After leading a management buyout, the chief executive of BrandAlley is cultivating fresh opportunities for the private Sale site.
A s we take a seat in the leafy garden BrandAlley has designed for the Chelsea Flower Show, Rob Feldmann, the private Sale website’s chief executive, tells me he had “a horrible sleepless night.” Then, with a wry smile, he adds: “Because I realised I’m so horribly competitive. It’s terrible, isn’t it?”
Competitive yes, but then the sleepless night was worth it; BrandAlley scooped the Gold Award in the conceptual Fresh Gardens category that very morning.
It isn’t just sheep Feldmann has been counting of late, having led a management buyout of the £33m UK subsidiary of BrandAlley in January - a move backed by private investors and one that separated it from existing shareholders News International and BrandAlley France, which owned 49% and 51% respectively. The decision to break away was made because BrandAlley in the UK was falling behind by being tied to its French parent, which serves a country where ecommerce is developing at a slower pace than on these shores. As a result the past seven months have been all about investment, with BrandAlley gearing up for a full UK relaunch at the end of August.
“It’s very exciting obviously,” Feldmann enthuses, as we sit within the roped-off confines of the garden while visitors to the show peer in.
Melissa Littler, BrandAlley’s UK marketing and PR director, explains that this involves new front and back-end platforms and a fresh look and feel, and that slowly more functionality will be added. When I ask what changes customers will see, she replies: “Because we’re a members’ club we need to look at how our members [can] have the best experience. So we’re looking at what a VIP club looks like for our best members, we’re looking at our whole CRM [customer relationship management] strategy to [better] communicate to people and optimise purchase behaviour.”
At present, 15% of BrandAlley’s UK sales come via mobile, with Feldmann expecting this to rise to 20% by the end of this year. As a result one area being explored as part of the relaunch is how to maximise this - a new mobile-optimised site is launching at the same time as the main site, and Littler says the company is now working towards “the easiest, fewest clicks route [to browse and pay]”.
Feldmann adds: “Now the opportunity is immense for us because we’re separating out, we’re developing our own website which would be totally separate and much more user-friendly, much easier to shop and I think much more beautiful. We’re doing it full-pelt at the moment.”
For Sach Kukadia, founding partner and buying director at rival private Sales etailer Secret Sales, the changes are overdue. “The BrandAlley site, despite being somewhat dated, remains very functional and supports easy navigation.
The checkout process is also quite efficient but fails in aesthetics. Flat design and large images aid in converting customers and therefore I expect a change in their web design in the following weeks.”
Now that BrandAlley in the UK no longer has to use the same aesthetics as the French site following the MBO, it hopes the slicker and more modern relaunched site will improve the user experience, boost unique user numbers and enable it to create its own distinct identity.
That identity could help to strengthen BrandAlley’s UK market position in the private Sale and designer discount sector. Figures for May from Kantar Media Compete put BrandAlley behind Secret Sales in terms of unique users, with 221,004 to its rival’s 233,240, but ahead of other competitors in the sector such as Cocosa at 82,924, The Outnet at 60,562, and Vente-privee at 42,382. However, the same data shows BrandAlley fared better than Secret Sales in terms of number of visits in the same month, at 619,883 compared with 501,116, and also in terms of the accumulative number of minutes spent by total users on the site in the same month, racking up 4.95 million minutes against Secret Sales’ 3.33 million.
When I ask who BrandAlley’s main UK competitors are, Littler is quick to say “still Secret Sales”, before Feldmann adds: “Well, The Outnet is probably the strongest. And Bicester Village is definitely a competitor.”
However, he adds that bricks-and-mortar outlets can’t compete in terms of sales volumes: “To give you an idea on volume, we’ve sold 18,000 units of Superdry in four days. That is far more than their outlets can do. So it’s an enormous volume, it’s very quick and sharp.”
On the financial side, BrandAlley’s turnover rose 14% year on year for the year to December 31, 2012, while it acquired 70,000 new customers along the way, took its membership tally to more than 3 million for the first time, and the average basket size rose from £69 to £99. And Feldmann adds that in April the average basket size rose to £100, which he says reflects the quality of brands on the site. Since the end of last year the UK management team has been tasked with elevating BrandAlley’s offer to a more premium positioning, focusing on higher-end and luxury brands, with recent
Sales including brands such as Michael Kors, Chloé and D&G.
“What we’ve done in the last year is key, focusing on [brands such as] Ugg rather than Havaianas, for example. Havaianas is a great product but it’s quite cheap. So we’re focusing on the more expensive brands and finding the customer base is responding really well to them,” says Feldmann. He adds that for the right brands the discounts don’t need to be huge, noting Hunter, Joules and Ted Baker as good examples of brands that aren’t often on Sale and are thus able to entice customers with a smaller discount.
Kukadia credits BrandAlley with having a strong fashion offer, “particularly on womenswear”, and isn’t surprised by its more premium direction, as it is an area he says Secret Sales has been focusing on for a while, particularly in footwear and accessories. “The behaviour of young consumers has changed over the last half decade. In the past consumers shopped by brand but now [they] are heavily pivoted on price. Consequently, fast-fashion retailers are dictating how consumers shop, which over recent years has developed a disposable mentality,” says Kukadia.
He adds: “It is this ideology that supports BrandAlley’s strategy to move towards more premium brands. Due to their lead times, there is little value [in] selling products similar to fast-fashion retailers so the sensible option is to move into the premium market. This way the items are worth waiting two or three weeks for.”
A recent change in strategy for off-price rival Cocosa was to axe its members-only strategy. Jessica Fioriti, analyst at market research firm Verdict Research, says the move paid off for BrandAlley’s Mohamed Al Fayed-owned rival, which reported 30% growth for the year to January 21, 2013. “By opening up its membership Cocosa ensured its offer is much more accessible and widened its potential customer base. Without the need to sign up, it has made Cocosa’s site more user-friendly and its offer more transparent, which in turn heightens impulse buying, rather than a purchase being hindered by the need to sign up.”
Feldmann and Littler assure Drapers that BrandAlley has no plans to follow Cocosa, denying that the members-only policy is a short-term business model. Instead they say BrandAlley’s members-only model enables them to really get to know their customers and their preferences, something the new systems being put in place in the relaunch will support.
Kukadia agrees that the members-only business model has legs long term, noting that they “serve as effective clearance mechanisms for premium brands to sell inventories discreetly without jeopardising their integrity or devaluing products.”
With a website relaunch just weeks away, you’d think Feldmann and his team would have enough on their plate, but you’d have thought wrong. Instead, with discussions ongoing about producing an own-label collection and the possibility of one day entering international markets, Feldmann’s competitive spirit should ensure the seeds are sown for further growth.