Amazon alliances and analytics - digital plays to stop Lands End becoming a cliff-edge?

Profile picture for user slauchlan By Stuart Lauchlan June 13, 2018
Summary:
Allying with Amazon is a pragmatic way to play digital catch-up, especially when allied with analytics spend.

LANDS END STORE
When considering digital disruption in the retail sector, the long shadow of Amazon is never far away.

At diginomica we’ve argued that while recognising the potential threat from that direction is important, there’s also a danger of being too fixated on ‘being’ Amazon and not playing to your own strengths, such as a balanced offline real estate profile as a big part of an omni-channel play.

Another question that some retailers are asking is a pragmatic one - do we fight Amazon or do we seek to find a way to co-exist? Too many retailers have focused their attention on being able to match Amazon’s capabilities and not asked whether there’s a way to piggyback on those without damage to their own brand.

For some, particularly those at the high end, luxury brand in the sector, sullying themselves with ‘commodity’ commerce channels remains unthinkable. What happens to these firms will play out over time. Others are more opportunistic - in a good way - in their Amazonian attitudes.

Take Lands End as a case in point. For the past couple of years the U.S. retailer has been investing heavily in digital transformation with the goal of reviving this heritage brand for an omni-channel world. As we noted back in 2016:

The reality is that Lands End is a retailer that’s struggled to make the move to the e-commerce era, but which also lacks the offline retail infrastructure to compensate for that or to provide a platform for an effective omni-channel strategy. Formerly part of the Sears group until its spin-off in 2014, Lands End is still reliant for its physical presence on 224 franchise outlets within Sears stores in the US, down from 229 this time last year.

Shortly after, then CEO Francesca Marchionni, who’d come from luxury brand Dolce & Gabbana in an ill-fated move, opted to push some of Lands End’s offerings through Amazon, arguing:

This provides an additional channel for us to introduce consumers to our new brand and expanded category.

Up the Amazon

While Marchionni’s time at the top of Lands End is unlikely to be looked back on as a success, that tentative embrace of Amazon is now something that’s paying off in expanded form for her successor as CEO, Jerome Griffith. Not only does Amazon provide a useful additional channel, he notes, it’s actually the beginning of the retail journey for a lot of potential Lands End customers:

While we are making it easier than ever to shop through our own website, landsend.com, we have recognized that half of apparel searches now start on Amazon. So, we are working with Amazon to provide another channel for consumers to discover our products. Based on our early results, we see that over half of our Amazon customers are completely new to our brand, and we are thrilled to see that this new customer is buying the same key items our existing customers love.

Building on that realisation, there’s now an enthusiasm to (a) expand the relationship with Amazon and (b) to seek out other third parties, particularly internationally, with whom Lands End could potentially partner. It’s still early days, cautions Griffith, but, it’s an idea worth exploring alongside working with Amazon globally:

There are other players and big players in individual markets that we are in talks with as to how we can get product feeds to them and start to market on their websites. I think that’s a big opportunity for us. It’s early days, we are not used to selling through somebody else’s market size, but it’s something that we could do a much better job with. We have a very small business right now in England with one of the department stores there, Debenhams,, but we do marketplace marketing online with them and we have a relatively robust business with them.

Given the current state of Debenhams, it might be wise not to put too many eggs in that particular basket (case) - we don’t want a repeat of Sears, do we? - but the basic principle of tapping into expedient third party relationships makes sense nonetheless.

Analytics everywhere

Elsewhere there’s work going on to improve the back end technology platform for Lands End to build on, including an ERP roll out that should be completed by the end of this year, says Griffith:

We recently launched the direct procurement and financial planning modules of our new ERP system and the rollout has gone smoothly so far...The next phase of our technology investment and upgrade will be in enterprise order management system that will enable inventory optimization and more flexible fulfillment options.

Elsewhere Griffith repeats his objective of getting to understand the Lands End customer better and is looking to analytics tech to deliver on this:

Advanced data analytics will remain a driving force behind everything we do as a customer-centric organization. Within product, we continue to leverage data to drive better intelligence on pricing and inventory, with a focus on our core categories of outerwear, swimwear, knit-tops, and bottoms as well as seasonal fashion items that make sense for our customer.

This has been driving growth in sales, he says, as well as a better, if unspecified, conversion rate. Analytics is also being used to shape the product offerings look-and-feel:

Taking this to another level based on our data analysis, we are learning what fabrics, silhouettes, and price points are driving purchasing behavior and using this information to design new styles in popular fabrics, develop top selling silhouettes and additional fabrications, and deliver product in the price points where there is the greatest perceived value.

For example, based on customer data, we know newness is most effective when we insert fashion elements, such as print, pattern, or embellishment, into a key item, like our women’s Supima cotton sweater. We also see success when we add a feature that the customer appreciates, a product with a purpose, such as stretch in our men’s favorite chinos or reinforced knees for kids’ pants. By leveraging our data to provide more of the product that our customer wants, we believe we have an opportunity to increase purchasing activity from active buyers and attract new buyers.

Having products that are more appealing to customers is one thing (albeit something that’s often overlooked in retail transformation strategies - the need to have something that people want to buy is kinda important! ). But with those products now available, the challenge remains of how to raise awareness of them in a targeted fashion.

Lands End’s history as a catalog-based company comes into play here. Some firms that have a catalog legacy to shake off have struggled with the demands by digital shoppers for a more personalized approach - see JC Penney as a case in point.

Griffith appears aware of this challenge and again points to investment in digital to produce ways to reach the customer in “highly-personlized ways”, that Holy Grail of digital retail. One aspect of this is to address and improve product searches on both the Lands End site as well as third parties:

Part of this effort is improving both our product page and the search functionality to best capture the customer during the discovery phase. We are enhancing our site with best-in-class search engine optimization practices, including updated product descriptions that align with the language and search habits that our customers use when searching for products. For example, we want to ensure that if she is shopping for tankinis, she can quickly and easily find the swimsuit that fits her wherever she chooses to engage with our brands. We believe this will ultimately translate into more traffic with relevant results and higher conversion for both new and existing customers.

And it all circles back to data analytics capabilities again:

We have a data-driven strategic view of what the personalization journey will look like for Lands End as we leverage both online and offline customer behavior to connect customers with the right products at the right time in the right contest. This means that the products that we highlight on our site or on e-mail communications for one customer maybe different than what we may highlight for their best friend, as we know their purchasing behaviors are not the same. Our initial work with personalization has helped deliver an increase in our conversion rate...which gives us confidence that our data-driven recommendations are on point with our customers’ needs.

It’s all a work-in-progress, of course. Griffith concludes:

We remain focused on executing our strategic initiatives, leveraging our data to further define our product assortment, become an even more digitally-driven company and improve our distribution network. At the same time, we will continue to enhance our infrastructure to support the business and help us achieve our long-term objectives. Our effort will be routed in responding to what our customers are telling us by offering the products they want communicating to them in a personalized way and making it easier for them to shop with Lands’ End as we move toward becoming a omni-channel retailer.

My take

I like the pragmatic approach that Griffith is taking to reviving the Lands End brand through judicious application of tech that can deliver benefit, such updating the back end ERP and investing in data analytics. There’s a need, of course, for the flashy front end and the mobile commerce/app play as well - de rigeur these days - but building a solid platform to support such activities is critical long-term. Too many retailers reach for the ‘look at this sparkly thing we’ve done’ approach to digital transformation, but all too often that means short-term chasing of the latest thing. That’s too much of a risk here. It may be called Lands End, but Griffiths is clearly intent on not driving the firm off a cliff