SHEIN doubles its sales for the eighth consecutive year.

It manages to replace  Amazon as the most downloaded shopping app in USA during May 2021

Last May 2021, SHEIN managed to replace Amazon as the most downloaded shopping app in the USA. (IOS and Android). This first place in the ranking had been occupied by Amazon for 152 consecutive days.

• SHEIN was founded in 2008 by Chris XU, an American student of Chinese descent. It has managed to double its sales for 8 consecutive years to achieve an annual turnover close to 10,000 million USD in 2020 (higher than Primark).
• After drastically reformulating its initial business of selling wedding dresses in the USA from China, SHEIN has focused mainly on the ultra-low cost women’s fashion segment for Generation Z customers and young women online, especially through its app.
• Unknown brand in China (does not sell in its domestic market), has as main markets USA, Mexico, Europe and Middle East. In total, it distributes to more than 200 countries mostly from its distribution centers in China.

The SHEIN business model has three clear levers:

• Accessibility
• Choice
• Addiction

Accessibility
The prices of its products are significantly lower than other competitors. For example, in the women’s dress category, SHEIN offers an average RRP (€15) -50% lower than Zara or Mango and +10% higher than Primark.

Choice
Every day it incorporates about 2,000 new SKUs in Fashion and accessories. Amount far above that of its competitors. The very fast supply chain and flexibility achieved with its local suppliers allow it to make initial runs of 100 units per SKU to later validate the results obtained and expand those products with better acceptance by market.

Addiction
More than 70% of its sales are channeled through its mobile app with all that this entails. Very high frequency of visit to know the news and an average duration of 8 minutes per visit.
From the first moment of registration, the customer receives a chain of promotions and offers that can also be linked to a program of reward points to redeem in the purchases.
TikTok, along with other social networks such as Instagram, especially suitable for mobile are used as a communication support for user content (UGC). Strong involvement with micro influencers.

Strengths

• Supply chain. They have achieved a strong integration with their local cluster of suppliers with flexibility and agility.
• Differentiation from other Marketplace platforms. Very focused to date on customer segment and limited product categories.
• Recommendations instead of searches. Low cost of customer acquisition.
• Simple and very effective photographs and videos.
• Sexy. In itself an attribute and product category with strong presence in its assortment and communication.
• Opportunistic use of external conditions such as U.S. tax/tariff exemptions for small orders

Weaknesses

• Delivery issues that impact the customer experience. Delivery lead times of several weeks.
• Quality and fitting problems. Returns with cost from the second garment per order.
• Clones and forgeries. Incidents and legal claims of some brands such as Dr. Martens and Levi’s
• Sustainability and social responsibility. They are not part of the brand’s values until the present.
• Lack of transparency. Characteristic of Chinese culture
• Lack of cultural sensitivity for various markets. For instance, controversies generated by the introduction of earrings with the swastika cross or carpets for the home with religious-Muslim motifs.

Retail Strategy>>

Perspective

• New product categories and segments. It is testing and developing new segments such as:

• SHEIN X. Market place for External Designers.
• SheGlam. Cosmetics and perfumery. Incorporating more current values of sustainability and well-being.
• Motf. Product quality upgrade with less emphasis on fashion trend.

Progressive geographical expansion without losing the concentration of efforts in its priority markets such as USA.
Attempts into physical stores. Already present through Pop-up stores (Mexico, London, Paris …) and potential acquisitions eg Top Shop chain.
The lack of proactivity in values and commitments (sustainability, transparency, social responsibility) will have to be reviewed to avoid possible rejections of the Brand.
Persistent rumors of near IPO with record valuation potential.

A commitment to differentiation does not always imply higher costs and higher prices.
Who said extremes were never good?

Más info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

Unicorn with a contagious smile

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.

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.

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.

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)

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

Patagonia, is a symbol as an innovative brand and pioneer in the proactive environment protection . With more than 45 years behind it, it is the ultimate exponent of a company that assumes as its authentic mission its own the value of the durable, “Patagonia is in business to save our home planet”.

Far from being a passing fad, Patagonia has dedicated, for more than fifteen years, 1% of its sales to finance and promote initiatives directly aimed at reducing the human impact on the environment.

Through its Patagonia Works entity, it selects, organises and develops all kinds of activities to reduce the impact on the environment with professionalism, rigor and at the same time, proximity and with activism, sometimes not complacent with the established status.

It develops more than 2,500 activities a year with strong involvement of local communities.

Outdoor Segment

It is not by chance that the founder of this company specialised in Outdoor is passionate about mountaineering. The same is true of other companies such as Mont Bell (Japan) and Rei (US) where the business’s precursors are in themselves, genuine passionate about free- to- air activity and develop their businesses with an exquisite proactive defence of the environment.

With strong larger competitors like Columbia, North Face, Patagonia has made progress in revenue and profitability. Its positioning with a price level slightly higher than its two main rivals has been no obstacle to continue to count on the loyalty of its costumers.

It hasss a small network of about 50 own stores, direct ecommerce and maintain the wholesale channel as its main distribution route.

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

Retail Operations

Product Assortment

Each product they incorporate is audited in detail to ensure that it is designed and produced with the least impact and that it fulfils, in a lasting way, the functions to which it is intended.

The progressive use of recycled materials for its products is a reality.

In addition, Patagonia proactively promotes the arrangement of those garments that for their daily use need a repair so that they continue to be used, either by its original customer or through its “Worn Wear” service by another customer thus giving a second life to the garments.

Repairs are carried out through its Central Specialised Center (Reno), as inside its shops and flying workshops with planned itineraries.

Given the importance of food, Patagonia has introduced a newline of business (Provisions) to offer an environmentally friendly assortment specially designed for use in outdoor activities.

Innovative initiatives for its employees

The working environment for its employees is consistent with the values it pursues and has a number of innovative initiatives that have managed to provide the lowest turnover rates in its USA sector:

• 100% of women with maternal leave return to work
• Own facilities and services for the care of younger children
• Flexibility to enjoy with 21 weekends (three days) a year to be able to develop free-to-air activities with their families
• 1.5 million km reduction in car journeys by its employees

Transparency and best practices for the outside

Patagonia has a clear policy of transparency and shares its best practices with other companies, including competitors, to the extent that it results in less impact on the environment. Altruism well understood.

Key findings

• Genuine matters
• Not always happy with the current situation
• Innovating always chasing the durable. A certain taste of RETRO
• A well-understood activism to defend values is not against  profitable commercial business and in fact facilitates a strong bond with your customers.

We need more “Patagonias” in other sectors!

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).

• 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.

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.

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

For some conventional Retail chains, flagship adjective is synonymous with point-of-sale that generates heavy losses. Efforts by some brands like the one Nike makes in this new flagship only have a good reason to be when there is a clear focus on omnichannel and core wholesale activity.

Located on NYC’s Fith Avenue and opened on November 2018 with more than 5,000 square meters of surface and six floors. Originally named as House of Innovation, follows  the track of the first opening of this type of Nike store in the Asian continent, not randomly (Shanghai).

It contains within it different new concepts, some of them already tested individually:

• Nike Speed Shop
• Nike Sneaker Bar
• Nike Expert Studio

Nike, with a growth of +10% annual sales (with only +1% stock) and consolidating margins, materialises in this new flagship store its three principles:

+ Innovation
+ Speed to market
+ DIRECT to client

Direct to client
“DIRECT” sales to customer already account for 1/3 of Nike’s total including own retail and ecommerce, the latter with year-on-year growth of 25%.

Platforms vs individual products
They are not based on merely releasing new individual products to market. Otherwise they make use of already proven platforms (e.g. Air Max) as a growth vehicle through new models designed much faster than the past.

Innovation
Strong support and development of its app and omnichannel with new features such as:

• Click & Collect internal in store. Looks and individual items
• Scan & try
• Express Check out paying from mobile without going through the cash register
• Extreme customisation for some products
• Selection of the goods displayed based on online analytical criteria for the specific geographical area where it is located
• Members of Nike Plus community enjoy special perks and privileges such as personalised assistance, express shipping and increased product customisation possibilities

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

Retail Customer Experience Optimisation

For some conventional Retail chains, flagship adjective is synonymous with point-of-sale that generates heavy losses. Therefore efforts by some brands like the one Nike makes in this new flagship only have a good reason to be when there is a clear focus on omnichannel and core wholesale activity.

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com