PAUL SMITH
Fig 2
The Merging of the Digital and Physical Worlds
CONTENTS 03
Introduction
05
What’s the Problem?
07
The Competition
09
Solving the Problem
11
Primary Research
13
Conclusion
15
Methodology Table
19
References and Bibliography
Fig 3
INTRODUCTION “You can find inspiration in everything. If you can’t, then you’re not looking properly.” (Smith, P, 2010 as cited by Hendriksz, V. (2014). Paul Smith, initially known for his original Nottingham store, Paul Smith Vêtement Pour Homme, now one of the most iconic British heritage designers to date and distinctly recognised by his signature stripes and classic Mini. However, in recent times the brand has taken a turn for the worst and seen a significant
drop in sales, both in-store and wholesale along with a drop in pre taxi profits. This report aims to demonstrate the drop in sales, understand the brands competition and provide potential solutions for the brand to improve as well as primary research methods I would undertake during research.
05
“Pre tax profits dropped from 20.7 millions to 9.7 million resulting in a 53% drop (Rannard, S, 2016)�
Fig 4
What’s The Problem?
Reports for Paul Smith’s 2013-14 financial year demonstrated that pre tax profits fell from 23.7 million to 20.7 million resulting in a 12.7% drop (Marlow, B. 2015). The following financial year reports showed pre tax profits dropped from 20.7 millions to 9.7 million resulting in a 53% drop (Rannard, S, 2016). From June 20132014 wholesales dropped from 109.4 million to 107.9 million (Marlow, B, 2015) and from June 2015-2016 dropped from 107 million to 95 million resulting in an 11.3% drop (Singh, P, 2016). Dividends however stood at £3.1 million despite the fall in sales, although this was £900,000 less than in 2014 (Smith-Dawkins, R. 2016). It is clear from these statistics that the companies in-store sales have been struggling over the past few years and the brand needs a boost to remain competitive.
However, Paul Smith has demonstrated positive effects with their website. In 2010 Paul Smith invested in redesigning and modernising the online store with the aim to reinforce the brands e-commerce experience and increase engagement with online consumers. As a result, the site has seen positive commercial results; the number of daily visitors increased by 27% between 2009 and 2010 with the average order value being up 22% year on year. Based on the build cost to revenue, the return on investment was a massive 8696% (Other Media, 2016). In March 2015, Paul Smith also invested in site-search technology from SLI Systems, a worldwide e-commerce acceleration provider designed to ensure their online customers can readily find the products they are seeking in as few clicks as possible. As a result the online store has seen a 39% increase in site-search conversions, a 45% increase in visitors who use the search box, and an 11% increase in overall site revenue. Simon Young, web development manager at Paul Smith, said “the cost-effective deployment of this technology has proven to be the most successful third-party vendor implementation for Paul Smith since its inception” (Source SLI Systems, 2015). From this quantitative evidence, its clear that modernisation and improvement of the brands website has had a positive effect on online sales and visitor traffic. As a brand, Paul Smith should re-evaluate the requirements of the modern consumer within physical stores and consider in-store digital experience.
07
Fig 5
The Competition
When considering the high end fashion industry, Paul Smith is in direct competition with the likes of Ralph Lauren, Hugo Boss, Armani, Versace and share similar brand values to Burberry (MBASkool. (2008). For two brands both iconic and quintessentially British, Burberry and Paul Smith are worlds apart when comparing in-store experience. Pre 2006, Burberry was suffering and represented by yobs, and football hooligans (Rose, F. 2015). In 2006 Burberry’s former CEO Angela Ahrendts and chief creative officer Christopher Bailey declared they wanted the brand to become the first fully digital luxury company (Milnes, H. 2015). Today digital experience and technology has become a fundamental part of Burberry’s brand personality. In 2012 Burberry opened their flagship store on Regent Street with digital at the heart of the in-store experience. The store was conceived to mirror the digital experience of Burberry World.
Selected products had radio-frequency identification tags activating catwalk and other footage relating to the product when taken into different rooms (McBride, K. 2014). Following the revolution of Burberry’s in-store experience, the brand reversed its financial decline and shed its negative representation. Indeed “Its approach of investing in digital while emphasising its core British-made trench coats and cashmere scarves paid off in robust full-year result” (Rigby, C. (2015). Similarly, Ralph Lauren, a traditional iconic fashion brand now utilising in-store digital experience. In 2010, two of Ralph Lauren’s flagship stores, 888 Madison Avenue, New York and 1 New Bond Street, London played host to the worlds first four dimensional experience, featuring 3D imagery, digital sound effects and scents selected from Ralph Lauren’s line of fragrances, designed to celebrate the 10 years of digital innovation in fashion retail (Lauren, R . (2010). Italian brand Fendi also utilises modern technology as part of their in-store experience which features moving visuals of the brand. The use of moving visuals along with the signature architectural display forms bring the old and the new face to face (Curtis, P.100). Paul Smith could take inspiration from this and understand that Fendi is keeping in tradition with the old whilst utilising the new. Paul Smith, however, is still stuck in a classic, heritage position, keeping the store as original and unique as possible continuing to celebrate brand values. For the brand to develop and grow, Paul Smith needs to be open to new developmental ideas. The use of in-store digital experience and technology should be considered if positive results are to be shown.
09
Fig 6
Fig 7
Solving the problem
As demonstrated, more and more brands are utilising digital and technology in-store to create a modern, more desired experience. Burberry is a classic case, a failing brand that used digital in-store to regain their identity and once again is one of the most luxury high end brands to date. Today the desire for technology is in demand with new phones, tablets and digital products developing yearly. Paul Smith would benefit by providing this experience for consumers, not necessarily re-brand into a digital store like Burberry but incorporating visually engaging digital experiences, ability to connect smart phone with the store to check stock and style guides and access to in-store digital technology such as iPads and Tablets. This would bring Paul Smith into modern day, blurring the gaps between physical and digital and provide space for the company to develop within the digital world in the future.
11
Fig 8
Primary Research This would focus on Paul Smith as a brand, would participants shop there, what does or doesn’t attract them to the brand and how could this could be improved? The discussion would then lead on to general in-store digital experiences and how consumers feel about it. The group would consist of 12 participants both male and female ranging from the ages of 18 to 60. To ensure the most honest and natural answers are given, I would situate the focus group in an informal environment where participants would feel more at ease with the researcher and therefore discussions are less likely to be bias. Focus groups can provide detailed responses and an opportunity for chemistry to occur between participants to provoke and develop topic discussions. However experimenter bias can occur so I’d need to prevent encouraged, subjective responses through not projecting my own personal thoughts and opinions.
Primary research designed to understand the typical Paul Smith consumer, establish how they feel about the brand and what they think about in-store digital experiences. This research would consist ethnographic research, focus groups and interviews. To understand how consumers would feel about in-store experience I would establish who Paul Smith’s main consumers are and what attracts them to the brand. To do this, I would conduct ethnographic research analysing foot traffic into Paul Smith stores. This would show who the main consumers are, what they’re interested in and what is potentially missing from their retail experience. From this I would deduct who Paul Smith isn’t targeting and how this can be changed. This method would allow for non bias results providing a clear indication of the consumer. However, as Nottingham is the home of the original heritage store, this could influence and have a negative impact on overall results. Because of this, further research would have to be conducted in other key Paul Smith store locations such as London, Leeds and Birmingham. To understand whether consumers are attracted to Paul Smith, I would conduct focus group research.
13
To understand consumers views on in-store digital experience and how consumers would feel about incorporating it into Paul Smith stores, I would carry out a number of interviews. The sample would consist of 6 participants, both men and women, two from the millennial generation, generation X and baby boomers era. The questions would gain an understanding of whether the participants shop at Paul Smith, what they like and dislike from the brand and whether the installation of in-store digital experience would have a positive impact. Interviews allow for intimate discussions and honest and detailed answers which provide in depth qualitative results. However I would have to be careful of experimenter bias and ensure questions didn’t encourage or manipulate responses.
Fig 9
cONCLUSION these types of experiences and facilities in-store to meet the needs and expectations of the modern consumers in retail. As demonstrated by Burberry, it is possible to keep the British heritage whilst integrating modern technology. Paul Smith must be open to newer, broader ideas, accept the world is moving into a modern era and they must move with it.
In-store digital experience as adopted by Burberry, Ralph Lauren and Fendi among others such as Amazon (BBC, (2016), clearly impact positively. Consumers today thrive off digital and technology and therefore the demand for in-store experience is increasing. Consumers have experienced brands such as Burberry and Ralph Lauren which has left them desiring more. Paul Smith needs utilise
15
mETHODOLOGY TABLE METHOD
SAMPLE
PURPOSE
Ethnographic Research
Consumers of Paul Smith who enter and browse the stores
Understand who Paul Smiths consumer is, what they are drawn to, interested in within the stores
Focus Group
12 participants Both male and female Ages of 18 to 60
Understand what participants think of the brand, how could it be improved and gain insight into whether consumers desire in-store digital experience
In-depth Interview
6 individuals Both female and male 2 Millennials 2 Generation X 2 Baby Boomers
Understand consumers views on in store digital experience incorporating it into Paul Smith and whether it would have a positive impact on the brand
mETHODOLOGY TABLE STRENGTHS
WEAKNESSES
Provides a detailed experience into the participant’s (consumers) life as its first hand research Anonymous research providing honest results
Research in the Nottingham store may be influenced by it being the original store ever opened by Paul Smith
In-depth responses, allows participants to bounce off one another producing detailed and honest answers - ‘wisdom of crowds’
Experimenter bias, need to avoid influencing answers by exposing own expected responses Participants finding focus group intimidating and not participating as much as others
Experimenter bias – ensure One on one contact allowing for intimate discussions and questions are phrased in a honest responses as there’s no neutral way to prevent leading questions and influence of opportunity to judge Flexibility - opportunity to ask responses questions down a different route
17
References Text References: BBC (2016) Amazon unveils plans for grocery shop with no checkouts. Available at: http://www.bbc.co.uk/news/ technology-38212818. Last Accessed December 2016. Borges, S. (2013). Issey Miyake. In: Klanten, R. Ehmann, S and Borges, S Brand Spaces. Berlin: Gestalten. 46-51. Curtis, E (2004). Fashion Retail. Sussex: Wiley-Academy. 100. Hendriksz, V. (2014). What Design Can Do & Paul Smith: ‘I am what I am’. Available: https://fashionunited.uk/v1/ fashion/what-design-can-do-a-paul-smith-i-am-what-i-am/2014050913412. Last accessed October 2016. Lauren, R . (2010). Ralph Lauren 4D. Available: http://4d.ralphlauren.co.uk/. Last accessed October 2016. Marlow, B. (2015). Paul Smith tailors smaller dividend. Available: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11367776/Paul-Smith-tailors-smaller-dividend.html. Last accessed October 2016. MBASkool (2008). Paul Smith | SWOT analysis | USP & competitors | BrandGuide | MBA Skool-Study.Learn.Share. Available at: http://www.mbaskool.com/brandguide/lifestyle-and-retail/2905-paul-smith.html Last Accessed October 2016. McBride, K . (2014). Four brands storming the world of fashion and technology. Available: https://www.theguardian.com/media-network/media-network-blog/2014/sep/05/burberry-ralph-lauren-fashion-technology-brands. Last accessed October 2016. Milnes, H. (2015). How Burberry became the top digital luxury brand. Available: http://digiday.com/brands/burberry-became-top-digital-luxury-brand/. Last accessed October 2016. Other Media. (2016). Paul Smith. Available: https://other.media/paul-smith/. Last accessed October 2016. Rannard, S. (2016). Paul Smith upbeat despite revenue dip. Available: https://www.insidermedia.com/insider/national/paul-smith-upbeat-despite-revenue-dip. Last accessed October 2016. Rigby, C. (2015). Burberry digital investment pays off in double-digit sales growth. Available: http://internetretailing.net/2015/05/burberry-digital-investment-pays-off-in-double-digit-sales-growth/. Last accessed October 2016. Rose, F. (2015). Burberry: How a failing English luxury brand managed to turn itself around. Available: http://www. deepmediaonline.com/deepmedia/2015/04/burberry-how-a-luxury-brand-turned-itself-around.html. Last accessed October 2016. Singh, P. (2016). Paul Smith FY15 turnover declines 8.4 percent. Available: https://fashionunited.uk/news/business/ paul-smith-operating-profit-nosedives-94-1-percent2/2016012219139. Last accessed October 2016. SOURCE SLI Systems. (2015). Paul Smith Boosts E-Commerce Sales with Site Search from SLI Systems. Available: https://econsultancy.com/press-releases/7938-paul-smith-boosts-e-commerce-sales-with-site-search-from-sli-systems/. Last accessed October 2016. Smith-Dawkins, R. (2016). Paul Smith reports 8.4 per cent drop in sales Read more at http://www.nottinghampost. com/paul-smith/story-28598338-detail/story.html#6cI5HvUgr49SoJ1d.99. Available: http://www.nottinghampost. com/paul-smith/story-28598338-detail/story.html. Last accessed October 2016.
References Image References: Figure 1. O’Sullivan, J M, (2015). Paul Smith Menswear Spring Summer 2015 London. [Online]. Available at: https://m.nowfashion.com/paul-smith-menswear-spring-summer-2015-london-8668 [Last accessed October 2016] Figure 2. Fowler, W. (2015). 5 things I might have learnt from Paul Smith if only I had been sober at the time. [Online]. Available at: http://www.williamfowler.co.uk/five-things-i-might-have-learnt-from-paul-smith-if-only-i-hadbeen-sober-at-the-time/ [Last accessed October 2016] Figure 3. Dawson, S. (2015). Why Sir Paul Smith Wakes Up Happy. [Online]. Available at: http://www. architecturaldigest.com/story/paul-smith-discusses-new-projects [Last accessed October 2016] Figure 4. Jeng, M. (2016). The Independent Mind: Paul Smith’s Spring ’16 Men’s Collection. [Online]. Available at: http://thewindow.barneys.com/paul-smith-spring-2016/ [Last accessed October 2016] Figure 5. Ganju, D. (2015). Burberry’s Digital Manifesto. [Online]. Available at: http://journeyofadreamcatcher. blogspot.co.uk/2015/11/burberrys-digital-manifesto.html [Last accessed October 2016] Figure 6. Labs, V. (2015) Location Technology - In-store Tracking Update. [Online]. Available at: https://www.wgsn. com/content/board_viewer/#/57831/page/1 [Last accessed October 2016] Figure 7. Righetto, H. (2015). In-store Technology: Interiors and Lifestyle. [Online]. Available at: https://www.wgsn. com/content/board_viewer/#/56743/page/1 [Last accessed October 2016] Figure 8. Rowe, K. (2014). What’s England’s biggest claim to fame? [Online]. Available at: https://www.visitengland. com/blog/history-heritage/february-2014/whats-englands-biggest-claim-fame [Last accessed October 2016] Figure 9. Show Studio. (2013). In Fashion: Sir Paul Smith interview. [Online]. Available at: http://showstudio.com/ project/in_fashion/sir_paul_smith [Last accessed October 2016] Figure 10. Fowler, W. (2015). 5 things I might have learnt from Paul Smith if only I had been sober at the time. [Online]. Available at: http://www.williamfowler.co.uk/five-things-i-might-have-learnt-from-paul-smith-if-only-i-hadbeen-sober-at-the-time/ [Last accessed October 2016]
19
Bibliography Predictable References: Bloomberg. (2016). Paul Smith Re-Enters China Market to Woo Wealthy Customers. Available: https://www. businessoffashion.com/articles/news-analysis/paul-smith-re-enters-china-market-to-woo-wealthy-customers. Last accessed October 2016. Borges, S (2013). Brand Spaces. Berlin: Gestalten. Boundless. (2016). Impact of Technology on Marketing. Available: https://www.boundless.com/marketing/ textbooks/boundless-marketing-textbook/the-marketing-environment-3/technology-32/impact-of-technology-onmarketing-170-7298/. Last accessed October 2016. Curtis, E (2004). Fashion Retail. Sussex: Wiley-Academy. Demetriou, D. (2016). Paul Smith has earned his stripes. Available: http://www.japantimes.co.jp/life/2016/08/02/ style/paul-smith-earned-stripes/#.WAZDXZMrK8U. Last accessed October 2016. Demetriou, D. (2011). Big in Japan: Paul Smith’s focus shifts to the East. Available: http://www.telegraph.co.uk/ finance/newsbysector/retailandconsumer/8887315/Big-in-Japan-Paul-Smiths-focus-shifts-to-the-East.html. Last accessed October 2016. Fame, (2016). Paul Smith Limited [Online]. Available via: Fame [Last accessed November 2016] Freyer, C, Noel, S, Rucki, E (2010). Digital by Design. London: Thames and Hudson Ltd. K. Wang, Y. Wang, J.O. Strandhagen, T. Yu. (2016). Human acceptance of 3D printing in fashion paradox: Is mass customisation a bridge too far?. In: K. Wang, Y. Wang, J.O. Strandhagen, T. Yu Advanced Manufacturing and Automation V. Southampton: WIT Press. P.372-378. Key Note, (2016). Paul Smith Limited [Online]. Available via: Key Note [Last accessed October 2016] Marlow, B. (2015). Paul Smith tailors smaller dividend. Available: http://www.telegraph.co.uk/finance/ newsbysector/retailandconsumer/11367776/Paul-Smith-tailors-smaller-dividend.html. Last accessed October 2016. McBride, K . (2014). Four brands storming the world of fashion and technology. Available: https://www. theguardian.com/media-network/media-network-blog/2014/sep/05/burberry-ralph-lauren-fashion-technologybrands. Last accessed October 2016. Niemeier, S, Zocchi, A and Catena, M. (2013). The Future of Retail. In: Niemeier, S, Zocchi, A and Catena, M Reshaping Retail : Why Technology is Transforming the Industry and How to Win in the New Consumer Driven World. Somerset: Wiley Olenski, S. (2013). How Retail Brands Are Using Technology To Provide Added Value To Consumers. Available: http://www.forbes.com/sites/steveolenski/2013/11/25/how-retail-brands-are-using-technology-to-provide-addedvalue-to-consumers/#7366c2fd49f4. Last accessed October 2016. Other Media. (2016). Paul Smith. Available: https://other.media/paul-smith/. Last accessed October 2016.
Bibliography Predictable References: Posner, H. (2011) Marketing fashion. London: Laurence King Publishing. Rannard, S. (2016). Paul Smith upbeat despite revenue dip. Available: https://www.insidermedia.com/insider/ national/paul-smith-upbeat-despite-revenue-dip. Last accessed October 2016. Salazar, D., 2016. Millennials redefine in-store experience. Drug Store News, 38(8), pp. 14-14,16. Singh, P. (2016). Paul Smith FY15 turnover declines 8.4 percent. Available: https://fashionunited.uk/news/business/ paul-smith-operating-profit-nosedives-94-1-percent2/2016012219139. Last accessed October 2016. Smith-Dawkins, R. (2016). Paul Smith reports 8.4 per cent drop in sales Read more at http://www.nottinghampost. com/paul-smith/story-28598338-detail/story.html#6cI5HvUgr49SoJ1d.99. Available: http://www.nottinghampost. com/paul-smith/story-28598338-detail/story.html. Last Accessed October 2016. Smith, P. (2007). The Toyko I love. Available: http://www.dailymail.co.uk/travel/holidaytypeshub/article-594779/TheTokyo-I-love.html. Last accessed October 2016. Sowray. B. (2011). Paul Smith. Available: http://www.vogue.co.uk/article/paul-smith. Last accessed October 2016. Steiner, R. (2015). Designer Paul Smith shakes up battered fashion empire, saying that firm ‘needed a kick up the backside’ as latest figures show pre-tax profits down by £20.7m. Available: http://www.thisismoney.co.uk/money/ news/article-3356546/Designer-Paul-Smith-shakes-battered-fashion-empire-saying-firm-needed-kick-backsidelatest-figures-pre-tax-profits-down.html. Last accessed October 2016. Unpredictable References: Dewitt, M. (2016) ‘Rogger Ballen’, HotShoe, (197), Fisher, H. (2016) Technology hasn’t changed love. Here’s why. Available at: https://www.ted.com/talks/helen_ fisher_technology_hasn_t_changed_love_here_s_why (Accessed: 2016). Freyer, C, Noel, S, Rucki, E (2010). Digital by Design. London: Thames and Hudson Ltd. Royle, E. (2012a) Modern Britain Third edition A social history 1750-2011. 3rd edn. London: Bloomsbury Academic. View (2016) ‘Fire’, Textile View Magazine, (115)
Word Count: 1,650
21
Fig 10
Molly Savident N0571002 FASH30108