Can you remember a really good recent shopping experience?
NEELA MONTGOMERY Yes. It was with Lego. My boys are ‘Lego-crazy’. Not only did the company know who I was but also how old my kids were and even which characters they liked.
You bought online?
NM I did. Then I decided to go into a store and the staff had exactly the same information when I walked in. That’s very impressive because often you can have quite a disjointed experience between the store and online. This was a a great example of simple but effective personalization.
ANDREW DOHERTY I bought the Google Pixel phone. I actually wanted to hold it in my hands before I bought it. But I couldn’t because there is no physical place to see, touch and buy that phone. So I had to take a leap of faith that the phone would impress me. And it did.
What are the main differences between customer behavior today and in the 1990s?
AD I like to compare shopping with television 25 years ago when we were told what to watch and when to watch it. The decisions were made for us by the networks. But now, if I want to watch all of Game of Thrones in one go, I can. In the past we were being told what to buy by retailers, but now we’re seeing that consumers are not only free to decide what they want to buy, but also very importantly, when they want to buy it, and from where.
NM That‘s true. These days customers are more influenced by many things beyond the control of retailers. That’s an essential change enabled by technology specifically social media. Customers want to get information from other customers. Today, brands are no longer defined by what they say about themselves but what others say about them.
Would you say that the customer is in the lead today?
NM Definitely. The customer has more options than ever before. Brands don’t have the same access to customers that they used to enjoy. So we all have to be more creative, more inventive – that’s why bloggers and networks/platforms have become so powerful within that dynamic.
AD We are exposed to so much aspirational imagery today. We see one of our favourite movie stars, bloggers, or favourite youtubers, using a product and nobody is talking about the product in a way that says “Please buy this” – The products are just being used, or seen in a natural way, and this has a very powerful effect on customers.
What role does personalization play today and in the future?
NM I think we are very much at the beginning of that journey and few retailers really deliver today. Customers will expect a deeply personalized interaction using predictive technology in the near future and will be unforgiving of those retailers who do not get on board.
AD We’re entering a new era where customers are moving away from product acquisition and towards product access. I don’t own any of my music. I rent it. I wanted to change music providers recently and go over to another one that was a little cheaper, but when I changed, none of my playlists were there, and none of the music recommendations were personalised. It felt like they didn’t know me at all, so I ended up having to go back to the original and pay the higher price.
NM Otto Now is an interesting model in terms of leveraging more income from rental, being able to reach much more customers and develop a subscription relationship with the customer.
Why do you think people are starting to prefer renting to buying?
NM If I want five different luxury handbags for different events, then renting rather than investing in one large purchase makes sense, don’t you think? Renting often feels like a smart economic decision. You often feel proud of yourself. It’s also perfect if you want to own the very latest product but can’t afford the purchase price up front. Uber and Airbnb have already demonstrated the power of shared networks and assets. For the model to work though, providers need a deep understanding of customers’ needs and the data intelligence to predict them as well as the technology to manage the platform.
But at the same time lots of people are afraid of companies knowing too much about them. Do you understand this fear?
AD If I had asked someone ten years ago if they would be comfortable using a product like facebook which would track their location with GPS, learn about their likes and interests, know who their friends are, what they are looking at – no one would have told me that that sounds like a good idea. But now even my grandmother is sitting there on facebook “liking” things all day. Customers say that they are afraid of giving away so much personal data, but if we look at what customers actually do, they demonstrate again and again that they are willing to give it up to get access to products. It is crucial that companies take their data protection responsibilities seriously.
NM Collecting data enables personalised content and it’s critical that customers see the value provided to them from using their data. At the same time, retargeting is in danger of becoming a negative trend right now. If you interrupt the customer journey too often, you abuse trust. Customers expect that data improves their experience and sales offers can sometimes cause more irritation than pleasure.
AD There is too much screaming advertising. It’s like screaming at a person “Buy me, buy me”. We have to transition towards whisper advertising – advertising that comes in the right volume at the right time.
NM Speaking of advertising, I am almost shocked these days when I watch an episode of Game of Thrones on a traditional channel because I had forgotten that there’s so much interruption of my viewing experience. Only five years ago, I totally accepted it. Netflix and other streaming services have completely reshaped my expectations.
A disruption-free user-journey … What other trends do you predict for the future of shopping?
AD I think the line between physical retail stores and e-commerce will be quite blurred. Just like Neela’s experience with Lego. She started online and then transitioned into a physical store in a seamless way. In the future we will also see items beingpurchased online and 3D printed at home on demand.
NM Exactly. Expectations of the physical experience will increase even further. Customers want stores to be visually stunning and they will want a sensory experience. When I go to Asia, I am always reminded how good they are at providing the whole package. They are much better at blending togethershopping with entertainment, art and family – the whole thing is much more vibrant and alive. Some shopping centres in Europe are too cold and clinical and places you want to get out of as fast as possible. In the UK market, which is relatively advanced in multi-channel, we see multichannel retailers winning again. They realized that if you can go into an attractive store, have a fantastic conversation about a product with a knowledgeable person and pick up or order packages to home or stores that’s a very compelling shopping experience!
Where within the Otto Group are you trying to address these developments?
NM Take Crate and Barrel. One of the things we recognized is that especially for high-value purchases like furniture people typically do want to speak to an experienced associate. And our associates are really very experienced. But customers often don’t want to complete the transaction in the store where they’re kind of under pressure. So now we offer the customer the possibility to go into the store to get help and then we send him the offer via mail afterwards so that he or she can finish the purchase from home. There used to be this unwritten rule: “There is no way people will feel comfortable to buy a 5000-dollar sofa online.” That’s just not true anymore. But it also means: if we offer a different experience in our online shop than the one you experience in our store, we immediately lose some of our brand trust.
What does a contemporary brand have to look and feel like in 2017?
AD A brand is a virus. It’s organic, it breeds, it mutates daily, and it’s everywhere. A brand is not just a logo that the Marketing team is responsible for. A brand is bigger than just marketing, it should be embodied by everyone from the Executive Board and CEOs to every employee in the field. Our job is to create the best conditions for the virus to grow.
NM A brand is like telling a story. If you tell exactly the same story over and over again, it becomes boring. It is a fine line: you need the core of your brand to stay consistent, it needs to evolve with customers and society.
Which brands at the Otto Group are doing well in terms of changing and adapting to the market and customer behavior?
NM Bonprix is successfully developing into an international known and appreciated brand with very loyal customers. Crate and Barrel is very well recognized brand in the US and has historically been defined by a unique in store experience. One point that’s important too: poor after sales experiences can really damage your brand. It makes people trust you less in the medium to long term. We have put a lot of effort in our post sales experiences such as our call centres. All retailers and brands generally need to think more critically about this experience.
AD The online sales process has changed the way we think about purchasing products. We no longer need to worry so much at the moment of sale, because in the back of our minds we know we can easily return the product later if it’s not what we want. So instead of deciding if we should buy an item or not, we now only need to decide whether we want to return it or not.
Within the Otto Group there are different levels of brands. On the one hand you have all the different companies, on the other hand you sell different brands within the Otto Group world. What role does a brand on that level play?
NM At the end of the day we’re a group and we’re not customerfacing at that level. So therefore our Group values are probably more important than the idea of a brand. But when you get into the individual business you will find very strong brand positionings and characteristics. For example: Bonprix offers women who know what life is all about inspirational fashion experiences. At the brand level it is very important to define what you stand for because there is no customer loyalty without a strong brand message. Brands are something that have to be actively managed, they have to be believed by every person who works in the organisation and that’s the real challenge these days.
What does this all mean for the employees?
AD I am talking a lot about Artificial Intelligence (AI) and people always ask me: “But will we lose our jobs to robots?“ I think there will be a shift in the kind of roles available to humans in the future. Loving your job and being really good at it will become increasingly important, because we’ll see that certain jobs can easily be replaced by robots. If I have a choice to interact with Siri or Google or one of the speech recognition products or a grumpy sales person who has had a bad day, I am probably going to prefer to interact with the friendly AI that knows me, even if it is a little clunky. Robots do a great job at repetitious tasks, but humans are really good at asking questions and other “unproductive” things like art, storytelling, and imagining. And these unproductive things are really valuable if our goal is to create the right conditions for customers to give themselves permission to feel good and spend money.
NM Therefore, the people who work in customer-facing roles need to be brilliant. I’ve been spending a lot of time recently in call centres and I’ve been impressed by how engaged our colleagues are in answering calls and interacting with the customers in a very human way. That’s what I like about the Otto Group. We are a very human company and we have a strong set of personal values which can be a great strength if they come across in our customer interactions as well.