Sainsbury’s and House of Fraser discuss the omni-channel challenge

SUMMARY:

The UK-based giants’ digital bosses discuss how mobile is presenting new opportunities for their business

Retail, much like the financial sector, is often the first to be wise to emerging technology trends and is frequently an early adopter. Unlike others (*cough*public sector*cough*), many companies in the retail sector recognised the importance of online transactions in the early 2000s and got to work developing successful business models for how websites could help boost revenues. Thanks to this, we now have a variety of widely used and useful tools at our finger tips to making shopping easier – click and collect, stock checks, order online for home deliveries, augmented reality tools, etc.

Two household names in the UK are truly reaping the rewards of this and are seeing the benefits that true online integration can bring. Department store House of Fraser, although only having launched a website in 2008, just cleared £200 million worth of sales and saw almost a 60 percent spike in online sales over the busy Christmas period. Meanwhile, grocery chain Sainsbury’s also has a successful online business, of which groceries alone is worth over £1 billion a year in turnover. Sales are booming.

However, with the rise in consumers using smartphones and with pervasive access to cheap internet, mobile presents a challenge – and an opportunity – for these two companies. New models are being tested, and with margins tight in retail, no one wants to make a mistake.

Jon Rudoe, Sainsbury’s newly appointed digital and technology director (who was previously the company’s online chief) and Andy Harding, House of Fraser’s director of multi-channel, both recently spoke at a British Retail Consortium event in London, where the pair compared and contrasted how their chain of stores will begin to take advantage of the mobile experience.

Integrating mobile into a seamless experience 

Rudoe began by explaining how Sainsbury’s doesn’t expect to see mobile used a great deal for an online shopping experience, given the nature of its business. Instead he wants to see customers using their smartphones when they are shopping in-store, to build on self-service options.

He said:

“Grocery is quite a different e-commerce experience compared to non-food. A consumer is buying a basket of goods, where a typical order is 50-60 items. It’s a weekly shop and as such a full order on mobile is not as prevalent as it is Sainsbury'sin 1-3 item basket. Having said that mobile has a huge role in that e-commerce journey, primarily for amending orders. 

“I think what’s more interesting and more cutting edge is the role that mobile can begin to play in-store, we are at the beginning of that journey. Mobile Scan and Go, exists in five of our shops, which allows the customer to scan their shop as they walk around the store and then pay before they leave. That’s a very interesting way that mobile is changing the mobile experience – through transactions.”

Not only would this probably allow Sainsbury’s to cut down on costs by requiring less staff to be on the tills serving customers, but it would also give the grocer access to a whole wealth of customer data and an insight into how people shop. And as we all know, the more data, the more opportunity there is to tap into some additional revenues. We have seen numerous examples recently where online businesses are trying desperately to use data to get to know us as shoppers, with the hope that this will allow the retailers to create a more personalised experience and also….make it easier to shop and buy more stuff.

Harding explained that House of Fraser also has similar plans and would like to use mobile to enhance this personalised experience in-store. He said:

“We see a lot of our customers using their mobile device to add richness to their experience in-store, to add value to their journey, to scan products, to look at content. It’s important to make the journey as seamless as possible because customers will stop using one device and pick up another device, and as long as you can make the journey consistent between that process then you’re going to deliver a better experience. 

“We want to enable customers to transact in the retail environment, wherever they want, by not having to go to a fixed point to pay at a traditional till. It is part of our strategy and we are figuring out how they can do it wherever they want. Self serve is ultimately where we want to get to, but it is a big challenge. 

“We are on that path and I think we want to be in a position when a member of staff approaches a staff member, house of fraserthey can surface data and do predictive modelling around what that customer would like to do in store to buy the sorts of thing they might be interested in. And use that data to provide a more personalised experience. It is complex, there are loads of road blocks to getting there, but that’s the direction we are heading in.”

All sounds very forward thinking and interesting, but Rudoe also pointed out to Harding that retailers shouldn’t just built systems “for the hell of it” and because they think it’s a nice idea. It should be grounded in something that the customer really wants – his main point being, if a customer approaches an employee in a store and asks where a product is, they probably just want a quick, simple answer. They probably don’t want a ‘personalised experience’. But I am sure there are examples of when surfacing data in store could be useful to a customer, it just has to be used wisely and where appropriate.

Stitching the channels together

A big problem for companies facing this omni-channel challenge, particularly in retail, is trying to figure out how customers use different channels in different situations and then providing the best products for those situations, at the right time. For example, using your phone on the train to browse a mobile site for a new suit and then getting to the office to make the purchase on the full website. Retailers need to be wise to the variations in this user behaviour.

However, luckily, Sainsbury’s has found that its long running loyalty scheme – Nectar – is going a long way to help the retailer figure out all of these channels and is helping to bring all the pieces together.

Rudoe said:

“I don’t think a lot of loyalty cards were designed this way, I don’t think people saw them as a great tool to stitch together the multi-channel, omni-channel transactional behaviour of their customers. But that is the one thing that they actually are doing. We talk a lot in our business about the power of customer insights through Nectar. It’s valuable in a number of different ways, it’s valuable in category design, it’s valuable in switching, but one thing it really gives us is a multi-channel perspective.”

Rudoe explained, for example, how it is surfacing the data within the Nectar scheme to link the shopping experience in-store to the mobile-internet-responsive-websites-389x379shopping experience online.

“One of the things that’s very surprising to a lot of out competitors, is the level of incentivising that we do in stores for our customers to shop online. We do that because we understand exactly what that incentivising does, we can measure it, we can manage it accordingly. It must be very hard to run one of these multi-channel retailers when you can’t actually join together your multi-channel transactions. 

“That’s got us a long way down the road in understanding that behaviour and it has given us a lot of confidence to give a customer an in-store coupon that is useful to them for it to be used online.”

Harding said that although House of Fraser also has a loyalty card which it runs across all of its channels, it is also trying to make better use of its mobile application to ‘gamify’ the customer experience and make consumers want to link all of the channels together via the retailer’s app. For example, he said:

“We are beginning to understand more about how we can use that in the retail environment through the app, using the app as the glue between online and offline  –  to say to a customer go to this department, scan this product, buy a coffee, you will earn loyalty points in the same way that you have traditionally done. 

“So we can start to gamify the experience and direct them to add value, but equally to benefit us and give us more data. The important part is taking that data and analysing it properly, otherwise there is no point in having it.”

A few words of warning

I thought it was interesting that given Rudoe was the online chief at Sainsbury’s when he was speaking at this conference (prior to being appointed as digital and technology director, replacing outgoing CIO Rob Fraser), he also took time to point out to those in attendance that even though online is critically important to most businesses going forward – it isn’t everything. You can’t fully automate, digitise, mobilise customer experience and he wanted warn anyone heading up digital initiatives to remember that the human touch is just as important.

I’ll leave his words to close:

“We have the most advanced e-commerce market for food retailing in the world and yet 90 percent of food Sainsbury'spurchasing in this country is done in stores. Let’s keep that in perspective. We offer click and collect in over 1,000 of our stores, and in those stores when you come to pick up your parcels, you pick it up from a Sainsbury’s colleague, in a Sainsbury’s uniform, who is incentivised by the performance of the Sainsbury’s business. 

“Even though we are talking about technology, I can’t say enough about how important human service. It’s a hugely important thing as the world of multi-channel retail becomes more blurred – great customer service.”