As well as speaking at and helping to moderate last month’s IT4Fashion event in Florence, Italy, WhichPLM had the opportunity to sit down with Simon Thun, scion of the Thun dynasty, to talk about Italy’s retail heritage, his family business, and the future of seamless commerce. Conducted during the show, the interview is presented here in full, and provides a unique perspective on the evolution of omni-channel retail and customer engagement – enabled by technology.
Simon Thun is the Omnichannel Retail Director, Thun S.P.A.
WhichPLM: Please tell our audience a little about Thun – its history as a beloved artisan company, through to its position today as a modern retailer.
Simon Thun: Thun is a family company, and I’m proud to represent the third generation. The business was from grandmother’s passion for modelling clay: she used to make little figurines and ashtrays at night when her children – my father included – were sleeping. Things then developed from there. Her friends were drawn to her creations, and then an extended network of friends-of-friends, and it became a business.
This was all just after the war, my grandfather was working as a lawyer, and he supported my grandmother while she grew the business. Then, by the time he was 23, my father had taken over the company, which had about 20 employees at the time, and was selling ceramic products out of a small shop window in a Northern Italian city called Bolzano. Things then really started to come together when my father developed a wholesale business strategy. He’d go from shopkeeper to shopkeeper, initially in Northern Italy then all over the country, asking to sell these ceramic figurines and clay models.
Today, we’re best known for the Thun Angel figurine, which almost every Italian person would recognise, but we’re also about much more than that; our product range covers around 2,000 products, and ceramics are only about 50% of it. So, over the last 15 years, we really became a corporate company, with Europe-wide distribution and a proper wholesale structure of franchise shop-in-shops, covering around 1,200 stores in Italy and the rest of Europe.
It’s only quite recently, in the last five years, that we’ve become retailers in a modern sense. We’re now down-scaling our wholesale business, because we see our biggest opportunities in the retail model.
WhichPLM: What kind of opportunities are we talking about? What were the major catalysts for shifting your emphasis from wholesale to direct-to-consumer?
Simon Thun: That transformation has been driven by two forces. Firstly, the wholesale model in Italy – and indeed the rest of Europe – for our product categories was slowing dying. Modern malls, shopping streets, and the Internet have already halved the traditional wholesale market, and things are not look positive for the future either. Traditional home and living shops, and local furniture shops, have had to close their doors, so finding a way to compensate for that was a matter of necessity for us. The second force was that we recognised that our products mainly sell where the right kind of service experience and customer engagement model exists, and those were things we could not properly enforce on our franchisees.
WhichPLM: You wanted to be the owners of that experience, essentially?
Simon Thun: Exactly. We wanted to own the data, to know what the customer wants, what he or she believes in, and then to be able to deliver whatever they need – all without losing control at any stage of that journey. So in the last five years we’ve been steadily scaling down our wholesale business and emphasising directly-controlled retail. In fact, 2017 was the real turning point, because it was the first year in which 50% of our turnover came from our own retail channels.
WhichPLM: And how much of that 50% is eCommerce?
Simon Thun: Currently about 5%, but in the next three years we’re looking to double that figure year on year. It’s important to realise, though, that we don’t see the opportunity in terms of different channels; our aim is to take a more holistic approach, and to build a seamless commerce structure where shoppers can fill up their baskets in a store, get interrupted for whatever reason, and then pick up exactly where they left off at home, online. And we have to have the right IT enablers in place for that to happen.
WhichPLM: You’re talking about a lot of different brand touchpoints, so I appreciate that you have to make sure there’s a consistent experience for consumers there. But what about the other direction? How do you track and engage with the same consumer across multiple different channels for loyalty purposes, CRM, and so on?
Simon Thun: We’ve worked very hard on building our loyalty program and improving our CRM. Interestingly, we actually have a unique loyalty program, called “Thun Club” that stretches back about 20 years. We were pioneers in the sense that we asked people to pay to join our loyalty program – quite a significant amount as well – which I realise is unusual. But back then we saw that there was such a strong attachment to the brand, and that the people who love it wanted to have more of it every day, in every possible form. So our vision was to give them that service, but in return they had to pay for it, which sounded quite fair.
Now, in the last two years we’ve evolved and relaunched our loyalty program, offering also a “lighter” version of it, with the aim to reach new clients, who are looking for a smarter and more digital way to interact with the brand.
Shoppers get a bit less of a service, but they can still collect points and rewards, engage with us on social media, attend events, make purchases and so on. The goal there, of course is to allow shoppers to be rewarded for their purchases across our entire spectrum of customer engagement channels – and in the end to encourage them to stay loyal to the Thun brand.
WhichPLM: There’s presumably a huge amount of cross-channel data behind all that. What does taking a seamless approach to consumer engagement allow you to do that wouldn’t be possible with a more traditional, single-channel strategy? Can you respond to market demand in different ways?
Simon Thun: Absolutely, we can. Through our seamless, multi-channel approach, we engage with customers on a very personalised level. To make the most of that, we’ve been building marketing automation tools that can transform the way things are done at the front-end, personalising the in-store experience and consumer interaction. Everything we do to understand and respond to customer needs, whatever the channel, is all back-linked through our CRM system.
WhichPLM: What kind of changes did you have to make to your back-end processes – things like supply chain, logistics, and so on?
Simon Thun: So we’re in a lucky position in that we own a very advanced logistics company as well, which is part of the family business. And we’ve recently acquired two IT companies – one systems integrator, and one consultancy that specialises in integrating different channels with our storefronts. So we had great support for driving this kind of back-end change forward, but still, it’s very tricky to get your supply chain right. Ideally you want to have a limitless stock experience, so you need to work back from that point and build the right channels and systems to enable it. So, if a customer goes into one store and finds that a product isn’t available, we can rely on those systems to know the closest channel (whether it’s another store or online) where it is available. Delivering that vision, wrapped in the correct customer experience is crucial, and we’ve all seen it done wrong.
WhichPLM: All these changes are also being driven and supported by technologies like CRM, ERP, and so on. How have you managed the cultural side of that digital transformation?
Simon Thun: Internal cultural change is the trickiest part. When you buy systems or services from a supplier, you know what you’re getting – more or less – and you can guide the implementation in a certain way. But when it comes to businesses with long histories, you have to manage the habits and expectations of people who’ve done things the same way for a long time. We’re turning 70 soon, so obviously there has been some resistance against the kind of change we’re putting into practice.
Adapting to a new mentality is, I think, the hardest part of any technology-led change, and I believe there is not enough supply for good consultancy that specifically targets that side of things. Because after all, internal change has to be built on a thorough understanding of the company, and it can only truly be driven by an internal force – by the CEO or another senior executive. In our case, we have a dedicated Digital Transformation Officer who assists and responds directly to the CEO. He’s completely separate from the IT department, and he has lead assistance from three or four senior supporters to drive change throughout the company.
WhichPLM: In that context, how important is finding the right technology partners to make sure that far-reaching change has the greatest chance of success?
Simon Thun: It’s very important. We know that Italy isn’t necessarily known for technology. But we also know that the rest of the world is leading by example, so we look at what bigger retailers than us are doing – the models they’re applying in the UK and the US – and we figure out how to apply them in Italy. A big part of that is narrowing down which suppliers meet our needs, technically, and then which of them have already scaled on an international level.
WhichPLM: Finally, what do you see as the future of retail – whether it’s for Thun or more generally?
Simon Thun: I see a good balance between on and offline, personally. I don’t think physical stores are disappearing in Italy; we live in a country with a very strong offline history. I’ve worked for some time in Asia, where you have this leap-frogging approach, where retail is being completely disrupted and overthrown by new technologies. But in Italy we’re the oldest retailers in the world; we have stores in every tiny city, so compare us to the rest of the world and we’re a little bit different.
That said, I believe we’re going to have to adapt, but it’ll be later rather than sooner. Unlike Germany, the UK, and the US, it’s going to take Italy a lot longer to get to that even split between online and offline shopping. I think the key to getting there will be creating seamless retail strategies that eliminate the usual barriers between channels, and turn stores into experience-driven consumer engagement opportunities, rather than being mainly transactional.