Internet Retailing Expo 2017: Key Takeaways from John Lewis and Lego

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1 Internet Retailing Expo 2017: Key Takeaways from John Lewis and Lego Source: Fung Global Retail & Technology 1) Fung Global Retail & Technology attended the Internet Retailing Expo 2017 in Birmingham, UK, this past week. The event showcased the latest trends and future developments in e-commerce and multichannel retailing. 2) Tom Rooney, Mobile Product Manager at department-store retailer John Lewis, highlighted the key points that have shaped the company s multichannel strategy. These include the importance of smartphones in the customer s shopping journey and the opportunities that apps present in terms of improving the shopping experience. 3) Shehnaaz Chenia, Global E-commerce Director from Danish toy maker Lego, shared details about the challenges Lego has faced in integrating its offline and online channels to most effectively and consistently portray the essence of the brand. The Fung Global Retail & Technology team attended the Internet Retailing Expo 2017 in Birmingham, UK, this past week. The event showcased the latest trends and future developments in e-commerce and multichannel retailing. At the conference, we attended a presentation by Tom Rooney, Mobile Product Manager at John Lewis, which focused on the eight key points that have shaped the company s multichannel strategy. We also learned how Lego, the world s leading toy company, integrated its physical and digital channels to most effectively display and leverage the Lego brand. 1

2 Eight Key Points Shaping Omnichannel Retailing Today Tom Rooney, Mobile Product Manager at John Lewis, presented the eight key points that have shaped the retailer s multichannel strategy: 1. The modern shopping journey is complicated and is no longer linear. The shopper approaches the retailer from a variety of channels, ranging from mobile apps to physical stores. Rooney defined the way shoppers approach John Lewis as a spaghetti journey. Currently, 40% of John Lewis s sales are made online and about half of those come from mobile devices. In designing apps or defining store layouts, retailers need to consider the intricacy of the contemporary shopping journey, Rooney said. Source: Fung Global Retail & Technology 2. Customers love to give feedback on how they shop. The shopping journey is becoming more sophisticated thanks to the variety of channels customers can use, and digital channels make it easier for retailers to gather information on their customers shopping preferences. Shoppers are generally happy to share their thoughts, Rooney noted. 3. It is all about the smartphone, which has become a key device for browsing and shopping. Smartphones have overtaken tablets and desktop computers in terms of traffic generation. Therefore, retailers must tailor their online presence to the mobile world. 4. Smartphones are not the same as tablets, and consumers behavior differs according to the device used. Smartphone traffic is higher in the early morning, when people are commuting, while tablet traffic is higher in the evening, when people are at home. Shoppers tend to browse longer when using a tablet, and conversion on tablets is higher than it is on smartphones. However, as smartphone screens get bigger, the use of tablets for online shopping is declining, which reinforces how important it is for retailers to focus their online presence on mobile users. 2

3 5. The product page is the new home page. Home pages are no longer the first page many online shoppers come across. About 30% of John Lewis shopping journeys start on a product page, as consumers tend to access the retailer s portal by typing the kind of product they are looking for into a search engine rather than searching the name of the retailer. So, it is important that the product page show how the retailer differs from its competitors. Retailers must offer a cheaper price, more convenient delivery terms or some other benefit in order to convince shoppers to buy the product from them and not from another company. 6. Apps offer different opportunities to interact with customers. Smartphone apps can include embedded features that shoppers can use when visiting a store to improve their shopping journey. For example, retailers can embed barcode scanners in apps to enable shoppers to gather more information on products. Retailers can also provide digital loyalty cards and digital receipts through apps as an extra convenience. 7. Shop-floor associates remain important and they continue to add value to the shopping experience. For example, staff can use in-store technology or smartphones to gather more information about products for shoppers. Such technology can enable store associates to make better use of their time by focusing on other aspects of customer service. 8. Retailers should avoid adopting solutions for things that are not a problem, and should embrace technology that actually helps improve the shopping experience. Solutions that are nice to have but do not make a difference are likely not worth the investment. It is important that retailers listen to their customers and see what their competitors are doing right or wrong before they decide what solutions to invest in. As a final consideration, Rooney said that the digitalization of the shopping journey is just at the beginning stages, and that the future will bring exciting new developments and new ways to shop. The Internet of Things (IoT) has already enabled smart washing machines to buy more detergent online, for example, and smart toothbrushes will be able to order a new head by connecting online. Retailers must design their future strategies with these new scenarios in mind. Lego s Quest to Translate the Store Experience into Digital Shehnaaz Chenia, Global E-commerce Director at Danish toy maker Lego, talked about the challenges the company faced in integrating its offline and online channels to most effectively and consistently portray the essence of the Lego brand. Lego was late to fully leverage the online dynamic, as the company had traditionally viewed itself as more of a toy manufacturing company than a retailer. Lego s physical and online distribution channels were disconnected from each other. The old Lego website was not inspired by the stores, and did not portray the exciting brand essence that customers feel when shopping in the company s brick-and-mortar stores. Lego faced the challenge of translating the appearance and feel of its stores to its website, and the goal was to have stores essentially go digital. Lego needed to figure out how to integrate its physical and online presences in order to capitalize on the success of the stores. It took the company two years of hard work to design the website and connect stores with the direct-to-consumer platform. Lego s old website was not inspiring, as it did not have a playful, fun appearance and did not enable customers to easily purchase products. In order to match its brick-and-mortar stores, Lego gave the new site a playful appearance, along with 3

4 playful messaging and fun language. The new site makes strong use of color, and uses the same color scheme used in stores. The site now strongly emphasizes the Lego brand, so that customers see the same thing in stores and online. Lego also simplified the look, navigation and search functions of the site and reduced the number of steps required to reach checkout. The old site made use of multiple pop-up messages that prompted and encouraged customers to add more items to their shopping baskets. This excessive messaging made checking out arduous and lengthy. Source: lego.com The new site has also allowed Lego to leverage consumer-created content for marketing purposes. Lego customers, including adult fans, can now write reviews online, post pictures of assembled Lego sets, and give tips and instructions on assembly of products. Lego continues to work on integrating the physical and digital channels in unique ways, using innovative gimmicks online that are similar to those displayed in its brick-and-mortar stores. For example, Lego stores feature a photo booth called the Mosaic Maker that takes customers pictures, then produces a Lego-inspired photo. The photo is used to create a kit for building an actual Lego version of the photo: individual bricks in various colors are automatically chosen by the machine, and then packaged. This sort of fun, interactive service and product could potentially be replicated online. Furthermore, the store-based concept of the Pick & Build Wall, which allows customers to pick and buy individual bricks instead of buying them in sets, could also be more effectively executed online. Lego also works to make sure that its distribution partners, which include Argos, John Lewis and Harrods, appropriately present the brand to consumers through their online channels. 4

5 One of the ongoing challenges for Lego and other retailers with a digital presence is the plethora of devices used by consumers and the number of different operating systems supporting them. Clearly, this increases the technical complexity of developing digital touchpoints with the consumer. Lego will leverage its new, integrated online offering and direct-to-consumer business to achieve its goal of reaching 300 million kids globally by The company already has a presence in China and is thinking of expanding further into the Asia-Pacific region. Key Takeaways Our primary takeaways from the John Lewis and Lego presentations at this year s Internet Retailing Expo are that: Smartphones are now key to the way consumers approach retailers, browse for product information and conduct their shopping journey. Retailers should use the additional features that mobile apps offer to improve the shopping experience and redesign operations to provide additional value to mobile-connected shoppers when they visit physical stores. It is crucial to provide a seamless, integrated offline and online experience that clearly and distinctly communicates the essence of the brand through both channels. Effective integration of physical and digital channels provides many opportunities to innovatively market and sell products. 5

6 Deborah Weinswig, CPA Managing Director Fung Global Retail & Technology New York: Hong Kong: China: Eva Kubicka Senior Research Associate Filippo Battaini Research Associate Hong Kong: 8th Floor, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong Tel: London: Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0) New York: 1359 Broadway, 9th Floor New York, NY Tel: FungGlobalRetailTech.com 6