Woolworths delivered to your door - 1998-2001
In the late 1990s it became fashionable for businesses to find new channels to market, attracting customers who did not want to shop in-store. A number of High Streetretailers launched 'Big Book' Catalogues in an attempt to break into the traditional mail order market. Throughout the twentieth century salesmen had signed up households door-to-door, particularly in poorer areas, offering easy credit terms and the convenience of home delivery. By the 1990s the market was dominated by a dozen major players. This appeared to offer potential for shops to attract custom by undercutting the established players with High Street prices.
In 1997 Kingfisher established an 'Alternative Channels' department at its headquarters to formulate a group strategy. They asked Woolworths to test the market with a small catalogue-based offer that Christmas. The chain already printed catalogues to help customers to plan their seasonal purchases. It was delivered door-to-door. A leaflet was added in a trial area. This invited readers to order by post or telephone. It offered home delivery for £3.95, or free of charge for orders over £100. As an incentive it promised £10 off the first £50 spent.
The firm signed up a fulfillment specialist, Salestrac, to provide a one-stop pick, pack and despatch service. The partner already operated a call-centre and fulfilment operation in Exeter, Devon. They served several small mail order business, which promoted a small number of lines which sold in large quantities.
Sales from the first Woolworth catalogue were encouraging, even though some of the products in the catalogue were ill-suited to mail order. The results helped to shape a dedicated offer for the future. During 1998 three more catalogues were published. These were given away in all 800 High Street shops.
As the operation expanded it bought in expertise from established catalogues. This provided an insight into some of the secrets of range construction and catalogue layout. The newcomers explained that the industry attracted new shoppers with incentives. Once hooked they were encouraged to buy regularly. As a result two version of each catalogue were produced. A small teaser was mailed to previous customers, encouraging them to collect a thicker version in-store.
The new recruits led the way in showing how to select, photograph and describe the new merchandise on the printed page.
The Spring and Summer Catalogues generated sales of £275,000 and attracted 40,000 new customers. They laid the foundations for a larger publication at Christmas. Sales rocketed in the festive season, quickly breaking the million pound barrier with an average order value of £65.
One possible reason for the early success of Woolworths Direct was the strong store engagement. The visionary behind the offer, Head of New Channels Chris Garthwaite, made a point of recruiting store people into his team and harnessing their energy in shaping the offer and the approach to getting buy-in from store staff. The store look was bold, including a large, backlit cartoon telephone. The store order points were clearly visible from a distance. They used simple language to explain the offer, both at the order point and on banners and on swinging tickets around the stores.
The project team made regular visits to the pilot stores in Swindon and the West Country to gather feedback from staff and customer. This helped to shape the offer before it was rolled out.
The chain also experimented with touch-screen ordering kiosks, testing a solution in a dozen stores. In part this addressed some media comment that had expressed surprise that the chain had favoured traditional paper catalogues over the emerging late-Nineties phenomenon, the Internet.
Executives at Kingfisher were well aware of the potential of the web. Keen to match the success that arch-rivals Dixons had enjoyed with Freeserve, they acquired the French company Liberté Surf, and the British e-commerce market leader, Streets Online. They also established a new e-Kingfisher Division.
A new strategy aimed to deliver sales of £300m within three years. Investment was planned build the requisite skills-base and infrastructure,
In 1999, the IT Director Colin Cobain, who was a passionate evangelist of the new channels, was appointed to the role of New Channels Director. He worked with the MD Roger Holmes to steer through a major investment proposal to buy the SAP Customer Relations Management ('CRM') system, and to acquire a large fulfilment warehouse in Braunstone near Leicester.
The two men also established a partnership with Freemans PLC, one of the top five producers of traditional Mail Order catalogues. The ground-breaking deal outsourced the fulfilment and call centre operations, and also gave access to the partner's expertise in laying out catalogues. It was intended to be a long-term commitment.
Cobain approached his role with enthusiasm, delivering better than expected sales. This led to stock shortages and some teething problems as the new teams gelled, and learnt the perils of taking orders by post and advance payments by cheque. Despite this 'Direct' went into the new millennium with confidence. The foundations had been laid to sustain the operation for twenty years, and the £300m target was in sight.
Cobain was also behind another landmark opening, as he persuaded the Group CEO to authorise a small venture onto the Internet. He hired Digitas to complete the build, setting them a target to get the new Woolworths.co.uk on-line before Millennium Day.
The launch dominated the December 1999's edition of Woolworths News.
'Technology is taking off at Woolworths! Woolies News takes a look at the latest developments.
We're on the web!
Following the phenomenal success of Woolies interactive TV service... its very own website: www.woolworths.co.uk. The site will allow internet users to choose from around 350 products including toys, gifts and top titles from the Woolies entertainment section. "The website willl allow customers to reach their best loved retailer in yet another way" said head of complementary channels, Jill Arch..
The Woolworths Direct team exeeded all of the goals that e-Kingfisher set for them. They were considered a role model for others, taking risks and making some mistakes, but learning and growing very rapidly. Everything appeared ready to exploit the new capabilities and drive ahead in the Third Millennium. But events intervened. When Kingfisher announced its break-up plans and appointed Gerald Corbett to head the demerged Woolworths Group, one of his first pronouncements was that the new channels operation was flawed and should be shut down. All of the assets were written off in an eye-watering £15 million exceptional item in the 2001/2 accounts. Three years later the Group CEO Trevor Bish-Jones started the circle again, and invested an even larger amount, to launch of the Big Red Book.
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