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Paul Frantz
Quick Facts Name: Paul Frantz
Company: Google UK
Position: Industry Head of Retail
Google

Paul Frantz, Industry Head of Retail, Google UK explains how retailers can make best use of the digital economy and the opportunities it offers.


Online sales in the current environment

Retailers may be finding it tough in the current downturn, but this recession is unique in being the first with a digital economy and merchants are therefore able to use internet technology to mitigate some of the declines seen in consumer spending.

Paul Frantz, industry head of retail, Google UK, says: "Retailers doing well are those putting bets online, with Argos and Tesco each having achieved £2 billion annual online sales. More and more retailers are now focusing on this, and as they get online stores the digital technology lets them make smart decisions."

And if retailers are in any doubts about the trend for greater use of the internet in their purchasing activities, Frantz has plenty of statistics to support the view including the fact Google now handles one billion searches per day, 80% of internet users compare prices whether buying online or in–store, and as many as one–in–three people post online comments every week.


Insights from search tools

The decisions retailers are now able to make to counter the downturn are made possible through the insight that the internet is providing. "It allows them to target customers more effectively. They get information that's actionable, from the many free tools that are available," he says.

Using such tools makes it possible to see some of the obvious trends like the big increase in consumers now searching for details of voucher codes, but Frantz says other more unexpected things can be spotted: "Aston Martin searches have increased by 10% while Lidl have fallen 10%. It might be counter–intuitive so you have to look at all the data."

Another key insight now made possible is the 'path to purchase' of consumers. The internet enables retailers to find the answers to the questions of "what do people do when they start a search and where do they finish, with the purchase".

He says an average of six searches is undertaken prior to conversion (to a purchase) but as many as 20% of purchases are converted after as many as 15 searches. And Frantz states that "this figure has increased as the recession has started to bite".

Over 40% of transactions are ultimately completed after more than 30 days following the date of the shoppers' first exploratory search, which means retailers have to be on top of using the insight that the internet is providing to track customer behaviour otherwise they will potentially lose sales to rivals who are utilising the technology and data more effectively.

"We've seen this trend accelerate so if retailers do not track [shoppers from their first search] through the year then they'll not be competing with the likes of Amazon," he warns.


Test, Learn and Get results

Frantz also suggests that it is only useful having access to insightful data if it is ultimately acted upon: "You have to look before you leap, but you have to leap. You cannot just look at the data."

This data now makes to affect change within a retailers' online business very quickly in real–time, with Frantz citing the example of Debenhams that had been initially disappointed with the level of take–up from its website for its new Beauty Club.

Following the raising of the image and the link to join the Club to above the mid-point ('fold') of the screen take–up increased 30%. And when this move was combined with a more 'aspirational' image the number of people signing–up jumped by a massive 89%.

Such changes can be done on a discrete ongoing basis and not just by entrepreneurial retailers but by the likes of Debenhams and Next. They are among the larger players that make modifications continuously in a process Frantz describes as "test, learn and get results".


Testing in Practice

When Next found that 40% of the customers to its site go straight to the search option and that the level of break from the box was high it sought to make changes. After doing a test on boys' socks that delivered a page mixing socks with, curiously, pyjamas the search results were amended to better reflect the search criteria – and so only socks were then displayed. This successfully reduced the level of break.

Clothing retailer Asos has also shown itself willing to make ongoing changes in order to better serve its customers and boost sales. This involves changing the models it is using for certain dresses and undertaking multi–variant testing that can contribute to increasing sales by 10%.

Shoe retailer Schuh is another advocate of multi–variant testing. When it reduced the number of items shown on pages of men's shoes, enabling it to display larger images of each product, it enjoyed a sales uplift of 10%. However, this was not replicated when it made the same change to women's shoes, leading Frantz to warn retailers that they cannot expect a one–size–fits–all approach to work.

He also cites Asos as a good example of a retailer that makes changes based on the customer insight it is gaining. When it found its customer base bought heavily when it had just been paid it decided to increase its ranges by 15% at that time each month and also put new dresses above the fold on the screen.

What is particularly important, according to Frantz, is for retailers not to be afraid of making changes because of a fear of failing. He reveals that even the mightily successful Amazon finds that only two out of every 20 changes it makes ultimately benefit its business.

Changes based on insight gleaned from the internet can also be utilised by retailers to improve the efficiency of their online operations. One of the major ongoing issues for online stores is the level of abandonment of shopping baskets at the checkout – which is typically a very high 65%.

To address this issue, electricals retailer Comet undertook tests on its website and the checkout process was simplified. The 'Your money is safe with us' comment and 'Top Checkout Tips' were both removed, which resulted in a 6.7% increase in conversions. A similar simplification exercise was instigated by John Lewis Direct and this helped it increase sales by around £1 million.

It is a combination of all these small measures that Frantz suggests will enable retailers to win the battle with their rivals over the "slightly smaller wallet size" of customers, compared with before the recession. "It is hard to forecast the future, but if retailers act with insight, test and learn, and are not afraid of failure then they'll come out of the recession stronger," he suggests.

Paul Frantz
Industry Head of Retail
Google UK
Telephone: 0207 031 3104
Email: pfrantz@google.com
www.google.com