- Tech & Gadgets
- BRW. lounge
Country Road will release its spring catalogue in early August. At the same time, the clothing retailer will launch something else new – a revamped website to sell to customers overseas.
The brand already makes 5 per cent of its sales online in Australia, New Zealand and in South Africa through Johannesburg-listed parent company Woolworths. The company is not a quick mover – “we like doing things slowly on strategy”, chief executive Howard Goldberg concedes – and although excited about tapping virgin markets, it is taking a cautious approach.
“If we get to 10 per cent in three years, we’d be doing well,” Goldberg says.
But online clothing sales into new territory is not what excites the Pacific Brands, Canterbury and General Pants Group veteran the most. Rather, Goldberg – outlining his plans exclusively to BRW – sees the technology changes underpinning Country Road’s international expansion as part of a wider rejig to back office functions to improve customer service. The same functions will underpin sales, whether to a customer shopping online in London or one that has just walked into Melbourne’s Chadstone shopping mall.
“It’s about real-time inventory,” he says.
A customer in a store might choose a shirt but discover the store does not have their size. If, however, the right sized item is in another Country Road store or warehouse, the customer can pay for it at the store and have it delivered for free within 48 hours. Other retailers already link inventory at individual locations to a centralised database – such as liquor retailer Dan Murphy’s, which allows customers to see what their local store has in stock – but it doesn’t offer delivery.
The system first tested at Country Road’s South Yarra store is now being rolled out to other locations.
“The old-fashioned retail model is not sustainable any more,” Goldberg says.
The Melbourne-based Asia-Pacific head of operations for British consultancy Numensa, Beverley Chambers, agrees. The back-end exchanges that customers don’t see are changing the industry, she says, describing inventory management in a water-versus-ice cubes analogy.
“What you can do now is a liquid stock holding,” Chambers says. “Instead of putting all liquid into ice cubes, you put it into a cup. Then, whatever’s in that cup, wherever it is – be it a warehouse, a branch in Darwin or in Collins Street – the customer can walk into any branch and if they have it you can buy it.”
What this means for the retailer is a potentially greater “sell-through” of stock, that is greater sales at full price before it starts discounting an item. “You’re going to get a better return on investment,” she says. “You’re making your money work harder. Markdown rates should drop.”
Goldberg says he doesn’t know what sort of improvement in sell-through Country Road will get. “We can’t measure it yet. I would rather say [it will] fulfil the customer’s expectations and avoid disappointment.”
A key part of making any such system work is the transport system that moves the items about. While stores might have transferred goods between each other before, this requires it on a much larger scale that still has to be cost-effective. It also requires structuring incentives for stores to co-operate. The store serving the customer and processing the sale may not be the one credited with the sale, if the item comes out of stock elsewhere.
On the whole, however, the system works well, Chambers says. “It tends to be the smaller stores that end up with the stock, as they have slower sell-through rates and as a result of this they end up selling a greater proportion of stock at full price,” she says. “So they’re happy and the bigger stores end up with happy customers.”
For Country Road, as with any other traditional retailer, the challenge is to make most of both a bricks and mortar presence with an online one. After all, “even if it’s 10 per cent [online], there’s still 90 per cent bricks and mortar,” he says.
The company is still investing in traditional stores. In July it will open a renovated store in Brisbane’s Carindale and in September-October it will open new stores in Townsville and Shell Harbour on the southern NSW coast.
“We have bricks and mortar but it’s got to be sustainable,” he says. “We’re always analysing consumer behaviour and looking at how Country Road is part of people’s lives.”
The signs are it is doing that successfully. In November, the company released its iPhone app and for that month it was the most-downloaded free lifestyle app in Australia after Apple’s and eBay’s apps.
But Australian retailers still have a way to go before they match the slick performance of their counterparts overseas. British retailer Aurora Fashions, the group behind the Coast, Oasis and Warehouse labels, last year launched a 90 minute delivery service to online customers in selected cities. The service is made possible by a separate company that aggregates capacity across a network of local same day couriers. It matches deliveries to be made with individual couriers.
The quickest delivery the company made took just 16 minutes from the time the online order was placed to getting it to an address in central London. This was because the closest store holding the item was only a few minutes away.
Chambers says it is more costly to deliver from the nearby store, so the 90 minute option attracts a charge. “It’s more cost-effective to deliver from the warehouse. Then [the algorithm that underpins the inventory system] goes to the branch with the nearest postcode to the customer postcode, or, to where they’ve got a lot of excess stock that they want to free up,” Chambers says.
Of course, distances and cost of delivery in Australia are much greater than Britain but stores in the large cities should be able to guarantee overnight delivery at least, she says.
“If I’m in Melbourne, if I’m buying from Country Road, I wouldn’t expect to wait 48 hours. I would expect to have it the next day. At (British clothing retailer) Next, if you order before 3pm, you’re guaranteed delivery before 9am the next day. There’s no reason why, in cities such as Sydney and Melbourne you shouldn’t be able to get next-day delivery.”
Perhaps when it comes to online retail, the Australian tortoises are only just setting off after the overseas hares.