Engelhorn on its way into the digital future
BY JASMIN STÖCKLE
Founded by Georg Engelhorn and Adam Sturm in 1890 as a business selling apparel for men and boys, the fashion and sportswear and equipment store Engelhorn – located in the heart of the ‘City of Squares’ Mannheim – is one of the leading addresses within the Rhein-Neckar region today. Spread out over more than 41,000 square metres across eight neighbouring buildings, the company employs a workforce of around 1,400 employees, all offering customers a unique shopping experience. With a chocolaterie, an exquisite flower stand, Michelin-star restaurants, a wine shop, events and a Tesla motorcar showroom as the most recent highlight, the fashion store is proud to be a truly special place for its customers to spend time. Fabian Engelhorn, the fourth generation to run the operations of this family enterprise, spoke with us about how he is preparing his company for the digital future.
How is Engelhorn approaching the challenges of digitalisation? To what extent and with what means are you digitally transforming your business?
Engelhorn has always embarked on new paths to stand out from its competitors, making home deliveries to our customers as far back as 1906. And entering the e-commerce arena has been an equally important step. We opened our online shop in 2004, through which we currently generate around a quarter of all sales. Furthermore, we also market our fashion, sportswear and equipment, lingerie and underwear, shoes, hosiery and accessories on platforms such as Amazon, Zalando, Intersport and eBay. Here, the offerings are distinct depending on the channel, customer demand and margin. As a retailer without a network of branches, broadly positioning ourselves as a digital trader is the only way for us to make contact with consumers outside of our catchment area. But we place major focus on excellent customer service with our online trade as well. This includes, for example, comprehensive telephone sales advice: in the case of consulting-intensive special articles such as climbing hooks, the hotline operative directs the caller – if the operative is unable to provide information – to a stationary specialist sales assistant, hence ensuring an optimum shopping experience. Furthermore, we are planning to deploy chatbots with the aim of quickly and easily responding to routine inquiries. In addition to these, we are already offering click-and-collect and click-and-reserve services and style advisers: customers select the products they would like online, agree a consultation time and then only need to try on or test the articles which have been prepared for them. This unconditional focus on the customer and his or her needs has been our recipe for success for over 125 years now. The fact that we are now expanding our online shop into a marketplace is the next logical step towards further improving our customer service.
With regard to the planned optimisation of your customer service, are there any other aspects that speak in favour of introducing drop shipments? Ultimately, you lose control over deliveries and have to rely fully on your suppliers.
I am very confident that the issue of who owns an item at the time of its sale will be completely irrelevant in the next three to five years. Customers expect products to be available at all times and to be delivered quickly. We are now also opening our online platform to suppliers to be able to deliver articles we do not have in stock as well. Around 15 of our 900 partners will be taking part in the pilot project. And – yes – you are absolutely right: drop shipments require new processes and a new way of thinking. We will no longer have control over the dispatched products – neither in terms of their quality, nor with regard to our pledge to deliver orders within 24 hours. This is why we are kicking this off with a manageable number of long-standing suppliers and only then gradually opening our online marketplace to further partners.
Hand on heart: are you implementing this project on your own? Or do you have professional support?
As a retail enterprise, we are unable to implement a project of this scale on our own. It is for this reason that we have secured the services of parsionate, a highly competent partner that we have been successfully collaborating with in regard to e-commerce master data management (MDM) and product information management (PIM) for many years now. There are very few service providers able to accompany this kind of project – and the project is again all about people. If you are able to sign a contract looking each other in the eyes with a clear conscience, you just know that you’ve done the right thing. From start to finish, parsionate accompanied us through the strategic design of the project and will now implement a data integration platform for us. In addition to change management, it is also important – among other things – that we develop logics and rules that ensure, for instance, that our suppliers only take over the order when we do not have the ordered article in stock. We are thrilled to have the support of experienced consultants throughout this comprehensive change process. parsionate’s know-how and the competence in the strategic and digital further development of companies will save us a lot of time and prevent us from making avoidable mistakes.
You mentioned the data integration platform. How will you ensure the consistency and quality of your master, product and ordering data?
In view of the sheer amount of data that will be flowing into the central integration platform, uniform quality standards are, of course, very important. To guarantee the greatest possible consistency, we will consolidate our own data and the information supplied by our manufacturers and wholesalers, with the aim of then cleaning this data, processing it in a channel-specific manner and distributing it in automated form. And it is self-explanatory that this is impossible without defined standards. And this brings us to the big challenge itself: defining standards for product information such as colour, size and price is already a complex matter. But this is immeasurably more complicated in the case of product descriptions that can differ depending on the manufacturer and author – despite central specifications. Deciding which text is better is not merely a matter of one’s own corporate identity stipulations, but also an issue of subjective perception. Here, we must learn through experience and develop reliable rules. Currently, three of our colleagues are randomly examining incoming supplier data, something we plan to automate over the coming years. This will be very complicated depending on the product group, as what is quite simple for a white shirt becomes considerably more difficult in the case of an intricate evening gown. Not to mention seasonal products that we only offer for limited periods. All in all, we sell around 120,000 items through our online shop each year, with 50,000 products permanently online.
Collating, managing and distributing this data is one thing. But evaluating and profitably exploiting it is a completely different matter.
You’re absolutely right. We are deploying a software solution with which we can develop requirement-oriented analyses ourselves. Drafting reliable evaluations in the retail sector is very complex. If you consider that our customers are in possession of around 300,000 loyalty cards, you can imagine how many transactions have to be managed and analysed. But detailed evaluations are also essential. The better we know our regular customers, the more accurately we will be able to fulfil their wishes with personalised offerings.
Does the introduction of your online marketplace complete your company’s digitalisation? Or are you planning further digitalisation measures?
For me, digitalisation is very much a work in progress. The retail sector is still very much in its infancy in terms of digital transformation and process automation. Many processes are incredibly inefficient. A blouse passes through far too many hands before it finds its way onto one of our racks or is packaged for dispatch. This has to change as a matter of urgency. I am absolutely convinced that if we continue to place our main focus on the quality of our customer service and orient our offerings on the needs of our customers, we will be able to face the future with great self-confidence.
Fabian Engelhorn is the fourth generation to work for the Mannheim-based family company Engelhorn. He is responsible for the entire operational management. Prior to this, Fabian Engelhorn headed up the Leisure and Sports division.
parsionate supports retailers and brands in developing and implementing omnichannel concepts: comprehensive consultation, superlative know-how in the leading software solutions and successful implementation.
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