Shehbaz, Redtag has been here in the Middle East now for quite a while; 17 years in fact. What are some of the biggest changes that you have seen in that time? How has the company had to evolve?
Yes, seventeen years has been a very good ride for us. We launched our first store in Abu Dhabi and after that we started launching Red Tag stores all across the GCC and MENA region We are close to more than 200 stores today and are known for our value retail. We operate in the value retail segment which caters to women as the prime target audience but obviously we’ve got apparel and merchandise for both kids and men too.
So over the last 17 years, yes, we have expanded our stores but at the same time the markets have become very competitive. You’ve had new retailers coming in, in the value segment. You’ve had a big change in shopping behaviour through e-commerce and other digital marketplaces. Customers have got a lot of new malls to choose from and obviously retailers are expanding in this part of the world.
You mentioned shopping habits. What shift in behavior have you seen here and and how does Redtag keep up with these changes?
What we’ve seen is in the last ten years is that they are more aware today. The awareness has come mainly through social media channels. There are different avenues where they get their information and they have become more demanding. But as a business, for us our strategy has always been the customer at the centre.
They’re more informative today so they know what they want and are very well aware about fashion trends happening all over the world not just here in the MENA region. And they’re much more demanding. You know, customers want the right product, right trend right price but they have other avenues too. So you really have to be relevant, you have to be on your toes, you have to be agile as a retailer. That’s why customers are the core for us, and hence we need to cater and give to them what they want.
Perhaps you could give me a breakdown then of your revenue and how much of that comes from the traditional brick-and-mortar stores compared to e-commerce, and how is that changing?
Today our e-com shares around 3% of our top line. We are planning to double it in the coming financial year, July to June. We are planning to go to 6% and hopefully 10%, in the following year. We are already doubling sales with regards to our e-com business but it’s not as easy as it looks. You have to keep the customer at the centre. Last mile is so important. There is also inventory, what you offer to them as well as the pricing aspect.
Now, one of the things that’s probably changed in the last ten years is the way in which retail has become much more catered towards the individual customer. What have you done to make it a more personalised experience?
Well, we’ve been pretty proactive on our loyalty program. We were one of the first to have launched a loyalty program almost ten years back and we’ve got a database of 15 million customers today.
Over the years, we’ve increased our database and we now have a customer data platform (CDP), which helps us to have a customer one view. What I mean by that is, I know our customer. I know what she buys, how often she shops with us, what are the categories she shops in or which is her favoruite store. Based on this data, we hyper personalize and send the customer offerings only looking at her preference. With regards to this customer’s shopping behaviour we send personalised messages through WhatsApp, through SMS and through digital PR platforms. So we hyper personalize with regards to our offering.
When a customer drops off our data can tell us if she is a new customer, how long she has been our customer and how do I get her back? So these are things that we look at to repeat our customer frequency. Today, almost 90% of our transactions are repeat customers. We have good amount of database, so being proactive in starting the loyalty programme is important and giving it back to the customer.
Is the way in which you use data one way you can stand out from other competitors in the industry?
Mark, our vision statement for the business is to be the most trusted retailer with happy people, making customers smile every day. And to do that it cannot only be data; it has to be over and above. We differentiate ourselves by the services that we offer. For example, a customer comes to the store and loves the product but can’t get the size. One of the things we can do is bring the size to the customer at her doorstep, free of cost. That’s the find your size offering that we have.
Secondly, we have brand ambassadors in our stores so we have platinum customers, who we cater to as brand ambassadors. We give them family and friend vouchers, which helps them refer a friend and we incentivise them because they shop with us. For example, any customer who shops above a limit, we give them a free gift. These are the delight factors which helps us to differentiate ourselves because the competition is always tough in both product and price. That will never change.
Lastly, each of our Redtag stores has a fashion stylist. So if any customer wants to understand more regarding body color, body shape, what is the latest trend or what is the best fit for an occasion we’ve got a fashion stylist in every store. And being a value retailer, when you talk about a fashion stylist you generally get this in luxury stores. But we have this service as an offering as well.
Shehbaz, I want to touch on something which has been very topical the last six months: AI. How do you think something like this can provide real value in this industry?
Yes, it’s making deep inroads into our kind of business. Before it was machine learning (ML). So the amount of data you put in, the machine learns and then advises you. So we do use AI for hyper personalising marketing campaigns. We have used AI in our social media where we have AI filters on Instagram, TikTok, Snapchat, which helps the customers to engage with the brand and also give them added gamification.
We are using AI a little bit on the e-com platform, which helps us to advise what to offer and when to be proactive on offering a loyalty program, AI is being used with regards to understanding when a customer changes their behaviour. But not to forget our supply chain. This is extremely important because with e-com growing there is a need for better pick, pack, dispatch times. AI is being used in the warehousing facilities to reduce the time of pick, pack, dispatch and make the process more efficient for last mile deliveries where we have third parties.
The other area we are using it is in marketing, which is the personalization of social media and our e-com channels mainly with regards to our inventory. So we have a plan going forward. So, for example, you’ve got these magic mirrors, the customer comes and looks at the product but doesn’t have to buy it. It shows how it looks on her through AI and things get done way quicker than how it’s happening today. I think these are the big three domains. We have a plan set, but we have to take it step by step.
In terms of the next five years what will your key areas of focus be and what are some of the big challenges that you’re likely to face?
The plan is obviously to grow the footprint of Redtag. We have been opening almost 10 to 15 stores every year and we want to continue that. At the same time, we do realise that e-commerce is going to keep expanding in this part of the world. We want to increase our footprint in the brick and mortar, but at the same time have a very immersive, engaging experience.
And also we have to realise that all the other channels are going go business. You take Insta, you take TikTok. We are already there on WhatsApp, but they’re all going go on business and be about more than just engaging and the social element. They are going to get commercial and all these kind of platforms will become monetized.
And lastly, not to forget, the omnichannel customer makes a choice. So we have to give complete power to the customer because the customer decides. In five years, I think retail like brick-and-mortar stays, especially in this part of the world because shopping is such a big part of the culture. And with the kind of reforms and the kind of expansion that’s happening in the region, we need to keep on our toes and continue to stay relevant.
Shehbaz Shaikh is Redtag’s Chief Retail Officer