Miroslav Umlauf (Avast): Showing customers how their data flows through the company should be the goal of all companies
"We were able to argue internally over missing facts. Now we will continue to argue over factual data. However, we will also be able to advise, consult and explain to the retailer why we think our proposed move is the right one," says Petr Břoušek, LEGO's Trade & Marketing Manager for Russia, Eastern Europe, Middle East, and Africa region.
In partnership with Adastra, LEGO has launched the first implementation project phase to understand better the customer experience and map shoppers' needs in physical stores. The aim of the project is not only to improve the service and products to customers but also better to support the sales of physical retailers with relevant data.
Ivana Karhanová: How has the pandemic changed shoppers' store-buying behavior? And has it changed at all? What does the perfect customer experience in physical retail entail, and how can data help? And what data do retail brands have at their disposal? Can data be used to break down stereotypes? That's what we're going to talk about today with Petr Breusch, Trade & Digital Marketing Director at LEGA for Russia, Eastern Europe, the Middle East, and Africa region. Hello, welcome to the studio.
Petr Břoušek: Hello. Thank you for having me.
Ivana Karhanová: How is the LEGO customer changing or not changing?
Petr Břoušek: Good question to start with. I don't think it changes fundamentally. Parents are always looking for ways to keep their children entertained, and LEGO is one of those great ways to do that. The truth is that Covid has helped us within that time frame. Families have had more time to be home and play together. That's why LEGO has raised the wish list of not only kids but sometimes parents. It has helped to get them to be together more and have an activity together.
Ivana Karhanová: In your opinion, is the retail market going through a disruption? In short, we probably perceive a change somewhere in the background, but we don't yet know where exactly it will lead.
Petr Břoušek: Definitely yes. When I was thinking about it a couple of years ago, we were already aware that retail was going to change fundamentally both in terms of channels and customer behavior. Covid was one of the big accelerators that sped it all up. We all discussed e-commerce as the future and that retail was moving much more into the omni or e-com space, which it has. But on the other hand, that doesn't mean that physical retail has disappeared and no longer has a role. On the contrary, its role remains and is still important. Now it's just important to talk about it properly and understand which opportunities remain and how to capitalize on them more.
Ivana Karhanová: What's important in physical retail from a customer perspective and your perspective as a brand?
Petr Břoušek: In the toy category directly, it's the physical experience with the product. You can see what the product might look like when you're online, but you can't touch the box directly. If we're talking specifically about LEGO, there's nothing more important than walking into a store, grabbing a box, messing with it, trying it on, like, how heavy it is, and starting to look at all the details that might be there. That's one of the important elements. Then, of course, depending on the channel, customers expect an experience that is connected to a physical ritual. It's not just about the merchandise on display. There's something extra to it that makes them spend time there and gives them a reason to go into the store. The last thing is the breadth of the range that is immediately available. In e-commerce, that difference is significantly reduced, but you still can't have that product for at least a couple of hours. Physical retail offers this.
Ivana Karhanová: Do customers expect a bigger or broader offer in physical stores?
Petr Břoušek: There are two views on the overall breadth of the offer. This is where online, in particular benefits, you have unlimited "shelves," so to speak, and you have a lot to choose from. On the other hand, it's much more difficult for a customer to navigate. When you go into a store, you immediately visually see what you need and go for it. You see the current offer, which paradoxically makes it easier to choose what to buy.
Ivana Karhanová: When you have a long menu, you spend half an hour choosing, whereas, in a three-item menu, you must choose immediately.
Petr Břoušek: Yes, I agree with that parallel.
Ivana Karhanová: How can data help you in all this?
Petr Břoušek: They certainly can, and here again, I will give a parallel with the online environment, where we can see how sophisticatedly we can work with it. We can see the whole customer journey, which we don't have in the case of physical retail. We're very blind here. All we have is the final sale of the item in the store. But we don't know how the customer got there, how they thought about it. So we're missing a big part of that overall customer journey.
Ivana Karhanová: If we parallel that with online, we know how many customers saw our ad, how many clicked on it, and how many bought the product. Does that mean you would need to get similar numbers from physical retail?
Petr Břoušek: That would be the ideal scenario, and of course, that's one of the aspirations we would like to fulfill in some way.
Ivana Karhanová: Let's talk about the fact that suddenly you can have data because, with Adastra, you start testing the deployment of smart shelves, smart scales, and other devices that allow you to see the data in physical retail. What were you using before to conclude whether this works and makes sense?
Petr Břoušek: To be honest, it was very much a feeler.
Ivana Karhanová: But that's what everybody has, right?
Petr Břoušek: I think so. Of course, some competitors may approach it partly differently, but, for us, it was a lot about distorted information we were getting, for example, from one-off surveys. These had some telling power for a given situation, a channel, and maybe even a customer. But we can no longer see how behavior evolves and which elements might influence it sooner or later. We also worked with data to get at least some customer insights. But it was very inconsistent, and of course, not all the data the customer wanted to share with us. Now, I mean the retailer's customer, for example, in the Czech Republic.
Ivana Karhanová: That's another thing that interests me. How do the retailers react to you telling them: We've got secondary exposure and want to measure the whole thing?
Petr Břoušek: This is going to be a huge benefit because if we're talking about the toy category again, I'm not aware that these discussions are going to go that deep and help even that retailer build more awareness of the category, of shopper behavior in the store and increase sales efficiency. What I think, and this has certainly changed, is the willingness of retailers in the last year or two because the pressure on physical retail, particularly because of Covid and the acceleration of communication channels, is much greater. So that puts pressure on them to be efficient and achieve their KPIs.
Ivana Karhanová: Does that mean their customers have started to move more into e-commerce when they couldn't go shopping in stores, and now they need to back up the numbers?
Petr Břoušek: Yes. It was in a situation where physical stores were closed during Covid, and e-commerce was the only platform for shopping. But there was also a realization among shoppers that, in some situations, it was far more convenient to shop online, so they had to find new ways to bring customers back and offer them something different. If I look even more at the change in consumer behavior in stores, and I think this goes across all categories, in toys, there is evidence that footfall to physical retail has declined.
Ivana Karhanová: By footfall, do you mean the number of visits?
Petr Břoušek: Yes. The number of visits, so the frequency during the year. It also reduces the time that the customer usually spends in the store. What has increased, on the other hand, is the shopping cart. That is, how much money a person spends per purchase.
Ivana Karhanová: Let's look specifically at what you'd like to measure and what you'd like to have from physical retail for data so you can make better marketing decisions or conclusions for the business.
Petr Břoušek: In this project specifically, we have the ambition to understand which categories in the store are relevant to us as LEGO so that we can be a part of that. That means having a product on display that is relevant to that category. So if I were to give an example, if a mum has a two-year-old, she's probably not going to go straight to a category that's maybe age six plus, but she's probably going to go to preschool and look for relevant products. And, of course, there's the question for us as well, whether we should be there, with what portfolio, and how to properly communicate that proposition to be relevant to that mom.
Ivana Karhanová: How do you know if the section is relevant to you? How do you know?
Petr Břoušek: Here we go back to the beginning discussion that we would like to mirror the concept of working with data online. What is the traffic in the different parts of the store and categories, and how many people were we able to engage, which doesn't necessarily mean they had to buy, but at least we exposed them to our communication.
Ivana Karhanová: At the very least, you knew that the kid stayed there, and the mom dragged him away for five minutes.
Petr Břoušek:: Exactly. And he could try out what it all looks like, play around for a little bit, and ideally, for both the retailer and us, they end up buying that box and we're the preferred product within the store.
Ivana Karhanová: You're the director of the whole region, are you going to be testing this across the whole region or are you only testing in the Czech Republic so far?
Petr Břoušek: We would like to go through the whole region. It doesn't mean all countries, of course. We have selected three countries where, according to our hypothesis, there may be some differences in buying behavior. We will try to test in Central Europe and Africa or maybe Turkey. The reason for this is that the 80:20 rule applies - buying behavior is more or less similar, but then the understanding of the LEGO brand itself can play a role. For example, if we look at the Czech Republic, everyone here knows LEGO, and we don't have to explain what it's for and how you can play with it. Here people are interested in what's new in LEGO, what's cool, and what else they might have. Whereas if we look at Africa, for example, there, of course, LEGO might not mean anything to the customer. It's more about building a brand.
Ivana Karhanová: Before the podcast, you told me there is a stronger focus on secondary exposure in the Czech Republic than elsewhere. What is the reason for that?
Petr Břoušek:I wouldn't say it's specific to the Czech Republic. With good product knowledge in Central Europe, we can say that we have the base well covered, and now we are looking more at just the groups where we would like to strengthen our position.
Ivana Karhanová: They cut the cake at the expense of someone else. :-)
Petr Břoušek: It can be interpreted that way. We try to be at least on the wishlist. I mean, again, using the example of the mom and the preschool segment, maybe she's not thinking about it. It might be a completely different toy, but if we're there and we can communicate it properly, she might think, "Oh, this is a brand that I have experience with, this seems like a good idea, and I'll buy it."
Ivana Karhanová: You were also saying before the podcast that you need to break down stereotypes, like LEGO is not for girls. So data collection should confirm or refute your testing exposure in other segments, aisles, and other positions.
Petr Břoušek: Definitely, yes. We're trying to go in a slightly different direction within this agenda than we have been. So that we're not talking about this kit being just for boys. This kit is just for girls. We think it's important for the child to choose what they want to play with. It's really up to them to make that choice. So our kits are for kids, and we try to find relevant categories in stores where we can offer them. We don't examine whether the kit appeals to boys or girls anymore. We just know it's relevant to the category.
Ivana Karhanová: So next to the dolls, I'll have cars?
Petr Břoušek: It can be like that.
Ivana Karhanová: And based on the measured data, you say: "This is working for us and we'll keep it there?"
Petr Břoušek: Exactly. A practical example is passion points. If you look in a toy store today, very often, the categories are gender-driven. What we're talking about is already more "unisex," and it's more important to highlight the "passion" that the child has. Whether it's dolls or cars, it doesn't matter if it's a boy or a girl. You know that when you go to a shop with a child and the child is interested in a car, you don't address the brand. You go to the category and start looking there. Now, this is LEGO thinking.
Ivana Karhanová: How can collecting this data change the position of brands vis-à-vis retailers? If it can change it at all.
Petr Břoušek: I think there will be two big benefits here. One internal. Because of the lack of certain insights and data, we can argue internally because we all have different opinions. It's even worse if we don't have clear facts about it. And I think this will resolve the situation. Now we're going to keep arguing over specific data. :-) It's going to be the conversation that can have some benefit. And the other important point is that we will also be able to advise the retailer, consult with them, and explain why we think our proposed move is the right one. But, on the other hand, we're not afraid to go out on a limb, too, if we see at that moment that we have a solution or a position that may look great but, for some reason, doesn't work and we're able to give it up.
Ivana Karhanová: What does it take on your part to embark on that kind of measurement? I guess it's not exactly an easy project, is it?
Petr Břoušek: If I knew this in advance, I would think twice. :-) Not because of Adastra, but rather because of the internal setup. I guess we didn't realize at the beginning how complex the thinking is and what all needs to be considered so that the results are relevant and in the form we imagine. In the beginning, there was an idea and a lot of enthusiasm about how simple it would be and how everything would run like clockwork. Still, it became clear how sophisticated the project was and how much interaction from different departments was needed. Maybe that's one of the lessons because we're not set up for this. We're more of a business organization that doesn't have a lot of technical support, and maybe this was a little painful. We had to set up internally how we would work with this and how we would pull this project off.
Ivana Karhanová: When you get data from, say, a particular secondary location, what does that entail for you going forward?
Petr Břoušek: It's linked to our other internal data, which is mainly from stores. We get it from our retailers, and we can also verify the business impact. Then we can tie that in with our internal application that shows what that execution looked like from our sales reps' perspective. And if we put those three views together, I think we have a solid case. So that's where we're going to validate whether this is the future we want to go for or whether we need to make some fundamental changes.
Ivana Karhanová: You mentioned this is a much more complex project than you imagined. Is that complexity because it affects other departments on the LEGO side? Which ones in particular?
Petr Břoušek: The sales department. There are daily "right battles" between sales and marketing, where we, as marketing, would like to make a "wow" solution that takes up half of the store, we are proud of it, and we see that shoppers or kids like it. Whereas, of course, sales again need to deliver certain numbers and commit to the customer. That's the basic "fight" about the right way to go. Then other departments like operations come into it, planning the goods and maybe even the production of these solutions. Or it's our BI department. Again, they have data inputs from individual stores and data items and can analyze what kind of growth they had, for example, compared to a store where we don't have that secondary location. So there are many departments that I've listed that are both regional and country level.
Ivana Karhanová: And that data can then crash their plans?
Petr Břoušek: We are prepared for this. I think that we are already at this stage where, on the contrary, we don't take the data as disrupting our plans but instead as helping us to make the right decisions. I'm sure there may be some level of discomfort that it's worked so far at least on paper and we find out that it doesn't in reality and we have to do something about it, but we think it's the right thing to do internally and for customers.
Ivana Karhanová: Do you see any more room at this point in what data you're missing to market even better?
Petr Břoušek: We are discussing with Adastra that if we can get this project off the ground and deliver the goals that we set together, we want to go one level higher and understand how the shopper behaves in the store. We, of course, get information from the basic tracking about how many shoppers were there and how many were interested in the product. Still, we don't know if they were there alone or with their children, what exactly they looked at at first, what was the element that made them spend more time there, and what was the element they didn't notice in the solution. This will help us to perfection in the end.
Ivana Karhanová: For the business and the brand, I get it. It would be great to have that data. How do you think your customers will react to this? I'm thinking of shoppers now when they find out that we can analyze their behavior like this.
Petr Břoušek: I would love for them not to even know. It would be natural. That's going to be the best feedback because if we're in the right place with the right solution and the right assortment, and that conversion shows up there, that's confirmation for us that it was the right way to go.
Ivana Karhanová: And in terms of retailers, when you start collecting data on how many people they have in store.
Petr Břoušek: There are two perspectives on this. At first, they will be reserved before they understand what the whole project can bring them. That was my view at the beginning. For example, when I was worried before we discussed it, if it's not sensitive, how we approach GDPR if there might be some element that will affect it. And I think this will also be on the retailer side. They will definitely have a lot of questions at the beginning, but if we can explain it to them properly, they will see the benefit in the end.
Ivana Karhanová: We should add that all data collection is anonymized - just like online. You don't see a specific person, you just see the data set that is built on top of it. What do you think is the most difficult part of data collection?
Petr Břoušek: I'm hoping, because we're at the beginning now, that it's really about getting the setup right, and once the machine is up and running, it's going to be a lot easier and we're going to focus more on what we can read from the data.
Ivana Karhanová: Says Petr Břoušek, Trade & Marketing Director from Lego for Russia, Eastern Europe, the Middle East, and Africa region. Thank you for coming to the studio. See you sometime.
Thank you. I'll look forward to it.