Thorntons is a tale of woe today. They’ve just announced an 8.5% drop in half-yearly profits, where they blame the bad weather, discounting as a result of weak consumer confidence and problems with their supply chain. They talk of closing more stores and, at best, suggesting flat (i.e. no) year-on-year growth.
I’ve been having a think about the Thorntons business and wondering if this is the whole story. I can’t help but think that they have lost their way somewhere. It now looks like a bit of an oddity on the UK high street and in the wake of some very cool competition, probably has some catching up to do.
I would suggest they probably have five places to start looking for the answer.
1. Brand refresh
It’s difficult to write anything about chocolate without mentioning Hotel Chocolat. The average UK chocolate lover has become more educated and discerning in their chocolate tastes and now understands the benefits of a high cocoa content. Hotel Chocolat appeals directly to this new discerning breed of customer and helps them further their knowledge and experience new flavours. What does it say about someone’s tastes (or indeed, their opinion of you) when they present you with a box of Thornton’s chocolates?
2. Reviewing the customer profile
I suggest that in 2011, gifting represents an ever-decreasing percentage of high street spend. Businesses like Krispy Kreme cater better for the emerging class of ‘office hero’ who will collect a box of something special at lunch to share with his work colleagues. There are new classes of consumer who could be worth catering for. Talking to customers would help Thorntons better understand what their expectations are from a chocolate retailer in 2011.
3. Rollout the big picture
For many retailers, much effort is put into brand development, which is then shared within the HQ, perhaps rolled out into the stores in the form of revised point of sale collateral and merchandising changes. Besides the few posters they receive, shop staff and franchisees remain unaware of this repositioning. I believe Thorntons could benefit from communicating all their brand values through the staff in every store. Why do they work at Thorntons? Why buy from Thorntons? What’s the benefit of Fairtrade? What do they recommend? Good customer service, as every retailer knows, can lead to referrals and repeat business, but without the selling tools, it’s difficult to put on a good show.
4. Opportunities from CRM
If I was in a Thorntons store, I’d be more than happy to leave my email address for the chance to enter a prize draw for a luxury box of chocolates. Offer me a truffle on the spot and I’d happily trade it for my address, phone number and the answer to questions about my buying habits.
If I haven’t been into a Thorntons store for three months, a £5 voucher would probably tempt me back, and I know I’d probably spend double that.
If I’ve ever bought corporate gifts from Thorntons in the past, isn’t it time I did so again?
Do I know any ‘look-alikes’? These are people, like me, who might spend over £100 pa on chocolate. What would a store be prepared to give up for people like these?
Our experience with similar retailers tells me that there is somewhere between 6% and 8% of additional revenue to be generated from carefully considered CRM activities alone.
5. Learn from the new kids on the block
It’s incredible how quickly new retailers can spring up in this sector and quickly establish market share. I’m thinking of businesses like Artisan du Chocolat, Chocolate and Love and Willie’s Cacao. What is it that they’ve got right? Whilst this niche positioning may not be right for every Thornton’s customer, there are lessons to be learned and adapting these lessons for a mass market could lead to new product lines. A partnership with some of these unique retailers might tempt Thorntons customers to dig deeper and spend a little bit more.
6. Test the water
We’ve been talking here about some changes that could be fairly bold to deliver in such an established business, so I’d kick off with a pop-up or concept store and carefully measure the impact of each change. I remember Peter Mark, the successful hair salon chain in Ireland doing this a few years ago. They knew there was a younger audience out there who hadn’t experienced their brand before, but wanted to offer something that was right for them without cutting off their loyal customer base. Peter Mark launched the Style Club, a new wave of salons, which started off in Dublin. I remember being shown round by the Marketing Director and thinking what a departure it was from their traditional identity and applauding them for experimenting outside their comfort zone.
It would be nice to see the UK’s last independent, publicly-listed chocolate maker come good in its centenary year. It will take courage and imagination from new CEO Jonathan Hart. Thorntons sales may have dropped, but there are places other than discounting to look at for growth. Or just blame the weather.
(Featured Photo by NordWood Themes on Unsplash)