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12 best-practice approaches

Retail can’t stand still because customers don’t stand still. Where once it was seasonality that dictated most of the timescales for change and new stock on the high street (real or virtual), fast fashion now sets the pace. Retailers need to be fast to keep up with customers’ ever-changing moods, says Sean Fleming.

1 Visual search looking good for Asos

Asos has enhanced its mobile app to let UK shoppers pinpoint items they’re looking for using visual search functionality. It’s a move that ties in nicely with social shopping, which is another trend likely to find its way into many retail strategies over the course of the next two or so years. Shoppers can search Asos’s range of more than 85,000 items for things that are similar to those shared by friends via Instagram, or even pictured in a magazine. The visual search tool is currently shown as a camera icon that appears in the Asos app search bar. With a single tap, customers will be able to take a quick photograph of something they see someone wearing – and task the search tool to find similar products. Users can also upload photographs from a camera roll, such as a photograph taken previously or a screenshot from social media, and search for products that look the same. Asos is also using artificial intelligence as part of its recommendation engine, which now learns customers’ preferences over time.

2 Payment as a tool to build loyalty

Ocado is using payment, or pre-payment to be precise, to help engender greater customer loyalty. Its Smart Pass subscription scheme entitles members to free delivery and 10% savings on selected brands, and is having an effect on both the frequency and value of orders. Smart Pass members place more orders, yet they are spending less each time. While order volumes rose by 15.6% during the first half of the year to an average 260,000 a week, basket sizes fell at the same time to £108.45, which is a drop of 1.4%. The challenge facing Ocado here is to manage the increased costs that an increase in the number of orders brings, when the average basket size is declining. Ocado said recently that more than 50% of its first-half sales were from Smart Pass customers, and explained the decline in basket value as a case of shoppers taking advantage of the available discounts and promotional offers. It also said the number of active customers grew to more than 600,000 by the end of the first half of the year, 11.3% up on last year.

3 Staying firm on pricing strategy pays off

It seemed like a bold decision at the time, but Marks & Spencer is seeing growth in full-price sales in clothing and homewares, as it sticks to its guns about avoiding heavy discounting. It also opted not to run a clearance sale in the first trading quarter of its current financial year. Food sales grew by 4.5%, in line with the M&S strategy of increasing the number of Simply Food stores over the course of the next two years. The retailer is prioritising better ranging and stronger promotions, which, it says, is assisting its move toward reduced discounting. It also says full-price clothing and home sales rose by 7% as the number of promotions fell. Its international sales were up by 3.8% thanks to the fall in sterling – but down by 4% when currency fluctuations are taken into account.

4 Multichannel focus for Sports Direct

Sports Direct has put multichannel development at the heart of its innovation and strategy activities. With a single web platform underpinning all its websites and ecommerce sites, investment in ecommerce and in managing the customer experience online is made more efficient, the retailer says. Intertwined with online development work, it is also closing some smaller stores and opening a new flagship store on London’s Oxford Street for its Flannels brand. Group revenue of £3.2bn in the year to April 30, was up by 11.7% on the same time last year. Pre-tax profits of £281.6m were, however, down by 22.2% on last time. At home, the retailer has attempted to quieten some of the concerns regarding employment practices, with a staff feedback initiative for directly employed and agency employees in its warehouses. With international expansion in mind, Sports Direct says it is developing a more tailored approach to key local markets. Since year end, it has bought 50 stores trading as Bob’s Stores and Eastern Mountain Sports in the US, which it will use as a way into the US market.

5 Taking the same-day delivery fight to Amazon

Tesco is making its same-day grocery delivery service available nationwide, claiming it will be able to cover more than 99% of UK households, from Shetland to Cornwall. The same-day delivery service will be fulfilled from 300 Tesco stores with an order cut-off of 1pm to take delivery by 7pm. The service is priced at between £3 and £8. The expansion comes as Tesco has already seen an 18% growth in demand for the service so far this year. Its same-day click-and-collect service is also available from 300 supermarket branches. This service means Tesco now outperforms rival Amazon on grocery deliveries since it offers same-day delivery and collection across a much wider geographic area of the country due to the reach of its network.

6 Amazon: coming to a locker bank near you

Not famous for letting the grass grow under its feet, Amazon has launched the Amazon Hub in the US, enabling deliveries to apartment buildings to be made by any carrier. The hub is essentially a locker for residential buildings where any carrier can leave deliveries for residents. While locker solutions are already available in the UK, this innovation, which starts life in Amazon’s US market, stands out because it is open to parcels from other retailers. Amazon describes the system as: “Your fast and easy way to receive packages from any sender.” It also emphasises the convenience of the locker system as being “open to anyone, at any time”. Locker banks and centralised click and collect are not new – but this system is different in that it will get Amazon’s brand before shoppers when customers buy from other retailers. That makes marketing as well as logistical sense for the retailer.

7 Zalando takes a leaf out of Amazon’s book

Zalando is to open two large fulfilment centres in Poland and Italy, alongside smaller fulfilment centres and localised warehouses near key cities, including Paris, Milan and Stockholm. It has also launched a new fulfilment service with similarities to Fulfilled by Amazon. Called Zalando Fulfillment Solutions, it lets fashion brands use Zalando’s logistics infrastructure and expertise. It also added new sports and lifestyle brands to its assortment, including KICKZ, Nike , Lacoste and Esprit . The Berlin-based fashion retailer and marketplace says the expansion is part of a strategy to invest in fast, convenient delivery and returns. It is also improving capacity and automation at fulfilment sites. Its revenues grew by 20% in the second quarter of the year, to €1.1bn, and average orders increased to 3.7 per customer a year, while the number of active customers rose by 800,000 to 21.2m. This, the retailer said, marked “another all-time high and indicated strengthened customer loyalty.”

8 AI-powered natural search for Yoox

The Yoox Net-A-Porter Group is developing artificial intelligence (AI) capabilities such as personalisation and image recognition. It has also announced the opening of a new Tech Hub in White City, London, which it says shows its commitment to the UK. A staff of 500 will be based at the online luxury fashion retailer’s hub initially, with 100 more jobs to be created over the next two years. This, on top of the retailer’s 500-strong technology team based in the northern Italian city of Bologna, demonstrates the extent to which technology and digital development are at the heart of the business’s strategy. The London Tech Hub will also be where the retailer works on a new wave of mobile technologies that it says will keep it “in the vanguard of digital innovation” as it looks to move from mobile-first to mobile-only. Mobile accounts for 50% of group sales, and the company has found that mobile customers at 1.5 times more loyal, twice as engaged and spend three times more.

9 Social shopping to set the pace for Debenhams

Debenhams is setting its sights on social shopping, which it defines as “shopping as a fun leisure activity enjoyed with friends and family and shared via social media”. This decision to focus more resources and energy on social shopping comes as Debenhams is enjoying a 64% increase in mobile orders. Overall, it saw 14.6% growth in ecommerce in the first half of 2017, including 12% growth in the UK. Debenhams sees growth opportunities in social shopping, as both leisure and mobile become a greater part of the shopping experience. It also expects to complete a warehouse automation programme in 2020. In the meantime, it is consulting on the closure of one of three central distribution centres and 10 smaller warehouses. Read more in our lead interview, page 20.

10 Hello to service diversification

Sales at Superdrug are growing strongly, driven by new services such as the Superdrug Online Doctor, a pharmacy that dispenses products direct to customers or for collection from local stores. Other diversification decisions have included Superdrug Opticians, which offers an online service, including an order and collect facility operating at more than 800 stores. The retailer also started to deliver ecommerce orders to the Republic of Ireland for the first time. It has also expanded its range of health and beauty and travel vaccination services. Its Health & Beautycard customer loyalty programme had 7m members by the end of the year, customers who receive free online delivery, special member pricing and bespoke deals. The proportion of online sales made by members grew by 5%. Additionally, Superdrug has been refurbishing its network of stores, and has opened its second Superdrug Wellbeing store in Watford. For more on Superdrug, see our case study on page 22.

11 Tesco mobile payments

Tesco is extending the availability of its mobile payments app, PayQwiq, to every Tesco store in the UK, making it quicker and easier for customers to pay for their shopping. Available as an app for both Android and iOS smartphones, PayQwiq allows customers to pay and collect Tesco Clubcard points, simply by scanning their phone. The initial set-up includes getting customers to register their debit cards or credit cards on the app. PayQwiq has a limit of £250 per single transaction, and provides customers with their transaction histories, as well as prominently displaying Clubcard points balances. During the launch phase, new PayQwiq customers downloading the app received 50 Clubcard points with each of their first 10 PayQwiq transactions. Additionally, as a thank you, existing customers received 50 Clubcard points with each of their next 10 PayQwiq transactions.

12 Fast food for Sainsbury’s future

Faster delivery times are one of the key battlegrounds in retail, and in grocery the pace is really starting to pick up. While Amazon shook things up a little with the UK launch of Fresh, Sainsbury’s and Tesco have both invested in same-day capability for grocery delivery and collection. For Sainsbury’s this involves a trial running from its Pimlico store in London, allowing shoppers to order via the Chop Chop app, then pick up their order from store just 30 minutes later, for no fee. This is the first time a sub-one-hour grocery service has been offered by a major supermarket. But don’t expect it to be the last. During the trial, which is limited to the Android version of the Chop Chop app, customers will be able to select and pay for up to 25 items for collection in 30 minutes, seven days a week. The orders will be packed and ready for the customer to retrieve by showing their order number at the store’s Chop Chop desk.

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