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Multi-Channel Retail

on-line | by phone | in-store

 

'on-line, by phone or in-store' - true multi-channel retailing from Woolworths in the 2000s

 

Woolworths Group's first Chairman, Gerald Corbett (2002-2007)When Woolworths Group demerged from Kingfisher in 2001, one of the first actions of the Chairman, Gerald Corbett, was to scale back the multi-channel operation. Initially he intended to withdraw completely, but was persuaded to keep a small 'Entertainment-only' presence by his well-respected web subsidiary, Streets Online. Streets provided a website for another Group operating company, MVC (The Music and Video Club) and explained that Woolworths could share the same infrastructure, and the iconic brand name could help to drive up traffic.

Millions of pounds of investment in woolworths.co.uk was written off. But three years later, the CEO Trevor Bish-Jones made multi-channel retail a key strategy.

 

CEO Trevor Bish-Jones introduced Woolworths' 'biggest ever range' - more than 300,000 items which were available on-line or at 5,400 tills across the chain's 818 High Street stores

Determined to leverage synergies within the Group, and passionately believing that the Internet was the future, Bish-Jones evangelised a true multi-channel offer. His goal was to offer the full Entertainment UK and superstore ranges at every till in the country and on-line. He set a series of challenges:

  • build an ordering system simple enough for colleagues to use quickly at the till
  • encourage customers to collect their goods in-store (even when ordering by 'phone or on-line)
  • grow the firm's award-winning call centre to move beyond complaints and enquiries into sales
  • enhance the selection by adding an extended 'to-order' range delivered directly from the manufacturer
  • communicate the new offer in-store and on-line
  • create a new, substantial catalogue, 'The Big Red Book', taking Woolworths head-to-head with Argos
  • explore new self-service options in-store through kiosks and stock-checkers

 

A prototype of In Store Ordering, pulled together by technical whizz Simon EllisThe Woolworths store in High Street Mold, Clwyd, North Wales


Work to grow the website was tackled by Streets On Line, who worked to sweat the existing asset while helping Buyers and Entertainment UK to grow the range. Meanwhile the Woolworths IT team quickly got a store trial up and running, thanks to technical whizz, Simon Ellis. Results were excellent in the pilot stores in Mold, North Wales (illustrated) and nearby Broughton Park, Chester during the Autumn of 2004.

 

Heswall on the Wirral in Merseyside, where Woolworths tested their integrated In Store Ordering system in Spring 2005Integrated ordering on the Woolworths web-based tills was tested in North West England during the Spring of 2005

Weeks later, in the Spring of 2005, a major breakthrough saw a new ordering application that could run on the till. Although not fully integrated, operators could 'hop' from registering take-home today sales straight to on-line ordering. The new system proved very popular in trials in Heswall, Merseyside and a dozen surrounding stores. The Streets Online team had excelled in identifying a way to exploit the web architecture of the tills and linking to the plumbing of the woolworths.co.uk website.

 

The Woolworths In Store Ordering System, which was rolled out across the chain at Easter 2005, went on to win an award as the 'Best Customer Touchpoint System in the World' at the Retail Systems Achievement Awards in Chicago, Illinois in March 2006

 

The implementation team had to find a way to persuade store colleagues to embrace the new ordering system rather than seeing it as a threat. Strong engagement would be crucial if the infant business was to achieve the CEO's goal of building sales to £300m sales within three years. Good teamwork, backed by a reliable system and strong package of marketing materials helped to secure the launch. A key reason for the success of the store engagement was the decision to allocate all sales made on the Internet to the store that generated them, or the nearest to the customer's home.

 

Steve Lewis, Retail Director of Woolworths and later MD of Entertainment UK

 

Strong support from Retail Director, Steve Lewis, made In Store Ordering a key part of everyday operations. By encouraging colleagues to ask 'did you find everything you were looking for?' and to follow up with 'would you like to order one?', the teams in-store embraced the technology and found it easy to use.

To the surprise of many observers, rather than in store ordering simply adding some icing to the cake with a few extra sales on top of those from the website and telephone call centre, stores became the largest source of on-line orders.

Lewis teased members of the IT team by offering them a £20 note, and then snatching them it back, saying 'oh no you don't take cash!' The move followed criticism from customers that the firm only accepted payment by card, to comply with the Mail Order Protection Scheme. When cash payment was added in Spring 2006, alongside an in-store collection service, sales rocketed. Over-the-counter orders accounted for two-thirds of the £70m turnover during the year.

The web designers continued their policy of 'write once, use many times', allowing Internet customers to opt for in-store collection as well as making new ranges like books available in-store. The result was a 'best in world' award at the Retail Systems Achievement Awards in Chicago, Illinois at Easter 2006.

 

The Big Red Book, a 6,000 product catalogue launched in the Autumn of 2006, saw Woolworths going head-to-head with Argos

There was more to come, as the CEO announced the most radical move yet. The best of the on-line range would feature in a catalogue, which would be launched in the Autumn 2006 and called 'The Big Red Book'. Woolworths was effectively stepping in to replace Index Catalogue Stores (part of Littlewoods plc which had since moved on-line), taking them head-to-head with Argos, particularly on Toys, Summer Furniture and Electricals.

The catalogues introduced new overheads. Higher quality pictures and better descriptions were needed, requiring help from an agency and the establishment of a team at Head Office to receive samples , photograph and describe them. The firm's television advertising budget was trimmed back to finance the set-up.

At a time when others were closing call centres and driving their catalogue business on-line, Woolworths had decided to buck the trend and encourage customers to order by telephone.

 

Despite great marketing and good strategic vision, the reality was that many multi-channel retail sales were loss-making. Entertainment products, fulfilled within the group by sister company Entertainment UK, and 'direct' orders filled by a supplier, were typically the only transactions to break even. On average the loss per general merchandise transaction exceeded £7. The investment behind the scenes to establish a fulfilment warehouse, a 100-seat call centre at the firm's Castleton office and a state-of-the-art computing platform capable of sustaining peak day sales of £20m, provided a foundation fo years to come. But unlike the most successful on-line operators, the firm did not yet have a simple, efficient supply chain for all products, or a bureaucracy-free operation behind the scenes. Best in the world at the front of house did not imply perfection behind the scenes, or that the economic model could be sustained for long.

 

Home economics test - which made more profit, a £10 purchase in store and carried home...
The bureaucracy of an on-line transaction, if you don't quite get it right.  It's hard to make a profit with an email, six leaflets and a courier delivery to pay for

 

Trevor Bish-Jones believed passionately that the future lay on the Internet. History has since proved that he was right, and saw the potential to make Woolworths into a major on-line brand. There can be little doubt that if Frank Woolworth had opened in 2009 rather than 1909, he would have headed straight for the web, with its low costs and massive reach, without every considering the High Street. While the entrepreneur would be sad about the loss of the stores, but he would also recognise and celebrate Shop Direct's woolworths.co.uk, and would be proud that it carries his name.

 

For those who know the writer, this feature has 'skipped' over the firm's £1m investment in kiosks, on the basis that a skip is exactly where the IBM and Retec technology landed up. Woolworths never got to see the cash payment machines working in-store.