On the front burner
Wednesday, November 28, 2007/
A strong focus on the core business, but a wide ranging view of its distribution, has been the key to this ‘bricks and clicks’ company. By TIM TREADGOLD.
By Tim Treadgold
Knowing when to call in the experts has been one of the keys to the success of Kitchen Warehouse, a “bricks and clicks” business that has its roots in Perth but which is spreading nationally.
When it comes to questions about accounting, there’s little doubt that John Macaulay (pictured), an accountant by training, knows the answers. But the man behind one of Australia’s fastest growing businesses knows something even more important. Not to take his own advice on accounting and tax matters.
Internet sales are carrying Macaulay’s business across the Nullarbor in direct competition with rival kitchen appliance retailers, such as Sydney-based Peter’s of Kensington. But a physical presence in the form of shops will soon follow.
“We can’t just sell over the net,” Macaulay told SmartCompany when it visited his dowdy office-storeroom-packing-centre in the southern Perth suburb of Booragoon. “Our suppliers would never stand for that because they don’t want to disadvantage their other retailers.”
Knowing how to use the omnipresent Google search engine is the second pearl from Macaulay – and to test that, go to Google, enter Peter’s of Kensington as your search criteria, and look who pops up immediately alongside as a sponsored link – you guessed it: Kitchen Warehouse.
Using Google, listening to his suppliers, as well as the tip about listening to your accountants, are two of the advisory gems from a man who got into retail by accident but who saw his family-owned business grow by 43.8% last year to post sales of $7.63 million (enough to sneak into a top 100 fast-growing companies list at 99th), and is on track to post sales of $10 million this year.
Other suggestions from Macaulay:
- Take care not to let an internet offering damage your traditional business.
- Constantly update your internet site and software.
- Don’t mix products that might confuse customers. Kitchen Warehouse only sells kitchen appliances.
- Always use the best advisory services you can afford.
A quick walk through a Kitchen Warehouse shop quickly reveals the answer to that last point about using the best. Macaulay explains how the floor plan was designed by a retail expert to “channel” customers through the shop so they see as much as possible, and then “trap” them so they come back to the front door past even more goods for sale.
“I used a retail specialist who charged $1000 just to turn up,” says Macaulay. “But the result is a layout that really works.”
It’s the same with the advertising material generated by Kitchen Warehouse. It’s not written in Perth, or anywhere else in Australia. Macaulay has turned to the services of a specialist New York-based copy-writer, and believes he gets something far better than his rivals.
On the danger of mixing products, Macaulay argues that his customers want to buy kitchen appliances, “and not an assortment of aromatic oils, cosmetics and gifts”.
On updating the internet site, Macaulay admits he has struggled to integrate on-line orders with invoicing, packaging and dispatching – something that frustrates a lot of start-up internet businesses. The result, a one-year old computer program, is being scrapped and will be replaced in January with an integrated system that will streamline operations.
On not damaging your traditional business, Macaulay generates limited sales in his home town of Perth, restricting advertising to states other than WA. He started the internet phase of his business, with limited success he says, by targeting Tasmania and then going national.
On accounting and tax advice, Macaulay says it’s just too hard to keep pace with changes to accounting rules when you’re running another business.
While retail is the heart and soul of what Macaulay does, with the help of his entire family in what remains a family-owned-and-run business, the background of the 63-year-old is about as far as you can get from a shop counter – he was an accountant in what was once known as the Post Master General’s department (PMG), which became Telecom, which became Telstra.
Failure to win an accounting promotion triggered Macaulay’s exit from Telecom in 1986, and into an erratic work life with employers of dubious distinction. First came a stint with a business run by the once-prominent WA merchant banker Laurie Connell, “until they started asking me to sign cheques I shouldn’t sign”. Then came a stint with another character from WA’s past, Kevin Parry.
One voluntary exit (Telecom) and two redundancies later, Macaulay found himself behind the counter, running a series of discount shops (King Kong sales and The $2 Shop) in the port city of Fremantle.
That eventually led him in 1992 into home wares, and his first major breakthrough in the importance of accepting expert advice.
“We decided to do home wares really well, so we took off on a trip around the world and looked at the best shops in the US and the best in the UK,” he says.
“Then we consulted a firm in London called Camron, which advises some of the best retailers in the world, and where one of my daughters was working.
“A two-hour conversation (with experts at Camron) led to what we do today; purely kitchen, not bathroom, not anything else.”
Today, Kitchen Warehouse operates three shops in suburban Perth selling nothing but the pots, pans, knives, mixers, blenders, coffee makers, and everything else used in a kitchen.
The lessons from Macaulay’s success
- A very clear focus on the what’s being offered to the customer.
- A willingness to pay for, and accept, expert advice.
- The importance of integrating an internet offering into a traditional business.
- The importance of switching software if what you have isn’t working well, and
- How to use Google, or some other search engine to drive business your way.