How digital can drive bricks and mortar transformation

Embracing online was a big leap for the Jax Tyres franchise, but the investment has paid off

Despite paying lip service to the potential of online, it's not unusual for established retailers to see it more as a threat than an opportunity. But Jeff Board, the CEO of Jax Tyres, has found online hasn't just opened up a new channel for his stores to acquire customers; it's opening up opportunities to transform the bricks and mortar side of the retail and service business.

"The Web is such a powerful thing for us, it's forcing us to rethink our bricks and mortar," said Board. "We need, in fact, more bricks and mortar.”

Jax Tyres is a business franchise with more than 80 independently operated stores in Queensland, New South Wales, Victoria, Tasmania and the ACT. Although it has a relatively venerable history stretching back to 1949, when the first Jax outlet opened in Sydney, the franchise, through a partnership with Salmat Digital, has embraced a digitally driven future.

It represents a big shift for the company, which as recently as the mid-2000s relied heavily on the Yellow Pages, direct mail and a touch of seasonal TV.

In 2006 the company launched its first website, and in 2007 the company's online presence underwent a major facelift with the help of Salmat Digital. That site was really 'mark one' of Jax's digital presence, Board says.

This revitalisation made such an impression that it drove transformation of the chain's offline identity; it wasn't the last time that digital would change bricks and mortar. "We were so impressed with the Web design that we took elements of the design and restyled some of other operations around that website," Board explained. "It was what we called our 'research, refresh, revitalise and relaunch' program."

The chain's relationship with Salmat Digital continued during 'mark 2': The Board's term for the second digital transformation of the business.

"In 2010 we had a conference with all our franchisees and we identified that we needed to move into the digital age," Board said. "So in 2010 — April to be precise — we reached agreement with our franchisees that we were going to invest fairly heavily in digital, which included a new website and, in terms of in-store activities, a move away from traditional merchandising into digital merchandising through a device which we called Touchpoint."

The 'Touchpoint' is a digital point-of-sale system that allows customers to browse and select tyres for their vehicle, and also preview what they would look like when fitted before they buy.

One of the most important elements of 'mark 2' was the creation of a mobile site, which has been a dramatic success for the Jax chain, Board said. In the past year, Jax's mobile traffic grew by 128 per cent. Site traffic overall has been growing by at least 40 per cent per year over the last five years.

Mobile is rapidly approaching 50 per cent of total online traffic, reflecting the changes in pre-purchase consumer research behaviour.

The investment for mark two didn't stop with the chain's online presence. "Our CRM system in the past comprised a component on our point-of-sale system, which was domiciled at the store," Board said. "We really didn't have any central collation of that data."

With the help of Salmat, Jax implemented two programs. The first was a loyalty program with a strong online component, dubbed myjax, to replace an under-used, coupon-based booklet system. The second was a customer feedback portal called mycustomer that works hand-in-hand with myjax.

"We have a source of business analysis now that is available 24/7, 365, back to the store, to the regional operations managers, and indeed to ourselves [at the national level]," Board said.

"We can collate it by region or individually by store or at a collated national basis to get the mood and the sentiment of customers — where we've got it good, where we need to do some work, what the exceptions are."

The chain has dipped its toes in social media, but for gauging sentiment rather than actively acquiring customers. "We came to the conclusion that we weren't quite ready for social promotion, but we're certainly ready for social reading," Board said. "We use Radian6 to monitor what's going on out there in social through the team at Salmat."

‘Mark three’ of the company's digital transformation is currently unfolding: A shift towards implementing a full ecommerce platform for the franchise that will allow customers to browse and purchase tyres and select when and where to have them fitted.

"Behind the scenes the stock management, B2B component of our ecommerce [system] kicks in and identifies where the tyres have got to be to suit that particular vehicle on that particular chosen date to have them fitted," Board said.

"Customers can choose a product [from the] database to identify which one best suits their vehicle. They can choose by price point, by brand, by application, tyre or wheel, and they can book into a store of their convenience, and it's not necessarily the store that's nearest to them."

The new website is being built using responsive design principles, so that a single site can be served to devices with different form factors: Tablets, smartphones, desktop browsers and in-store displays.

"When we started, with mark one, we took where we were traditionally and sort of made a Web design look like our corporate design,” Board said. “Now we're starting from the Web and working back, redesigning the corporate look: In-store, stationary, all our point-of-sale collateral. Everything we do is being redesigned back from the look and the feel of the website."

Board admitted that at first, not all franchisees were convinced of the digital-led changes at Jax . "They felt they were losing power, they were losing control," he said. But this has been turned around. "We have a thing called the Jax Academy where we do our training. And the feedback that we were starting to get very rapidly was that there was an awareness, particularly in 2013, that was 70 per cent of our customers ring before they approach a store physically. So they're still doing the phone around. But nearly 100 per cent of those 70 per cent of customers have either visited or are on our website."

It's been a substantial investment for Jax, and Board said mark three isn't cheap. But the results from the business' digital push have been hard to argue with. The tyre business tends to do well when new car sales drop. And last year industry revenue dropped overall by around three per cent. "We had a record year," Board said. "During that period we achieved almost double-digit growth."

This year will be the "year of online for the Australian tyre industry," Board believed. Already the growth of online for Jax has the chain considering how to put in place channel strategies to cut down on website wastage, or leads that come through for customers in areas that aren't serviced by Jax.

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