Debenhams has just announced an 82.4% growth in its Direct business. Emma Herrod speaks to Simon Forster, Head of Online Trading, about what is driving that expansion.
THE DEBENHAMS Direct team has had a busy two years overcoming cross-channel challenges, enhancing the customer experience, launching iPhone,Android and Nokia apps and maintaining daily trading on a website that receives 2.5m visits a week.During its last full financial year, the Direct business grew by 88%; it built on this in the six months to 26 February to achieve a growth rate of 82.4% compared with the same period of 2010 and post sales of £92.3m. Overall gross turnover for the group rose by 3.4% on last year to reach £1.46bn.
Simon Forster puts this phenomenal growth down to two things: having the right team in place and increasing the number of access points through which customers can buy from the company.
The Team
“We trade the site quite hard,” says Forster, explaining how the entire team is focused on sales, so everyone has responsibility for the customer experience.And, while Debenhams’ dotcom operation is a separate division of Debenhams plc, to allow it to focus on growing channels, it works hand-in-hand with the rest of the business functions and will eventually be fully integrated. In fact, around 50% of Forster’s time is spent liaising with other areas of the company.
Product experts from other parts of Debenhams have been brought into the ecommerce team.He says:“If we send out an email about dresses then we need the knowledge to pick the right product, combined with ecommerce’s experience of delivering the email. If a product is on rotation on the homepage the clickthroughs will tell us pretty quickly whether or not customers are interested in the product.”
He adds:“The customer doesn’t buy from us because it’s a website, they want that product. Ecommerce is a retail business, not a website.” So while Direct has a separate focus in the business, the customer sees only the Debenhams brand.
It has also invested a lot in a strong customer acquisition team and through digital marketing channels such as search.“We don’t do much above the line advertising,” says Forster,although its website is included in all the retailer’s advertising.
The second factor that has fuelled Direct’s growth – the increase in the number of access points – includes a collect-from-store service, in-store ordering and mobile apps.
Behind the scenes
Debenhams is concentrating on a cross-channel future for the business. Forster says he has been lucky in having strong support from the board.This will continue when the current Deputy Chief Executive, Michael Sharp,assumes the role of CEO from 5 September this year.“His view is to trade the business,” says Forster.
The skills needed to run a successful crosschannel operation are far more than technical ones.“The technology is changing so quickly,” says Forster.He explains that it’s a case of having people who can learn, innovate and adapt alongside those with core retail skills, since crosschannel retailing requires a blend of employees skilled in different areas such as marketing, logistics and so on.
Cross-Channel thinking
“The organisation is becoming seamless [as far as the cross-channel customer experience is concerned],” says Forster. Shop assistants should be able to make a sale regardless of where the stock is located and this is one of the reasons that self-service kiosks are being rolled out across the department store chain.The touch screen devices have been installed in 24 stores to date with full roll-out expected to be completed by the autumn. “They will be a massive move on again for our customers,” says Forster, since the kiosks enable shop assistants to help customers order out-ofstock or home delivery items.The obvious advantage for the smaller stores is that customers will have access to a broader range of products.
The kiosks don’t use the same interface as the website. It’s ‘a big-button’ solution like the smartphone apps,according to Forster.Customers using the kiosks generally know what product they want to see and want to navigate to it quickly. Initially, they will be used with the assistance of store staff but Forster is hopeful that customers will be comfortable using them on their own in future.He explains:“If we have the interface right customers will want to use it [the kiosk] themselves. If not,we’ll know we’ve got the interface wrong.”
The retailer has also developed a mobile strategy. It launched SMS marketing in September last year and rolled out mobile vouchering and a fully transactional iPhone app in October.The company had high expectations of the app and it hasn’t been disappointed, since the initial investment was paid back within just three weeks of its launch.
Alongside shopping functionality with multiple product images and reviews, the app has added options and cross-channel functions: a wishlist; a link to Debenhams TV; a store finder which gives location details; and the ability to enter a postcode to get the opening times of local stores with a link enabling users to call the store.There is also a scanner for reading barcodes in store and QR codes to enable customers to obtain further information. Codes are currently being used in shop windows and in advertising.
To date, the iPhone app has been downloaded 400,000 times and the avalanche of downloads shows no sign of abating.“Every week we are seeing a consistent number of people downloading the apps,” says Forster,who reveals that it had come second to Amazon by only 0.1% in a recent app usability study by eDigitalResearch. Over five months, the iPhone app has:
- brought in £1m sales;
- been launched 2.4m times;
- been used more than five times by one third of users;
- accounted for 15,000 days of usage (equivalent to each session lasting nine minutes);
- been used to scan 90,000 barcodes;
- been used across channels, for example, to find stores;
- extended the shopping day with peak usage at 10pm compared with the online shopping peak of 7-8pm.
Harriet Williams, strategy and online marketing controller at Debenhams, told delegates at the recent Internet Retailing Expo that 17% of customers buy directly via the iPhone app and 30% go on to purchase in store.
Another example of the impact of smartphones on the retail business comes from a test using the same voucher offer sent by email, text and on paper to customers in October 2010.The mobile voucher drove a greater percentage of recipients into a store.
The iPhone app has also generated an uplift in basket value since this shopper segment has a higher average order value than online customers. The largest order in one transaction stands at £1,500.According to Williams, initial analysis of m-commerce sales shows that the majority of app shoppers are new customers and so represent incremental sales.
This app has been followed by apps for Android and Nokia phones in March 2011 and a‘Beauty Club’ iPhone app in April.The retailer says it plans to have a mobile-enabled site ready at some point this year.
Forster is clearly excited by the features mobile can offer and their potential effect on sales. Customers currently expect to see simple, intuitive functionality such as getting directions to a store. “We then have to convince them to walk into that store,” Forster says.One way to entice them in is offers and vouchers; another is Google’s local shopping feature which Debenhams is currently investigating.
Customers need to see the same product information across all channels but formatted in a way that’s easy to read on a mobile, so Debenhams runs one content management system that can send information to all channels. There’s also one stock file for all channels and the retailer is working towards having a single view of the customer.“We do have a long way to go though,”admits Forster.
When asked about the proliferation of channels and whether this is changing customer habits, Forster responds that “customers aren’t opting for channels, they’ll want to use both”.The example of furniture buyers using multiple channels to research, view, sit on and purchase illustrates his point.“There’s an‘and’culture for channels not ‘or’ so retailers need to consider all of the options,”he adds.
Debenhams & other online developments
Customers can buy any product through highlighted click-to-buy buttons on Debenhams TV.Though Forster says:“TV is a good example where customers will access the website not just for purchasing.”The channel launched in late October 2010 with the aim of giving customers a fresh alternative to the traditional browse and buy online experience. Its footage includes interviews with designers, such as Ben de Lisi, Henry Holland and Matthew Williamson,who work with the brand, to fashion advice from the retailer’s product range experts. In a bid to generate attention through social media the launch content focused on seasonal dilemmas such as ‘what bra size your wife might be’ and ‘the perfect gift for her at Christmas’.
While not sharing specific ROI figures for Debenhams TV, Forster does say that its results concur with the industry accepted evidence that one in two purchases in store are now researched online. In response to a question at IRX,Williams said many people are engaging with Debenhams TV via the website, iPhone and YouTube and these same people spend more.
Forster says Debenhams wanted to offer engaging content through the Debenhams TV channel online “so we have to be conscious of what the customer wants”. Likewise, the retailer’s use of the Fredhopper searchandising solution.“If Fredhopper is working well the customer gets a good experience,” he comments.
Other major developments on Debenhams.com include a major overhaul of the homepage to include rotating merchandising messages and a review of the entire customer journey.This has led to better navigation enabling customers to get to products quicker and the checkout faster.“We’re still in the infancy of multivariate testing and expect to see some great results through that,” comments Forster.“If we can fine tune to get functionality right such as cross-selling – that is, accessories to go with a dress and‘other customers viewed’ – it is the same for the customer as having a personal shopper in store.”
An interesting development for Debenhams is that the customer profile for store and online channels is now the same.A year ago the best customer in store was older than the best one shopping online.
“There’s technology but at the end of the day it’s the organisation acting and thinking in a crosschannel way,” says Forster.“We’re as good as the customer assistant on the day.”
Sales are credited to the separate buying team regardless of the channel through which they are made and orders collected in store are attributed to that particular shop.This means everyone can count them as company sales so teams don’t see different channels such as ecommerce as competition but as an opportunity to sell more.
The customer is not always right
Debenhams puts a big emphasis on what its customer think. It uses ForeSee onsite surveys to test the customer experience and journey and has a focus group of 15,000 consumers. Information from these channels is backed up by strong website metrics.“We are highly tuned to what customers think,” says Forster.
But he points out that “the customer only knows what they know now”.They want Debenhams to offer them great value for money, choice of products and brands and to make it easier for them to shop; so its annual customer survey asks what will make it easier for them. Last year,when asked whether they wanted to interact with Debenhams via mobile, the answer from customers was an emphatic “no”and mobile ranked at number 100 in the list of requirements.
Luckily Debenhams decided to take a strategic view and invest in mobile anyway.This year,mobile was ranked in the Top 10 in the same customer survey. Forster explains that there’s always going to be a choice between what the customer is telling the retailer now and how this can be improved, and what Debenhams should be doing next.
Fulfilment
In August 2010, a new warehouse opened in Peterborough through which all ecommerce and collect in store orders are fulfilled. The warehouse went from a bare site to operational in only six months. Supply chain has a view of all stock and its location in the business, but store replenishment is handled elsewhere, although the retailer says it aims to bring everything into one single stock holding.
Customers don’t shop in isolation at only a single retailer; they shop at Debenhams and in the rest of the high street so they will compare the retailer with what its competitors are offering.“They’ll tell you what they like and don’t like,” he says, but to get real answers questions have to be couched in a certain way. For example, rather than asking customers how often they would like to receive emails, they should be asked whether they receive too many.
Whatever method/s are used for customer feedback the key, says Forster, is to be consistent since consistent feedback will inform you whether you’re going the right way so you don’t jump the wrong way from random, one-off comments.
Customer Reviews
Customer reviews have been a good way of getting customer feedback and are becoming increasingly important to the retailer with the information being fed back into the business.More than one third of products have been reviewed with Debenhams using Bazaarvoice’s automatic moderating process to remove any profanities. Forster explains:“If we moderated the review in any other way it would soon be discussed across the social networks. If a customer writes a review they expect to see it.”
He adds:“We also have a lot of followers on Facebook. If there’s a problem our customers will let us know – and we want to know.”
Debenhams was one of the launch companies on Facebook Deals in the UK,a system through which brands can offer rewards and discounts when users check in with Facebook Places. Its first giveaway was more than 1,000 free mascaras and makeovers for the first 10 people to check in at each Benefit brand counter at Debenhams stores across the UK. Forster says Facebook Deals is something it will continue to do.He adds:“Do we get a hard cash figure from it? [Facebook overall] No. But you have to look further ahead – with so many people using it you’ve got to trust retail instinct and don’t rely on ROI.”
Future plans
The iPhone app has brought new customers to the department store chain and not just from the UK but from all over the world, according to Forster.
An Ireland-specific website Debenhams.ie was launched in November 2010.The new country site is based on IBM’s WebSphere 7 – Debenhams.com currently runs on WebSphere 5.The new platform will enable future country-specific sites to be run from one pot of data and localised to each country. Roll out is expected to happen from the end of this year.The UK site will be upgraded in early 2012.
Debenhams currently delivers internationally to France, Germany, Spain,Sweden, the US,Australia and New Zealand via the UK site,and has 62 franchise stores mainly in the Middle East and Russia.While Forster wouldn’t be drawn on specific countries for the new ecommerce launches, he did say that it will serve states in Western Europe; so it seems likely it is going to expand in the European countries into which it currently delivers.
“International expansion is very important over the next two years,” comments Forster. But he cautions that you “have to have people who understand the local market but also understand Debenhams”.
Orders from the country-specific sites will continue to be fulfilled from the UK – as are those for the Irish site with delivery being made by Nightline – but this will be reviewed as order rates increase.
Although Debenhams has been busy overhauling its UK website, launching into mobile commerce, self-service,multi-channel ordering and collection, joining up product and stock data, it will continue to make significant changes over the next two years as it replatforms the UK site, launches an m-commerce site, reinforces its position with international customers and takes further steps towards a single view of the customer.
Forster is conscious of the fact that cross-channel is not going away,and while the retail industry is quite open to what this type of business will be like, it’s a different way for customers to interact and they are evolving faster than the retail industry itself. By mixing customer insight with a strategic view of the retail business,Debenhams has certainly found a cross-channel strategy that’s paying dividends.
