First thing this morning Thorntons have released their three year plan. Many people won’t be interested in reading this; they don’t want to know how chocolate finds it way in to their high-street and aren’t really bothered by the human stories – at home or abroad. But if you’re like me your fascinated by the business of chocolate then you’ll find this interesting. For my sins I’ve been a business owner since I left university – where I obtained a Degree in Economics and awards in finance. To me if you mix business and chocolate you’re always going to get my attention.
We all know that Thorntons have had their problems and previously I’ve suggested how they can improve what they do and how people should drop their out-dated views of the company, but how does the new CEO Jonathan Hart see they can remedy the situation? Here are some edited highlights of their Strategy Review (my views in italics).
They’ve not done enough to mitigate risk, they’re too focused on seasonal buying periods. - It seems that they go all out to make the most from too few seasonal events and then heavily discount afterawards. Currently they’re doing a 50% sale, although it may be necessary to get cash in the bank, if you’re constantly discounting online and in your own stores it can only harm the brand perception.
They believe they haven’t kept up with changing consumer demand and behaviour. - I see consumers seeing chocolate more as a status symbol with the “look what we found” and the “how great is this” at a dinner party. They’ve been too slow to react to this. Furthermore, I think that they’ve also missed out on the growing purchasing power of the younger generations. Even though they’ve tried to remedy this with their grab bag style products, that mainly affects the pocket-money customers and not the “first job” customers that may prefer to go for the more stylish alternatives that are becoming increasingly prevalent on the high-street.
Many of their own stores are no longer in prime positions and they’ve not really kept up with where people are. - Having spent an afternoon in Bicester on Saturday I could see that there were literally no customers in the store – and there was no snow storm or heat wave. Much of the trade walks down to the busy Bicester Village shopping area. It looks like they’ll be closing about 120 of their non-profitable stores and offering people the opportunity to turn them in to Franchise stores. They’ll also be looking to open new stores in more profitable and exciting locations.
They want to grow the relevance of their chocolate throughout the year - when I’ve had a chocolate client in the past for my online marketing business it was very clear that even though demand does slowdown in the “hot” summer months, there are still marketing angels to drive incremental sales. People just don’t buy chocolate at Easter, Valentine’s, Christmas, Mother’s Day etc. In the review Thorntons point out, and I can see from my own data that birthdays, anniversaries, congratulations do offer a lot of consumer demand. Hotel Chocolat are experts at picking up this “out of season” market.
New product ranges including “little gifts” and a new “flagship brand in 2012″ - I see them as needing not only to bring the fun back into the products they offer, but also bring a sharp focus from consumers’ and the media’s on to their Academy of Chocolate award winning chocolatier skills. A new product launch squarely focused on their quality is an absolute essential in my mind. Also most (of not all) of their main competitors don’t offer online or in store personalisation – it appears they are going to make a bigger play of this.
Improve their merchandising and displays with “more space for the quality of the chocolates to be demonstrated.” - Walking into their stores is like walking into a jungle in full bloom. I’m blinded by the colour and by how they seem to monetise every inch of their stores. I’d prefer more colour-coding to push people into the various areas such as the top of the range chocolates, seasonal, etc. At the moment when I walk in I’m just overwhelmed with the choice and I don’t know what to pick up first. I’m sure others suffer the same fate.
They plan to improve the customer experience with new customer sampling - I completely agree with this. Hotel Chocolat staff is very quick to offer you a sample as soon as you walk in. As such you’re almost compelled to buy something to reciprocate the offer. Many people may walk into a Thorntons store for a gift, but they still have a past perception of what their chocolates taste like – offering a sample of their finest should break that out-dated view and increase sales.
I really do wish Thorntons well. They have a massive challenge ahead. I’m sure Jonathan Hart could spend his weeks sat up at a beach bar somewhere sipping ice cold beer and lapping up the sun, but like the rest of the Thorntons staff, proving the media, the markets, their competitors and the general public wrong appears to be a challenge worth undertaking. I’m sure chocolate fans will come to love Thorntons again.
p.s. they really do need to sort out the search engine optimisation on their site though, signicant increases in sales could be achieved with a few changes (including their online mindset).