rather to give consumers every reason to buy an item, either in the moment or later in time, if they prefer to order it online.

This is the key to building customer loyalty, in addition to higher sales. Oracle’s research found that knowing the right product will be at the right place at the right time is the most important element of the shopping experience for 31 per cent of shoppers.26 Tellingly, more than 50 per cent of consumers would be more loyal to a retailer that gets this right.

John Lewis, one of the UK’s most respected and enduring department stores, has been taking advantage of new technologies to improve its customer experience across all channels. A strong focus on its ecommerce site has helped John Lewis to drive online growth and complement its instore offering. David Hunn, director of IT delivery at John Lewis, explains the motivation behind this approach: ‘Our ongoing customer commitment includes adopting new technology to enable us to better serve customer needs and meet their expectations for convenience, choice and experience.’

Part of John Lewis’s success has also come down to the improvements it has made to its search engine optimisation (SEO) approach using Oracle Commerce. By providing fast and responsive search and navigation tools on its website, John Lewis has reduced cases of customer searches yielding no results by 30 per cent. The company’s SEO growth has contributed to a boost in sales from £1 billion to £1.7 billion in just three years.

3. Confidence

A seamless experience for customers demands an equally seamless retail operation; from the assortment and shipment of goods, to inventory management, to a convenient purchasing journey. Just as crucially, these individual retail operations must also be joined up in a seamless way.

Achieving a single view of their operations gives retailers the confidence to plan more proactively, in addition to giving them more confidence in the strength of their relationships with customers.

With transparency across all their processes ‘behind the scenes’, companies can make better informed decisions when it comes to pricing, range, assortment, fulfilment and growth, which, in turn, means they can deliver on shoppers' expectations and foster higher levels of loyalty on the front lines. Seventy per cent of shoppers say being provided with real-time information on the availability of a product adds significant value to their interaction with a retailer.27

For brands, delivering on the expectations they set for consumers also requires confidence in their merchandising system supply chain and that no surprises will disrupt the on-time delivery of customers’ orders. Modern supply chain technologies offer retailers total transparency in their relationships with trading partners, as well as into the procurement and provenance of their inventory from the source. Complementing these, today’s merchandising systems allow brands to easily marry supply and demand by reconciling their sales and financial data, purchase orders, item availability and suppliers.

Visibility into these processes puts businesses in the best possible position to ensure the accurate and on-time delivery of the thousands or, in some cases, millions of orders that their online customers place. This is paramount to the ‘commerce anywhere’ generation for whom the guarantee that a product will be delivered to a certain address by a certain date is not taken lightly, and who will be quick to express their discontent if a retailer cannot fulfil their promise.

A reliable, transparent operation is particularly important for online merchants eyeing international growth. With each new market it sells to, a retailer adds a new layer of complexity to its merchandising and supply chain processes and, having a single, consolidated view of these operations becomes the only way to manage them effectively.

Recommended actions

In short, keeping pace with changing consumer demands will require retailers to continue becoming better at listening, both to shoppers – who are no longer shy when it comes to expressing their needs – and to signals within their data that can help them spot and act on potential issues before they result in a poor customer experience.

Deckers Brands, the parent company behind UGG, is one retail brand leading the way in this regard. In the words of its president, Dave Powers: ‘Customers seek out the UGG brand online, on their mobile devices and in stores. By creating a single, accurate view of their engagement with us, we can better align our service, marketing and merchandising with their needs.’

What this all means, fundamentally, is that there is no finish line. The retail market has never been more competitive, and retailers must make a long-term commitment to continue innovating and becoming more agile if they are to differentiate themselves from the competition in the face of an increasingly discerning public.

1.3 Expert commentary: John Lewis moves to mobile

John Lewis is the UK’s largest department store business and a leading omni-channel retailer, serving over 11 million customers every year. Sienne Veit, director, online product at John Lewis, works with teams across ecommerce, stores, marketing, customer service and IT to achieve customer, commercial and strategic growth targets through product development and harnessing new technologies. Veit was previously head of mobile and research and development at Marks & Spencer and head of mobile at Morrisons. For more information, visit: www.johnlewispartnership.co.uk.

I met up with Veit to talk about how the mobile device is used by their customers.

Optimising mobile for shopping success

‘Our customers are increasingly using their mobile devices to shop with us. In the past year we have seen mobile traffic grow 60 per cent whilst desktop has taken a step back.’ Veit explains that mobile has become the default device on which inspiration and search happen in the moment, in the spaces in our busy lives. It is increasingly becoming the shop window for consumers and also the glue between John Lewis’ channels. It is the one device that is used for shopping everywhere: on the bus, at work during breaks, at home on the sofa and in bed late at night, but also, in shops.

To optimise this trend, John Lewis has made several changes to its mobile offering over the past 18 months. It has both a mobile-enabled website and also native smartphone and tablet applications for both Android and Apple devices. You need mobile web, as many journeys still start in a browser with search, or use media as a jumping off point to shopping. But you also need apps, so customers can use the native mobile device capability, such as the camera, as a scanner to check prices, fingerprints and touch ID to log in and make payments, as well as push notifications and location features to provide relevant information, reminders and prompts.

‘We constantly track and measure data about how our customers shop and have learnt that many shopping journeys start in our shops and are then completed at home online or vice versa. This is even more so for higher value, considered purchases, like furniture, TVs and large appliances,’ she explains.

Veit says that the business recognised that it needed to ensure that customers could use their mobiles to assist the purchase journey in a shop and cross the boundary between shops and home. So, all their shops now have free WiFi, which is easy to log on to. This means their customers can use the John Lewis app in shops to help them choose the right product by scanning product barcodes to find more images, product information, product reviews, pricing, offers and online stock availability (which is especially useful when there are colour and size variants not available in shops).

In 2015–16, John Lewis also updated its wish list capability to make it easier for customers to create wish lists and add items to them so that, if the journey starts at home or in a shop, the customer always has the products they are considering with them.

The company has also created a digital version of its loyalty card in the app so that customers never forget to scan their card to receive the benefits that it brings: points that lead to rewards and vouchers and also Kitchen Drawer, a first-of-its-kind feature that saves all of a customer’s online and instore receipts in one place and makes it easier to keep them for returns or reference purposes.

‘We researched how customers use their cards in our shops and made sure that the app version was really easy to use: you simply shake the phone to activate the card (making it easy to scan at a till point) and the card works offline (if the store WiFi or 4G signal isn’t available at the time). Our most recent iPhone release has enabled the myJL card, barcode scanner and product search to appear from the app icon on the phone using force touch on iPhone 6S for faster availability in a shop.’

How do you know if you are doing the right thing on mobile?

Veit’s team are constantly tracking and closely watching how customers shop. They track app store reviews (which is a good measure of customer happiness with a new feature) and take all negative feedback or requests for change from the app store reviews and feed these back into development.

They keep the customer front of mind and bring them into the design process early and often. If what they create is not right for customers, it will not be commercially successful.

Shopping is not just something that happens online. John Lewis recognises that the shops are a key part of the customer’s shopping journey and that for some journeys they are essential. The company designed its online and app experiences with shops in mind (sometimes putting the development team in the shop for a week). Veit says that if they just focused on ‘online shopping’, they would ignore a key part of how their customers shop.

As a final recommendation, Veit says that you have to foster a culture of experimentation and innovation. She makes sure teams are given the freedom to pursue new ideas and trial them and to improve upon or quickly abandon them, if they do not work as planned.

1.4 Expert commentary: mobile shopping opportunity

I met up with Kevin Jenkins, MD for VISA UK & Ireland. For more information, visit: www.visaeurope.com.

Jenkins explained that consumer behaviour is different when shopping on mobile. McKinsey last year reported on evidence from South Korea (the world’s most developed ecommerce market), showing smartphone shoppers are more impulsive in their purchases than those who shop on their laptops.28

First, these mobile customers tend to go straight to a retailer’s website or app (if they have one), rather than using a search engine as their route. This is particularly valuable for a small retailer, who may lack the resources to constantly manage its search engine rankings, as it presents an opportunity to build greater brand recognition and direct loyalty with your customers; music to the ears of any small retailer on the high street.

Second, shoppers are blurring the lines between online and instore. Research that Visa conducted in 2015 confirmed that shopping trends, ‘web-rooming’ and ’show-rooming’, are here to stay. Over 74 per cent of consumers web-room, i.e. research items online, then go to purchase instore; whilst 40 per cent show-room, i.e. visit a store to examine a product before buying it online.

Much of this happens on mobile, which, in turn, generates a very different kind of shopping experience. If you are selling goods both online and offline, then thinking about the mobile browsing experience and how it matches what is seen instore is going to matter.

Third, the payment experience can be different. Shopping on mobile often hits a barrier at the point of payment; no matter how smooth the browsing process before it, entering card details on a touchscreen can feel cumbersome. That is why we are seeing the growth of mobile payments and digital wallet services that remove the need to enter payment details every time you shop. It works on a traditional laptop set-up, but really comes into its own in the mobile environment, because it addresses the payment barrier.

Finally, Visa’s research shows 68 per cent of consumers cite fraud and security as a reason for reservations towards mobile shopping and, clearly, there is some historic baggage concerning security. But, in reality, this need not be a concern. The authentication systems for mobile or laptop purchases are identical, whilst mobile technology is actually becoming even safer, with the rise of fingerprint-authorised payments (known as biometrics).

A decade ago, smartphones did not exist. Today, half the world’s adult population owns one and shopping via mobile is booming. To be successful, online retailers need to avoid the temptation to treat all online avenues the same. Mobile is different and successful retailers will consider the unique opportunities mobile shopping presents and how these can be addressed.

Successful retailers are ensuring that a well-developed and differentiated mobile offering complements their other channels. By doing this, they can offer a seamless retail experience to their consumers: online, on mobile and instore. Consumers may not make a conscious distinction between retail environments any more, but ensuring you cater to their needs, whilst joining up the experience across platforms, is the key to success.

In conclusion, Kevin says that consumers will continue to expect secure shopping experiences that suit their preferences, habits and the latest changing technology. As always, the most successful retailers will do all they can to meet their customers’ requirements, whilst keeping transactions secure and convenient, no matter where, or on which device, they are made.

1.5 Case study: Graze.com

Omni-channel is not just about offline retailers going online, but, as we have seen in the case of Made.com, more and more native online retailers are expanding into the real world. Another example is Graze.com. This is a case study about how Graze leveraged its online retailing experience and business model to compete with traditional fast-moving consumer goods (FMCG) companies in stores.

As part of its rapid growth ambitions, online snack subscription brand Graze recognised the scale of the business opportunity presented by omni-channel operations. With the synergies available from the existing online business resources, and by enabling the brand to extend its reach to new customers and snacking occasions, it was a significant and cost-effective commercial opportunity to drive profit and strengthen brand awareness and loyalty. Unlike other start-up food brands, the success of its online business created a strong launch platform. Graze had strong brand awareness already and had been proactively approached by flagship grocery and high-street retailers to establish a retail proposition, reflecting a shifting regulatory focus on healthy snacking.

This case study looks at how Graze defined and launched its retail proposition, including:

  • preferred form factor;
  • recipes;
  • brand positioning;
  • packaging;
  • internal launch;
  • trade marketing, PR and CRM.

Key findings

  • As an omni-channel brand, existing marketing spend now drives multiple channels.
  • Graze can now support online and offline customer journeys, which is driving profit – in the first three months over 1 million customers tried Graze offline.
  • It has been a cost-effective expansion for the brand, and it could invest ahead. Graze was able to utilise existing online business resources; namely marketing, new product development, operations, facilities, supply chain and technology.

Interviewee

Anthony Fletcher started at Graze in November 2009 as head of marketing, sales and innovation, becoming its third employee after the founders. He then became CMO in July 2011, MD in November 2011 and, finally, CEO in December 2012. Prior to joining Graze, Fletcher was innovation manager at Innocent Drinks.

About Graze

Launched from a bedroom on the same day Lehman Brothers collapsed in 2008, graze.com was the brainchild of seven friends, including the co-founders of film rental company LoveFilm. Graze was devised to provide office workers with healthy, convenient and exciting alternatives to vending machine snacks, by sending a selection of personalised, portion-controlled snacks by mail.

Graze designs, manufactures and brands its own snacks and its mission is to reinvent healthier snacking with pioneering technology. Food is one of the largest consumer markets in the world, yet is underpenetrated by technology. Adopting a direct-to-consumer subscription model, the consumer signs up to graze and receives four different snacks in a recyclable box as often as they choose. Consumers (called grazers) select the kinds of snacks they would like to eat, from a range of over 120, and can rate the snacks afterwards. Graze sells in both the UK and US markets and competes with traditional FMCG snacks.

The company has grown from 7 founders in 2006 to 500 employees in 2016. Graze has a proven track record for growth, with revenues up 29 per cent to £68 million in the year ended February 2015.

Its online sales strategy

As the business has grown, Graze has, typically, launched one large initiative every year – expanding into a new snacking segment or occasion, such as broth boxes or sharing bags. In 2013, Graze launched into the USA, having established an office in Manhattan and a manufacturing site in Colony. The company was delivering to all 50 states within two weeks and achieved a US sales run rate of $35 million per annum in the first year. Rapid profitability was also achieved, with US operations EBITDA positive in month 13. In 2014, Graze committed a further £45 million to be invested over the following three years, including $3 million to open a factory in New Jersey to fulfil US demand. Graze’s ambitious online strategy has always been driven by the vision to be the number one healthy snacking brand in the world.

The Case

The problem

With the growth of healthy snacking in the UK, Graze recognised a gap in the market for wholesome on-the-go impulse options, which would also deliver on excitement and taste. It is estimated that 98 per cent of UK adults snack, with 68 per cent snacking at least once every day. But there was also considerable commercial demand for healthier options.

Big retailers and manufacturers alike were under pressure by the UK Government’s ‘Responsibility Deal’ to reduce salt and sugar in foods and promote healthier alternatives to high sugar and high fat products. As a result, space instore traditionally designated to confectionary – particularly ‘guilt lanes’ at tills – needed to promote fresh or healthier alternatives. These areas represent the highest rate of sale space in stores and retailers looking to boost profitability and expand their on-the-go healthy single-serve snack offerings approached Graze directly to develop a range.

Benchmarks for small- to medium-sized snacking brands that have entered the UK retail healthier snacking category were strong, so it offered a significant commercial opportunity. Going omni-channel would also drive profit and the synergies available to Graze from being able to utilise the online business resources – marketing, new product development, operations – gave it confidence of driving strong EBITDA quicky.

Fletcher, CEO of graze.com, commented: ‘There was no doubt in our minds that an omni-channel presence would strengthen the Graze brand. Trust, reach and familiarity are, traditionally, a problem for online brands, so combining our direct-to-consumer online business with a retail offering would raise awareness and build brand trust and loyalty. A clear advantage of omni-channel operations is being able to cross-sell both ways – to drive consumers to and from the online subscription business and offlline retail business using promotion codes and awareness emails.’

The background

Unlike most start-up food brands, being a well-established online business meant that there were a number of significant factors that gave Graze a strong launch platform into retail.

First, Graze had strong awareness and scale already. Graze was the second largest manufacturer of dried fruit, nuts and seeds in Europe by value, and the number one snacking brand in these products in the UK by value. Graze’s annual marketing spend put it in the same league as household names, such as Lindor and Jacobs, and above big brands Pringles, Doritos and Kettle Chips. Its main competitors in the healthier snacking space were spending far less and the result of this was that its brand awareness statistics were high. Graze was cited as the number one ‘healthy snacking brand’ in the UK amongst females, ahead of significant players, such as Ryvita, Special K and GoAhead and, when asked to describe Graze, the top words used by non-customers were: modern, unique, imaginative, innovative and credible.

Second, a Graze retail proposition was in demand. Unusually, Graze had been proactively approached by some ‘beacon’ brands and accounts to establish partnerships – such as a major cinema chain, national airline and major grocery and high-street retailers Sainsbury’s and Boots.

Third, Graze could utilise the power and minds of an existing organisation, critically in communications, new product development, supply chain, data and technology systems. It had the ability to test products online before introducing instore and was able to self-finance. Graze’s online business is profitable in both the UK and US markets and was, hence, able to fund the FMCG launch and invest ahead.

The solution

To implement the omni-channel expansion, a UK retail director was appointed in December 2014 and, by July 2015, Graze launched an impulse ‘on-the-go’ range of 12 stock keeping units (SKUs) nationally in three strategic accounts. With the advantage of having a deeply vertically integrated business model with manufacturing, in-house creative and product team, the retail launch was delivered by a tight and flexible team led by the new retail director and marketing manager with the support of an existing product developer, insight manager, project manager, designer and finance manager.

The resulting proposition was 12 sleeved punnets, but Graze went through a careful process to define this retail proposition. With the online subscription business generating 15,000 customer ratings an hour, and with 7 years of product ratings under its belt, Graze had a good idea of what the UK public liked to snack on.

Originally, it considered the idea of launching a narrower range with only one type of product, i.e. six low-calorie recipes. However, Graze was aware that consumers enjoy a wide variety of snacks, from sweet to savoury, and felt it was important to reflect that same variety to retail.

A two-month trial of nine test SKUs in Boots, the UK’s leading chemist, from February to April 2015, was critical in honing the proposition and gathering insight on offline customers. With zero marketing or promotional support, Graze delivered the highest rate of sale across the store’s total snack business; with the range representing five out of the top ten revenue selling SKUs for the period it was trialling. In addition, the Boots loyalty Advantage Card data revealed that, during the trial period, almost 50 per cent of purchases were made by consumers who had not actually bought from the Boots snacking category in the last five months at all, indicating that the new Graze offering was set to drive significant category value. After the trial, Graze decided that launching 12 SKUs would allow it to launch 3 snacks under 4 different umbrella varieties (pillars) to ensure there was a healthier snack for everyone. In this way, each of the 12 SKUs would have a nutritionist-approved badge, such as ‘less than 100 calories’, ‘high in fibre’ or ‘8 g of protein’ – to appeal to the different needs of consumers, and so there would be a reason to feel good about eating each portion-controlled product.

In terms of the preferred form for this range, alternative options were assessed, based on the following criteria: differentiation to its competitors, value perception versus the competition, how well it fits with the existing Graze brand, consumer understanding of packaging/concept, cost/capital expenditure, complexity to implement, and launch date achievable. Eventually, Graze opted for a punnet (as per its online products) and cardboard sleeve (with window). This had some key attributes – first and foremost, as a differentiated format in the category, which was seen as a major brand asset. It enabled visibility of the ingredients and product, whilst also leaving space for brand messaging and communications. By following the same punnet format as for the online product, there was no new manufacturing equipment required or CAPEX concerns and Graze already had the capability to deliver the right volumes. The packaging would also be sustainable, which was important for the Graze ethos.

In terms of the retail snacks in the range, 11 out of the 12 snacks launched were the same or similar products to online. This meant there were synergies with existing supplier relationships and ingredient bases. However, creative product names were tweaked to make sure they were immediately recognisable to a time-poor retail customer.

The run-up to the retail launch prompted the broader Graze brand team to agree on and define the global brand positioning ‘good just got exciting’; a message that Graze would roll out across geographies on all communications, including its packaging, website, social media platforms, PR, advertising and inserts. Similarly, when designing packaging for retail, Graze soon realised it had some core brand assets it was keen to incorporate into the packaging material and creative design. Going omni-channel forced Graze as a business to establish and align on key brand assets, including its recognisable brown logo, brown, textured Kraftpak and clear, plastic punnet. The design team believed they were missing colour identity with the Graze brand so, in July 2015, launched the Graze brand colour ‘electric moss’ to provide consistency across different channels.

To drum up internal excitement, engagement and support for the launch, Graze branded all three office locations and handed out goody bags during launch week. It also launched an internal social media competition to kick-start a wider Instagram campaign.

Retailer support was key to landing a successful launch. Each of the launch partners – Sainsbury’s, Boots and WH Smith Travel – enabled the use of on-fixture point of sale, which included ‘new’ posters, ‘new’ barkers and branded display units. Additional support secured included car park advertisements, A-frame posters and secondary-site display units. Ian Rankin, senior confectionary buyer, Impulse, WH Smith Travel, comments: ‘No other product launch in snacking and confectionary over the last three years has driven the same level of excitement and opportunity for store managers to get behind.’

Also integral to launch was a solid PR launch plan. Along with appointed consumer and corporate PR agencies, four key tactics were employed. There was an announcement to the trade media to reveal the Graze retail range to industry publications one week before launch, followed by a media house tour at two key publishing houses – inviting journalists from the UK’s biggest household titles to come and meet key members of the team, learn about the Graze story and try the new ‘on-the-go’ range. Graze also conducted an Instagram influencer campaign with eight well-known foodie bloggers, with each of the influencers paid to post three images of the Graze retail products during launch. Their PR agencies met their established press contacts to seed the retail story to them in advance.

Finally, Graze made use of its 7 million strong existing customer database. Emails to the Graze database at each of the retailer launch dates enabled communications and key messages to be delivered to 7 million engaged or previously engaged Graze consumers for free.

Results

Graze used a number of different measures to monitor success, of which the most valuable was free electronic point of sale (EPOS) data available from key accounts. Graze used both its own, and category data, where it was available – allowing it to compare base rate of sale both in value and volume, against its competitors. Graze purchased category data from its biggest account, Sainsbury’s – measuring all healthier snacking brands in the retailer. This would indicate the average number of units sold of each punnet per store per week – an important measure because that is how a retailer buyer naturally compares products and makes ranging decisions.

Second, loyalty card data from Sainsbury’s Nectar Card and Boots Advantage Card revealed an additional layer of detail that flat EPOS would not, and put performance into perspective versus the competition. Graze’s retail director Emma Heal comments: ‘As we were seeing similar performance in both Sainsbury’s supermarkets (a grocer) and Boots (a high street retailer), we could make a safe assumption that this was being replicated in other key accounts across the country. We could see that we were attracting new consumers into the snacking categories of Sainsbury’s and Boots – meaning we are driving incremental sales, not just stealing market share from our competitors.’ Loyalty card data also allowed Graze to assess the number of repeat customers in a week versus those trialling it – revealing a strong repurchase rate against its competitors. It could also calculate the average number of units bought per week per customer off promotion, which informs its promotion strategy.

Another benchmark that Graze used was in retailer take-up, assessing the percentage of total retailer estate. For instance, Graze launched into 850 Sainsbury’s stores in June and, by September, was listed in all 1,100 stores – reaching 100 per cent distribution.

Retail also ran its own internal P&L, detailing profitability at three stages – gross, contribution and EBITDA. Results were assessed through weekly reporting by the retail director until a commercial team was in place three months after the launch, later supported by a commercial finance head recruited within six months of launch.

Critical success factors

There were a number of critical success factors for Graze. This included spicing up its packaging so that it could hold its own on supermarket shelves, whilst still ensuring that it strongly reflected the Graze brand that online customers were familiar with – keeping the trade mark Kraftpak box look and feel by importing a Kraft sleeve. Balancing profit with an accessible price for consumers was also vital to a successful proposition.

Fletcher adds: ‘With over 150 products available online, for Graze, omni-channel success meant being brutal with the range – identifying which products cut the mustard for retail. Ultimately, you have got to test, learn and be agile. And be prepared to learn that people shop differently online and offline, and that your approach might need to fluctuate accordingly.’

Lessons learned

Looking back on the omni-channel expansion, Emma Heal, Graze’s retail director comments, ‘Graze has always been a trailblazer and, from being one of the first mail-based providers of snacks to becoming one of the first omni-channel FMCG retailers, the number of direct analogues in the market they have been able to learn from or look to is limited. But something we’ve learnt for ourselves is that we should have launched into retail sooner. Having spent seven years building a strong online business, going from clicks to bricks took a long time. We’d also be bolder with our launch assumptions. Within two days, we were out of stock on shelves in Central London, and it was lucky our dynamic supply team could react quickly to meet such significant demand – we had to treble our forecast. The beauty of going omni-channel from online is typified in Graze’s agility and ability to innovate quickly. Within five months, we’d replaced two SKUs with stronger recipes.

‘Ultimately, you’ve got to be bold and go where your customers want you to – even if that means a significant change in your business model.’

Recommended actions

  • Create synergies with the existing online business – capitalise on CRM and customer databases, to cross-sell against different channels with promotion codes and awareness emails.
  • Align core brand assets and brand positioning to create consistency of identity across all different geographies and channels.
  • Test and hone products online before introducing into store – use existing data and feedback to determine the make-up of the range.

1.6 Deep dive: omni-communications

Can retailer-consumer communications increases sales, retention and customer satisfaction across the board for online retailers? According to mGage, global mobile engagement provider (for more information, visit: www.mgage.com), this is certainly the case and it has never been truer than now.

Modern audiences are the most fragmented in history. Gone are the days of single points and methods of contact. Consumers have an ever increasing amount of access to content delivered in a plethora of forms, from the written word to images, audio to video and many more. Not only is there a multitude of content available, potential customers can also access this information through a huge and growing list of channels, be it social media, TV, radio, snapchat, email, etc. The points of contact are countless.

How does a brand reach this new and fragmented audience?

In short, the only way to achieve any form of lasting connection with this new type of consumer is to become omni-channel. Retailers the world over are breaking down the data from customer communications and are coming to the same conclusions. The customers that engage with retailers across multiple channels are much more valuable to the brand as a whole.

Still not convinced that your business needs to adopt such an approach?

Research into omni-channel engagement for retail shows that:

  • businesses that successfully employ a consistent cross-channel marketing strategy enjoy a 14.6 per cent year-over-year increase in annual revenue and a 13 per cent annual improvement in customer retention rates;
  • omni-channel customers have a 30 per cent higher lifetime value than those who shop using only one channel;
  • a poll of 7,000 people across 7 countries revealed that 64 per cent of customers expect to receive real-time customer support, regardless of the channel, and 75 per cent of customers will return to companies they deem to have good service;
  • seventy-one per cent of instore shoppers who use smartphones for online research say their device has become more important than their instore experience;
  • omni-channel campaigns are highly measurable, so you can find out which channels are the most efficient for reaching your customers and optimising your communications campaigns. Every dollar spent in tracking the output of your channels returns $13.

By definition, omni-channel is inclusive, it involves conversation between the retailer and the customer wherever, whenever, however the customer feels comfortable.

In recent years, the retail giant Macy’s has conducted huge amounts of research into the benefits of switching to omni-channel marketing. It found that shoppers who use a number of communication channels are eight times more valuable than those using a single channel.

Similarly, MasterCard claims that customers who shop both online and offline spend 250 per cent more on average. Can this be ignored?

To put it simply, businesses that employ an omni-channel engagement policy have better customer relationships, higher lifetime value and generate more revenue, year on year!

How can other retailers leverage the power of omni-channel communications?

The next stage is to work out the best channels to target for your business; becoming truly omni-channel takes time and should be taken in steps.

Mobile is vital for reenforcing communications. For consumers, text messaging is the preferred channel of communications – 20 billion SMS messages are sent daily; to put that in perspective, that is 40 times more messages than the 500 million tweets sent out daily. Messages are short, non-intrusive and even the least tech-savvy amongst us feel comfortable with them.

Today, there are more connected mobile phones than there are people:

  • The current global population is 7,289,122,584.
  • The number of mobile phones is 7,352,011,604.

The shift to mobile has been huge and the importance these phones play in people’s lives can be shown by the need to replace and protect new technology over the norms of times gone by – it is 26 hours before someone reports a lost wallet. In comparison, it takes only 68 minutes for someone to report a lost mobile phone.

Recently, the shift to personal messaging for enterprise has grown and is predicted to boom this year. It is thought that, by 2017, customers will be talking with brands through WhatsApp, SMS, Facebook Messenger and many other platforms. This transition is happening already and customers have barely noticed, for one reason in particular: it is already second nature. Customers are completely comfortable with messaging because it is already intuitive for almost all demographics.

Thanks to growth in all these channels, the average person checks their phone 221 times per day and time spent on mobile phones increased by 117 per cent in 2015 compared with 2014.

Who, then, should retailers target?

Now that the importance of mobile has been covered, selecting the demographic with the most growth is key.

Born between 1980 and 2000, Millennials are the first generation to grow up with mobile phones, the internet and computers. They are tech-savvy, educated and have serious purchasing power. Millennials want information at their fingertips, instant gratification and want to be able to self-serve – mobile phones make all of this possible.

Millennials already make up 28 per cent of the global population and, according to Deloitte, will fill a staggering 75 per cent of the UK workforce by 2025.

As retailers, there are some extra bits of information to take into account. Seventy-four per cent of Millennials browse the internet on their mobile devices whilst they watch TV, meaning that they are accidentally using multiple channels at the same time.

Furthermore, when outright shopping, 84 per cent of them are using mobile devices whilst instore for comparing prices, checking availability and styles, and so on.

In terms of uptake on new technology, mobile payments have been widely available only in recent years but, for Millennials, it is already booming: 73 per cent of them are onboard.

How do we reach Millennials?

When someone thinks mobile, they might instantly think, we need an app for that … You do not. It can help when done properly but, of the apps downloaded, the majority of them get opened only once. There is, however, one app that is number one amongst all demographics, users do not have to change notification settings or locations settings with it, it never gets deleted and does not even need the internet to function. It is SMS.

SMS is the ideal channel to further engage shoppers:

  • Ninety-eight per cent of all SMSs are opened within five seconds.
  • Forty-five per cent of SMS campaigns are successful compared with 6 per cent of email campaigns .
  • Engagement from an SMS is eight times higher than email.

How best to harness SMS for retail

Two huge developments for retail, in particular, when it comes to mobile engagement, have been click & collect and basket abandonment retargeting.

Click & collect as a whole is on the rise and smartphones provide almost infinite access to stores from sofas and offices across the country. Fast food establishments, like Hummus Bros, are already using mobile to enable customers to preorder and pay before they arrive at the shop, negating the need to queue and, therefore, having more time to enjoy their lunch.

Click & collect does not only mean shorter lunch queues; we are seeing more and more pickup locations near major transport hubs, allowing items to be ready and waiting as customers get off the train. Whether they are picking up a coffee from Starbucks or a new computer mouse from Argos, customers are increasingly using click & collect to streamline their lives.

Click & collect is a great example of how mobile can help to bridge online and offline – a great online user experience allows for seamless integration from online purchase to offline collection.

According to Deloitte, home delivery services are struggling to meet demand and we will see a 20 per cent increase in click & collect uptake over the next 12 months.

The most effective ways to remarket to ‘basket-abandoning consumers’

  • Do not let the opportunity go cold. The best conversion rates from remarketing are achieved by reaching out to a customer within an hour of cart abandonment.
  • Use a service lead message. Customers respond extremely positively to remarketing activity based on providing a service to help them overcome problems they experienced on a website. Customers respond well when the retailers understand the reasons why they abandoned in the first place.
  • Vary the remarketing channel according to the value. High-value basket items with the highest margins of profit should be valuable enough to justify using outbound phone calls to remarket to a customer with an abandoned cart. Lower value baskets can be targeted with both email and SMS-based remarketing activity.

Remarketing to online basket abandonments becomes an even more attractive solution when you discover that abandoners spend 55 per cent more when successfully remarketed to.

As previously mentioned, customers are comfortable with messaging; something that has not been pointed out is how the language used affects customers.

An SMS can be informal, friendly and to the point. Using these short and concise messages, retail companies can speak the language of the customers they are targeting, the Millennials. Currently, brands can use a base of increasingly intelligent CRM systems to create a sense of conversation with the customer, but there is more to follow.

Tech giants the world over are looking at an increasing number of ways to incorporate their sales within messaging. Conversational commerce is a recently coined phrase that encompasses this. For example, Uber is testing Facebook Messenger integration in North America; consumers planning to meet up can discuss where to meet and when, in a chat thread, and then order their respective vehicles from within the same thread, without opening the Uber app.

All this leads to mobile 2.0, the shift in approach for mobile that has arrived and that nobody spotted until very recently.

With the launch of the first iPhone and most smartphones since, we had mobile 1.0 – the constant drive to replicate the web on a mobile screen.

Mobile 2.0 finally recognises that mobile is now bigger than the desktop web and marketers are taking this on board by grasping messaging as the future, not just an addition to the past.

Recommended actions

There are various ways in which companies, large and small, can adopt to an omni-channel approach. There is, however, a strong argument that says, when ready, the first recommended step will be mobile, whether this is to gain new users or improve relationships with current users or both.

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1 Zhang, Z., Farris, P.W., Irvin, J.W., Kushwaha, T., Steenburgh, T.J., and Weitz, B.A. (2010) ‘Crafting integrated multi-channel retailing strategies’, Journal of Interactive Marketing, 24, pp.168–180.

2 www.screwfix.com.

3 www.screwfix.com/jsp/help/pressoffice.jsp.

4 www.screwfix.com/jsp/help/pressoffice.jsp.

5 www.retail-week.com/sectors/home-and-diy/kingfisher-full-year-profits-slide-but-bq-and-screwfix-sales-up/7006011.article?blocktitle=Top-story&contentID=17831.

6 www.lets-do-diy.com/News/2011/03/Benefits-for-trade-recognised-as-Screwfix-celebrates-latest-win.aspx.

7 www.made.com.

8 www.retail-week.com/sectors/home-and-diy/madecom-launches-amsterdam-showroom-as-it-ramps-up-european-expansion/7004211.article.

9 www.cloudtags.com.

10 www.retail-week.com/sectors/grocery/ocado-mulls-over-opening-its-first-bricks-and-mortar-showroom/7003004.article.

11 www.sofa.com.

12 www.warbyparker.com.

13 www.warbyparker.com/retail.

14 www.warbyparker.com/history.

15 loaf.com.

16 www.retail-week.com/stores/store-gallery-loaf-moves-into-bricks-and-mortar-with-loaf-shack-launch/5079639.article.

17 www.oakfurnitureland.co.uk.

18 http://swindon-business.net/index.php/2015/04/27/swindon-bosses-join-battle-for-britains-top-entrepreneur-award/.

19 www.retail-week.com/technology/innovation/analysis-retails-new-entrepreneurs-three-businesses-taking-the-industry-by-storm/5063849.article.

20 www.alixpartners.com/en/Publications/AllArticles/tabid/635/articleType/ArticleView/articleId/1600/The-AlixPartners-Growth-Retailer-Report-2015.aspx#sthash.mHUWwb62.dpbs.

21 www.screwfixcareers.com/business-areas/head-office/.

22 www.screwfix.com.

23 www.missguided.co.uk.

24 http://www.retail-week.com/analysis/opinion/comment-embracing-change-is-central-to-retail-success/5072658.article.

25 Retail Without Limits, Oracle Retail 2015.

26 Retail Without Limits, Oracle Retail 2015.

27 Retail Without Limits, Oracle Retail 2015.

28 http://www.mckinsey.com/industries/retail/ourinsights/learning-from-south-koreas-mobileretailing-boom.

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