Ecommerce professionals, for more than a decade at the vanguard of innovation and radical change, are themselves now having to adapt as ecommerce is no longer a mere channel but an equal partner with stores. The three keynote speakers at the recent InternetRetailing Conference – from Airbnb, Urban Outfitters and Halfords – shared their thoughts with Emma Herrod on how new horizons in marketplaces, international and mobile are providing new opportunities for retail growth and differentiation.
Online retailing has changed from the days when ecommerce professionals were just happy that their site was working; today, ecommerce is so intrinsic a part of multichannel that maybe it’s time to drop the term itself in favour of simply, ‘retailing’.
Retailers, regardless of their size, are now being judged by consumers against extremely high standards. These standards are being set by innovators such as Airbnb – which has a business model that couldn’t have existed pre-digital – by entrepreneurs and by elite companies which are connecting with customers in new ways. Urban Outfitters, for example, builds its communities around consumer lifestyles, music, flash events and giving stores the autonomy to morph the global brand to fit the local customer.
Nowadays, every digital interaction, regardless of sector, is training retail customers to be demanding and unforgiving. Shoppers want retailers to be as slick and as capable as Amazon, as exciting as Airbnb and as trustworthy as Boots. The demands are high and that affects not only the people, processes and technologies that need to adapt to the changing customer, but also the brands themselves and the values they bring to the market and to their customers.
Airbnb, for example, has kept its core brand values and culture as the company has expanded from its inception in 2008 to 2,500 employees today. In fact, it had written its core values before it had even hired its first employee. Its six core values embrace its ethos of being a hospitality company making people feel at home wherever they are: Champion the mission (of belong anywhere); Be a host (Airbnb is a hospitality company); Every frame matters (so look at the end-to-end experience of everything); Simplify; Be a cereal entrepreneur; Embrace the adventure (having that youthful spirit regardless of age, being open minded and adaptable).
Every candidate is rated against the 6 values as part of the performance review process. James McClure, General Manager Northern Europe, Airbnb, points out that the feel of its offices around the world is different as employees “pay homage to the greater culture”, but it becomes localised as everyone remains true to who they are as well as who they work for.
Being a hospitality company, it puts great store in the customer experience, and this extends from the staff through to hosts, too, with guest reviews rating their helpfulness and friendliness. “You can’t get more than four stars for just features; you need interaction to get a 5-star review,” says McClure. And these five-star reviews are as good as a personal recommendation from a friend.
As the hosts listen and interact with the end customer, so Airbnb listens to the hosts. It holds an annual conference for hosts which last year attracted 5,000 from 100 countries. The event helps the business to improve its understanding of why people become hosts and how they can work with them better. Engineers also attend the event, evaluating ideas and making changes to the site during the conference. “Last year, there were 50 tweaks made during the three-day event,” says McClure.
The power of the community also comes to the fore with marketing campaigns. In 2014, Airbnb gave 100,000 hosts $10 each and asked them to do something that makes #onelessstranger in the world. One host on holiday in Israel, for example, asked anyone who was in Tel Aviv to join them for dinner. “If you give creativity to people who know you best, you get creative ideas that an agency wouldn’t come up with,” says McClure.
It is this sense of community, openness and trust that has built up with the sharing economy that’s helping to build loyalty for longer-established brands and retailers.
At Urban Outfitters, whose mission is to become the pre-eminent global lifestyle community for twentysomethings, this is created through store events and spontaneous happenings beyond the store environment.
The 45-year old fashion business has remained focused on the customer and has tapped into the community of its target 18- to 28-year-old demographic as it expands into new markets and categories. Products and services have changed as the brand has moved into beauty, intimates, shoes and homewares, and it has brought new experiences into the stores, including food and beverages and live music. “We increase the reason for people to go to stores. We create a real community,” says Andrew McLean, Chief Operating Officer, Urban Outfitters, and “that means moving with our customer, in channels and in stores”.
Its use of music highlights how the brand is building a community and working across channels. It has bands playing in stores, sells vinyl and gives users of its mobile app access to new music, interviews and enables them to create playlists. McLean says that the brand wanted to share customers’ in-store music experience across other channels.
“Digital is part of our world and connects all of our world,” he says. It also forms one of the major ways in which the brand serves individual countries, localising the experience but in an omnichannel way – which encompasses wholesale, retail and concessions. In one category, the company is helping customers to put together an outfit, while homewares is connecting all the channels as customers click and collect or use the stores as a showroom.
But at its core is high-impact imagery which can be customised to change the look of the brand in different markets. “This is backed up with great products,” says McLean. By staying focused on the customer, and using lots of pictures rather than words, Urban Outfitters can connect with customers across all channels while supporting the brand story.
The brand has to remain focused on the customer over time, too, and always be ready for the next generation. “You don’t do that with a bunch of 40-year-olds,” says McLean, explaining how a youthful culture, intellectual curiosity and a belief in the customer has meant hiring people in their 20s and early 30s who are able to connect with its target customer. “I now have a bunch of 20-year-old employees who tell me what we should invest in and we test and learn,” he says. In fact, Urban Outfitters uses test and learn “to survive”, throwing out lots of ideas, aggregating them and looking for the winner. He explains that it’s like an ongoing A/B test that happens to be across channels rather than just on a website. He warns: “If you don’t have that curiosity, I don’t know how you’ll be successful.”
Tony Rivenell, Chief Digital Officer at Halfords, agrees that retaining the essence of the brand is essential, and says companies need to look at how they support customers and staff. As the firm transforms its big box image into a brand that’s focused on supporting customers through life’s journeys, from car seat, to bicycle to learning to drive and so on, it is “embedding service into its dna and enabling colleagues through support”.
Halfords has a click and collect rate of 90% and that, explains Rivenell, is because it sells bikes which have to be built. It also give customers a connection with shops, so even if their expectation is that they want things quicker and delivered wherever, the flip side for Halfords is that by building their bike the company will always have a personal relationship when the customer goes into store to collect. “So, as the mobile channel grows, the fulfilment of that will be a service that we offer,” explains Rivenell. “It’s how we deliver that in a seamless, joined-up way that cuts across the channels, rather than simply ordering from a shop.”
Shop colleagues are allowed to be experts in their area and are given extensive support and training, as well as access to a range of digital solutions being tested by the company. “We can’t simply put devices in shops and expect people to pick them up,” says Rivenell.
One trial has been looking at how smart watches can be used to support staff to do their job better, improve services and free up their time to serve customers. They also reduce the amount of paperwork required to pick an order in-store and prepare it for customer collection. By generating a pick list, the devices enable staff to pick orders while they walk around the shop doing other tasks, an important factor when 90% of online orders are collected in store.
Technology is also empowering customers. For example, Halfords has trialled touchscreen kiosks at the front of its shops, allowing customers to confirm their order and page a staff member to bring it to the collection point. The technology has also helped increase collections by 1%.
Rivenell points out that Halfords is considering what digital support it will give to colleagues on the back of the trial.
New Horizons: Mobile
Halfords was founded in Birmingham in 1892 and is now the UK’s leading retailer of motoring and cycling products, with stores across the country and multichannel capabilities. Some 90% of its online orders are collected in store.
Talking about how the company has expanded through mobile, Tony Rivenell, its Chief Digital Officer, explains that mobile has to be developed in a way that’s right for the customer, gives them value and is relevant to the brand. “What is the value add that will be delivered through these devices?” he asks.
Fitting a wiper blade on a car isn’t a digital task – there are many physical steps that need to happen too – but booking the appointment online could be part of the solution and part of the transformation that mobile brings to the company.
CHANGING CUSTOMER BEHAVIOUR
What McLean finds interesting about the way in which consumer behaviour is changing, apart from the move to ecommerce, is the amount of research that takes place online before customers go into a store. This not only requires the company to act in a seamless way, with the same offers and focus applied to every touchpoint, but has also led to it making sure that it has created a great mobile experience for its customers so they can get the information they want.
He explains that if the customer is spending more time researching before they come into store, you have to think about how to present information in a way that relates to the overall experience, such as how the shop on their mobile relates to the overall store experience.
Rivenell agrees that consumer behaviour is constantly evolving. “The www of whenever wherever still exists but how do you make that work for your business in a way that’s also profitable, sustainable and works for both sides?” he asks.
While Halfords and Urban Outfitters have stores and a pre-digital heritage, Airbnb is a recent entrant to the market, and one which couldn’t have operated before digital made the widespread sharing economy possible. McClure highlights the importance of providing customers with engaging information when you don’t know when they are travelling or even if they are going to travel to the location they are researching. It’s about the brand as a credible content provider. Airbnb, for example, has built up guide books full of crowd-sourced recommendations from its hosts. The important point, believes McClure, is to be engaging so that when it’s time to buy, it has built up your credibility either for that trip or the next one, he explains. “That content is really important and you have more chance of getting that transaction at a later date.”
New Horizons: International
Urban Outfitters is a 45-year-old brand which started in Philadelphia in 1971 selling fashion apparel to the 18 – 28 age group. The brand’s philosophy is to keep track and stay a little ahead of its customers, adding stores, mail order, online, concessions and wholesale as part of its journey to becoming a global brand. It has also expanded into a lifestyle brand selling beauty, intimates, shoes and homewares.
“We use the channels where they matter,” says the firm’s Chief Operating Officer, Andrew McLean, as the brand moves to engage with customers anytime, anywhere. Some of its growth internationally has been spearheaded by its mix of channels and its ability to engage the customer in one channel, such as social or email, and interact before they walk into a store.
McLean says that they’ve had to move with customers through the introduction of the ‘new’, whether that’s new product categories or how they are experienced across channels, such as selling vinyl and the music experience in store and how that’s taken into other channels.
Urban Outfitters has also created immersive experiences wherever it sells, be that web, wholesale or concessions, producing captivating content and imagery in a story that the customer can live through. “It’s about other brands, too, and sub-brands as they become relevant to the customers.” These are then localised to different countries.
Looking to the future, McClure believes that augmented and virtual reality could redefine how travel is bought, since travellers would be able to get a real sense of a place, the room, sights and sounds before they make a booking. “It would ease the choice between whether they go to the South of France, Greece or Dubai,” he adds. Although there are many applications for other businesses, particularly travel agents, it will “change how people consider and dream about the options they have”. As far as the timeline is concerned, he draws comparisons with mobile, which took from 2007, when people were talking about what it could do, till 2012, when the conversation had moved to what mobile is.
“Social commerce will make a return, too,” believes Urban Outfitters’ McLean. He talks about China and the amount of commerce undertaken by the early adopters on WeChat and Weibo. He cites Burberry and Tommy Hilfiger as brands leading the way. Although f-commerce didn’t come to fruition in the West 8 or 9 years ago, McLean thinks “it will start to find its way back into our dna over the next few years as some of the Chinese retailers expand further into Europe and America”.
He explains that Chinese retailers treat the commercial element as the final point in a very long chain of a relationship.
Retailers still have a lot to do around personalisation to individualise the experience across channels, believes Rivenell, saying: “There’s still a huge opportunity for us in that space. We are playing catch-up with the disruptor start-ups.” But he does feel as if the industry is discounting individual experiences before they’ve become a reality because, he says: “it’s difficult to get there. In some ways we’ve gone, ‘this is tricky, let’s move to the next thing’, but there’s still room to grow in that area and that quite excites me.”
He understands, though, that culture change doesn’t happen overnight. Retailers need to be creators, strategists, technologists, futurologists and collaborators. It isn’t an exact science and everyone’s growth journey needs to be in line with their business. And whatever role people are in at the business, it’s still about the bottom line and how growth is delivered, because, at the end of the day, everyone is there to improve the firm and the brand that they represent.
Whether expanding through marketplaces, mobile or across borders, changes have to be managed in a way that remains true to the brand, mixing channels and putting the customer first.
New Horizons: Marketplaces
Airbnb was started with the simple objective of enabling the San-Francisco-based founders to pay their rent. They rented out an airbed in their front room, gave the traveller breakfast and told them about the local area. Airbnb has since expanded its network to 2.5 million places to stay and operates from 20 offices. “When people are travelling, they still want to get the local experience,” says James McClure, General Manager Northern Europe, Airbnb.
The sharing economy, which connects a distributed network of people and tangible or intangible assets, would not have been possible before the internet. While making use of the idling capacity of those assets, the sharing economy encourages meaningful interactions and trust while embracing openness and inclusivity. While it was retailers who started reviews online, they now underpin peer-to-peer networks. Twenty 5-star reviews on a flat in London is as good as a friend recommendation.
McClure shares learnings that:
- Experience rates higher than services – interaction with the host to make the person feel at home ranks higher than a hotel-type experience;
- Culture and core values – the core culture was written before the first employee was hired;
- The power of community – the hosts are where the marketing stories are and they can tell the story better than we can.