Clothing chain Joules has been much discussed by the mass media for defying tough market conditions and has been dubbed a ‘surprise’ high street success story. In this interesting article, the CFO details the digital KPI’s behind new store openings. The business has adopted a “digital first” approach to all aspects of its operations, and its way of working may be food for thought…
Here’s our previous article on Joules, written when we heard that their sales figures were growing and they were opening new shops. It includes some insight into what might have caused a huge 28.5% jump in profits for this brand success story in the last year – https://www.mia.org.uk/2018/08/could-your-business-learn-from-this-brand-success-story/
Below is the article originally featured in Essential Retail, which includes quotes from the retailer’s CFO, Marc Dench…
The decision process behind opening new Joules stores has changed significantly in the last two years, as the business has adopted a “digital first” approach to all aspects of its operations, according to the retailer’s CFO Marc Dench.
In a rare public speaking appearance from a Joules senior director, Dench took to the stage at London’s eTail Europe event on 18 June to describe the new appraisal process the fast-growing fashion retailer uses before opening bricks and mortar.
He said stores are now opened as much for their potential to serve click & collect customers and boost eCommerce sales, as their ability to drive traffic and revenue from the physical space alone. Recent trading figures show half the business’s sales are now from online.
In an interview on stage conducted by City AM’s Seb McCarthy, Dench said: “It used to be that we could project the sales, we’d know margin and we’d know the costs, therefore [we’d work out] the pay-back time on that.
“We now start with why would anyone ever go to that location, why would any of our customers want to go into this place when they can buy anything online and get it delivered the next day or same day?”
He added: “Rather than just financials, we look at how many new customers we think we can acquire and capture data on for the first time in that location, what level of click & collect we’ll be able to do in that location, and also eCommerce returns.”
Dench said Joules will delve into local council plans to understand how they will continue encouraging people to visit the area, as well as assessing whether there is nearby access to free parking, galleries, entertainment, and food facilities.
He revealed that when Joules opens a store, the company’s eCommerce sales go up by 5-10% in that area.
“It’s about brand measures and customer engagement – we are probably spending more of our effort now trying to track those non-financial data points than we’ve ever done because the belief is that if customers are engaged and positive they will continue to buy as long as [we] are keeping product to a certain quality,” noted Dench.
Retailers often say they are digitally-driven organisations, when the truth is often the opposite. Dench offered some intriguing detail about Joules’ key performance indicators, which suggest it does practice what it preaches when it calls itself “digital-led”.
He said Joules previously mapped out between 5-10% sales growth each year for its stores, but now the retailer factors in a 5-10% sales decline each year as a base shop revenue prediction. But it sets “quite challenging targets” for click & collect and digitally-influenced transactions attached to each store, to drive overall growth.
Dench revealed 25% of all transactions in a shop are related to a digital sales journey, be it pick-up in store, buy online but return in store, or orders via endless aisle facilities in a shop because it is not in stock.
“We see [stores] as being completely critical in terms of brand experience,” the CFO stated.
“Now is the time to invest more in the stores and the sales assistants to give customers the best of what Joules is, so even if they don’t buy, they leave the store thinking ‘I might go to their website’. Or next time they see us at a Center Parcs, on a ferry, or at an airport terminal, they think ‘Actually I know that brand and I will buy that’.”