Interview by Patrick Avenell
It’s been an interesting week in the clicks and mortar space: declines in JB Hi-Fi’s traditional core software categories is hastening its web deployment, Harvey Norman’s website was down for expended period yesterday while franchisees conference in Melbourne and Dick Smith is taking over David Jones’ consumer electronics division.
There is no doubt many traditional Australian retailers have struggled to fully understand and execute an online strategy that increases sales without compromising its values.
To find out how that can be achieved, we spoke to Simon Russell, the director of retail operations development at UK department store John Lewis to find out that company had succeeded where Australian companies had faltered.
What are some of the common mistakes you have observed from ‘clicks and mortar’ retailers in this space?
Not looking through a customer’s eyes and achieving a consistent and relevant proposition between channels.
For example different, prices online to physical stores, different policies (on, say, product returns), slow fulfilment that doesn't work for distressed purchases or not being able to easily return an online purchase in a shop.
Early investment in the right IT infrastructure is key to enable this.
What advice do you have for bricks and mortar stores looking to develop and grow an online business?
Be clear what your point of differentiation in the market is; be it price, the quickest fulfilment or perhaps the best integration of both channels.
Secondly, an early analysis of your IT infrastructure, given timelines can be long, to give an omnichannel platform.
Above everything would be to invest in staff so they understand the change in the business and embrace it rather than resist it.
Finally, and specifically in the electrical sector, a watch out that price is a real challenge for bricks and clicks retailers to be able to compete with pure play businesses, given they have much higher fixed costs.
A lot of bricks and mortar chains are hesitant to invest a lot in online retail as they think it will cannibalise their traditional business – is this fear reasonable?
No. Our evidence suggests customers who embrace both channels spend about 3.5 times as much as a shop only customer and are more loyal.
In Australia, John Lewis has a very good reputation for how it developed and grew its online business — why do you think JL has done well when others have faltered?
We invested early, buying the UK site and team of Buy.com in 2001, giving us an established team and platform.
Since then we have 'hot housed' online to accelerate growth early and had a strategic focus on the multichannel since 2008, which the whole business has got behind (shops, distribution and head office).
Online is now fully integrated into our business and is over 25 per cent of our sales now.
I keep hearing rumours that JL and/or Waitrose are going to establish stores in Australia — is there any truth to this?
No plans at the moment.
Simon Russell from John Lewis is a keynote speaker at the 2013 Online Retailer Conference & Ecommerce Expo in Sydney; 20-21 August 2013.