For some wholesalers, moving into the retail space is about taking control, for others it’s more a natural progression.
Cameron Bayley talks to two business owners who have made the move and are enjoying the benefits of giving their wholesale business a retail shop front.
When Kirsty Andruszko set up her pet accessory business Puppy Phat as a side interest while running a restaurant, it was all supposed to be very straightforward. “Send an invoice, send a product, not dealing with anybody,” she says, summing up the intended process. However, her ideal of a “simple little home-based business” wholesaling her product didn’t last long.
Although she was getting her unique designs into some big-name stores, Andruszko had little control over where they were putting them. She visited one well-known giftware chain and after much searching found her distinct pet tags on the top shelf in the kids’ department. She also found herself in a catch-22 situation: until her products developed a name she couldn’t really dictate how they were displayed, but being tucked out of sight on the wrong shelves was hardly going to boost sales. The only other option was to distribute them to pet stores, which wasn’t her ideal destination for the funky range of products.
Andruszco had already sold her restaurant with no particular plan to move into retail when she came across a retail space in Daylesford, outside of Melbourne. And despite the ninety-minute drive from home, she took a punt and opened her first store, hoping to capitalise on the heavy tourist trade in the area.
Designing the perfect store was something she had in the back of her mind from the early days. “I always imagined the store would look as it now does,” she says proudly, with the design based on a gift fair stall she’d used to launch the products.
For Renae Pilkington, founder and designer of the Papinelle sleepwear range, moving from wholesale into the retail space was a little more organic as her brand began to flourish. “I knew it would sell, it had market acceptance, and so it was just a general step forward. It was very attractive to us that it would all be showcased in the one place.” Having a Papinelle store is a big plus, she feels, in terms of advertising and marketing her collections. Like Andruszko, Pilkington’s decision was largely based around distribution. Although the Papinelle range was successfully being sold in several stores, it was being done in a way that tended to fragment each collection. “Homeware/lifestyle stores would only have the pyjamas. The lingerie stores got the lingerie pieces. It was very hard to have a point of reference with everything,” she explains. “People can really feel the essence of it in a shop.”
When retail space became available in Sydney’s Paddington, an area where the products had sold well through a former stockist, Pilkington saw an opportunity. A design and branding consultancy finalised the location, and took charge of the store’s fit-out.
A major concern for any wholesaler opening a retail outlet is whether or not to continue the wholesaling arm. The key consideration for Andruszko and Pilkington was the brand. For Andruszko, who chose to stop wholesaling not long after opening her store, it was about keeping her products exclusive. With three stores now and franchising just around the corner, her priority is her future franchisees. “Why would someone buy my franchise if they can buy my stuff wholesale? It diminishes the power of it. Then my franchisees don’t have anything special. They’re the one believing in me and my products.”
Store Territories
Pilkington maintains her wholesale relationships, as she’s happy with the various markets they cover. And in retaining stockists she advises wholesalers to be very sensitive about encroaching on territories already established. When deciding to open her retail store she was careful to find a location that wouldn’t infringe on any of her current stockists. She also makes sure there’s no competition between her stockists and the Paddington store. Whenever a new range goes on sale it does so simultaneously through the store and the various retailers. However, like Andruszko, she is mindful of making sure the brand isn’t overexposed. “We definitely don’t want to end up everywhere, so the [wholesale clients] we have we’ve had for a very long time and are in nice little areas. It’s not like we’re going to turn up on every corner. We’re still very careful how we choose them.”
Having run three restaurants before opening her retail store, Andruszko knew a fair amount about what was involved in running a premises. However, 10 days after opening she was hit with a letter threatening legal action, saying her original name was infringing on another company’s trade mark. “That was the biggest fork in the road,” she reflects. “I wish someone had warned me about that because I lost a hell of a lot of money.” Yet it also forced her to reassess her situation and put all her efforts into retailing under the new name, Puppy Phat. “It made me stop and think. I gathered my thoughts and realised ‘OK, I’m not happy doing wholesale, so therefore I’m not going to do it any more’.” She also found herself encouraged by her customers. “It would have been easier to give up when I got sued, but it was the customers who were saying ‘Good on you’.”
Customer feedback has been a major bonus for both Andruszko and Pilkington. As their businesses are based on products of their own design, they enjoy the immediate contact with the public, and the impact this has on their designs and the stores. “In wholesale you never hear any compliments. Any feedback is a complaint,” says Andruszko. “Now I get compliments on the store, on the prices, on the stock. I’m getting feedback and that will dictate what people are looking for.”
In Pilkington’s wholesaling experience, supplying retailers did provide some insight into the industry from a sales point of view. “It definitely helped as far as knowing what the best price-point was and what styles and colours were selling, especially in what areas. In Victoria our winter pyjamas don’t sell as well as in Sydney because everyone’s got heating in Victoria. Sydney people rely on clothing to keep warm.”
She now goes to the shopfloor staff with her designs, seeking their opinion, and says the fitting room is a great source of information. “When you’ve got a fitting room there you get all the comments back about what’s working and what’s not and why, so it’s definitely instrumental in helping us design.”
Although she has a designer’s eye, Pilkington admits she hadn’t considered the huge role of visual merchandising. “It’s something you don’t really think about until you physically have to lay out a shop and think about where customers go first, and the positioning of clothing and colouring,” she says. “It’s something I didn’t know about and just taught myself as I’ve gone along.”
Working out how best to budget is another ongoing challenge Pilkington faces since making the switch to retail. “I massively under-budgeted,” she says. “Everything I thought it would have cost, it cost three times what I thought. Next time I’ll have itemised down to the last detail what you have to buy when
you open a store. Everything from alarm systems to air conditioners, and all those things I hadn’t thought about.”
Pilkington certainly wasn’t expecting the unwelcome termites that caused her retail floor to be ripped up, and while things such as wood-eating pests can’t always be predicted, she advises any new business owner to take a ‘worst case scenario’ approach with budgeting. And be prepared to learn all the tiny details that are taken for granted. For her, staffing and banking have proved a “whole different kettle of fish”, and she’s had to learn fast.
Retail Benefits
Andruszko and Pilkington both enjoy the steadier cash flow involved in retailing as opposed to wholesale. “With wholesale, everything goes out in one week and then you’ve got three months where it might be just re-orders,” says Pilkington. “Retail is constant.” Andruszko agrees, and says that unless you’re extremely vigilant about payment on invoices, as a wholesaler it’s not unusual to spend months waiting for a payment of a couple of hundred dollars.
Neither have any regrets about making the move into retail. Andruszko admits she entered retail reluctantly, having faced many ill-tempered diners during her time in the restaurant business. “I was really dreading getting into retail. Now I love the customers.” She happily admits her products now establish a common ground, which helps. “If you don’t like dogs you’re not going to walk in the door. It’s a totally different environment.”
And in a slight twist, thanks to the new franchise launch, Andruszko finds she is taking on the role of wholesaling again, albeit to her own stores. “I’m actually looking forward to getting back into wholesale with what I know now,” she says. “I feel like I’m coming full circle, because as soon as I sell a franchise I am a wholesaler to the Puppy Phat store. It’s like wholesaling to a family member in a sense. You know they’re not going to burn you.”
