Black Friday is not House of Fraser’s only challenge

SUMMARY:

Struggling UK department store chain House of Fraser has invested in tools from Microstrategy in order to address its challenges and capture new opportunities.

The idea of ‘Black Friday’ gets a somewhat mixed reception in the UK. Imported a few years back from the US in an impressive piece of fancy PR footwork, there’s no real reason for the event to exist outside of America, since the preceding day is not a public holiday elsewhere.

Still, heavy discounting does persuade many UK shoppers to spend, so British retail executives will be keeping a close eye on today’s sales performance.

At UK department store chain House of Fraser, CIO Julian Burnett and his colleagues will be watching the data as it comes in, he told diginomica. Recent work with analytics company Microstrategy is getting that data into better shape, but there is still much work to do:

We’re right in the thick of it with Black Friday, and we are starting to make trading decisions every minute, based on what’s occurring, because we’ve now got data that informs us in a real-time context. That data, in the past, would have been committed to a batch-based system, stuck in a database, needing to be organized to create structured output that we would read after the event – and, really, what’s the point of that?

Turnaround plan

Informed decision-making matters a great deal to House of Fraser, which is in the middle of a big turnaround effort. Performance at the company has lagged behind its big rivals John Lewis and Debenhams for some years. In September this year, it received its first cash injection, amounting to £25 million, from its Chinese owner Sanpower, which bought it in 2014, after a long period of under-investment. In the six months to July 29, House of Fraser reported like-for-like sales down 5.2 percent and total sales dropped by 5 percent to £545.8 million, in part due to disruption caused by a website overhaul during the spring. Online sales were down 9.8 percent during the period. Says Burnett:

We’re at a point in our history where we’re taking a long, hard look at all aspects of our business, in terms of our positioning in the market, our customer engagement, our operational effectiveness, our store portfolio – all aspects of our business are being reconsidered relative to the market that we’re in. And that market, as I’m sure is pretty obvious, is dramatically shifting due to a whole bunch of prevailing factors, not least the digitization of the relationship we have with our customers and suppliers, but also because of the big economic uncertainties and challenges that we face, as do our customers. We’re putting that all into a melting pot to come up with a reasonably practical strategic plan.

At the heart of that plan is information and data. Burnett says he’s been looking at the analytics capability that House of Fraser has, versus where he believes it needs to be today, and in the future, hence the work with Microstrategy:

We’re waking up to the enormity of opportunity that the data we have and the tools that we use can provide to us over the next couple of years. Data will be a strategic capability for us.

Putting plans into action

It’s one thing, of course, to announce a big investment in a business intelligence suite of tools and quite another thing to deploy it in ways that will really make a difference to the decisions that staff make on a day-to-day basis. For Burnett, it’s no longer good enough to use analytics to slice and dice historical data on past performance. Instead, he says, the emphasis needs to be on what data is saying about trading conditions in the here and now:

It may sound glib, but it’s about shifting the mindset and the tools available, away from worrying about what happened on this day last year, when we were pricing products and promoting them a certain way to particular customer groups, and towards what’s happening today and what we would like to make happen. We shouldn’t allow history to define our future, is my view.

So how will the work that Burnett and his team are doing with Microstrategy help? Here, Burnett is taking a two-pronged approach. First, they’ve come up with a clear understanding of the leading indicators that matter to senior House of Fraser executives and worked hard to establish a ‘single version of the truth’:

It’s no secret that the overall performance of the business is going the wrong way and has been for some time. Our transformation journey looks to clarify what I describe as a ‘winning formula’. There are absolutely parts of our business that work well, some that work less well and some that don’t work well at all. Our task is to identify the leading indicators, to identify the things that work well and do more of them, but also to concentrate our investment strategy around those things that we want to be part of a sustainably profitable future.

These indicators are delivered to a small group of senior executives in a ‘shrinkwrapped’ format, on a dashboard, that shouldn’t be tampered with or questioned because so much effort has gone into cleansing the data and guaranteeing its providence, he says. But if that sounds draconian, in the second stage of his two-pronged approach, Burnett says he is trying to deliver freedom, too, in the form of visualization tools that reach a wider group of House of Fraser employees, empowering them with information:

Retail is insatiable in terms of its appetite for information, but we’re trying to deter people from asking for excessive reports by giving them a visual equivalent for all the tabular format reports that they’re used to receiving. A visual equivalent allows them to really, really concentrate their enquiries, and is based on a precise selection of data points that are most likely to be the things worth looking at – because if you spend less time looking for information, you’re more likely to spend more time actually taking decisions and acting on it.

At this stage, he says, he and his team have probably codified around 120 to 150 visual equivalents of regular and popular tabular formats.

A data-centric vision of the future

There’s still a long way to go in this data-centric vision of a ‘new’ House of Fraser. Burnett is aiming to move a big on-premise structured data warehouse and also an unstructured data pool into the cloud, so that he doesn’t have to worry about buying new hardware. He wants to expand the use of the Microstrategy toolset, as House of Fraser is probably only using about half of what it has today and widespread training will be required to get other tools into production. And he’s experimenting with artificial intelligence to work on some really knotty, data-intensive problems, such as markdown optimization when it comes to sales periods in the retail year.
But the biggest uphill challenge may lie in changing mindsets at a company with a heritage of some 168 years in business, as Burnett acknowledges:

It’s really hard, of course, because this is a business that has accumulated a modus operandi based on things that have worked in the past. Repeating what’s worked in the past is sometimes the right thing to do, but often, it’s impossible to determine if those things still work unless you can use data. This business has led on history and instinct, so shifting to looking at real-time information and prediction is quite a pivot – but I absolutely believe it’s the best way forwards.

Image credit - House of Fraser

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