From the source: Nicky Sparshott, T2 Tea
BIO: As CEO of T2 Tea, Sparshott’s role involves leading the performance of the business across channels, functions and markets to build its growth across the world. She is also the vice president of the global leadership team for Unilever’s refreshment category.
COMPANY PROFILE: Unconventional tea retailer T2 Tea launched in Fitzroy, Melbourne in 1996 and immediately surprised customers with its modern twists on tea flavours and combinations. In 2013, the business was acquired by Unilever and it now has 96 stores around the world including London, New York, Singapore and Scotland.
IRW: What has the last financial year been like for T2 Tea?
NS: We’ve had a really solid year of growth, which has been a little bit tougher as we’ve entered into 2017. It’s sort of reflective of the retail landscape across the board, but we’re still seeing very solid double digit growth which we hope will continue. A little bit of it comes down to the fact that tea is really having its tipping point right, which has been happening for 12 months now, but particularly now with the trend around health and wellness and an increased focus on millennials on alternative beverages.
IRW: What plans does the business have for the year ahead?
NS: We’ve got three strategic imperatives. For us, it’s about continuing to build a beautiful brand experience for the customer, whether it’s through our physical stores or online. We’ll continue to invest heavily in innovation and bring a more progressive take on tea. We’ve always been anti-establishment went it comes to the industry and doing things differently. We’ve got an innovation agenda.
We’re continuing global expansion. We remain really passionate about our home market in Australia and there’s still a lot of unrealised potential here, but at the same time, our mission is to create a T2 generation on every continent. In the last two years in particular, we’ve taken the business into NZ, the UK, the US and most recently, Singapore and will continue over the next 24 months to open a few new markets, so watch this space.
From a channel point of view, like most retailers, our physical stores will continue to be incredibly important for elevating the customer experience and coupling that with an immersive online experience. We want our online store to be up there with our sexy stores around the world.
IRW: T2 just launched in Singapore this year, which is the business’ first entry into the Asian market. How has that been going?
NS: We chose Singapore as a gateway into Asia. It’s a beautiful market with a very sophisticated retail landscape and an affluent shopper base, but probably what attracted us most to it was its melting pot of different tea cultures. You have the colonial influence there, the beautiful green teas from China, the Indian influence with all the chai and the teh tahrik from Malaysia – it’s a beautiful melting point of tea cultures. We felt that gives us a beautiful platform to introduce the T2 brand in the market. There’s already that appreciation for tea in Singapore.
So far, it’s been an entry we’ve been really proud of. Since we opened up the market in January, we’ve got three stores and hope to open a couple more before year end, then see how it goes. I think it will open a lot of interesting opportunities across Asia, already we’re finding that a lot of our e-commerce sales from Singapore have been going into many of the Asian markets, so that bodes well for future expansion.
IRW: How has the business been tailored to suit the Asian market?
NS: When we enter new markets, we choose those markets where we feel that the current representation of the brand would most easily transfer without needing to turning it on its head. Even as we’ve gone into Singapore, we’ve tried to be true to what makes T2 great and in so many markets that preceded Singapore, we’ve just made nuanced changes where we think they’ll make a difference.
Any market we go into, we always launch a signature breakfast blend, it’s a nod to their culture. We spent a lot of time thinking through the new Singapore Breakfast blend, thinking about those signature flavours that resonate with Singaporeans that you feel when you’re in the food courts of Singapore or in the homes of people. We crafted a signature blend around that, which is made up of pandan and coconut and really took inspiration from the kaya toast many Singaporeans have every day for breakfast. Unsurprisingly, it’s the number one SKU in Singapore. We’re soon to launch a Scottish blend in the coming weeks for our recent Scotland launch, too.
We nuance as we go so we can get a feel for the market that we’re in. What was really important to us going to Singapore was to give ourselves the space to see in the first six months what resonates most with customers and even those in different stores, so we’ve tailored our store formats to better meet the customer profile of the different locations that we’ve opened.
We’ve been agile enough to change when we see either an opportunity or where we find something that’s not working.
IRW: And T2 just launched in Scotland too. How has T2 Tea been received there?
NS: Scotland is the newest kid on the block. Buchanan Street is one of the most shopped streets in the world, I think it’s the second most shopped strip in the UK. Scotland has some of the most pervasive tea habits in the world, there’s lots of tea is consumed there! We felt the Scottish consumer was ready for tea done differently from Down Under. So far, it’s only early days of course, but the brand has been really well-received on that street and by the Scots.
IRW: What would you say are some of the main challenges in the food and beverage retail sector at the moment?
NS: The first one is differentiation. It’s a very saturated market and borders are very open. It’s a global marketplace that customers are able to shop. We’re obsessed with differentiating our brand and making sure everything we do adds back to the customers in a really positive way. We also want to marry insight and foresight so we can set the pace for what’s coming next.
The second challenge is around the seamless integration of offline and online, so food and beverage retailers need to navigate an omnichannel landscape right now. It’s popular to talk omnichannel, but I think when you strip it back, it’s about recognising a day in the life of our customers and being able to create experiences that fit their purpose in a channel agnostic manner. That’s key right now.
The third one is probably around pace of change. I think for everyone, that pace is unprecedented and that’s not going to slow down at all. So we’re constantly reinventing our own innovation cycles and our ability to get to market more quickly and respond to change almost in real-time.
I think the last challenge, which I think is the most interesting, is the customer-led change, which few retailers have fully gotten ahead of. Today, people are really looking for brands that are sustainable and purpose-led which are placing at the core a holistic view of business done better to improve community, environment, beyond just the four walls of any store.
IRW: I think when it comes to food and beverage, translating things like taste and smell to an online platform must be a real challenge.
NS: It places the onus on us being incredibly good storytellers and that hasn’t changed. With all the technology that has taken place, what remains true is that humans respond well to stories told well. It’s about bringing the brand to life through our stories and evocative visuals so that people are compelled enough to come into our stores or to shop online. Marketing becomes increasingly important in an environment where customers don’t always have the benefit of being able to smell and taste the tea.
IRW: How did T2 change the way tea is viewed by the general public and make it seem so much sexier than before?
NS: It started with a vision 20 years ago to present Australians with a world of tea beyond just milk and sugar and really break that stereotype around tea being an old-fashioned beverage that your grandma may have given you to comfort you. That focus from when T2 was born right up until today hasn’t changed. It’s about presenting a world of tea done differently, unlike that which you may have experienced to date, whether that’s through over 250 different blends with crazy combinations to give you a really evocative and surprising taste experience or whether it’s our imaginative and diverse teawares to help you make a beautiful cup of loose leaf tea more easily but without compromise.
It all marries up to this desire that we don’t just want to offer a product that people buy, we are really encouraging a T2 lifestyle that people opt into.
IRW: How would you describe the T2 customer?
NS: Our consumption footprint for T2 is quite broad. We have young kids who come into our stores who really enjoy our fruit tisanes, our caffeine-free teas on ice. We also have a broad cross-section of much older customers since T2 was born 20 years ago.
It’s not a demographic that defines them, but more of a psychographic, which talk to their psyche that brings them together. They tend to be quite creative people, who have an interest in fashion, music and food. They’re certainly curious with an appetite for new experiences. They tend to be independent free spirits, so these guys are quite pioneering in their experimentation around tea.
And they tend to be well-travelled, so they see things in different parts of the world and they want to replicate that experience in their own home. Quite often food is the way to replicate those experiences, and beverages in particular, because it has unique manifestations of tea. Every country has a tea ritual and everybody understands the hospitality that comes with the gesture of offering a tea, irrespective of the tea type or ritual.
IRW: A lot of brands have been focusing on the millennials customer lately. Is that happening at T2 as well?
NS: What’s interesting is we’re finding a natural gravity from the millennials customer into T2 and I think it’s because there are so many points of alignment between what T2 stands for and the values of millennials today. There are three points in particular.
Wellness for millennials is a daily pursuit, it’s just about small things done differently every single day that add up to more wellness in their life and a simple cup of tea plays that role nicely in their lives.
Millennials are our first digital native. They’ve grown up with the digital landscape being the only landscape as they’ve known. We’ve always lived and breathed largely online, because we wanted to build a conversation with our customers. We never really had a push strategy to entice people to the T2 brand, it’s been much more about building advocacy through conversation. That’s aligned to a millennials customer.
These guys are all about access versus ownership, they’re about experience versus stuff. And at T2, we’ve always really prided ourselves on the fact that when you step into a store, you are stepping into an experiential world, a highly sensorial world where you can unleash your curiosity, creativity, passion and experiment, which I think is holding well with the millennial group today.
IRW: How would you describe the in-store experience at T2?
NS: When someone walks into a T2 store, we want to immerse them in a world of teas and the possibility of a tea lifestyle that they can opt into. For us, that means giving the customer absolute freedom to taste, touch, smell, feel, ask questions and be taken on a journey of tea, whether you’ve stepped into T2 for the first time as a tea novice, or whether you’re one of our most loyal customers who comes in often and is always seeking out what’s new or you’re just grabbing a much-loved favourite.
We want people to feel that they are able to get really hands-on with T2. We have tastings at our brew bar that we change all the time, we really want to inspire what you can create at home.
It’s not good enough for someone to just come in and have a beautiful cup of tea, we want to enable them to replicate that gorgeous experience at home and have the confidence to do that. That might be through our tea tastings, our masterclasses that help people brew the perfect chai, create the most gorgeous matcha or learn about the most authentic rituals when it comes to tea making and how we’ve modernised them. We might teach them about the tea rituals around producing a matcha in the Japanese way but at the same time, we can always show you our proprietary matcha flask so you can brew it up for yourself when you’re out and about.
IRW: T2 has long had an amazing cult following. What have you guys done to foster this sense of community amongst customers?
NS: One of our values is generosity, so we want to thank the people who are contributing to T2’s success, whether it’s through buying our beautiful teas for themselves, gifting them to other people or giving us input in the exciting new flavours we could consider. We want our T2 fanbase to be part of the family and almost co-create with us in some ways where we take the brand next. It’s one of the cornerstones of our business.
In our Tea Society, we have 820,000 members globally who we actively engage with. We give them access at times to money-can’t-buy activities and events that we run. They have access to tea knowledge and of course, what I love about it most is that it’s not a one-way dialogue. We get amazing input from our Tea Society fans on what we can do to make the brand better, the retail experience stronger. They tend to be people who are passionate, experimental and typically well-travelled, so they have a nice view on what’s to come next.