Apple’s market cap recently hit an incredible £2tn, which represents a doubling in only two years, and this has happened during a period when sales of its core iPhone have been slowing. The reason for this apparent disparity is largely down to a realisation by investors that the value of Apple is not so much down to its sales of hardware but is increasingly about the revenues it drives from its eco-system – including its App Store, add-ons like its AirPods, and services such as iCloud, Fitness+ and Apple Pay.
All the major technology firms such as Apple have a laser focus on building-out their ever-broader eco-systems that ensure customers remain tied to them for a growing number of services and this keeps their virtual tills ringing. Such is the potential value to be had from locking customers into these eco-systems that it’s not surprising companies of all types have sought to tap into the trend.
The most obvious route is through subscription services. Even the most non-tech-focused of companies can bolt on a proposition that delivers goods or services to customers on a regular basis for a recurring subscription fee. It’s clear that many businesses are doing just that because, since lock-down, 22% more companies have set up such services, to add to the existing 28%, according to Barclaycard. Take-up by consumers had increased by 39.4% year-on-year in July as 65% of UK households now spend an average of £552 on a typical seven different subscription services.
Against this backdrop Pret recently launched its in-shop coffee subscription “YourPret Barista” (powered by EagleEye) which – for £20 per month – enables subscribers to enjoy up to 150 coffees and other drinks. It’s an interesting move because Pret has, until recently, eschewed anything loyalty-related and digital, preferring to do everything by gut feel.
However, in reality it had already been working on addressing this outdated view under new chief executive Pano Christou who, last year, sought to kick-start a digital transformation to make the company more multi-channel. Its historical focus – purely on the store model – had served it well, just like it has for many other foodservice companies, but Christou understood major change was needed.
He had begun early stage trials of digital labelling on shelves and scan-and-go technology as well as installing iBeacons on tables. But covid-19 has accelerated things massively and prompted much more than this tinkering around with the stores. The game plan is now all about aggressive, full-on multi-channel and the creation of an eco-system.
To this end, as many as 30 outlets have been closed, click and collect has been introduced into some stores, the chain is rapidly building up its delivery business through Deliveroo, UberEats and Just Eat, and has formulated plans to open up to ten dark kitchens dedicated purely to producing food for these delivery partners.
There is also a trial of “Pret Office Drops” that is a replica of the scheme popular in the US, which enables orders to be taken on an app and the customer then collects the goods from Pret shelving, located in their office. Plans are also afoot to launch pre-packed food in supermarkets in the new year and to sell bags of coffee through Waitrose and Ocado later this year. Christou has suggested that between a third and a half of turnover could be derived from off-premises sales.
Pret is, by the admission of its chief executive, very much in the eye of the storm of covid-19 and is feeling the full impact of the massively reduced footfall in major city locations. Its actions to create a multi-channel model are, therefore, being undertaken at a critically rapid pace. Although other companies might not be in such an acute situation, it could well be advisable for them to take an equally proactive approach because the direction of travel is very much away from physical stores being the sole revenue generators for any business.
What will likely link the different channels for Pret is its YourBarista scheme that will form part of the backbone of the burgeoning Pret eco-system. Anybody questioning such a focus merely needs to look at Apple for inspiration and recognition that using such tools to engage with your customer base are the critical levers on the dashboard of future prosperity.
Glynn Davis, editor of Retail Insider
This piece was originally published on Propel Info where Glynn Davis writes a regular Friday opinion piece. Retail Insider would like to thank Propel for allowing the reproduction of this column.