Amongst all the propaganda, agendas and poor strategic decision-making in retail today, it is wonderful when you come across a diamond in the rough that points to a bright future for our industry in the not too far distant future.
Make Designed Objects– a Melbourne based ‘blended multi-channel’, designer home-ware retail business is a glowing example of this.
Make opened its doors in 2003 in Carlton. It combined bricks and mortar store and online in 2007. Its average annual growth rate since it established in 2003? Nearly 40 per cent – every year.
How has it achieved and maintained this growth? Firstly, the team has an indefatigable passion for what they do.
Secondly, it focuses on the 20 per cent of customers that make more than 80 per cent of the profits.
Thirdly – and perhaps most importantly – it is very choosey about the company it keeps. The products it stocks are a pointer to the strategic thinking that all retailers must apply in the new global distribution paradigm era that the technology enables.
An example of this is a partnership with Marimekko of Finland. Reading the changes in the distribution landscape, Marimekko has moved to eliminate local distributors and adopt global pricing. This means that consumers using shop-bot search engines to compare prices will see the wild variances in price for the same product around the world eliminated.
It has also moved to restrict distribution to fewer outlets, thus enabling the retailers that do represent them the opportunity to invest in a better customer experience, a greater ability to upsell and cross-sell and the increased capability to make sustainable profit growth. It also understands the need to innovate and to create controlled, customer valued inflation of price points.
The results of Marimekko’s strategy are remarkable. It has cut its distribution coverage to less than a third of the retail outlets it had over a year ago and in the process doubled sales, tripled profits and decreased prices to consumers by 30 per cent. Consumers have absolute transparency about price and availability – globally – and have gravitated to buying locally through great retailers like Make.
All of the major initiatives undertaken by Make revolve around differentiation – from creating its own products to sponsoring designers whose works they will later distribute.
Make gets that in the real world of retail today, those people who believe that the only thing that matters is cheap price won’t exist in the next decade because once you start down that slope you have to be the cheapest in the world. At last count there were more than 14 billion active e-commerce sites in the world with no barrier to entry. A tsunami of cowboys willing to do anything to offer the cheapest price possible by fair means or foul.
While local distributors may be a dying breed unless they genuinely add value, great retail experiences can and will flourish. They will flourish by concentrating on all the strategic attributes in play that put control of pricing back in their hands – not in the hands of some faceless retailer in the back of Whoop Whoop.
You can do what Make has done – adapt and prosper. Or you can keep doing what you are doing and meet a very painful ending.
Your future really is in your hands.
