The new episode of the Face 2 Face podcast explores how The Warehouse Group transformed its processes and brands to return to growth after a difficult couple of years. Spencer Bailey looks at how they managed it.
In theory, retail is a pretty simple game – sell stuff for more than you buy it for. In theory, tackling Sonny-Bill Williams is a straightforward proposition too – grab his legs and hold on tight.
But in both instances, you have to take into account the real-world factors which make both of these things far harder than you might imagine.
In the case of retail we live in unprecedented times – customer expectations have never been higher, it’s never been easier to compare products and international competitors are making their presence felt locally.
These were the market conditions facing The Warehouse Group when it announced its profits had plummeted in the 2016 financial year by 75 percent. New Zealand’s biggest retailer had two choices – evolve or go extinct.
To survive, the group -– which includes household name brands like The Warehouse, Torpedo7, Noel Leeming and 1Day – needed some pretty profound changes, among them a new approach to how they presented what they did to customers.
That scale – touching nearly half the population of New Zealand every week – is a double-edged sword. The group at the time was a series of separate companies, with different teams for everything, including their marketing.
This was the first thing they moved to change – bringing those back-ends together to simplify the structure, scale back from seven media agency arrangements and many creative agency engagements, and crucially, unify the user data they had.
For the first-ever group chief marketing officer Jonathan Waecker, this was the first job which he had to undertake – unifying the brands whilst finding a way to maintain their unique identity. That is where Nigel Douglas (chief executive of OMD New Zealand) and the Omnicom Media Group (OMG) came in, creating a bespoke unit to service the unique requirements for the company.
But a new structure, and better view of the customer, were not going to be enough. Every brand in the group needed some TLC from an image perspective – a new way of talking to customers, and as importantly former customers, about what they actually are today.
The Warehouse was a prime example. It holds a place in the hearts of many a Kiwi – how many brands have their own nickname which (Warewhare) is probably more commonly used that the actual name of the store?
But over the years, as Waecker admits, the business had pushed a little too hard on the promise of cheap goods, and not built up any equity around value. That was a problem Waecker and the team needed to address, and work out what role the brand played in people’s lives.
They introduced an ‘everyday low prices’ strategy, so rather than relying on constant sales, pushing the notion that you’ll bag a bargain whenever you go into the store, whatever you’re looking for, without having to compromise on quality.
One example of this was last year’s launch of Kiwi Scrabble, which saw the company work with the makers of the board game, consulting the public to create a list of 300 uniquely New Zealand words (including Chillybin and Hungus) which were then added to the official Scrabble word list.
But no game is complete without a challenge – so The Warehouse issued a call to arms to Australian players. The prize? The right to the disputed word Pavlova. The game was streamed live on Instagram, and fortunately, the New Zealand team came out on top.
Initiatives like that are part of the ongoing strategy across the brands – to show how they add value to customers’ lives every day, and start to create moments of connection which bring people back in store.
The results speak for themselves. The most recent full-year financial results for the group showed profits were up 26 percent, showing customers are responding to brand building positively.
In that time competition has only grown, but so too has the team at The Warehouse Group and OMG, both in terms of their capabilities and also their understanding of what works in bringing customers down the funnel, and getting them to convert.
It’s a mix of classic brand building and modern-day smarts which has put the company back on the road to sustainability and give Kiwis a business to be proud of.
Hear the full story from Jonathan Waecker and Nigel Douglas in the new episode of Facebook’s Face to Face podcast, available here.