Kotryna Group transformation: from traditional into a multi-channel retail business model

The Kotryna Group, the largest retailer of baby and children’s goods in the Baltics, approached NFQ in 2018. At the time, it had wholesale operations, five e-stores and 88 physical stores and was looking to transform its traditional retail business model into a multi-channel one.

Business problem

The company, running a total of 93 stores, was struggling to manage its internal processes as sales volumes increased and could not offer a fully developed customer experience in the journey among sales channels. That was causing considerable inconvenience for customers since: regular customers, for instance, could not use their loyalty cards at the e-stores.

With the goal of rapidly expanding multi-channel retailing both to other brands the company owns and to other markets, the business realized it was vital to upgrade its technology, solve the problem of unified and centralized management, and improve the customer experience.

While it already had some multi-channel retail features, like pickup at a physical store, the speed of the service was no longer sufficient. The order handling processes had to be reviewed and optimized to reduce administrative costs and increase customer satisfaction. As turnover rose, order fulfilment from more than one warehouse was becoming inefficient, adding administrative and logistics costs – the business needed to optimize that.

The company also needed to expand its multi-channel sales capabilities – to offer customers of physical stores a wider assortment from an e-store, fulfill orders while the customers was still in the physical store and delivery purchased items to the customer’s home. 

And finally, the company wanted to standardize loyalty programs across all the Kotryna Group’s online and physical stores.

Strategic solutions

Set on improving the Kotryna Group’s multi-channel retail model, NFQ’s CEO Paulius Insoda, CTO Tadas Gliaubicas, and Head of Business Development Tadas Četkauskas got actively involved in the design stage. They raised hypotheses about what needed to be changed or enhanced, debated the priorities, and helped specify the investments that change required. The teams at Kotryna Group and NFQ worked together closely to develop a data-driven solution and to clearly define the innovations to be carried out, why they were needed and how their business value would be measured. 

Technological solutions

The decision was made to migrate the Kotryna Group's online shops for further development using PHP Symfony technology on the Sylius e-commerce platform. Sylius does not limit how many e-shops can be activated, and sales channels can be set up based on assortment, brands and different markets.

The e-shops interact stably with each other regardless of the size of each one’s product range or volume of users. Customers can log in to different e-shops with one single account and thus form a single shopping cart and take advantage of the loyalty program on any e-commerce channel.

The solution allows for independent, channel-specific e-commerce campaigns and flash sales. Online sales channels have an adaptive user interface, so customers can use them no matter how big their device’s screen is (whether it is a computer, tablet or smartphone). Note that the assortment published in the e-shops is managed by central multi-channel sales process software.

Results

The system that NFQ developed and the algorithms it applied have helped optimize the Kotryna Group’s fulfillment of e-commerce orders. The company, which sells toys and products for babies and children in Lithuania, Latvia, Estonia and Finland, has one central warehouse and 88 physical stores. In optimizing processes, the goal was to pick a customer’s order from the optimal number of warehouses and send it to the customer as one parcel composed of multiple parts rather than as separate shipments from each warehouse, thus saving on logistics costs.

Considering the dynamic nature of product information and the strict criteria for its presentation, NFQ's developers implemented an Akeneo PIM centralized product information management system. The system enables the centralized provision of product information to an unlimited number of sales channels. It also standardizes processes for entering and updating product information, streamlining the everyday work of the staff that handle product information. The system avoids duplication of work in managing product information and makes it possible to organize large amounts of information about products very quickly. 

To maximize the benefits of a multi-channel business, a special solution was also developed that lets sales attendants, right on their handheld device or tablet, find an item a customer is interested in that is not at the physical store, and order it for the customer and have it delivered to their home. 

Today the Kotryna Group has 11 e-shops in Lithuania, Latvia, Estonia and Finland. The flexible and easily scalable Sylius e-commerce system is enabling the Kotryna Group to centrally manage e-shops that maintain their uniqueness and are packed with useful business features. By broadening its multi-channel business possibilities, the Kotryna Group improved the performance of retail locations without increasing their floor space and the availability of products without investing heavily in inventory. It also improved sales without increasing the cost of the sales team and kept administrative costs in check while expanding from five to 11 online stores.