Articles

I Have Seen The Future – And It Lives In Melbourne.

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. They combined store and online in 2007. Their average annual growth rate since they established in 2003? Nearly forty per cent – per year.

How have they achieved and maintained this growth? Firstly, they have an indefatigable passion for what they do. Secondly, they focus on the 20% of customers that make more than 80% of the profits. Thirdly – and perhaps most importantly – they are very choosey about the company they keep. The products that they stock 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 their partnership with Marimekko of Finland. Reading the changes in the distribution landscape, Marimekko have 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. They have also moved to restrict distribution to less 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. They also understand the need to innovate and to create controlled, customer valued inflation of price points.

The results of Marimekko’s strategy are remarkable. They have cut their distribution coverage to less than a third of the retail outlets they had over a year ago and in the process doubled sales, tripled profits and decreased prices to consumers by thirty 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 their own products to sponsoring designers who they will later distribute.

Make get 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 fourteen 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 – adapted and prospered. Or you can keep doing what you are doing and meet a very painful ending. Your future really is in your hands.