How the UK’s top multichannel retailers are investing to win DECODED consumer spend

In association with AT A GLANCE CONTENTS n 2020 the consumer changed forever, pressing retailers and brands alike into reducing their transformation strategies from CHAPTER 1 years, to months, to mere weeks. Five retailers tell us what they expect the future of customer The retail industry, known for its agility, rose to the challenge. experience to look like IBut what does this new consumer look like? What makes them CHAPTER 2 tick, what will drive them to spend, how can retailers win their How technological advances can help retailers futureproof their loyalty in a largely subdued market and how will this shape the businesses amid the accelerated shift to ecommerce operations future of customer experience? CX Decoded: How the UK’s top multichannel retailers are CHAPTER 3 investing to win consumer spend, a report produced by RWRC in Why delivery, click-and-collect and other flexible, convenient association with Arvato, provides the answers. delivery models have become key to the shopping experience This report looks beyond the initial changes in consumer mindset CHAPTER 4 and behaviour generated by the coronavirus pandemic and instead What retailers are doing to make in-store shopping fit for a focuses on the now prevailing longer-term trends that will come to multichannel future and a seamless extension of digital define the market in the years that follow. The report features five in-depth interviews with retailers that CHAPTER 5 are innovating in customer experience – including Kingfisher, Hotel Our ranking of the UK’s top 30 multichannel retailers Chocolat, QVC, Waterstones and Seasalt – across pages five to nine. CHAPTER 6 They reveal how their customer experience strategies are We set out what this means for you and how you can futureproof changing, where they are investing and how they set KPIs and who your business drives them, as well as discussing the role of customer service agents in stores and contact centres, and the complementary role that automation will play in a world where the consumer has increased expectations on speed and become used to virtual customer service. As part of this report, RWRC has also produced a ranking of the top 30 multichannel retailers in Chapter 5, compiled using data and analysis from our in-house expert analysts at Retail Week Prospect. However, the market is currently extremely changeable, so rather than the bulk of the report analysing the ranking and these retailers’ performance based on financial results and the attributes they offer across each channel, this report takes learnings from the ranking but looks squarely to the future. With retailers now ripping up the rule book to reimagine the customer journey, this report will provide a blueprint to help them develop a roadmap for true CX transformation.

RWRC: CX DECODED

Head of Commercial Projects Contributors Helen Berry, Rebecca Dyer, James Knowles 020 7715 6167 Nick Hughes, Chris Young [email protected] Business Development Director Commercial Production Editor Tom Jones 020 7715 6533 Stephen Eddie 020 7715 6015 [email protected] [email protected]

2 | September 2020 In association with PARTNER VIEWPOINT XXX

DAVID MORTON SALES AND SOLUTIONS DIRECTOR, ARVATO CRM SOLUTIONS UK

cross the board, retailers have we saw at the beginning of 2020 in the short to build and nurture new relationships. greater insight into customer data to medium term, leveraging the right data to This report brings together businesses and therefore buying behaviours provide a personalised, seamless, channel- from across the sector, from high-end than ever before. An influx of smart agnostic experience is vital. fashion retailers to high street booksellers, to Atechnologies, including artificial intelligence Platforms underpinned by data analytics provide insight into how they are investing (AI), and analytics, as well as multichannel and AI are already being used to collate and in attracting and retaining customers and engagement across apps and digitals streamline this information. Generating a what the future of customer experience will channels such as web chat, social media 360-degree view of every customer, as well look like, both online and in-store. You will and asynchronous messaging, have become as delivering detailed insight throughout the learn about where retailers are focusing their enablers for retailers to collate information. buying journey, this technology is helping the budgets and how you can develop a roadmap This is on everything from purchasing habits consumer towards a personalised, seamless to transform your operations to provide to preferred store locations and favourite buying experience. This data can be used outstanding customer experience. fashions in order to personalise the service to ensure staff can engage proactively with I hope this report will help inform how offering. Think Amazon’s ever-present customers, with the required insight to you invest in winning more consumer spend. ‘Customers who bought this also bought…’ deliver the right outcomes and tailored next and ‘We think you might like…’ prompts that best actions no matter where they are in their never fail to draw us in. purchasing journey, whether that’s seeking Customer experience, positive brand more detail on a product they are looking to engagement and, increasingly, brand loyalty buy or wanting to make a return. have now taken on a new level of importance. This will reduce customer effort and The retail industry is going through a help deliver increased sales conversions. significant period of transformation. Online- AI-enabled automation underpinned by PLATFORMS only retailers have flourished and those with customer data can also be used to support the primarily bricks-and-mortar models have shift to self-serve, ensuring needs are fully UNDERPINNED BY DATA had to adapt to focus on digital sales. In May addressed and reducing overall cost to serve. 2020, online purchases rocketed to a third This is a vital asset in delivering the ANALYTICS AND AI ARE of total retail sales, up from a fifth just three outstanding, personalised customer months before, according to the ONS. experiences people now expect. And with ALREADY BEING USED As competition intensifies for consumer consumers across every demographic attention, customer experience has become a seemingly set to stick with the digital key differentiator. With face-to-face, in-store ecommerce channels they have become interactions unlikely to climb to the levels familiar with, this presents a great opportunity

ARVATO

Sales & Solutions Director, Arvato CRM Solutions UK David Morton [email protected] arvato.co.uk

September 2020 | 3 CHAPTER 1 THE FUTURE OF CUSTOMER EXPERIENCE Retail Week speaks to five leaders in customer experience to find out what transformation looks like for them

4 | September 2020 In association with WHAT THE RETAILERS SAID

Which channels are you most focused on to Our store concept team is focused on drive growth, and has that shifted? how we improve our fulfilment experience Over the past few months, we have seen in stores by improving our Click & Collect immense growth in our ecommerce sales areas, trialling parcel lockers and drive- as people make more of their home spaces thru collection, and improving customer to make them more comfortable for both self-service and access to our wider range of living and working. So, our focus will be products from stores. on ensuring that we scale our ecommerce businesses in line with our customers’ What do you see the role of the store associate Sienne Veit preference for shopping online, and within or virtual customer service agent being now Group digital this, on using their mobiles more and more. vs in the future, and how do you see these product & platform However, we know our stores play an integrating together? director, Kingfisher important part in our end-to-end customer Our colleagues are the beating heart of journeys, especially where we offer our brands and bring these to life for our convenient click-and-collect and deliveries customers in our stores and contact centres. from stores. Stores are at the heart of our We know that our customers appreciate the ecommerce growth. We worked very expert advice and guidance, and services such quickly to enable safe shopping in our stores as kitchen design. We see technology as an during Covid-19. enabler to do certain tasks in a more efficient way and thus give our colleagues back time Who is driving your cross-channel CX strategy to spend with customers, so they can provide and how are they determining KPIs? better services and experiences to them. Our focus is on delivering seamless customer shopping experiences that leverage all our Looking ahead to the next five years, how channels. The newly established Kingfisher do you envisage your online CX strategy customer and digital team, led by chief changing? What kind of pressures are you customer and digital officer JJ Van Oosten, already anticipating facing, and where do you is charged with coordinating and delivering see opportunities to meet those challenges and activity and best practice across our distinct stay one step ahead? banners in France, the UK, Poland, Romania The home improvement market has seen a and Iberia. huge boost in recent months and we expect our customers will be ever more demanding Which technologies are you investing in to in their need for new and convenient drive customer service and experience across products and services, speedy fulfilment your digital channels, and why? and for their mobiles to be a key tool in Mobile is a key focus area for our ecommerce helping inspire them and complete their DIY investment. Mobile is already the primary projects more successfully and enjoyably. way our customers engage with us. It is the In the next five years I would expect us to glue between online and our shops, and be able to deliver change in an accelerated a key convenience driver. It is also key to way, to use data to provide greater how we empower our colleagues to be more personalisation and for customers to be able efficient in our stores and to deliver great to engage with us in new ways. That could customer service, advice and help for our be by voice or to more easily use their phones customers wherever they are in our stores. to ‘see’ products and projects in their homes and gardens – and to use advanced planning What does the future of the in-store tools to calculate what they need, and video experience look like? to show them how to do what they need to do Because stores are at the heart of our step by step along the way. ecommerce strategies, we are investing in We know the future is uncertain and both the digital and physical experience that new ideas can come from anywhere, so in our stores so that they can meet our it is key for us to have an agile ecommerce customers’ needs for convenience and speed, platform that enables us to easily integrate as well as inspiration, advice and service. new capabilities and deliver change at pace.

September 2020 | 5 WHAT THE RETAILERS SAID

Which channels are you most focused on to What does the future of the in-store drive growth, and has that shifted? experience look like? Where will you be We are focused across all channels – investing to drive CX in-store? nothing has shifted, but I would say we have I believe there is still a very important role of accelerated our digital plan. We’ve seen a lot interaction that stores play. I have seen some of customers shift to the channel. We were retailers go down the route of ‘everything must always planning on growing that channel, be digital, even the high street’, but actually we’re now just doing it faster. We are also still I think human beings in person are vital. focused on growing our other channels too. We’ve been slowly building out our drinks Lysa Hardy I think customers will gravitate back and ices proposition – that is something very Board director and towards the high street, but where they were differentiated that you can’t get on our website. chief marketing forced to 100% shop online, I don’t think it We are also currently remerchandising our officer, Hotel will be anything like it was before. We saw stores to bring our brand story to life. Chocolat this trend happening over time and this has just accelerated it by a few years. We do still What do you see the role of the in-store believe the high street is really important as associate or virtual customer service agent we are human beings and we want physical being now vs in the future, and how do you see interaction. these integrating together? To what extent do you see automation of these services coming Who is driving your cross-channel CX strategy to play a greater role? and how are they determining KPIs? Our employees are our brand ambassadors, That is myself and the board. We have a small but it’s not a one-trick pony because if a leadership team, so I work closely with the customer wants something super-efficient, CFO, the COO and the CEO, and we also set that is where automation can play a role. the business’ KPIs. Our KPIs haven’t really That can allow customers to self-serve really shifted, we are measuring the same things, efficiently, so we have to offer those services. but I think we are getting to a more granular The danger is that retailers suddenly say level of detail, particularly in digital. automation is the way to do it, but the reality Our KPIs are a blend of sales performance, is that is not what every customer wants. So I our customers’ engagement with the brand, think it’s about the appropriate interaction at frequency of shopping, and if their baskets the appropriate time. are bigger or smaller. We look at those within each channel, but I think the key piece is Looking ahead to the next five years, how taking a macro-view across channels. So do you envisage your online CX strategy this year, for example, when our stores were changing? closed, if we could see the same customers We don’t think the world is going to look were instead shopping online then we were completely different, just that the pace of happy with that and that was a KPI. change is going to get faster. The challenge will be how we keep pace with that and Which technologies are you investing in to customer expectations and required skills. drive customer service and experience across Our challenge is that we have a consumable your digital channels, and why? product with an expiry date on it – at Easter our We invested in a CRM system about 18 Easter eggs were available in our stores rather months ago and that allows us to really do than online where people needed them. So that cross-multichannel piece and to look we need to be prepared for emerging patterns, at customers rather than channel. So that and investment in back-end systems will was a significant investment in terms of be critical. technology and people. But we have also put in some additional investment into the ecommerce area – things like multi-variant testing and digital skills, so again not blue- skies technology but things that allow us to work to a much greater degree of granularity, and automation so we can move quicker. NOTHING HAS SHIFTED, BUT I WOULD SAY WE HAVE ACCELERATED OUR DIGITAL PLAN

6 | September 2020 In association with Which channels are you most focused on to drive growth, and has that shifted? TV is still a major focus, but digital is a huge growth channel through the website and app. Social is really strong from an engagement perspective, but increasingly that is becoming THE CONTACT CENTRE FIVE a revenue platform for us too. YEARS AHEAD WILL BE VERY Has QVC’s exclusively digital/online offering James Keegan shaped its CX experience and the tools and DIFFERENT. WE SHOULD BE VP customer service technologies you use? and experience, QVC Not necessarily the tools and technologies. FAR MORE PROACTIVE International We know we have the ability to build powerful relationships through TV. Our aspiration and challenge is to replicate those relationships that we’ve built through TV through our other digital platforms. Ultimately video commerce is what we are. The more video content we can push out What do you see the role of the virtual in those platforms, the more we connect with customer service agent within your contact people through our hosts. centres being now vs in the future? To what extent do you see automation of these services Who is driving your cross-channel CX strategy coming to play a greater role? and how are they determining KPIs? That [virtual customer service in contact It goes right up to our president over in the centres] is definitely on the roadmap. The US through to our market leader CEOs. It is contact centre five years ahead will be very now everyone’s challenge, not just customer different. We should be far more proactive in services’, to be the champion of the consumer. reaching out at appropriate times. [The way Historically they would have been knocking to effect that] will be a contact centre that is down those barriers, but it is a different world very much around complexity and problem- now. The customer is now the centre of our solving. That is where we are tracking. guiding principles. That wouldn’t have been That is a very different skillset for a typical the case five years ago. contact centre team member. However, while Our KPIs are different across functions machine learning, AI and chatbots serve a and levels. We have operational KPIs which purpose, there is a point in a journey where look at contact rates, speed of answers, human-to-human contact is the best way to through to more holistic views of repeat find resolution. So we don’t believe we can purchase behaviour and advocacy measures. automate everything, though there are some very simple transactional things that our Which technologies are you investing in to drive customer would be completely comfortable customer service and experience across your in going through automation. digital channels, and why? The legacy volume contact centre is Our investment is focused on self-build and moving away, and they will start to focus on our aspiration is to achieve the single view quality rather than quantity, with all of the of the customer. Globally we are retiring simple stuff [dealt with by] chatbots. existing and legacy platforms. We will buy [from third parties] where it makes sense, but Looking ahead to the next five years, how do you our focus is on self-build. Those capabilities envisage your online CX strategy changing? What are coming on gradually. The work ongoing at kind of pressures are you already anticipating this minute is about social and will be more facing, and where do you see opportunities to of purchase than build. meet those challenges and stay one step ahead? It is very much about building out those digital capabilities to serve the customer what they want, when and where they want. However, if they want human-to-human contact, that will be easy too. Balancing that is the challenge. What do you serve up as self-service? Because from a cost-efficiency perspective, you want to serve up as much as you can, but you don’t want to put friction in the way. Building loyalty and advocacy through customer service, we want to retain that human contact because it is more powerful than a chatbot interface.

September 2020 | 7 WHAT THE RETAILERS SAID

Who is driving your cross-channel CX strategy and how are they determining KPIs? Customers drive all of our CX strategies. We take insight from their feedback, which they give in a variety of ways, including social media, email and behaviours. We then use this FUTURE VIRTUAL AGENTS to create our customer experience strategy, which is agreed at board level but remains SHOULD BE ABLE TO high on the agendas of key departments for Beccy Preece governance and implementation. That said, it PROVIDE A MORE Logistics director, is important to note that customer experience Waterstones is driven by all departments in Waterstones. BESPOKE SERVICE The success of a cross-channel customer experience strategy is largely calculated by the amount of interactions we have with our customers. They determine KPIs such as the effectiveness of our marketing campaigns, website traffic, conversion rate and customer retention. Within the customer support department, we would typically look at frequently asked questions by customers. They resolution time, customer satisfaction scores can only do as they are programmed to do, so and returns rates. the answers meet some customer needs but you tend to end up in a looped scenario which Which channels are you most focused on to drive can lead to frustration. growth, and has that shifted? Future virtual customer service agents Specifically, for our online customers we should be able to provide a more bespoke are focusing on social channels, self-serve service, for example telling the customer the knowledge bases, email and live chat. The status of their order. Thereby, linking up to rapid shift was forced upon us to a degree as intuitive systems to almost replicate what a a result of Covid-19, with far more customers live customer agent would be able to provide. finding comfort in making contact via social media channels. Equally, it became clear In delivery, how important is it for retailers to customers were searching for answers which move towards a model whereby they have could have been resolved independently multiple partnerships to deliver on customer should we have had the right knowledge experience? base in place. Therefore, social media and Customers expect delivery options unique knowledge base moved up the priority list. to their circumstances and preferences. It is unlikely that a single carrier can offer all the Looking ahead to the next five years, how do you variations, be cost-effective and best in class. envisage your online CX strategy changing? What While there are benefits from partnering with kind of pressures are you already anticipating a single supplier, it does not come without risk. facing, and where do you see opportunities to Having a model that supports multiple meet those challenges and stay one step ahead? carriers allows flexibility. With carriers In part, the next five years will be determined sometimes imposing changes at the last by the needs of our customers. Our strategy minute, including delivery restrictions, to date has not been to drive an omnichannel increased rates and capacity constraints, customer experience. However, I anticipate having multiple carriers on board allows a greater need for this to become a part of volume to be distributed differently without our strategy, for the customer experience the risk of losing sales. to become a fully seamless experience and with our shops able to provide answers to our Which technologies are you investing in, or online customers and vice versa. planning to invest in, to drive customer service Customers will continue to expect a high and experience across your digital channels? level of service, be that on email, message or a We are investing in our CRM, supply chain telephone call. However, I would also expect and internal systems. the market to become more competitive and CRM needs to provide insight, report those that do not take customer experience trends, identify opportunities and monitor seriously will be left in a much poorer state. feedback. Supply chain processes are important – delivery delays, ordering and What do you see the role of the virtual customer availability issues all impact the customer service agent at contact centres being now vs in experience. Internal systems are often the the future? areas that provide the most challenge as The virtual role of customer agents is based typically these are legacy systems built and on pre-determined factors based on the most adapted over many years.

8 | September 2020 In association with Which channels are you most focused on to that really play well in a store. The first drive growth and has that shifted? is communication of our brand Seasalt The rate of growth has shifted. We are more Cornwall, in terms of us being Cornish than 50% up year on year online, which is and the influences of Cornwall that drive fantastic. For a clothing retailer to be in that us in our product and the way we present situation, we are very fortunate. ourselves. So the way our store is set up Does that mean we have shifted focus is really important. The second is the on channels? No, because we still have a ability to touch and feel products. When reliable store customer that wants to shop we evolve the store proposition it is about Will Charnley in shops. There are a group of customers that making sure it is really anchored around Omnichannel still haven’t come back, so we are working those points of difference. director, Seasalt out how we can engage with them even if We have been doing appointments, they are not comfortable coming back. allowing customers to come in and have The shop still plays an incredibly time where there is no one else on the shop important role for us, our website is growing, floor, just them and a member of staff. Fitting we are starting to work with marketplaces – rooms are shut at the moment but this allows adding eBay for our outlet stock and Zalando them to use the fitting room. We are just for the European market to our existing trying to make sure the experience is safe partner Next – so the focus is meeting the and enjoyable. Beyond that it is starting to customer where they are spending their time. evolve that store experience in relation to any other footprint that customer has with Who is driving your cross-channel CX strategy us. So if we know they shopped on the and how are they determining KPIs? website, we know the kinds of things that It is a real team sport, we have some great they liked, can we curate that experience customer-focused leaders in the business. around the product they gravitate to? That includes everything from the way our product is curated and our brand point of What do you see the role of the in-store difference, our marketing, content, customer associate or virtual customer service agent in experience, and in my world how it presents contact centres being now versus the future? in channels. Our customer likes a human voice and We do have a customer experience that sense that they are talking to Cornwall director, Adam Cotgreave, and he knits when they call. They will often ask us what all of that together and gives us a playback the weather is doing or have we been to of what he is hearing from customer the beach. That level of interaction for our services through feedback. It is all of our customer is extremely important. So when responsibility to make sure it is thought we talk about automation, I think that works about end-to-end. for transactional enquiries such as someone For us the highest level KPIs with who wants to ask where is my order or where customer experience are how loyal are they my return is. But our nuance is around and how often are they returning. community and inclusivity and therefore we can’t just automate a bunch of stuff. Which technologies are you investing in to We do have live chat that enables our drive customer service and experience across customer service team to have that dialogue your digital channels? if that is how the customer wants to engage It is a stressful time for everyone. A lot of with us. We are layering more service people are working from home and have propositions on to our business and the more time pressures and a lot of people want we do that, the more qualified and dynamic personalised experience. So technologies our customer service agents have to be. where we can enable convenience and understanding where the customer is at Looking ahead to the next five years, how on their journey and being able to serve do you envisage your online CX strategy up good content and relevant product changing? recommendations are key. Things such as a For us it is international growth. How do we really good search-and-merch tool, an easy become relevant to local markets. We are way to pay with us, or a really clear route launching our international site in October. to fulfilment, those are the things we are I think the other piece is convenience and focused on, and making sure our website the battleground around same-day delivery is performing well and just really basic and speed to fulfillment. hygiene that allow customers to shop easily. Then I think having that seamless channel interplay whether the customer What does the future of the in-store has seen you in social, whether they have experience look like? seen you in an email, in-store, that we are First and foremost we believe in the serving them up with really good content store. For us, there are a couple of areas and making it easy for them to shop with us.

September 2020 | 9 CHAPTER 2 THE AGE OF ECOMMERCE

he coronavirus pandemic may one with 80% intending to stay with the new day be pinpointed as the period when channels they have become familiar with. ecommerce came of age. Online All of this evidence points to ecommerce sales that were on a steady, albeit remaining ascendant. Tunspectacular, upward trajectory before the pandemic have surged further and faster Fit for purpose than even the most bullish commentator In this context, customer experience in the could have thought possible. digital space will become even more critical The proportion of retail spending online to determining which retailers emerge from hit a record high of 33.3% in May, according the pandemic fit for the future. to the ONS, up from the 20% recorded in Data insights will play an integral role in February – the month before the closure of painting a 360-degree view of the consumer, non-essential retailers. from who they are, to how they shop, when A recent PwC article on the return of and across which channels and what they retail noted: “The last recession saw a flight like to buy. to value and buying clever. This time, we’ve Innovations such as virtual selling, seen online penetration increase in areas whereby a store associate appears via video that historically had poor penetration, such call, mobile payments, contactless collection, as grocery and health and wellbeing.” augmented reality and delivery are all trends KPMG’s 2020 UK Customer Experience that will persist. Excellence research found that 58% of people And retail contact centres are also have changed their channel of interaction and transforming. Aided by advances in become multimodal during the pandemic, technology and particularly in automation

10 | September 2020 In association with in the form of artificial intelligence and chatbots to answer simple queries, and data analytics and insight to enable human RETAIL SPENDING ONLINE customer service agents to do their job better, they provide retailers with the opportunity to really excel. HIT A RECORD HIGH OF To do so, retailers must not only have that aforementioned 360-degree view of the customer, but also be able to serve them in a channel-agnostic fashion, with agents digitally enabled to carry the customer % journey across multiple platforms from social channels through to the retail website, face to face and on the phone. 33.3 This does, however, mean more customers engaging with retailers in this way, so in- depth product and service training will be essential if customer service agents are to provide the immersive brand experiences that will help set them apart. Meanwhile, AI-enabled chatbots and voicebots will drive efficiencies by allowing whereby a 360-degree view of its customers In August, Argos announced the symbolic retailers to automate simple customer service will enable tailoring of their experiences decision to stop printing its famous paper requests, freeing human agents to spend across channels and allow it to offer more catalogue after 47 years as part of a definitive their time on more valuable interactions. relevant loyalty rewards. shift to online. In recent years, the retailer Behavioural analytics will be used to track It will also develop online personal has emerged as a digital leader in customer customer behaviour online and provide services, such as virtual nursery appointments experience, launching features such as voice targeted support on ecommerce platforms. (through which expectant parents can discuss and visual search and investing heavily in products and design with advisors virtually) building capabilities that give customers Rapid transformation and home design advice, and plans to extend more information on product availability and The implications of the migration online convenient pick-up and delivery solutions. more control over delivery times to reduce have been huge, with businesses having For example, Waitrose plans to open a third customer effort. to fast-track structural changes that were online fulfilment centre in Greenford, west already in motion before Covid-19. Retailers , to specifically service delivery slots CX front-and-centre with legacy store estates have had to pivot at for customers in the capital, while it has The determination among the top 30 lightning speed to fulfil unprecedented levels trebled the size of its Rapid two-hour service retailers (see table, page 17) to make of online demand. to specifically support deliveries for customers customer experience a major strategic focus Tesco sales grew 9% in the first quarter of in the capital. shows how central they see it to future 2020, driven by a 49% leap in online revenues, Carphone used the period to success. What has changed, however, is the which hit a peak of 90% growth in the 13 accelerate its digital operations and build its shape of what a great experience looks like. weeks to May. In response, the supermarket online market share, while also leveraging While fundamentals such as price, product invested in more than doubling the capacity the strengths of its in-store expertise. Chief and service remain important, other factors of its online delivery service – from 600,000 executive Alex Baldock told Retail Week: such as safety, efficiency and integrity have to 1.3 million slots – over a five-week period. “We’ve done what we said we were going to come to the fore. Kingfisher’s group digital product and do, which is to improve the range and make KPMG describes the rapid evolution platform director, Sienne Veit, reports seeing it easier to buy online, whether it’s better of the customer that has occurred in a “immense growth in our ecommerce sales” search and recommendations, checkouts matter of months. “There has been a global (see Chapter 1) to support the increase in or site speed, as well as making it easier for psychological shift in values, beliefs and home DIY projects. Like many retailers, [customers] to get a hold of their products needs. Existing trends have been accelerated scaling its ecommerce operation, and in once they’ve ordered.” and new ones introduced. Customers feel more particular its mobile capabilities, is seen as Marks & Spencer chief executive Steve vulnerable, insecure and less in control than integral to Kingfisher’s strategy. Rowe is another senior leader to acknowledge ever before.” It adds that values have evolved, John Lewis now expects to generate 60% that the trend towards digital has been with consumers demanding brands put of its sales online, up from 40% before the accelerated. M&S was already going through integrity and purpose before profit, and that pandemic, and forecasts that penetration of a series of structural changes to the basic this has become fundamental to businesses. online sales at Waitrose will rise above 20%, infrastructure of the business, including Retailers, as a consequence, are faced with from 5% currently. The retailer plans to double closing 54 of its legacy stores. Moving two imperatives: to rapidly ramp up their down on making shopping easier across forward, digital has moved to the forefront ecommerce and multichannel capabilities, both its brands by investing in availability of planning and will be consolidated under a while delivering the kind of authentic, in store and online, and improving usability single transformation team, bringing together purposeful, seamless experience that helps and personalisation of its apps and websites, data, online development and technology. sustain customers’ trust in the brand.

September 2020 | 11 CHAPTER 3 DELIVERING ON EXPERIENCE

elivery has long been a key battleground in retail. Often it is the last touchpoint a consumer has with a retailer and one that makes, Dand leaves, the biggest impression. During 2020 swathes of consumers who delivery offensives. Amazon, most notably, previously would have predominantly introduced free grocery deliveries within a bought in-store were forced to shop online – two-hour window for its Prime members on Research from IGD found 13% of all shoppers all Amazon Fresh orders over £40. had their first grocery ecommerce experience Retailers that lack Amazon’s logistics during the first half of the year, for example. infrastructure have sought to partner with This new, digitally literate consumer third parties to offer customers speedier, more base is likely to continue spending online in convenient delivery options. M&S launched the future, so this means big things for the grocery delivery on the Deliveroo app in late retail sector, delivery volumes and customer March, while in July, Asda unveiled a new service expectations. trial home delivery partnership with Uber In its 2020 customer experience report, Eats that offers customers in Birmingham KPMG notes how Covid-19 reset how we and Leeds delivery of a selection of grocery view time. “Described by some as an infinite essentials in as little as 30 minutes. present, it means we are looking for an This is part of a wider trend towards true order today, receive today (ideally) but at a partnerships, whereby retailers work alongside minimum, receive tomorrow,” it stated. a diverse network of supporting partners to While some retailers took the decision deliver on their customer experience promise. to temper delivery promises at the peak of This can extend from carriers through to lockdown – Asos, for instance, removed technology providers and customer support next-day delivery in order to manage as retailers look to service an online customer operational capacity – others launched new base that is growing exponentially.

12 | September 2020 In association with 13% HAD THEIR FIRST GROCERY ECOMMERCE DELIVERY IN LOCKDOWN

However, the pressure will be on to ensure Click-and-collect services were already customer activity that will give retailers and a seamless and effortless customer journey. popular, and growing accessibility will their partners operational control. So any widened network of partners will lead to an equally growing appetite among Contactless collection and delivery is set require investment in data to ensure each consumers. But retailers haven’t stopped there, to emerge as a key trend as retailers attempt has the 360-degree view of the customer, with innovations coming to the UK market. to make their propositions ever-more and of what each other is doing, to deliver Other retailers are looking to leverage convenient to customers. on expectations and reduce customer effort. underutilised store assets by offering drive- Research by Retail Week found 19% of thru collection options. A PC World consumers would like to see more retailers Investment in the future initiative allows customers to drive to stores offer contactless delivery as standard, with Consumers are also now willing to embrace with dedicated parking and pay for and pick the figure rising to 21% for drop-off returns. machine technology as a way of getting up the products they want to buy without While leaving parcels unsigned-for on essential supplies delivered quickly to having to leave their car. Kingfisher also says doorsteps increases the risk of error, future their doors. In June, the Co-op expanded it is looking at drive-thru collection as well technologies such as biometric security its robot delivery service in and around as trialling parcel lockers as part of a range of – whereby a delivery driver can send a Milton Keynes to meet increased customer improvements to customer self-service. customer a unique digital ID and get them to demand. The retailer said the number of The Entertainer, meanwhile, has launched confirm who they are using the app – promise customers using hyper-local robot deliveries a ‘ready in 10’ service, which enables to speed up the delivery process and provide in Milton Keynes and Buckinghamshire queueing shoppers to make an order from convenience and traceability to customers. had more than doubled since the start of the their phone that can then be collected from Post-purchase communications, and even UK’s coronavirus lockdown, and transaction the shop within 10 minutes. during the delivery process from the moment values had increased four-fold. And with The use of stores as local fulfilment centres the customer checks out, are an arguably consumers becoming more familiar with this is also set to increase. Prior to reopening some untapped opportunity area for retailers with convenient and accessible way of delivery, it of its branches in late May 2020, varying degrees of success in achieving a is likely we will see a great deal more of this turned 335 of its 446 shops into ‘dark stores’, truly on-brand experience. in the UK market. allowing customers to place orders with staff As a result of the increase in online In addition to home delivery, 2020 also at the entrance but prohibiting them from deliveries, this will become critical to service witnessed a rise in click-and-collect services entering the store itself. enquiries about delivery options, parcel as a way of providing consumers with a safe All these innovations require investment tracking, returns and complaints. Customer way of collecting goods that doesn’t require in technology, infrastructure and people contact centres will come to play an even them to stay in stores for too long. to support their execution, or risk leaving more central role, where complex enquires are In July, John Lewis announced it was customers disappointed with the experience. serviced by humans, who will be supported extending its click-and-collect delivery and by AI customer service chatbots informed returns partnership with the Co-op to make Data will determine success by 360-degree-view data that automate the the service available in more than 500 Co- With network complexity set to increase, volume of simpler transactional enquiries. op stores before the end of the summer. The retailers will need to improve their Getting these contacts right and making retailer said the extension of the service analytical capabilities to ensure effective sure they are personalised to each customer was part of its plans “to invest in digital decision-making and strong execution. To is vital to reducing their effort and ensuring capabilities and collaborations which this end, predictive technologies such as they have a positive experience – even if this make the shopping experience even more AI or machine learning can help deliver the means agents proactively reaching out when convenient for customers”. real-time visibility of products, people and things don’t go to plan.

September 2020 | 13 CHAPTER 4 THE FUTURE OF THE IN-STORE EXPERIENCE

n 2020 the changes to the in-store advice, and virtual classes such as wine experience have arguably been the most tasting and skincare, as well as augmented profound, and look likely to be in place reality to demonstrate products within the for quite some time. customer’s home environment. Dulux, for IAfter years of investment in in-store example, has an app that allows shoppers to theatre and services in order to increase virtually try its colour ranges on their walls. dwell time and maintain relevance, retailers A similar concept has been launched by have been forced into reimagining the entire Dixons Carphone, whose ShopLive service store experience to put safety – both of allows Currys PC World customers to chat to employees and customers – at its heart. staff in-store using a video link to get advice Two unifying themes have emerged: the and see demonstrations of the products desire to provide high-quality experiences within safety confines, and the leveraging of store assets, people and technologies in ways tailored to social distancing and lower footfall. Virtual service to the fore In particular, virtual services that replicate the in-store experience in a digital setting and make full use of the skills of store associates have been introduced by leading retailers. In July, John Lewis launched a virtual personal shopping service using online conferencing tool Zoom. The service, available in its Southampton store and at Peter Jones in London, enables customers to book a free 30-minute appointment and be shown around departments on video by an in-store adviser. Items can be ordered and sent to customers’ homes, or picked up via click-and-collect. The aim is to utilise store space while making use of the specialist advice and standards of service the business is renowned for. Other virtual services on offer include home interiors and personal styling

14 | September 2020 In association with they are interested in from the comfort of their own homes. Initially launching with 30 participating colleagues, ShopLive was rapidly scaled up to have 280 experts on % hand to talk to customers online, with plans for further growth in the future. 37 In fact, Currys PC World was already exploring live video chat before 2020. Last OF SAINSBURY’S STORE SALES year, it partnered with tech supplier Go In Store and electricals supplier HP on a pilot, WERE VIA SMARTSHOP which gave shoppers browsing HP products on the Currys PC World website the option to SCANNING TOOL start a one-way live video feed of a member of staff in-store, who could showcase the product they were researching and answer questions via a headset. This is in addition to the efforts by many retailers in recent years to offer the endless aisle, with in-store offering a more personalised customer technology in the form of kiosks or iPads experience with instant rewards. The new offering their full ecommerce range, along scheme will be hosted through an updated with digital assistants to provide support. M&S App with all the features of the But this trend extends beyond virtual relaunched scheme fully integrated online. appointments with store associates, with New members can download their Sparks contact centres also set to play a central role card via the app straight to their phone or in this new world where remote service comes stored to their M&S online account. M&S to the fore (see Chapter 2). These agents will chief digital and data officer Jeremy Pee says be trained to provide the kind of immersive a digital-first approach to loyalty “builds our experience that customers have come to relationship with customers through a more expect in stores, armed with a data-enabled, personalised experience”. 360-degree view of the customer that allows “Through capturing and analysing data them to provide a truly personalised service. across the customer journey and touchpoints, retailers are able to proactively provide The role of mobile insight-led support and offers to reduce Mobile technology in stores has also seen a customer effort, and improve the customer step-change in adoption. Order and Pay apps experience and loyalty,” says David Morton are already becoming ubiquitous in pubs sales and solutions director, Arvato CRM and restaurants, and their retail equivalents Solutions UK. are rapidly gaining traction too. Customer counting, which is necessary Sainsbury’s SmartShop tool, which allows to limit the number of people in-store at shoppers to scan groceries as they go and any time, is another area where technology then checkout through the app, comprised has the potential to carry out repetitive, 37% of average store sales in the first quarter mundane work and free up store associates ending 27 June 2020, and exceeded 50% in to focus on more productive tasks. Tech some stores. firms such as Philips, xplace and Alphabird Trend forecaster WGSN has predicted have developed AI sensors that detect the more consumers will adopt the habit of using number of customers walking through a personal devices for making transactions. In shop’s doors and display that information July, M&S reported it had tripled its Mobile on a digital sign outside. Using a traffic- Pay Go network from 100 to 310 stores, light system, queueing customers will be meaning more customers across the UK able to see how many people are currently can pay for groceries up to the value of £30 inside and make an informed decision about without visiting a till, using the M&S app on whether they would like to enter, or if they their smartphone. are permitted to. Marks & Spencer is similarly putting Asda, meanwhile, has begun trialling a mobile at the heart of its loyalty proposition. “virtual queueing” system where the customer In July, the retailer announced the relaunch joins a queue using their phone and remains in of Sparks as a digital-first loyalty scheme, their car until it is their turn to shop.

September 2020 | 15 CHAPTER 5

THE RETAIL WEEK PROSPECT VIEW: THE TOP 30 MULTICHANNEL By Eleanor Smith, analyst, Retail Week Prospect – Retail Week’s in-house expert RETAILERS retail analysis team

he UK retailers leading the pack specialist released its first transactional will come as no surprise. Those who app in late 2019, before fleshing it out with have soared in this ranking all have AI-powered recommendations, and has growth strategies underpinned by heavily promoted its Collect in Store product Tcustomer experience initiatives, which in reservation service, which now accounts turn are supported by comprehensive and for 33% of its online sales. It also launched seamless multichannel offerings. its ShopLive service for Currys PC World But the appearances of the likes of Screwfix, customers in April, virtually connecting them Lakeland and JD Sports are arguably more with in-store sales associates. unexpected. While not traditionally thought of Topping the list is generalist and now as customer experience leaders, these retailers former catalogue retailer Argos, with its have worked tirelessly to improve the lives stablemate grocer Sainsbury’s at the lower of their respective customer bases through end of the top 10. Having scooped up many measures such as channel-agnostic loyalty accolades over the years, including at the Retail schemes and in-store technologies such as Week Awards, Argos is arguably paradigmatic smartphone scan and pay. of the ultimate multichannel retailer, having The development of multichannel been at the forefront of this model since its propositions, such as same-day collection, merger with Sainsbury’s in 2016. and a deep dive into its customer-facing Approximately 60% of all purchases are procedures, have even seen Screwfix pick made online, and at least 90% of purchases up three Retail Week Awards: Customer made at Argos involve a store, a staggeringly Experience Initiative of the Year for 2016, high level that is no doubt due to the strength as well as Digital Pioneer and Best Retailer and awareness of its collect-in-store offering. Over £250m in 2018. But while multichannel The retailer’s Fast Track service provides capabilities are vital, they are not the be-all customers with near-instantaneous in-store and end-all. collection or same-day delivery. Investing in customer experience, not Alongside this, Argos has experimented merely for the sake of iterative improvements with burgeoning technologies, such as but to make drastic advances in usability for voice shopping, made possible through the end customer, is a willingness shared by the culture of innovation fostered at its UK the cream-of-the-crop retailers. And Dixons tech hubs. And it wasted no time in seeking Carphone, which operates the Currys PC out synergies with Sainsbury’s, leading World and brands in the to the opening of complementary small- UK, is one name that hasn’t shied away from format Argos Digital presences within the multichannel transformation. The electronics supermarkets.

16 | September 2020 In association with The UK’s top 30 multichannel retailers 1 Argos

2 John Lewis

3 Dixons Carphone

4 Next

5 Screwfix

6 Marks & Spencer

7 Sainsbury’s

8 Tesco

9 Asda

10 Lakeland

11 The White Company

12 Burberry

13 Kurt Geiger

14 Amazon

15 Jessops

16 JD Sports

17 Waitrose 18 The Entertainer METHODOLOGY 19 River Island The analysis within this report has been 20 Halfords compiled by Retail Week Prospect, an intelligence service offering insight and analysis 21 Urban Outfitters on the UK retail scene.

22 Ikea Retail Week Prospect has developed a scoring system to determine the UK’s top 30 23 Yours Clothing multichannel retailers. The UK’s top 200 retailers were under consideration. 24 Hobbs Our calculations take into account the 25 Space NK proportion of sales generated through the online channel, as well as a range of factors 26 Boots such as delivery, in-store and online services, and single view of stock. 27 French Connection The ranking is based on financial data from 28 Ted Baker 2018, the last financial period all of the retailers featured have released accounts for, and 29 Reiss propositional data up to December 2019. 30 Mint Velvet

September 2020 | 17 CHAPTER 6

SUMMARY: WHAT THIS MEANS FOR YOU

learly, there have been profound in creating branded livestream shopping changes to the way in which events to drive sales and generate a buzz consumers live and shop. So what around a brand. Social media platforms does this mean for the future of retail? will be integral here, as retailers and brands CFirst, and most obviously, that experience look to leverage and grow their social is increasingly going to take place online. communities and generate buzz around new Alex Baldock told Retail Week that Dixons launches and events. Carphone expects the shift online it has seen Writing for Retail Week in May, Justin in many of its customers to continue. “We Sablich, editor at global innovation expert do think this forced digital-first immersion Springwise, highlighted how “live- that many have felt, whether it’s video streaming has allowed brands to shift sales conferencing or telemedicine or online online, promote new products and even host shopping, will continue, and we expect these multi-day events”. Sablich gave the examples to all become enduring trends,” he said. of the Chinese phone manufacturer Xiaomi, In the same way that many people have which streamed a 72-hour product launch, turned to conferencing apps such as Zoom and fashion brand Lanvin in Paris, which and Houseparty to stay connected during utilised virtual-reality (VR) and streaming lockdown, features such as ShopLive promise technologies to put on a cloud fashion show. to provide the kind of personal shopping Underpinning all of this will be experience that many customers will still technology investment, enabling retailers to crave while social-distancing requirements deliver on this promise through greater data persist. In fact, this trend has highlighted insight and automated processes that allow the expertise of retail staff and customer them to focus their human agents’ efforts service agents when it comes to product on the areas that drive the most value and knowledge, and this is likely to develop over require the most creative input. the coming years. Events that previously attracted people Experience remains key into stores will also increasingly be recreated Experiential retail, which was so much online. Innovative companies are investing a focus from the past five years, will not

18 | September 2020 In association with disappear but will need to evolve to maintain changing demands of shoppers. In May, director, Arvato CRM Solutions UK. its relevance. Next revealed it had signed flexible leases on In-store technology will, of course, In July, Burberry and Chinese technology five stores that Debenhams is exiting for the continue to evolve, driven by pioneers such giant Tencent announced their collaboration launch of a new beauty store concept. Next as Amazon. It was recently reported that the on a new concept store in China, which is chair Lord Wolfson explained the move as etail giant intends to launch as many as 30 described as a “social retail” experience. “bringing our online business to life through Amazon Go cashierless convenience stores A dedicated WeChat mini-program has premium store environments in some of the in the UK as it ramps up its multichannel been created to help customers experience UK’s most important retail locations”. capabilities. In California, meanwhile, the store’s 10 unique rooms physically or Significantly, Next said it intends to hire Amazon plans to introduce a new trolley, digitally. Each room is designed to have “experienced staff with proven premium known as a Dash Cart, which uses cameras its own personality and offer a different beauty retail experience”. This suggests and sensors to track goods, and charges interactive experience. Shoppers can use that while technology, in the form of mobile for them when bags are removed, enabling the WeChat program to access features such payments, customer service chatbots and customers to do a larger shop and then leave as store tours and product information or to the like, is taking over certain functional without queueing. book in-store appointments, event tickets and aspects of the customer service proposition, Ultimately, the future of customer tables at the in-store cafe. human contact and expertise will remain experience is about being in the places people The blurring of lines between physical and central to the overall brand experience. The want to shop in a way that is safe, efficient digital will also require retailers to display key for retailers will be to deliver a consistent and secure but that also excites and inspires. operational agility, flexibility and scalability. experience across a range of contact Personalisation will also be critical across Writing for Retail Week in August, B&Q channels and touchpoints that increasingly channels to help retailers stand out in a owner Kingfisher’s chief executive, Thierry includes a variety of social media platforms crowded market, with retailers aspiring for Garnier, explained how the DIY group built and virtual AI assistants, such as Amazon’s the single customer view, as detailed by QVC at speed a new system that enabled store Alexa and Google Assistant. in Chapter 1. associates to pick online orders straight “Through removing the simpler Retailers now have the opportunity to from B&Q shop shelves and offered drive- transaction queries through automation, reshape the entire customer experience thru, installing hundreds of contactless and through providing a 360-degree view they offer to be more suited to a digitally click-and-collect sites. It also started to offer of the customer and insight-led next best connected world. more home delivery direct from stores rather actions, human customer service agents will By ensuring they have a transformation than using fulfilment centres. “In a matter be empowered to deliver a more proactive roadmap in place they can reap the benefits of days, we reconfigured our model to meet customer experience and reduced customer of increasing sales, loyalty and quality of online demand in a way that would simply effort,” says David Morton sales and solutions service. not have been feasible a few weeks earlier,” Garnier wrote. Stores reimagined A reduced need for store space, combined with growing demand for fast, flexible delivery means stores are set to play an increasingly key role in future fulfilment. Rather than fulfil orders from centralised or regional distribution centres, some of the most nimble and progressive brands are using stores to provide hyper-local delivery options, In a matter of days, we reconfigured our in some cases opening new neighbourhood stores specifically for the purpose. Hema, the rapidly growing chain of grocery stores in model to meet online demand in a way China owned by Alibaba, has opened a series of 1,000 sq m stores that can process 10,000 that would simply not have been feasible orders a day, using hundreds of delivery mopeds that can deliver within 30 minutes a few weeks earlier of an order being placed. And what of the store experience itself? Thierry Garnier, B&Q owner For many multichannel retailers, stores Kingfisher’s chief executive remain a key part of their future customer proposition, albeit reimagined to meet the

September 2020 | 19 Love this report? Why not book in one of our experts to present the findings to your team, examining what they mean for you and your business. Contact Isobel Chillman on email: isobel.chillman@.com

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