How to create growth in a tough climate
Online growth may well be slowing down but the industrys leading players have plenty of strategies up their sleeves for growing their top-lines. By Glynn Davis
Among the successful online and multi-channel operators speaking at the ECMOD 21st Annual Direct Commerce Show in London this week was Joe Murray, co-founder of Worldstores, which runs 79 niche online stores and is looking to boost growth by switching from an acquisitive mode to one that also focuses on retaining existing customers.
Focus on retaining customers
This involves adding products beyond the core selection: “We are moving into other categories such as homewares. So on our kitchens and beds websites there will also be home improvements and lighting products.”
This will be done in tandem with the launch of a site that combines everything from the company’s many niche sites, whereby customers can shop across the various sites in one location. Another growth area, according to Murray, is the potential to “offer our next day two-man delivery platform” to other merchants.
Of Worldstores’ 175,000 SKUs that require a two-man delivery, the company can achieve next-day delivery on 70% as a result of its unique model, which involves sending its own couriers to collect goods from suppliers’ warehouses.
Furniture retailer Dwell is also looking at a retention strategy by expanding its offer into smaller, complimentary items, which afford cross-sell opportunities, such as accessories, art works, mirrors and rugs.
Aamir Ahmad, founder of Dwell, says: “Our existing customers have been much stronger [through recession]. They’ve been spending more than normal, so new product development is the cheapest way for us to sell more products.”
Although he says there is a strong reluctance to use promotions it has been used very sparingly and encompassed no more than 10 SKUs on occasion and these have been successfully delivered via email. Catalogues have also played a strong part in keeping customers engaged with the brand.
Utilise the power of catalogues
Nigel Swabey, chief executive of Scotts & Co., is also a big advocate of paper-based catalogues as they generate significant web traffic. Of the company’s online sales – that can fluctuate between 12% and 43% of total sales depending on the different brands the company operates – Swabey says 80% of this can be tracked-back to customers who have received a catalogue.
During tough times he says there is careful management of the distribution of the catalogues as this is a very effective lever on managing the businesses costs and sales.
International growth opportunities
Another area of growth during these tough times is expanding overseas and Long Tall Sally has an innovative way of growing its international sales, which has been developed since it began to acquire stores in Germany, Canada and the US.
Gerald Dawson, finance director of Long Tall Sally, told delegates at ECMOD that it opens pop-up shops over the course of a weekend in US cities where it is considering opening up physical outlets.
“We build a store for three days in a function room and they can take $100,000. But ultimately it is about finding places where we’d like to put a store,” he says, adding that this sort of activity has helped the company grow its store sales from 5% of its total turnover three years ago to a current 55%.
Shoe chain Pavers has also dipped its toe into overseas markets – notably India – where it has 50 Points-of-Sale. And where the company sees big time growth is through TV shopping, both in the UK and overseas.
Switch on to TV shopping
Stuart Paver, managing director of Pavers, says: “TV shopping is leading to international opportunities because when you’ve created the content you can use dubbed versions internationally.”
Such is the belief in TV shopping that Pavers switched from simply using the TV channel of Ideal Shopping Direct and now produces its own ‘as-live’ content (that gives the appearance of being live) for use on SKY Digital. This platform made it more affordable for retailers to operate their own stations.
Paver calculates that this move will enable it to go from the peak £5 million of sales (10% of its total turnover) that it achieved on Ideal to the £10-20 million level now it had its own station. And with as-live content it can operate cost-efficiently by only adding three to six new hours of content each month.
Pavers’ move to TV shopping looks set to be replicated by many other retailers as Verdict Research predicts the market will grow by 2.5% this year to £756 million. Pete Mills, director of The Broadcast House, is helping smaller retailers tap into this potential market with the creation – revealed at ECMOD – of ‘The Dept Store’ channel that will launch on SKY Digital in February.
“The cost of airtime is cheap and viewing figures are high as people are staying in so we are launching an as-live channel for seven members with each having their own set hours,” says Mills. The members will be retailers with products covering areas including cosmetics, collectables, home entertainment and apparel.
To keep up with the latest developments in the Multichannel arena, register now for the Retail Bulletin's 3rd Multichannel Retailing Summit 2012. Sponsored by GfK, it will take place February 1st in central London. Speakers include Halfords, asos.com, o2 Telefónica, Tesco.com, Schuh, Santander UK plc, Marks & Spencer, Boots.com, Game Group, Alexon Group plc, Everything Everywhere, Joules Clothing, Adnams Plc, eDigitalResearch, Collect Plus, Norbert Dentressangle. Click here for full details and registration.
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