Shop Direct: 80 year old catalogue business goes digital
- Summary:
- The group's retail and strategy director explains how everything is now designed around the customer
In 2009, Shop Direct – which owns popular brands including Littlewoods and Very.co.uk - was distributing some 30 million catalogues to customers around the UK. Four short years later, after having undertaken a new digital strategy that pushed online products over physical distribution, the retailer is now down to publishing just 2 million catalogues a year. The massive reduction in catalogue creation has been displaced with investment in digital products, where employees are encouraged to trial innovative technologies and continuously test and improve upon the sites.
Speaking at a British Retail Consortium event in London last week, Gareth Jones, Shop Direct's group retail and strategy director, said that the business in the past had really struggled with the idea of change, but in recent years has tried to implement a culture where “red is good” and employees are told that its okay to fail, as long as they move quickly on to the next thing to make products better.
“There are about 35 experiments on our websites at any one time, where at least a third of these fail – that's fine. In our business, red is good. We will get it wrong and we are happy to get it wrong, as long as we move forward,” said Jones.
“We are going to transform this catalogue business into a world class digital retailer. The heritage of our business is to get a catalogue over the line and into a customer's hands and it sits there for 26 weeks – we all know that the online world just doesn't work like that.”
Restructure to focus on the customer
Jones said that in 2010, two years after he joined Shop Direct, the business ran its first online test. Previously, decisions made on how the websites were structured and how they appeared was based purely on opinions made by the “highest paid individual”, rather than based on feedback delivered by the end users.
“We certainly felt that pain, I remember my first executive meeting and 10 different people told me that they own the website. It was very difficult, just chaos – operations, marketing, sales, no-one really understood who was going to own this business, who was going to take control of the end-to-end seamless customer experience that we were all after.”
To rectify this, Jones decided to run a test on the website through third parties and 'behind the scenes', which took approximately nine weeks to complete. The resulting changes to the website were small, but they delivered an additional £11 million in sales for Shop Direct, which Jones said was the turning point for the company.
“I remember looking down at my sheet that day and thinking I don't have many things on my sheet that can create £11 million worth of sales from one test. That took us away from the highest paid individual person's opinion, to the customer opinion. That's very much the foundation of what we are trying to do now,” said Jones.“Our business in the past 18 months has completely reorganised itself to focus on the customer, the customer is the key in all of our decision making and all of our innovation. Everybody's objectives in the business are geared around how to get closer to the customer.”
Shop Direct has now built a 'world class' UX lab in-house, so that tests no longer haver to be carried out externally and through third parties – which also gives the company much closer links to the customer. Jones said that seeing customers walk down the corridors of the Shop Direct's offices is “incredibly powerful”, because staff can get in involved in focus groups and to get under the skin of the qualitative analysis that takes place.
The qualitative information that is received from customer feedback is then used to run quantitative tests on the websites, so Shop Direct can prove which results work best in a live environment. Shop Direct now runs approximately 30 to 40 tests a month.
“This is everything from the smallest test on the product page, to persuasive messaging, to some crazy innovations coming out of Israel or Silicon Valley. Where does it start? It starts with the customer – problem solving, understanding data, understanding people's pain points in the customer journey, why they are rating us poorly in certain areas. Using structured and unstructured data to understand this,” said Jones.
One example of a change made to the Shop Direct's websites, off the back of customer feeedback and testing, includes a size comparison tool. Shop Direct is finding that people weren't buying handbags online because they couldn't tell what size they were and would rather purchase in-store. To counter this the website now has a tool that allows users to compare the size of handbag to an iPhone.
Another example includes how customers can now quickly view a product and add it to the basket from the quick-view box, reducing the number of
Some of the more innovative trials taking place include an augmented reality tool that allows customers to use images of rooms in their home to see how furniture would fit in that space, as well as some new technology that would allow them to feel the texture of the fabric on the screen of the iPad (apparently this is coming soon!).
“We aren't doing this because it's exciting and new, we are doing this because it's coming from the customer,” said Jones.
Preparing for devices and data
Shop Direct found that it took 15 years to get 50 percent of its business online, but it only took three years to get 50 percent of its business on mobile. Jones said that although smartphones and tablets are still the most important focus for the company, he is aware that new trends are emerging and the 'internet of things' could be a strong priority for Shop Direct in the future.
“This isn't just about the mobile phone, this is about devices, this is about a seamless end-to-end customer experience - understanding that journey across devices. This is why our connected programme is one of the most critical programmes in the Shop Direct business.
“This is a heavily invested programme where a number of people are looking at the pathway to conversion of loyalty across devices, how do we understand those interactions and integrate the customer's experience into those interactions? Mobile phones are critical, but we need to understand that other devices are coming through.”
“We have a treasure trove of data in our business, 80 years of history of customer payments, browsing data, social media – we have more end-to-end customer data than most. We are going to use that data to power real-time decision making into some of our engines, we are seeing this already today and we have deployed nine or so tests this year, seven of which have been mega successful for us.
“We have taken snippets of data and deployed real-time actions into the website, real-time changes to the customer experience that are personalised to that customer. Things have been personalised to their preferences based on what we know about them. We believe that over the next three to five years this will make us uniquely different.”
