Case Study: Customer Loyalty, channel harmonisation bolstered Country Road through the pandemic

Country Road's long term digitalisation program enabled it to manage huge fluctuations in consumer behaviour during the pandemic — and to position itself to manage a new world of retail where online channels will likely account for more than a third of its sales.

Investments in web optimisation and additional server capacity during the pandemic, as well as the transformation of retail outlets into dark stores to support product distribution during lockdowns, positioned the Australian retail icon's digital business as a cornerstone of its operations, says head of digital Matt Jones.

• Subscribe to Digital Nation Australia's twice-weekly newsletter

Looking ahead, the business will increase its use of digital wallets with tighter integration to providers such as Stocard and Apple to improve customer experiences and enhance its customer loyalty programs.

With 90 stores across Australia and New Zealand, a concession environment inside David Jones and recently onboarding with leading online retailer The Iconic, the company has transformed and extended itself in recent years as well as navigating one of the most challenging retail environments since its launch due to the pandemic.

Speaking to Digital Nation, Jones said the company’s digital business played a significant role in the last 18 months in sustaining and growing the business. “The transformation to digital was something that was very much a focus of ours and has been for many years now. And continues to grow from strength to strength.”

Pre-COVID, 25 per cent of the business was driven by online sales, and during the early days of the pandemic this jumped to 100 per cent, says Jones. The company’s modelling suggests that online sales will settle in at around 35 per cent of the total post-COVID, a significant increase over two years.

Back end systems

“Our operating model and our back end systems were really robust enough to see us manage that increasing demand,” says Jones.

“We have a distribution centre, we actually call it our Omni Fulfilment Centre that was well placed to cope with that spike in demand. We had a retail network — we refer to them as dark stores — through that period. That meant that whilst they weren't able to service their customers from an in-store perspective, obviously, they were there to help us keep up that online momentum by dispatching and shipping orders directly to customers in a really timely manner.”

Country Road’s systems held up despite the disruption, although there were some additional technology investments says, Jones.

“We invested some additional cash in server capacity to ensure that we were supported, there was a lot of work with our CDN partners to make sure that the website can be as fast and robust as it can be at all times. And you know, touchwood that held us in good stead through that period.”

Jones pins the accelerated digital transformation as the key to retaining customers throughout the pandemic.

“We've spent a lot of money in ensuring that our web experience is as optimal as possible. We've gone through some recent iterations with our header and footer, we're about to pivot and redesign around our PDPs (product detail page) and our PRPs (product replacement plan), we've seen an increased investment in digital advertising to ensure that we are front and centre with customers so that we're reaching the right customers at the right time.”

While some retailers will return to investments in bricks and mortar and others look to extend their online offering, Jones says Country Road is looking to engage customers with the retail experiences that are suited to them.

“What we see as the perfect harmony is this great convergence of online and offline. We don't favour one over the other, we want to be there for our customers to engage with our brand in whichever channel suits them at that point in time.”

Loyalty

Country Road's customer loyalty program has been running for 15 years and now contributes between 70 and 80 per cent of its sales.

"It just gives us a high level of relationship with those customers, which is fantastic. So we see there's an opportunity to offer them exclusivity. We give them exclusive access to products, we give them exclusive access to events within our shops when we can, [and] which we are planning for Christmas. We give them exclusive access and in most cases sole access to a lot of our promotions."

"Our Spend and Save is our signature promotion, which we know our customers love. And that is a promotion that is exclusive to our members, we do not take that to the public."

The rise of digital wallets enables Country Road to offer additional benefits to members, says Jones. 

"The fact that we had that sticky loyalty customer just meant that a wallet was a natural evolution of us building an even closer relationship with them."

To date, the main utility of digital wallets was to provide customers with a convenient way of presenting their card in-store and getting access to some loyalty benefits, present that in store for just a convenient way of getting access to some of their loyalty benefits. For Country Road, it provided a channel to alert customers to the benefits of the program, and to employ proximity marketing through geotargeting.

"We've had a lot of testing and learning with Stocard and we've been able to scientifically validate that that is absolutely driving incremental benefit for us. We've done a myriad of lift tests with them, where we hold back control audiences we test the outcome and without exception that has always delivered fantastic results."

Jones says the retailer is about to launch a much deeper integration with Stocard. "Instead of the current approach [where] we talk one-to-many at any point in time the evolution that we're we're building next week is a much deeper integration where we will be able to develop a one to one relationship with our customers within the Stocard digital wallet."

Likewise, it is deepening its relationship with the Apple wallet to allow similar messaging.  "Customers [will] get a much sharper, singular view of their loyalty status, their tier, their spend, are there any rewards any offers, and in a similar vein as what we're doing with Stocard we will be looking to update the Apple wallet."

Both updates are due to go live shortly.