Retail and Digital Convergence: an Open Discussion
Updated: Dec 21, 2018
It’s hard to believe, but some people still shop in physical stores. In fact, brick-and-mortar retailers make a significant contribution to the global economy. However, well aware that online sales have doubled in the last five years, retailers (rather unsurprisingly) are paying attention to how they market their products online, to knowledgeable, fickle and often distracted retail-gone-digital customers.
So how do the two worlds co-exist? And what can they learn from the one another?
In order to learn from the experts, HVO Search gathered 10 senior executives (from co-founders of start-ups to CEOs) for breakfast on the top floor of Google Campus to discuss the biggest challenges to retail and digital businesses. Attendees and biographies are listed at the end of the article.
With social and mobile shopping becoming the biggest trade drivers to physical stores, the discussion about omnichannel approaches is omnipresent.
Maria Hvorostovsky, Director of HVO Search, posed some questions around the issue.
HOW DO YOU CREATE A SEAMLESS USER EXPERIENCE ONLINE?
Nuno Miller, CIO at Farfetch.com, describes his business as a digital world with physical touch points – over 300 boutiques in over 24 countries. The way Farfetch attempts to juggle these two elements is, according to Miller, to ensure that the products (more than 2,000 brands) are presented in as uniform a way as possible. For instance, models are always photographed in the same pose – standing, with their faces out of the shot. This is a challenge, as brands can be particularly sensitive about the presentation of their products. For Miller, this means that, “we really need to work quite closely with the boutiques and let them get to know us”; the integration between the brands, boutiques and the platform is paramount.
At Farfetch, there is also a lot of A to B testing, with different versions of the site running simultaneously to see how users respond to various layouts, colours, etc. A lot can be learnt from this raw data about customer behaviour online, meaning that Farfetch are “always try[ing] to experiment with different things.”
What is key, says Miller, is the fact that the home page doesn’t sell the product, but tells stories and shows you what’s happening in the world. As he puts it:
“If you get to our homepage, we don’t really sell product […]; we just show you stories.”
It’s content that’s given centre stage, allowing the community to search for, and discover, products. For example, fashion bloggers are used in this space in order to create buzz: the most prominent ones are invited to design new products – a shoe, for instance – and the customer is invited to choose which one gets to be produced and sold on the site. In this way, the process becomes much more interactive.
Nish Kukadia, co-founder and CEO at SecretSales.com, advises retailers seeking to gain new customers to develop interaction, to “invest in channels where your target audiences are likely to be”.
For his organisation, Kukadia claims that better engagement is found through another channel – TV, or, more precisely, through the integration of TV advertising and mobile. Due to an increasing amount of their customers using mobile devices whilst watching TV, Kukadia states that, “we advertise on daytime TV and get tons of people coming in from that.” In fact, 60 percent of SecretSales revenue is through mobile and tablet devices.
This being the case, Kukadia says that: “We haven’t used social media as a core acquisition channel. It’s a great ‘touch point’, but rather than a strong sales channel, it is more of a brand building environment”. For Kukadia, social media is not the best place to engage his target market. As he says, “I don’t think, from a personal point of view, that [users] are in a ‘purchasing’ frame of mind [when using social media]; If someone follows a brand on social media, the brand doesn't follow them back. It's a personal space and most people prefer to watch videos of cats than talk to brands.”
Elena Koudreiko, International Business Director at Be On, a division of AOL, and an expert in online video content distribution, argues that, when it comes to creating branded content, companies fail to make the distinction between driving sales and driving acquisition: “Videos of cats are obviously well received by audiences online, so if brands out there are looking at using that to their advantage, they need to make the distinction between driving sales and driving acquisition. I think video is still very much a branding tool, which is about investing, in making sure that the audience already has a relationship with your brand, they know who you are, they know what you stand for, why they like you and they know why they want to come to you. And if you’re looking purely to drive sales, then there are, of course, other channels, affiliates or others that might be more relevant.”
The focus of marketing campaigns should be to create user engagement by creating enjoyable user experiences. It’s more important to build a relationship with your audience which then, in an informal manner, leads to sales and recurring sales. Essentially, user experience governs whether customers come back or not.
In order to capitalise on consumers’ hunger for online video, Koudreiko claims that brands need a “concise and clever strategy” whereby “everything that is put into that space is going to add real value to your audience”. She believes that, in terms of Facebook, there has to be “reasons to like you as brand” – you cannot expect to receive thousands of “Likes” without giving consumers reasons to like and resonate with you. Brands should invest in options such as video as a branding tool to ensure your audience “already has a relationship with your brand, […] know who you are, […] know what you stand for, why they like you and why they want to come to you”.
For Koudreiko, “[Facebook] is not a sales channel, it’s a branding channel first.”DOES SOCIAL MEDIA CONVERT TO SALES AND WHICH TOOLS WORK BEST?
Romain Bertrand, UK Marketing Director at e-Harmony, believes that social commerce is the future, but adds that brands must understand that every channel is different. He says that content needs to be targeted, that bands must “provide the right content”. In short, companies must ensure that customers experience “the right journey”.
Bertrand believes that, “anything linked with Google advertising as targeting is already optimised”. YouTube, for example, is successful because it has various targeting options: “It’s contextual advertising from Google, it’s got Google Ads, and it goes directly to your site.” “Facebook”, Bertrand continues, “is useful as a convergence ad, but you can’t just push any message or any ad – it has to be done in the right way, because clicks are expensive. Twitter was embedded from the start, making it a wise avenue to go down, and is launching one-click e-commerce which several brands are testing – it’s going to be a one-click directly buying into Twitter”.
When creating and developing a brand, for Fiona Satchell, it’s not a question of “one-size-fits-all”; rather, it’s about understanding individual cultures by using professionals within the local markets. Satchell, head of Trade and Marketing for Liberty.co.uk, is an expert at doing just this. With her previous company, Luxup, she had “professionals on the ground, an editor on the ground, all for those markets with the local knowledge”. This allowed them to intercept and understand their customers’ behaviors and buying processes in an attempt to “inspire them with the window of exclusive products and experiences that we hoped would draw them to the stores when they arrived in New York, Miami or Hong Kong”.
These customers were “100 percent spending tons of money, but not online at all. We wanted to intercept their shopping patterns with this merchant platform.”
When interacting with users at this level, it’s important to delve into their whole culture – not necessarily just pushing products, but also tapping into content and local knowledge, trying to engage with them on a personal level. Fiona made sure her brand “engaged them in the lifestyle they were aspiring to have, country by country, giving them options to buy luxury goods they wouldn’t be able to get at home”.
How do you find out who your customer is, in order to create the perfect online experience for them?
According to Olivier Binse, Head of Digital Advisory at Deloitte Digital, this question is borderline philosophical. He says, “The companies that seem to be doing really well are the ones who care about their purpose – they are very focused on what they mean to people. When you know the meaning of what you’re doing, it sets you apart. Meaning is the design, so every little detail is in your culture, it’s in your building; it’s on every page you do, in every word you write”.
He, like Koudreiko, believes that businesses should think of their social channels as entertainment for their customers, and that this is a way of making them excited about your product.
Nicholas Diamond, Global Marketing Director for Procter and Gamble at Tesco, agrees: “Just as people would sit down to watch the US Superbowl advertisement – 30 seconds or a minute of pure entertainment – people still want to be entertained today, they just look for it in different places”.
As Diamond says, “people don’t buy platforms – they buy brands”. Retailers must evolve to become integrated organisations, delivering seamless experiences for non-stop, socially connected consumers.
“It’s about building brands,” says Diamond, “whether you are building brands online or building brick and mortar brands. It’s about properties that consumers aspire to. Everyone is talking about technology and people often focus on the facts that are of worth to the consumer.”WILL PURE DIGITAL PLAYERS EVER BUY RETAIL SPACE? ARE THE LIKES OF AMAZON EVER GOING TO HAVE A STORE?
It’s often said that there may be a need for online retailers to create a “destination” store, an embodiment of the brand, which some view as integral to the multichannel experience. By augmenting the brand experience with a physical store, retailers are able to engage and entertain their customers. Burberry’s “entertainment destination”, for example, gives loyal clientele an exclusive chance to purchase from the new range. Its aim? To synchronise the physical store with its corresponding digital communication activity.
Similarly, Diamond talks about Tesco purchasing smaller stores and cafes in order to ensure that they still have retail space which is entertaining to their customer: “They need a reason for consumers to come into their shops, a lot of the time it’s just so that they can do a bit of shopping; but they want to be entertained in other ways, too.”
Miller adds that, “the consumer is looking at ways of mixing the online experience with the physical experience but, to embrace the omnichannel approach, communities need to work together. For example, if I want to buy online and collect from the same store, this is really easy. But if you want to buy from one store and pick up in another, this is totally different”.
The concept of going into a physical store and then later purchasing online is something that’s also happening on a global scale. Mark Eve, Founder and Chairman of the Global Retail Forum, uses Turkey as an example. Online retailers come into Turkey, he says, and “cherry pick consumers away from them; in the Turkish market, most online sales come from outside the country”. This means that there is a huge emerging market of consumers buying from stores that are actually based elsewhere. But is this something that will change in the future? Will online stores dedicated to selling products in their individual countries come into place?
Miller thinks that the consumer is looking at ways of mixing the online experience with the physical experience. But as online shopping booms, it can be harder for them to do that: “If I want to be able to buy online and collect from the store, if it’s the same store it’s really easy, just change the check-in process to change it to store. But if you want to make it buying from Florence and pick up in Browns it’s totally different so we must evolve to have the community working together because Browns is going to spend time on people entering the store for something they haven’t sold. But on the other side, you have different people in the store that is buying this sort of product so it probably makes sense for them.”
For Kukadia, the freedom to browse almost anywhere that can have a positive impact on businesses. He claims: “What’s most creative about our website is that it’s timed and there is a limited amount of each product, so you want users to be able to access it at the time the sale goes live”.
Statistics show that tablets drive four times as much traffic as mobile phones, and 69 percent of tablet owners make a purchase on their device at least once a month. Tablet users also rack up a far higher number page views and conversion rates. However, Cristian Parrino, VP, Online Services at Canonical, states that these stats are sometimes hard to decipher since “tablets get included in mobile stats when the two are completely different formats”.
Regardless, a substantial question remains about how to effectively target these users: should a specific app be built for your business or is a mobile web page enough? Koudreko’s company receives over one million video views every day, and 10-15 percent of those views are from mobiles and tablets. But she claims it’s not necessarily “a special mobile format”, that’s helped to achieve this, “it’s just people trying to access normal websites through their mobile device”.
Reports show that 82 percent of media time spent on mobile devices is on an app. So perhaps apps are the best way to target the end user? Binse believes that it’s the target’s context that’s important. For him, if “you understand the context of someone”, you can “serve them the content most relevant to them”. He believes that apps are opening up further options for businesses, giving Weave as an example: “They know who you are, where you are and what you like, and they tell you ‘20 metres from here you can have 20 percent off there’. That’s really quite exciting”.
For Koudreko, “maybe the key word here isn’t excitement, but […] about getting some kind of ‘emotional’ reaction.”
However, according to Diamond, “convenience is the reason that 75 percent of sales that go through Tesco.com; 75 percent are items already in their ‘favourites’ basket”. Still, Diamond too believes we “need to make the everyday more exciting”. The ideal approach, according to him, is to make even soap powder “more fun and sexy”.
Perhaps it’s all about finding the perfect balance between branding a product so that it’s interesting and exciting to the buyer, whilst ensuring that the shopping experience is convenient, quick and simple.
Ezra Konvitz, Co-founder of ArtStack, sees a social commerce future based increasingly around niche social networks. He believes that “good discovery mechanisms are key to effective social commerce" adding that "too much content on major social networks is too irrelevant to too many people. Companies like Facebook are struggling to serve the right information to the right people, simply because there is so much content out there. As a result, more people are turning to more niche, curated communities for meaningful experiences".
Similarly, Mark Eve, Founder and Chairman, Global Retail, believes that it will no longer be the large companies or organisations dictating the items on offer; instead, it will be the users who are given freedom to create the products they desire. Ultimately, consumers could become masters of their own destiny. Eve states: “The consumer will become the designer, so they will be able to say ‘that’s what I want’, and it will therefore become more consumer-designer led”.
The future remains unknown. So, as always, it will be up to businesses to adapt in order to communicate with users through the emergence of ever-changing, different channels, using customisation to understand individual shoppers in context.
It’s about customising, connecting and converging in order to remain relevant in today’s fast-paced world. But how’s this best achieved?
Watch this digital space.OUR GUESTS
Cristian Parrino: VP, Online Services, Canonical
Cristian leads the Online Services business at Canonical. This sector of the business includes a number of search and affiliate partnerships including Ubuntu One, the world’s best free software platform. Prior to Canonical, Cristian was Chief Marketing Officer and Vice President of Marketing and Alliances for two British Telecom (BT) laboratory spin-outs in the mobile content and location services sectors.
Elena Koudreiko: International Business Director, Be On, AOL
Elena has been part of the international media technology community for the past 8 years, most recently spending five years helping to build Be On (formerly GoViral) into the global leader for branded video content distribution, acquired by AOL for $97m in 2011. Her passion for innovative technologies helps Elena lead the teams responsible for high-profile client accounts such as Diageo, Hyundai, the European Commission and others.
Ezra Konvitz: Co-Founder, ArtStack
Ezra is the Co-Founder of ArtStack, the social platform for art. ArtStack’s platform hosts over 250,000 artworks and is used by museums, galleries, artists and art lovers globally. Ezra previously led strategy at the Serpentine Gallery, London, and holds an MA from the Courtauld Institute of Art, an MPhil and a BA (Hons) from Cambridge University.
Fiona Satchell: Head of Trade & Marketing, Liberty.co.uk
Fiona is currently at the luxury department store Liberty. She helps the e-commerce team get the best out of their online channel by utilising her understanding of strategy and proposition design, buying and merchandising, and commercial planning. Her experience in e-commerce and luxury fashion retail includes working with Luxup, Thecorner.com and Harrods.com.
Mark Eve: Founder and Chairman, Global Retail Forum (GRF)
Mark started his retail career in 1999 when he joined the management trainee program at Littlewoods Index before settling into the Business Development sector. Mark joined New Look in 2005 and, over the past six years, has helped launch New Look into 27 countries, 300 stores and delivering a turnover in excess of £300m. Mark is also Founder and Chairman of the highly respected Global Retail Forum (GRF).
Nicholas Diamond: Global Marketing Director, Tesco, Procter & Gamble
Nicholas is currently responsible for marketing of the Procter & Gamble (P&G) portfolio in all Tesco stores. He has extensive experience in marketing, commercial, and general management roles, and has worked in more entrepreneurial and un-structured roles throughout his 17 year career at P&G.
Nish Kukadia: Co-founder and CEO, Secretsales.com
Along with his brother, Nish is one of the four original founding partners of Secretsales.com and was appointed CEO in 2010. SecretSales is a UK members-only flash sales business, hosting online sales for over 650 designer fashion, lifestyle and homeware brands with almost two million engaged members. Nish gained his undergraduate degree in Management & Marketing from Manchester University.
Nuno Miller: CIO, farfetch.com
Nuno joined Farfetch.com in 2011 where he leads the Software teams as the Chief Information Officer. Farfetch.com delivers a unique shopping experience with over 150 business partners in the EU, US and Brazil. Nuno started his career with Deloitte as a consultant and is an expert on the IT and technologies sector.
Olivier Binse: Head of Digital Advisory (Telecoms & Media), Deloitte Digital
Olivier joined Deloitte Digital, UK, in November 2007 to head up the Digital Advisory team. He specialises in strategy formulation and product development across a variety of sectors. Prior to Deloitte, Oliver was head of Strategy Function at O2 in the UK. Olivier was educated in France at Ecole Nationale des Ponts et Chaussees and holds an MBA from the College Des Ingenieurs in Paris.
Romain Bertrand: UK Marketing Director, e-Harmony (mentor at Seedcamp)
Romain joined e-Harmony five months ago as UK Marketing Director. Previously, Romain was responsible for developing JustGiving’s marketing and supporter acquisition strategy and was also Head of Acquisition and Partnerships at Photobox. He has also held senior marketing roles at T-Mobile and Skype.
Maria Hvorostovsky: Director and Founder, HVO Search
Maria’s exceptional talent network, coupled with her relentless entrepreneurial spirit, led to the creation of HVO Search in 2012. Based in the heart of London, HVO Search is the provider of bespoke executive search and intelligence services to global clients within digital, retail, consumer and technology industries.