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Aurora fashion is best known for its high street brands, including Karen Millen, Oasis and Warehouse, with several hundred stores across the UK.
Aurora's group IT director John Bovill was recently named as one of retail's top 70 movers and shakers by Retail Insider, and the group also received Retail Week's IT team of the year award in June.
I spoke to him about the challenges faced by retailers moving into the multichannel space and the impact of mobile and online technology as a supply and demand chain facilitator, as well as the way Aurora has been working with BT Expedite to develop an innovative integrated store system.
Can you explain how you are using technology to more efficiently match supply with demand?
Absolutely. In retail previously you’d be dealing with fairly standard stock management systems, ERP based, that sort of thing.
More and more now we’re moving into the cloud, although when I say that it’s fairly unique to the sector because we use the term to describe a private cloud, which is pretty much a prerequisite for integrated store.
My personal view is that you need a solid technical footing in order to drive innovation, so we’re moving toward a single stock pool model. Stock can be made available anywhere, we can now check stock across distribution centres and stores about every 15 minutes, whereas in the past you’d be looking at hours, if not daily checks, which results in sales based on a trickle feed, here we have greater connectivity.
To put that in simple terms, if we have a customer on the website, they can order direct from a store, the store will check that an item is in stock, and is given a maximum of 30 minutes to reply to the customer and confirm the item is available. It’s then reserved and the customer has 24 hours (based on working days) to collect from the store.
That’s been live for about eight weeks in Warehouse now and we’re rolling it out across our other brands.
We’re also looking at an extended aisle model. If stock is unavailable in store it can be ordered directly from our distribution centre and either sent direct to the customer or they can pick it up from a store of their choice, which is particularly useful if for example, you work in London but live in Cambridge. You can order an item in London and pick it up from your local branch.
We’re also integrating this into our CRM to build up as complete picture of the customer as possible, getting a single view of them which of course is great information to have.
Can you talk about your collaboration with Thomas Pink and how that has benefited both companies?
Well we’re completely independent companies, so there’s no actual ties, but basically I get on very well with my counterpart at Thomas Pink, so we’re collaborating actively on certain projects and sharing tools.
We both have various demands of BTE and the Fresca system so it makes sense.
Thomas Pink are actually using things in a slightly different way, it doesn’t make as much sense for them to utilise the distribution centre management in the same way we do because they don’t have as many local stores. I believe they have around 40 or so stores whereas we have closer to 300, so theirs is a different model, but we’ve discovered that currently the system won’t allow us to use both models, so we’re hoping to roll out phase two of development around the middle of 2011 to address that, and BT seems confident it’s possible although we’re still confirming things there.
Can you tell us about the in-store tablets initiative at your Regent St Karen Millen branch? Will this be replicated in other stores?
The in-store tablets are basically a mobile web portal. It makes sense to equip staff with a mobile device or allow customers to use one to place orders.
The customer shouldn’t have to wait in line, if there are large queues then they basically represent lost sales so this is a way of mitigating that and providing a much better experience for the customer.
I don’t think this will be replicated in other stores in its current form for two main reasons. Firstly we need to enrich the functionality in order to justify that kind of investment, at the moment it’s purely a portal but there’s a lot more that we can do with that.
Secondly, right now tablet technology is moving so quickly. Any devices we use have to be fit for purpose, the iPad is the obvious choice but given the environment we really need something robust, so that might not be the right hardware to go with, so there’s some things to iron out there first.
Is there a 'typical' multichannel customer, or are there large differences in the way customers utilise different channels?
Well it’s quite a spread. By and large customers aren’t really purchasing on the tablets, they’re using them to browse, and we’ve experimented with kiosks but those aren’t really right for our market.
Mobile devices are better suited and they really help us build the relationship with the customer and that’s something the prototype has really clarified for us.
Something we have noticed though is that with the integrated store sales have been truly incremental.
I think we set targets saying we expected increases in conversion and sales of between 21/2% and 10% and that’s been pretty much on the nose.
Obviously the concern as you open up more touchpoints is that you’ll be susceptible to cannibalism, but we’ve found very little, and we’re seeing that by and large the multichannel customer is a very high value customer.
Typically they buy more products, more often at a higher single item rate, so there isn’t a shadow of a doubt that they represent a very high value, high revenue market.
With your 'reserve and collect' initiative, and other similar multichannel schemes, are there any tensions between different departments in terms of which department gets credit for sales (i.e. stores versus online)?
Initially we thought there would be. We assumed that sales for reserve and collect would be very high and sales would be accredited to the web, to e-commerce, but what we’re actually seeing is roughly a 50/50 split.
We’re also getting lots of positive feedback, even on cancellations which have always been a big challenge.
Previously stores only really saw returns from the website so there was no positive information there, but now they’re seeing that we’re actively driving extra traffic into the store so that’s very good for them.
We’ve also taken a more global approach to how we attribute sales so it hasn’t been a big problem.
Could you tell us a little about the iPhone voucher app? What other innovations are on the horizon for Aurora?
Yes of course, we’ve actually won 10 awards in the past year so that’s been really nice, Including a best tech award for integrated store, and we received two for the mobile voucher app.
Rather than a traditional gift voucher, if for example I go into a store and buy a $50 voucher for my wife’s birthday, then the system will send her a text with a unique identity number, rather than a barcode.
Then if my wife decides to spend say £20 of that, it’s validated based on the ident as a unique sale, so that way we avoid any danger of it being virally spread, then the system will send her another text with a new number for the remaining £30.
In the past you could only tell that I had purchased a voucher, but now you also see who I bought it for, for what purpose, a birthday, an anniversary etc, and how it was spent, so that’s incredibly useful information.
We’re still working on expanding the iPhone app as well, we want to add in more services like reserve and collect there, which is a completely logical next step.
Currently it’s only live on the iPhone but we’ve also just started integrating Android so we can have a much broader market there soon as well.
As I say it’s great to get recognition for that sort of thing because IT is a tough industry so it’s really nice to have that good will.
Do you think we’ll see wider adoption of this kind of system in retail – do you think physical location retail will ever be replaced by online, or will it become truly multichannel?
I don’t think we will in our industry for various reasons.
Firstly we don’t have a product that can be digitised, at least not yet, and secondly because fashion is a very social experience and that’s actually increasing.
In my view, and this is a personal view rather than a company one, I expect online retail to account for about 20% of overall sales in this industry.
As our touchpoints increase we really need to concentrate on providing a great experience that’s integrated across all our various channels
Finally, this obviously represents a technological challenge, but do you feel it’s also down to a shift in organisational thinking? Is that something we’ll see more of?
Absolutely, that’s actually the biggest challenge.
With the technology, in this day and age you simply have to provide solutions, but it’s critical that you have a good user experience because tech is now very front of house in retail so it’s very strategically important, and that represents a need for a complete change in the business mindset.
We can’t afford to think in single, modular terms based entirely on bricks and mortar outlets anymore.
And of course one of the largest changes once the technology is in place is in the actual in-store processes, it represents a massive shift in organisation and we’re just starting out on that journey.