In Conversation: Next Generation Retail
Last week saw the latest instalment of The Industry.fashion’s "In Conversation" sessions, in partnership with Klarna, with a panel of retail and e-commerce leaders discussing "next generation retail" at the W London – Leicester Square hotel.
The line up consisted of Lea Cranfield, commercial director of Matchesfashion.com, Emma Watkinson, CEO of SilkFred, and Jonathan Sheard, global fashion commercial manager of Klarna. Here’s a round-up of the best of what they had to say.
It’s no secret that retailers now face more demanding customers than ever before, and the more knowledge you can attain about your customers, the better it is for business. The growth in online retailing has no doubt changed the landscape forever, but that’s not to say that bricks and mortar retail has lost its relevance, far from it.
Matchesfashion.com started out almost 32 years ago as a family run bricks and mortar designer fashion retail business in Wimbledon village, co-founded by husband and wife Tom and Ruth Chapman. They later rolled out to locations including Marleybone and Notting Hill. “Then they had this crazy idea of going online!” commented commercial director, Lea Cranfield. It was among the earliest of independent boutiques to do so, and Cranfield said that at the time “it was a pretty bold move.”
Tom Chapman has a podcast where he talks about the craziness of waiting for that online moment – “when they were literally waiting for the internet to ‘turn on’.” But Matchesfashion.com have had a remarkably fast and successful story online, as well as in stores.
SilkFred is a relatively young company compared to Matchesfashion.com, having been founded as recently as 2012, but seeing a meteoric rise online too. “We’re a platform that connects independent fashion brands with customers,” said CEO Emma Watkinson. “Really what we’re all about is discovery of unique and affordable fashion, with core boutique brands that you wouldn’t necessarily get all in one place – helping the high street customer navigate interesting fashion choices.
“We’ve very much built the brand on social media, starting conversations with customers. Customer engagement has been running through our veins since the early days. Customers give us a lot of information about what they are expecting and what they want to see next. As we grow quickly it’s really about meeting our customers needs at each point.”
Klarna’s global fashion commercial manager, Jonathan Sheard, is also extremely well placed to talk about shaking things up on the retail front. Its “buy now, pay later,” philosophy has really hit home with brands and customers alike. He said: “The whole idea and ethos behind Klarna was how do we simplify buying and reduce all the friction that you typically see with payment methods. Out of that was born the pay later proposition which has grown massively across Europe.”
Klarna only launched in the UK in 2015. “It really breaks down a lot of the typical barriers that you might have as a consumer, so it drives a lot of conversion and makes it really easy to check out at the end with that one click purchase,” continued Sheard. “There’s a trust element as well, with the fact that consumers are allowed to buy the goods without paying for them first. That drives a lot of loyalty and repeat purchases.” It’s also become so popular that ‘Klarna it’ has now become a buzz phrase.
Service and customer experience are at the heart of everything Matchesfashion.com do. “Everything we do has to have an experiential feeling to it, and it has to be authentic,” said Cranfield. “We know our roots and we have to make sure we are touching that customer at every point in her life. She might come in to the store, yet she might go home and decide to get things sent to her that she’s been shown in store.”
The digital-friendly retail, events and broadcasting space at 5 Carlos Place, Mayfair, is the true reflection of how Matchesfashion.com has embraced omnichannel retailing to the maximum. It’s a 7,000 square foot space over five floors – with two floors of retail space and two floors of personal shopping, and it really is something to ‘experience,’ with a café on the top floor.
“The retail spaces are always different as we usually change them every two weeks,” offered Cranfield. “It’s very exclusive and very different. We really try to make that space experiential, and you can’t find that product anywhere else. We’ve tried to bring Matchesfashion.com DNA and authenticity to life in one space, which doesn’t go without a lot of hard work from many different teams.
“It’s what we call ‘beautiful chaos’, but it works. Instore, you can try and buy, or you can order something on an iPad and we can get it delivered to you in 90 minutes, or you can just have a drink or some lunch upstairs while you wait. It’s a whole space that becomes a bit more of an experience and a reason to be somewhere social and cultural and enjoyable. Everything we do has to be both physical and digital.”
That really is service with a difference, and a move away from the type of more clinical retail traditionally found on the high street. For SilkFred as well, though it is online only (aside from trialling a pop-up shop), the focus is also very much on customer experience and how they interact with their customers.
Watkinson said: “We’re a brand that was born out of Facebook more than Instagram, though Instagram is growing for us. We are a company that was very much built on those ‘likes’ and ‘comments’. What we found was that, because we are working with a network of micro brands, they are very agile. So, what we were able to do is take some of those comments and feedback from customers and pass those back directly to the brands, who were then able to optimise their offering. We still have a very reactive business model today, and we are our customers. It builds a lot of loyalty.”
Building a much closer emotional engagement is also something that Klarna has embraced. Sheard said: “Culturally as a brand we’ve had a big shift in the last 18 months, from being very much a transactional company to being about how we actually engage with the retail network in a more holistic way, and how we actually engage with our consumers in much better way – building a closer emotional engagement.
“Our theory is, if we can start to think more like retailers, we can add so much more value to the retail partners we work with.” That’s now to the point where Klarna is planning to do a 2,000 sq ft pop-up shop in Covent Garden from 5-12 June with brands including ASOS and Beauty Bay, doing different events on different days with the brands. “It’s just about showcasing who we work with,” added Sheard.
On the subject of dealing with returns, Cranfield said that Matchesfashion.com monitors them, but they are not something that they see as an issue. “The more engaged you become online the better. Generally, our customers keep a lot more than they return. You can also learn from returns and discover if there is an issue with something – like sizing on a particular product. Also, a returns rate can be minimalised by having a more personal service. And if products are bought online but returned in store there’s always the likelihood the customer will have a mooch when they are there.”
Watkinson believes there’s different ways of looking at returns. She said: “There is that underlying behaviour now of using your home as a changing room, and people are a lot more comfortable shopping online now. So, the returns rate is growing a little bit as we are tracking it, but we are comfortable with it and prepared for it. It’s speaking to the customer and building loyalty and frequency.
“It also tells you if there is a problem with the product, and we really want to fix that – it’s our responsibility to sort out. Then there is the customer behaviour and, yes, it is a little bit of dirty secret that people wear and return, but it’s not a huge problem for us because our customer is older than the likes of ASOS and Boohoo. Our customer is more like 29-50, broadly speaking.”
For Klarna, returns are used in positive way, as Sheard commented: “The whole idea of being able to try before you buy naturally gravitates towards increasing returns, and I don’t think we shy away from that. Actually, in terms of customer lifetime value, we’ve got a wealth of data on returns. If you look at it at a customer level, and what those customers do, you’ll find that 90% of your returns come from 10% of your customers.
“So, you can isolate that quite closely. But, over a year, they are also the customers that will spend the most and be your higher grossing from a net position. But that are still those who absolutely abuse it, and we get involved with all kinds of discussions with retailers around strategies to help that. That might come down to blocking repeat offenders from our payment method, though we don’t endorse that.”
Taking customer service to the ultimate level is the aim for all, and is something Matchesfashion.com is now doing with its ‘Grand Tour’, featuring exclusive collaborations. Canfield explained: “As a business, one of our most amazing departments is our vacation edit. That covers many facets from beach to dresses and shoes.
“We know our customer probably travels between 11-12 times a year, and sometimes they are travelling with the same people and can’t possibly be seen in the same thing twice. So, we’ve partnered with the Pellicano hotel group, and we’ve got this beautiful 1930’s boat which will have our edit of beautiful brands and collaborations, sailing up to the luxury hotels where our VIP customers and friends of the brand can get on board and view the collections.” Now that really is next generation retailing. More champagne anyone?
TheIndustry.fashion In Conversation events are proudly staged in partnership with Klarna.