Sunday, August 29, 2010

A Shoes of Prey Store?



We've previously experimented with taking our business offline, and we're starting to seriously consider opening a Shoes of Prey store. We get so many email from customers asking if we have a store they can come and visit, and while only a small portion of our sales come from Sydney, there's a lot of interest here and we think there's a good opportunity for us in traditional retail. Speaking with customers in person would be a great way to educate them and help them make a decision on which shoes to purchase, aiding us in overcoming our low conversion rate.

A store would also be a good opportunity for us to use all the great data we have from the shoe designs customers are saving, and sell a range of ready made shoes in store based on the most popular styles and colours.

And finally, a store would give us an avenue to sell some of the returned shoes when we remake shoes for customers after they don't fit the first time.

Traditional retail still makes up well over 90% of all retail sales in Australia, so by only operating online we're missing an enormous opportunity. This has been particularly obvious this week following our story on A Current Affair with literally hundreds of emails coming from potential customers who are unlikely to have made a purchase online before. Obviously we want to help encourage them to shop online and do our bit to help grow online retail in Australia, but many of them aren't comfortable doing that yet. Having them experience our brand and shop from us in a physical store may actually be a good way to then encourage them to buy their second pair of shoes from us online.

There's obviously a cost and a risk in opening a store. A 3 year lease is the standard for a retail store, which locks us in to a significant investment of money. In addition to rent there's fitout and staffing costs, along with the cost of purchasing shoes to stock in the store. On top of that is the significant amount of time we'll need to invest in a store and the opportunity cost of working on other things.

On the plus side, if we get it right and a store goes well, there's no reason we couldn't open more physical stores which, in addition to the website, could be a great way to continue growing the business.

For the last few weeks we've been speaking with real estate agents and looking at some locations in the Sydney CBD and eastern suburbs.

We'd love to hear your thoughts on a number of things:
  • What locations do you think would work for us?
  • Would you shop or tell your friends to visit a Shoes of Prey store?
  • Do you think it's right for our business?

8 comments:

  1. WOW. This is a fascinating topic, and I'm sure you'll get a host of responses with varying views. For me, this is a bigger decision than opening a store and buying in some stock. From my perspective your entire model and therefore underlying business case is based on an online model, and in my eyes, opening a store would change everything. It would almost go back to those very first seedling conversations you had when you decided to start this venture...working from the sofa, a boat, the office. Or opening a shop at 9am every morning?

    It challenges your cost base, and takes away your identity as a store that is open 24/7 to millions of people around the world.

    If you have shoes in stock, your competition changes to low cost retailers on the high street, and your proposition around 'unique' starts to shy away.

    I think it takes away your nimbleness, and the speed you have to change/alter your current shop front.

    But most importantly, I strongly believe that Australia will soon start to grasp the concept that online is good. Just look at the new VISA adverts which focus on the benefits over EFPOS by enabling online purchases. If you can hold out for the world to catch up, I think your virtual shop is far more compelling, agile, innovative and revolutionary to build up a sustained following.

    I do however think that there is definite merits in looking at what the benefits of a store, or offline addition to the business model, might be. What would then be interesting is too keep your innovative and creative focus and find new and exciting ways to get those benefits without becoming a retailer.

    Maybe a concept store where some of the shoes are featured, but you still buy on line?

    Or look out for end of lease/closures and sign up for short term locations around Sydney and the suburbs. Short sharp bursts of energy that get the PR message out there, without long term commitments.

    And finally, possibly the least risky, and therefore not most lucrative, but find someone to partner with? Why take on the burden of your own real estate? Find a brand or store that isn't a competitor but a complimenter, and buddy with them. Give them a notebook, some sample shoes and a percentage of the profits/shoe and see whether the retail environment is right for you? Certainly a cheaper experiment than a 3 yr lease, and gets you out there to a larger geography and diverse group.

    Now it's dinner time ;-)

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  2. Hi Guys,

    I think a retail store may have some merit in that it will allow people to try on shoes and work out which is the best size. I bought a pair of your shoes at a pop-up store so am now confident to buy online. Having said that I buy lots of things online and don't worry about the size too much as long as I can return it if it doesn't fit.

    On the down side you may end up 'clouding' your go-to-market model and change your cost structure. Though this may turn out to be a great complement to your online store if you pick the right location.

    Maybe you could look in the inner west also? Redfern, Glebe, Balmain?

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  3. Have you considered travelling pop-up retail? The model isn't perfect but its a lot cheaper than a full bricks and mortar shop. Something we've been looking to do at fmsshop.com.

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  4. Dom - Lifestyle is definitely a consideration. Opening a store at 9am every morning certainly doesn't fit with the dream of working from anywhere in the world, so that's a downside, but we think there is a huge amount of potential upside in the business and ideally, once the store was up and running we'd have someone else working in it for us.

    I think the customer proposition would still remain 'Design your own shoes' and that's what will attract people to the store, but ideally, if we had a ready made collection of shoes, customers would buy those in the store because they can take them with them and wear them right away, and we saw that happen when we did Sydney Fashion Weekend a few months back - more than half our sales were actually ready made shoes. I think we could manage that process so it didn't take away or confuse our brand message at all.

    Australians are definitely going to move to shopping online more and more, but that's going to be a long, slow process. And we will of course always focus on the online store so we'll be there to take advantage of that.

    Lisa - That's great feedback that you've purchased from us offline and are now more confident to buy online. Good to hear our returns policy would have helped you to purchase from us online anyway. Did seeing the quality of our shoes in person help in making your more confident to buy from us online in the future?

    Dave - Good suggestion on pop up retail. We did consider it and we've done a bit of that with Sydney Fashion Weekend, some bridal fairs and the Bondi Markets and it's all gone well. In an ideal scenario we would do some more of that but the downside is the time it takes to find good pop-up locations, set up the stores and promote them, only to move on to a new location. We talked to Westfield Bondi Junction about some pop up space but even the fitout costs to do something there for more than a few months were very high. We also need more permanent office space so getting a retail space with office space attached would make things easier on that front.

    Cheers guys.

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  5. Hi,

    Yes I think the quality of your shoes does make me more confident about buying in the future (though why I haven't done so I don't know! And here lies the conversion dilemma!). A comment on your subsequent post, I think that a store with less foot traffic has some merit. There are a couple of stores that I make special special trips to (one used to be in the Dymocks building) that basically have no foot traffic but offer a specialised service. I learnt about these stores from word of mouth.

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  6. Hi Lisa, I think we've come to the same conclusion about a store with less foot traffic being ok for us given people hopefully hear about us via word of mouth. I actually went up into the Dymocks building with a real estate agent the other day and that could work for us. I didn't quite like it from a brand point of view but the concept is good. Upstairs in the Strand Arcade is probably a little more us brand wise so I've been looking there too as it's s similar story to the Dymocks building in that you probably wouldn't go up there unless someone told you about it, so the rent is much cheaper.

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  7. Hi Michael,

    If you would like, I'm happy to chat with you again about our retailing experiences.

    A low customer-traffic location can sound good, but it isn't a great fit if you want to carry ready-to-wear stock. There is a minimum stock turn-over required to offset the costs of stock holdings and that requires high customer traffic.

    If you are looking for a complementary partner, I'm also interested in exploring ways for Vein to gain additional exposure in Sydney. We are able to do customised shoes so the message would be consistent.

    Chris
    +-t

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  8. Interesting, I'd love to have a chat Chris. I'm in Brisbane next week so I'll give you a shout.

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