HOMECHOICE
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HOMECHOICE
Omnichannel Digital Retailer
Reaping Rewards
of Customer Service Excellence PRODUCTION: Manelesi Dumasi
Keeping up with customer trends in a fastmoving and forever changing environment is one of the keys to success in retail. South Africa’s HomeChoice has developed a profound understanding of its customers to ensure it is always delivering what, where, when, and how they need. “We push ourselves very hard to stay apace with the customer,” says CEO, Shirley Maltz. www.enterprise-africa.net / 3
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Most companies claim to have developed a ‘deep understanding of their customers’ but very few can back these claims up the way HomeChoice can. This Cape Townheadquartered JSE-listed retail powerhouse has been honing its understanding of “her” for decades. Established in 1985 as a mail order distributor of cast iron pots and pans for the kitchen, HomeChoice is today South Africa’s number one home-shopping retailer with an omnichannel route to market for its vast product range and complementary business divisions offering financial services (FinChoice) and value-added products. The HomeChoice team is relentless in furthering its
// SHE’S ALWAYS SHOPPING SOMEWHERE, SHE JUST MIGHT NOT BE SHOPPING WITH YOU. IF SHE’S NOT SHOPPING WITH YOU IT’S BECAUSE YOUR PRODUCTS ARE NOT GOOD ENOUGH // understanding of the client so that it can seamlessly deliver first-class service along with relevant and needed products. “The business has always been mass-marketed, targeted at females, specifically urban, of African descent,” HomeChoice SA CEO, Shirley Maltz tells Enterprise Africa. To be precise, the HomeChoice customer base is 84% female, usually mothers, in the mass-middle market (75% LSM 4-8), earning around R10,000 a month, between 30 and 60 years old, living in South
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Africa’s urban areas, and utilising digital channels (specifically mobile) for shopping. “She’s always shopping somewhere, she just might not be shopping with you,” says Maltz. “If she’s not shopping with you it’s because your products are not good enough. Whether it’s your merchandise, customer service or whatever. We push ourselves very hard to stay apace with the customer.” “We haven’t changed our target market but the market has changed,” says Maltz. “During apartheid our target market did not have freedom of movement, she had very poor schooling, very poor sanitation, no electricity and no water. There is no doubt in my mind that the roll-out of housing, sanitation, electrification and schooling over the past 35 years has changed her life and that her desire to beautify and improve her home has been a key driver of our business. However, the delivery backlog for these services remains huge and coupled with the impact of the economic hardships over recent years, this has made her more discerning about how she spends her money. Only by continuing to offer her quality products that are affordable and beautiful, will she respond, and will we continue to grow. “We love our customer, she loves us, and we are very good at developing products for her. We want to focus on her, she is our queen and we will never move away from her.” And ‘she’ has helped the business achieve significant
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success. Financial results for the six months ending 30 June 2018 detailed group revenue increasing by 16.1%% to R1.5 billion, growth in retail sales of 18.9%, as well as a strong contribution from financial services with loan disbursements
growing by 30.0%. Maltz confirms that the business continues to thrive in a challenging environment. “I’m happy with how we are trading but times are tough in South Africa, make no mistake.”
OMNICHANNEL STRATEGY As HomeChoice embraces its digital transformation, the company continues to improve customer engagement through the development of existing and new touch points. Mobi and web
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channels offer convenience, a dedicated customer support call centre provides support across all lines, and the newest strategy, retail showrooms encourages interactions with products and staff. “We launched our first showroom next to our head office in Wynberg two years ago,” details
Maltz. “We have just launched our second showroom in Maponya Mall and our third in East London opened on 1 September. Later this year, we will open our flagship showroom in Rissik Street, Johannesburg and our fifth in Nelspruit. “The concept is that you can
walk in, look at the product and feel the quality before ordering online for the product to be delivered or collected. “Inside our showroom, we have set up an example of a home and kitted it out with HomeChoice products so that our customers can see exactly what they could have
//Mobiz - The key to HomeChoice’s successful mobile strategy Being South Africa’s number one home retailer, HomeChoice has to be at the forefront of customer engagement to drive growth. As the business has moved from newspaper advertising through catalogue marketing to digital modernity, the way it has embraced mobile channels has been vital to its success. A key element of the company’s mobile strategy has been its relationship with Mobiz, the Cape Town based technology company. Mobiz developed SmartSMS specifically for use by businesses looking to create more personal and relevant engagements with their customers through mobile. Since establishment in 2005, Mobiz has helped improve customer engagement by 800% over traditional SMS and has improved collections over print and email by 20%. “We started working with HomeChoice in 2014,” details Mobiz CEO, Greg Chen. “We provide a customer engagement platform that helps them to drive mobile engagement. “HomeChoice has been using Mobiz for mobile communications with their customers, from a monthly mobile statement, all the way through to mailing specials that are sent out with a personalised landing page for each customer, who get their own unique offer and message. “When we started working with HomeChoice, we predominantly focused on marketing, but over the last four years, we have become more integrated with their external and internal communication channels.” Mobiz also recently partnered with all four major networks in South Africa to provide zero data usage when engaging with their SmartSMS. “We are constantly innovating and have recently launched a very big product update, as well as introducing a free data link where all customers engaging through mobile would not have to use their data or airtime. This is something that we could look at in other parts of Africa, specifically in regions where HomeChoice is growing,” says Chen. “Since launching this new feature, our clients have seen around 100% improvement in engagement, when communicating with the end-user, because it is a free and accessible channel, regardless of the customer’s data.” Bentzy Goldman, Business Strategist at Mobiz is confident that mobile will be a key component in the retailer’s Africa expansion efforts. “The growth of mobile, especially smartphone usage, across Africa provides a big opportunity for us and them. We want to make it seamless for the customer to receive relevant offers and make purchases in just one or two clicks without using their data, all in one single engagement. The result is a customer experience that is personalised, efficient and frictionless.” Mobiz is already changing the way major businesses in SA engage with clients. Along with HomeChoice, other companies in various different industries including Momentum, Old Mutual, Dis-Chem, Woolworths Financial Services, and more utilise this essential mobile marketing platform. Contact Mobiz today to see how SmartSMS can work for your business.
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HOMECHOICE
// WE LOVE OUR CUSTOMER, SHE LOVES US, AND WE ARE VERY GOOD AT DEVELOPING PRODUCTS FOR HER. WE WANT TO FOCUS ON HER, SHE IS OUR QUEEN AND WE WILL NEVER MOVE AWAY FROM HER // and exactly what we offer.” But she is quick to point out that HomeChoice is “not a bricks and mortar retailer” and the company will never consider the mass roll out of a traditional store network. These showrooms are about complementing the existing digital strategy while creating new interaction opportunities. The retail showrooms are equipped with kiosks for customers to access financial services from FinChoice and trained consultants guide customers around use of the Mobi
platform on smartphones and tablets. “With FinChoice, 78% of loan transactions are now digital, and all of that is through mobile phones. Our customers don’t really used fixed lines and that is why we have a Mobi first strategy. Last year, our groupwide digital credit extended was around 32% of total credit extended and right now it’s around 39% so it’s growing very fast,” says Maltz. HomeChoice is also working on more value adding products to fill gaps in the lives of an increasingly digital customer, who does not have time to waste and is looking for
convenience, in the hope that it can develop cross-selling opportunities. “It’s the late evening and you run out of electricity,” Maltz begins. “You have to walk down the road to buy prepaid power. It can be the same with data. You have to leave your house and leave the kids on their own. We don’t want her to have to do that,” she says. “We’ve launched value added services so that she can access our financial services portal and buy airtime, data and electricity as a 100% digital product while being able to make payments and transfer money. It’s an
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engagement strategy so that we can make her life easier and encourage her to our portal more often. “We try and choose really good technology partners and that is why we work with digital experts like Mobiz and Grapevine. We are going
live with Oracle Commerce Cloud in September and we will be one of their first cloud implementations in the MEA region. Our new Oracle Commerce Cloud will really improve our speed to market with digital commerce products.
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“At the end of June 2018, it was about 13% of sales across around 100 brands. We started our brand portfolio in shoes and it worked well so we expanded it to all categories this year. We want to make brands accessible to the mass-market through credit. Our customer is loving having access to the brands, especially in fashion.” In the future, HomeChoice will consider introducing branded furniture to complement its fashion and bedding offerings, but Maltz is keen to ensure the range is not flooded. “We don’t want to overcrowd our marketplace – sometimes you can get onto a website and find more than 5000 pairs of shoes and you have to sift through all of them. We don’t want to create that situation – it can be overwhelming,” she says. “We know the customer very well and we want to curate the choice and choose brands that we think she will like. Currently, it’s working well and augmenting our existing offering.” While only a limited number of products will be on display in the new HomeChoice showrooms, the entire product range is easily accessible through digital channels and employees in showrooms will look to drive traffic through web and Mobi.
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//Grapevine Customers demand to be recognised, remembered and appreciated regardless of when, where and how they choose to shop, buy or engage with your brand. According to Forbes, 98% of people believe that purchase, delivery and returns should be easily available across multiple channels. Many South African organisations have been talking up a storm about executing omnichannel strategies to increase customer engagement. In fact, 66% of CMOs say developing deeper, richer customer experiences is their top marketing priority. However, few have actually moved beyond the talk to deliver a truly seamless connected experience. Companies, like HomeChoice, who have embraced the shift towards omnichannel marketing automation, have experienced first-hand the positive impact that expertly executed integrated digital marketing and omnichannel communications can have on the business. With Grapevine as their digital communication solutions partner, HomeChoice have access to world-class platforms and tools to create, automate and measure curated omnichannel customer experiences that flows seamlessly across channels and devices. They are able to engage with their customers across channels such as email, SMS, USSD, social and more from a single point of service. They also have access to a team of highly skilled professionals to advise and support them along their journey.
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“Our showrooms are to augment our omnichannel strategy,” Maltz reiterates. “We want to be an omnichannel retailer with a high-focus on digital. Our showrooms will help us capture new market share – perhaps people who are nervous about shopping online or nervous about direct marketing. It helps us service clients by answering queries and recommending products, and it allows us to offer click and collect.” AFRICAN EXPANSION? HomeChoice’s preferred customer also exists outside of South Africa and while she is subtly different in other countries, her buying patterns are similar. This is why the business currently attributes 8% of its customer base to other sub-
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Saharan African nations. But when asked if HomeChoice will expand beyond South Africa’s borders in a big way, Maltz says that growth will only happen when the time is right. “We are currently in Botswana, Namibia, Lesotho and Swaziland with our retail business. The financial services business has not moved out of South Africa yet, but testing is underway. “Our top line growth rate over 10 years has been 20% and that’s quite high. At a certain point, you can grow your business too fast and introduce risk. We still enjoy good growth rates here and so I would like us to enter other markets at the right time. I do think it’s an opportunity for us in the medium term, we’re trading well in the
countries that we’re already in, our customers like our products and we service those customers well. We will expand cross-border but we’re in no rush. There are logistical challenges. We tested in Zambia two years ago and there was great demand for the product but getting the product to the customer was complex. You must be confident that you can get the product to the customer in a timely manner and that is a big investment. Right now, we are busy with our showrooms and our digital strategy and there is only so much that we can take on at one point.” Interestingly, the customer outside of SA is increasingly digital – perfect for HomeChoice and FinChoice. “Outside of South Africa, we have a higher digital
HOMECHOICE
// WE ARE A FANTASTIC BUSINESS. WE HAVE SO MUCH OPPORTUNITY AND WE HAVE A LOT OF FUN WORKING HERE // penetration,” says Maltz. “South Africa is very social, we have around 780,000 Facebook friends who are very active with us, but we tend to be more active on social media outside of SA.” This is great news for HomeChoice considering its ‘digital first’ strategy. The only hurdle is ensuring regular, uninterrupted access to Mobi and web
connectivity, and the company is working with MNOs to ensure this is as constant as possible. “The cell phone companies can affect us with how broad their reach is and how much their data costs. In the financial services business, we have made all of our Mobi sites free if you’re on Vodacom and soon to be free on MTN. We will soon do the same for our retail business,” explains Maltz. In a time where retail businesses are under the spotlight, heavily scrutinised for how they deal with changing consumer trends, HomeChoice is an example to follow. Four key messages emanate from the company’s success story (which has seen it become a R744 million operating profit business) - digital
transformation is vital, not taking the customer for granted and understanding them deeply is fundamental, not overlooking township economies reaps rewards, and a sensible approach to growth results in sustainable operations. “We are a fantastic business,” admits Maltz. “We have so much opportunity. We have so many ideas and innovations and everyone is excited, and we have a lot of fun working here.”
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