Meet the panel
Melanie Tan
Joy Hysteric is a Gold Coast-based womenswear boutique operating since May 2004. Located in Broadbeach, the store offers collections from new and emerging Australian and international designers. Product categories include apparel, footwear, accessories, gifts and lifestyle products and brands have included Karla Spetic, Friend of Mine, Stolen Girlfriends Club, Cameo, Romance Was Born, Beau Coops, Tristan Blair, Low Luv and Disney Couture. Tan launched thejoystores.com in September 2007 and relaunched with a brand-new look in 2010.
Sarah Pavillard
Founder, the-dreamery.com
Following the success of online fashion boutique Frockaholics, Sarah Pavillard launched her latest venture www.the-dreamery.com in October 2010. The e-tailer stocks a number of leading designer brands including Akira, Megan Park, Ellery, Little Jo, Therese Rawsthorne, Arnsdorf, Aurelio Costarella, Mrs Press and Helen Kaminski. Pavillard became among the first Australian retailers to launch a Facebook store, taking her clothing, footwear, homewares and accessories offer to the world of social media. The buyer is also a regular blogger for www.ragtrader.com.au during Australian Fashion Week.
Karen Reischieck
Founder, Alice Euphemia
Alice Euphemia is a Melbourne-based boutique established in 1997. The store has developed
a strong reputation for supporting clothing, jewellery and accessory brands from the Australian and New Zealand market, being among the first to stock iconic brands such as Romance Was Born and Tina Kalivas. Alice Euphemia often collaborates with designers on limited edition ranges and stages a number of retail activations including exhibitions, pop up spaces and launch events. Brands stocked include Ellery, Romance was Born, Tina Kalivas.
ASSIA: I want to begin by addressing the biggest talking point in our industry at this time: the current retail climate. Profit downgrades, sales slumps, voluntary administrations. How are the independents faring?
KAREN: I think the perception that retail is suffering is the worst element.
MELANIE: I agree Karen. There’s nothing worse than customers coming in expecting huge discounts because they have heard how tough we are all meant to be doing.
SARAH: Yes, trade is challenging at present, but The Dreamery launched in this economic climate so it’s business as usual for us. I believe a lot of current consumer sentiment is driven by the doom and gloom reported in the media, not necessarily the reality of their financial situation. Melanie, interesting you mention discounting - I think that the reporting of big discounts is building a consumer expectation that they won’t spend without a discount and a key challenge is managing those expectations.
ASSIA: Surely the evidence speaks for itself? We’ve seen a number of high-profile administrations this year and sales declines among the majors, including David Jones and Myer.
SARAH: I think the businesses you mention are businesses that are not as agile as some small retailers, and therefore haven’t been able to address quickly the changing expectations and behaviour of customers - David Jones in particular.
KAREN: Good point Sarah. Providing value has always been the key. Finding people who see value in your product might feel more challenging for some at the moment. I think it’s a great time for boutique operations.
SARAH: It’s very difficult to generate full priced sales from customers, even right at the start of the season when they have the pick of the best and most beautiful hand- picked garments. I am finding customers are first visiting the sale stock, but I can’t take it off the website as the cash flow it generates is very important at present.
MELANIE: I’ve found that with more designers selling direct through their own e-stores, this has also affected the ability for me to sell their product at full price as the designers are discounting their product quicker than retailers.
SARAH: Plus it means that those retailers who may try to recover a little extra margin are not able to do so.
KAREN: This is a problem that we will have to solve to stay in business. What’s new in store may feel like old new to the supplier. They want to move on to the next season [by discounting previous stock] while we are just getting started. There are certain expectations that our suppliers must understand. Many people with online stores are new to retail. I’ve had to explain some pretty basic concepts.
MELANIE: I have with one supplier in particular who tends to discount stock not long after it has gone into stores. When they did not hold off on their online sales, I returned the stock. And I do understand from their end that they need the cashflow, but we should be priority customers. I find it also challenging the number of online stockists in the market now. There are limits on the number of stockists in a particular area, but there seems to be none when it come to online stockists. We are all still targeting the same market, particularly when it is easy to ship internationally. I had an issue with one supplier whose product was on a US website for about 40 per cent less than the Australian RRP.
KAREN: All of a sudden it’s as if dozens of stores selling the same stock as you have popped up in your street. Our suppliers should understand this basic rule of competition. We are asked to stay with ‘industry standards’. I feel a basic industry standard should be to sell at the same price - not 40 per cent less online. Yikes! I need to feel secure enough to invest. If the rules change half way through the season we can be left out of pocket. That’s not the sort of business that is easy to run.
SARAH: I have raised it with a number of suppliers - there is an expectation that a minimum order will be placed to secure the brand, yet all the way down the line all terms and conditions are in favour of the label, and to then find product heavily discounted early in the season [online] is extremely frustrating. They are also extremely concerned about maintaining a RRP until it suits them. When we have offered short term customer rewards etc with small discount, we have been asked to maintain a certain price level for the brand. I had purchased stock from a number of labels with the expectation of a certain online presence for those brands and then find in-season that the playing field has changed completely. I make and place orders on what I understand to be the competition and marketability of the brand to online customers at that time.
MELANIE: I also think that is a challenge when brands are able to offer their entire collection through their own e-commerce site. It is even more challenging when they have their product available before we even receive our stock.
ASSIA: Have you thought about putting something in the order contract to counteract this?
MELANIE: I have not actually, but this is something I will be doing going forward. I have received orders that were not fulfilled and I suspect that the reason behind it could be that the designers have picked my stock in order to fulfill their own orders from their e-stores. Why wouldn’t they take the full mark-up rather than sell to me at wholesale when they have the demand?
SARAH: Interesting you mention contracts - all my orders going forward will have a list of terms and if the brand is unable to agree, I simply cannot place an order for that brand.
ASSIA: We recently published a blog about the increased rate of non-paying or late paying buyers in the industry. The response from brands and designers was incredibly hostile towards buyers. Perhaps this is why more are venturing into their own e-tail stores or having tighter terms?
KAREN:I did read that story with much interest. We do need each other. It can’t be us (stores) versus them (suppliers). We’re in partnership together. I think some solutions could be being honest about the timing of payments and staggering deliveries? Stores do need to be able to rely on delivery times. Suppliers need to be able to rely on payments. There are many variables that effect an ability to pay. We need to be honest about this. It’s so easy to buy, but we always want to think ahead. We can’t control everything but there is a certain level of prediction involved in this business. I can see the next few seasons being a very different buying environment if buyers lose confidence.
SARAH: I think that everyone across the industry is introducing tighter payment terms, and meeting payments can be extremely challenging at present, when buyers are required to place orders up to six months in advance. I think that brands can expect continued, smaller orders for winter in light of current and expected consumer sentiment - and I agree with Karen, and ‘us vs them mentality’ isn’t good for anyone - we are dependent on each other for ongoing success. Brands can’t survive without their cashflow and retailers can’t survive without full price paying customers. I think maintaining good communication is key, and being realistic about delivery timeframes and payment terms.
MELANIE: A SOR payment model is always an option, but not many designers (established ones) would agree to it. I have worked with a few smaller ones on this basis. Staggering deliveries would be wonderful! We are ordering for the season so it is almost impossible to pay within 30 days, let alone upfront, for stock that is delivered in one drop.
SARAH: Melanie, agreed. What I found interesting in the recent discussion about buyers and their ability to pay was a lack of acknowledgement of the benefit of brands backing themselves - by offering consignment or SOR models to retailers. And as an e-tailer, there is the additional challenge of photographing and loading the stock for sale after receiving it in stock and labelling.
KAREN: Agreed Melanie - ordering six months worth of stock and expecting to pay for all that stock after one month’s trade is a big call for many. We could go about the pros and cons of SOR forever, but I feel it’s the same as it always was - for some it will work, for some it won’t.
ASSIA: You’re all operating at some level in e-commerce. Is this a lucrative growth area?
SARAH: I think that there is a perception that online is the easy road to retail. It’s not. There are a whole different set of issues, expenses and requirements that you need to manage to provide a quality website and high level of customer service, and to generate the traffic to maintain sales. Shipping, for one. Consumers increasingly expect free shipping and someone has to pay for it! Shipping within Australia is expensive and even more so if shipping overseas. Photography, managing images, staffing website maintenance and product upload, managing social media in an active, present way.
MELANIE: I buy for the physical store. The online store is purely another avenue to sell these products. I’m not willing to invest (risk) in buying separately for them - ie doubling my spend. I will not stock a brand in the physical store unless they are happy for me to sell it online as well. I feel this is my right as I have purchased the stock and should be able to sell it however I can. I have had issues with suppliers in the past who refused to allow me to sell their product online. I think it is more of the issue of online stores requesting exclusivity of product in their market.
SARAH: I think that the increase in bricks and mortar stores going online is going to require a new approach by designers supplying both ‘bricks and clicks’ stores and pureplay online because of the issues you just highlighted, Melanie.
MELANIE: Having the online store lets me indulge a little in some niche brands that I would not normally buy, being on the Gold Coast. We don’t offer online refunds at this stage. We don’t do this in-store for change of mind reasons either. Although, it is not uncommon for me to allow it where customers have contacted us first to enquire about this prior to purchasing online.
SARAH: We have a no questions asked returns policy on pretty much everything. Without this assurance consumers simply won’t take the plunge and I have to think of their bedrooms as the replacement of in-store changing rooms. There is a time limit, however, and we send items back to the customer if there is any evidence of wear etc. There is definitely more of a lean towards refunds than exchanges. But looking after that customer who wants a refund in a seamless manner generates huge loyalty and trust, and in the long term they tend to come back and purchase again and again.
ASSIA: Sarah, you’re quite an innovator in this area, having being among the first locals to introduce a shopping facility on your Facebook page.
SARAH: For us, Facebook shopping is quite straightforward. You can customise a shopping platform, but there are also lots of inexpensive tools that can provide presence. We export to our tab and customers can browse and then click through to the website. It just gives another opportunity to experience the store in the ‘safety’ of Facebook. Having said that, it is actually the items we feature on our wall that give the best response in terms of sales.
MELANIE: This is something I have been wanting to do - when I get the time! Our Facebook page generates A LOT of sales from online and local customers. I make it a point to update our Facebook daily. I am also on Twitter and have a Tumblr account. It is time-consuming trying to update all these things, along with the actual online store, while also buying and serving customers on the floor, but all of it is worthwhile in the end. Facebook is the most useful - consumers love the interactivity. An online store can only have so much information displayed but seeing others comment on a particular item gets the excitement levels up. I prefer to update our Facebook page than direct email marketing, which I feel can sometimes be intrusive.
SARAH: Facebook has more traffic than any other website. It is really easy to generate word of mouth through sharing and friend recommendations. It takes the normal day to day conversations that people have digital. And it’s immediate. Overall however, my email database is the most valuable asset in my business. Emails generate direct, real sales. We’re investigating some new social media platforms for expanding The Dreamery’s online presence in the next year. I think we are going to continue to see boutiques and brands close, but there is also great opportunity in the market for savvy, agile retailers to build a real presence in their markets. We are going to see more and more money spent online - lets just hope that more is spent on local etail rather than sending it all overseas!