From the source: Ross Poulakis, Harrolds
BIO: Ross Poulakis has been the managing director of Harrolds for almost five years, taking responsibility for the day-to-day operation of the business after finishing university in 2012. Since then, he’s taken the business from strength to strength and is now charting the future of the company, relaunching its private label suit range and considering the possibility of an international expansion.
COMPANY PROFILE: Founded in 1985 as a single store luxury concept by John Poulakis, Harrolds is one of the most prominent multi-brand luxury retailers in Australia, having expanded its boutique department store concept to five locations in Melbourne, Sydney and the Gold Coast. The family-owned business has recently added another level to its Collins Street flagship, bringing in womenswear for the first time.
Inside Retail Weekly: It’s been a big 12 months for Harrolds, from the opening of your Gold Coast store to the renovation of your Melbourne flagship and now the Birkenhead Point outlet How are things trading at the moment?
Ross Poulakis: With expansion, things have to be travelling quite well. We’ve jumped from just being a luxury men’s department store to a fully-fledged luxury department store with the incorporation of womenswear. That’s been a really great transition for us. Aside from just bringing in a whole new clientele base, we’ve seen an increase in menswear and couples shopping, which has been really good.
IRW: The changes you’ve made to the Melbourne flagship are quite extensive, you’ve really reinvented that store. Could you give us a bit of detail about the process you had to go through to put in that extra level?
RP: As you can imagine, it’s quite funny to look back and say, “Far out, where did it start?” It’s just been such a long process. It was first and foremost getting our landlord onboard and explaining the growth of our brand and why we needed more space. In Sydney, due to us being in a Westfield, we couldn’t incorporate mens and womens in one store, so we really wanted to achieve that in Melbourne, especially since it’s the flagship store.
We started that process with our landlord and they bought in straight away, they really wanted to do it. Originally, we wanted to take the level above, but that wasn’t an option, so the next point of call was to reconfigure the car park and take an extra 500sqm there to incorporate womenswear.
All the designs are done internally by us. We have an architect who works with us and listens to our ideas, but we designed everything ourselves, from the racks to the floor – absolutely everything in the shop. At the end of the day, our philosophy is that myself, my father, brother and our buyers know our business and we know what works for us.
IRW: The decision to bring in a fully-fledged women’s range wasn’t taken lightly. What was the motivation behind that, and what does it mean for the future of Harrolds?
RP: One of the biggest things, even before we did Melbourne, was that our father John, who started the business, always pushed to us, saying that if you stand still, you die in the retail space. You have to be constantly innovating and offering customers something new, giving them a reason to come back, especially in our luxury field.
That’s where a lot of Australian retailers have fallen, they’ve had the market for so long and they haven’t needed to innovate and change. All of a sudden, when these international brands come in and flood the market, they are on the back foot. They’re being hunted now.
For us, it was more so that we’ve absolutely mastered menswear so we asked, “What else we could do differently?” That was the biggest thing for me when I came into the business, we even had women coming in buying men’s product – the time was just right.
What we’re now finding is that it’s encouraging men and women to shop together, especially with our street offering – it’s very unisex so it helps bridge the gap.
IRW: Is it time to slow down, keep the portfolio you’ve got and see how things trade with womenswear and your relaunch of private label?
RP: It is. With private label, it’s the same thought process as womenswear, our entry level suit was $2000 and we really felt there was a huge market for people that weren’t necessarily prepared to spend that on a suit. They potentially felt a bit intimidated by Harrolds, so we saw that gap and developed our private label suits, shirts, ties and shoes. We’ve lowered the price to $1,200 and launched it a couple of weeks ago – the results so far have been really good.
We’ve got two styles in private label, the Milano and the Parigi. The Milano being a classic Italian fitting suit, and is a bit loose in a drop seven. The Parigi is that drop 10 slim fitting suit, it’s ultra-modern. They’re all 100 per cent produced in Italy and the fabric is sourced in Italy, so in terms of the price point, it’s definitely the best suit on the market.
IRW: Has it been a challenge to get that off the ground by diving into the supplier side of the market?
RP: Yeah, it’s taken us a while to master, we’ve had to form the relationship with the manufacturer and grow with them. It’s taken a long time to get to the point where we’re able to offer these fabrics from Italy at the prices we have – we’ve gotten there now and it’s an exciting thing.
The other department stores aren’t doing it, and if they are looking into it, it’s usually Italian-sourced fabrics made in China or Hong Kong, which, if you’re paying that price for suit, really loses that appeal. As a business, we can’t afford to be seen doing that. We have to continue having that offering of quality and luxury.
IRW: That relaunch is trading against the backdrop of the Cartier X event you’re running in Sydney at the moment. That’s due to go to Melbourne next month. How successful has that been, and has it left you bullish on more partnerships with other luxe brands?
RP: It’s a must to do these collaborations because it’s innovating, giving your customers something different every time they’re walking into the store. To be able to collaborate with a world-leading brand like Cartier is very humbling, but also a great opportunity to grow that space and do more collaborations. From introducing the Cartier collaboration in Sydney, I’ve already had quite a few offers from other mega-brands to do something similar. It’s gotten traction.
IRW: You couldn’t tell us who could you?
RP: Unfortunately, not just yet!
IRW: Can’t blame a guy for asking. You guys have also run a sneaker lottery, which runs in a similar promotional vein to the Cartier event, but really homing in on that high-demand/scarcity model. How did that initial test go?
RP: It was quite successful when we first launched it, you need to be careful with it because you can’t do it every fortnight, it takes away from that special feeling. For us, it’s making sure that if we are going to do it, we need to make the product exclusive and limited. You want to create that demand, you don’t have enough for everyone to get one and you don’t want to have that many.
We’ll be looking to do another one with the lottery system, because it creates a lot of great hype and excitement. It’s been really successful.
IRW: These initiatives are good examples of what Harrolds is doing to stay ahead of the curve, but there’s been lots of commentary about the state of the sector at the moment, and most of your big competitors are struggling. How are you feeling about consumer pockets?
RP: It’s hard out there. You’re hearing a lot of bad stories coming out of retail, whether it’s Topshop or some of the Australian brands. There’s no hiding the fact that times are tough, but you can’t be stagnant, you have to take those calculated risks to continue to grow, which means really investing in your clients to give them something different.
That’s where we’ve really been able to grow in this period. Not a lot of businesses in the retail sector have had our growth during this period, so we need to keep innovating. We can’t be afraid to grow and take risks, the results will come. Our entire team shares that passion and those values, and you need the entire team onboard to have that culture.
IRW: Harrolds has been quite competitive in the market, you haven’t shied away from discounting during your promotional period. But there’s been a fair bit of discussion about retail and its relationship with discounting, especially in the upper portion of the market. Do you think the so-called “promotional fatigue” shoppers are apparently suffering from is a legitimate concern?
RP: It is. Some of our major department stores have trained their clientele to only shop on discount. Every two weeks there will be a special offer, whether it’s 30 per cent, 50 per cent or ‘buy two suits get one free’. At that point, you are educating your clients not to buy at full retail and that’s catastrophic for any business. We’ve got our one discount period at the end of the season, we run that for four days and then that’s it.
IRW: Is that where the Birkenhead outlet comes in? Being able to put the off-season stock there and avoid remaining heavy on inventory while still maintaining that integrity in the flagship?
RP: We have an outlet store at Crown and that’s historically been used to house all the excess stock left over from the previous season, but as the business has grown, we’ve increasingly needed a discount store in Sydney. We’d been looking for a space in Sydney for quite some time before being approached by Birkenhead Point. They’ve got a really successful model that works, so we jumped on board straight away.
We try to keep it quite separate, we don’t really focus on an outlet business, for us it’s there to serve its purpose. Our big focus is really just retail and our flagship stores, and continuing to offer new product to clients. We don’t have a big focus on outlet.
For us, it’s old season stock that’s gone through our flagship and hasn’t sold. Every business needs to have a method to clear out existing stock, we choose not to push that or advertise that.
IRW: It’s a tough domestic market, but tourism has become an increasingly prominent part of luxury retail in recent years. Has that been the case for Harrolds, and are you doing anything to capitalise on it?
RP: I think it has been really important for all retail businesses, especially our business. But a lot of people are making the mistake of just buying and catering for that Asian market. Our philosophy is that we’ll continue to work on our local clients, that’s our foundation and we can never walk away from that. What happens if the tourism market falls over tomorrow? We’ll just be left high and dry. We like to think of tourism as the cream on top while we continue to grow our local clientele. It’s been a huge influx though, so hopefully that trend continues and I think it will.
ME: The presence of that demographic has been one of the factors that’s seen a vast array of international brands, many of which are your suppliers, look to open stores Down Under, or expand their local footprint. With the market getting more crowded, what are you doing to ensure Harrolds stands out?
RP: They’ve already come and they’ve already started to open their own flagships. It actually hasn’t affected us negatively, it’s actually really helped our brand. They develop their brands in the marketplace and that grows demand. Where we come out on top of mono-brand stores is that we’re a multi-label environment, so we have options [for consumers] to choose from.
That one brand might bring out a collection for that season that isn’t strong and then where does that leave them? It’s not a good space, whereas as a multi-brand environment, we don’t rely on one brand. That simple thing for a customer to be able to buy one brand’s jacket with another brand’s trousers always wins out.
IRW: Demand for those brands isn’t just growing at home, it’s also growing throughout Asia. As the Harrolds brand picks up steam with those consumers, is there scope for expanding internationally?
RP: Definitely, we feel that our expansion across the entire eastern seaboard is enough for us in Australia. The next stage of the growth strategy is to take the business internationally, and it’s definitely a model that works in any city you put it in. It isn’t a full department store, it’s a boutique department store which caters and focuses on service.
ME: Any timeline there? Are we looking at five or 10 years for other markets? Would you look to keep things consistent, or change things up for other markets?
RP: It’s probably a five-year plan. We’ll keep our brand as it is, whether the stores are the same will depend on the market, but we will continually innovate and change our stores every few years anyway. It will be the same form and style of offering.
IRW: Looking forward to seeing how that develops. But what about e-commerce? Luxury has had a bit of a sceptical relationship with online shopping, but we’re starting to see cracks emerging with the launch of LVMH’s new website. Is that something that could work for Harrolds?
RP: It’s actually quite funny. When I started about five years ago, in my position there was a write-up in Business of Fashion that used Harrolds as an example, saying that we’d be a showroom floor for customers to look at products then go buy online. They said brands like us would go under, but five years later, we’re growing all over Australia, going from strength to strength. Online hasn’t affected us, it’s been positive. It’s educated local clientele on luxury products, and at the end of the day, there are so many people who don’t want to buy a product they can’t touch and feel.
When you’re spending substantial dollars, whether it be $400 for a t-shirt through to $20,0000 for a jacket, you want to touch and feel and have that experience. Nothing beats the experience of walking out of a store, having been absolutely pampered, with the goods in the bag. There’s no better feeling, and that’s where we’ve combatted online. We will look at doing it, that’s in our growth strategy as well, but it’s got to be done really concisely. We won’t have all our products online.
IRW: Would a click-and-collect style hybrid offer make more sense?
RP: Yeah. Correct. That’s what we are all about. We want that relationship, so we’ll look at a hybrid model because it’s about asking how we can give someone that luxury experience when they’re just clicking behind a computer. That’s the most difficult thing for us to get our heads around.
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