Tradition-conscious in a digital age
BY SANDY STRASSER
(Published in The Produktkulturmagazin issue 4 2015)
We are in the year 1890. At this time, Mannheim only has 80,000 inhabitants. It is during this year that the cornerstone for a company over a century old is laid. With ‘engelhorn’, businessman Georg Engelhorn and the tailor Adam Sturm opened a shop for men’s and boy’s ready-to-wear clothing. In times where anyone who took pride in himself wore tailor-made, this plan was bold. But success proved him right. 125 years later, the fashion house has arrived in the digital age but also has remained what it always was: a regionally anchored traditional company. Together with Managing Director Fabian Engelhorn and Michael Stolte, Head of E-Commerce, we take a glance into the past and experience how its future is being shaped.
Mr Engelhorn, Mr Stolte, you have always believed in the particular dynamics of information in the digital world. How can a company be lead into the digital age in a target-oriented manner?
Fabian Engelhorn: Curiosity, heart and courage have been the driving forces in our company for more than 125 years. This is deeply rooted in me thanks to my father Richard. This approach was also lived by our ancestors in order to act courageously: we had one of the first of 100 vehicles in the Rhine-Neckar area for our first delivery, the first display window illumination, the first electric escalator. We were one of the first ones in Germany to introduce a customer card. Even the fact that we approached the subject of E-Commerce a good ten years ago was trend-setting. And back then it wasn’t such a mega trend. Today, digitisation is everywhere. Every-one uses it - whether customer or employee. But even today a lot of retailers and even many brands are having a hard time getting to grips with it. Discovering the newest trends all the time, trying them out, it’s exciting – time and again. We want to keep up with the times.
Michael Stolte: It’s not all about on or offline, online as friend or enemy for bricks and mortar retail. The customer has decided by visiting us increasingly more often via mobile devices - soon this will be over 40 percent of our e-shop customers. Online shopping in its many facets has become a retailer’s fundamental element of success. Even if we have had many critical discussions, it has always been clear to us where our roots are. Rather, knowing how we will establish equal customer interaction on all touchpoints is decisive. The family Engelhorn was determined to prove that the online development should be seen as an opportunity and to sustainably entrench this in the engelhorn organisation. This process is dynamic, complex and a challenge which will never be concluded for all concerned.
What challenges emerge for companies like engelhorn, which carries over 950 fashion, sports and luxury brands?
M. S.: Our customers don’t differentiate between traditional and digital contact to our brands. The market is constantly producing cool apps, new start-ups with ambitious business models are emerging on a daily basis, financially powerful investors are showing their courageousness and are massively supporting them, even those with unusual ideas. The customer has a lot of choice. They use the newest information technologies and challenge us as retailers with it on a daily basis. They expect from us that we create an engelhorn world made of strong employees, inspiring shopping locations and digital diversity. And it is exactly here where, on one hand, our biggest opportunity can be found. We are specialists on the world of sports and high-quality fashion. We carry the most sought-after brands in stores as well as online. However, at the same time, the act of transferring the personality of our stores onto our online shopping locations is a huge challenge. How do you transport the traditional shopping experience with the scent of fresh flowers by the entrance, the haptics of high-quality garments or excellent sales talks online? That and providing the right information in the necessary depth of detail in the most suitable places is decisive. We have to give the question of the desires and requirements of our customers more space in complicated decisions and in where we invest in order to remain competitive. We will only be able to proceed if we make mistakes and learn from them immediately.
F. E.: The online market is still awakening, is still right at the beginning of its life-cycle. Our focus is clearly on growth at the moment. The online shop is a huge opportunity to gain new customers. And in fact: more than 75 percent of our online customers don’t come from the region. Even I am convinced that many companies still have to learn that a good shop concept can be realised in other ways than just shopfitting in bricks and mortar stores. We have been offering designer label shops online too for years. Successful brands such as Nike, adidas, BOSS and a few others have understood the added value of prominent online designer label shop solutions. We all find ourselves, whether retailer or label, in an intense process of change. Each employee has to get used to the term and content of change management.
Sell online and administer over two million items. How do you manage to transport the physical shopping experience that you create in your stores into the digital world?
F. E.: We asked ourselves this question early on and reformulated it for ourselves according to our understanding of it. Basically it is about answering the question of what we have to do in order that the customer who is close to us and values our brand gets that same feeling of happiness online as in our shops. Sophisticated architecture, high-quality furnishings for shopfitting and the fine cuisine of our restaurant has to be illustrated differently online. The large range helps us to better understand what the customer wants. We vary our product range structures, and can react better to changes in brand desire. Such a large number of items has to be well organised of course. That is not always easy, but is an essential part of our DNA. We create sustainable shopping experiences which are talked about.
M. S.: We translate our bricks and mortar values by authentically entering into dialogue with our customers over social media channels. The mixture of our buyers’ inspiration through social media, outfits or product recommendations and the usability optimisations via an optimised shop search are part of a logical translation of these transformation aspirations.
The revenue which you generate with this total at more than 20 percent of your retail business. What goals have you set for the next five years? How will the engelhorn customer shop in 10 years’ time?
F. E.: Online shopping will become even more powerful. Above all via mobile devices. Many shops are far from being geared towards this, ours is. Today every fifth purchase is already made via smartphone. All possible forms of technology such as e-payment or self-checkout are increasingly being used, particularly in the stores. As a rule, the customers are perfectly networked and have full information transparency available to them. We will remain to be the impulse-generator, and continue to inspire and moderate fashion and sports trends.
M. S.: The customer wants a more relevant and customised choice which suits his taste exactly. Personalisation is a big topic, we can learn from stores here how individually our experienced sales assistants can enter into dialogue with long-term customers. I am convinced that we will be able to offer each customer a fully-personalised shop platform in a few years. Apps will receive a completely different status than they have had until now. We will experience new forms of cooperation with the brands and as a result re-emphasize the attractiveness of the range. Price should not be the most relevant criteria. The inspiration and enthusiasm for ranges will be re-interpreted. Shopping will evoke ever more moments of happiness and joy without persistently reminding the customer of their consumption.
What general advantages are there to connecting offline and online business?
F. E.: Interlocking the sales channels is a huge topic for us, which we are sustainably investing in. We strengthen our regional roots with additional service offers. ‘Click & Collect’ for example, is a practice which has been in use for a long time in our stores - it means buy online, we put the products together, the customer tries on the garments at the shop and chooses conveniently. We are concentrating our bricks and mortar activities on the Rhine-Neckar region. It is exactly for this reason that we remain in personal contact with our customers. To an extent, our loyal return customers, who buy in our stores as well as online, ensure real turnover growth with relatively low return quotas. Express delivery and ‘Click & Reserve’ are additional services which we want to realise for the region.
At the end of the day, what does ‘digital transformation’ mean for your employees?
F. E.: It means change for the whole company - for every individual. For example, the E-Commerce team gives information regularly in the form of workshops and presentations, and we have introduced round tables to discuss opinions and to raise potentials together. Reporting requirements are realised more quickly and efficiently as a result. All managers from the stores have run through a two-day training on the digital possibilities in this dynamic department. I am convinced that if we didn’t consequently follow the digital transformation, our company would be badly-equipped for the future.
M. S.: It was also very important to us to inform personnel on the shop floor about the digital changes. Within the scope of the series of trainings ‘we are engelhorn - use digital opportunities together’, we could broach the issue of the challenges together with the employees and offer support for everyday problems. Such trainings are effective because they are developed together, cross-departmentally. We will develop this. We have to adapt in order to remain competitive.
What do you recommend colleagues who are on the search for suitable technologies? What methodology should be used to approach such a large project in order to find the right partner?
M. S.: We emancipated ourselves from the full-service agency in 2013. A customised online shop with integrated PIM was developed for us in the initial years, this worked very well for us in the first few years. We were able to learn quickly and grow with the agency. With time it became more difficult to ‚recreate‘ the developments on the market. We wanted to take things into our own hands, expand the knowledge in our organisation and specialise the teams. For this, a new system architecture was necessary. We didn’t only invest in our logistics but especially also in the shop system Demandware. At the same time it was clear to us that with such a diverse range of almost 1,000 brands, we would have to make a future-proof investment in a PIM. We decided on Informatica. A powerful tool to build on the data correctly and in a standardised manner for the future.
Why is Informatica right for you as a strategic partner in the realisation of such large projects?
F. E.: Upon choosing, the only partners and technologies that came into question were those that could accompany our ideas and requirements. Informatica is able to support us well with this complex transformation and the growth as software. We are interacting well and call for further developments to be made to their product on a regular basis. However, it is the triad in the collaboration between customer, software and IT service provider which accounts for success.
M. S.: Informatica has the same mindset, that information accounts for a company’s very high rating. A strategy of being flexible and open for the exploding new sources of data in an extremely fast-growing world is very important to us.
A brief portrait of Informatica
Informatica is a leading independent supplier of software and concentrates on the preparation of transformative innovation for the future in all matters connected with data. Companies all around the world choose Informatica to tap the potential of their information and to fulfil important business needs.
The Informatica platform is an intelligent data platform which includes data integration and quality, master data administration, data archiving and security and which allows the customer to convert potentially insecure raw data and therefore takes care of precise recognition and effective decisions. This master data management helps companies to make better experiences possible for the customer, where a complete and correct view of company critical data is created - a 360 degree view of customers, products, suppliers and locations as well as all relationships between these data. This leads to higher conversion rates to E-Commerce, faster product integrations and allows personalised customer discourse in all channels. Informatica MDM Product 360 makes companies fit for successful Omni-Channel Business. It creates the pre-requisites to administer product information centrally for all sales channels and makes end-to-end process management of the entire product information supply chain possible. In this way, the right product information can be made available at optimum quality and at the right time in the right place in the right format. More than 5,800 companies rely on this in order to optimally use the value of their information assets on premises, in the cloud or on the internet including in social networks.
Engelhorn and Informatica – Fashion goes digital
For the digital transformation at engelhorn, it was important to bring processes, people and the right solutions in harmony with each other in an optimal way. With the Informatica solution for Product Information Management, the company is in the position to sell over two million items from over 950 brands, whether in the store or via the internet. Today, engelhorn is aiming at making 20 percent of its revenue over the internet and is optimally set up achieve further growth in all distribution channels.
Picture credit © engelhorn