Ruth Marlow N0642518 2,985 Words Marketing Strategy and Communication FMBR20001 BA (Hons) Fashion Marketing and Branding Nottingham Trent University
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Introduction
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Situational Analysis
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User Experience
Conclusion
2. Introduction 4. Aims & Objectives 5. Methodology
6. Macro Environment 8. Market 10. Competitors 12. Consumer
15. Opportunities 17. Development 18-19. Sketches 20-23. Wireframes 23. Testing 24-27. Desktop User Journey 28-29. Mobile User Journey 30. Implementation
31. Conclusion
With the rapid increase in online engagement, demand for e-commerce facilities alongside an omnichannel retail experience, it is crucial for brands to provide dynamic and engaging user experience (UX). British retail has been shocked by tremors in the global macroeconomic and geopolitical sphere, large-scale shifts in consumer behaviour, and intensifying business pressures (Business of Fashion, 2016b). Competitiveness within the fashion industry is at its highest, with the 2017 consumer deciding when, how often, and through what channel, they wish to consume brands. This report will answer a question posed by Next PLC on 10th November 2016, to recommend UX and feature improvements that can implemented to drive online revenue on their channels, additionally with an emphasis on “fun and engagement”. Next is a clothing, footwear and accessories retailer established in Leeds in 1864 and is now the largest fashion retailer in the United Kingdom (Mintel, 2016f). Next offer “beautifully designed, excellent quality clothing, footwear, and accessories for men, women, and children, as well as homeware accessories and furniture” (Next Annual Report, 2016q). Next target their 30,000 products at a core audience of 25-45-yearold ABC1’s - established middle class. It is crucial for their online channels to reflect the in-store experience and be intuitive, easy, memorable and valuable. This report provides a macro, meso and micro analysis of the global environment, British fashion industry, and Next PLC. Supported by in-depth primary and secondary research, this report will examine insights and develop recommendations for improvements for the Next online channels that will drive revenue and show customers that online shopping with Next is engaging and valuable. Next is a multichannel business which has a global reach through both online and its 750 stores. The Next PLC group primarily consists of: - Next Retail currently operates 550 stores in the United Kingdom and Ireland. - Next International Retail operate 185 mainly franchised stores in Europe, Asia, and the Middle East, with experienced fashion retail companies. - The Next Directory is an online and catalogue shopping division with over four million active customers in the UK and overseas. - Next Sourcing is an international agency which designs and sources Next branded products. - Lipsy was acquired by Next in 2008, Lipsy designs and sells younger women’s fashion products. Trading in around forty stores, online, and through wholesale and franchise channels. - Label launched in 2014, a stand-alone website selling brands from Nike to Joules. Lipsy and Label target an audience in the 16-34-year-old range. (Next Annual Report, 2016q)
Aim The aim is to offer the client an idea with three-five features for the Next online channels that will drive online revenue and move Next ahead of the competitors, with respect to UX and customer perception. The features will develop from research insights and will be tested to ensure an enjoyable, logical and innovative user experience. Objectives 1.Conduct in-depth primary and secondary research into the macro environment, fashion retail industry, Next PLC, Next customer, and UX. 2.Form three improvements to the Next online channels that are expected to increase online revenue by 5% by nine-months and increase conversion rates by 15%. 3.Accurately form an implementation plan for the UX ideas in a realistic time frame for Next and monitor reaction using success metrics.
Primary Online Questionnaire sent specifically to Next’s target market to gain an understanding of where they shop, their online shopping behaviour and response to UX ideas. This research technique was quick to distribute, simple to answer and reached twent-four people by only circulating to the target market achieved verifiable results. Offline Ethnographic study in Next, John Lewis and M&S was conducted to gauge the customer demographic, store offerings, shopping behaviour and links between offline/online. Interviews with Next customers gave opinions on the online channels, their shopping behaviours and Next as a brand. Interviews with Next Retail staff from across the country improved information about the real customer and their shopping behaviour. Interviews with industry insiders: including buyers from Next and Asos. These interviews gave a valuable insight into the fashion industry and ways in which Next could improve. Secondary Online Next PLC annual reports and trading statements give accurate facts about the company. The most recent report is their January 2017 trading statement, including their sales in 2016 to 24th December. Databases: Market research companies such as Mintel, WGSN and Passport, release databases containing information about markets, trends and research insights. Reports of particular importance are ‘Clothing Retailing – UK – October 2016’ and ‘Online Retailing - UK – July 2016’ by Mintel. Analytics: Google analytics and Similar Web have been used to gain insights about the traffic, referrals and audience for the Next website and app. Websites: Retail trends have been sourced from websites like British Retail Consortium and Business of Fashion which supply information about the fashion industry. News Broadcasts: The key references from The BBC, The Guardian, Marketing Week, Retail Week and UX Magazine. Offline Print media such as Cosmopolitan magazine - letter from the editor Farrah Storr appendix p34. Books: Observing the User Experience, The UX Book and Agile Experience design.
The macro environment is the condition that exists in the economy as a whole. In the last few years, increase in technology-dependency has rapidly changed consumer behaviour, while the economy suffered from a medley of inflation, political and economic uncertainty. Intensifying competitiveness has led to raised pressure for businesses to produce more for less — less time, less cost and less effort. (Business of Fashion, 2016b) These disruptive forces continue to provide both the challenge, but also opportunity, businesses need to innovate and be bold to stand out in their sector. The British economy turned in a slow but steady performance in the first three quarters of 2016 and growth in the third quarter (covering post-referendum) which was stronger than predicted pre-vote (Financial Times, 2016g). The uncertainty of BREXIT continues, just last week the Prime Minister confirmed that Britain cannot remain within the European single market (BBC, 2017b). In 2017, growth is predicted to slow: uncertainty within the economy means businesses are expected to delay investment plans and household incomes start to be squeezed by rising inflation. (Financial Times, 2016g) “Despite the uncertainties facing the global economy, certain trends are inevitable. The world will become smaller, more aged, more city-focused, more cautious and more polarised between the rich and poor. The climate will change, food prices will rise and economic power will shift from West to East.” (Mintel, 2016m).
In 2016, the fashion consumer landscape saw significant shifts, not only are consumers expecting a personal and memorable experience when they engage with brands, they are also increasingly expecting it at lower prices. Mintel report saying over three quarters of women prioritise low prices and just under half have bought new clothes to take advantage of a sale/special offer (Mintel, 2016m). While such tactics are useful to drive footfall in the short-term, they are generally unhealthy for fashion companies, as mark-downs and promotions eventually lead to a ‘race to the bottom’ that shrinks profit margins and eats away at brand value (Business of Fashion, 2016b). Next’s pending price rise of 5% (appendix p18) is not expected to be received well by Next customers, especially as Next tend to only discount during their famous boxing day sale.
Part of the reason why consumers have the ability to seek endless discounts and promotions has been the uptake on e-commerce and digital tools. Over the past few years, consumers have grown more comfortable with digital interactions and buying online (Cosmopolitan, 2017, appendix p32). In 2016, digital platforms and strategies became more prevalent, integrated and sophisticated. During New York Fashion Week, thirteen shows were broadcast in 360-degree virtual reality (VR), while many brands are introducing VR in-store. These examples demonstrate the degree of modern technology used in the fashion industry, which compared to Next - who only released a mobile version of its website at the end of 2015- feel like they are being left behind (Mintel, 2016o).
The 2017 consumer demands that their needs be met with the absolute minimal delay. The average attention span has fallen from twelve seconds pre-mobile revolution to just eight seconds – with technology mostly at blame. Brands have increased speed and reduced delivery time-slots and with “see-now, buy now” customers globally have virtual access to fashion shows and buy collections at the click of a button (Dickinson, 2016b). Primary research discovered that users are under time constraints which prevent them from viewing all the products, (appendix p8-9) Next must capture and maintain the attention of customers, they should consider showing users the products which are relevant to their wants and needs.
The clothing market experienced one of its toughest years in 2016, the amalgamation of Britain’s unstable economy and tightened consumer spending meant fashion companies had to work harder than ever to be perceived as relevant and interesting by consumers. Mintel estimated that consumer spending on clothing rose only 1.8% in 2016 to £54.8 billion (Mintel, 2016f). A factor which influenced this trend was the unseasonal weather, which discouraged people from updating their wardrobes and left retailers heavily discounting to remove stock. Also, there has been a shift away from people spending their disposable income on clothing and more towards intangible activities to build experiences and memories (appendix p18). Online-only businesses such as Amazon and Asos are benefiting from their digital business models. The forecast for consumer spending
on clothes and accessories is estimated to rise by only 1.3% next year (appendix p13). Next have decide to pass-on cost increases to their customers by raising their prices appendix p18), this may lead to consumers cutting back even further on buying clothes. These uncertainties intensify the competitiveness of the market and there is a more obvious divide between the fashion winners and losers (Mintel, 2016f). According to the Business of Fashion Global Fashion Survey the top three words selected to describe the fashion industry are:
Personalisation Retailers are embracing the individuality of their consumers in a bid to engage them and strengthen their emotional bond with the brand. Personalisation boomed in 2013 with Coca-Cola’s share campaign which offered an affordable personalised product that exists in the real and virtual world. Since then, fashion brands have tapped into the trend both offline and online, customers have responded positively to the trend and it is fast becoming a necessity in one form or another. Technology companies have found that tracking user habits enables the creation of an online universe where algorithms make each users experience deeply personal and self-determined. In May 2016, fashion e-retailer Missguided (appendix p34) teamed up with personalisation software provider Monetate and increased conversion rates by 34% by implementing a personalisation strategy that targets customers with specific, tailored experiences (appendix p29). Online shopping company JustFab, provides a personalised shopping experience based on members’ indicated fashion preferences – ensuring users find products they are likely to purchase. Predictive shopping has time and cost implications, each item of clothing must be considered by a stylist to fit into a category, whereas algorithms can have similar effects with less effort (appendix p29).
Next are competing in a highly saturated, extremely competitive industry. Technological advances have allowed consumers to make well-informed purchase decisions. Personalisation and other data optimisation strategies have been embraced by successful omni-channel and online-only retailers, who have captured and maintained the attention of consumers while increasing sales and conversion rates. The changing retail landscape has been problematic for all retailers, but a lesser amount for those with agile business models who have reacted to changes with speed and efficiency. The perceptual map (appendix p33) shows Next within the competitive landscape of the British retail market. The map is plotted in relation to how customers perceive the brands, the axis rate engagement with customers and the product/service range. Next is placed in the third quadrant, this is because of they have a wide product range, but competitors in the group extend their offering to electricals, food etc. The brands in quadrant one and four offer more services to customers like travel, insurance, mobile phones and loyalty schemes. The map
shows that competitors with varied offerings can be engaging and feel personal to the consumer. The maps identify the clothing market to be saturated, with almost all the brands offering substitute products/ services at competitive prices. Brands in group one (retailers/e-retailers) are highly engaged with their customers and have high market share. Next have direct competitive rivalry with brands in group three who offer similar products/services at a similar engagement rating. Additionally, competition is also high from retailers in group two, they have higher engagement and strong brand identities. The second map shows internet retailers (e-retailers), top players include Asos, Amazon and Missguided, whose online channels have excellent usability and UX (appendix p34). The Next online channels have been placed figuratively in the map to measure their position beside the e-retailers, Next’ multichannel availability is good but in 2017 that is not enough. Next need to learn from the highly engaged brands, evaluate their current position and utilise their channels to become more competitive.
John Lewis are the leading UK department store selling homewares, clothing, electronics and home technology, with clothing their best-performing category of 2016 – up 6.2% sales growth within their £ 3.7 billion year sales. The company’s uniqueness is its drive to innovate, from store formats, local initiatives, efficiency to technology. They are recognised for their unique ‘Never Knowingly Undersold’ policy whereby their prices are guaranteed to match the lowest high street price, making John Lewis seem trustworthy and honourable. They are also renown for a strong omnichannel experience which they have established through recognising the importance of IT and systems infrastructure. (John Lewis PLC, 2016a) John Lewis understand the importance of the omnichannel customer journey, their strategy is explained below: “In line with changing customer expectations, we are redesigning shops to offer additional services and instore experiences, while delivering convenience and added flexibility through our online channels…On a 52-week basis, online sales increased by 17.3%, and while sales in shops were down 1.0%, their role in the omnichannel journey is demonstrated by the fact that more than three-quarters of our customers made a purchase from one of our shops, and online sales increase in catchment where we open a new shop.” John Lewis PLC, Financial Statements for the year ended 30 January 2016.
M&S are the leading mixed goods retailer selling mainly food, homeware and clothing, with last year end sales at a staggering £10.6 billion. They are competing with Next on price, both with upper mid-market positioning (Mintel clothing retailing) but the majority of M&S clothing customers are 65+. In late 2016, M&S revealed a major strategic change to convert mixed stores into food-only shops, in an attempt to grow their sales in the food market (The Guardian, 2016). M&S have embraced personalisation in their online channels as seen in appendix p30-31.
British society has experienced a major increase life longevity, aided by improvements in health, diet and preventative health care. The aging population has not only added pressure on the economy but changed the role the high street plays in society. The wider demographic has redefined the perception of ‘old’, prompting a trend in down-ageing: where consumers act younger, both physically and mentally. M&S’s poor clothing performance in recent years has left their clothing attracting a pension-worthy demographic. The combination of these two factors has effected Next: “the success of Next has been in holding on to customers that 10 years ago might have been expected to migrate to M&S” (Mintel, 2016f). This argument is subjective but a factor to consider in their targeting.
Target customer vs consumer Next are currently targeting a core demographic of twenty-five to forty-five-year-old ABC1’s. Next focus predominately on a female customer, though Next is not exclusively a women’s brand they acknowledge she often has power of purchase. Whether it be mothers, wives or partners, the female customer can trigger sales in all departments. (Internship at Next Head Office 2016). Ethnographic studies (appendix p5-7) and interviews with Next customers (appendix p8-9) and employees (appendix p10) revealed the Next customer is typically above the target thirty-fifty-years-old. A clear definition of their target market will help Next focus their efforts. In an interview, Jill Tedds, Buyer at Next, expressed an opinion that Next may need to re-evaluate their target consumer in order to improve (appendix p11). Changes such as these require extensive money and resources, furthermore, during such economic uncertainty a re-alignment may be a risky strategy. Instead, Next should embrace their customers and use psychographic segmentation to define them. The pen portrait (opposite) holistically forms a characterisation of the consumer Next should be targeting. It includes her home, skincare, family, diet, clothing and life necessities. The persona below internalises the ideal customer Next should try to attract, and her personality traits, values, motivations, interests, and lifestyle. Images on appendix p32 show examples of the customer using social media.
The Next online channels comprise of a desktop and mobile website as well as Apps for tablet, iPhone and Android. The content and product offerings are identical across the devices but the layout varies due to screen sizes. The pages are intuitive and easy to navigate with the help of: site ID, headings/subheadings, local navigations and a ‘you are here’ indicator. The channels have very little personalised or linked social media content. Next allow customers to personalise their account by adding subscriptions (appendix p.26), this evidences Next are trying to use their resources efficiently by accommodating to the user’s preferences. Customers found the sizing difficult or no stock available indicated in the funnel p22.
Key Insights -This report contradicts the assumption that the real Next customer is their target age of twenty-four to forty-five. Using ethnography and customer/employee interviews it was revealed that the real customer is typically aged thirty-fifty. -Users are time-poor and utilise their expanse of shopping choices if they can’t find what they want on one channel quickly or easily. -Users complained about findability on the Next channels. -Users did not find the channels memorable or valuable. -Secondary research shows Next’s competitors have implemented dynamic and profitable UX strategies. -Consumers are growing in confidence with submitting their information online activity. -The Internet of Me and Personalisation are trends which make each user’s experiences unique and profitable. -100% respondents shop online -83% respondents use filters to find products while online shopping Key opportunities -To be inclusive to Next customers -To improve findability -Improve UX to be deeply personal and self-determined
Aim The insights in this report build a framework for what the UX idea needs to accomplish. It must drive online revenue and improve findability while creating a personal, self-determined and valuable user experience. The idea will recapture the attention and maintain engagement of the user as well as prioritising their needs across the channels they use. Objectives 1.Increase conversion rates by 15% in six months 2.Active account-holder growth of 10% in four months 3.Average basket value up 10% in six months Vision The idea is inspired by the first rule of e-commerce: If they can’t find it, they can’t buy it. It embraces current UX trends and ultimately assists users in satisfying their goals. The idea is a personalised product filter, it stores information about the user in order to help them refine their search for products they are likely to buy. The customer will input data such as gender, shoe size, dress size, body shape and lingerie size. The idea embraces the individuality of each customer and makes their online experience as unique as their fingerprint. The idea is split into three key functions: 1.Pop-up configuration box 2.‘Me’ filter built into the refine by filter box 3.Edit personal data in the ‘My Account’ section Validation The feature will be valuable to the user because it will save time, improve findability and include a personal and interactive element to the Next channels. The configuration will take a few minutes but once activated users can transition between product categories and the highest results on the page will give preference to their body size and shape – without having to re-filter all the sizes they wish to look at (appendix 24-25). It is within the abilities of the user, as 83% already use filters while online shopping (appendix p4). The filter will be automatically switched on in their gender department but it can be temporarily switched off or edited by the user. Configuration During the configuration there will be an image example to help the user understand the desirability and value of the filter. The configuration will be a pop-up box which is in-keeping with Next brand guidelines, aesthetically pleasing, simple and has smooth transitions between stages. The language will be clear and the tone friendly and lighthearted; the answers will be optional and multiple choice which gives the user a sense of freedom. Next aim to use a friendly tone of language on their social media pages (Next internship, 2016). The feature and the unique information it holds will be synchronised across all channels and devices where the user is logged into their account. The square pop-up box will be used for the Next website and iPap app, while a rectangle will be used for the mobile site, Android and iPhone app. For the first month since implementation, the user must be an account holder before they are introduced to the feature. After monitoring response for one month, the pop-up would be rolled-out to all site users and include a ‘sign-up’ stage to complete the configuration. Hypothesis 1.The configuration box will be quick, intuitive and aid the user to set-up their personal filter 2.The ‘Me’ filter will be used to refine results and therefore concentrate on a selection of products that the user is likely to buy. Hence increasing basket value and online revenue. 3.‘My Account’ will hold an editing facility for users to change preferences on their filter. The feature will attract new users to make accounts and actively use them.
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Sketches In the early stages of design, these sketches take ideas/functions and turn them into the foundations of the UX improvements. Annotations communicate the process and functionality of the concept. Below is the rectangle and opposite square.
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Wireframes These wireframes show a drafted version of the idea and features for the Next online channels. Annotations include task prioritization, changeable features, click gestures and colours.
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Testing During the testing stage, the idea and features were shown to Next customers. Key out-takes -Positive response in relation to layout/visuals. -Navigation was intuitive and easy. -A customer said that Asos have launched a size recommender based on purchase history which it was useful when looking for products in their size (appendix p28-29). -The pop-up box may be misunderstood to be an unrelated advertisement. The Next logo could be incorporated to make the configuration more trustworthy. -Shoes can also be in width sizes. -In ‘My Account’ there could be a small information section about the filter as it is explained in the configuration but users may need reminding.
User Journey The user journey is an example of the process a user is likely to go through while engaging with the concept - in desktop and mobile. This version includes alterations made after the testing to result in the final design criteria.
Implementation The features align with Next’s overarching marketing strategy to personalise their online channels. Next are also aiming to narrow the difference in conversion rates between mobile (4.2%) and tablet/iPad (7.7%) and desktop (8.5%) (Next. 2016q). The idea will aid this change as it will be introduced and used across all available channels and devices. The implementation shows timeline and details of the project (appendix, p34). Success metrics will be used to track the development of the implementation. They are essential in measuring how engaged the users are with the idea as well as spotting trends in online behaviour which may need alterations. Idea One – Configuration Box 1. Number of users that completed the process 2. Number of users that exited the process Idea Two – Me Filter 1. Number of users that kept the filter on 2. Number of users that turned the filter off Idea Three – My Account 1. Access to the edit facility 2. Successful information changes 3. Number of users that deleted the filter Impact For Next, the idea will increase online revenue because users can quickly and easily find products they are likely to buy. The idea will re-engage current account holders and encourage new ones, it will provide a wider picture of the body sizes and shapes of Next’s customers and may influence product design, marketing etc. Upon release, the idea will be publicised via news broadcasts, social media but mostly in private discussions between friends and family – showing them how it works. Next Retail offline will experience more click & collect orders and a positive effect on the perception of Next as an engaging and interesting brand.
The fashion industry is a highly competitive, hyper-saturated environment. With macroeconomic and geopolitical changes, brands are facing mounting pressures to be innovative and successful while chasing consumer investment - who are also gradually spending less, particularly on fashion items. A new definition of online convenience has emerged as customers demand that retailers immediately fulfil or even predict their needs. Technology companies have created algorithms to customise online content to a particular user’s interests, habits, locations etc. This self-fulfilling prophecy of content is being embraced successfully by many brands but not Next. The consolidation of Next’s body size and shapes with the products from hundreds of independent brands within Label results in an extensive list of filter options. The filters do not transfer between categories and take time to apply, but without them users are faced with scrolling through several pages of content which may or may not be relevant to their needs. In-depth consumer interviews revealed complaints about findability and orders announced as ‘out of stock’ in their size during the checkout stage. These factors annoyed users in addition to increased bounce and cart abandonment rates. Competitors have succeeded in the last year by implementing personalisation and optimisation strategies which have resulted in increased conversion rates and revenue. The proposed idea and its features assist the user in satisfying their goal of purchasing an item from Next. It will be valuable to the user as it will be time-saving, improve findability and introduce a personal and interactive element to the Next channels. The filter will allow users to transition between product categories and the highest results on the page will give preference to their body size and shape – without having to re-filter all the sizes they wish to look at. The idea meets current consumer demands as it gives the user the power to find products quicker and easier while giving preference to products which meet their requirements. For Next, a personalised online shopping experience is expected to receive monetary benefits as well as active customer growth. Intangible benefits will include forming a positive perception of Next in relation to investing in UX innovation and exceeding consumer demands. A ‘one-size-fits-all’ system does no longer work for clothing or user experience - which is becoming easier, faster and more transparent by the day. Next must be bold and agile to utilise growth opportunities while innovating and forecasting trends in technology. While all retailers are apprehensive for the future in the industry, brands who master this time of unprecedented change have the best chance to emerge as winners in the coming year.