Harry & David's Digital Transformation Ignites Sales of Its Familiar Gift Baskets

If the pandemic and its attendant economic fallout has a positive side, it may be that retailers are getting the chance to remake their businesses for an increasingly demanding customer.

For some, it meant throwing in the towel (more than 7,600 brick-and-mortar stores have shuttered permanently since the beginning of 2020). For others, it meant pivoting to or ramping up their e-commerce business.

But for Harry & David, the iconic gourmet food brand best known for Royal Riviera pears and Moose Munch popcorn, digital transformation changes were afoot long before COVID-19 became a household word, according to Steven Lightman, group president of gourmet foods and gift baskets for parent company 1-800-FLOWERS.COM.

The current crisis may have accelerated the timeline, but it also created more demand among customers who embraced online ordering of Harry & David’s gourmet foods and wines with even more fervor as they were too afraid to venture out.

Pivot to e-commerce only

Although 1-800-FLOWERS.COM announced it would close 38 of its 39 physical Harry & David stores earlier this spring, Lightman insisted it was all part of a plan. He pointed out that Harry & David had filed for bankruptcy protection in 2011 and subsequently shut dozens of its brick-and-mortar locations before 1-800-FLOWERS acquired the brand in 2014.

Back then, they’d been discussing closing stores because “our retail model didn't make any sense,” Lightman told CO—. For those unfamiliar with the brand’s history, Harry & David is a mail-order company with roots that predate the Great Depression. The company did a brisk business shipping the signature pears grown in its Oregon orchards to customers all over the world. It expanded to include gourmet gift baskets in 1934. Mail order continued to be the primary source of the company’s revenue even though it opened physical stores over the decades.

Millions of catalogs in the mail mean that those who prefer to use the telephone can still call to place an order, but Lightman said Harry & David’s business is primarily online and they redesigned the website to make ordering faster and more personalized back in 2017. The digital transformation continued with enhanced mobile ordering and integrated Apple Business Chat for customer service in 2019.

Now with many states still under stay-at-home orders or only partial openings for businesses, “Going online [only],” said Lightman, “was a win-win.”

If he sounds confident, Lightman has only to point to the early numbers that suggest the brand’s trajectory is on the right track. During its third quarter [of fiscal year 2020], the Gourmet Foods and Gift Baskets portion of 1-800-FLOWER’S business saw revenue increase 27.1%. This segment represents more than half of the company’s overall business, yet its growth exceeds the average increase for the gourmet food market as a whole. Before the pandemic, Bain & Company found that sales of high-end food had grown 6% over last year and fine wine sales increased 5% and were predicted to continue growing.

“Our business has continued to perform well, as people have been increasingly turning to us to help them connect with others who they cannot be with in-person,” said Lightman. He said families are buying gift boxes, wine and prepared meals to share with each other on video calls. Others are sending care packages to co-workers and clients. “With more people wanting to stay home, we are also seeing strong demand for items for self-consumption,” he said, so charcuterie, meats and fresh fruits are flying out the door, too.

Giving the customer what they want: The baskets must ‘look like the picture’

Of course, these offerings range in price from affordable to pricey, but Lightman also pointed out that Harry & David’s subscription boxes can now be bought in a pay-as-you-go model instead of having to make a three-, six- or 12-month purchase commitment. “Our fruit discovery box program is generating the most interest,” he said. And the added flexibility to cancel at any time has worked in the company’s favor. “We are seeing customer adoption continuing to ramp up,” Lightman noted.

But, he observed, it’s more about maintaining a high level of customer service throughout ordering, delivery, and even after the items have been received. Lightman said that Harry & David’s customer communication is always meant to engage and support. Little things like sending reminders that a gift was ordered for a birthday or anniversary last year nudge the customer to consider reordering. Once they do, Harry & David’s customer service reps get in touch when the item arrives to make sure the delivery and the product was satisfactory.

He underscored the fact that the customer needs their shipment to “look like the picture” on the website or in the catalog. If it doesn’t, he said, the company aims to make it right. That extra call, Lightman said, has done much to cement the loyalty of customers old and new.

Hooking younger customers with wine, specialty food and Instagram

While Harry & David’s “iconic customer” is over 60 years old, Lightman said, the brand’s offerings and its digital marketing efforts have resulted in organic growth and a new younger customer.

He pointed back to the creation of Harry & David Gourmet two years ago which features prepared meals, specialty foods, wines, meats, fish, charcuterie and cheese, which younger customers are using to entertain at home.

Marketing these offerings has spanned across digital display ads to social media platforms such as Instagram, Twitter and Facebook. Food and wine are meant to be shared anyway, he said, so social media sharing just makes sense. “We are directly connecting with our customers to introduce our latest videos, announce upcoming events, and share exclusive content,” he said, and that includes tips for connecting with family and friends in the time of quarantine.

What’s next for Harry & David? Lightman said he has a roadmap for the next two to five years that he wasn’t at liberty to share. Instead, he pointed to its current growth and the good fortune of having an established brand backed by solid technology for its e-commerce operation — which has become invaluable to retailers navigating COVID-19.

“We see good tailwinds coming out of this environment because of our positioning as a brand that helps customers connect and celebrate with the important people in their lives,” Lightman said. A recent report on consumer spending from Unity Marketing suggests that confidence is well-placed. “Food and beverage spending boomed in the shutdown, up 10%,” with meats, fish, and fresh fruit—all major Harry & David offerings—posting double-digits increases, according to a report from the market research consultancy.

Lightman, however, is leaning into the little things that comprise Harry & David’s customer experience to drive business. “We will also find more ways to engage with our customers beyond the transactional process,” he said, “helping them build relationships, share with others, express themselves, connect in new ways, and celebrate moments big and small.”

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