Blame the Technology and Australia


Continuing my search into what happened at Whitcoulls and Borders and  generally what’s going on with New Zealand retailers I am finding no surprises, which is a real worry. Two words come up a lot. Technology and Australia. I know a little of both. I live for technology and have trained many retailers over the years (including some who were already millionaires) and while the technology has changed, the principles haven’t. More on this to come.

Australia and New Zealand

As to Australia. In the 90’s many Australasian retailers who had New Zealand operated subsidiary chains based in New Zealand, decided to do away with local country management, local buyers etc.  and to save lots of money by treating their NZ shops as Australian branches. I guess they considered New Zealand as a slightly bigger Tasmania. Not huge, but worth having, especially if they didn’t put much effort into senior staffing  resources.

When performance decreased they blamed the economy, they said that NZ was just an over inflated state and it was always going to be that way, which was how they justified reducing local resources in the first place. The fact is while we may have a lot in common, we are not the same. We are made up of different cultures and history and have subtle differences in our lifestyles. Subtle enough that you can’t treat NZ stores the same as Australian stores and expect the same result.

Similar scenarios happened in many cases with the decades of American Globalisation. It’s funny really that America wanted to change Japan and the rest of Asia Pacific while Japan wanted to change the west. I well remember having discussions with senior management of Casio in Tokyo and Hamura about improving the software on their cash registers. One of the issues was that they hadn’t allowed for people pressing buttons in the wrong sequence. Have you ever been in a retail store when the ECR (Cash Register) is bleeping loud noises no matter what buttons are pushed and the stress it caused the cashier? Their initial response was “They must use the ECR in the right way or you should find better customers”. We ended up beta testing their software in NZ and Australia first and then getting Japan to tweak their software. That was one of the initiatives that helped us get 70% market share in the ECR market in NZ and helped Casio increase theirs around the world. But then of course the company I worked for was sold and I along with my boss and several other great people were made redundant despite the fact that we were doing really well, but because they thought we were earning too much. I’d love to know what their market share is in NZ now. I know it isn’t 70%. Anyway I’m going off on a tangent.

The big thing I noticed in the NZ stores was inventory management. They were carrying a lot of books that I wouldn’t think anyone would buy other than as a joke. I went back to Borders a week ago to jot some of the names down, but it looks like they went in the $1, $2, $5 sale and were gone. They had many dated books especially computing which must have been in store for several years, technical books on how to use software that almost no one has used in the last 5 years.

From what I’ve been told, someone automated the purchasing software to replace books that had sold, so for example if a particular book sold really well, say 5,000 copies, the system would replace with another 5,000 copies. Well there goes the profit from the first lot.

One of the things that makes New Zealand different is our ethnic communities. All over New Zealand, but particularly in Auckland we have clusters of ethnic communities; Chinese, Korean, South African, Indian, Pacific Islanders and more. Brands who fail to take that into consideration waste massive levels of stock by having the wrong product in the wrong locations, which then becomes shop soiled and potentially unsaleable.

Inventory needs to be managed locally by category managers who understand and are at the leading edge of their category and who understand their local market. They need to know weekly what is going on and understand who their customers are and what they are buying. Some books date more quickly than others and need to be moved on quickly, others will hold their value longer, but will still have a rapid half life.

In my previous blog about Whitcoulls and Borders I wrote about how they could follow the example of Amazon and know what their individual repeat customers were buying and therefore their interests and could recommend books to them. Amazon continue to prove that people in NZ will buy based on recommendations along the lines of “You bought these 3 books, other people who bought the same books also enjoyed the following titles”. Not only do we often buy them, but we also pay massive freight costs to get them here, at the same time as local book retailers are discounting stock that people aren’t buying. How smart is that?

One good way of dealing with this is using Business Analytics or Business Intelligence tools such as BIonaMAP, soon to be launched by New Zealand geospatial solution provider, GeoSmart. Fortunately for retail chains, this product will support both Australia and New Zealand, so users can have visibility over both countries.

BIonaMAP

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Ideas for Retailers including Borders and Whitcoulls


As I mentioned last week, I am speaking at the  Mobile Marketing Forum in Auckland next month. I’m going to share some good practical business ideas there that smart retailers and destination businesses can implement. You might catch the odd one on #NZSoMo on Twitter, but I’d recommend if you want to get into and ahead of the wave of new social media and location based mobile marketing, you should invest in attending this event.

Some time ago I talked about the situation with Whitcoulls and Borders. I said I had lots of ideas about how they could run their businesses more profitably without sacrificing their models. I’m happy to share some of my ideas, but not all of them, because I am thinking that maybe there is an opportunity to partner with some local developers or entrepreneurs to commercialize some of my ideas, seeing as the people in these businesses can’t see the wood for the trees.

I’m happy to share a few concepts to get things started and to show I’m not just full of hot air.

First is basics. Whenever a business starts falling by the wayside, the smart ones go to consultants or mentors. Often the business has gotten so busy they forget about what made them great stand out businesses in the first place and often they have forgotten good business practices.

A key one is stock turn by category. Some of the books I saw in the sales were going to struggle at $1 a book and should never had been stocked. How did Borders NZ decide what to stock in each category? Did they liaise with the people who read the books or just on what the publishers told them.

Back in the day the late Shaun Joyce of Sounds Music used to consult my daughter on which albums he should bring in for the big teenage market. She was big on music and researched amongst her friends which meant they got what they wanted and Sounds stocked what the segment wanted and it moved.

Shaun Joyce

I haven’t explored retail in the US for a number of years because it was no longer relevant to my current business environment, but that is changing, partly due to a new solution that GeoSmart is launching soon called BIonaMAP or Business Intelligence on a MAP. More on this in the near future but it is very exciting for lots of businesses including retail chains.

I fell in love with Borders in the USA. Shame they may not be there much longer.

They were innovative in lots of ways. there were 3 that I particularly liked (I’m not writing a book here folks!).

  1. They had book signings and meet the author every week (I’m talking about big city stores here). The ones I liked best were autobiographies, for example imagine going to a store, watching BB King play Lucille and sing a couple of songs, having a chat and then personally signing his new autobiography.
  2. They encourage you to read in the store and have a cafe you can take the books to. My first thought was, they will damage the books. My 2nd thought was now I can check a few books to find out which is the one I really want, especially for me technical or music related books. I very rarely go to a book store and buy only one book. This year I have bought at least 20 books from local stores and another 8 from Amazon.
  3. They have massive range, width and depth. If I want to buy anything other than a top 100 book (I’m not generally in the demographic for many of those).
I will come back with some advice and would love some feedback from you dear reader because part of the fin is coming up with the ideas.
My best business read this year has been Jeff Jarvis “What Would Google Do?” My first recommendation to whoever ends up owning and managing Whitcoulls and Borders (if they don’t just shut them down) has a mandatory read of this book. If they don’t come up with at least a dozen innovative, exciting and compelling ideas as a result, I’d suggest they resign from their jobs because they are stuck in the track of “This is how the book trade works, this is the way we have always done it”. Folks this is the way the book industry crumbles instead of making itself relevant. And no hanging a discounted eBook reader off a hangsell rack is not a modern way of doing business.
I will share some more ideas with you for those who need some sparks to get their thinking juices started, but I’m really keen for some participation here, so for each idea, I might also throw out some questions.
What do you think Borders and Whitcoulls can do better that would make you want to go to their stores and spend money?
I visited Borders on Saturday. They were having a stock take yesterday and I would expect some more sales coming up. Not much worth buying but I did get a copy of the 2010 book Kiwi Rock Chicks, Pop Stars and Trailblazers down from $49.95 to $5! They probably could have sold it in volume to the record store next door:(
Footnote, while I believe it is a long time before eBooks totally rule, but Amazon has announced that they have for the first time sold more eBooks for Kindle than printed books. Of course one issue and opportunity is the cost of freight, especially to NZ, but then that is compensated for by much cheaper books as long as you buy a few at a time.