Leaders on Shopify: Welcome to ⁓ on Shopify Stuart, thank you very much for joining the show You could start by introducing yourself and giving us a little bit of background So I'm sure Pavers currently chair of Pavers shoes chair of the Pavers foundation Visit York, Make It York and a couple of other things ⁓ Keep busy, yes. Keep busy. And from my research, you've been fascinated with the internet and selling things online for quite a long time. When did you sort of decide that the internet was going to be the way to go for a shoe retake? I think it was about 1998 that we first started playing with it. Possibly 97 with an information only site. In 98 we were starting to plan selling product online. and 99 was when we actually launched shoe-shop.com which ended up selling most of the shoes from the big British manufacturers and big brands early on. So were exclusive distributor for Clarks, ⁓ Church's Schuh.com the retailer and many many others right from early days in early 2000s. So you're probably one of the first people to start selling shoes online? Do you think? Possibly in the UK, probably in Europe. We were definitely amongst the first one or two in Europe. So yeah, we really started early. I remember when I first started in digital marketing at the internet. I've been in this a long time. I was like, I get why people are buying books on Amazon. I said, nobody's ever going to buy a of shoes on the internet. We thought that to begin with as a retailer you always think that and then you look at what used to be the scope of catalogs and there was something like 400 million pounds worth of sales in the UK done through the old catalogs So it's obvious that people wanted to buy from their home. Yeah, So ⁓ got involved and started selling shoes online from your backdrop of big direct mail business ⁓ the sort of ⁓ and obviously I'm not expecting to share exact numbers, but roughly how many pairs of shoes, how many brands and how many different sort of moving parts have you now got on Shopify? Because I know it's sort of been an evolution and you're not just one brand, but some numbers just to give people a gauge of size. I think we operate five brand stores on Shopify and probably ⁓ 65 million pounds worth of footwear online So numbers ⁓ So it's important that we get the systems correct Yeah, and what was ⁓ you've you've had lots of different websites over the time What your big reason why you decided to move to Shopify and how did you approach that? I suppose in the early days we built our own We then moved on to a system. I can't remember and another one then Magento, but Magento always felt like it was built for programmers rather than retailers. And Shopify has the sort of opposite effect. It feels like it's built really for retailers. And apparently it was built by a retailer in the first place. The guy that started it was a retailer of Snowboarder. Yeah, Snowboarder's in Canada. So it just has a different feel and a different emphasis on what we want to control as a retailer. And first of all, I think was it you put Jones on to see sort of where you go and then you've obviously got now. So suppose what's been the journey? How's it gone down with the team? How's it changed your business? What are the sort of positives that you see? ⁓ The positives of Shopify really are the front end. It's a great front end. handles the transaction brilliantly. ShopPay just makes life simple. And it really does make that whole processing of orders and everything else great. It's not so good in the backend. There's still, that's why there's an app store. Because you need the additional things to go on the backend of it to help out with what's going on. But Shopify, really great. Hosting, security. We don't have to worry about these things the transaction with the cards. We don't have to worry about Cyber security on the Shopify site because that's all handled. Yeah and roughly you talked about in sort of revenue terms How many hundreds of thousands or millions of pairs of shoes are you selling push your five brands a year? Roughly one and a half 1.7 million pairs a year online That's a lot of shoes every day. It's a lot of shoes every day. I always envisaged that it would be a big thing. I always hoped it'd be a low cost operation, but it's not a low cost operation. It practically costs us as much as running a store as a percentage of each transaction, given what we have to spend these days. what being, ⁓ suppose that you mentioned the backend being a challenge. What other challenges have you had with either the team, the infrastructure, the sort of transition into selling online because online is a big part of your business now. It is a big part. ⁓ Some businesses it's 30 % but others it's now more than 50%. One of the biggest issues is that as you transfer more to online, your warehousing becomes ever more important. The ability to handle all those transactions, the ability to handle the returns, the ability to make sure you're not losing things or ⁓ are going out that you're not aware of. So systems become increasingly important ⁓ just scaling up for that volume is a really, really difficult thing to do. Because our warehouse was initially set up to bring things in and send them out to shops and then to fill up the shops. Now the stock's got to sit in the middle to fulfill those orders coming in online. So it takes more space, more expense in the centre than you traditionally had. I suppose more people. Or different people? More people, different people. different skill sets, but it's all about sort of accuracy and speed of movement around the warehouse, speed of picking, all those different metrics that as a retailer you probably never got involved in, in the past. Is it before it was all about maybe the store layout and the merchandising in the store? Yeah. And it was, sending one van full of shoes and then the store manager will deal with it. Whereas now you've got to think, well, how do we lay this warehouse out to be most efficient? What are the top sellers? Where do we put them? So how have you had to change the sort of warehousing in the business? Build bigger warehouses and more automated warehousing so that things move around the system without too much interaction with people. We've looked at robots for picking and packing. We haven't got there yet. They're still a little bit off, but I would think that in the next five years there'll be some seriously good opportunities with picking and packing. ⁓ so from a sort of business point of view now, if you're looking forward... ⁓ How do you see online growing for the paper's brands? Where do you see the next steps in the evolution of what is or isn't going on? a fairly mature market now, ⁓ The people that don't buy online are probably ⁓ 80 plus. The of the people have migrated the spend that they're going to spend online. And it's really about... being the most efficient person in acquiring those customers, keeping them motivated, selling them the second pair, selling them the third pair, and really customer retention becomes very, very important now. Yeah, so it's that sort of brand loyalty. And how much of that is down to good quality marketing versus good quality product? Because the trick in retail is always about being, selling a good quality product. It's easier to sell a good quality product with bad marketing than it is to sell a bad product with good marketing. It just, if people understand the product, see the product and talk about the product because it's good, get customers, they'll come back for their second pair, they'll come back for their third pair. ⁓ product that's just purely marketed. and isn't really that good, you may get your first sale but that's it. Yeah, and I suppose for you, well I just have to look, so Pavers, my mum's a big customer, you just have to look at, she then unwraps up all the Christmas presents in the Pavers shoes box, and we don't think we'll get Pavers shoes but she's done us a little mini thought. I think two Christmases ago there was about six Pavers shoes boxes and that's just from her shoes this year. I don't know that's a good customer or if that's... So is there an average number you're aiming for a pair of shoes per customer a year? There's a distinct difference between male and female buying of footwear.

Stuart Paver: women want a new pair to go with a new outfit. So men buy on average about two and a half pairs a year. averaging around ⁓ three and a ⁓ Right, ⁓ the big ⁓ You mentioned before the cost of running a website, the perception often is well it's cheap to do ⁓ but that's not necessarily the case. What are the things that cost you the most money and what are doing to try and optimize that, improve it, tweak it and all those sorts of things? Well, Google.

Leaders on Shopify: to four pairs a year. Right, so, was a big difference. A huge difference. You mentioned before the cost of running the website, the perception often is, well it's cheap to do e-commerce, but that's not necessarily the case. So what are the sort of, what are the things that are costing you the most money and what are you doing to try and optimise that, improve it and tweak it and all those sorts of things? Well, Google is a huge cost. Whether that ever gets replaced is... debatable at the moment. I think we can all see people buying lots on AI starting to and ⁓ think the world is going to change quite quickly as far as ⁓ PPC everything else is concerned. But marketing is definitely a much more expensive spend for online sales. And then it's just the whole processing and warehousing that costs a lot of money. Yeah. And that whole AI, we've sort of touched on it. We've managed to get nearly, I don't know, 15 minutes in without mentioning AI. We talked a bit about robotics in the warehouse. personally, and I know you're quite into technology, I'm spending more time in Claude and Gemini than I am in Google search, researching, finding things, finding products, getting help and advice. How would you see the shoppers journey changing and when are we going to sell the first pair of shoes directly from an LLM? think it's a question of when they start including those links within their answers. And they will do that without doubt. I think it started already in a couple of models, but the major models... It's a question of whether it will actually ruin the model in that it becomes if you pay the most you get included in the answer. Or, yeah, it sort of defeats the object, yeah. Because in America, Open AI has said you can sponsor links and sponsor products, minimum spend $250,000 a month. So that's a bit prohibitive to the big brands. Theres Shopify has done the UCP with Google to create this. So I suppose you as a Shopify retailer should, when they launch it into the UK, we can just press a button and then somebody who's researching on their best slippers for comfy slippers for the winter or whatever. You're supposed to be there and this should be a buy now button. Yeah. And I think that's going to be this year. Yeah. No, that wouldn't surprise me at all. It's... It's going to change the whole market though and I think ⁓ a couple of years we're going to see a completely different outlook to where we are now and we've got to be ready for it. I was talking to someone else the other day and they were saying, I was saying, well do we see a world where there's retailers who don't have shops, don't have a website, they're almost like a dark warehouse who's got a connection into the LLMs and it's almost like they're just shipping product. ⁓ And we were having this debate and he goes, well, that's no different than just selling on Amazon Marketplace. He goes, and there's people who've built great businesses just selling on Amazon Marketplace. ⁓ It's harder, less margin, and Amazon's taking money at every stage of the process. But he was saying he does see a world where you could potentially run almost like a ⁓ operation shipping product if there's enough demand for your product. I don't know if I agree. ⁓ Well, within our sector, there's hundreds of Chinese brands exclusively selling on Amazon, non-branded products at very low prices. And the product only touches the UK when it's sold. The Temu.com model for fast fashion. these are all dark warehouses where the product's stocked and for the European market or the American market or anywhere else. But they have no staff in the UK, no staff in Europe. ⁓ it's market and driven. And they're not paying the right taxes and then their duties because of the packet sizes. Yeah. it destroys a lot of retailers. but that's what drives efficiency here. You have to be efficient otherwise you're not going to have a business for much longer. would argue though, because do you sell anything on Amazon? How does Amazon sort fit into the mix? We have a tiny presence on Amazon but sometimes it's more expensive selling on there than any other platform so ⁓ it more more difficult and ⁓ you're always undercut by ⁓ the Chinese direct to consumer, I said brands but they're not brands they're just a product. ⁓ yeah, so of biggest moats is the fact that we are a brand now, our customers are loyal, they like the stuff that we do, ⁓ they think the that we charge is fair ⁓ and they think comfortable so that's our real sort moat to stop. the competition. Yeah. And from a sort of business point of view now and the whole evolution on Shopify, you, cause you said before it's quite mature. Do you see it's now the LLMs are just going to, cause I'm trying to work out, everybody said, sort of reframed the question, everybody said that the internet is going to kill the high street and you've got 170 stores. So it's not killed your stores. It maybe changed some of those stores. And people are now saying, LLMs and people shopping in LLMs might kill website and traditional digital marketing. My personal view is I think it's just going to change it. It's going to be really interesting to see how it goes. From your sort of point of view, having lived through stores, internet, internet plus stores, how's business going to change over the next two, three years? Well, one of the strange things about our early days is we started off completely online with Shoeshop.com and after about three years moved into catalogs as well. ⁓ people like shop on the screen, now it's all on mobile, ⁓ they like sometimes a piece of paper to relax with and a catalog to relax with and... have a coffee and flick through it. So it's just another stage of evolution. It will bring people into the Shopify site, whether it's through an LLM, whether it's through whether it's through ⁓ catalog, it all drives the person into ⁓ facilitator of the sale, which is Shopify and which I can't really see changing. Yeah. ⁓ from... ⁓ A business point of view, also did TV and sort of, there's this big trend in China at the moment about people doing, like what do they call it? Live sales, Live sales. Do you think that's going to be a thing for Pavers? Is that going to come back? you sort of dabbled in that? at one point you had a studio, had TV, almost a TV channel. Well, we had our own dedicated TV channel on Sky. was it 659, I think it was 659, the channel number. yeah, we sold a lot through third parties on TV, the likes of QVC and the other one, I can't remember what they were called. And they became increasingly difficult to work with and we just decided it can't be that difficult to start our own TV channel. We got the studio, we did the recordings and everything else. ⁓ uplinks and everything else were just farmed out to somebody. And yeah, it worked really well for a while, but that whole market has changed. That whole market is imploding as people moved much more onto online. And it's just constant evolution at the moment. Yeah. And one thing we've talked about LLMs, we've talked about AI, we've talked about robotics. ⁓ If you'd have asked me last August, is image AI ready to be used in real life? But I know you as a business have been testing out if you can images shoes with legs and feet. the cost of producing images for a website is the photo Shoot, Shoot all of that. historically would go take a load of models, take a load of product. and do all that and that puts a load of cost in which then you've got to get either eaten into your margin or puts the price up. One thing I know you've been playing around with is images ⁓ enhancing images to make them put them on your situation or using AI. How's that gone down? What's been the sort of feedback from both the team and the consumers as it improved conversion rate? ⁓ been the sort of journey there and ⁓ that been going? ⁓ Really really interesting to sort of monitor this and see what's evolving the quality of what you can do has increased exponentially over the last six to nine months It still has its limitations and it's ⁓ sometimes in vent shoes that you don't sell or add an extra leg or do some random things ⁓ but needs that quality control with humans and everything else but The quality of what's happening incredible. Video is more difficult to get realistic because even the best ones that I've seen for products, the product looks great, but it doesn't look realistic. It just has not quite evolved ⁓ far enough, but it's a matter of time. ⁓ I think the whole real of ⁓ products the real shooting of videos ⁓ and people off to South Africa to get a bit of sunshine for it. it's going to be decimated. That whole industry is. Well, I think it's interesting because you were talking about you've to be more efficient so you can compete. Yeah. This is potentially a way you can be more efficient. And I think what a lot of brands like yourself did is they reduced the actual types of product shots just down into individual product shot in the studio. Yeah. And having the situational shot was beyond based on the cost. Yeah. Now AI gives you that opportunity to put a pair of sandals. right. So we're talking about images. if someone had asked me last September, I would have said maybe for like dogs, buildings, the odd thing like that that didn't involve a human. or didn't involve a physical product with a brand on because it was destroying products and brands. I've seen, with your website and with quite a lot of other brands now starting to really evolve this. And I think we saw there's a luxury handbag company, they've been testing it and they still do the photo shoot, but they don't do the video shoot and they take the photos and turn them into video. Yeah, successfully as well and it's and it seems to be working So completely agree with the evolution about I think then the the hard base. How do you productionize that? Yeah, and also everybody thinks it's for free. It's not free. ⁓ there's tokens there's compute cost there's AI cost. It's not for free, but it is still cheaper Yeah, and potentially better and what sort of performance up this have you noticed? Have you got enough data yet? ⁓ We really got enough data, but We know on foot shots increased conversion, so our ability to produce those a low cost certainly helped conversion. ⁓ one of the great things is that you can take a really poor shot and you can make it into a good shot. ⁓ done it deliberately with coffee cups in the shot and all sorts of things ⁓ from the wrong angles ⁓ ⁓ will work it out and create a good shot for you. Now it's interesting. Yeah. Yeah. So the actual most that post-production just becomes so much easier. Yeah. Or if someone took the wrong photo, you can make it into a good photo. Yeah. And ⁓ lot of people's perception Shopify is that it's just for the small startups, the mom and pop shops. You're a big tens and tens of million pound turnover retailer. If you're an enterprise level retailer listening to this podcast. What would your advice be about looking at Shopify? Well, I think Shopify enterprise is one of the choices for the bigger retailers and there are ⁓ of million pound turnover stores on there. It's not just for small retailers anymore. There's a version which is suitable for every size. Yeah. ⁓ And you're looking ⁓ at the sort of data side of things. Don't want you to be too biased we're sort of agnostic, but you can talk about other data. You can talk about dashboarding tools or whatever. But yeah, so one thing you is the reason you love Shopify is the front end, the speed, the way it merchandises your product and gets that transaction from sort of somebody landing there to clicking and ⁓ checking out. ⁓ Other frustrations with you've had with Shopify, one of the things you said was the back end. What do you specifically mean? Is it the reporting? Is it the measurement? What is it about the back end that has frustrated you? It's a lot to do with the reporting and how it joins information together. You'll often find that you want this piece of information in this report and it just goes, no, we don't do that. you need external sources to be able to take all the data, join it together and produce the reports that you actually want to see in the way that you want to see it, which will create value for you what you need to replenish, what you need to mark and all those sorts of metrics that a retailer works with every week are sometimes quite difficult in the back end. even when you understand the language of the Shopify reporting, it's just sometimes it won't allow you to join the stuff up. So how do you go about doing that? What do have to do then? I suppose you then have stores and marketplaces and everything else. So what do you end up doing? So we end up using other tools in order to get that done. that's, there used to be Crystal Reports, then it's Tableau. we're moving much more ThoughtSpot and based tools. And we've also been utilizing the beta version of the ASK BOSCO® app ⁓ to a look at the backend. ⁓ And starting to work really, really well. ⁓ And forward. You're mainly UK based, you've dabbled in different countries in the past. What's your current view? And I know there's geopolitical issues at the moment, but what's the current view about global domination with you? Global domination is difficult, but we do have some very, very specialist products that we can sell all around the world, which great. And the aging population in China and Japan and different places. gives us a prime opportunity in some of those markets to sell very specialized, come for older people's footwear. And would you go there with the Shopify proposition? Would you go online first or how do you think you'd talk You'd have to go online first because online is such a big proportion of sales. Whether you're using live presenters to live sell, which to be a huge thing there. you'd probably end up doing a bit of it. And then some concessions in department stores in the main centres would be the entry. And when you're not running Pavers you do a lot with the Pavers foundation, you keep yourself busy with lots of other things. What's been the big things you've been doing in the last couple of years? Ooh. One of the most enjoyable has been supporting Ukraine and working with our foundation out there. We raised a lot of money separately to the main foundation funds and have used that to do an awful lot of good work over in Ukraine, helping save loads of lives. And really does give you a great sense of achievement ⁓ people tell you that you've saved X number of lives because they use this equipment that they never had without you. Yeah. So you're using some of the profits and some of the money you've raised from your business to help change people's lives. you're not as fortunate. Yeah. That's one part of it. The rest of it is the foundation, the Pavers Foundation, where we've given away nearly two and a half million pounds now to mainly two causes brought to us by people that work for us, so something that means a lot to them. It's allowed us to really help them with those projects. And every six months we have a committee that sits down, looks at all the ⁓ from people ⁓ then awards them some money, the ones that they think deserve We ⁓ especially the sort of ⁓ kitchen charities where we know that every pound that we're giving actually makes a difference. Not a big overhead, there's no profit, it's going straight for the cause. And there's been such a lot more requests for food banks and feeding people and the basics which you think should be covered but they're not. So a lot of people that work for us work for these local charities and things or have a member of family that's been ⁓ helped by a charity and they just want to give something back and we just help them do that. ⁓ that must be really rewarding ⁓ ⁓ family-run business and for the team and everybody else to know they're part something that isn't just about making profit. ⁓ you have 170 locations it's really difficult tying them into remembering that they're part of a family group and everything else and that This just makes everybody feel part of something more than just selling shoes. you've been in retail a long time. Which retailers do you sort of look up to or follow or look and think, ⁓ they're quite smart. I'm going to borrow some of their ideas. Who's on your sort of radar, who's doing it well? Plagiarism is a bit of every retailer's armory. A lot of the people that we looked up to 10 years ago aren't here anymore. were those? Russell & Bromley for instance. They were flying and doing brilliantly 10 years ago and we aspired to be where they were with regard to profitability and everything else. Unfortunately they disappeared a few months back. I've always been of the opinion that you look at what you do and you try to improve it in small increments all the time. big ⁓ that people want to do lead to problems. So it's to just keep doing what you're doing a little bit every three months and never lose focus on your customer. ⁓ And you've done good at avoiding my question there. Which of the current retailers out there do you sort look up and think they're doing it well? Doesn't have to be shoes Yeah, you'd have to say that Next just defy gravity all the time. They defy, they just keep on bigger, more profitable and working ever more effectively. Is some of that economy to scale do you think? Or is that just good systems process? I wouldn't say the systems are that great sometimes, but they've just cornered that consumer. They're providing them with want, when they want, and the way that they want it. it just, keep going to them. ⁓ Well, that's been super interesting. Thank you for coming on ⁓ and really impressed the stuff you're doing with the foundation and looking forward to see you lots of shoes Thank you. Thanks, John.