Across the entire retail sector, brands have found their e-commerce capabilities put to the test over the past three months as COVID-19 has resulted in the closure of physical storefronts around the world. For some businesses, that’s been a body blow; for others, it’s been a tough test, but one that’s thrown up some learnings around the omni-channel balance. And for Lands End, it’s a crisis that has played to its operational strengths.
In recent years, Lands End has suffered from its dependency on concessions in Sears outlets around the US for its physical presence. With the problems facing that firm, the retailer spent 2019 breaking free of its last links there and embarking on an own brand store opening program. That’s on hold now while the pandemic’s long term impact on the economy remains unclear, but it does mean that in contrast to most of its competitors, Lands End hasn’t suffered from enforced store shuttering.
As of today, the firm has only 26 company-operated outlets, with bricks-and-mortar sales accounting for less than 5% of its total business. While the lack of physical stores had been regarded as a strategic gap that needed to be plugged over time, events have conspired such that this shortfall, if not exactly an asset, isn’t doing harm. CEO Jerome Griffith says:
This July landsend.com will celebrate its 25th anniversary. We were innovators in the e-commerce space in 1995 and in 2020, we are pleased to push into this next era of digital innovation…We are a digitally-driven company, with 95% of total revenue coming from e-commerce. Of that 95%, approximately 80% is direct-to-consumer revenue.
That said, the company’s online sales have followed what is by now a pretty familiar retail sector pattern. March saw a significant drop in demand as COVID-19 took hold, followed by a rebound in April as shelter in place orders kicked in, before seeing a double-digit rebound in May as the new world order settled down and shoppers looked beyond toilet rolls, hand sanitisers and groceries.
There have been other shifts noted during the crisis, says Griffith, but the basic tenets of the firm’s e-commerce thinking remain the same:
Our mobile experience remains a priority. We know that we need to be where the customer is shopping. We have seen the customer shifting their shopping preferences to this channel over the past few years. We are continuing to upgrade our mobile experience by increasing the speed of navigation, checkout and payment options, among others. While we are seeing a higher mix of online shopping to PCs, which we attribute to work-from-home policies, we expect mobile to remain the preferred shopping channel longer term.
While a number of clothing retailers have suffered from the lockdown rules around the world - there’s no demand for a party frock or a fancy new business suit if you’re spending all day on Zoom in your PJs - the more ‘comfy’ nature of Lands End inventory has played well to changed consumer circumstances, says Griffith, with digital marketing and outreach emphasizing comfort and value as the key selling points:
Our product offering has been an important differentiator for us in this new industry landscape. Lands End is best known for high-quality at a value price point, offering our customers a composition of basics, seasonal basics and newness….Consistent with the shift in customer dynamics, as more people work from home, we are seeing strength in this offering, as well as select multifunctional items with UV protection within our swimwear category, as people are ready to spend more time outdoors. Home is another category for which we are seeing strength, as consumers are creating a more comfortable living space with the increase in time spent at home.
As retail stores around the US begin the process of re-opening for business, Lands End is teeing up its own priorities for the post-lockdown period. Its own 26 stores should all be open by the end of June, but the planned 20 new stores for 2020 are on hold. Other projects remain on track, most notably the completion of a new Enterprise Order Management system, critical to increasing the ability to deliver on online orders. But as previously announced, other tech spend in the near future will be restricted to consumer-facing essentials until the financial climate becomes clearer.
But despite inevitable uncertainties, Griffith sees Lands End as having had ‘a good war’ to date:
Despite focusing on and responding to the crisis, we continue to make progress in building on our key strategies. The economic challenges and uncertainties we are seeing today are only accelerating the secular changes that have been evolving across the retail landscape over the past 10 years. We see opportunities to expand our customer base through more recent strategies, including the planned launch of Lands' End on kohls.com and in 150 Kohl's retail stores this coming fall.
That gambit is part of a desire to work more with third party platforms. A relationship with Amazon, where over 75% of purchases have been driven by either new or lapsed customers, is seen as a positive template here.
And Lands End is ‘eating its own dog food’ here, becoming itself a platform for third parties: Griffith explains:
In light of the Lands End team's demonstrated ability to listen to the customer react as they embraced let's get comfy and a stable strong converting website, I am pleased to announce the creation of the Lands' End marketplace…As a digital platform, Lands End plans to open up our website to third-party sellers and brands who have a product offering,
That claimed ability to listen to the voice of the customer will come in handy as the consumer retail landscape of the post-pandemic era takes shape and firms need to react to changed demands. Griffith argues Lands End existing tech investments will serve it well here:
Within digital, data remains an important cornerstone in informing our decisions. We are expanding our comprehensive database to build out our consumer insight capabilities, which we are leveraging across our organization. We remained focused on improving and refining our approach to our customer file. As our customer database grows, we are able to improve our algorithms to enhance our predictive capabilities. We use these insights to drive repeat purchases from our existing and new customers.
We are continuing to test and learn from our AI, where we have already seen more effective and profitable promotional and markdown cadences. In March, we implemented a number of tests to better understand customer behavior in this environment. We attribute the growth in US e-commerce for April, partially to the application of learnings from these tests. As we continue to test and learn, we will improve our database, which will enhance our understanding of customer motivations.
Lands End can emerge stronger, concludes Griffith:
Our uni-channel distribution strategy remains more important than ever as we look to serve our customer, wherever, whenever and however they want to shop our brand…The consumer landscape has drastically shifted and we expect many of these changes will remain once the crisis has passed.
Tracking Lands End recovery transformation has been a bumpy ride over the years, but the retailer had exited 2019 seemingly in a place where omni-channel investments were beginning to pay off and 2020 might be a year to build. Then along came COVID-19 and all bets were off. That said, the firm’s “limited retail footprint” has provided an unexpected benefit and a quarter of a century’s e-commerce experience has come to the fore. Add to that being a supplier of comfy PJs and ‘slouch around the house’ clothing and given the wider retail landscape, Lands End is better placed to ride out the storm than many.