IMRG Online Retailer Interview: HEMA

A Q&A with Syed Kazmi, International and Development Director, HEMA

We spoke to Syed about expanding into the Middle East, maintaining thousands of SKUs, and HEMA's environmental initiative: the 'green leaf stamp' campaign

In your own words, tell us about HEMA

HEMA’s purpose is all about making daily life better, easier, and more fun for our customers. If you walk into a HEMA store, you’ll find clever, sustainable and quality items at a great price.

What are your biggest challenges in 2019?

I think the biggest one at the moment is continually improving the store experience across our 800-store portfolio which spans 10 different markets.

We have over 6 million customers visiting our stores every week, and to keep that number consistent, and to keep customers coming through, we’re always looking at new ways of innovating within our stores, whether that be how we allow customers to pay (via scan-and-go desks), whether it be in terms of how we showcase our product offering, or how we integrate online to offline. That’s our biggest challenge for this year.

Do you focus your attention more on your online offering?

We see the future of retail as: online will always grow stronger than bricks and mortar, but bricks and mortar will always be there and have a purpose. I personally don’t see a future where we only have online stores. I think online is becoming more and more important in this day and age, but brands will always need a smaller, but important bricks portfolio.

It will be different by market and continent as well. Online is a lot more penetrated in Europe than it is in the Middle East, for example, where we also have stores at the moment, which requires us to have a different strategy by market to fully maximise.

Tell us about your recent move into the Middle East. Are there any territory-specific obstacles you’ve had to overcome?

As of today, we now operate in 10 countries. 8 of them are in Europe, and 2 of them are in the Middle East. We have stores across the UAE and Qatar.

Our stores in Europe are quite similar in terms of the product offering, the assortment, and the challenges. However, the moment you move into a new continent, you’re dealing with challenges around product importation, compliance, testing. You’re dealing with different seasons, and you’re dealing with different marketing calendars.

I think that’s where the challenge is. When 99% of your business is focussed on a European calendar, and a European customer, making a number of changes to servicing a new market and a new customer is a significant challenge this year for HEMA.

80% of HEMA products are the same globally. And around 20% we tailor to local markets from within our extensive product catalogue.

What kinds of product tailoring do you implement?

There are two elements to localising the product assortment. If you look at our market in the Netherlands, for example, apparel plays a very big part in our sales contribution – probably 30-40%, whereas in our international markets, apparel is significantly lower. It completely depends on the market you’re moving into and what the customer requirements are.

We have over 25,000 SKUs across our product offering. We do everything from food, to toys, to apparel, to stationery, to home and living, and our footprint in our international format is a lot smaller than what we do in the home market. In the Netherlands, we have stores anywhere from 1,000sqft to 35,000sqft, whereas in our international format, we go anywhere from 1,000sqft to 5,000sqft.

Do you see a big difference in what people buy and how much they spend in-store and online?

Our customers definitely seem to have a higher spend online, typically 3x more than what they spend in the store on a typical basket purchase. I think it’s due to the fact that the majority of what we showcase online has a wider assortment than what we showcase in stores. People have a wider offering to browse. Also, with the online purchase, we not only offer home delivery but also click and collect, which a lot of our customers make use of.

You have a few shops at train stations. Do you see that in-transit destinations like these have greater footfall?

The travel-format stores are some of our highest sales density stores. We definitely do well in these locations. HEMA really thrives off high footfall locations, so train stations and airports do very well for us.

How effective has your ‘green leaf stamp’ campaign been?

In the current climate that we live in, sustainability is becoming a lot more top of mind, and becoming important as part of a customer’s buying choice and loyalty to a brand. At HEMA, the cotton we use for our apparel is 100% sustainable, we sell fair trade chocolate and coffee, we use sustainable paper in our stationery items, and we’ve just launched a new cosmetics range ‘BAE’ which is vegan and cruelty-free.

So, we’re always looking at ways of bettering what we do and the lives of people that use our products too. It’s a huge attraction when we look to take the brand globally. We have a number of competitors in our value segment, and being sustainable is definitely a unique selling point for us and for people that want to partner with the brand. For us, it’s great. It’s part of the DNA of HEMA: taking better care of our customers and the environment.

The green ideology is inherent to us for sure: if that wasn’t the case, we wouldn’t be shifting towards more organic, sustainable produce in our stores. It’s definitely the way forward for us, and that’s the feedback we’re getting from our customers.

Is there a preference amongst your customers for home delivery/click and collect?

Again, it depends on the market. So, if we take the Netherlands, for example: we have over 550 stores, and click and collect is a big part of the contribution. A lot of the customers are local to a store, so they don’t need to do home delivery. Typically, in the majority of our European markets, it’s about a 50/50 split between home delivery and click and collect.

Do you do click and collect in the Middle East?

Not as of yet. In the Middle East, we currently have 7 stores: 4 in the UAE and 3 in Qatar. It’s something we’ll be offering our customers once we have an online platform. As of now, we only have bricks and mortar stores. We’ll probably look to operate an online platform in early 2020, and then offer click and collect as part of the offering.