BUSINESS DAY TV: Building an online empire that will never go out of fashion
Brent Curry is chief information officer at The Foschini Group
BUSINESS DAY TV: As shoppers flood the country’s malls in the last few shopping days before Christmas, others are avoiding the crowds, online. While SA still pales next to the likes of the US and Western Europe when it comes to online shopping, the large retailers are making their presence felt in cyberspace.
One of those is The Foschini Group (TFG) which owns chains including Foschini, Markham’s and @Home. It aims to have all 20 of its local chains on its eMall in two years’ time and has set an ambitious target of R550m in annual online sales by the end of 2020. Chief information officer Brent Curry joins us now on the line.
Brent … retailers still hard at work ahead of those Christmas sales?
Brent Curry: Yes. We’ve all obviously prepared and the stock is in the stores, and then the online side as well … post the Black Friday, still tracking well and we’re quite happy with the progress so far.
BDTV: You talk about progress tracking well — have you noticed any marked shift in trends when it comes to consumer shopping habits and their affiliation to online shopping in the first place? How ready are South Africans for the eMall?
BC: Yes we have seen … we launched two years ago. One of the unique offerings we had was to offer our own private label card as a payment means so suddenly we had 3-million customers who are potentially non-online customers now able to shop online. So we’ve seen a big growth in that, and in the past couple of months quite an exponential growth. From our group perspective we are trading 2% of our sales online. It sounds low but the industry norm in SA at the moment is about 1% so we are seeing an increase in the consumer adopting this means of shopping.
BDTV: By using the store card do you think that, first of all, it brings on customer loyalty and keeps those customers loyal to the Foschini group, and do you also know whether you’re attracting new customers to your eMall?
BC: Yes, clearly those customers are existing customers we see, that’s just a transition. But we are seeing an increase in cash customers, normally nongroup customers at the moment, and we’ve definitely seen an increase in that side as well.
BDTV: How are you actually promoting traffic on your online platforms as opposed to traffic through your doors at the moment?
BC: The primary is through emailing. You can go to print media and things like that but we find that the email marketing is still the big driver where you have good marketing process, you entice the customer to click through to your site, and then once they’re on the site there obviously have to be compelling offers. We’re finding that the consumer who goes online is expecting a compelling offer, and that’s what we need to keep doing, making good deals online for the consumer.
BDTV: It’s apparently going to take two years to get all of your stores online, you have 20 plus stores in SA. Why does it take so long, is it really just to get the logistics in place because I should imagine there is a great big logistics chain that needs to be in place and ready for online shopping.
BC: Yes, the logistics is part of it. With the way we’re set up, each site is a separate online entity if you like, a separate branch. Again, like the big mono brands where they take one site and they set up their ecommerce channel, we have a federated process so we will have 20 of those and the customer can shop across each of those. That’s quite unique to us, that you do one checkout. So to answer your question, why is it taking so long? We wanted to keep adding to that over a four-year cycle and to be really prepared, making sure that we iron out all the logistics as well, and ultimately to grow that offering over the cycle. So that was our strategy in terms of launching our ecommerce.
BDTV: How much investment is being directed to your online platform in terms of capex spend?
BC: It’s a big investment. We reported the R100m investment over a four to five-year period and we’re obviously tracking according to that. So yes, quite a big investment, but R100m is the number we’ve been quoting.
BDTV: Talk to us about Phase Eight in the UK, that’s the UK retailer bought by TFG, because they also have an online presence. Is this a different experience that they’re having due to the maturity of the markets in the UK?
BC: We’ve actually got Phase Eight and we’ve got Whistles in the UK so we have two brands there now. The UK market is quite mature on online. For Phase Eight around 27% of their sales are done online, so they’re quite big into the online already. Whistles is about the same, 25% online. We’re finding a lot of synergies in the process but what we’re clearly doing is that we’ve got a lot more innovation happening on our sites. Things like, for example, we have just launched a "deliver to me" concept which is an Uber-type app and when your parcel is ready for collection it pings you wherever you are and it delivers. You could be sitting in a coffee shop and we will deliver to you. You can move around and we can follow you. So we’ve launched that in the past couple of weeks and we believe that is synergy now for us to take into the UK market as well.
BDTV: Okay so exciting times ahead. At the moment you say online sales make up 2% of your overall sales volume and you’ve got a target of R550m in annual sales by 2020. How far off that do you currently sit?
BC: We’re right on track with that. At the moment we’re around the 2%. As we take on more brands that obviously increases. I personally believe that is quite a conservative number. We have already started to see an exponential growth. As the consumer starts to feel confident that they can trade online, the site is secure and our deliveries are efficient, and as we go through that experience, we see a greater uptake.
BDTV: Waiting for pinging parcels to follow us this Christmas …