Danny Feltmann, president and CEO of KappAhl, about the past year 2016/2017.
How was the year?
Exciting! During the year KappAhl made great progress in the areas we decided to improve.
Implementtion of our business plan is on track and we are steadily moving towards a ten per cent operating margin, thanks to our successful price and campaign strategies, good cost control and the now completed restructuring in Poland.
How did market developments affect you?
Our sales markets in Sweden, Norway and Poland saw positive macroeconomic development, but were also characterised by high competitiveness. Several major actors in the industry have had inventory challenges, which made price competition tougher than usual.
This is a sign of customers’ changed purchasing behaviour and the transformation of the industry. As eCommerce increases its share of total sales it is even more important to have the right product at the right price in the right place at the right time!
It is also becoming more important to reach out with a sustainable offer and be transparent throughout the entire business.
How are you addressing this development?
It means that we must increase sales per square metre, which we are addressing through our omnichannel initiative, but also with the continual review of stores – locations, concept and space.
During the year we launched a pilot project for Click&Collect and Shop Online in Store, which turned out well and we therefore decided to roll out the services on a broad front in autumn 2017.
For KappAhl, with many different store formats, it is also important to follow our programme for conversion, closing and moving stores to ensure that our entire store network achieves our profitability requirements.
To position ourselves for the future, during the year we increased our rate of investment in store conversions, processes and IT-related projects. With commitments such as changing to sustainable materials and processes as well as creating solutions for sustainable consumption for our customer, we are showing where we are headed as regards sustainability. It all starts with good collections that appeal to our customer.
The restructuring programme in Poland was also completed during the year, can you tell us more?
After closing a large number of stores we now have a sound store network from which we will grow. The Polish market is attractive and a first step will be taken in autumn 2017, when we open a new KappAhl store and a first, stand-alone Newbie Store. Our employees have made a fantastic effort and we can now look forward in Poland as well!
As digitalisation increases, the customer meeting in store increases in importance, how are you improving it?
During the year we introduced Customer Service Follow Up, which means that we send out digital customer surveys to our club members just after a purchase. We ask for feedback on how they experienced customer service, range and offer. This is an important tool that allows us to follow up and strengthen the customer meeting.
Does the change in customer behaviour contribute to changes in your organisation?
Yes, we want to give the customer an integrated impression of our total offer – from inspiration to guidance and personal service – regardless of channel.
Consequently we have restructured parts of central operations and created the Customer Experience function. Here we collect the parts of our organisation that work with the customer experience, from online and market communication to goods distribution, customer service and loyalty programme.
As part of our change programme we have also continued work on a more modern IT platform to ensure a more flexible and dynamic omnichannel solution going forward. That journey will continue in the next few years.
How do you create commitment among employees?
We have started a cultural journey we call The Movement. The purpose is to facilitate action among our 4,000 employees with the help of clear processes and responsibilities.
We motivate and strengthen employee responsibility for the Group’s performance by working on our values, behaviours and attitudes.
How have you developed the range during the year?
We never stop working on the range! We carry on a continual dialogue with our customers on further improvements to both fit and selection, to be able to offer garments that always work.
The more important initiatives include the launch of Scandinavian Feminine in womenswear – a range strategy that creates a clearer style for the customer and helps to make KappAhl her first choice. In addition we can look back with pride on a year where we increased the percentage of sustainable fashion from 38 to 53 per cent.
I would also like to mention the denim campaign in more sustainable cotton that uses less water and chemicals in the production process, which has led to almost half of all denim at KappAhl now bearing sustainability labelling.
Developing the range is an important part of the new sustainability strategy Responsible Fashion, can you tell us more about that?
The strategy takes its cue from our stakeholder dialogues, from the UN global sustainable development goals and the Stockholm Resilience Centre’s research, and it includes everything from range, production and stores to inspiring our customers to make more sustainable fashion choices.
In that way we contribute to the transition to a more sustainable and circular fashion industry, but also to our journey towards being an even more sustainable company. Sustainability is about acting responsibly, which has been an important part of KappAhl’s DNA throughout the years.
What were you most proud of in the past year?
I am very proud of the commitment and energy characterising the many changes we are making, both to our offer and our organisation. There is a strong “we” at KappAhl that gives me the assurance that together we will achieve our objectives with our change programme and thus also achieve the target of a ten percent operating margin.
However, it is quite clear that this is an ambitious target that will make heavy demands on us and we will certainly meet challenges on the way.
Where is KappAhl headed now?
The idea behind Clarity for the Customer is that in a few years KappAhl will be a fashion chain with omnichannel presence. Already now, 80 per cent of our customers start their shopping trip digitally, regardless of whether they then make the purchase online or in store.
Consequently, we want to refine our internal processes and ensure that we have a modern platform through investment in business systems.This is a condition for being able to create effective and profitable operations going forward.
When you look back on your first year at KappAhl, what are you most proud of?
We have confirmation that our efforts are having an effect and our work to develop the organisation is now continuing at a sustained pace. The pace of investment will probably continue to be high as we adapt the store network and develop our omni-channel services.
In addition, the exciting expansion of Newbie Stores continues, both in existing markets and the United Kingdom. One of the guiding principles in the continued work is the right fashion for our customer, when and how the customer chooses. KappAhl is to be the first choice of our customer.