Retail in the 2020s

Joe:                  Hello and a very warm welcome to the first Digital Brew of 2020. We’ve had a little bit of a lull, but I’m pleased to be here today with Jason Heller of Huggle and the mighty first of the first ever branded Digital Brew mugs. We are talking about retail in the 2020s. Jason, you’ve got a really interesting background and career, so perhaps you could start by just giving us a quick history of your life.

Jason:               Sure, sure. Well, my background, my career has always been in retail. I spent 18 or 19 years working for various businesses of different sizes, from Arcadia, House of Fraser, through to Tesco. I moved out to Canada for a few years to work for a wonderful business called Holt Renfrew, and then I’ve worked for smaller retail businesses like Thomas Pink, which is part of LVMH, but always in buying roles.

Joe:                  Buying person.

Jason:               Yeah, and predominantly in menswear buying roles. But slightly unusual in the sense that I’ve worked at both the luxury end of the market and also I’ve kind of got down dirty at the value end, so a little bit unusual for a lot of buyers because you normally specialise in a certain area. We moved back from Canada about 12 years ago now when my daughter was born, and Rachel and myself decided that we’d had enough of the corporate world.

Joe:                  You took the plunge.

Jason:               We thought we’d take the plunge. We thought life wasn’t stressful enough, and we thought given that we’d been introduced to some wonderful people when we were living in North America that had a similar business, we were really surprised to see that there weren’t any businesses like that in the UK.

Joe:                 Give us a snapshot, tell us about Huggle.

Jason:               Well, Huggle caters for what’s called mother and baby market, the baby sector. Really we sell what we consider to be some of the best products in the market. Some of the brands we work with we work with on an exclusive basis, so we’re their only retailer in the UK and Europe. Others, we’re one of a handful of their handpicked retailers, so we might be one of five or ten retailers in the UK. And then some of the other brands that we work with, we consider best in class, and you’d expect to see them in any good nursery retail store. We have a store, a 4,000 square foot store in Northwest London.

Joe:                 Where we are today.

Jason:               And we run kids classes, so we run things like Mandarin for kids, we do baby ballet, we run lots of music and dance classes, but all interactive.

Joe:                 I think you describe yourself as the modern baby store, that’s your kind of page site on your website and I quite like that.

Jason:               Yes, yes.

Joe:                 That’s a good place to start. I don’t want to start on a negative, but there’s a lot of talk in the trade press and commentary about 2019, saying it’s been the hardest and toughest year for retail in 25 years. We’ve had Mothercare shutting down 79 stores. What is the real backdrop to the challenging conditions for retail overall, and the second question is, given the parallels obviously with Mothercare, and I think it’s really interesting to speak about Huggle and what are you doing differently and what’s the root cause of their problems.

Jason:               Well, I think it’s been very well documented as to how much the retail market has changed, and the speed of change as well, which has been really challenging for a lot of businesses. Mothercare, along with a number of other retail businesses that were founded in the 20th century, were designed and conceived as a 20th century business. And their challenge, and particularly Mothercare, because they had a number of legacy issues, their challenge as we moved into the 21st century was really how they turned that business on its head to cater for not just changing demographics and the changing customer base, but also where they had a big footprint, a large number of stores, how they managed to match those increasing costs with what was needed to feel amenable and really address those issues.

Joe:                  Rates and rent, is that a common problem for all retailers? You read a lot about even some of the really massive retailers having to renegotiate on their terms with their landlords just to keep going. Why has that happened recently rather than before?

Jason:               Well, again, I think it’s unfortunately part of the challenge that retailers have is most retailers sign up to five, 10, 15 year leases, and they tend to all be upward only leases. When you combine that with ever increasing business rates, for example, the business rates on this site, we had a review about three years ago, and our rates went up 75%. That’s a huge challenge, massively, massively.

Joe:                 With no real right to sort of question it or query.

Jason:               Well, interesting enough, we actually challenged them, and they came back and actually put them up further. So, lesson learnt, I think. But it’s a challenge, and you’ve got rising costs for your properties, you’ve got increasing wages, and you combine that with the increase in expectation from consumers. It’s a really big challenge.

Joe:                  Definitely. And I think, again, a lot of commentary around Mothercare is their relative failure to truly embrace the digital space and online. Do you think that’s a fair accusation?

Jason:               I think that’s a little bit harsh, because I think they deal invest an awful lot of money.

Joe:                 I think it’s the fastest growing channel. That’s not uncommon, admittedly, but I think the… I can’t remember the name of the person who’s sort of heading something, they seem to have turned that corner, which is why I think it’s a surprise that they did an end up shutting all the stores.

Jason:               Martin Newton Jones that went in there latterly to change things. But prior to that, they had a couple of really, really sharp, good digital executives in there that really changed the focus in the business. But when you’ve got 180, if you include Early Learning Center, it was 300 stores. But you’re paying rent, rates, salaries on them, and in reality you don’t really need more than maybe 50 stores to cover the country and a really good online presence. You can understand why those legacy issues that they had became such a problem for them.

Joe:                  I see Huggle very much as a clicks and mortar business. You’ve got a fantastic store. My children are a bit older, but I remember when I was in the baby buying phase, there’s no substitute for touching stuff, feeling it, feeling the weight, does it feel well put together, et cetera, et cetera. How… and maybe this is very specific to your particular audience, but how do you see online and offline complimenting each other? Do you have a strategy in terms of how to use them both, or do they generally operate in isolation?

Jason:               Historically, they have operated separately. We’re trying very hard to bring them back together, because at the moment, customers don’t really see a difference. They want to be able to shop across different channels at a time that’s convenient for them, and that can be quite a challenge for retailers. We have a new website that launches in the next few weeks, but that’s a big investment, especially for business our size, and it’s a huge challenge for bigger retailers than us. The difficulty is that when you shop online, what you actually want for an online purchase generally is a good price, speed of delivery. And for us, particularly in store, when our store is all about the experience, all about building that emotional relationship and bond with the customer, it’s very hard to replicate that.

Joe:                 It is a challenge. That investment in online, did you have any sort of measurement around the website driving full into store, and is that a specific objective of that side, or was it more of a longer distance selling mechanic, so you can have a bigger audience and a bigger revenue, ultimately, from selling to people who wouldn’t otherwise be able to come into the store?

Jason:               The whole online in store sphere is changing so quickly. Historically, in store was your point of distribution and online was really where you did a lot of your research. But actually what’s happening now is in store is really where you have an opportunity to build that emotional connection with a customer. In store is really becoming kind of the new form of media because we are able to really showcase brands in a way that perhaps you can’t do online.

Joe:                 I think experiential marketing it is definitely a thing. I think it’s being able to give people experiences which you can’t do online.

Jason:               There’s a lot of technology coming to market. There’s a lot of companies that are trying to bridge that gap, and it’s really interesting what’s what’s happening, particularly with the introduction of artificial intelligence and different technologies that can help. The challenge for businesses like us is the cost.

Joe:                 And selecting which ones really help rather than being snake oil.

Jason:               Exactly.

Joe:                 We can’t really talk about retail without mentioning Black Friday. What’s your view on that?

Jason:               Where to begin? It’s a double edge sword because when Black Friday first came over a few other states, it was seen as an extra period, an extra selling period, and the promotional activity was predominantly online. As online and e-commerce has changed and expectations from consumers have changed, it now has to be mirrored in store from price and promotional strategy point of view. The challenge for us is how you protect your margin during those periods, and you have to be a very good brand or a very brave retailer not to get involved in those promotional periods.

Joe:                  Well, this year in particular I saw there was the whole keep Friday green sort of mission, which I really like, actually. Let’s not have a race to the bottom, let’s concentrate on good values, good service, good products at a fair price, and I think it’s difficult to avoid a sense of sort of a race to the bottom when everything is just price driven.

Jason:               Yes.

Joe:                 I’ve got personal experience with this, being a keen kitesurfer and windsurfer. I used to work at our local shop, and to this day, they’re doing really well because their service is brilliant and their advice is excellent. I’m sure you’re the same. And physically having products which you can go and talk to someone who genuinely understands the difference between particular buggies, for example, these are considerations you should take into account. I mean, where do you live? Do you need to get in a car? Think about all the things which a good salesperson will have that discussion and naturally guide you to a decision which you may have already made having done the research, but it’s nice to have a human validate it, I think. So, this shop and your shop doing well because of that top tier service. However, I’m sure you still have people coming in using and abusing you for the touchy feely bit, and then they go and buy it as cheap as they can, which is there a solution to that?

Jason:               I don’t think so. I think you’re always going to have a percentage of your customers that appreciate the work you put in and your team put in and will be loyal, but you’re also going to have-

Joe:                 Happy to pay a premium for that

Jason:               Well, interestingly enough, because of the way the markets are changing, our prices in store and online are exactly the same, and they’re pretty competitive. I wouldn’t ever say that we’re the cheapest out there, but we’re certainly not the most expensive, and I don’t think you can be these days, because people shop in the phones in their hands. They have that access to information so quickly.

Joe:                  Do you see you in store picking a product, liking it and then literally Googling it?

Jason:               Absolutely. I think regardless of how affluent or careful you are with money, it is the way that people shop these days, and you have to accept that. The information available to consumers is all consuming because it’s immediate, and you need to work really hard to make sure, we need to work really hard to make sure that we stay competitive price wise.

Joe:                 Definitely. And what’s your view on discount codes / voucher codes? Is that something you do, or do you avoid it?

Jason:               It is something we offer up at various points of the year. We have to. I don’t think there’s any escaping from it. And it becomes a challenge, particularly with some of the brands that we work with here, because they don’t want you promoting their products out of season. But the harsh reality is if you have a competitor that’s driving traffic either to their store or online, you have to be nimble nimble enough to do that.

Joe:                 They can actually help conversion rates because people would just be nudged over that line because they think, “Oh, there’s a voucher which appears to run out quite soon,” whether it does or it doesn’t it’s irrelevant, but it’s not all bad. I think the reality is we’ve always had boxing day sales, and I think people have waited for an event. Cyber Mondays, Black Fridays, I think they’re not actually incredibly new, but the kind of frenzied nature of them seems to be different, I think. I suppose from myself as a consumer, we do wait sometimes for that period to come, but maybe we always have done. Maybe that’s actually not as different as we like to think it is, the razzmatazz. I do sense there’s a slight trend of anti Black Friday.

Jason:               There’s definitely a feeling around that. I think there is definitely a pushback. How that plays out over the next couple of years, I don’t know. The Black Friday just passed was a challenge for a lot of retailers because it felt so late. It almost knocked into that Christmas trading period, which was difficult for people. So, you found yourself, and we certainly did here, you either find yourself kind of holding fire at the risk of losing trade, or getting involved in that frenzy.

Joe:                 Margin massacre, I say.

Jason:               It is, it is.

Joe:                 I know. But then volume, I suppose you’ve got the stock and as long as the margin is still there, then volume obviously is a good thing and you can get more customer base and hopefully they come back, et cetera, et cetera, et cetera. Talk us through some of the things you do having the physical presence. And I know you’re very good at this, and you kind of alluded to some of the initiatives that build community within the store, so the experimental stuff that it’s much harder to do online.

Jason:               Yep. Well, here we run a number of classes in store. And we have an onsite cafe. The classes are not just parent child interactive classes, but we also have antenatal classes. Yep, we do first aid for parents. And really when we started business about nine or 10 years ago, we were one of the first retailers to do that. Bow it’s almost become the norm. So, our challenge is how we almost move that that on, because when everyone starts doing that, the expectation almost latches up a notch or two.

Joe:                 And do you find there’s an extended community amongst your customers? So, again, just specific to Baby World, I did the NCT route, and some of my friends to date are those people because we were in the same life stage at the same time with the same emotions, the same fears, the same questions, et cetera, et cetera. Do you find you have the kind of Huggle community which actually does extend beyond the store, and really good friendships being built?

Jason:               Absolutely. For me, it was one of the nicest parts of the business was when one of the first parents came up to us when their child was three or four years old and told us that actually some of the best friends they met they met at classes here at the store. So, that’s a wonderful part of the business. We’re very, very fortunate. We have a very supportive local community. But obviously to grow the business, you need some sometimes look a little bit further field. With that comes challenges because you can’t always replicate that local feeling, that community feel when you’re selling to someone that might live in Sheffield or Birmingham.

Joe:                 Have you looked at that and have you thought how can we do the community building online? There’s traditional things like forums, which are very hard to get off the ground, but when they do they can work really well. Netmums, which is the obvious one, is a huge powerful force. Have you considered what you can do as Huggle to replicate what you’re doing here in London online?

Jason:               We have, and being very honest, it’s very difficult to do that. You can do that with the retail side of things with live chats, or the next step from live chat now is live video chats. But to do that with a class or to do that when people are making friendships or seeing their child sing and dance at a class or learn a language is very, very difficult. So, being very honest, it’s something we’ve looked at, but not necessarily something that we’re going to chase for the foreseeable future.

Joe:                 I think technology is an enabler and you can have certainly have that kind of virtual salesperson. That that can work really well, albeit at a cost, at a resource. Where is that person? Are they off off the shop floor? Are they sitting in front of a bank of webcams? It’s never as straightforward as people like to think, but it is doable. But I think it’s the customer to customer relationship which is clearly kind of harder to do online, and I don’t know if you’ve seen any kind of futuristic tech that you’re kind of thinking, “This is exciting.”

Jason:               We have. We see an awful lot of new products. Some of it is fantastic. There was a recent example of there was an Israeli tech company that we spoke to that offers artificial intelligence suggestions to customers that might be looking at certain products. So if you chose a cot that looked a certain way and have a certain feel to it, it was automatically able to make suggestions based on what you click, so very, very clever. You could also take a picture and upload it. It’s almost a Shazam thing for retailers. The challenge again comes back to cost, because the cost for a business outside is almost prohibitive.

Joe:                I’m sure your customers here in store become your brand ambassadors and they’ve helped spread the word within the local community. What’s your view on mummy bloggers and influencers within your space? Do you have a lot of experience, and what’s your view on that?

Jason:               I think there are some pros and cons to working with so-called mommy bloggers. We don’t currently. We have done over the years, we’ve worked with different bloggers and influencers. Obviously the benefits are that it gives you exposure to a wider audience, and that, particularly when you’re growing the businesses, is a great opportunity. The downside to it is it has become very commercialised. And I think a lot of people are becoming a lot more aware of that.

Joe:                 The trust. When you review a buggy and lo and behold, it’s amazing, but they’ll only ever feature stuff if you give it to them for free. Obviously, as an agency, we deal with influencers quite a lot, and some are brilliant. They’re very, very accomplished and good publishers. They publish really good content for their audience. But a lot just want payment. Sometimes they have the audience and the quality’s there. That’s a commercial decision, who increasingly we’re seeing so many more now with an assumption that they should give them the world with really little substance, and all their reviews are positive and glowing. I think as consumers, I think they’re a lot better at cutting through the noise and thinking, “Well, we know it’s been a motivated thing.” I think that ability to be… it’s old fashioned journalism, really. It’s accurately finding pros and cons is a much better sort of an endorsement, I think. I think those bloggers are harder to find. There are fewer of them.

Jason:               For us, particularly in the market that we we’re in, the sector that we’re in, so many people have children at the same time as their friends or family, or they might have that infrastructure, those people to go to to ask their opinions. So, I think a lot of our customers are able to filter the information and are able to bounce that off against some good old fashioned advice, along with that burgeoning industry, that influencer industry, which is huge. The value is phenomenal.

Joe:                 The whole social media machine must work very well for you, because you say you’ve got pockets of people in that life stage, and they can share positive experiences and share their advice. That’s why I think online works so well. It’s that kind of, I understand your pain, and if you can do a good job of giving them help and advice and just assistance in the way you would do in the store, then that obviously works really well.

Jason:               I think really interesting parts for us, given that we’ve spent so much time and effort trying to build a retail business that gives customers and experiences, is looking at where that online experience moves to next, particularly social media is becoming so important from a transactional point of view. It really is breaking down barriers for people shopping and making that process so much quicker.

Joe:                 Buying on Instagram, that’s potentially huge. Although, the famous F-commerce feels like it’s on the back burner a little bit in many ways. Well, there’s a lot of stuff which is over hyped, and I think you’ll see brands like Nike coming off Amazon, for example. I think there’s some interesting examples where retailers, they’re actually pulling back and saying, “I want to own that customer journey. I want to own that experience and make sure that we…” not from a sort of megalomaniacal way, but it’s consistency and quality, which is hard to do when you’re spread too thin, I think.

Jason:               I think Nike’s a really interesting example because for a lot of retailers, they’re struggling with the number of their suppliers or brands that are actually selling direct to the consumer. And Nike have obviously been… it’s been quite well documented that they’ve pulled some of the channels with not just Amazon, but some of the retailers they work with. So, it’s how we as a retailer change and work with some of our brands, like, for example, Cybex here, to actually showcase their products in a way that they feel comfortable with, but at the same time don’t give over space in store, which is expensive, to brands that actually are focusing on selling direct to consumer rather than actually focusing on you.

Joe:                 How much of your decision in terms of your buying is influenced by a growing appreciation of business ethics, primarily environmental considerations, for example?

Jason:               For us, it’s been a really important part of what we do here. We’ve always chosen brands that either were contemporary or modern, but more importantly, were sustainably sourced or environmentally friendly. So, we work with a number of Scandinavian brands that only source their wood from sustainable forests. They might use varnishes or lacquers that are water based rather than chemical based.

Joe:                 Is that you being good, or is it the demand from your clients?

Jason:               I think it’s both.

Joe:                 Lastly, we always like to finish on a glimpse of the future. We’re at the start of a decade, how do you see retail both online and offline panning out over the rest of the roaring ’20s?

Jason:               I wish I had the crystal ball. But there are some things that we do know, and the speed of changes has been phenomenal. Everyone’s talked about online and offline merging, so omnichannel becoming a lot more important. Technology, we’ve touched on artificial intelligence. I think that’s going to be a big, big game changer for a lot of retailers. But also in terms of the way our customers shop, and particularly the growth of not just millennials but the next generation, generation X, Y and Z, if you want to call it that, because a lot of them are shopping in a very different way, and they might not necessarily have the same disposable income as their parents or grandparents, or they might not necessarily be able to get on the property ladder as quickly, but that isn’t just the primary consideration for them. You’ve touched on the sustainability, environmentally friendly products, that’s become-

Joe:                 Complex needs.

Jason:               Absolutely. It’s becoming a much more important part of how they shop, and retailers like ourselves need to ensure that we’re addressing that and also ensuring that we’re giving them that experience that they need installed, because otherwise, they won’t shop with you, and that’s the reality.

Joe:                 Jason, I really enjoyed that. Thanks a lot. I know you need to go. You’ve been summoned away.

Jason:               Yes. Thank you. Very nice talking to you.

Joe:      Thank you for watching that. As always, we are always happy to hear from you if you’d like to be involved in a future Digital Brew, but in the meantime, if you have any baby requirements, huggle.co.uk or in store is the place to go. Thank you.