Big interview: Hobbycraft CEO on encouraging customer advocacy

Hobbycraft is keen for its customers to play a key role in the company's marketing strategy, and it is putting more platforms in place for shoppers to share their experiences of the brand and its services.

"60% of the traffic to our website is natural search – we're working really hard to build a community so that we don't have to pay for our marketing or we create our own marketing in a natural way," Hobbycraft CEO Catriona Marshall explained to Essential Retail.

The rise in popularity of online retail and the surge in the number of digital social platforms, where millions of people are conducting conversations about their every-day lives, has led multiple brands to try and leverage the power of user-generated content. Fashion e-tailer Missguided and flat-pack furniture purveyors Ikea are just two examples of retailers that have recently built platforms on their websites for shoppers to share their opinions, pictures and feedback relating to the products they purchased from those respective retailers.

Hobbycraft has followed the trend, too, launching technology from Olapic on its website that allows customers to upload images of the items they have crafted using the retailer's products. These images are then distributed to relevant categories on the site as a means of inspiration to other customers, similar to the way online fashion house Asos uses pictures of its customers wearing items as a way of underlining the popularity of the brand.

Marshall commented: "This creates inspiration – and our customers have done it for us.

"Our long-term strategy is very much, through digital, creating a community and using that community to generate their own content and share it. The plan is to use as little paid for marketing as humanly possible because you can't afford to develop a business on Google search."

Underpinning the retailer's drive to build a community of happy brand advocates is the Hobbycraft Club, which over the last 18 months since its inception has evolved into a substantial group of more than two million members. Personalised emails and marketing material is now sent to these members based on their individual behaviours when shopping at Hobbycraft.

The most frequent and highest spending customers are invited to special events, where Marshall says "they come along, get discounts, demonstrations and goody bags, and we make them feel really important".

Commenting on the type of customer Hobbycraft now attracts, Marshall describes a very multichannel shopper.

"It's a very digitally led business because people love social media, they love shopping online, they use digital in their craft, and yet crafting in itself is almost the opposite," she said.

"It might be that people download a pattern and then knit a jumper. People think of crafters as not that digitally savvy but, my god, they are digitally savvy. Things like Pinterest they'll use for inspiration and ideas. They'll download from these sites, they'll use digital technology to create their own patterns as a way of transforming their ideas. They'll then come into stores and buy the components they need before going home to make it."

Tasked with transforming and growing the business in 2011 following a private equity takeover by Bridgepoint, Marshall has gone ahead and overseen a period of significant change at Hobbycraft.

Store numbers have doubled during the time, with a number of new-look shops operating across the UK targeting a younger demographic. Technology systems and supply chain transformation was required to provide a platform for this growth and, back at the start of the project, Hobbycraft quickly ruled out so-called tier-one enterprise systems such as Oracle, SAP or Dynamics AX as too costly and time-consuming projects.

Working with K3 Retail, the retailer opted for Microsoft Dynamics NAV and the LS Retail product as the core systems to run the business's operations, allowing for other plug-ins as the organisation grew.

As some of the latest developments would suggest, attention has turned to the retailer's online operation over the last year – so much so that web sales jumped by 36% over the last 12 months to represent 7% of turnover. Marshall says the brand is strong on social media but more could be done to convert the people who engage on these platforms into shoppers. For instance, there are three million customers a year visiting the Hobbycraft blog but the challenge is to achieve a commercial benefit from social media "and not just a feel-good factor".

"It's a never ending journey on the site in terms of conversion rates. The traffic is very strong but it's constantly about working on mobile optimisation and how we increase conversion rates. There's a big plan of lots of little things across the customer journey to improve that."

Hobbycraft now has over 80 stores across the UK (image from Dex Retail)

Last week saw the business tailor its online operations to suit the needs of an international audience, for the first time, with shoppers from outside the UK now being served in their own language, currency and with local payments options.

The specialist retailer said EBITDA was up by 63% to £10.9 million in the year to 21 February 2016, with like-for-like sales up by 4.8% and total sales increasing by 7.6% to £151.8 million.

Marshall, whose previous roles in retail were as trading and marketing director at Pets at Home and, before that, as director of own label at Asda, says there are multiple reasons for the business's encouraging performance of late.

"We've come through a big investment and transformation – [there are] lots of things coming together," she said.

"We've invested to be very competitive on price, which is particular important nowadays because price is transparent across channels. For specialists, it's really important that you're on the button on price."

Marshall added that the development of the Hobbycraft Club has been a real driver in the business's success because the retailer "can talk to our customers two or three times a week in a topical way". Ultimately, though, it seems recent good results can be put down to many of the retailing basics.

"We have much better customer service, much better product innovation coming through and it is much easier to shop online and in store," she said.

"It's the convenience of multichannel, the club and value. The strategy sounds simple, but it's actually about making it happen!"

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