Tags Innovation, Strategy, Change, Bottom Line

All change?

When a company has been around for 130 years, the idea of transforming its business seems superfluous. Surely, the sensible strategy is for management to stick to the knitting? John Lamb finds out.

“Every company is under pressure to continuously develop in modern retail,” says James Gurd, Home Shopping manager for UK-based houseware and hardware retailer, Robert Dyas.

“You want to stay faithful to the values of the organisation but you can't stand still for a moment.” Gurd is heading a determined effort by the chain to graft an online channel onto its existing estate of 94 high street stores. The firm has built its reputation on knowing what its customers want, providing a high level of service and employing staff who know their onions. All qualities, says Gurd, that are being transferred to the new venture.

Robert Dyas tested the e-waters for some years with a basic, entry level website attached to one of its stores and sharing the outlet's warehouse. The operation was so closely wedded to the bricks and mortar operation that online sales were even entered through the store’s tills.

Gurd acknowledges it was very much a learning process: “From the outset, we committed to a steep learning curve, knowing that we had to get to grips with the ever changing nature of the online market. We tested different product and promotion strategies while driving our knowledge of the underlying technology platform.”

It was clear some customers wanted a home delivery option or at least a facility to research product and price information before they ventured out into the high street. The online business showed strong growth from day one. Today, Robert Dyas makes more sales online than in any single store.

However, one shortcoming of the initial set-up was its lack of integration with Robert Dyas' back office systems. Clerical staff had to manually transfer prices, promotional data and stock availability into the Web application from the company’s software retail system, which ran its tills, pricing and stock control. Robert Dyas also had highly manual processes for order handling and customer communication. Prone to human error, these hands-on activities created bottlenecks that meant, when sales increased, Robert Dyas had to increase its headcount just to keep up with orders generated through the website.

With the help of e-business specialist and IBM business partner EMS, the retailer replaced its existing Web software with low cost, IBM WebSphere Commerce-Express V5.6 software, designed to help growing companies do business on the Web straight out of the box.

The company also invested in IBM’s DB2 UDB Express Edition information management software, to hold a central repository of website content and synchronise data between the WebSphere application and their legacy software system. To improve fulfilment, the operation was manned by five customer service staff and was allocated a separate part of a warehouse in Enfield.

“Robertdyas.co.uk is a good, solid transactional retail website,” says Lawrence Walker, sales director for EMS, which developed the new site and continues to host and maintain the firm’s online presence. “The challenge for the company with its previous site was that, as sales grew, they struggled to manage the level of demand. The only way to handle fulfilment was to add staff – an expensive and ultimately unsustainable situation. Having EMS build a solution around WebSphere solved that issue and provided Robert Dyas with an excellent platform for online growth.”

For Gurd, one of the biggest advantages is the way that home shopping is now part of the overall business set up. Management reports on all aspects of the online business are available through the company’s legacy retail system in the same way as for any other department.

High street stores too can take advantage of WebSphere to order via the website; arranging for goods to be delivered either to customers at home or to the store for customers to pick up.

“O“The biggest challenge was ensuring a company-wide understanding of the role of the internet in the overall business, positioning it as a complimentary sales and service channel to the stores and not a completely separate part of the business,” Gurd points out.

Gurd is adamant that bricks and mortar will continue to provide the bedrock of Robert Dyas' business while the online channel continues to increase its share of sales contribution. The company has been growing steadily since it started life in Fetter Lane, London, back in 1872, and is opening new stores at the rate of 10 to 15 per year. Robert Dyas is already looking forward to opening its 100th store in 2006.

With around 2.6 per cent of the firm’s more than £100m current annual turnover coming from the internet, the website makes a healthy but modest contribution.

However, Gurd is convinced that by optimising their current platform, he can double those sales to five per cent of the total business over the next two to three years: “We have a long way to go – we’re looking at 24 months of continuous development,” he says.

“First, we've got to better understand what people want to buy online and how they want to buy it. That’s why we’ve focused on our key brands, the lines that we know sell best.”

The website is part of the company’s overall strategy to move up market: “We want to be seen as a destination for home and garden essentials, across our all of our core categories as well as niche product areas like air-conditioning,” explains Gurd.

At present, online shoppers at Robert Dyas can choose from some 1,000 products, compared with the 7,500 available through stores. However, the current emphasis online is on promotional and high ticket items, which given the £4.95 delivery charge makes a sensible customer proposition.

Gurd is looking to different product strategies in the future as well as strategic affinity partnerships to improve the product portfolio and, essentially, the customer offer.

The key to growing the internet business will be to exploit WebSphere’s functionality, says Gurd. He wants to introduce more advance search facilities – by brand and price, for example – and provide more detailed product information to ensure the customer experience improves. As he says, there’s no time to stand still: even after 130 years in business.

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