Listed retail company Specialty Fashion Group has so much data on its 6 million customers that it is considering expanding into general lifestyle products targeting its audience of plus-size, middle-aged women.
Chief financial officer Alison Henriksen says the company has been collecting information on its customers since it was founded 20 years ago and can now analyse that data to find new business opportunities, thanks to IT investments made in the past decade.
“Our market is generally under-served because she is not particularly wealthy, not particularly young and not particularly healthy,” Henriksen says.
“We see great opportunity to leverage our knowledge of our customer, expand that knowledge and bring to her products and services she can’t get anywhere else. It doesn’t have to be fashion garments, it could be other lifestyle products, and that’s how we see our ability to extend our share of her wallet.”
The Specialty Fashion Group brands, which include the Katies, Millers, Autograph, City Chic and Crossroads clothing chains, have already expanded into jewellery, shoes and lingerie. Henriksen says the company is now looking actively at new opportunities such as lifestyle experiences, holidays and even financial products.
The company is the largest fashion retailer in Australia, according to Henriksen. It has 900 bricks-and-mortar stores here and in New Zealand, five online stores focused on the Australian market and a separate online store in the US.
Henriksen adds that the market is generally either plus-size or mature-aged, or both, and is focused on the value end of the market, competing with the likes of Target, Big W, Kmart, Rockmans and Suzanne Grae.
Investment in IT infrastructure
Henriksen, who as CFO also has the group IT and marketing functions reporting to her, says the company standardised on a new enterprise system, including customer relationship management, about six or seven years ago. This meant that all the data was in one place.
The database of members is 7 million, or about 6 million when adjusted for overlap, which is about 55 per cent of the Australian women’s market.
“About three years ago we realised we needed to find a way to use that data more effectively and more easily because what we were doing up until then was downloading files into Excel and trying to manipulate the data,” she says. “You can only get so far doing that and certainly in terms of speed it’s just not there.”
The company adopted Alterian through a reseller. About a year ago, SDL bought Alterian and Specialty Fashion Group now manages the software in house, through a direct relationship with SDL.
City Chic fashions
About 80 per cent of sales are to members, whether online or in store. Henriksen says the high cost of postage means that they focus their campaigns on the 2.8 million members who have supplied email addresses, and this translates directly to sales.
“The proportion of sales we get from these customers we can engage with directly has increased,” she says. “Two years ago less than 30 per cent of our sales came from our emailable members, today it’s close to 50 per cent. Because of our ability to engage directly with her, we’re seeing returns from that.”
The company uses SDL to segment customers by propensity to shop, whether she is a bargain hunter or more interested in new-season fashion and so on, and tailors email communication accordingly. The retailer has also identified which customers who don’t currently shop online are the most likely to in the future.
Henriksen says it is quite common for the company’s email campaigns to have an open rate and click-through of 40-50 per cent and because they use control groups, they know the impact on sales. A typical email campaign delivers an uplift of at least 3 per cent of sales and because there are only seven people in the data team, that means a return on investment in the thousands of per cent.
Shortage of skilled data analysts
Henriksen says she has hired a couple of university graduates and is training them up but nearly all the experienced members of the team were recruited from the UK.
“It’s a challenge not just in retail but globally to find and keep people who truly have that analytical skill and ability,” she says. “They can’t just be analytical geeks, they need to be commercial too and have this marketing bend too. The team that we’ve built, I’ve hired them nearly all from the UK, because this is an area, particularly for the retail sector, where the UK really leads the way – Tesco is our benchmark and John Lewis is another example that’s had incredible success with their omni-channel strategy.”
“We always want to employ Australians – it’s more costly, more time consuming and more complicated to hire someone from overseas and bring them to Australia. It’s not our choice, but the reality is we do have resource shortages in Australia in certain areas and in retail we have a number of functions where it’s impossible to find the people we need. In the Australian retail market we’re many years behind in this field, we just don’t have the people with the experience.”
Some of the British recruits came on 457 visas, while some had Australian connections. Henriksen says the changes to the 457 visa system will make it harder.
“It’ll just mean it’ll take longer to bring people on board, it won’t mean we’ll find more people in Australia,” she says.
