Speaking with style: Mike Shearwood, CEO, Aurora Fashions
By Petah Marian | 8 December 2011
Aurora Fashions CEO Mike Shearwood
Women's wear retailer Aurora Fashions, owner of the Coast, Warehouse and Oasis brands, has moved beyond multichannel retail to something that CEO Mike Shearwood describes as "omnichannel". Here he tells just-style in an exclusive interview how this strategy is having wide-ranging impacts across the retailer's business, from ensuring a seamless offer to opening up inventory across multiple channels.
Aurora Fashions is already experiencing the benefits of developing its "omnichannel offer", having booked a significant uplift from its "Anywhere Everywhere" approach to inventory management.
The retailer revealed to just-style it has seen an "incremental sales increase" of GBP2.5m (US$3.9m) over the past six weeks as it tested an innovative new inventory management scheme that opens up its merchandise across all of its stores - both online and bricks-and-mortar. "If we have it anywhere we have it everywhere," Mike Shearwood says.
Traditionally, retailers allocate stock, with pots for each of their stores and then another for online. What Aurora is doing, is making that stock available to all consumers across its estate, through online, ordering in-store and click-and-collect.
The CEO is forecasting that this way of managing inventory, which was developed in partnership with Retail Assist and BT Expidite, will increase its e-commerce sales "by a third". He says the programme has increased SKU availability by 28% for online customers and has "doubled the online conversion rate".
Describing the evolution towards omnichannel, Shearwood says there was a period when people were talking about pure-play online fashion retailers decimating the channel "as it has done in other sectors like music and electrical goods."
But then they realised they needed a store presence to enrich the experience and have good customer service, "so then everyone started talking about multichannel", to the point where the pure-play guys were thinking "I need stores for the marketing presence."
"Now, if we're using one lot of inventory, we're calling it omnichannel, because the customer wants to transact with us and we will do that in whatever way she wants".
While the retailer has seen significant successes from the trial, it faced significant challenges, particularly around underestimating exactly how many orders would end up going to the stores - with far more than originally expected.
"We had originally thought that we would get three to five orders a day per store, but we found that some stores were coming in in the morning with 200 orders waiting to be picked, packed and delivered," says Shearwood. "We thought that we put enough packing materials and stationery products in the stores to last them a week, but we found that within two hours they had run out. The volumes were much higher than we anticipated."
The company's omnichannel thinking goes beyond inventory management, right through the store to returns, highlighting that items consumers buy online can be returned in-store. "A lot of retailers won't allow customers to return goods bought online to their stores, so you make it easier for her to return, the more she'll buy."
However, convincing staff in its bricks-and-mortar stores of the benefits of online retail has taken some work, because they have seen it "taking sales away".
He says the key to overcoming this hurdle is enabling them to "get the benefits of the sale, whether it's ordered online and fulfilled from the store, or whether its ordered online in their store with delivery to the customer's home".
Indeed this new method of inventory management has won store staff over, with store fulfilled orders requiring extra staff hours, combined with the added benefit of them getting to recognise the sales. "We've had to increase the number of hours worked in the stores. The stores are loving it because they're getting the sales. Our store teams are now loving online," enthuses Shearwood.
Also part of this strategy is the company's 90-minute delivery service, which it began rolling out earlier this year. Shearwood says that 50% of the portfolio now has the service and this will be lifted to 90% by February next year.
While this will offer convenience for customers and mean there "shouldn't be an incidence where we don't have something in a size or colour", it will also have an impact not only on how Aurora manages its inventory, but also on how it buys products.
"Most retailers buy in their stock and say that's for the stores, that's for e-commerce and then the biggest stores will get the biggest chunk. So the smaller stores obviously get less choice and fewer options.
"Ultimately, as a retailer, you end up selling your best products through the top of the chain so you have none left. But at the bottom of the chain you have odd sizes and fragmentation which will go into markdown and sale."
Instead, by opening up its inventory, Aurora's brands will be able to optimise the products they buy, making those in its smaller stores accessible from either online to home delivery, or click-and-collect.
"We'll technically be able to buy shallower, which reduces our fashion risk and also puts us in a position where we can genuinely sell-out of product, and where we can tell our customers hand on heart, if it's available anywhere we will find it for you. If it's not available anywhere, it's sold out."
Shearwood adds that this reduced risk will mean the retailer will also be able to offer more choice as it can buy more products.
While the company has increased the amount of online fulfilment carried out in-store, the retailer has no plans to shift away from a traditional distribution centre model. "We are still utilising the DC, because the most efficient and cost effective way to do it is a pick, pack and dispatch team in our distribution centre".
Developing the store
While all this has been taking place, Aurora has continued to integrate technology into its 1,278 stores in 33 countries.
The company recently re-launched its flagship Oasis store in London's West End, placing digital technology at the heart of the experience. Staff carry mobile iPads that are equipped to handle transactions, as well as allowing customers to flick through the online lookbook.
Shearwood describes these moves as attempting to keep up with its next generation of consumer who "don't have to learn how to use technology, they've grown up with it" and "build it into their everyday lives."
In the past, he says, retailers have moved "at the speed that consumers have been able to adapt to [and learn] new technologies."
But the expectations of today's shoppers means the pace of change will only accelerate - and Aurora Fashions is determined to lead the way.
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