How Worten is leading Portugal’s omnichannel retail revolution

Less than a decade ago, Portugal’s Worten was a brick-and-mortar electronics retailer. Today, it’s the country’s omnichannel leader, seamlessly mixing physical locations with e-commerce in a transformation that has resulted in the company—in direct competition with global e-commerce leaders—selling millions of products.

In this conversation, Fran?ois Videlaine and I speak with Worten Portugal CEO Miguel Mota Freitas about how the retailer redefined its value proposition and operating model, adapted to meeting changing customer needs, and embraced the promise of omnichannel. The CEO also discusses the challenges of making such dramatic organizational shifts, plus his hopes for the future of retailing.

This conversation is part of a senior executive interview series in the upcoming 麦肯锡 - EuroCommerce report,?‘State of Retail 2024 – Europe: Transition and transformation in nongrocery retail’.

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McKinsey: What is unique about Worten’s consumer value proposition, and how is your operating model aligned to it?

Miguel Mota Freitas: We come from a typical electronics offline retail value proposition: very price-driven, with relatively low levels of service. In the past five to seven years, we started a new, two-part journey. The first is clearly the core value proposition for Worten: to be really the best omnichannel player in the market. And the second is around marketplace positioning. We believe that the strongest omnichannel player in the market will be the winning player in electronics.

What does it mean to be the “best” in omnichannel? We have two strong assets to leverage: our people and our network of more than 200 stores. On top, we needed to also be a very good e-commerce player in electronics and link our offline and online operations. Building the tools to make that seamless integration between channels is a never-ending story. But while there is still a lot of work to do, we have made great progress.

In terms of getting the organization to be omnichannel, there’s a “soft” part—like a cultural change needed—and a “hard” part around how you organize. The “hard” aspect was relatively straightforward to address because it aligns closely with the core organizational structures typically employed by retailers. The difficulty is that to be truly omnichannel, we needed to destroy the walls and silos that traditionally existed within the organization. This required a cultural and mindset shift as well as an adjustment to our work processes.

McKinsey: How did you make your vision a reality?

Miguel Mota Freitas: We started seven years ago by making a clear statement: we want to be a digital company with physical stores and a human touch. This vision is still valid today. The first part of this statement is an important one. We started a project called Digitalism to introduce “digital first” thinking in our ways of working. It’s not only about selling digitally but also working digitally and interacting digitally with customers and suppliers. We are now a different company than the one we were five or seven years ago. E-commerce is only about 20 percent of our sales, but in every meeting digital is at the center of the discussion. That shift is very important in delivering changes and developing a proposition that makes Worten a true omnichannel player.

McKinsey: Has the shift also put the customer more at the center of your thinking?

Miguel Mota Freitas: There are two things in retailing that didn’t exist until 10 years ago: orders and customers. Most retailers—and this was our case—didn’t really manage customers, we managed transactions: the customer comes, buys, takes the product, and leaves. Order management was even less of a priority because the transaction was complete. Now, more than 50 percent of our business is about managing orders. Only about 40 percent of our sales are what we call grab and go. That’s very new for the company. Putting customers more in the center of the organization is also a shift. It’s an area of investment in people and in systems. Retailers now really measure customer satisfaction and the longtime value of customers, among other new metrics.

McKinsey: What role do the stores have when it comes to customer satisfaction? Do they have the same role as online?

Miguel Mota Freitas: First, we have 50 to 70 customer journeys that we measure every time a customer buys or interacts with us. Worten teams manage and report this internally every week to identify where are we doing better and where are we doing worse. Also, we’ve seen progress in two ways in the role of stores. First is from an experiential perspective. Stores are showrooms where our customers can touch and feel products, close to their homes, and get advice from our sales staff. Second is from a logistics point of view. Stores are pickup points for online orders and warehouses to stock products and also a trusted space for repair and after-sales management. For example, stores can remove the biggest pain point customers have when buying online: returns. And solving this problem with a human touch is something that online pure players are not able to do. This is a valuable differentiation element of our value proposition.

McKinsey: How far have you pushed the omnichannel organization?

Miguel Mota Freitas: Conceptually, everything we do is integrated in the omnichannel logic; that’s an important step. I still hear about a lot of organizations that have online and offline operations separated, and we don’t. Bonuses is a relevant example. Store employees had evaluation KPIs related to offline sales. But all managing positions in the organization now use the same KPI for their annual bonus. So be it the CEO, a store manager, or a category manager, we all have the same KPI.

McKinsey: When did you see a step change in your omnichannel journey?

Miguel Mota Freitas: Probably the pandemic period, where we had the strongest market share gains. That created positive momentum in the organization. To be omnichannel, you need the physical network, a very efficient operation, and a good online presence. To be good online, you need to be relevant online. If you’re not relevant for the customer, they just forget that your brand exists. The biggest challenge for an electronics retailer is the low frequency of purchase. A usual customer buys twice a year, maybe. They buy a mobile phone, a TV, a refrigerator, but not every week. So even if you have the right service, assortment, and pricing, there’s a certain risk that customers forget about you.

Midway through our journey, we felt that it wasn’t enough to be solely a very good omnichannel player in electronics. We challenged ourselves to become a generalist marketplace and get customers to visit us more often and buy more than just electronics. We came from being an offline retailer with about 20,000 to 30,000 SKUs to offering 10 million to 12 million products on our website—part of it sold by us, but a big part through marketplace operations and partners or sellers. It’s a successful formula because we are the most visited e-commerce website in Portugal.

McKinsey: If you had one hope for the retail industry in the next five or ten years, what would it be?

Miguel Mota Freitas: Electronics retail is a tough market. We need to find additional sources of revenue—for example, through services such as repairs. As an industry, what we need the most is innovation and, particularly, product innovation. Brands and retailers need to continuously introduce innovation in the market and enlarge the scope of categories where technology is relevant. The possibilities are limitless.

Our role is to be the independent advisers. We are the ones that need to help customers identify the best solution for their needs or problems. As long as that product innovation keeps coming to the market, I think the sector is very well positioned to continue to grow.

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McKinsey: Thank you for speaking with us. We look forward to sharing more insights in our upcoming report,?‘State of Retail 2024 – Europe: Transition and transformation in nongrocery retail’.

Thank you to EuroCommerce and McKinsey co-authors and contributors for collaborating on the upcoming report: Christel Delberghe Anton Delbarre Valeryia Despaihne-Chernyak Franck Laizet Fran?ois Videlaine Markus Schmid Ralph Breuer Sebastian Gatzer Cornelia Grossmann Dr. Philipp Nikolaus Kluge Axel Mayer Tim Lange Alessandro Turco Gereon Sommer Katja Zolper Julia P?tzl Natalya Sak Dayan Jayasuriya Roberto Longo Sergey Kondratyuk Alexander R. Thiel Sabine Becker Sara Hudson Amaury Saint Olive Pieter Reynders Tanina Sehl Willy CAMOU Oscar Kettaneh Luis Filipe Duarte Martins