Thursday, September 2, 2010

Meeting with Peter Pitt, Director of HypeDC



Jenny Oye of Oye Modern who is a frequent commentor on this blog put me in touch with Peter Pitt from HypeDC and last week I caught up with him for a coffee to talk shoe retailing.

HypeDC was founded in Mosman Sydney 12 years ago and has since grown to 30 stores. They sell short run, limited edition street shoes - think Converse, Vans, Onitsuka Tiger etc. It was fascinating talking to Peter about what has made HypeDC such a success. Here are my 3 key takeaways:

1. Keep your stock fresh
HypeDC never order the same shoe again, even if it sells incredibly well. They might order something similar, or make some small changes to the shoe, but they won't range the same shoe twice. They do this because they know their customer. Their customer wants to be unique and have limited edition shoes, and their customer loves shopping. Shopping for their customer is a fun pastime rather than a once or twice a year event. They purchase when they see something they like, not when they need a new pair of shoes. So HypeDC need to constantly have new stock to keep the store fresh and exciting for their target customer.

2. Manage your stock well
HypeDC put a lot of time and resources into inventory management. If a particular shoe is selling well in 5 stores but not in the other 25, they'll move that style of shoe from the 25 stores into the 5 where it's selling. As a particular style sells down, different sizes will be moved around so that stores selling that shoe have enough of each size in stock. This means HypeDC don't need to discount their shoes as much to get rid of old stock. It's only when they only have a few sizes left in only one store that they discount the shoes to move the last few pairs. This helps them maintain margins and keeps their brand away from discounting.

3. Hire the right people
HypeDC have a strong internal culture and if they hire someone new who isn't a good fit into the culture, team members are quick to tell management that this person doesn't fit and the managers will act on it rather than keeping someone who isn't the right fit in the business.

Some great lessons for us here as we consider opening a Shoes of Prey store.

2 comments:

  1. Now then, you are going to wonder if this is the same Dom after the mails we've just exchanged, but this area fascinates me.

    I will call this the iceberg theory. When you get a business that looks similar and that you admire, you tend to only see the bit that is above the water. Lessons learnt from such people should be taken with a level of intrigue and a slight level of doubt. The idea isn't what's golden...its the way they have applied it.

    The reason that becomes more important in the iceberg theory, is that for every bit of information you gleen from above the waterline, there are 10 bits of information you don't see. In this case, its the dynamics of the business.

    A devils advocate would say that Hype is a completely different business. They sell branded shoes. They have no manu/prodn, and very different concerns when it comes to supply chain. Prob half or more of the advertising for their shoes is already done. The need is already there. They are merely providing the location for the sale to take place. As a set of skills, experience and training, they don't need anyone worrying about design, marketing, materials, exchange rates or international markets.

    In essense they are a reseller, albeit a very good one. What is intriguing is how these things go in cycles. In the UK in the late 80's and early 90's, all the big TV brands had their own flagship stores in each town, Sony Centre's being the most frequent. There is one in Chatswood still. But these died out when Sony etc realised that their core competency and reason for being in business was making great TV's. Not the retail sales of TV's.

    I would challenge any organisation looking at vertical integration, to take a fresh look at their core competencies and what alterations they need to make to their business model to incorporate such changes.

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  2. Very interesting thoughts Dom and their business is certainly quite different to ours. I think their customer and the type of shopping they are doing is different to ours and it's certainly a different type of shoe that they sell. I think we won't necessarily know how our customer would shop in a physical Shoes of Prey store until we try it but it's definitely good to hear about how customers shop in other stores to give us an idea of things to look out for.

    Sony Centre's are an interesting analogy. I think there's still a Sony Centre in Sydney's CBD and I love going in to that shop for the brand experience. I love Sony TVs and there's no where better to go and see them all in the one place. When I only want to buy a Sony TV, shopping in places like JB Hifi isn't as good. It's a similar story with going to an Apple Store.

    I think for particular brands that command loyalty a branded experiential store can provide a great experience for customers. Our brand is a long way off a Sony or Apple, but certainly some of our customers would love to experience the Shoes of Prey brand in a physical store and there would be lots of cool things we can do with leather samples and displaying different shoe components to make it an interesting experience for customers.

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