Ecommerce

19/10/2020

The Future of Retail | Sanjay Vadera CEO of Fragrance Shop Interview

Sanjay Vadera (CEO of The Fragrance Shop) joins Sean Brown (CEO of Mercarto and Mercarto Enterprise Technologies) to discuss how his business coped going into lockdown, the services they offer to increase repeat purchases and where he sees the future of retail.

Sean

Hello everybody, my name's Sean and I am the CEO and founder of Mercarto. Today we have a very special guest Sanjay Vadera, the CEO of The Fragrance Shop. I'd love to start this off with a little bit of an intro from your perspective, so how have you become Sanjay Vadera?


Sanjay

I got involved in the Fragrance Shop from my distribution business PerScent. PerScent was the first business that I started straight from university in 1990. I was an investor with a couple of other investors at the time with one of the founders as well and we bought it back from a fashion chain. I took over the business 100% around 2008, so a couple of years down the line. I've been CEO since 2006/ 2007. 


Sean

Am I right in thinking you have over 200 stores? I think you've probably got the best perception and thought process on how covid has impacted retail stores, so how's it been going for you? 


Sanjay

It impacted us massively as pre-covid 80% of our sales were still brick and mortar. Fragrance is still a sensory product and quite an impulsive purchase and that interaction is quite important as part of the process when you discover new fragrances. So I still think it's quite important to have physical presence within our sort of sector.


Sean

Obviously you can't plan that sort of thing. I can't imagine anyone having the ability to plan for something like that, but where it really does lie is the ability to innovate off the back of that. As you deal with a sensory product, what sort of innovations have you tried to create and how have you tried to navigate this and move everything online?


Sanjay

We've done something called Try It First now for about 3 years which is where you buy the product, we'll send you a sample with it, you'll try the sample before you open the bottle and if you like the sample you keep the bottle. 


The customers are very happy and we received hardly any returns when people are doing Try It First. So it seems to work and it gives the customer the guarantee that they can return it so they've not got a wasted product.


We also created a concept called Scent Addict which is a subscription service by the Fragrance Shop. It’s where a customer who can’t necessarily get to the doors, still wants to try a fragrance but doesn't want to spend £50 - £100 on the 50ml or 100ml because it's quite an outlay, right? Especially if you don't know if it will be something you really like. Scent Addict is about discovering a fragrance, we send you a 10ml version of it, you can try different fragrances every month or you can try the same one for a couple of months. The one that you do like you can then redeem the £12 against the larger size. So it's another way of discovering fragrances. 


Sean

With these products and services that obviously you built prior to it, as part of your continuous innovation cycles, have you seen that these services have been really popular as well with the take up? 


Sanjay

Obviously at the beginning when the announcement was made and because people just cut out things going out of the bank account we had some cancellations. But then we started getting the uplift again from around May onwards. People started feeling better about being able to spend again. 


Overall we've had a massive spike. The online side of the business once the stores were closed took over as the only channel and we were probably close to 300% over the lockdown period so it was like doing Black Friday week every day more or less for a period of time. Customers did switch to online, but it did make a big difference.


Sean

I know you have a huge eye on the infrastructure that supports both businesses, so obviously you were ready for a Black Friday, but sustained over a period of time, how did your systems hold up?


Sanjay

They were totally fine. It was a good test. We re-platformed at the end of last year, and our development team in India have been excellent at being on hand if there were any slight issues. Even if there was a slight niggle on the site, maximum it would be down for is a minute or 2 minutes. But there was no impact at all from a trading point of view. 


We're taking all the precautions now obviously for Black Friday because that footfall you get just on that one day it is just enormous. Nobody knows how that's going to change this year, but in essence we believe it will still attract customers. People obviously want to shop on Black Friday and online is the best place for them to go.


Sean

I think it's only fair to predict that the future is going to move more and more online and hopefully a mixed reality of online and physical to get the customer service element and the personal element of purchasing such a personal sort of product. So how do you see it going? What does the future of retail look like? What does the future of e-retail look like?


Sanjay

Everybody knows that physical stores are having issues. If you've got too many stores out there or if you've got too much square footage from a cost point of view. It is just not workable anymore. Just because the customer footfall isn't like it used to be. 


The customer has a choice of being able to buy under different channels for online and you can see that shift obviously moving to more of the convenience and the way the shopper wants to buy their products. So I think there has to be that shift into turnover rents and it needs to be more of an equitable relationship between the landlord and the tenant. 


I think that's the process that most retailers are going through right now. It's not easy for the landlords as well, it's a big shift for them to make because obviously they've got large institutions invested, large borrowing from the back of this so I'm not suggesting that it's not painful for them, it's painful for both sides but I think it's a shift that has to happen if physical retail is to survive. 


I do still think that the human retail experience interaction-wise is not going to get replaced 100% overnight. I do think that you can create great brand experiences and the whole touch and feel factor obviously, it's still quite important in any buying process.


Sean

I think physical retail is going to be here forever, it's not going to be removed. I think there may be a more integrated route to digital. But that touch and feel, you can't replace that online, especially with gift related presents and something as personal as your own scent. It's just what is the model to get people into the stores not just for a purchasing experience, but to get them in for that pure experience.


Sanjay

I think there's going to be a lot more digital interaction experiences in stores and the actual physical aspect of it the customer will have a choice. It could be that the product gets shipped to you within 90 minutes or 24-hours depending on your delivery requirements and you don't want to have to carry the bag around with you shopping and you can go straight for lunch or a coffee and not have to worry about leaving your shopping anywhere. I do think that shift is going to happen and customers will feel a lot more comfortable in the future. Not having to carry around the products in shopping bags and being confident that it will arrive in the morning or within 90 minutes.


Sean

I think we're about to hit the 10-minute limit so I just want to say thank you so much for coming it's a genuine honour and obviously since I met you for the first time I've been looking up to how you run your businesses and the decisions you make 


Sanjay

It's a total pleasure Sean it's great being on here, thanks for asking me. I appreciate it.


Sean

Thanks a lot.


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