Lane Crawford is no stranger to tradition. The luxury department store operator—established by two Scottish entrepreneurs—has been a presence in Hong Kong’s prime retail districts since 1850. But it has also carved out a place in the city as a trendsetter, regularly revamping its brand line-ups and refreshing its spaces with cutting-edge art installations.

The private company, now part of The Lane Crawford Joyce Group, has adopted a similarly bold approach to e-commerce, using online channels to compliment its physical store network, extending the company’s reach and encouraging more interaction with customers.

Its experience stands in marked contrast to the standard narrative of traditional retailers losing ground to an onslaught of Internet-based competition, and proves it’s possible for bricks-and-mortar stores to reinvent themselves for the digital era—even in the sometimes tricky China context.

The numbers speak for themselves. Lane Crawford has only 10 stores spread across Hong Kong and mainland China. The Beijing, Shanghai and Chengdu outlets opened up in 2012, 2013 and 2014, respectively. Meanwhile, its online shop ships to over 180 cities in China alone—and over 80 countries around the world.

The online business is growing at triple digits annually and is forecast to account for one quarter of Lane Crawford’s revenue this fiscal year, up from 10% the previous year, according to president, Andrew Keith. Much of that growth is coming from places where the company is not physically present, such as second and third-tier Chinese cities and other Asia-Pacific markets, including Japan, Singapore and South Korea.

Growing into it
The foundations for these achievements date back nearly a decade. Lane Crawford started looking seriously at e-commerce in 2007, researching different business models. Much of the firm’s time was spent planning a technology platform that would allow for a unified view of inventory and consistent look and feel across various Internet channels, as well as supporting multiple languages and currencies. It also had to be integrated with the company’s legacy systems—a process that Mr Keith says is still ongoing.

Although the aim was to build an online business with global capacity, Lane Crawford’s historical focus on China, and the market’s intricacies, meant it was a primary consideration. “There were two very important considerations,” says Mr Keith. “Firstly, how we could create and integrate a totally new way of business into our current operations while also driving a physical expansion plan in mainland China. And secondly, how we would actually operate e-commerce in China where it was still very price-focused and where we would have to build the infrastructure for a luxury proposition because it simply didn’t exist.”  

For instance, low rates of credit card usage meant Lane Crawford had to provide for alternative means of payment with various partners while maintaining tight security over personal data.

The shift to e-commerce also required organisational changes. The company embarked on a major recruitment exercise that drew e-commerce, technology and digital marketing talent from around the world into a new business unit that worked closely with existing staff.

The actual launch of Lane Crawford’s online marketplace did not take place until October 2011. It started small, with a limited range of women’s ready-to-wear, shoes and accessories. Menswear followed, then beauty, home and lifestyle goods. The company now has 80% of its total fashion range available for purchase on its website, and is aiming for 100%. “We worked on getting it right and then scaling the offer,” says Mr Keith.

Shopping around the clock
Today Lane Crawford serves an increasingly mobile customer base. Stores in strategic locations, such as Shanghai, Chengdu and Hong Kong serve as regional ‘hubs’ from which products can be shipped—or where customers can pick up or return goods they have ordered online.

Being able to engage with customers on multiple fronts has had a significant impact on retention and loyalty, and hence spending, says Mr Keith. “Our omni-channel customers shop five times more than our single channel customers and they spend 5.3 times more, so driving the conversion of these customers is key.”

These gains have not come easy, however. In addition to having to cater to varying payment standards, logistics can be extraordinarily complex.  China customs, for example, subjects garments to rigorous testing that can take weeks to complete, making it difficult for the company to achieve its goal of having all products available everywhere at the same time.

And while improvements in analytics tools mean Lane Crawford can capture and use more customer information, it comes with the need for greater vigilance. “Data security is at the top of our agenda and we are constantly looking at ways to strengthen this,” says Mr Keith.

There is also the challenge posed by gigantic online marketplaces, such China’s Taobao, where virtually anything can be found and which are increasingly used throughout the region. But Mr Keith does not see them as direct competitors. To him, they have played an integral role in building an infrastructure for e-commerce in China that everyone can take advantage of.

“We’re a very different business; we buy the inventory we sell directly from more than 1,000 brands that we have relationships with and build (their and our) brands together,” he says. “Other multi-brand retailers run a concession model which is essentially renting out space to other brands. Taobao does a similar thing online.”

Designs for next season
Looking ahead, Lane Crawford expects the online contribution to total revenue to increase even further as the purchasing power of millennials (those born between 1980 and 2000) grows. Alongside its expanded range of online offerings, the company is planning to explore predictive technologies to create a more personalised customer experience.

Nonetheless, the progress notched up so far is just the beginning. Mr Keith still sees Lane Crawford as in the early stages of a transformation from a traditional retail business to something that is “part retail, part media, part technology, part data – and who knows what else.”  The next generation—generation Z—will know no other way of shopping than online, observes Mr Keith. “It’s incredibly exciting.”

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