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IMRG Online Retailer Interview: Schuh

A Q&A with Sean McKee, Director of eCommerce and Customer Experience, Schuh

In this retailer Q&A, we spoke to Sean about economics, multichannel, and the future of retail.

Tell us about Schuh

At our core we’re a multichannel retailer. I’d say we’re pretty mature. The core of our business activity is as a retailer of brands and products to a youthful demographic. We have a primary consumer between 15 and 25, and a secondary consumer between 26 and 40. We see ourselves as a pretty broad church, selling whatever brands are relevant within fashion footwear to customers in a volume environment (stores or website).

We try to organise our business around being convenient and in the moment – having what customers need, organising ourselves around decent service with a good attitude, and being efficient in how we fulfil the customer’s needs.

What is your biggest challenge in 2018?

It’s got to be the economics of retail. We’re undergoing a transition away from a predomination of bricks-and-mortar locations which were capable of growing overtime, to a situation where not all of those locations will be able to grow.

So, there’s a fundamental challenge with all the costs that are sunk into those physical locations and the very disruptive effect that ecommerce has had in terms of a consumer, with very low levels of loyalty and stickiness, and an ecommerce business model which attracts a lot of variable costs at the point of the sale.

The economics of those two different things going on in a business means we have to think about the economics of one versus the other. I suppose the logic, then, is that ecommerce needs to become more profitable within its own right, given that it’s going to be taking a larger share of retail businesses.

Schuh store

Have you seen a switch internally focusing on the longevity of ecommerce?

We’ve never lacked attention, but I think we’re seeing the wider business becoming more aware of the scale of what we do, and the impact that ecommerce is having on stores in particular.

It’s very easy to unite around forms like the performance of click and collect because everyone speaks that language, and it’s a cross-channel phenomenon. People are becoming more aware of the scale of the beast, and what the disciplines of ecommerce might mean for the wider business.

For example, are search volumes a lead indicator of product performance ahead of time, as opposed to relying exclusively on lag measurement of what did we sell and what didn’t we sell? That’s how retail businesses have historically organised themselves. We’re getting better at the incisiveness of the measurement that ecommerce is quite good at, and we’re seeing increasing ramifications for the broader business to be able to better predict performance.

How does your multichannel presence affect your approach to the customer journey?

Our position up to this point has been an agnostic position: we lay choices in front of the consumer and we let them shop in a non-partisan way. We say, ‘here are all your choices, what do you want to do?’ Increasingly, we’re going to take a slightly different view on that.

The best way to describe it is to call it ‘local first’. If we can geotarget consumers to a defined radius of one of our stores, we would like to make sure that editorial on our side and the services we make available to you, and the quality of our marketing effort in the knowledge the you’re in a particular location, should drive the most economic result for the business. And in that particular physical location, we want you to go into the store.

There’s an increasing awareness that we must coordinate at a geographic level. We’re getting better at leveraging the economics of the situation and being prepared to edit in a less agnostic way what services are available to what consumer, based on things like physical location and the profitability of the item that they’re buying.

It’s also the case that more profitable products should have a wider array of services available than less profitable products, and we should be aware of the economics of the transaction. The economics of ecommerce needs to be more fluent. If ecommerce takes a bigger slice of the overall business, we need to work the economics and profitability very hard.

Debit card customer

Have you found that returns differ between purchases made in-store and online?

Our returns rate in stores is running at about 40% of our returns rate online. There’s the opportunity in-store to try things on, and there’s a different opportunity when it comes to exchanging as opposed to refunding.

Having online returns go back through stores is a good thing. It gives us some issues to contend with – how can you account for that activity? But the customer gets a full-brand experience. They can exchange as well as refund, and we’d prefer that they exchange sometimes as opposed to refund all the time (which is what they will typically do if they don’t use a store).

I think we’ve taken a pretty can-do approach to the issue. Really the issue of returns for retail businesses is online returns, it isn’t store returns. We’re accepting that most of our online returns go through our stores, and we’ve worked over the last few years to make sense of it. But it’s part of a broader picture.

Is there internal data to support the claim that one click and collect will lead to extra purchases? A pair of shoes will lead to a customer buying shoelaces at the same time, for example?

No not really. We have very limited upselling opportunities, and we’re currently busy at work removing cash desks. So, the places where you would typically do upselling (the physical positioning of an item) – we don’t have much assortment, and we’re reducing the number of physical locations where the appropriateness of that might be an opportunity – we’re moving away from cash desks towards hand held payment and cashing-out areas on the wall.

Blue shoes

Do you have a social media strategy?

We do, yes. We work to be involved in the pertinent platforms. With a youthful demographic, it’s obvious which platforms those are. At an ecommerce level, I continue to be interested in the potential for social commerce.

As a percentage of our mix over time, we haven’t seen anything which fundamentally shifts the needle. We’ve seen growth which outstrips other traffic sources, but it’s still a low flow with a very contained conversion performance. I’d like to see it more in the mix.

I’d like to see social commerce really work, but I think all the evidence up to this point means we should still be sceptical. Is it even remotely natural to want to shop when you’re on a social platform? That remains the key question. To what extent can you truly commercialise it, in a hard, direct way.

What are your thoughts on User Generated Content?

We’ve encouraged it on and off. We’ve experimented in the past, and where customers interacted with content produced by another customer, the conversion rate could be as much as six times higher. But the number of customers who actually interacted with that kind of content was very small.

So, we’ve been on and off with a couple of suppliers. We’re expecting to go back there, but in conjunction with a broader marketing effort and a pipeline to produce enough content for us to publish, rather than us having a terrific functionality around the publishing end, but not at the production end.

Do you encourage reviews?

We encourage two things – product reviews, because we want to publish them to help customers buy things, and we also measure customer sentiment. We measure Net Promoter Score and Net Easy score.

In the last 6 months, we’ve picked up somewhere in the region of 60,000 pieces of customer sentiment, which allows us to have a very clear view of what they think of their experience. From an ecommerce perspective, the Net Easy score is the most attractive, because we use it as a proxy to measure friction and taking the detractors into calculation to really understand what annoyed them.

Man writing a review

What do you think retail on/offline is going to look like in 5 years?

There’s going to be closer integration. Retail estates are going to have to be smaller, because the economics is real and is providing enormous challenges. You would have to say that retail will continue to be value-oriented in its presentation: that’s a challenge as well.

Over time we’ve developed a more value-oriented language for the consumer, as well as putting more into the offer, because that is what the consumer is looking for. I think we need to embed ourselves in a more obvious way with our branded suppliers.

I think retailers need to remind brands what they’re excellent at. Fundamental to that is well-trained staff with a good attitude in a specific location, which is something that no website can do. When we put customers in front of a person (including chat on a website), the conversion performance increases in multiples, because human beings sell things with a degree of emotional engagement, which the bold functionality of a website simply cannot do.

You’d like to think that retail is better than just another algorithm – that it is about some form of emotional engagement.

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