Chalhoub Group: the hybrid retailer

Published: 13 February 2019 - 9:42 a.m.
By: Logistics Middle East Staff

Chalhoub Group started discussing its digital transformation at a time when its customers were evolving and changing. It wanted to explore e-commerce opportunities to deliver an omni-channel experience to all customers, but the delivery service was a significant challenge in Saudi Arabia, one of the largest online marketplaces in the region.

“The demand for online shopping in Saudi Arabia has grown steadily, but perfecting the last mile delivery experience was very challenging,” says Marouane Rihoum, group head of logistics, Chalhoub Group. “For us, the delivery process is an extension of the brand image, so if you have a bad experience with the last mile delivery, it will also impact the brand.”

According to ParcelHero, one fifth of customers won’t return if they have one bad experience with an online platform, which can result in a significant loss of potential revenue. So, the stakes were high in Chalhoub Group’s efforts to penetrate the online Saudi market.

“We decided to use our existing fleet for the B2B and took a portion of the last mile operation in-house, the rest being outsourced,” says Rihoum. “We did this with basic technological tools at first, by requesting customers to pin their location to arrange for their deliveries. This showed immediate positive results on the customer’s experience.”

“Within the process, we realised there was an opportunity to further improve the last mile delivery journey, so we decided to search for a robust solution,” he adds.

Chalhoub Group turned to logistics technology solutions provider FarEye.

FarEye’s last mile solution automates the end to end logistics process, enabling real-time coordination between the drivers and the online shoppers for a seamless experience. Using mobility, data analytics and automation, the SaaS platform provides real-time visibility and predictive intelligence in the last mile operations, thus ensuring on time deliveries and business excellence.

“The platform provided by FarEye allows us to facilitate the delivery process making it more agile, and user friendly for the customer,” explains Rihoum. “We must embrace the change in the consumer journey by extending our services in a seamless experience online and offline.”

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The e-commerce market in the GCC is undoubtedly on the rise. Online customers want retailers to deliver an ‘in-store’ like buying experience focused on instant gratification, says Gautam Kumar, COO and cofounder at FarEye.

“Next-day deliveries, customising delivery locations and timing on the fly, paperless billings are requirements that are becoming the norm for the consumer,” he says. “We at FarEye identified that efficient and predictive logistics operations have a huge part to play in delivering these expectations.”

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Gautam Kumar, COO and cofounder at FarEye.

With Chalhoub Group’s set of unique challenges, FarEye put into play its proprietary workflow engine to create highly customisable workflows as per the client’s requirements.

“With our easy-to-use app, the riders were also able to efficiently manage their day, easily navigate the routes, track their tasks on the mobile device and take a digital proof of the deliveries,” says Kumar.

“The logistics managers gained real-time visibility of on-field operations, thereby achieving better control and predictability. The customer interaction module enabled easy and direct communication with the end-customers, increasing the delivery happiness score for Chalhoub.”

This seamlessness was important for Chalhoub Group in the Saudi market, because of the unique demographics compared to other countries.

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“The main two challenges we were facing in Saudi Arabia were recruiting Arabic speaking drivers and accuracy of the addresses provided by the customers,” says Rihoum. “With FarEye’s tool, we’re able to send a text message automatically in Arabic or English the moment an order is processed so that the customer pins his location and provides his preferred delivery time slot.”

For this, the Group has used its existing logistics infrastructure domestically within the Kingdom. It has 20,000 sqm of warehouses in Riyadh and Jeddah and a fleet of 25 vans operating the B2B delivery operation.

According to Rihoum, because of the size of the company, it was able to easily integrate last mile into its operations.

“We benefit from our resources, so our B2B delivery fleet is better-leveraged and due to our highly skilled and committed staff working in different shifts, we can schedule the deliveries seven days a week, from morning until late evening, at our customers’ convenience.”

This set-up has contributed to the online sales growth in the Kingdom.

“It was important for us to get our last mile operation right in Saudi Arabia because it is a market with great opportunities” says Rihoum. “Operating the last mile in-house in Saudi Arabia is just another arm of the business, it’s less complex and less costly operationally.”

Chalhoub Group is now using the FarEye platform to enhance the local deliveries to its stores in the UAE and is expanding the use of this tool in other markets across the GCC.

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Chalhoub Group doesn’t follow a hub-and-spoke model for its regional distribution, so while the Jebel Ali warehouse is the largest, it isn’t the focal point for import and re-export of products regionally.

“Some deliveries are made directly to the warehouses in Riyadh or Jeddah for example, it depends on the logistics setup for each brand.” says Rihoum.

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By blending its Middle East expertise and intimate knowledge of luxury, the Chalhoub Group is building brands in the region, by offering service excellence to all its partners and a unique experience to its customers.

The Group is moving fast from a traditional distributor and retailer for luxury in the Middle East to a hybrid retailer bringing luxury experiences to customers.

With a growing workforce of more than 12,000 employees, including a logistics team of 750 people in 14 countries, as well as operating over 600 retail stores, Chalhoub Group has vast experience in logistics and dynamic retail operations, for the past few years it has been taking that know-how into the digital sphere.

“We want to be a hybrid retailer, bringing luxury experiences to the fingertips of customers everywhere by leveraging both online and offline retail,” says Rihoum. “FarEye has proven to be the perfect, equally dynamic, partner.”

“The implementation was very smooth and easy,” adds Jonathan de Fraine, group logistics solution manager, Chalhoub Group. “It’s now been almost a year that we’ve been working with them, and we keep on enhancing the tool to respond to our customer expectations.”

“We are covering the main cities of the Kingdom and a few remotes areas such as Mecca, Taif and Qatif with our in-house solution,” he says. “We are currently providing same day delivery in Jeddah and we are progressively scaling up our solution based on our customers’ needs.”

“Our volumes in Saudi Arabia are now growing much faster and our KPIs for last mile deliveries are far stronger. So far, we do not have any claims and we are able to collect and deposit cash on time,” says Naim Boughzala, KSA Logistics Manager, Chalhoub Group.

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