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Welcome to the House of the future

House of Fraser’s executive director, multichannel and international, says it is happy to experiment to perfect the science of modern retail

I started in ecommerce at the beginning of 1999 for a business that no one had heard of at the time – Amazon.” And there starts the multichannel journey of House of Fraser’s executive director, multichannel and international, Robin Terrell.

To say the pace at which the industry has moved in those 13 years has been rapid is an understatement. Terrell reminisces about those days at the end of the 20th century. “Back then at Amazon we were receiving letters from customers saying how amazing the service was because they had ordered a book online and it had shown up at their door. The pace of change since then has been so dramatic – customers now expect what they want, when they want and how they want it.”

So what impact has this had on the numbers at House of Fraser? Terrell joined the business in February 2010 and online sales over the past few years have soared. In 2009, numbers hit £22m, in 2010 they rose to £52m, in 2011 to £100m and this year sales are expected to reach £150m. Multichannel is a big part of this and as Terrell explains: “As customers begin to shop across channels their spend becomes more than double and that increase is distributed across all the channels used.”

A big part of House of Fraser’s recent multichannel offering has been the launch of click-and-collect stores in October. While Terrell is reluctant to give away figures, he assures me both are doing very well. “We are extremely happy with the performance of these stores so far. We always knew we wanted to open in two locations simultaneously so we can ensure we can see the figures are format rather than location specific. We want to see how both stores trade over two seasons before we start thinking about further investment.”

However, Terrell tells me the original list of target locations for this store format was 10 and with two of them open, that still leaves eight to go. The reason House of Fraser decided to launch this format was derived from the popularity of the buy online and collect in store option. Across the board, 35% of orders made online are collected in store but this figure rises to between 55% and 60% in the catchment area of a store.

Although House of Fraser has 61 stores nationwide, these click-and-collect stores allow the retailer to have a presence in new areas in order to tap into the local markets.

David Oliver, consulting partner at PwC, thinks this is a format we will see other retailers implement in the future. “Multichannel is starting to make retailers think about their stores and the purpose of them,” he says. “Primarily they have two distinct functions – as a showroom allowing customers to interact with product and a place where customers can pick up something they have already decided to buy. In due course, potentially all fashion retailers should be considering doing this as they realise that they probably don’t need as many full service stores as they did pre-internet but customers still want a place to pick up product at their convenience and, more importantly, they feel much more comfortable if they have a physical location to place returns.”

Another channel that is proving a big success for House of Fraser is mobile. While Terrell thinks the retailer was a late adapter to online (the transactional site, www.houseoffraser.co.uk, launched in September 2007) he believes it came to the mobile market early, launching a mobile-optimised site in 2010. Currently this drives 25% of traffic to the website and generates 15% of the sales.

The department store also launched a fully transactional app earlier this year that has already had more than 50,000 downloads. Terrell is clear about the difference between the two channels: “Our app needed to offer something different. It’s targeted at in-store interaction where customers can scan product from their phones and also allows them to manage their loyalty card on it. The long-term aim is to give customers the opportunity to completely manage their loyalty card via their phone so they don’t even need an actual card.”

Moving on from mobile, I question Terrell on his thoughts on social media, and his response is refreshingly honest. “From a personal perspective I don’t get it. I feel no need to share the contents of my lunch with others. However, from a professional standpoint it’s a must because it’s where our customers are,” he says.

Terrell explains the House of Fraser strategy behind social: “From the start we knew there was no point canvassing a load of fans [on Facebook] just for the sake of it. That’s more of a vanity game. Instead we used things such as our celebrity connections in order to engage users on this site.”

While Terrell definitely believes social sites must be part of a retailer’s multichannel strategy, he sees it as much more about customer service and engagement than sales. “The value of these sites comes in the form of customer service where you can respond to customers in real time. However, the commercial value of them is still unproven.

It’s not so much about the sales angle but more about being part of the conversation and engaging with users,” he says.

As part of this customer focus, individuals within House of Fraser’s customer service team are dedicated to monitoring social media sites to ensure all queries and complaints are answered as soon as possible. This is a smart move considering some of the backlash other retailers have faced by not handling these platforms effectively.

So what’s next for House of Fraser? “It’s about extending the product offering, learning from our experiences and ensuring we keep pushing those boundaries.” Terrell gives a good example of this when he talks about offering garden furniture (a product not available in store at the time) on the site last year: “The success of this category online has since meant that House of Fraser has now decided to sell it in four of its stores.”

In terms of online, Terrell sees it as a continually evolving process. He states that the redesign of the checkout is imminent as well as a number of other small improvements online. “We currently offer customers the option to order by 5pm and collect from noon onwards the following day. The challenge now is to close that window even further.”

The other massive opportunity for House of Fraser is, of course, the global market. At present less than 10% of online sales come from the international market but other retailers have shown the potential of this global audience. Currently the biggest markets to House of Fraser are the predictable four – France, Germany, Australia and the US. Terrell confirms that House of Fraser will be developing propositions in those countries with plans to launch specific sites beginning in 2013, although in which country first he will not disclose.

As for the rest of the industry, Terrell believes this year will be the time for retailers to go back to basics. “To be brutally honest, there is a need for many retailers to catch up with the basics. If you don’t know that you are delivering your product to the right place within the right time frame then you need to. The interesting thing about our industry is we love to be the next big thing but first we have got to have those core basics right.”

As Terrell concludes, it is all about moving forward, overcoming challenges and most importantly taking chances: “For me, the future is very much multichannel. The death of the high street is not going to happen. Customer behaviour is changing but it’s more about using a variety of channels rather than disregarding the in-store experience. No one knows what the ultimate answer is but the upwards direction is clear. We are willing to fail – not big or often – but we are absolutely up for innovation and for that you’ve got to experiment.”

Read more features from the Multichannel report

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