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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Serving inspiration alongside a pot of paint

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Serving inspiration alongside a pot of paint
Serving inspiration alongside a pot of paint

Ahead of the launch of the new Homebase website, Emma Herrod speaks to Managing Director Paul Loft about cross-channel, digital  in store and how the company  is listening to its customers.



The recession has been difficult for many retailers but for those whose business is as dependant on people moving house as the DIY and home  sector, things have been particularly tough. Underlying this is a change in customer behaviour away from DIY to employing a professional to do the work plus the need for the home sector to provide inspiration and project support rather than being just a shed from which to buy paint.



Homebase  has been listening to its customers and is repositioning itself as a multichannel home enhancement retailer,  refitting stores and introducing digital tools to  help staff and customers in store and online. Part way through its renewal plan, it is due to launch a new ecommerce site in April to match the inspirational requirements of its customers and provide the technology the company needs for the next phase of growth.

“Housing transactions are an important part of the Homebase business,” says the firm’ Managing Director Paul Loft. When people move they tend to decorate and it is usually 6 months after a house move, once they have had a chance to settle in and decide what or how they want to alter it, that they start buying and turn to Homebase.

That’s also when they purchase big ticket items such as new kitchens and bathrooms as well as paint and accessories. That doesn’t mean, though, that people have stopped investing in their houses, as many are choosing to enhance their homes instead of moving. In fact, the change in sales during the recession has been offset to a certain degree by sales in other Homebase departments such as ‘Garden’, which has been pretty strong.

The company says it is seeing an “increase in consumer confidence” which is good for sales of items such as kitchens and furniture. Loft says the outlook is “starting to get better and more positive, but he is conscious of the effect that any interest rate rises will have o mortgages and customers’ spending ability.

PROJECTS & SERVICE

In the past, Homebase may have lost out on customer spend because of its shed-base layout. This didn’t enable customers to shop easily for an entire project, which is what they want when embarking on home improvements, envisaging a finished room rather than just a paint colour. Customers are looking for service, explains Loft, and the way they view DIY is changing. There will always be the DIY enthusiast who likes doing the job for its own sake and there will always be work that people carry out themselves such  as decorating. But, says Loft, these skills are  being lost, and he believes customers are looking for easier ways to get the job done, whether that’s with the help of guides or videos or getting someone else to do the work for them.



Homebase is not planning to forget its DIY customers in its move to cross-channel, but it is increasingly focusing on a group of consumers that Loft calls “the home enhancer”: mainly females who love their home and are more interested in the outcome of the project than doing it themselves.

Women continue to dominate as specifier for purchases, he explains.  This long-term trend away from DIY to Do It For Me (DIFM) is where Loft believes the future lies for Homebase. “Half of kitchen sales we install,” he says. The company also arranges the installation of bathrooms, tiling and flooring, as well as decorating. “We’re investigating other things including garden landscaping,” he says. Prices are on a par with those charged by local tradesmen and Homebase has in-store staff trained to offer advice. “That’s an important part of it,” he says. Loft admits that services aren’t a product stream, but he says there’s enough margin in a kitchen, for example, to make it a valuable extra for customers which supports the whole project.

“The bigger problem for customers is  deciding what to do,” Loft says, so it is  implementing various technologies in store and online to help inspire consumers and to help them choose. He adds: “Customers say that they err on the safe side when decorating but want to be more adventurous or bolder. They also want to make sure they get a good  outcome.” Customers want to stay in charge of their projects so don’t want an interior designer who’ll take over – but they do want help. So staff are being made available to make suggestions and help customers with their planning or mood boards.

It is through this offering of advice, inspiring and helping customers, that Homebase is moving forward with its crosschannel proposition, bringing digital in store and enhancing its website. “In the past it was difficult to have people in store with all the answers,” Loft says. This meant that when, for example, a customer wanted to compare products such paint strippers, some staff would know the answer while others would have to look at the packaging. More help and advice is where digital is able to help staff help customers.

According to Loft, this extra support is encouraging customers to buy more with refitted stores already are seeing a 20% sales uplift. So where has the retailer been investing?

DIGITAL IN STORE

Homebase announced its store refit and multichannel investment plans in October 2012 so it has already been able to learn lessons from its first store revamps. It has enabled it to evolve how technology, staffing and products are used best in store and to trial new initiatives in each phase. From the first “proposition store” that was refitted in Aylesford, Kent, in 2011, it is now on the third phase of its refits. The first of this phase is due to open in May or June in Worcester.The Worcester proposition store will have a larger number of room sets than other stores, so customers can see products in an inspirational setting. As with the other refitted stores, it will have iPads for staff use and wifi.



The biggest changes to the new-look stores has been the introduction of technology and more staff to help customers choose the products they need for their project. The Decorating Centre (the first version of which was trialled in Aylesford) incorporates touch screens through which customers can access Homebase’s ‘Create Your Own Look’ tools  to style a room by changing paint colours, wallpaper, flooring and decor products. The wall, floor or ceiling of the virtual room changes instantly so they can see how it could look; since the images have genuine perspective they can see, for example, how a paint colour will appear lighter closer to windows, and the wallpaper print scale across a room. They can also upload a photograph of their own room to alter. Once the design has been saved, a list of the products featured is shown and can be purchased. The firm introduced this tool on its website in January 2012.

In the same area, physical products and swatches of flooring, tiling, wallpaper and paint materials can be brought together with the digital image so customers can create a moodboard of their design ideas. A coffee shop is also incorporated into the Decorating Centre giving customers somewhere to go to contemplate their ideas before making a purchase.

Loft says he is conscious that “people don’t go into shops, go to a machine doing something they’re not sure about and use it”, so staff are available to assist customers with the technology in store as well as with their projects and design ideas.

Homebase has also been looking at in-store staff responsibilities, freeing up their time  so they’re available to help customers. Some  are now dedicated to assisting customers, especially those working in the digital areas such as the Decorating Centre. The new stores have 15 - 20 extra members of staff and they’re bringing in new skills such as City & Guilds trained decorating consultants. Loft

explains that the extra sales these generate make the extra staffing costs worthwhile.

Exclusive brands and concessions are playing a part in the merchandising and store refits and, says Loft: “giving customers a reason to go to the shop. We have to give the customer the notion of having something of interest to come and visit. Homebase is doing this through its own brands such as Habitat furniture, lighting and homewares, concessions including Laura Ashley, licensed products and partnering with other brands such as Farrow & Ball. “We have some things that others don’t have,” Loft explains.

“Laura Ashley and Habitat create visits to store and loyalty.” He adds that Homebase aims to increase the number of brands and partners along with new formats. Fifteen proposition stores have been refitted at a cost of £1m each during the past financial year and a further 25 stores are being revamped during 2014 and early 2015. The following financial year will see an accelerated roll-out to the biggest and best stores to cover the most customers. Homebase plans to refit  100 stores to its full proposition over the next  few years while also trialling a lower cost refit, which will include digital features such as Create Your Own Look and iPads for staff, for the rest of its store estate. “Store flexibility is the hub for the customer experience,” Loft says, especially around delivery and the cross-channel proposition. The new website will have a flexible checkout, so customers will be able to arrange multiple deliveries via one checkout enabling some items to be delivered to store, others to their home, or reserved for collection in store.

QUESTIONS CEOS SHOULD BE ASKING:

Is there an overarching proposition that this sits under?

We as businesses need to ensure we have the right digital teams and that they

are freer of day-to-day trading;

IT needs to be faster, testing, with more partners. If you have a problem, open

up and see what solution others come up with;

Integrate IT properly with your business structure;

Be sure you have control and what’s yours is yours;

Get people from different backgrounds; it affects the pace on digital and IT;

Don’t forget the valuable asset of people and arm them with digital tools such

as customer-serving staff in store.


 THE WEBSITE



The new site is due to launch in April and will mirror the stores’ proposition of being inspirational for customers with advice on how to carry out a range of tasks such as hanging a door, along with better photography, product comparisons and service. But the DIYer hasn’t been forgotten, Loft adds: “Customers will still be able to just buy a tin of paint.”



The site build aims to improve consumer understanding and engagement through personalisation; it will also do this by learning about the customer’s house, their previous projects, what they are planning to do next. A customer will be able to save information  about their project such as moodboards, and by registering, those details can be connected with the information Homebase already holds about them through the use of their Nectar loyalty card. This means the firm will have one single repository of the customers’ transactions. It has 7 million customers with Nectar cards and this is used in more than 60% of its sales Enabling these changes to its ecommerce site is an upgrade to the latest version of IBM WebSphere from an early release. “Out of the box has most of the things we need,” Loft says explaining how the Homebase business is mainly run on SAP and WebSphere. He adds that he “wants to be an SAP/WebSphere business” as this is something that “will put us in good shape for the next phase”.



When it comes to choosing IT, the company  has made a cross-business decision that it doesn’t want to have lots of different packages. This means it will look at an SAP solution if one is available for any business issues before considering other providers. Loft says the upgrade “will get us to the forefront of the current world”. He adds that the firm has been working on the site and its integration into existing business systems since October 2013, with a go-live date set for the spring. “There are things that we’ll continue to work on in other areas, such as distribution,” he adds.



MEASURING SUCCESS

So, part way into its refit and renewal programme, how is it measuring success? Multichannel sales are currently at 7% with “anything enabled by digital” attributed to the local store’s postcode catchment area, Loft explains. This includes reserve online, collect in store sales – which have been the principal driver of multichannel growth – along with everything bought online, except for kitchens.



When asked about forecasts, Loft responds: “probably double that by 3 to 5 years”. This year has seen 30% growth with 2 million people visiting a store and 2 million visiting the site each week; a third of that traffic is from a mobile device.



Mobile has an important role to play in joining up the channels: Loft’s view of the future is that customers will be able to use an app to find products in store, click to chat and read reviews. A plant finder app currently available for the Garden business tells gardeners if a plant scanned in store is suitable for a specific position in their garden





if they put in criteria such as soil type and level of sun or shade. “Mobile offers a compelling experience across the channels,” says Loft. Nectar also plays a big part in how the company tracks customer store visit behaviour, increasing purchases and getting them to buy across what Loft calls extra worlds such as Home and Garden. It helps the firm to improve customer engagement, understand their transactions and build on triggers.



Homebase uses ForeSee for analysis against the competition, online analytics, and surveys online and in store. Its Paint us a Picture customer feedback format is an online and mobile survey that customers complete to receive a discount off their next purchase. “We also use financial measures,” Loft says. He adds that the company is “confident in stores” but that “digital should take us to another level”.

Loft admits that Homebase is “a long way from seamless at the moment”. But in terms  of cross-channel capability, it does have a clear picture of how customer shopping behaviour is changing, how they view home improvement and how Homebase’s customer proposition is now different from its shed heritage. 



Our view of the customer experience is ahead of where technology and the customer experience currently sit”, he explains. Homebase does have a goal, which it has been working towards since launching its prototype refitted store in 2011. Loft says the firm is passionate about services and the opportunity to get it right for the customer so that it becomes their natural partner for the next project. He says: “It does drive loyalty and we’ve found a way that requires investment – in refit costs and extra staff – but puts sales up 20%.” Homebase is proving that cross-channel transformations work even in the toughest of product sectors. By listening to customers and making the right investments, it is showing that digital and physical can be connected in a way that is more than just bringing the web into store.



Paul Loft will be keynoting the Customer Experience & Journey Conference at the Internet Retailing Expo on Wednesday 26 March at 10.30am.
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Featured In
InternetRetailing Magazine – March 2014, Volume 8, Issue 3

InternetRetailing Magazine – March 2014, Volume 8, Issue 3

Featured In
InternetRetailing Magazine – March 2014, Volume 8, Issue 3

InternetRetailing Magazine – March 2014, Volume 8, Issue 3

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