Sunday 18 March 2018

The Perfect Retail Model

Selfridge's Boxing Ring

Ex Myer CEO, Bernie Brookes, made a comment this week that could be a good guide for all retail entities.

“Why not take the best of the John Lewis online model, together with the best of the Nordstrom service model, together with the retail entertainment model at Selfridges and the private label focus at Kohl’s.”

Brookes was talking about Myer but before you say “What is the relevance for our market?” I think the relevance covers the whole retail spectrum – online accessibility, customer service, entertainment, and exclusive offer, are all elements that any retailer needs to look closely at, including QVM Traders.

John Lewis, the UK department store, has long excelled in its online offer. In 2016 it reported that 33% of its sales were conducted online. While in-store sales have declined like most other department stores around the globe, their online growth has been continuous and a useful counter to the impact of changing consumer habits. QVM Traders who are experiencing a similar sales decline in-stall may usefully look at online business to fill the gap, just like John Lewis. As we have pointed out elsewhere, Australia Post are recording record parcel numbers as consumers embrace online buying.

Customer Service:
Nordstrom, The US department store, has become synonymous with best customer service and it stems from their personal approach with customer service people having names, and being encouraged to act individually in meeting customer needs. Finding ways to make your customer service personal (and that includes electronic communication) is a valuable tool and, as Nordstrom have found, takes the pressure off price.

Selfridges is another UK department store, and they go the extra yard to entertain their customers with things like their creative pop-up stores and even potato peeling classes. Don’t laugh, there are many in the new age generations who have never peeled a potato. Selfridges recently introduced a boxing ring and boxing classes in one of their stores and have a long history of innovative entertainment including showcasing one of the first TVs back in 1925. At QVM, entertainment will probably fall largely in the realm of management responsibility although individual traders can certainly consider exciting their customers, and differentiating from their competitors, with innovative in-stall activities.

Exclusive Offer:
The US department store, Kohl’s, has steadily grown its private label or exclusive designs as a core way to differentiate from its competitors. In 2016 nearly 50% of their offer was in private labels and that has certainly been a focus for local stores like Myer and David Jones. Myer’s private label content however is less than 20%. Bernie Brookes, while recently heading South African department store Edcon, got their private label content up to around 70%. Aldi is a classic local example of maximising private brands. Exclusivity can be generated in many ways, including simple branding, and QVM Traders may also benefit from promoting exclusive content.

Large retailers spending millions (probably billions) on how to best promote to modern consumers. They are our consumers as well, and it would be wise to closely examine what the big boys are doing.