Posts Tagged "MHE"

Large-scale personal styling. With sales over 1.500 million € it is not a niche market

Product customized by stylists with the support of data that matters. Artificial intelligence and personal touchStitch Fix Home Personalizacion

Growth and large size. It is not a niche market

  • Stitch Fix individually personalizes the looks (5 pieces) of clothing and accessories that it sends to its clients thanks to a large number of stylists (5,100) and with the support of the detailed information that its clients provide. It is not a subscription service and the customer returns, without obligation, everything that is not to your liking. It has no physical store.
  • The business started its activity in San Francisco (USA) in 2011 and has been publicly traded since November 2017.
  • With annual growth of over 25%, it has achieved sales of USD 1,577 million in the last fiscal year of 2019. Unlike other companies in its segment, it obtains operating benefits.

Stitch-Fix-Evolución-Ventas-English-

  • The gross margin with which he works is 45% and he obtains an excellent inventory turnover greater than x6 per year. The investment in communication is high (10% of sales).
  • The assortment is aimed at women, men and children with an extensive portfolio of external brands, exclusive (medium / high level) and a small number of private brands.
  • It has 3.4 million active clients distributed in a wide range of ages, being the most important segment of 30-50 years.
  • He is focused on USA and has recently started his activity in the UK (2019).

Grafico-ventas-Stitch-Fix-English-

Customer experience differentiation. Data that matters

The great differentiation of Stitch Fix is the detailed information available:

Customer (initial set of 90 detailed attributes)

  • Socioeconomic profile and context
  • Size and fit
  • Product types and categories
  • Styles Colors. Prints
  • Prices. Marks Purchase Guidelines

Relevant detailed product attributes
Specific customer feedback at the individual product level received and planned (85% of customers participate)

 

Set-de-Data-Stitc-h Fix

  • The stylists have the support of this model that facilitates the selection of the looks for each client that receives in 3 days.
  • These proposals have a 63% probability of success that is gradually increasing by incorporating the real feedback from the client (+ 21% to the sixth look the client receives).
  • It began with Women, later joining man and child.
    Direct actions with good acceptance are being incorporated, such as the proposal of an additional color for a garment that the customer has previously acquired and extra accessories to the look already sent.

 

Competitors with different origins and channels

The list of competitors is increasing with different origins and approaches among which are:

  • Trunk Club Belonging to the Nordstrom chain of department stores
  • Personal shopper. Amazon Ward Wardrobe subscription service extension
  • Le Tote. With an alternative rental component. On-line
  • MM Lafleur. Showrooms and online

 

Trunk Nordstrom

Mhe Services

Retail Strategy and Operations >>

rganization and structure adapted to the business

  • Stitch Fix has 8,000 employees, among which the 5,100 stylists who work part-time and remotely stand out.
  • These stylists are supported by a strong Artificial Intelligence department that has more than 125 analysts and a team of 280 people managing the client experience.
  • They have a total of 7 distribution centers (Usa and Uk).

Stitch-Fix-Staff-English-

 

Retail Impact

Stitch Fix is pointing the way to customize, on a large scale, a fashion business based on the advice of stylists with the support of artificial intelligence fueled by continuous feedback from its customers.
Retail chains have before them the challenge of incorporating in a relevant way for each business and sector, this approach that flees from a mass and indiscriminate volume of product that the client considers less and less attractive.

Artificial intelligence and personal touch (large scale)

More Info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

“Not much ado about something “

ULTA Beauty. High Performance Retailing Mirror

ULTA interior

  • Founded in 1990, it is in the stock exchange and currently has almost 1,200 of its own stores, all of them in the USA, with an average area of 1,000 sqm. They have scrupulously fulfilled their plans to open 100 stores / year in the last five years. The estimated optimal potential for Usa is a total of 1,700 stores. Further, you will have to start an expansion in other geographic markets.
  • All its stores have a hairdressing salon (100 sqm) with more than 10,000 people working only in this service.
  • They are especially strong in cosmetics (above 50% of their sales). They offer an assortment with 25,000 references, 500 brands and top 10 suppliers represent 2/3 of the business. They also have their own brands and some external brands such as Kylie – digital natives – exclusive for their physical stores.
  • Its authentic machine room is its loyalty program with 32 million members and they contribute 95% of its sales.
  • With a strong omnichannel vocation, ecommerce already accounts for more than 11% of its sales and those customers who use more than one channel have an x3 expense higher than what they only buy in physical stores.

 

ULTA Exterior

Talking numbers

ULTA, as the leading chain (sales of USD 6,716 million) in the USA specialized in perfumery and cosmetics, has a discrete business card and the analysis of its results generates a special satisfaction when it is verified how a company of that size has doubled its turnover in just 5 years in an organic way and with an operational efficiency without frights or “big headlines”ULAT Evolution 5 yearsULTA-sales-evolutionULTA-Income-Evolution-

 

Operating model with proven track record of real benefits

  • The growth in sales has been achieved maintaining the solid profits (before taxes) of 13% on sales. Vital constant of this business and in clear contrast to the “Unicorn” business models that occupy the main comments in the current economic news.
  • Traditional retail KPIs such as sales productivity per meter (USD 6,000 / m2), inventory turnover (x5 per year), LFL growth to comparable surface … coexist with selective investment initiatives in artificial intelligence and virtual reality start-ups that are incorporated Gradual way in business.

And all this is being achieved with a board of directors made up of 11 members with an average age of 60 years. Experience, good work and a culture open to innovations that work

 

ULTA-attributes-EN-

Mhe Services

Retail Strategy and Operations >>

 ULTA vs Sephora

  • There is strong competition in this sector in the different existing channels including department stores, consumer generalist and specialists such as Sephora.
  • The boundaries between the mass market segment and the selective “Prestige” have become blurred and in the case of ULTA customers, ¾ they are both mass market and Prestige.
  • The cornerstone of ULTA’s progress has been the continuous improvement and upgrade of the half-accessible brands to match them in their store setting and attention with the selective channel.
  • With a wide range of age / socio-economic level of its customers there is a gradual convergence between the two leading operators ULTA-Sephora

ULTA Brands

ULTA ¡They have a Plan… and know how to execute it!

Always with changes not abrupt but that occur and are executed with a clear purpose.
Sephora and ULTA, two different paths that converge over the years. Nike and Adidas, Sephora and ULTA … the binomials work.
Health and beauty is clearly a mirror where to look for other retail sectors

¡High performance and profits do not go out of style!

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Casper. Native Digital Vertical Brand. Direct to Consumer

Improve customer experience as a starting point

  • Casper, with only 5 years of existence in the USA has generated a new segment in the rest sector selling mattresses online and delivering them at home in a box.
  • Its starting point was to improve a mediocre shopping experience on the part of the customer that compared it with the purchase of a second-hand car.
  • Getting a company valuation over USD 1 billion at this time has not been an easy task.
  • Among the investors in this Unicorn company are profiles as diverse as Private Equity, the TARGET retail chain and some famous people such as Leonardo di Caprio.
  • Since its start, Casper has developed a very simple and easy to communicate assortment, fleeing the crowd of alternatives available in the sector of materials / specifications / measures similar but different.
  • The price range starts at USD 300 up to USD 2,750.
  • It has its own production.
  • It has always led to the testing of its products (100 nights) and facilitated its possible return at no cost.

Casper Interior

Strong sales growth but still losses

Casper’s sales went from USD 373 million in 2018 to an estimate of more than USD 550 million in 2019. Still in losses (USD 64 million in 2018) has consumed the usual 5-year grace period granted to Unicorn companies.
It is currently in the expansion phase in new markets such as Canada, UK, Germany and Asia.Attributes-Casper

 

Numerous competitors replicating the Casper model

  • Casper is no longer alone in this segment. Among its most direct competitors are Brands like Tuft & Needle, Purple, Nectar Sleep, Leesa Sleep, Allswell (Walmart), Evesleep (UK), Simba (UK) … There is a substantial increase in revenue but it is still a business model With operating losses. Most of these brands, being digital natives, already have selective distribution agreements through some existing retail chain (home specialists, department stores …).
  • The downside is in the difficulties encountered by more traditional specialist chains such as Mattress Firm that had to close more than 700 physical stores in the USA in 2018.

 

Retail Strategy and Operations Specialists

MHE Services >>

 

Differentiation and creativity

Creativity, humour and innovation have always been present in Casper’s marketing. They highlight co branding campaigns such as the one carried out for the business class of the American airlines or the successful campaign based on hieroglyphs for the NYC Metro network.

Amercian-airlines-and-Casper-collaboration

casper-subway-puzzles

Retail Approach

Native digital brand, opened its first own store in 2018 in NYC. It currently has about twenty stores of its own and are present with corners / linear in more than 1,000 Target stores in the USA.
Its main channel is its own Online and they also sell through Amazon.

Casper y Target

Elements in common of the “DNVB” (Digital Native Vertical Brands)

The new Direct Consumer Marks (DTC) tend to have a number of common characteristics:

  • Digital natives
  • Focus on the relationship with your customers. Obsessed in the Customer experience
  • Disruptive in its sector. They generate a new competitive environment in their segment
  • Intensive use of social media
  • They use the content as a differentiating element of their Marketing and with a clear Story to tell
  • Own retail very limited
  • Agreements for selective implementation in other existing retail chains

The performance results also tend to converge:

  • Strong growth of their  income (35-50% per year)
  • High customer acquisition costs (CAC)
  • Significant operating losses in the first 4-5 years
  • Difficulties when they start to go public (IPO)

Even if they are not easily consolidated as a viable business model, they have a strong impact on their more traditional operators who are incorporating some of their characteristics spurred by a consumer, who logically embraces the new commercial approach without entering those “little ones” profitability details.

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Unicorn with a contagious smile

Smile direct club store front

Breaking Moulds

The health sector is not inmune to digital transformation and improved customer experience. Smile Direct Club has identified as an opportunity to facilitate a smile with well-aligned dentures without having to go through the brackets, frequent visits to the orthodontist and with a 60% smaller budget.

In just 3 years it has already  more than 300 stores of its own in Usa, and it has recently started (3T 2019) its expansion in Canada, UK and Australia.

It makes the experience more accessible. The customer chooses how and where to start it: at home or in one of its stores

The innovation focuses on making an orthodontic treatment easier and more accessible by means of invisible moulds, made using 3D printers that the customer changes without having to go to the physical consultation of the specialist. Using an initial kit that is received at home or on a visit to its stores, the treatment is initiated and it is monitor by the specialists remotely used an app on the mobile. The duration of treatment has been reduced by half (6-8 months) of the traditional and cost by 60% less.

doctor-directed-SDc-Rempte-controlled

Sales growth and astronomical losses

Belonging to the “unicorns” league (start-up with a valuation of over USD 1 billion) listed since this September 2019 on the Nasdaq. As appropriate, it has been doubling annually its income and losses over the past 3 years. Customer experience at the stroke of a talonary.

Sales-SMD-compressor

losses-sdc-compressor

 

Specialists in Strategy and Retail Operations

MHE >>

 

Initial challenges. Their main supplier and corporativism of specialists

Not everything has been pink in their way. After a frustrated initial collaboration with its Invisalign supplier, it has currently  the largest existing global plant of moulds made using HP 3D printers (produces 20 million moulds per year).

The main challenge it faces now is the corporate struggle undertaken by the collectives of orthodontic professionals who are trying to stop their expansion.

Lab-ed

Extreme Omnichannel

Its website, with more than 5 million visits, feeds its store network  in shopping centers and urban centers. It also has a fleet of travelling buses to bring the experience to new places before the opening of new shops.The channel with the highest growth is the progressive opening of up to 1,500 “implants”  corners with reduced dimensions within CVS pharmacies/drugstores in the USA.

The management team has already extensive experience in this type of situation. They have previously developed similar businesses in:

  • Contact Lenses (1-800 contacts)
  • Diabetes Care (Simplex Health)
  • Hearing Aids (Hearing Planet)

standard-bus

Retail Implications

In all these cases they have applied the same recipe:

  • Simplification of product/service range with the implementation of technological innovation
  • Competitive priced
  • Elimination of friction points in the customer experience
  • Greater self-control by the customerl of the process Omnichannel
  • Selective use of a physical network of stores, own and third parties

With an initial overvaluation (like good Unicorn it is) and downward stock exchange quotation , Smile Direct Club is an example of the current transformation taking place in Retail.

There are no exceptions. Which subsector will be next one?

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Unicorn at full speed. Growth by all means.

“TOGETHER WE GO FAR”peloton1-min

 Unicorn – Extreme Growth

PELOTON, belongs to that selective unicorn company league with an innovative business model in the fitness sector, based exclusively on growth expectations, with no track record of profitability and with a valuation of more than $1 billion, in recent IPO process.

It started in the USA in 2014 selling its first connected premium exercise bike and currently provides almost 1,000 different sessions per month online with the best available instructors.

 

Addictive Satisfaction

It provides a rewarding experience to its half a million subscribers who after paying a minimum of 2,000 euros for their connected bike, pay about 39€ per month to be able to enjoy at home this innovative cocktail of Fitness + Media + Technology.

With 8-13 sessions per month and a low churn ratio of 0.65% per month, they have managed to articulate a healthy “addictive” experience.

Its Direct to Customer model mainly online, also has its own retail limited network (75 stores with a wide range of formats such as the 30-sqm micro store or the 150-200sqm Studio where customers can try and experience the products and fitness sessions.

Explosive Income Growth

Total revenue has quadrupled in the past two years, with a strong investment in marketing/sales (35% on total sales) and an R&D effort of 6% of total sales.

Its growth expectations are based on the international expansion (recently it has begun its activities in Canada, Germany and the UK) and the extension to other product areas such as yoga/mindfulness.

In addition to its core revenue from product sales, it is clearly being supplemented by its monthly subscriptions, which already account for 20% of the total with strong growth over the past two years.sales peloton-minSales Evolution Mix Peloton English-min

 

Retail Strategy and Operations Specialists

MHE >>

 

Strong Losses

The results line reflects heavy losses due to the high cost of acquiring new customers and the main focus on growth at all costs in the hope of achieving a higher volume that balances the current cost structure. There is a big question mark of financial feasibility at midterm horizon.

This financial model is an exclusive privilege as a Unicorn company that does not apply to other conventional companies (which must provide dividends) and that is justified exclusively by their high growth expectations.Peloton Losses-min

 

Digital Transformation

The fitness sector is not being at all oblivious to digital transformation:

  • Digital platforms grouping hundreds of fitness centre of various brands and formats: e.g. Gympass, Andjoy, Fitpal
  • Transformation of the traditional gym business towards specialization/segmentation: e.g. Equinox
  • Brands of connected equipment similar to PELOTON: e.g. SoulCycle, Echelon, Techno Gym …

Try a claass with us Peloton-min

Retail Implications

It is clear that Peloton, disruptive, with its revenue/cost structure and lack of business profitability, to date, can not be applied to the conventional Retail model.

Spite of all this, we can identify a number of elements and features of the new Unicorn businesses that sooner rather than later, will be selectively adopted by Retail and Brands:

  • Direct to the Customer
  • Focus on mix of products and services
  • Use of innovative technology to customize and provide “on demand” the product/customer service
  • Subscription. Recurring income
  • Extreme omnichannel. Online and physical
  • Clear adaptation of physical retail formats based on the different roles they have (e.g. stores from 30 to 200sqm). Limited footprint.
  • Addictive and satisfying experiences in communities

Yoga Peloton-min

 

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

NYC Flagship. Reinventing your Third Place: Home, work and Starbucks experience

Temple with more than 2,000 square meters

A new temple for Starbucks lovers opened last December in NYC, in the Chelsea Market area, across Google’s offices in the city. They are more than 2,000 meters distributed over three floors with 5 well differentiated areas including an area for cocktails, Italian pastries and sandwiches (Princi), ice cream and of course, 6 different ways to make a coffee (in addition to the espresso).

Starbucks NYC Flagship

  • 280 employees strive to realise a differentiated experience for customers who are willing to pay 7 to 10 euros for their coffee. The price does not seem to be an impediment to continuing to grow this company that with sales of 22 billion euros (same Inditex and Mercadona league) and annual growth of 10% is making Starbucks that “third place” desired by its customers after home and work.
  • With a local design, copper colour dominates the environment. The central axis of the store is a roasting area that prepares more than 500 tons of coffee to be used in some of the 28,000 outlets that Starbucks has. With a high annual x17 inventory turnover, it is indeed the envy of any other retail business.
  • The plan is to have a total of 6 Flagships with similar globally characteristics. They have already also opened in Seattle, Shanghai, Milan, Tokyo and soon in Chicago.estadatisitcas-min

Declination of formats

Few businesses have declined their format in variants as different as they have, from small kiosks implanted in hotels/office blocks to these 2,000-meter theatre stores maintaining a special aroma and atmosphere.

Starbucks NYC

Mhe works for major chains and brands improving retail strategy and operations

Retail Customer Experience Optimisation

Food

Food already accounts for more than 20% of its sales and the alliance, in full execution with Nestlé to distribute its products on supermarket shelves and other distribution channels, will facilitate the transfer of the same experience to theirs home that’s why they will have additional reasons to visit “the third place”.

Strong Competition in China. Luckin Coffee

It is present either directly or through licenses in 80 countries – with varying results – and the strategic points are USA and China. In fact, it is in China where they are encountering a first-timer but strong competing operator: Luckin Coffee. This startup (October 2017) has already opened 2,000 outlets and plans to double them during this year 2019 beating Starbucks in the Chinese market. With -30% lower prices and focused on a queueless service, take away and Home/Office Delivery Luckin Coffee is managing to change habits in their compatriots.

Innovation and size can work together

Innovation and size can work together and Starbucks achieves very high levels in omnichannel, loyalty programs and advanced initiatives in corporate responsibility as support in the secondary and university education of its employees, hiring 22,000 wives of military veterans and a strong commitment to sustainability and the environment. Profit and support local communities live together and feed each other very well.

Beyond the product, beyond the price

Approaching its 50th anniversary, It gets a renewed experience that makes its followers continue to consider it as their third place: Home, Work and … Starbucks. Beyond the product, beyond the price.

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

Starbucks Merchandise

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