Retail veteran Sandra Boyle plans to increase the number of Wild Cards & Gifts outlets by almost 20% by the end of next year despite tough retail conditions and reluctance of banks to support her franchisees.
With the boom years ending in 2008, the Wild Cards & Gifts founder says she’s working harder than ever and is happy with $32 million in revenue so far this year from 42 stores.
Boyle, who has been in franchising for 17 years, supports state-based laws to enforce the Franchising Code of Conduct and says landlords are offering sweeteners to tenants despite suggestions the tough line will remain.
The Wild Cards & Gifts founder also offers insights into how she balances online offerings with the needs of franchisees and her concerns about how SMEs will cope with a carbon tax.
Did you take in the carbon tax on the weekend?
Yes. Not happy about it.
I think it’s going to affect our stores – they’re all going to get a 10% increase in their charges, all their electricity charges and that’s going to make them less profitable at the end of the day.
So I think personally we’ll see, but at this stage it’s not looking great for the individual. It’s okay for pensioners and low-income earners but what about small business owners? They’re doing it tough.
So how is the card and gift game at the moment? Do the conditions compare to what you experienced through the GFC or are they better now?
We never really got a drop through the GFC. We weren’t affected at all terribly much.
We’ve increased growth every year, we’re coming into our 10th year of operation and we’ve had an increase every year. Last year was 5% but everyone’s still trading and new stores are coming on board so we’re looking good.
What’s your growth target for the year ahead?
We’d like 50 stores by the end of 2012. That’s our target at this stage but that will only happen as long as the group maintains the average sales. And we’re doing that at record levels.
And your revenue target?
So far our turnover for this year is $32 million. We’re happy with that and as you would well know it’s been a very, very tough year for retail in general.
The challenges we’re finding are the banks. They’re discouraging lending for retail and our prime target is to get franchisees on board. For that most of them have to borrow money, and even though retail sales and margins are excellent the banks are still saying no.
And how long has that been the case?
I’d say that’s probably been going on for two years now. Obviously when the GFC really hit hard that’s when the banks said “that’s it”.
It’s really been hard for them; we’ve had lots of opportunities for new stores but when the people have gone to the banks they just can’t borrow.
And how are you finding landlords to deal with?
I think in the next 12 to 18 months it’s going to start to improve. With a lot of the closures of stores the competition has declined and our competitors have drifted away, and I believe with groups such as REDgroup and Colorado and Jag, they’re [landlords] not losing one store in their centres, they’re losing multiples.
And I believe it’s going to affect their bottom line and they’re going to become a little bit more reasonable.
We’re finding there have been a couple of offers and we’ve been nicely surprised. They’re becoming reasonable.
So on the record nothing’s changed, but off the record there are sweetened deals out there.
Correct. Because I think they’re realising that they’re going to have to otherwise they’re going to have centres and we’re going to follow on like the US with deadmalls.com and have all these malls that are turning into call centres.
That’s what’s happening over there and if they don’t start realising that it could be a possibility down the track.
Your stores are mainly in shopping centres?
Yes, that’s the way to go for us.
And cities and regions?
We’d love to do a little bit more regional but cities, we’re in majors now, we’ve 42 stores and the majority are in majors around the country.
What is your marketing focus at the moment?
At this stage in marketing we’re really trying to embrace new technology, that’s a big part of what we’re focusing on now.
We’ve just installed a new point of sale system, we’ve had a $100,000 spend on that and we’re now doing online catalogues to send people into the stores not to purchase online because we believe until the stores can be profitable through online purchasing we don’t do it.
We have to work out a way that we can send the profit from online shopping straight back to the stores and we haven’t come up with an answer to that yet.
Until we do and because franchising is that little bit different you have to make sure that stores are making the profit and that it’s not coming back to one person. Otherwise they get a little narky because they’ve all got their territories and that’s where you’ve got to be careful.
I’m sure Harvey Norman knows what you’re talking about. Have you been following the franchising debate about states looking to introduce state-specific legislation to shore up the Franchising Code of Conduct?
I think the code is obviously a terrific thing. I’ve been in franchising now for 17 years and over that time the code has really cleaned up a lot of things so we’re very pro the code on that.
So you’d be supportive of state-based legislation to ensure that it is enforced?
In terms of growth you mentioned the 50-store target. Is international expansion on the agenda?
No, we won’t be taking this internationally. There are a lot good card and gift groups overseas, many of which are struggling, but I think we just focus on what we know best, support our local distributors and importers through Australia. No, we have no intention of going overseas.
What special methods have you introduced to keep people spending in your stores?
What we have done is created a wonderful web strategy in that we have a rather large bank of email addresses. We do a lot of direct marketing now, we’ve jumped on the social media band wagon and that has really improved immensely.
Through Facebook we send out eDMs every week. Obviously they opt in to receive them but we’re increasing our database all the time and people are finding that we’re not pushy on that and we do a lot of suggestions.
We do stories on the individual franchisees themselves if something special happens to them or if they’ve got some special local marketing happening, we make them aware of it.
I think online and web strategies have been a good thing for us.
Who is your average customer, who do you send that email to?
Well that’s interesting because it’s such a broad scope that one. I haven’t got an exact answer on that one for you because it is so broad.
We’re finding it’s not necessarily the worker out there, it’s a lot of home mums and so forth, so it’s no one in particular.
When you started the business who did you have in mind?
Our customer is a female shopper, definitely. Even if it’s a male purchase, it’s still a female shopper that goes into the stores.
It started off a little younger but we’re getting a little bit older as years go on, so it’s probably the 25 through to about the 65 female.
That’s a wide range.
It is very wide because we do cover anything from babies right through to graduations, retirements. Because of that we cover such a broad area.
We have our aged sections which caters for 18-year-olds right through to 90 and 100-year-olds, so it is very broad.
How does the high Aussie dollar affect your company? Obviously your imports are cheaper.
Yeah, our local distributors are having quite a good time and they are able to pass those savings on to us. I think that is a good thing.
What about other costs?
Well, no, they’re not too bad. IT is probably the greatest cost because you have to keep up all the time.
A lot of our competitors have drifted away because they are all still back in the 90s and they are not keeping up.
I think that is why we are the largest card and gift group in Australia and we will maintain that.
What are you doing on a day-to-day level with the company?
I am working harder than I have ever worked. We went through a period there probably 2005 to 2008 which were good times, really good times; you could be a little bit reactive on things.
At the moment we are being very proactive because we have to come up with strategies that continue to put money into the franchisees’ pockets.
Without them we don’t have a business. They are our customer and they come first.
What feeling do you have in terms of the return of consumer confidence? When do you think retail sales will return to perhaps not quite what they were in the boom years but better than what they are now?
We haven’t seen a downturn simply because of the products that we sell.
We are in a feel-good industry, the type of products that we sell are all to do with good times whether it be a birthday, birth of a new baby, wedding, engagement, they are all good times.
So I think the confidence within our stores is good. But I think the pressure is on people to pay their mortgages and to keep jobs.
I suppose a card is an affordable gift.
It is. Our average sale is quite good. We’re obviously not talking whitegoods here. But for the type of store we have we’ve got good, steady, average sales.