Schuh’s Sean McKee [IRDX ISMC] tells Chloe Rigby how the retailer understands its shoppers’ needs
YOU CAN LEARN, says Sean McKee of Schuh [IRDX RSCH], a lot about shoppers from their delivery choices. The footwear retailer knows, for example, that customers who shop from smartphones are more likely to opt for next-day delivery. Mobile devices come into their own at sale time.
“Very immediate gratification is best achieved on a smartphone,” says McKee, the company’s head of ecommerce and customer services. That’s something worth knowing for a retailer that sees about 22% of its online traffic arrive via tablets, and half via smartphones, while half of its sales are made on mobile devices.
Not only that, says McKee, but, “We see a very big difference in basket size between people who use Shutl or want to speak to us via live help, which is a fulfilment type of a sort. Customers who click and collect at stores typically spend different amounts of money, are looking for slightly different things and have different perceptions of the way they want to interact with us.”
What do these conclusions mean for the retailer’s logistics strategy? “A wide spread of choice is always going to be essential, but there are choices within that spread that we find commercially more attractive.”
FROM INSIGHT TO INVESTMENT
Schuh has based investment in infrastructure on this learning. A West Bromwich distribution centre (DC), opened in November, now augments its original delivery hub in central Scotland. As a result, last order time for next-day weekday deliveries to southern England has moved from 5pm to 10pm, with the aspiration to offer a 10pm cut-off every day.
Schuh’s position at the top of the IRUK500 Operations and Logistics Performance Dimension is earned through sheer choice of fulfilment options. Depending on availability, UK shoppers can choose between 10 tracked delivery and collection choices. At one end, free 20-minute check and reserve, click and collect, and standard delivery; at the other, next or nominated day delivery, and Shutl. Returns can be made for a year.
In the future, Schuh plans to enable shoppers to pre-order out-of-stock items, while offering next-day click and collect as a minimum – and same-day at best. “It isn’t always overtly sexy,” says McKee, “but it’s about getting things quickly to the customer and giving the certainty they tell us they want to have.”
LEARNING ON THE JOB
The retailer learns as it goes, experimenting with, for example, the cost of next-day delivery. Immediacy, says McKee, is key for shoppers from the south-east, with London shoppers the most likely to use the speedy delivery-from-store Shutl service. But 70% of Schuh’s online orders are delivered by free standard delivery.
At the bottom line, the retailer ensures that deliveries are profitable. “You have to make sure that the cost of the parcel is reflected in the overall mathematics that you do when you try to work out that you’re making a profit, and you need to be happy with those costs,” says McKee. That means answering questions such as: to what extent shall we subsidise premium services?
Over the last six months, the company has trialled changing the price of next-day delivery from £4.99 to £1 or £2 as it looks, says McKee, to “work out where the sweet spot resides between time of day and the device that is used, and the price you pay for the service”, as well what impact the price of delivery has on demand. It now charges £4.99 as standard, but uses lower prices to encourage higher order levels at quiet times. The percentage of deliveries that are sent next day has risen. McKee adds: “We link it very directly to conversion rates. If we take the cost of a service down we expect to convert better – there is a pretty simple logic to what we’re doing.”
THE BLACK FRIDAY EXPERIENCE
Achieving the balance needed to deliver the service most efficiently comes under particular scrutiny at peak times. McKee says levels of demand that started the night before Black Friday [28 November] 2014 “blew us away”. Its systems generally stood up to the test. “Most customers got exactly the service they expected that day, but a very small minority were disappointed,” he says.
Next year, he promises the retailer will have learned from the experience. It already knows from its carriers that it will be able to offer a finite number of next-day deliveries. “There just isn’t enough capacity in the system and there isn’t going to be any more capacity in the system, so we just need to think about managing customers’ expectations correctly and making promises we can always deliver on.”
UNDER THE SURFACE
Schuh uses a merchandising system, Shark, which was developed in-house, and which gives a single, close to real-time view of product and its location. Trading policy is first come, first served, using an algorithm that matches the best store to the best stock.
The company has 110 stores in the UK and Ireland, and plans to expand, but there will always be demand for more choice. McKee monitors emerging potential delivery and collection options, such as pick-up at Doddle railway stores or Transport for London stations.
He predicts delivery will soon move away from fixed-point delivery, using the retailer’s ability to pinpoint the customer’s location through a mobile or wearable device. “We’ll be delivering to where you are in a way that’s convenient to you,” he says.
He also sees potential in delivering to different retailers’ shops in the way that eBay already does to Argos shops.
So, from his experience, how would McKee advise others looking to improve their fulfilment options? “There isn’t a formula that I can identify but there are basics,” he says. “You have to offer a click-and-collect service and you have to offer a very cheap or free delivery service that arrives with the customer in a reasonable time frame. But whatever your individual promise, you have to deliver.”