Wednesday, June 18, 2014
By Vicki Matranga, Design Programs Coordinator
Robert Parker has been involved in the Australian homewares industry for more than 40 years. He served as president of the Tasmanian Divisionof the Australian Retailers Association and has been a long-time member of the association’s governing National Council.
In 2011 when Mr. Parker merged his five-store business, Your Habitat, with the General Trader Group and its 18 kitchenware stores in four Australian states, he was appointed General Manager charged with integrating the two businesses. Soon the Group’s owners also acquired the upscale group of three Minimax stores in Melbourne, resulting in a conglomerate now triple the size of any of the three brands individually. With 23 stores throughout Australia, this retail group focuses on branded merchandise, aiming to offer unique product variety to its customers. Mr. Parker discussed the strategies and buying goals of this Australian specialty retail conglomerate.
Australian Retail Landscape
Population – 23.5 million people in the vast continent
Major cities: in narrow coastal band
Sydney 3.9 million
Melbourne 3.7 million
Brisbane 1.8 million
Adelaide 1.1 million
Tasmania (State) 513,000
Dominated by two major department stores (Myer/David Jones) and two major supermarket chains (Woolworths/Coles).
Vast majority of retail trade occurs in locations anchored by at least one of the above.
In the year to March 2014, Australians spent $15.2 billion on online retail. This level is equivalent to 6.6% of spending with traditional bricks & mortar retailers.
Australia: a very expensive country
- Isolated continent
- Small population (and small market)
- High logistics costs. Cheaper to ship from China to Melbourne that to ship between Australian cities.
- High value of $AUD
- Distributors/importers rather than manufacturers. No manufacturing of household goods, all is imported
- Extraordinary occupancy and labour costs (approx. 20% of sales for each)
Recent Factors/Trends
- $AUD vs. $US/EURO – Recent strength in the Australian dollar has had a downward impact on retail prices and increased the prevalence of offshore online shopping.
- Strong trend towards private label/direct sourced brands as a point of difference.
- Large increase in overseas entrants e.g. Williams Sonoma, H&M, Zara, Uniglo, etc.
- Continued move to cross-channel platforms – most major players have a significant online presence.
- Huge pressure on occupancy costs (as high as 25% of sales!)
- Recent change of Government dampening demand. Continued low consumer confidence.
Prices include 10% VAT and all goods must list country of origin. Quarantine regulations are very strict; especially for consumables that must be examined for vermin and contaminants.
“Entertaining Ideas for Your Life”— Homewares Group Structure and Differentiation
The Homewares Group comprises the following stores:
Your Habitat turns about $AUD 12 million annually in five Tasmanian stores from 1600 sq. ft – 13,000 sq. ft. It emphasizes premium brands in its mid-market assortment.
Minimax turns about $AUD 13 million per year in three stores in Victoria ranging from 3200 to 8600 sq. ft. The upmarket stores emphasize premium brands, quality giftware and European ceramics.
General Trader turns about $AUD 16 million per year in 15 shopping centre/outlet stores in Queensland South Australia and Victoria. Stores range from 1500 to 2,600 sq. ft and feature 50’s retro-themed utility kitchenware, tabletop and gadget products.
Homewares Group Strategies
The consolidation of these businesses into one group is a response to the highly fragmented Australian specialty homewares retail market. The Homewares Group seeks to combine the resources of the best players in the market to offer its customers a unique and rewarding customer experience, styled around a differentiated product offering and great service.
The Homewares Group’s product strategy is to offer our customers a ‘House of Brands’ within the kitchenware/homewares segment, as well as to develop several private label brands It’s easier than growing organically, although it is difficult to unite three diverse brands with very different “look and feel” and cultural heritages. The demographic differences and market size makes it difficult to specialize on narrow segment(s).
Mr. Parker presented some challenges the Group faces and outlined some strategies for driving the business into the future. After the presentation, he addressed questions about the recent decline in the Australian market. He stated that he believes we are experiencing a fundamental shift in some parts of the world. We’ve gone through a long period of people buying things. The growing social conscience on waste and recycling impacts a younger generation that doesn’t want to spend as much as money on products and prefer spending on services and experiences. Macro economic issues and currency valuations also apply. Australians shop in other countries and online, resulting in disruption as internet shoppers seek lower prices. Almost impossible to sell at full price anymore when discounts are required; it’s a constant battle in small market.
Robert Parker began his retail career with the Myer department store in Hobart, Tasmania where he became homewares controller at the age of 22. After several management roles with Myer and spending a year at Wedgwood in London, he served as retail manager of the Charles Davis hardware chain in Australia. In 1984 he started Habitat of Hobart, which specialized in quality and affordable leading homewares brands. Later renamed Your Habitat, the store grew rapidly and became an iconic destination and market leader. In 1994 Mr. Parker was awarded an Australian Institute of Retail Management Fellowship to study the latest retail trends in the U.S. and Europe. Your Habitat has won numerous awards for Australian retailing and was recognized as a Global Honoree for the 2002-03 gia Global Innovation Award.
