Retailer Adairs has outlined strategic plans to upgrade its digital customer experience, including with increased personalisation and AI trials.
The high-end bedding and homeware company announced multiple initiatives, which also include plans to create a single view of customer.
Managing director and CEO Mark Ronan said the business delivered strong results in a “challenging trading environment” at its full-year 2023 results on Monday.
Ronan said price increases helped “maintain product gross margins, with gross profit impacted by cost increases across the domestic supply chain”.
Digital sales and online roadmap
Adairs launched a new website in November last year, which “has provided us with the foundational platform to deliver an improved customer experience”.
Its Linen Lover program delivered 83 percent of Adairs-brand sales in FY23 and “enables us to continue to talk directly with our customers.”
“The new site has improved customer conversion and with ongoing enhancements we believe we can continue to make it the logical starting point on any customer’s journey to creating a home they love,” Ronan said.
“Off the back of the new website we are currently rolling out ‘click and collect’ functionality across our store network, which will replace our previous ‘call and collect’ service.”
The ‘click and collect’ functionality is due to go live this September, in line with the NDC changes.
The brand is also trialling AI across multiple areas to improve customer experience and productivity.
“On top of this over the past 12 to 18 months Adairs has invested in bringing together the variety of customer or Linen Lover data we have access to into one platform to enable us to create a single view of customer,” Ronan said.
“This foundational piece of work now enables Adairs to deliver, at scale, the personalisation of content for our customers.
“Whilst we are just commencing trials of a number of initiatives, the early signs are positive and we the investment made the opportunity for us to identify and test different scenarios and then move successful trials quickly into ongoing program is a great opportunity and will be a key focus moving forward.”
Its Linen Lovers program also saw an 8 percent increase in paid membership and over 450,000 sign-ups in FY23.
Returning control of its NDC
Adairs’ operations have been impacted by “ongoing … inefficiencies” from a national distribution centre (NDC), which Adairs has decided to take direct control of. [pdf].
Adairs said it agreed with operator DHL Supply Chain Australia (DHL) to take control of the NDC from September 6, due to poor customer experience, the company said.
“The last 12 to 18 months have been incredibly frustrating as we’ve not been able to deliver the experience as customers expect from us as a result of the issues within the NDC,” Ronan said during the Monday investor call.
Ronan said the impact to customers has been a “poor delivery experiences and stock-outs in store.”
He added, “The changes we need to make were always going to take time. Progress was being made [but] it was simply going to take too long”.
Ronan said a capital investment of $20 million into the NDC was “significant” but “largely in line with the investment we would have made if we had elected to operate the NDC at inception”.
“Across the last 12 months, our team have identified the most immediate areas of priority and had the benefit of observing how technology was utilised within the facility works, which has provided us with a clear roadmap of what needs to be done,” Ronan said.
“Importantly, with us taking over the facility we will deliver ongoing improvement in both service and cost.
“We’ll see improved order picking accuracy and faster dispatch times, leading to less refunds and more repeat customers for online, and in stores we’ve improved product availability with faster store replenishment, delivering both a better customer experience and increased sales”.
The decision to take over its NDC resulted in the company’s board also opting to not pay a final dividend for FY23, citing the capital commitments of the NDC and the importance to retain a strong balance sheet.
The company recorded total group sales of $621.3 million, up 10.1 percent from the prior period, attributed to customers opting for in-store shopping.