From the source: Scott Druce, Milligram

It’s an irony not lost on many an op-ed columnist that millennials, the so-called digital natives, have been responsible for the revival of vinyl records, single-speed bicycles, pour-over coffee and stationery products.

Is it a hipster-driven obsession with nostalgia, or simply a desire for something tactile and uncomplicated in an increasingly chaotic and digital world? Whatever’s behind it, Milligram is benefitting.

The Melbourne-based retailer has grown from an online-only direct-to-consumer brand selling primarily stationery products, to an omnichannel lifestyle brand with three – soon to be four – bricks-and-mortar stores in just over a  year. It is targeting interstate expansion and is developing an own brand for global distribution.

Key to Milligram’s recent growth is an overarching commitment to selling only truly useful products, what the retailer refers to as “tools for living”. This ethos has seen Milligram expand its range beyond covetable journals, pens and desk essentials from brands such as Moleskine and Lamy, to travel products like bags and backpacks and homewares.

Scott Druce, the co-founder, director and general manager of Telegram Co., which owns Milligram and Telegram, a stationery distribution business operating across Australia and New Zealand, believes the company’s product offering is unique in the market.  

Here he tells IRW how Marie Kondo has helped his business, and which products are most popular with millennial customers.

IRW: How and when did Milligram start?

SD: We started the business about 11 years as a multi-brand distribution business – Telegram – and direct-to-consumer e-commerce business. We’ve gone from two people working at a dining room table in the startup phase to over 100 staff and a couple physical stores.

IRW: Who does Telegram distribute to?

SD: When we were first establishing ourselves, we mainly dealt with small, independent retailers, and they’re still our bread and butter. But over the years, we’ve expanded into major retailers like Officeworks and David Jones. We do a lot in travel retail too. It’s quite a broad mix these days.

IRW: How does your distribution business fit in with your retail business? Could there be a Milligram without a Telegram?

SD: We consider ourselves a multi-channel business. Distribution is a really important channel for us. As is e-commerce and physical stores. They all really require each other to be successful. I think it’s important that we talk directly to the end consumer, because it helps us shape better product choices, better pricing and better presentation. But on the flip side, it’s good to be in the distribution business as well because we actually create volume that way, and it means we can invest in marketing and brand-building through a multi-channel approach.

IRW: What was behind the decision to open a physical retail store?

SD: Ever since we started the business, we wanted to do physical retail, but we got really busy. We had a lot of ideas of what we wanted to do in the physical space; it was more about finding the right time to do it and do it properly.

Years ago, we probably would have thought we needed to stock everything in-store. But technology is surging ahead, and because we have a strong e-commerce business, when we went to execute the store, we decided to carry a lot less SKUs. This allows us to create a much nicer experience in-store with breathing room around the product and space to do events. If a customer comes in and wants a product we don’t have, we can ship it to their home or office straightaway. We carry less than a third of our range in our stores, and each store has a different product mix in it.

IRW: Did you know when you opened the first store that you’d be opening four stores within a year?

SD: Yeah look, we’re pretty ambitious in the way that we want to grow. We wanted to make sure we got the first store right, and then it all happened quite quickly. I’ve just come from the construction site of our fourth store in Carlton.

IRW: How would you describe your core offering, since you tend to offer quite a wide array of products?

SD: We actually rebranded our retail business around the time of our first store opening [from Notetaker to Milligram] because we didn’t want to pigeon-hole ourselves in stationery. About 60 per cent of our sales come from stationery products, but we sell a lot of other products, so we wanted a broader name. We see ourselves as a lifestyle store. We sell these really amazing Japanese cheese graters that customers love, but alongside them we can sell a $300 backpack or a Moleskine notebook. We try to create an environment where customers trust the product, so we’re really conscious of the ethos of the product we have in-store. It needs to fit certain criteria.

IRW: What is the central logic behind the various products you stock?

SD: We have a core purpose within the business around selling what we call ‘tools for living’. We’re not interested in decorative items; we’re interested in items that are really useful that you’ll cherish. They have to have a use and a purpose and they have to be responsibly manufactured. All of these things together help us range very different things in a single space, and customers get it, which is really good.

IRW: Has the Marie Kondo phenomenon been helpful to Milligram, since people are more wary about buying things that will end up becoming clutter?

SD: Absolutely. There are a number of key issues we’re hearing from customers at the moment, and one of them is, ‘Do I really need this stuff in my life?’. Australia is a really rich country, but consumers are waking up a lot more to reusable products and plastic…we’re doing a project around that this year. A lot of things have happened: the War on Waste [documentary], Marie Kondo…it all plays into a much more conscious consumer, which really fits with our values as an organisation. For instance, we just phased out all single-use pens from our stores. Now every pen we sell, you can buy refills for. So you can buy a $50 pen and have it for a lifetime.

IRW: What has your growth been like since going into bricks-and-mortar?

SD: For direct-to-consumer sales, online is the biggest single store, and I think it always will be because the more brand exposure we get, the more our online business grows. But physical is going to plan at the moment; we don’t want to be a big chain retailer. All our stores currently have a completely different design and product mix. We want to be more of boutique retailer, with every store treated like a flagship. We don’t want to go down the path of every store being a cookie cutter.

IRW: Do you see Milligram expanding interstate?

SD: We’d like to. We’re definitely open to most of the capital cities over time, but again we don’t see ourselves being a huge chain of stores.

IRW: Besides opening your fourth store in Melbourne, what other projects are on your calendar in 2019?

SD: We’ve got a lot of things in play at the moment. Every channel in the business is growing, so our plate is pretty full with our current strategy. We expect to have four stores by the end of February, and we’d like to do another few stores this year. It’s really about staying on track.

IRW: It has been an interesting time to go into bricks-and-mortar, with some external market forces making the end of 2018 a pretty difficult time for retailers. What has your experience of the past few months been?

SD: I can definitely see [the slowdown] and the pain that a lot of retailers are feeling at the moment. The shift to online sales on top of less footfall in shopping centres will create the perfect storm over the next couple years. I think we’re a bit different because we’re not pushing an older form of retail. We’ve created an aspirational and exciting environment where our staff are passionate about the product. We do a lot of events and workshops in-store, so we’re doing retail a little bit differently. I think with our size and unique product offering, it’s actually a really good time for us [to go into bricks-and-mortar]. I’d love for consumers to be spending a little bit more, but it’s alright.  

IRW: What do you think retailers need to do to grow in a tough trading environment like we’re seeing now?

SD: We touched on this before, but I think we’re definitely seeing things like the War on Waste impact customers’ decisions, at least for our demographic, which is a younger demographic. We’re also seeing customers really happy to spend a lot of money on single items, but they’re considering the purchase a lot more than they were in the past. I think you’ve got to have a unique product offering that’s genuinely different. I think there’s a lot of sameness in retail in Australia.

IRW: It sounds like this is a growth opportunity for Milligram. What are some other growth opportunities you’ve identified?

SD: There’s the whole design stationery side of our business. A lot of people would say stationery is a dying category, but we actually find it to be a great growth category for us. I don’t know about you, but my mobile phone is an extension of my hand, but I actually really love putting pen to paper, and I really love disconnecting from it. Most of the customers buying paper

are millennials, and I think that’s really awesome. They grew up with keyboards, but they’re the ones who are coming to our workshops to learn how to do calligraphy, or how to use a fountain pen. I think that analog, digital thing is alive and well.

IRW: What kind of in-store events do you offer?

SD: We distribute a really great Australian brand called My Goal that’s all about setting goals to make a change in your life and reach your potential. They offer a range of stationery products and diaries, and we do workshops with their founder that are always packed. We also do events around doing calligraphy and using wax seals and that sort of thing.

IRW: I understand Milligram launched its own product range recently. Can you tell us a bit about the decision behind that?

SD: We launched our own Milligram product around the time we opened our first store. We really wanted to have the same buying ethos that we already have in the business, which is around product that is actually designed by somebody rather than sourced and we wanted to have a close relationship with our manufacturers and make it responsibly and in Australia if we could. Those are kind of like the guidelines as to how we operate. We’ve been really fortunate to be working with a lot of great local artists on the collections, and we’re actually making them in Australia, which is awesome.

We also realise we already distribute a lot of awesome brands, and we’re not interested in going into their space. We’re designing products in gaps or areas we don’t currently have product in. We’re not going to launch our version of a Moleskine notebook or Lamy Safari pen; those products are pretty perfect already. Just before Christmas, we launched an Australian scent collection, including candles and oils that were all made in the Dandenong Ranges.

IRW: As a newer bricks-and-mortar retailer, what have been some of the surprising things you’ve learned over the last year?

SD: It’s been a pretty sharp learning curve. When you’re in the e-commerce space, it’s very data-driven. You can collect so much information about how someone is transacting on your site, so [physical retail] was a real shock to us. We were like, ‘How are we going to measure conversion rates in-store?’

But actually being on the shop floor and talking to customers has really helped us expand the way we buy product and service our customers. Not being as data driven is a good thing in some ways.  

IRW: Can you share any specific examples?

SD: What comes to mind is mostly suggestions for new products that we could sell.

IRW: A few weeks ago, one of Milligram’s own brand products was featured on The Strategist, a popular US website that recommends products to buy online. Did you know about this? And if so, what impact did it have on sales?

SD: We saw it when it came out and were elated. And it generated some good traffic for us. We didn’t know what The Strategist was at the time…we do now!

IRW: So was it a nice bump? Or a really nice bump?

SD: I don’t have any exact data on that, but these things tend to have a long tail because the content lives on.

IRW: Do you have many international customers at the moment?

SD: Not at the moment, but what we’ve wanted to do with our own Milligram product is develop it to the point where we have a more complete product range, and then start working with some great international retailers. I think we’ll aim to do that later this year.

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