Can Kit Cheong’s methods put a smile on our retail dial?When Darren Lehmann took over as coach of the beleaguered Australian cricket team a couple of weeks ago, he encouraged his charges to see playing cricket as a fun thing to be do again, rather than as a stressful job. In Lehmann’s credo, having a bit of fun was the key to unlocking the players’ best performances. Results on the field quickly improved.
Kit Cheong hopes that putting the fun back into shopping will have a similar effect on Australian consumers, helping to unlock their tightly closed purses and wallets. She is the CEO of the Australian subsidiary of Japan-based variety store chain Daiso, which has just opened a 900-metre flagship store at Westfield Parramatta in suburban Sydney. It is Daiso’s fourth store in Australia but easily its largest.
Many more stores are planned across the country and by the end of 2013 the retailer will have 16 open in NSW, Victoria and Queensland. This will come as unwelcome news to retailers who have overlapping product lines such as variety stores, discount department stores and pharmacies.
To many Australian shoppers without a heap of disposable income, shopping and fun are two words they would rarely utter in the same sentence. Daiso is setting out to alter that perception with all guns blazing. In doing so it draws from the playbook of other wildly successful global retailers such as Costco and Aldi, which have figured out how to drive repeat visits by turning shopping trips into treasure hunts.
What is the secret of the treasure hunt?
Treasure hunts can be created within the shopping experience in a variety of ways. Daiso’s recipe includes the following:
Revolving inventory. You will not find all of the same products in the store each time you come. Part of the inventory rotates in and out, inducing shoppers to come back to see what’s new. It also creates a sense of urgency among shoppers that if they don’t buy it now they may not have an opportunity to do so in the future.
Roughly one-fifth of the average store comprises core lines that are always in stock. These are best sellers across the company’s 24 product categories, such as storage solutions, stationery and Japanese crockery. The remaining inventory is changed regularly.
Colourful and attractive products. Stores are a blaze of colour, with simple everyday products brought to life in whimsical hues and fabrications. Packaging carries labelling in both Japanese and English. Mundane objects become novel. This is heaven for the impulse buyer.
Compelling and uniform prices. Every item in a Daiso store sells for $2.80. This simplifies things for both customer and retailer – the customer doesn’t need to look for a price tag and the retailer doesn’t need to spend time and personnel resources changing price tags went it wants to mark something down. This frees up labour to help customers and do other chores.
Shoppable stores. Australian shoppers have been driven crazy for years by pocket-sized specialty stores with narrow aisles and poor sightlines that make navigation difficult and browsing a misery. The set-up works well for landlords who can harvest more rent from small spaces, but any pretense at shoppability goes out the window.
Global retailers like Daiso operate larger stores partly so that they can create superior visual merchandising experiences. Daiso’s Parramatta store also has low shelf heights of 1.5 – 1.8 metres so that even a fairly short person can easily gain a panoramic view of the whole store from any location within it.
Hard-to-find items. Looking for a finger-holed futon clip? A laundry net? While many items on display are taken for granted, some are so ‘out there’ they seem at first like solutions looking for a question. Or they address problems elegantly that the shopper may have solved by alternative means. But this is a key to Daiso’s technique for putting ‘fun’ back into shopping: it prods you with a constant question as you walk through the store and examine its products: “Why did no one ever think of this before?”
Daiso will have an easier time rolling out a large store count in Australia than Costco, Aldi and other international entrants. This is partly because Daiso doesn’t sell groceries so it will not be kept out of shopping centres by opposition from the supermarket majors.
Another key attraction in Daiso for landlords is its value proposition to lower-income people and its capacity to draw traffic to a centre. It is big enough and strong enough to behave like an ‘anchor’ store.
It will not be all a stroll in the park Daiso. The supply chain that stretches back to Japan (55 per cent of Daiso’s inventory is manufactured there) will be tortuous to manage, particularly as its low-cost business model militates against air shipment.
Speaking of costs, labour costs are a key challenge since they are too high in Australia to support the same high-service model that is possible in Asia.
These obstacles are unlikely to bring much joy to its competitors though. They too will be forced to find ways of offering a more ‘fun’ shopping experience. After a lifetime of drudgery, that will be a hard act to pull off.
Michael Baker is principal of Baker Consulting and can be reached at [email protected]杭州夜生活m and www.mbaker-retail杭州夜生活m
The original release of this article first appeared on the website of Hangzhou Night Net.