What must BHS do to survive its CVA revival?

BHS’ owners breathed a sigh of relief this week when creditors voted in favour of a Company Voluntary Arrangement (CVA) that will see rents cut on many of its stores, but this is just one small victory on the road to recovery.

The department store chain’s past has been somewhat chequered in recent history. Loss making for 7 years, BHS was bought by invesment group Retail Acquisitions for just £1 in March 2015, when retail Tycoon Sir Philip Green failed to revive its fortunes.

BHS’ chief executive, Darren Topp, has placed the blame for its latest poor performance squarely at the door of retail property prices, claiming the retailer’s problems are down to cost rather than sales.

The CVA will certainly ease some of this pressure, as 47 stores will have rents slashed by either 50% or 75%, while negotiations will take place to reduce rental on the remaining 40 stores (excluding those held separately by BHS Properties Limited) by 25%.

What’s more important, though, is that Retail Acquisitions use this lifeline to raise the capital needed to reinvigorate the BHS brand, as its lacklustre results are down to much more than rising costs. “The shops are tatty and the clothing lines dowdy,” remarked the Financial Times’ Jonathan Guthrie in his analysis of the situation.

However, Guthrie’s conclusion that “department stores have themselves fallen from fashion with shoppers” couldn’t be further from the truth. BHS has to look no further than John Lewis and House of Fraser – both of which pre-date the 88-year-old chain – to see two examples of similar businesses that have evolved much more successfully.

So, where did BHS go wrong – and what does it need to do in order to put it right? Certainly within omnichannel retail, the business has been caught napping. John Lewis and House of Fraser have put significant investment into their digital strategies, both in terms of online offering and promoting technology-led engagement in the store. House of Fraser has gone mobile-first with its website, while John Lewis’ retail app was recently voted third best in the UK. Both companies have invested heavily in click-and-collect.

In contrast, BHS has been driving down its margins even further with seemingly permanent discount promotions, and trying to diversify into new areas such as foods rather than reinventing its core clothing and homeware range.

Recently, though, there has been light at the end of the tunnel. The convenience food initiative is still in play, but BHS seems to have turned a corner with regards to prioritising what needs to change. 23 stores have already undergone a rebrand, and Topp has vowed to streamline its product range and focus on the brands which resonate with its customers. It’s also implementing an aggressive ecommerce strategy, to increase online shopping’s share of sales from 12% to 20%.

Interestingly, BHS has hired ex-House of Fraser brand marketing director, Tony Holdway, as marketing and creative director. He has already vowed to overturn the company’s lack of brand appeal and investment.

The fact that Holdway has jumped ship from House of Fraser is almost a bigger coup for BHS than the CVA. Having someone who knows how to run department store marketing, 2016 style, will help the retailer to shake off its outdated image and start embracing the omnichannel, multi-touchpoint journey to purchase that hallmarks modern retail.

One thing is for sure; if BHS doesn’t aspire to the relevance and agility of John Lewis and House of Fraser, it’s going to find itself back in the danger zone pretty quickly. And it would be a huge shame to lose one of the High Street’s most recognisable heritage brands.

How can retailers make in-store a more flexible shopping environment?

For every positive story in the retail press at the moment, there seems to be a contrasting tale of lesser fortunes. For example, Ocado has announced a first-quarter jump in sales, with average orders increasing nearly 17%, and weekly orders passing a quarter of a million for the first time. Compare this to the wider grocery industry, where profits are falling and sales are stalling, and it’s clear that more needs to be done to keep customers satisfied.  It’s not a just supermarket thing either; only last week, John Lewis revealed a near 10% fall in pre-tax profit.

What makes John Lewis unlike some of the other retail brands to have suffered a dip in sales is that they simultaneously announced a plan to drive recovery. The department store chain is moving their services to 7-day delivery, driven by the “need to reflect how and when our customers are shopping with us” in the words of Managing Director, Andy Street, as “customers increasingly want flexible shopping and delivery times”.

The fact that John Lewis wants flexible shopping as well as delivery is important. The recent success of Ocado would indicate that fulfilment is high up the priority list for consumers, but convenience and seamlessness rank highly also. PWC’s Total Retail Global Report 2016 shows 55% of UK consumers cite convenience as their main attraction to online shopping, compared to just 37% being motivated by price.

Bearing this in mind, retailers need to focus on making the store more flexible and agile, in line with shopper priorities. Click-and-collect has been the first hugely successful cross over service in this area; 60% of consumer report they have used it, and a huge 98% recognise the concept. This illustrates that, despite drops in foot traffic, shopping in-store is still an important channel for most consumers.

So how can retailers create a store environment that not only attracts shoppers, but also meets their expectations and encourages them to spend? PWC asked a sample group of online shoppers how retailers could enhance their physical stores, and better alignment of in-store and online services ranked highly. With this in mind, we would recommend retailers focus on enhancing three core aspects of their bricks-and-mortar business:

  1. Increase communication between staff, and locations, to streamline the customers experience

Poor in-store communication has long been a problem for some retailers, but improving it needs to be a priority. We know that a third of consumers have abandoned a shopping trip because they couldn’t get the information they needed prior to purchase, while 4 in 10 have left a store and sought the item elsewhere. The industry needs to understand that consumers place value on the ability to check online stock quickly (32%) and sales associates with a deep knowledge of the product range (40%).

Alongside providing training to empower their staff with all the information they need, retailers should consider investing in managed data networks to address this problem. Giving sales associates connected devices can improve their access to knowledge about the customer, as well as giving instant access to stock information, store transfers, and transactional capabilities, but these will only run efficiently with a robust supporting network

  1. Improve systems to reduce waiting times

Shoppers, rightly, demand the speediest checkout experience (35%) possible, and retailers know queuing times can have a negative effect on sales. Yet many are working with overloaded systems, which can affect not only payments, customer queries, and processing orders, but also core tasks including inventory. This has huge potential impacts on customer loyalty, with a third (32%) of consumers not returning to stores with slow service, and 1 in 5 being put off buying from that brand over any channel.

In response, retailers should review their systems and consider updating them, or even just increasing bandwidth, to avoid technical downtime.

  1. Invest in the customer across all channels, to deliver a joined up experience

PWC’s report clearly demonstrates that technology is as important in-store as online. A fifth of customers are interested in store WiFi (22%) and most use their mobile phone as an important research tool when wandering the aisles. Alongside this, many shoppers would like to receive mobile promotions in-store, be able to access loyalty programs, and make mobile payments.

With 3 in 10 believing the quickest way to answer queries is to look up the question on their own mobile device, retailers can better facilitate consumer needs by ensuring there is a fast, secure WiFi offering in place, and also providing independent technology experiences such as in-store tablet information points.

To find out more download our report More than words – Why retailers and customers are becoming disconnected by the store network – and how to fix it

The secret to successful store expansion

Online retail is no stranger to positive headlines. In fact, it sometimes seems that all we hear about in the industry is the strength of ecommerce.

And it’s these types of stories that have put stores in the spotlight for the wrong reasons. Although 90% of all sales still happen in physical shops, there seems to be far more of a focus on the aspects of bricks-and-mortar that aren’t doing quite so well. For example, in the last few weeks alone, BHS, Greggs and Dixons Carphone have been making headlines regarding store closures.

One of the key reasons that stores close is because they don’t resonate with shoppers; in the interactive, instant world of digital commerce, store layouts and processes can appear outdated. However, this is something that can be amended – and there’s a huge appetite amongst retailers for getting the store right and growing its presence. New research by CBRE has revealed that retail estate expansion still remains high on the agenda, with 83% of retailers adamant that store growth will not be influenced by the rise of ecommerce this year. After all, there is no online substitute for seeing, touching and trying items before purchase.

The benefits of bricks-and-mortar haven’t gone unnoticed by e-tailers. Already this year, we’ve seen their eyes move towards the high streets, with the likes of Missguided announcing its first offline stores. Yes, the business is doing very well trading as it is, but if they want to grow even further, it makes sense to offer a physical experience as an alternative too.

So how can retailers optimise their stores for profit growth – and potential expansion if they get their formula right? For starters, today’s connected consumer is all about convenience and, as we well know, that doesn’t necessarily mean choosing between online or offline retail. Instead, shoppers want to switch between the two at different stages of their journey, and they need to know that retailers will allow them to be flexible in this respect.

Achieving this level of agility means incorporating some of the elements that shoppers love about digital platforms into the store experience. Some retailers are already way ahead of the game, launching concepts that aim to convey the ‘store of the future.’

House of Fraser, for example, recently experimented with shoppable windows, whilst Tommy Hilfiger has brought the runway to the store using virtual reality headsets. These are pretty ambitious of course; the store must focus on perfecting the basics before taking this kind of leap. Investing in more mainstream technology such as mobile POS is one good example of connecting the bricks-and-mortar experience through online functionality.

Another key consideration is the interaction between ecommerce and store activity through click-and-collect. Even though many retailers already offer the service, there are still elements of the process that frustrate customers. Perfecting the ‘collect’ part should now be a major focus for stores, making it a pleasant experience for those finalising their purchase. Enabling speedy payments technology, such as contactless, will be handy here, as well as ensuring the right amount of staff are there to keep the queues running smoothly. Streamlining the click-and-collect element will increase the opportunity to encourage further impulse purchases.

Of course, not all online browsing will take place at home. In an era of smartphone addicts, it’s now habit for consumers to rely on their devices whilst in a store too. Vodat International recently commissioned some research that revealed 54% of shoppers use their smartphones to compare prices in the aisles, 46% look up product information and 44% for personal reasons, such as checking social media. The bottom line is that consumers expect to be able to connect to the web whenever suits them – and that includes within the bricks-and-mortar shopping journey.

It may seem obvious, but there are still retailers that do not invest properly in strong WiFi to encourage this behaviour in controlled circumstances. In fact, 3 in 10 shoppers don’t find the current standard of WiFi unreliable. Retailers with sub-par WiFi are not only at risk of frustrating their customers, they are also losing a valuable opportunity to understand (and react to) their behaviour patterns. Provided they select the right provider, retailers will be able to interact with, influence and capture insight on consumers when they log on to the network.

It’s great to hear that retailers are feeling optimistic about the potential of stores, especially at a time when ecommerce is threatening share of sales channel. Gone is the time where stores and online were two separate things; the future of the store is very much intertwined with digital interaction. If they go about it in the right way, retailers can now harness the power of ecommerce in the physical environment, and use it to boost profitability.

Stay tuned for our new report – Battle of the bandwidths: why customers are won and lost on the strength of retail networks – which will provide even more insights into the connected consumer.

Inside the mind of the modern consumer

Understanding customers is no easy job for retailers today. What consumers want is changing all the time, as is the technology that they rely on as part of their shopping trip. It’s no wonder that many businesses are struggling to keep up!

It doesn’t help that retailers are inundated with headlines that profess the latest insights into consumer habits; which ones can they actually trust? Here, we’ve detailed the most recent retail research that retailers – online and off – should factor into their customer experience strategy.

“They are impatient” – Vodat International

5 minutes; that’s how long a customer will wait for their query to be answered in-store. That doesn’t leave much time for a staff member to gather the information they’re unsure of, before that shopper abandons their journey completely.

How to respond

Ensure that your workforce receives regular training regarding your product offering – especially if new items are added. For an extra helping hand, why not implement tablets in stores so that answers are always at staff’s fingertips?

“They expect personalisation” – iVend Retail

A third of shoppers think they get personalised offers online, but not in-store. Perhaps this is one of the key reasons why ecommerce seems to gaining its sales share of channel.

How to respond

Yes, online has automated capabilities that allow loyal customers to receive information that is specific to them – but there is something the store can do better.  The ability to see, touch and try products cannot be replicated online, and even better, the presence of staff means that shoppers can get even more insight into the products they’re interested in. There’s nothing more personable than face-to-face interaction, so encourage conversation to give staff the opportunity to upsell products that might compliment a customer’s purchase.

“They tap-to-pay” – Visa

The number of contactless transactions made in the UK last year increased by 250%, according to the payments specialist. It’s suggested that this is largely due to the spending limit rise in September, which saw consumers able to pay for goods of up to £30, as opposed to just £20.

How to respond

The speed of the payment method fits the profile of today’s busy, impatient shopper. Therefore, now is definitely the time to ensure that your store not only accepts contactless, but encourages its usage.

You’ll also find that the same NFC technology in contactless terminals works with some mobile payments services, e.g. Apple Pay. As availability widens, consumers will come to expect all retailers to offer the method to them in-store. Those that don’t are likely to be viewed as outdated pretty soon, while those that do will see queue times accelerate and customer satisfaction soar.

Of course, if you’re planning on implementing such technology, you’ll want to make sure that your card payment network security is up-to-scratch. You can find out how to ensure this here.

“They go mobile” – Episerver

Mobile shopping is already playing a huge part in how people are shopping this year; 59% of Brits used their device to purchase items in the January sales.

How to respond

Shopping on a mobile device is meant to provide the ultimate convenience for consumers, allowing them to browse retailers wherever they go. With this in mind, it’s essential that you make your own mobile experience easy – ensure that you’re website is properly optimised, and that the payment process is neither lengthy nor fiddly.

“They click-and-collect” – Atomik

Shoppers might love mobile, but not quite as much as click-and-collect. A recent survey saw it beat mobile as the method that impacted their 2015 shopping experience the most.

How to respond

The role of the store has evolved from being just a sales channel, it now has to deal with a constant flow of click-and-collect orders. As most retailers now offer the service, they need to make sure that it’s the best it can be to stand out from so many others that offer the same. Training staff, implementing dedicated click-and-collect personnel, or adding an interactive kiosk are all ways to better optimise the store for click-and-collect. Of course, with all this extra technology, retailers must invest in a network that’s robust enough to support it.

Have you seen any recent retail statistics that you think offer real value to retailers? Then share them with us on Twitter via @Vodat_Int.

 

Argos’ Fast Track delivery is a real traffic driver – if it works in-store

An eyebrow or two was likely raised in the retail industry this week, when Argos announced its new Fast Track delivery service – same-day service any day of the week, provided the order is placed before 10pm.

While it might seem like a reaction to the UK launch of Amazon Prime Now to some, it makes a lot of sense. We’re about to hit the busiest trading period of the year, so taking its delivery services in-house gives Argos the opportunity to scale up workforce and logistics to cope with spikes in activity, such as Black Friday.

And as a multichannel retailer, naturally Argos is also rolling out the service into stores, offering free delivery to the customer’s local outlet – as opposed to the £3.95 charge for home delivery. Again, this is logical, as the cost to fulfil into store is going to be lower than home delivery (if the product isn’t sitting there already), and it takes some of the pressure off fulfilment networks.

Argos’ big money promise for store collectors is that they can collect the item within 60-seconds of being served, as the retailer’s stock management is able show estate-wide location and availability of products.

60 seconds is a big gauntlet to throw down – especially when you consider we’re about to career into the Christmas trading period. Its investment may give Argos greater control over fulfilment of Black Friday orders, but we can see the ‘quick click-and-collect’ promise really catching on as we move through December, and this could cause serious headaches.

Although Argos is taking on 1,000 extra staff for the Christmas period, those personnel are going to need to get up to speed quickly to cope with a potentially even bigger than usual late rush.

Its retail park locations and extended opening hours are a natural magnet for consumers fitting their festive shopping around a busy schedule, especially if they can secure speedy service at no extra charge.

But what seems to the customer like a simple act of picking something up, is reliant on a well-oiled machine at the back end. Argos has the inventory visibility, but it needs to perfect the chain of events between order and collection to deliver on time – and to expectation – in the store environment.

Argos will also need to upskill these temporary staff very quickly on how to work the technology required to complete transactions – and of course they will need a robust network to cope with the increase in order volumes. Customers are going to be twice as grumpy if they have to wait due to technical problems AND they are in a hurry.

As we mentioned in a blog post earlier this year, Argos is doing some really savvy things around technology, which reinforces its credentials as a cutting-edge, customer focused retailer. During this highly pressured trading period, let’s hope its new scheme is optimised for the tidal wave of store pick-ups as well as home deliveries.

How to embrace online in your retail store

If the path to true love never did run smooth, then it must be true love between consumers and retail stores. Despite the overwhelming majority of shoppers still using bricks and mortar for most of their purchases, the growth of online retail and, most recently, mCommerce, has forced retailers to integrate activity in the aisles with digital touch points.

But while much has been said about the complexities this brings to retailers and hospitality vendors, it seems the growth of multi-channel shopping has strong benefits. According to a new report by dunnhumby, multi-channel customers are far more valuable to brands than those who stick to one shopping channel – in fact, they are worth 28% more in terms of potential sales.

With this mind, it’s retailers with a bricks and mortar presence pushed themselves even harder to integrate digital into the physical shopping experience. And here are 3 key ways to do it:

WiFi

Research by GfK has revealed that 20% of consumers browsing a retail store are doing so whilst monitoring prices on their smartphone. This trend is known, known as showrooming, isn’t something to fear. In fact, to prove competitiveness at the shelf edge, retailers should make the process as easy as possible by ensuring your store is equipped with guest WiFi. Pair this with some form of price-matching guarantee to increase sales conversions.

Digital technology

Tablets and smartphones aren’t just convenience devices for consumer use; retailers can incorporate digital technology into store kiosks to offer unattended customer service – or use them within customer interactions to assist the sales experience. This has the added benefit of bringing online capabilities into the store, such as instant stock checks and increasing inventory availability.

Click-and-collect

It may seem like an obvious suggestion, but there are still many stores that have not perfected their click-and-collect offering for customers. Many shoppers find there is more choice and availability online, so choose to shop this way instead. Providing them with the option to pick up their order in store gives shoppers greater fulfilment flexibility. Upon arriving at the store, the shopper may feel tempted by the products in front of them – presenting your staff an opportunity to engage with that customer face-to-face and upsell.

Essentially, consumers buy into brands, not channels. They don’t care how the touch points they use test retailers’ resources; they want their goods in the most convenient manner, with a trusted and consistent experience every time.

Retail businesses that understand this behaviour, and work to integrate all their channels into a single brand experience, will be the ones to benefit from the added potential value of multi-channel shopping.

Tis the season to test your multi-channel experience to breaking point

It might feel like Christmas is coming earlier every year, but this year it really is – according to research by the Ideal Home Show, the average person has been shopping for gifts since 24th October, and will have purchased 14 presents by the time December begins.

In theory, this should make things easier for retailers, as it spreads consumer activity across a broader time frame. However, 2014 is set to be one of the most complex Christmases on record for multi-channel retail businesses.

Why?

The rise of click and collect will see cross-channel activity surge. It’s estimated that 95% of online shoppers will use click and collect this Christmas rather than wait around all day for a delivery.

For the store, this means sales associates are having to deal with two distinct strands of shopper; those who’ve arrived to collect an order, and those in search of goods.

This influx of click and collectors increases not only traffic on the shop floor, but the strain on resources – more people logging onto in-store WiFi, longer queues, the increased complexity of processing online orders and additional transactions resulting from impulse purchases.

In theory it sounds like a fantastic opportunity for multi-channel retailers. However, gain can quickly turn to pain if your business does not have the optimum operational set-up or a robust network to cope with the pressure placed on it during the festive period.

Now more than any other time of the year, consumers’ tolerance levels are low. Particularly if they’ve ordered online, shoppers want to be in and out of your store as quickly as possible. This relies on both a well-managed in-store experience and a smooth collection process – both of which rely on operational technology being used to its greatest effect.

The Christmas rush may have already begun, but retailers still have time to act before it reaches its peak. Multi-channel businesses are well advised to align their systems, staff and stores sooner rather than later, rather than count the cost of poorly handled cross-channel custom in the New Year.

5 in-store challenges that didn’t exist 10 years ago

Whether it’s customer service, product ranging or managing profit margins, there are some challenges that have been on retailers’ radars for decades. However, the rising ecommerce challenge and rapid technology advancements over the past 10 years have impacted retail businesses in ways they could never have predicted.

Here are five challenges that the digital era has presented to retailers:

1. Click and collect

Although it was being trialled in the early 2000s, click and collect has increased exponentially over the past few years. It does create great up-selling opportunities – research by Deloitte has revealed multichannel consumers spend 82% more per transaction than those who only shop in store – but it also creates several logistical headaches, such as accommodating a new channel of distribution and return, along with adding another function to retail associates’ workloads.

2. Showrooming

One of the biggest changes in the way consumers now shop is their use of mobile in high street stores. Many retailers lose sleep over how to tackle shoppers browsing in-store but buying online, perhaps from a competitor. And these worries are not without reason; according to Microsoft, 42% of UK consumers admit to showrooming.

3. Webrooming

Thankfully, improvements in internet connectivity over the past decade have also facilitated physical retail, as those that don’t fall into the showrooming category often choose to webroom – research online before buying in-store. However, this places greater strain on customer service expectations, as consumers tend to be armed with knowledge and require detailed answers to complex questions before deciding to make their purchase.

4. Staggered technology

Retailers are working harder than ever to make the store environment more compelling by introducing features such as mCommerce, digital advertising and personalised mobile marketing via iBeacons. This creates a huge IT headache though, as retailers have to find a means of seamlessly integrating new technologies with legacy systems.

5. Great expectations

Ultimately, the more digitally dependent consumers become, the more they expect – and quickly. Ecommerce introduced the idea of a wide range of products being available at your fingertips, and improvements in mobile have extended this connectivity on the go. This is putting more pressure than ever on the store to deliver the same levels of satisfaction as online, despite core activities such as price updates, payment options, inventory tracking and product displays being much harder to implement outside of the virtual arena.

Retailers need a network fit for a multichannel environment

The in-store network is fast becoming the life line for retailers that need to reach their customers through multiple channels and devices. There has never been a better time for the store to rediscover its strengths as the flagship for the retail brand as, regardless of which channel a consumer decides to shop via, the store remains a key destination at any stage in the shopping journey.

In particular, the millennial generation (generation Z) take a different approach to shopping, one that centres round the store. Before making a purchase it has become common practise for this group of consumers to visit the store for the purpose of browsing, taking pictures of products to send to friends, log onto the Internet through tablets and kiosks and update their Facebook pages with latest locations – all before deciding what, when and which channel to make a purchase.

While eCommerce provides convenience, consumers actually gain more enjoyment from the physical shopping environment. However, at present it lacks lustre in comparison to product availability and the capability to evaluate prices online. To counteract customer disappointment, new technologies have recently been deployed to bridge this gap and entice tech-savvy consumers back in-store.

The emergence of these new interactive technologies are also delivering value added services within the store environment. These include payments on the spot, scanning of product tags using a mobile for detailed information and connection to the online channel.

However, it’s a double edge sword as generation Z have high expectations once in store. Some retailers have worked hard over many years to satisfy these demands, but  the bar has risen: retailers need, if they can, to identify every customer as they arrive and provide each of them with a personal experience, regardless of the reason behind their visit.

This is where the store network comes into play. Retailers cannot forget the technology behind the scenes that enables all this functionality – the retail network. It is the crux of in-store operations and will continue to be so, as the in-store environment evolves into an interactive hub, where consumers can look, touch, feel, test products and engage with sales staff armed with devices delivering in-depth knowledge far beyond the capabilities of a lone sales assistant.

Click and collect – the saviour of the high street?

Click and collect is breathing a new lease of life back into the high street. According to the IMRG Capgemini e-Retail Sales Index, the increase in mCommerce has been supported by services such as click and collect or reserve, which have become prominent in the shopping cycle.

According to the index, making a purchase or reserving online for collection in-store now accounts for 25% of cross-channel sales. Retailers with both an online and high street presence reaped the rewards in December, with a recorded month-on-month growth of 16%.  With 91 billion spent online in 2013, and £11 million alone in December, click and collect is an opportune way for high street retailers to have a piece of the pie.

On the high street, specialist retailers including; Argos, Dixons and Halfords have prospered from the growth of online, by better linking their web and in store operations, proving that an integrated approach is the way forward. Nearly 50% of sales at Argos are now online, with its check and reserve service having proved popular with customers.

More than ever, consumers want to shop at their own convenience. Browsing online teamed with collection in-store offers just this, enabling consumers to view a wider range of products teamed with collection at a store, day and time of their choice.

In store, mPoS is linking back to the online channel, allowing customers to browse a retailer’s full range of products once in-store whether they are catalogued to that store or not – preventing customers making a wasted journey if a desired product is not in stock. Options include order for store delivery at a later date or home delivery, providing the ultimate cross-channel service and most importantly for the retailer, securing a sale that could have otherwise been lost.

It’s clear that online and in-store services working in tandem is breeding success for retailers and therefore the best route for the high street. Retailers that adopt this joined up approach will be the ones to prosper in 2014.