January is a time for resolutions. A time to decide to work smarter, not just harder; a time to refocus and home in on what’s really important. In business, the start of a new year is a good time to give your company a health check and work out what you need to do in order to keep on growing.
During the ECMOD 2011 conference on 30th November, seven business leaders from the direct commerce sector—dubbed the “power panel”—shared their insight into what will be the main areas of growth in 2012. Each was asked for his top three tips. We’ve compiled their comments so that they may inspire you—and hopefully give you plenty of ideas for the coming year.
Joe Murray, cofounder, WorldStores
For Joe Murray, growth in 2012 rests on three things: category expansion, customer retention, and opening up the WorldStores platform to third parties. WorldStores currently operates more than 70 niche online stores including LogCabinWorld, PatioHeatersWorld, and BedroomWorld. The business was built around using search terms to identify product categories that have a large volume of searches, but few satisfactory results. This strategy works well; Murray told ECMOD delegates that WorldStores can recruit customers quite profitably this way. But the challenge for the four-year-old business now is retention. Once a customer buys one log cabin, he is unlikely to need another. In 2012, WorldStores will expand its range to include more “repeat” categories, such as homewares, kitchenware and DIY products. This year also sees the company launch an “umbrella” site so that customers can be acquired at a niche level—sofa buyers, for instance—but retained at a group level—sent offers for cushions or throws. Another avenue WorldStores is exploring is opening up its platform to third parties—either as a white-label site or as a marketplace concept.
Aamir Ahmad, managing director, Dwell
New product development is also a key focus for furniture retailer Dwell. Ahmad says this year the business will strengthen the emphasis on existing customers and increase their average spend through offering complementary products such as mirrors, rugs or artwork. He also acknowledges that in today’s retail climate it’s impossible not to be promotional, but to lessen the impact on margin, Ahmad recommends using “targeted, short-term offers”. For instance, only offering a very small number of product SKUs in the promotion, or using text-messaging to contact a select segment of customers. Text works very well, he adds, but you have to use a very promotional message. Another piece of advice from Ahmad: grow all your channels equally. At Dwell, for example, the retailer is growing its store network and its use of mobile in tandem. In a fine example of multichannel integration, customers can create an online basket using their smartphone and complete the purchase in-store.
Gerald Dawson, financial director, Long Tall Sally
Gerald Dawson, who held the post of commercial director, North America, before becoming financial director of apparel retailer/cataloguer Long Tall Sally, recommends that when retailers need to increase prices, they also need to increase the product quality. When Long Tall Sally did so, it found “little resistance” to higher prices because the quality of the products justified the rise. Another growing area is international. Three years ago, says Dawson, Long Tall Sally’s customers were almost all UK-based. Today, it ships to some 73 countries and the UK generates less than half of total sales. The key to this, says Dawson, is acquisitions, his third tip for 2012. In October 2009, the business acquired Canadian retailer Tall Girl, while in July 2011, it bought German business Long Fashion. “There are some good deals to be done out there,” he adds.
Stuart Paver, managing director, Pavers
Home shopping is on the up, says Stuart Paver. He argues that with the British high street losing stores to out-of-town malls, the poor choice on customers’ doorsteps is driving them back inside. Footwear retailer Pavers is also benefiting from an aging population and is seeing lots of potential for growth from its TV channel. Among the opportunities for 2012, he tells delegates, is targeting emerging markets, such as India, with product videos/TV spots dubbed into local languages.
Kevin Hague, founding partner and chief executive, M8 Group
M8 Group operates Greenfingers.com and PetPlanet.co.uk and Kevin Hague argues there are huge advantages to being an online-only retailer. If you can find a niche and really specialise, being online-only allows you to be more competitive. You can respond to trends quickly, tailor product copy in an instant, update prices to match a competitor. Operating as a pureplay online retailer gives you the edge over multichannel merchants in that you don’t have a build-up of data silos. If you’re already multichannel, Hague advises looking into whether you can spin off an online-only brand. His other tips relate to sustainable growth and value. He defines sustainable growth as when you don’t need to rely on a customer’s lifetime value. His final recommendation is to focus on giving customers good value and service.
founder and chairman,
Charles Tyrwhitt Shirts
Get more from the core, focus and keep it simple. That’s the advice from Nick Wheeler, chairman of apparel retailer/cataloguer Charles Tyrwhitt. “When we focus we grow, when we don’t focus we almost go bust”. Aspire to be the best you can and you will grow, says Wheeler. Look at how you do the simple things and strive to offer the “greatest price, greatest value and greatest product”. Motivate your team to get the best out of each employee and ensure that everyone know what he’s doing and what more needs to be done to achieve your company’s goals.
Nigel Swabey, chief executive, Scotts & Co
Nigel Swabey isn’t interested in a massive sales growth. To him, growth means a substantial increase in profit. To make a profit you need to make the business more efficient, develop your overseas business and accept new payment methods. He doesn’t just mean PayPal, either. Scotts & Co recently introduced a gift card option, enabling customers to buy a card in denominations starting from £10 up to £500 that allows them to shop at all the group’s brands. He also reiterated the importance of making customers feel special; “mail your best customers more often, but don’t offer too many discounts”. Make more out of your list rental revenue, accept inserts in product despatches and stop “encouraging” customers to opt-out of receiving third-party mailings; in other words, make receiving information from other parties more appealing. To cut delivery costs, try introducing a premium service customers have to pay extra for to offset the costs of your standard charge, also try cutting the cost of your catalogue mailings by joining schemes like the one operated by CatEx. Most of all, says Swabey, stay positive.
*Mandatory fields your email address will not be published. All comments are moderated and may be edited. Comments do not necessarily reflect the views of the Catalogue Development Centre Ltd.