Stuart Barraclough
Operations Management
IMBA 2018 - J4

The Hotel Chocolat Customer Experience exemplifies many of the Schmitt Principles of customer experience.The cooking classes and events show how experiences don't come randomly. They have to be planned and the idea that to maximise the customer experience you need to build up different kind of experiences.The layout and choice and location of products within the stores demonstrates an obsessive attention to the details. They also show a consistent methodology by their commitment to the production of high quality chocolate with low sugar content and providing an ever-growing variety of uses and products.

Each Hotel Chocolat store is carefully designed with bright lights and deliberately positioned displays to reflect the premium product they are selling. The layout of the store is purposefully orchestrated to maximise spending by having small, cheaper bags of chocolates by the till to encourage impulsive extra purchases even when a customer may have only intended to buy a gift for a friend. By doing this they not only increase sales but by occupying the customers with more products to look at in the queue, it is a means queue management as unoccupied time feels longer than occupied time.

In peak periods it is inevitable that there will be some need to queue. Some of ways I have identified that Hotel Chocolat is trying to manage queueing is:Increasing staff numbers by an average of one person per store to reduce the time and pain of waiting in linesOperate a 'click and collect' service to allow purchases to be made online and collected in store with some stores having specific tills for speedy collection. One risk of this strategy is that the customers queueing may feel it is unfair if they perceive someone coming in to collect their order and being served before themIntroduce cafes into the stores and allow customers to pay for purchases when they pay for their drinks. This means that they are having a drink while waiting to pay so it is not 'unoccupied time' and also we learnt that solo waits feel longer than waiting in groups and normally customers will stop for a drink with friends.

Hotel Chocolat has invested heavily in its website and mobile application to provide a wide range of services to enhance the customer experience which has resulted in an 8% increase in online retail.The online platform allows you to navigate the products with ease, filtering by product type, price and dietary requirement. There is a wide range of suggested gift categories such as 'summer', 'father's day' and 'for him/her' and even gift suggestions associated with 'mood and interests' such as cheer up and romantic gifts and Champagne Lifestyle.Online ordering also allows for customisation as visitors are invited to build their own gift box from the full range of chocolate, beauty and beverage products on offer.

Hotel Chocolat has introduced cafes into its stores. This has not only provided an additional source of revenue through sales of drinks and cakes but also enhanced the customer experience. The 'coffee-shop' culture that Starbucks has so effectively developed is huge in the UK and Hotel Chocolat focusses on providing a comfortable environment to enjoy a coffee while also being able to browse its store.

Hotel Chocolat organises Corporate Adventures, cooking classes and even children's chocolate workshops. By bringing the customer inside the world of chocolate in a fun and engaging way creates a memorable experience, and an entirely different means to attract and intereact with their customers. This will have a lasting and positive impact fostering an affinity towards the brand and increasing customer loyalty.It and will also encourage the customers to share their experience with others thus providing another means of marketing.

Hotel Chocolat's magazine provides a way to keep its customers updated on new products and to keep them enged with the brand. It also contains recipes and suggestions on ways to use their products which will also help drive up sales.

Hotel Chocolat continues to develop new products with a link back to its core material cocoa. These new products include:Range of Cocoa butter beauty productsIce cream range called 'Ice Cream of the Gods'Range of specialty chocolates such as vegan, dairy free, gluten freeAlcoholic drinks such as cocoa gin and cocoa beer dark aleNon-alcoholic drinks such as Iced Tea packed with anti-oxidant rich cacaoFrom my research, HC employs the Flexible Approach to product development as there is overlap between the concept development and the implementation.

Hotel Chocolat's core product offering, chocolate, traditionally has highly seasonal fluctuations in sales.From my research this has been addressed in the following ways:Developing non-peak demand.Outside of the traditional peak season (Christmas and Easter), they focus on a wide range of other celebrations or events which may encourage customers to buy chocolates. These include Father's Day, a valentine's day, birthday selections, congratulations gifts etc.Sharing Capacity. Increasing the range of products that use its raw ingredient of cocoa beans. By introducing a range of beauty products it not only provides an additional use for any excess cocoa beans but also enters a new market and therefore increased demand. These products also have a far longer shelf life (they are not perishable food items like chocolate).Informing and educating customers. Their online platform, cooking classes and magazine help inform customers about the products they offer and ways to use them.Developing complementary services. The introduction of cafes in many of their stores is a prime example of this as people will buy a coffee to drink while they enjoy their chocolate or ice cream.Multitask staff. By training staff as baristas and store assistants, Hotel Chocolat is able to manage changes in demand almost instantly.Supply Chain. We can see the connection between supply chain and matching supply and demand. Vertical integration helps Hotel Chocolate manage demand fluctuations. However, the wider their range of products, the more complex this becomes and the more important efficient inventory management and production processes become.

Kanban or 'pull strategy' is a scheduling system which companies can use to help manage production lines and follow a Just in Time approach.Hotel Chocolat has an online subscription model allowing customers to have regular deliveries of chocolates. The regularity and lead time for these orders allows for the implementation of Kanban.Retail stores operate predominantly on a push strategy as they need to have products in store to be able to sell them. As the products Hotel Chocolat is selling are perishable goods it is essential that they manage stock efficiently.

Resilience is the capacity to prepare for disruptions, recover from shocks and stresses, and adapt and grow from a disruptive experience.Two of the ways in which Hotel Chocolat demonstrates is resilience are by offering a diversified product range and by effective supply chain management.

Diversification in its revenue streams, product offerings and sales channels increases Hotel Chocolat's its ability to survive adversity.The main sources of revenue for the company are:Chocolate salesAlcoholic and non-alcoholic beveragesCafesBeauty productsHotel and plantationSales Channels are:In storeOnline deliveryClick and collect

The Hotel Chocolat Boutique not only provides another source of revenue and builds on the brand's luxury chocolate but for those lucky enough to stay there it is another example of how Hotel Chocolat provides a memorable customer experience.

Hotel Chocolat owns and operates its own cocoa plantation in St Lucia which gives it vertical integration throughout its supply chain. When the founders bought the Rabot Estate in 2006 they made many visits to understand how chocolate is farmed and processed. This approach of seeing it for yourself 'Genchi Genbutsu' ensures the senior staff really understand their business from start to finish of the supply chain.However, they also work with many other cocoa producers around Central and South America. This means that if one farmer were to suffer a bad crop, natural disaster or a country's trading or taxes policy were to change, Hotel Chocolat has diversified suppliers of raw materials to continue to operate.Hotel Chocolat also prides itself on its ethical values and ensures that farmers are fairly reimbursed. Coupled with its intricate knowledge of the cocoa farming industry in the Americas, this has allowed Hotel Chocolat to form strong relationships with its suppliers and to be able to indentify early if there may be issues in its supply chain. This is key to be able to react effectively to reduce any negative impact.

Kaizen means continuous improvement and is an essential ingredient in lean operations through a special focus on quality and removal of waste.Three recent examples of improvements being implemented in Hotel Chocolat are:Upgraded truffle making facility and recipe. This increased production capacity by 20%Cross-functional team in store as they diversified through the introduction of cafes in selected stores. By training staff as baristas and shop assistants it improved efficiency, allowing them to cater for fluctuating demand for each service. By training staff in multiple areas reduces the risk of Mura (unlevel workloads) and increases motivation and job satisfaction leading to higher retention.Improved scheduling of manufacturing processes to optimise production and reduce Muda (waste)A plan is underway to increase storage and handling capacity of liquid chocolate in 2018 to make it possible to receive larger deliveries of materials, reduce delivery charges and improve efficiency

In the words of Forest Gump's mother "life is like a box of chocolate. You never know what you're going to get". The same could be said about running a company and I will examine some of the means that Hotel Chocolat runs its operations. I have chosen Hotel Chocolat as this is an industry I know nothing about and offers the opportunity to apply the concepts studied in the Operations Management course to a real company. Hotel Chocolat sells perishable consumer goods (chocolate) and has begun to diversify its business by selling other foods, developing non-edible products, opening cafés, running a cocoa estate and a luxury boutique hotel. There is a wide range of areas within the company but I have chosen to take a deep dive into managing the customer experience whilst also identifying some other key areas of the business such as new product development, how it continues to improve its offerings, resilience strategy and matching supply and demand.I will also attempt to demonstrate how many of these activities combine as part of the company's overall strategy for success.

Take AwaysIn fast moving consumer goods industry, customer service is no longer enough. To be successul you need to create a complete customer experience which requires careful planning and precise execution.As technology continues to become more integral in our everyday lives, online and digital sales channels are essential to boost sales and build brand awareness.Combining vertical integration with outsourcing of raw materials reduces the exposure to risk and creates a more resilient firm.Diversification not only allows a firm to reach new customer segments and increase revenue streams but can also form part of a firm's resilience strategy.Hotel Chocolat is far more than a premium chocolate brand. Staying true to core values allowed it to expand into new lines and develop an increasing customer base.For a firm whose core business revolves around mass production of perishable goods, an effective supply chain, inventory management and multiple distribution channels are vital.Whilst each area of the business can be viewed individually, it is clear that strong links exist between all areas within the company and if one begins to fail, it will have an impact on the rest of the company. Operations must therefore be viewed as stretching the full length and breadth of the firm and it is vital that all areas are aligned with their strategic goals. While I have not had the opportunity within this mindmap to address the importance of communication, cooperation and avoiding silos in detail, the interconnectedness of the business reflects the importance of this as we saw in class.If you want to find out more or just want to treat yourself, click the attached hyperlink to visit the Hotel Chocolate website.