Live from ECMOD: Checking into Hotel Chocolat

London–U.S. marketers aren’t the only ones struggling with managing multiple channels. Most U.K. catalogers already have Websites, just as in the U.S.; now–again like their U.S. counterparts–many are opening stores as well.

Hotel Chocolat, a £30 million cataloger of upscale chocolates, opened its first store about a year ago because, according to chief executive Angus Thirlwell, “we wanted to reach the half of the population that won’t buy direct.” In the session “Unravelling the Complexities of Customer Behavior in a Multichannel Business,” presented Nov. 24 at the European Catalogue and Mail Order Days (ECMOD) conference, panelist Thirlwell said that the chocolates marketer felt it was “missing out of huge sales from impulse buyers.” Hotel Chocolat was trying to create a luxury chocolate brand, he said, “and that was harder to do with mail order and the Internet.”

Hotel Chocolat in 2003 underwent a rebranding for its retail expansion, starting with a name change. The company had been founded as a catalog titled ChocExpress in 1993; it started a Website in 1997. The brand’s name “wasn’t suitable to retail,” Thirlwell said, so the business was rechristened Hotel Chocolat.

After opening its first store in late 2004, Hotel Chocolat found that retail attracted a wider audience than its direct channels. The company knew that 40% of its Web customers had an annual household income of more than £60,000 and that catalog customers were typical mail order buyers—70% of them were female, with an average age of 40. But the stores were bringing in all types, “from schoolgirls to pensioners,” Thirlwell said. The company currently has five stores, with two more scheduled to open at by the end of this year.

Multichannel inventory management “is where we’re really feeling the pressure,” Thirlwell said. “Our stock control managers are being pulled in different directions,” since mail order peaks first, then the Web, and finally the stores. From a systems standpoint, he said, “we have managed to coast along [with systems it had], but we’ll have to review it as we open more stores.” About 30% of Hotel Chocolat’s retail products are not available in the catalog or online.” If there’s a problem with having enough stock, he noted, “whichever channel gets the sale first gets the product.”

Another thing Hotel Chocolat learned in retail is to keep it simple. The company, which wanted to create a “sanctuarylike experience” in its shops, had grand ideas about providing leather chairs and antique telephones for customers to place catalog orders in the store. But the stores tended to be too noisy to be conducive to a relaxing phone ordering experience, Thirlwell said. Perhaps more critical, “customers didn’t like shouting out their credit card numbers” over the din in the stores.

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