Lands End goes over the cliff as omni-channel progress remains sluggish

Profile picture for user slauchlan By Stuart Lauchlan September 6, 2018
Summary:
There's no land's end in sight yet for the beleagured US retailer in pursuit of an omni-channel future.

cliff-step
The pursuit of an omni-channel business model in the retail sector is one that’s resulted in mixed fortunes for many, not least US firm Lands End which yesterday found that the only land’s end in sight was the cliff edge over which its share price went.

The reason why? Take your pick - slow revenue growth, increased losses and a slide in same-store sales of 5.8%. To be fair to Lands End, that last stat has been heavily influenced by axing 57 stores at Sears locations around the US, but it’s still pretty grim reading.

For CEO Jerome Griffith inevitably the glass is half-full and getting fuller in pursuit of a new omni-channel approach to the chain’s business model:

We are digitally driven as we work to leverage the wealth of information we have from our catalog heritage and deepen our engagement with customers through personalization. For example, in July and August we delivered more relevant experiences and email and our website with households with kids receiving back to school messaging while other adults were served transitional and fall product offerings. We continue to develop insights into the product offerings and marketing campaigns that drive customer response. By using this information to determine individualized messaging in our emails and customer specific content on our page views we believe we can drive higher conversion.

As we look toward holiday we plan to have relevant and differentiated communications for gift givers versus customers that purchase for themselves based on behavioral data footnotes. As we develop a uni-channel distribution model, we continue to focus on creating a consistent high quality seamless customer experience across channels to enhance our customer connection wherever and however they choose to shop. We plan to do this through our own retail store expansion, our own website, landsend.com and third party e-commerce platforms, like Amazon.

There’s a drive to improve and enhance the online experience, he adds:

We're focusing on improving both our product page and 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 match the language and search habits that our customers use. We're also beginning to understand how our best customers engage with both our digital and contact center channels. They desire an easy experience how and whenever they choose to engage with Lands' End and we're working to improve our online self-service capabilities in time for the holiday shopping season. Increasingly our core customer is visiting and purchasing from us on a smartphone and we're very pleased that in spite of the major traffic shift to the smartphone which is typically a lower converting device, we're seeing double-digit increases in online conversion year-to-date.

As mentioned earlier, Land’s End is one of those retailers that has chosen to work with Amazon rather than try to come up with defensive strategies to fend off. Griffith says:

We began selling key items on Amazon in February. While it's still early we're seeing evidence that we are reaching new customers and increasing brand awareness. Approximately three quarters of all customers who purchase Lands End through Amazon are either new to the brand or haven't shopped at Lands End in the last year. We believe Amazon could provide tremendous potential for us to expand our customer reach. We’re so excited to see we're attracting a younger customer through Amazon and that we can sell our products in a less promotional way. We were very happy to participate in Prime Day as we were featured in several deals of the day and more than quadrupled our average daily sales.

In store

Offline, following its (toxic?) relationship with Sears, Lands End now seeks its own retail footprint, he adds and that means a new approach to offline stores:

Our company operated stores perform better than the Lands End shops at Sears and we expect performance to improve as more customers discover our attractive well merchandised locations. We had a goal of opening four to six stores this year. Already in the third quarter we've opened two additional stores one in Staten Island the other in Bridgewater, New Jersey. We plan to open one more in Paramus New Jersey by year end which would bring our new store openings this year to five.

He adds:

Our new stores make it easier for customers to find our products in person and in inviting brand appropriate setting. New stores should also drive greater brand awareness. During the quarter we operated our new store in Kildeer, Illinois which opened during the last week of Q1 and our new store in Burlington, Massachusetts which opened early in Q2. We're learning a lot about customer preferences and we're using that data to test which products from our whole assortment are best represented in store versus available through in-store electronic kiosks.

The in-store kiosks are a good example of how offline and online can converge, suggests Griffith:

It's still early days, but what we have seen so far is that best sellers online are best sellers in stores. Things that are key items online that do extremely well there also do well in stores. We do see, because the stores are a tighter footprint and we don't carry everything in our full range in our stores, that we have a little bit higher penetration with our kiosk sales. So customers will come in and they may want something that's not in the store or maybe we don't have a size and they buy it online and that penetration has been increasing a lot more with newer stores than with some of the existing stores that we've had.

My take

It’s all still very much a work-in-progress and that progress isn’t moving very fast. Behind the scenes, the company is still focused on getting a new ERP infrastructure up-and-running by the end of the year and launching an Enterprise Order Management System project. That’s all necessary stuff, but it’s also stuff that a modern retailer should have had under its belt by now. Overall, it’s the same old cliche - no land’s end in sight here.