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Inside Cue’s frictionless retail ecosystem

Australian heritage apparel retailer Cue has come a long way since 1968. As it celebrates its 50th year of operation, Cue’s chief information officer Shane Lenton has opened up about the complex web of technology that supports the company’s continued success.

By Sarah Dunn | July 12, 2018 | Technology

Cue has 200 stores across New Zealand and Australia. As well as the flagship women’s workwear brand, it also owns a more design-driven label Veronika Maine, and edgy Dion Lee.

It entered New Zealand with Cue during the 1980s, and Lenton says it’s broadly mirroring its Australian operation in Aotearoa. However, there are some adjustments for localization – each store’s mix and fit-out is tailored for its immediate surroundings – and there’s also an element of treating the Kiwi market as a ‘test kitchen’ for new initiatives.

“In some cases, we’re doing things first here.”

Business in New Zealand is up around 15 percent, says Lenton, who explains that this is driven by a 300 percent increase in online business. This is due to the launch of Cue’s localized New Zealand website 18 months ago: “That’s had a significant impact.”

There’s some bad news with the good - Cue has just closed 11 stores that weren’t performing well. In New Zealand, this includes three Veronika Maine stores, four Auckland Cue stores, one Cue in Wellington, two in Christchurch and one in Hamilton.

Among these is the 277 branch in Newmarket, located in the Westfield Newmarket that’s the site of Scentre Group’s much-anticipated  $790 million redevelopment.

The company has maintained a Veronika Maine pop-up on the site during the 277 redevelopment, and plans to put both Cue and Veronika Maine stores into the finished shopping centre. Lenton says he’s excited about what’s going to happen.

The company launched Afterpay in-store during late June. The company was the first to launch Afterpay in Australia, and Lenton notes that the method is popular with “credit-conscious” Millennials.

“Lay-bys were always relatively strong for Cue but they were never convenient for us or the customer.”

It also recently launched Alipay and WeChat Pay in Australia, and is working with a partner to do so in New Zealand within a few weeks’ time.

Cue releases 30 new styles per week into its stores. Some city stores are angled towards an officewear perspective, others might be focused on eventwear and casual pieces.

“There’s a good mix at every store but we do curate based on the place,” Lenton says.

Like a fast fashion retailer, Cue can get its products from the design floor to shopfloor within four weeks, but Lenton says its quality remains sky-high: “We’re fast fashion with quality.”

“Because we don’t mass-produce, you don’t walk out on the street or turn up to a party and there’s 10 people wearing what you’re wearing.”

Lots of other retailers will put buffers in as they have plenty of depth on product, but Cue is shallow, Lenton says. Its extreme speed to market means that if trends and weather change, Cue can quickly pivot and save itself a lost investment in, say, thousands of heavy coats sent out into a warm winter.

Lenton says Cue is now trying to replicate its design innovation from a retail technology perspective.

The immense number of SKUs scattered across its different stores could mean trouble with fulfilment, but Cue’s back-end integration means every store can offer consumers ‘endless aisles’.

It turned on click and collect in New Zealand in June. This relies on real-time inventory tracking across the business, with inventory management showing the customer what’s available at their preferred store on the product details section during browsing and also during checkout.

“It’s been something we’ve worked hard on, achieving that speed order,” says Lenton. “Without that stock management and the inventory being in the right place, we couldn’t do what we do.”

Cue also offers what’s effectively the opposite of click and collect: ‘store to door’. This initiative means shoppers can pay for their item in store and have it posted to their homes. Getting the customer to pay on the spot is crucial for closing the sale, Lenton says – if they’re retargeted later on, they’ll have lost interest.

“A week later, they’ve moved on, they’ve bought something else.”

“It’s about capturing the sale then and there and being convenient for the customer as well.”

Every Cue store in New Zealand is now also a fulfilment centre.

“We’ve essentially nine times the inventory of any existing store from online,” Lenton says. “Having that store footprint is a great advantage for us over a pureplay in terms of speed to delivery.”

Cue’s software means that in-store picking and packing is managed from the same system that staff are already used to, simplifying the process for them. They’re also timed on the efficiency of their fulfilment – reminders go off at 10-minute intervals to make sure the orders are acknowledged and processed speedily, and an alert is logged at head office if not.

The key to success is to have head office overseeing fulfilment, says Lenton: “The store compliance is amazing”.

If one item in the order can’t be filled, the store marks it as ‘can’t fill’ so head office can reassign it to a new store.

“The customer is oblivious to this, it all happens in the background,” Lenton says.

The accuracy of Cue’s inventory tracking means multiple items from a single ecommerce transaction can be fulfilled seamlessly from several different sites.

“There’s nothing worse than having your things arrive and you’re like, ‘Where’s the rest of it?’”

Cue customers can buy from any touchpoint now, including customer care. The customer care team can sell over live chat, on the phone and via email, meaning if a shopper enquires about a product, the team can sell it then and there.

Last month in Sydney, Lenton says, a customer called to ask about a top and came away with 10 items. He explains that most customer care staff have come up from the shopfloor in the first place and know how to sell.

“Buy anywhere, fill anywhere: it’s our strategy.”

“We’ve really taken that unified commerce approach to everything we do.”

Maintaining good inventory and store compliance systems is essential to Cue’s new direction, Lenton says.

“If you can’t get those two things right, it’s a bad outcome for the customer.”

Shoppable screens is an extension of the current ‘store to door’ approach. This Cue initiative is present in Australia and is coming to New Zealand in the “not too distant future”. The screens will be drip-fed into the system as the Kiwi stores need upgrading, refurbishment or relocation. They’re currently using 22 inch Chrome-based screens, and are looking to extend into more of a tablet format.

The tablets won’t just lead to Cue’s customer-facing website, but will host an app that’s linked up to the company’s unified commerce platform.

“It’s not just a bit of tech in the store for the sake of it.”

Cue’s single back-end perspective allows the company to deliver a great customer experience. All transaction history is visible if the customer is in-store, and the shopper can view this themselves online.

“We’ve executed all these things in an automated fashion.”

A 2017 customer survey indicated that not as many shoppers knew about its local manufacturing and ownership as the company expected, leading to a big educational marketing push this year. Cue produces up to 70 percent of its product in Australia, and is the largest apparel manufacturer there. It also remains private hands of its founding family and owner.

Even for heritage retailers, speed and efficiency are impossible to do without in today’s market, Lenton says.

“You can’t make it hard anymore, those days have changed.”

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