How SFG is Winning at Omnichannel Retailing

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By Published On: March 28, 20180 Comments

Specialty Fashion Group may have its struggles with its store network, but it is delivering on its omnichannel strategy.

Specialty Fashion Group (SFG) released their first half financial results recently, which were ahead of market expectations and showed improvements in core focus areas for the business, despite a year on year decline in sales and earnings.

Like most bricks and mortar retailers one of SFG’s key strategies is, to become a more ‘omnichannel’ business. That focus has driven online sales to 12.3% of total sales (FY18H $399m sales), up from 4% in 2014, and with a stated goal of 20-25%.

Whilst online is only one part of an omnichannel story, an integrated web and store network is the foundation for an omni-channel customer experience, as SFG notes in their Annual Report:

“Our strategy is to be the leading omni-channel retailer in our markets. Specifically, to lead in meeting the needs of women who are often overlooked by fashion – the older and plus-sized segments. Understanding our customers and delivering a seamless and consistent online and offline customer experience across all channels, is central to our strategy. Our aim is to enable our customers to shop and engage with our brands – any time, any place, any way.”  

Detractors have been keen to point out that SFG was late to adopt online, but the truth is that SFG has a well-developed strategy that is necessarily mindful of their target markets, customer loyalty and brand equity across their businesses, and they have been delivering to it for more than 5 years.   Unfortunately, the realities of dealing with multiple relatively independent brands (including the acquisition of Rivers along the way) has significantly increased technical complexity of delivery.

These brand differences play out online.  The City Chic brand, which is targeting young, bold, savvy customers had more than 34% of sales online, although the figures are just 4.4% for Millers (plus size Women’s clothing) and 6.0% for Rivers (shoes and clothing) brands.   (Interestingly, Millers has 175,000 Facebook followers, more than any of the other brands.)

2017 saw the relaunch of all the brands’ ecommerce sites: Millers, Crossroads, Katies, City Chic, Autograph and Rivers.  This was a significant achievement with all six brands running off a single SAP Hybris commerce platform, and as the systems integrator engaged to deliver the new sites, we are acutely aware of the many challenges the digital and IT teams at SFG have had to deal with.

An omnichannel solution requires a myriad of elements to work together to offer a frictionless customer experience.  Not only does the store need to be seamlessly integrated into the customer journey (SFG has an ongoing store refurbishment program to align customer experience), but customers now demand unprecedented flexibility.

For SFG’s technical team that meant dozens of integrations such as CRM and loyalty, fraud management, multiple delivery systems and payment gateways, gift cards, SMS and email, and of course ERP and inventory.  That number is constantly growing. In September, Afterpay was rolled out across the sites, and it has been a significant driver for higher margin sales. Having a platform that facilitates innovation is critical but so is performance.  The platform has been load tested to 30,000 requests per minute.

Times are challenging for traditional retailers, with rents high and customers moving online, and SFG will close nearly 300 stores by 2020.  However, with a customer database of +10M working in their favour, and +80% of sales coming from members, with careful planning, SFG is confident that they can migrate a good percentage of customers that are losing local retail stores to the online environment.  Early testing has upwards of 50% of customers either migrate to a neighbouring stores or shop solely online. SFG’s experience with City Chic in the US may be a portent to the future. In the US, the City Chic brand is now largely online, and supported by concessions in Macy’s, Nordstrom & Bloomingdales, rather than a large network of physical stores.

To get closer to their customers, SFG has moved ecommerce and customer insights functions into each of the brands, all reporting to a brand head of marketing.  Fortnightly feedback from the brands is rolled up to a small central ecommerce team. Previously, these functions were provided by a shared back-office team.

They have also recently invested in the SAP Hybris Marketing platform and are working to introduce best practice marketing techniques across the brands, whilst empowering them to uncover their own customer insights and the ability to prioritise changes.

At the heart of any retail strategy is the need to ensure the right product offer is made to customers.   SFG has started to place more emphasis on presenting outfit collections rather than individual products.

“Ease of navigation is a critical component of success – mapping the customer journey and rectifying the pain points along the shopping journey often results in a significant improvement in conversion and satisfaction”, said Tim Fawaz, SFG CFO in a recent CMO interview.

The keys for SFG as they recover their market position, will be to continue to enhance their customer experience by leveraging the solid foundation they have laid to drive innovation, and to ensure their product offer is compelling enough to their various niche markets.

This post was first published on LinkedIn.

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