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A compelling retail concept is crucial – key questions for designing the retail concept The cornerstones: customer satisfaction and loyalty – examples from Esprit and LMVH Deliver on your customer promise – executing on position shapers across functions Internal properties of an effective retail concept – low costs, low risk, high motivation, closeness and speed How to ensure strong execution – 1 + 4 elements must be present

Retail concept Designing, maintaining and executing a compelling retail concept


Consumers are changing behaviour and competition is fierce: The importance of a clear, unique, compelling and executionable concept is bigger than ever The world becomes more and more dynamic

The key questions when designing the retail concept

• Online retail, multichannel retail, social media, … consumers and shoppers interact in various way and expect to be met seamlessly across all touchpoints

• What should we promise our customers that will make us unique and make our customers appreciate that position?

• The role of physical stores change with the introduction of assortment range, product availability, prices and services designed specifically for each channel

• How do we design each "position shaper" to fulfil our promise?

• In general, we will need less or even dramatically less physical sales square metres in the future • Shoppers are international, but local taste, style, climate, heritage and competition sometimes require adaption of the concept to win the local hearts (and wallets) • To stand out, you need to be uniquely attractive – and be able to communicate and execute your proposition clearly and simple

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• How do we ensure consistent superior execution of the specific position shapers? Is there a limit to how sophisticated our shapers can be without jeopardising our promise? • Do we have the structural and organisational fitness to execute the customer promise and the specific shapers? • How do we design and implement the "internal concept" in order to enforce necessary effectiveness? • Which culture and mindset to we need to enforce to ensure the necessary clock speed and closeness to the front-line?


In September 2011, Esprit announced closure of stores in Denmark, Sweden and Spain plus downscaled in the US (‌) However, we realise and admit that our values and heritage were neglected in the process of fast growth and expansion. The focus was too much on short-term top-line growth instead of long-term customer satisfaction and loyalty. While commercially very successful, we gradually eroded the brand and to some extent lost sight of the customer. Our past opportunistic growth entails challenges, which the economic crisis has amplified. Our customers have clearly said what we need to do: change. The Esprit woman wants Esprit back: a responsible fashion company that gives her fashion and quality made to last. Stylish and feminine, inspired by our Californian heritage. To her that is more relevant than ever before! Letter from the CEO in the annual report 2011

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"There are four main elements to our business model — product, distribution, communication and price. Our job is to do such a fantastic job on the first three that people forget all about the fourth."

LVMH executive to The Economist


The customer promise is broken down into specific position shapers that must be consistently executed across stores and customer touchpoints Brand heritage, target group and customer promise Availability

Store design

Marketing

Online

Staff

Assortment and pricing

Brand A

As is

To be

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Facts and description

Facts and description

Facts and de .

Facts and description

Facts and de .

Brand B

Facts and description

• What characterises our brand and Facts and Facts andcompetitors Facts and Facts and our closest – factual description de . description de . observations, real-life execution and customers' perception?

Brand C

Facts and description

Facts and description

New brand A

Facts and de .

Facts and description

• Who wins and sets the bar?

Facts and de .

Facts and description

Facts and description

Facts and description

• What does it take for a future concept to become unique and compelling? Facts and description

Facts and description

Facts and description

Facts and description

Facts and description

Facts and description

Service concepts

Discounts/mark-downs

Price position

In-store stock/delivery time

Number of SKUs

Brands and own labals

Categories

Sales, service and product skills

Staff profile

Staff level/service level

Location-based promo and shopping

Social media

Loyalty club and 1:1 relations

Online/mobile store and service

Windows and VM

In-store campaigns

Mass marketing and catalogues

Ambience and inter-activeness

Fittings and equipment

Store layout and spacing

Visual identity

Opening hours

Store formats and size

Number and locations

The position shapers


The effective internal retail concept ensures low costs, low risk, high motivation and high closeness and speed … Shop

• HQs support = chain synergies. Does the internal retail concept provide compelling chain synergies that make it favourable to be part of the chain, or would the store (despite of current ownership) actually be better off on its own? • How are processes, services, organisation and governance designed and implemented to enforce effectiveness, low costs and high speed • The stores are on top of the organisational chart – the most important part of the business • The success of Support is clearly aligned with the store's success

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… and to have strong retail execution you require presence of 1+4 elements 0

The foundation

The uniformity of store locations, store formats, go-to-market models, supply chain, local ownership models, etc. The degree of complexity deriving from different models and concepts

Best practices 1 • The organisation supporting the stores' operations: RAM, retail managers and other HQ/market functions. Closeness to operations • The capabilities, skills, power, Support & and hence earned respect of the support organisation

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• The "package" of documented guidelines, best practises, procedures, tools and templates made available through physical folders, manuals, commandments and web portals

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Training

• The "Retail Academy" that facilitates training, e-learning, in-store training and education materials to all relevant staff • Naturally, the Academy takes its starting point in best practises

3 • The KPIs revealing mediocre or excellent store performance • The simple (one page) overview is a very important part of the successful cockpit • The ability and organisational acceptance of using facts in decisions (culture)

Execution and operational power

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=

Best practices

Cockpit

X

Training

X

Cockpit

X

Support & Organisation

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