ACROSS: YOU HAVE AMBITIOUS PLANS FOR THE EUROPEAN MARKET. WHAT ARE YOUR TARGETS?
SERDAR ERSOY: Two years ago, we established our hybrid DeFacto.com team in the UK, where we quickly created a multinational digital com-pany culture. We made all our end-to-end processes compatible with e-commerce, from agile and data-driven culture, personalization, digital advertisements, and product trees to customer comments. We proved our success in this field by doing this simultaneously in both our national and international organizations. We entered the US market by starting sales through Amazon. Three years ago, we declared Europe as our target market. Therefore, we entered 12 European countries in a record time of four months in cooperation with the e-commerce site Zalando. As a result, we were ranked as the fastest-growing brand on Zalando last year. In four months, we increased our net revenues by 400 percent in our European operations through Zalando.
ACROSS: WHAT IS THE NEXT GOAL FOR EUROPE?
ERSOY: Our goal is to carry this success to different European countries. While DeFacto focuses on strengthening its existing investments, we also take strategic steps in target markets. Our “New Generation Franchise” model is an extension of this. We continue to establish new business partnerships with e-commerce and franchise channels and open stores in strategically important locations for the investments we realize by combining the power of fashion and technology. We have put franchise investments at the forefront of our agenda. As a franchise, we have 39 stores in 17 countries today. Especially in the next three years, we want to grow the franchise channel by 300 percent and reach our 2027 target with our business partners. The most important criterion we consider while doing this is our approach to our franchise stores reflecting the DeFacto DNA and being as important as our stores: Our new generation franchise model.
ACROSS: EUROPE IS CURRENTLY NOT NECESSARILY THE PLACE TO BE FOR RETAILERS. WHAT CHANCES AND WEAKNESSES DO YOU SEE IN THE EUROPEAN MARKET?
ERSOY: Our organization is undergoing a major cultural transformation based on “Lean Thinking.” With lean thinking, we focus on our products and resources that will affect the product instead of our organization, technology, and fixed assets. In this respect, parallel to the concept of “achieving more with less” represented by lean thinking, we have built and developed all our operations on eliminating waste, reducing costs, offering only what our customers want, when and where they want it, and shortening the time from order to delivery by using resources only for this purpose. We plan to meet our customers’ expectations in all business processes, from collections to marketing activities, by meeting local needs with global standards, and thus, we globalize rapidly.
With our ‘accessible fashion’ approach, we make stylish, high-quality, and comfortable clothing no longer a luxury in every country we operate. We create special collections in each category according to the countries’ cultures. In this way, we establish a close bond with our customers. We handle collection and marketing/communication activities in a multidimensional way that is “tailor-made” for the location we operate in, from the media used to the richness of the content.
ACROSS: YOUR BRAND HAS BEEN INVESTING SIGNIFICANTLY IN ITS “NEW GENERATION” FRANCHISE MODEL TO GROW. COULD YOU EXPLAIN THIS MODEL TO US?
ERSOY: Looking around the world, we see that the wholesale model is generally preferred. Since DeFacto has adopted the corporate base business model, we have designed a new generation franchise model. The main thing that differentiates us from the sector and takes us one step ahead in this field is our approach, which forms the backbone of our model. We do not see our franchise stores any different from our stores, and we offer uninterrupted and integrated service in this channel, just like our other channels. We manage all processes within the framework of 360-degree operational excellence and provide our franchise stores with a turnkey retail experience. From finding a place for the store to construction, from product selection to planning, from pricing to operational efficiency processes, we are involved from start to end and progress with our business partners. Expansion and franchising in DeFacto work like a stand-alone company managed with its dynamics.
ACROSS: ON A COUNTRY BASIS, THE COMPANY MANAGES THE ENTIRE END-TO-END PROCESS WITH ITS TEAMS – THIS IS NOT A STANDARD MODEL.
ERSOY: The message we want to send here as DeFacto is to cooperate with a visionary partner with a financial and commercial background in the targeted country. DeFacto franchise teams meticulously manage all remaining processes. Our main priority is that all our franchisees operate according to the DNA of our brand and grow profitably and reliably.
ACROSS: WHAT CRITERIA DO YOU USE TO SELECT YOUR FRANCHISE PARTNERS?
ERSOY: We have designed a new-generation franchise model specifically for ourselves. This model’s most essential feature, distinguishing DeFacto from the industry, is that this channel is seamless and integrated like our other channels. We are improving our business processes to provide 360-degree service to avoid any deficiencies in franchise selection in countries. We are involved in every step, from finding a location for the store to construction, from product selection to planning, from pricing to operational efficiency processes, and we progress together with our business partners. The most crucial detail is that we do not separate our franchise stores from our own and run them similarly. We also sign country-based ‘Master Franchise’ agreements with our investors, look for partners with the DeFacto vision, and aim for growth and market leadership. By sharing all of DeFacto’s retail knowledge with our partners, we support them with operations, planning, and visual and online training and ensure their investment turns into a sustainable trade.
ACROSS: WHAT EXPERIENCES HAVE YOU HAD IN EUROPE SO FAR, ESPECIALLY WITH YOUR STORE IN BERLIN?
ERSOY: Our new playground for the last two years has been Europe. At the end of 2021, we opened our new generation store in Berlin, the capital of Germany, and we are demonstrating the compe tence of a brand from Türkiye in the field of digitalization, which brings together the physical and digital worlds. Thus, we are a fashion brand as much as a technology company. Accordingly, our Berlin store is more than a classic physical store; it is a new-generation fashion, technology, and living center representing the future of retail. It is also a physical experience field of our DeFacto brand, which has been strengthening in Europe with our e-commerce platforms and online stores. Thus, our customers get to know and experience us more closely. For this purpose, we started our operations in our store, located on one of the most famous streets in Berlin.
ACROSS: WHAT MAKES THIS STORE SPECIAL FOR CONSUMERS?
ERSOY: We include art and innovations that will surprise our guests. We utilize virtual, augmented, and robotics technologies in our Berlin store, equipped with RFID technology. Thus, our cus-tomers can see the product on themselves without wearing it in the smart mirror, and they can decide what to buy without visiting the store. They can get support from robot consultants on all their questions and how to benefit from the smart store. Thanks to the smart cabins, customers can request the product without leaving the cabin. Within 30 seconds, products in the desired size and color are delivered to our guests. They can get information about the products with virtual glasses in the store. Through kiosks, they can shop without visiting the cash desk with auto- nomous payment facilities. They can buy the products immediately from the store, or we can deliver them to their addresses. With all this and more, we proudly offer a digital experience for fashion lovers. With these powerful features, our Berlin store supports our brand offline and online and is an essential milestone in our global brand journey that started in Türkiye.
ACROSS: HOW WOULD YOU DEFINE CUSTOMER SERVICE IN THE RETAIL SECTOR IN 2024?
ERSOY: When we look at the trends, we see that the development of suggestions that will provide the customer with a comfortable and effortless experience comes to the fore. As DeFacto, we always act with the understanding that this is our central axis, and we plan to provide the best service to our customers. Research shows that improving customer experience remains the number one priority for businesses. The rise of the “phygital” store results from combining physical and digital retail strategies to create a consistent customer journey. We are improving ourselves in this field every day. To stay competitive, retailers must constantly innovate and rethink their customer experiences. We will increasingly see the digital merge with the physical to create new content and ways to shop to keep customers engaged.
As DeFacto, we serve the needs of all age groups with our products. Different generations have different shopping habits, and we use technology to provide personalized options for each of them to provide an ideal shopping experience and positively influence purchasing decisions. Companies have more data on their customers than ever, providing a detailed understanding of how different types of people shop and like to interact with brands.
ACROSS: SINCE THE BEGINNING, YOU HAVE LABELED YOUR BRAND AS A PIONEER IN DIGITALIZING THE RETAIL MARKET. WHY DO YOU PREFER TO CALL YOUR COMPANY A TECH COMPANY RATHER THAN A FASHION COMPANY, AND WHAT ARE THE INTERNAL AND EXTERNAL CONSEQUENCES?
ERSOY: In 2019, we launched our first Smart Store concept in Istanbul, and in this store, we bring our customers together with the technologies of the future. Our experience store, which we opened in Berlin in December 2021, is the latest result of these investments. Based on customer insights, we will continue to develop in-store applications with DeFacto Technology in the coming period. As DeFacto, we stand out not only in fashion but also through our investments in technology. Our development team creates proprietary software, which we adapt to provide better customer service. By building the infrastructure of omnichannel technologies, we are creating a playground for ourselves where we can realize our dreams.
ACROSS: HOW DOES INNOVATION HELP TO IMPROVE CUSTOMER EXPERIENCE?
ERSOY: As DeFacto, we try to touch millions of customers and add value to their lives. Our most critical focal points are making them feel good and accompanying their renewal. We always listen to our customers and take care to act with their insights as a result of our research. We are a brand that follows the trends and brings our designs to our customers at affordable prices.
We share the technologies we have developed within our organization and with our business partners and our franchises. In short, we share our knowledge with our franchises and continue to grow together. Thanks to the data we have collected with our omnichannel strategy, we establish a strong bond with our customers and make them fall in love with us. Our globalization success is based on our ability to offer local values by using this data correctly and responding to the needs of that culture.
ACROSS: WHAT DOES THAT MEAN IN CONCRETE TERMS?
ERSOY: We strive to provide the best service to our customers on every platform, regardless of the channel. Thanks to our omnichannel integrated structure, we are with our customers 24/7. Using “Big Data,” we get to know our customers closely, design personalized campaigns and provide surprising experiences. We once again demonstrated our determination and success in this direction with the DeFacto GIFT CLUB, one of the outputs of our digitalization and customer orientation vision we launched last year. With DeFacto GIFT CLUB, which offers benefits to our customers via a mobile application, we have reached more than 14 million members. In our “phygital” store experience with the combination of physical and digital, we focused on making every point of our stores a solution point for our customers and making the shopping experience uninterrupted thanks to our DFPOS application, which is among the first in the retail sector. We offer a single inventory to our customers as a default. This way, our customers can access this inventory through their desired channels.
ACROSS: WHAT ROLE DO APPLICATIONS PLAY IN THIS?
ERSOY: Two examples are our applications ‘Pay At Store’ and ‘Ship From Shop.’ In our ‘Pay At Store’ application, we provide the opportunity to deliver products purchased from the store to the location requested by our customers. With the ‘Ship From Store’ model, we also make the stocks in our stores available for online sales. With the ‘Pay At Store’ service at DeFacto, we provide customers with a connected shopping experience between online sales platforms and stores. We enable customers to easily access the product, color, or size they want, even for products not available in store stocks. With the addition of the ‘Pay At Store’ service to the Retail Master application, which allows easy product search in the store, personnel time management, and e-commerce transactions, we provide convenience for shopping at every point in the store. The purchased products are delivered to the customer’s requested address or the selected store with free shipping. In our ‘Click and Collect’ application, we deliver online orders to any desired store without any shipping fees.
Serdar Ersoy is General Manager of DeFacto’s Alternative Sales Channels and Business Development.