Feature

The Grand Social on digital technology and fashion in Australia

“Focus. Focus. Focus.”

hansel_2This simple word has been on repeat behind-the-scenes at The Grand Social head office and the dedication has paid off. The fashion e-comm site recently reported double-digit revenue growth, that’s a 46% growth, in the past 6 months.

An astronomical figure for what started out as a relatively small online marketplace for local emerging designers.

So what do they attribute to their success?

According to CEO Jean -Claude Abouchar, they did a detailed review of the business about 18 months ago to assess what was working and what wasn’t. They had seen substantial organic growth month on month since launching in March 2008 and with this came more staff and increased operating challenges.

They also invested in a range of new product developments and a number of sales/marketing activities including a successful pop-up store in the MLC Centre which ran for about 6 months and a joint venture with Pacific Magazines to launch and operate Shop It under the InStyle masthead (the first true online store integrated with a fashion magazine globally).

The marketplace was getting increasingly competitive and they knew they had to start focusing on less is more. So, not ones to shy of a challenge, they set themselves a goal of re-launching the website, setting up a new streamlined warehouse and bringing on a dedicated PR agency which they did with MCMPR.

“We spent last year consolidating operations and getting our cost base down to get better margins in the business in what was a challenging trading environment for everyone,” says Jean-Claude. “Drilling down on our operating model and increasing the level of flexibility for the brands we work with has translated into significant gains this year.”

Combined with this, has been the signup of about 50 new brands in the past 6 months and with that some fantastic new product.

“At the end of the day this business is about getting great brands with great product infront of as many customers as possible and ensuring the whole process is seamless for both brands and the end customer,” he said.

With this renewed focus, The Grand Social now has the capacity to move beyond its localised brand stable to stock larger more mainstream labels in the future.

Stocking emerging Australian labels has always been the site’s point of difference and a huge factor in their sucess to this point. Jean-Claude says going forward the focus will always remain on Australian brands, but they are interested in working with Internationals that `share the same passions’ and fit within their brand mix.

“Emerging and independent brands are core to our offer and will always be,” he says. “We also continue to be selective about the brands we say yes to because everyone of them needs our support to help them grow their business and share their story – and that requires time and money.

“We want to make sure we are working with brands that are serious about their business. A lot of our customers look to us for inspiration and guidance on their product choices so it makes sense to provide the same direction with more established brands also.”

handsom_3While many local fashion retail businesses comment on the difficulty of competing with the influx of international players diluting the market, Jean-Claude says big online companies such as The Iconic, ASOS and Shopbop have actually contributed to the success of GS and Aus online retail in general.

“The Australian online shopper is very savvy and as we know is driving huge growth for retailers like ASOS, Net-A-Porter, Matches and the US Department stores, however only 25% of all online purchases are in the fashion category, so there is still plenty of opportunity for growth. (Source:roymorgan.com)

“This growth is going to come from larger etailers driving more new customers online and educating older shoppers. As the category grows so do we and that’s really what we’ve seen this past 12 months.”

It’s these learnings Jean-Claude will share when he presents at the Fashion Exposed Conference which kicks off this weekend.

“It’s a lot about taking risks and being agile so you can adjust your plans accordingly,” he said. “Most of all it’s about being really focussed from the start about what your vision is and remaining focussed on achieving that vision.

“There’s always going to be opportunities that come up on the journey and the danger is chasing them at the expense of the core business. Time is one the most valuable commodities when launching a new business and you need to treat it with respect or it will quickly evaporate. The risk is that you end up spending 3 months on something that sends you back a year instead of forwards.

“The other critical factor is the people you surround yourself with. Talk to as many people as you can that can teach you something about your business and take criticism onboard. Your friends will usually tell you what you want to hear so talk to people who don’t know you and get honest feedback.

“At the end of the day you also need to accept it’s not going to be perfect on day 1 so just get it live and start making it better on the run. I’ve heard plenty of great ideas but they are just ideas waiting to be done by someone else until you launch.”

We took five with Jean-Claude to get an insider’s view on where the local fashion industry is headed; what we can do now to prepare for it that won’t cost a fortune; and the role of data and user-generated content.

viparoThe fashion industry is moving faster than we can prepare for, what are some of the major hurdles you think retailers will face into the future?

Big question. There are some fundamentals about the fashion business that will never change and in reality the actual business model has not changed that much so far – especially when you compare it to the impact of the Internet on the travel category for example . The most amount of change is happening on the consumer side, which is where all the disruption is occurring.

The power has really shifted to consumers now who are driving demand and democratising fashion content in what has been a pretty closed shop controlled by the major fashion titles. User generated content is changing how and when shoppers consume fashion content along with who is influencing them.

The other massive shift is the role of data in both supply and purchase sides. Companies like Editd are changing the way retailers buy and what designers make by giving them access to what their competitors are doing and where shoppers are spending – all in real time. On the consumer side free tools like google analytics mean a business of any size has access to actionable insights about what is and isn’t working on their online store and can make changes to improve conversions to sale in minutes not weeks.

There is also a huge number of really sophisticated marketing platforms that enable you to segment and target customers with highly personalised content and offers. This sort of software was only available to the big brands a few years ago and can now be accessed by anyone with a browser and a credit card for $50 a month.

Are there things they can do relatively quickly and cheaply now to get up to speed? If yes, what?

Marketplaces like etsy.com provide a massive amount of really useful information about selling online for free. From how to photograph your products to how to write content correctly so you get found by google. If you are a small brand and want to sell online I recommend spending time reading the help pages and forums to get great tips. You can also connect with other sellers who may have similar customers/products and get inspiration from what they are doing.

There have been quite a few recent closures including iconic Lisa Ho label and Kirrily Johnston – what are your thoughts on this? What can retailers do to prevent this from happening to their brand/retail?

Talk to any retailer in the past 18 months and there is one phrase that is consistent – tough trading environment. This is from the corner stores to David Jones. Everyone has had a hard time and unfortunately for some businesses that were already stretched financially it’s hit them harder than normal. It’s a real shame to lose great brands like Kirrily Johnston and Lisa Ho – especially as we worked with Kirrily in 2009/10 and had some great results.

What are the some of the biggest changes you forecast for online retail in the next 5 years?

The biggest changes will be in content distribution and business models. On the content side the increased connection speeds will drive further investments in video content and video merchandising. On the consumer side the growth of social networks like Vine will continue to grow user-generated fashion content via video.

I don’t see massive shifts in the online shopping experience beyond improved content, greater choice and better service levels overall as the category becomes more competitive. However we are seeing more investment in personalisation and social integration to the browsing experience. It’s certainly a focus for us moving forwards and we are implementing a number of these programs for clients on the agency side. The business models are where the real disruption is.

Companies like Bonobos.com have secured massive investment (US$50M) and are expanding their physical footprint with their fitting room retail model. Stitchfix.com has re-invented the subscription model of Birchbox with a service layer based around ‘personal stylist crossed with intelligent software’. Pose.com allows anyone to upload photos of themselves, tag the products they are wearing and get rewarded for it if they generate a sale. These are all new models that didn’t exist 5 years ago and I expect we will see a lot more – especially in the mobile space.

Do you think we will see more virtual change rooms for e-tail?

I think we will continue to see innovations in the category but I expect these will be more than just reproducing real world experiences. The virtual change room is a nice gimmick and anything that personalises the shopping experience is going to help but it works far better in some categories (eyewear) than others (apparel).

Grand Social have also experimented with offline via pop-up shops in the past, is this something you will continue going forward? Or expand on? Why/why not?

When we launched GS in 2008 we had to explain to media the concept of a pop-up store – it now seems that the concept of a pop-up store is a mainstream retail strategy. This is really a reflection of the structural change occurring in Australian retail combined with the increasing costs and risks with running a physical retail business. I don’t think anyone has cracked the omnichannel challenge yet – even in the US.

There’s more investment from pure-plays like Amazon and Bonobos into offline retail channels but these are more test and learn models then a serious play. We launched a physical space due to a combination of opportunity and strategy. A street level shopfront space in an emerging retail precinct became available because Nick was moving into the building with his agency business – so it made sense to utilise some of this space.

Strategically we’ve always felt customers are more comfortable if they know you exist in the real world also as it increases buying confidence. It also meant we could provide brands with a real world space for launches, exhibitions, collaborations and sales. We quickly moved to this model after trading as a pretty traditional retail store and have had far more success in treating it as a space for temporary events because it also generates press and content for the website. It’s also our head office which is great for our sales team who can meet with new brands on site and show them the space that is available for them to use if they want it. Especially for some of our Melbourne labels who use it as their showroom when they are doing sales.

dricoperThe media has always reported this war between bricks-and-mortar and online, do you think this is the case? And should bricks-and-mortar be afraid of online shopping?

It’s the media’s job to write compelling content and many a column was written around the theme of old and new. The same stories are being written about the death of newspapers and publishing. Bottom-line it would be foolish to be afraid but then again my outlook is focused on opportunity not failure and as an entrepreneur you need to have that kind of perspective or you will never move forwards.

Almost every retail category has undergone transformation since the rise of the online economy and every business responds to challenges differently. Those who adapt survive and thrive. The reality is that every business now has access to the same intelligence as their competitors at a fraction of what it cost 10 years ago so there’s no excuse not to take advantage of this. The challenge is more about prioritising which opportunities.

Everything that shopping online isn’t bricks and mortar retail can be and vice versa. They have their pros and cons and always will. If you’re selling product that’s available everywhere then you’re not selling something unique and compelling then that is totally fine. But expect to compete in a global marketplace that doesn’t have a level playing field. That will not change so you need to adapt and maybe take a look at what you’re selling and evolve and sell something else that isn’t available everywhere.

Create a reason for people to buy your products and remain loyal. There’s something magical about discovering a store you love and spending time in that physical space, looking at all the amazing products. We’ve all been there – in many cases whilst travelling. Fashion retailers have the opportunity to create fantastic experiences in their spaces and if they spent more time on providing a little magic for their customers they might just find them coming back for more than just the

Jean-Claude Abouchar

Jean-Claude Abouchar

See Jean-Claude Abouchar of The Grand Social present `Digital technology and fashion in Australia’ at the Fashion Exposed Conference on Monday August 26 from 11-12pm
A major online fashion hub, The Grand Social shares their understanding of digital media in Australia. How to tackle the current retail marketplace; by posing some difficult questions and offering some inspirational solutions.

To book, visit fashionexposed.com

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