M&S: Evolving for the new normal
Laura Wade-Gery , Executive Director, Multi-channel E-commerce at Marks & Spencer shares her thoughts on the ‘new normal’ of retailing, what it means for M&S and how the business is transforming.
THE HIGH street has constantly evolved; even browsing was once a new concept to shoppers who were used to going into a shop to purchase specific items from a person behind the counter. By painting ‘admission free’ on the outside of the M&S store in 1894 so the concept of browsing was born. Presenting at the recent Internet Retailing Conference, Laura Wade-Gery, Executive Director, Multi-channel E-commerce at Marks & Spencer, spoke of how the high street has constantly evolved and how now with its digital lab, virtual rail and cross-channel retailing M&S is evolving for the ‘new normal’. But what is today’s normal? “It reflects how we’re living our lives,” says Wade-Gery. Nowadays, everyone is glued to a screen and going away on holiday doesn’t alter that fact since holidaymakers in a remote forest reserve in India can still download a new book to their Kindle in less than 30 seconds.
Internet access is growing fast, indeed 16 fold globally. In 2005, it was the developed world that saw the speedy uptake of broadband but by 2015 it is the developing world that is pushing that growth and mainly with mobile access rather than fixed lines. In 2015, over three quarters of connections will be mobile and of course data capability over those 10 years has also changed. Wade-Gery promted delegates to think back to 2005 and what it would have meant to download photographs or a video. “3D will force us yet again to think about how differently things can be done,” she says.
“Digital puts the customer back in the driving seat. Until recently, retail was location, location, location,” says Wade-Gery but the internet untethers customers from location. “The customer is changing,” she says and she urges retailers to never underestimate their customer, emphasising the point with a profile of her favourite lady who is a 75 year old member of the WI, a Conservative who lives in St Albans. This lady’s favourite website is Groupon because she ‘lunches’ and the best place to get discounts for restaurants is Groupon. “Never underestimate your customer!” The opportunity that the internet and changing customer behaviour brings is a revolution for M&S and all retailers. M&S is currently in the final year of a three year programme to transform the company into an international multichannel business; quicker to react, with new points of entry to the brand and the ability to work its store estate harder. “Multichannel customers spend more and as M&S adds channels that spend continues to rise,” says Wade-Gery. Expanding marksandspencer.com not only gives the company more reach, but drives more spend from its customers and by providing new ways to access products it is attracting slightly younger customers and extracting more value from its stores.
THE ROAD TO TRANSFORMATION
So how far down the road is M&S in transforming itself into an international, multichannel retailer? From the customers’ point-of-view M&S is reinventing shopping so that they, the customer, can shop how they want. The Shop Your Way slogan is being used to explain the principles of cross-channel shopping to customers with free next-day to store delivery launched to bring customers into store and offer delivery choice on top of the standard delivery, nominated day, next day and international options. Some 54% of orders are now collected from stores.
“We’re taking elements of technology to create a generally better shopping experience,” says Wade-Gery, and this is being done through inspiration and dialogue, choice and availability and making shopping easier and more convenient. Examples of the way that M&S is changing and using digital in store to enhance the shopping experience include the Kalverstraat store in the Netherlands in which the company asked “how could we transform the way we showcase our wider product offer – in a food store – so that customers experience the entire breadth of womenswear?”
The concept store opened in April 2013 to complement the Dutch localised web and mobile sites that launched at the same time. The E-boutique within the store includes two virtual rails made of three stacked 46" screens, three physical rails each with 50 clothing samples, each trend updated every six weeks and two pillar inspiration screens. Two order points and three dedicated style advisors equipped with iPads round off the ordering experience. A full-line M&S store with a full clothing, homeware and food offer will open in The Hague in the Spring of 2014, followed by a flagship store in Amsterdam by Autumn 2015.
The business unit, store design and ecommerce teams have collaborated to make existing stores work harder and bring the M&S multichannel experience to life. Some 1,500 iPads are being used by staff in stores to help customers order items not available in store for delivery to their home or for pick up in store. Wade-Gery has been “impressed by store colleagues” who have embraced the iPads.
Earlier in the year they were all taken into the school wear department to make sure that customers had their entire school uniform requirements before leaving the store. Some “40% of school wear orders were taken through the digital platform with many orders placed in store,” she says. Over 250 Browse and Order points have been installed across 82 stores enabling customers to shop more of the M&S product catalogue. “We’ve all had computers or kiosks in store,” explains Wade-Gery but “design really really matters”. M&S transformed the store computer into “a giant iPod on a stick” that’s inviting and looks like something integral to the store. The new home concept has been launched in 33 stores with “encouraging” sales performance. It not only maximises selling space, with touch and feel sample displays to showcase items such as towels, fabrics and upholstery, but customers can browse and order from the full range via iPads and large format touch screen points. The format also features interactive buying guides, such as ‘Your Perfect Night’s Sleep’, which helps customers to select the ideal duvet. The Beauty Shop, with virtual makeover counter, is now in 55 stores and delivering strong double digit sales uplifts. The ‘counter’ uses facial recognition technology to enable customers to upload a photo and experiment with the latest beauty trends. Featured both online and in store, it has attracted more than 200,000 visitors to date. “We’re just at the beginning of understanding and exploiting wifi in store and that will be a huge transformer of the experience for in store shoppers,” says Wade-Gery.
Online, visitors to the marksandspencer.com site increased over the past financial year with 3.6 million weekly visitors coming to the UK site, attracted by a combination of improved navigation, more style advice and greater choice, including 40% more online product exclusives. Online innovations included Dressipi, “a 21st Century solution,” to make a personal shopper available to all. The online business accounts for 13% of General Merchandise sales (compared to 10.9% in the previous financial year), with 40% of all dresses, and one in four M&S suits, sold online. In May 2012, M&S relaunched its mobileoptimised site to deliver an even richer browsing and shopping experience with its first transactional iPhone app launching in July 2012. The M&S Home iPad app, which brings the home catalogue to life in an easy-to-shop format, helped furniture sales to increase. Mobile and tablet sales have increased by almost 200% and now account for 18% of marksandspencer.com sales.
The area where M&S continues to bloom is its food hall which has seen continual like-for-like sales growth over the past 12 financial quarters. Meat and fish for a special occasion can be ordered online for pick up in store. The Occasions Made Easy service includes large joints of meat, whole sea bass and cooked lobster via the virtual fishmonger and butcher. M&S already sells an assortment of party foods, cakes and office lunches online for pick up in store as well as food for Christmas and New Year. Will the company be launching a full scale grocery ecommerce service? There is no announcement yet but with a further 150 Simply Food stores opening in the UK over the next three years the reach of its food offering is certainly expanding, sales are growing as is its market share in the sector. Its Food to Order service is a £130m annual business with 30,000 orders per week. Sir Stuart Rose (who also keynoted at the Internet Retailing Conference), commented to a Guardian journalist at the event that “by next year, M&S will be the only large grocer that doesn’t have [an online grocery service]. If the customer wants it, eventually they are going to have to provide it,” he said.
The multichannel expansion continues in international markets as well with Shop Your Way and fully mobile-optimised sites complementing localised websites in Ireland and France. M&S is now online locally in ten markets, including Germany, Spain, Austria, Belgium, the Netherlands and Luxemburg, and delivers to over 80 countries. In addition to its European ecommerce offer, M&S is working closely with international partners to benefit from their local infrastructure and expertise to help the company explore growth opportunities in more complex ecommerce markets. In January, it launched an online shop on China’s leading retail website TMall and in February, plans were announced for an ecommerce offering for the Russian market, operated by existing franchise partner Fiba.
THE OPERATIONAL CHALLENGE
Wade-Gery explained that the challenge when she joined M&S was that the company was still a traditional British retailer with 80,000 staff with skills orientated to store retailing. The Amazon platform was becoming a limiting factor particularly around multichannel plans and integration with store and “our DC infrastructure was not fit for purpose,” she says. Some major changes have been underway in terms of supply chain, systems upgrade and multichannel platform. A fully mechanised, 900,000sq ft distribution centre has been built at Castle Donnington to fulfil ecommerce orders and act as a national DC for the stores. Opened in May 2013, it has the capacity to process and ship up to one million products per week to store and customers’ homes.
As part of the supply chain transformation, which sees a small number of large DCs replacing the network of 110 small warehouses, Castle Donnington will enable better visibility of stock, drive improved availability, faster delivery times and lower distribution costs. It also reduces the company’s reliance on manufacturers to distribute stock. The Amazon platform is being replaced and marksandspencer.com site is being rebuilt in what Wade-Gery concedes is “a huge undertaking”. M&S will add in some things to “make it distinctly ours,” she says of the bespoke multichannel platform that will drive marksandspencer.com and power all M&S’ multichannel technology, integrating into store and service systems. Work to create the new multichannel platform is being led by SapientNitro, part of customer experience company Sapient.
It will build key capabilities including ecommerce, content management, search and analytics to create a customised multichannel customer experience. Tata Consultancy Services will provide order management, product information management and integration with existing systems. SapientNitro will also become M&S’ digital partner in a relationship that will extend beyond the delivery of the new digital platform in January 2014. Supported by the new DC, the new website and multichannel offer will transform the M&S customer experience, improving availability online and the ability to offer later cut-off times for customers’ orders to be delivered next-day to store or their home. Hinting at what the new site may look like when it goes live in the Spring of 2014 Wade-Gery says that it will be “merging content and commerce absolutely seamlessly so shopping is more interesting”. Maybe hinting towards more interesting content and inspiring customers, the Style Edit section of the existing site offers inspiration and advice through editorial features and videos on the seasons’ trends and selected outfits for different occasions.
The company has also been bringing different skills into the organisation; “from being a company with no coders or engineers to quite a substantial group of developers who are excited about turning M&S around and being liberated to innovate”. But how do you turnaround a large corporate to work with nimble innovators as the digital industry produces? M&S realised that it needs to be agile, with the right infrastructure in place and the ability to innovate with pace if it is fulfil its multichannel ambitions. In February 2013, the Digital Labs function was launched in order to help the company move faster in developing first-to-market technologies for ecommerce, in-store technology and digital marketing. The Digital Labs team of specialists is out there working with UK start ups, testing emerging retail technologies, building prototypes and developing concepts for implementation on a larger scale across M&S. Bringing the corporate and the nimble entrepreneurial enterprise together brings benefits for both parties. For example, “bringing a five-person start up into sourcing has been hugely powerful,” says Wade-Gery.
Everyone who works in the business has to understand the multichannel customer. The new normal; the idea that they will not just have the product available that’s in front of them but the full breadth of every category along with dialogue with customers and trend info. The top 120 managers were put through a course “to understand that multichannel is done by all of us,” she says explaining the revelation of the swimwear buyer who can sell all year round without being constricted by space. The 2012/13 year marked the peak of the 3-year £2.3bn transformation plan in terms of investment but 2013/14 will be a milestone for M&S’ multichannel journey. The launch of the new platform, coupled with a fully operational distribution centre, will significantly enhance its capabilities and help deliver tangible benefits for the business and its customers; creating a strong and efficient platform from which to deliver sustainable long-term growth.