Leading By example

Costa’s Mitre 10 Mega in Campbellfield opened only a few months ago and has already exceeded all expectations. Tom Prince spoke to Stuart Wainman about what it’s like being the new kid on the block.

The Costa Family operate three Mitre 10 Home & Trade stores in Melbourne’s Western suburbs, as well as a roof truss and wall frame pre-fabrication plant. Sensing new opportunities, they built a Mitre 10 Mega Home Improvement Warehouse in the formerly outer Melbourne suburb of Campbellfield. The location is the busiest road in Melbourne which leads to the highest residential growth corridor in Victoria. Within a seven Kilometre radius are three competing big boxes and according to Stuart Wainman, General Operations Manager, they’ve got the best possible spot imaginable. “We’re now a true competitor to warehouse timber and hardware,” he says – and it all came about simply by doing things a bit differently.

Before building the store Gerry Costa, Managing Director and Stuart Wainman, General Operations manager, put a tremendous amount of energy into finding out just what the best new competitive model would be. They looked far and wide and eventually found the answer in New Zealand, where Mitre 10 is the dominant timber and hardware retailer. Three separate visits and a painstaking amount of fact gathering later they brought home the formula, which they adopted on home ground. The end result is a combination of competitive pricing and service levels true to a traditional Mitre 10 store. The store’s 9000 square meters of floor allows for a large paint department, an extensive timber yard and an impressive tool department. “In our opinion we have one of the best tool departments in Australia in terms of size, range and layout,” says Stuart. They also specialise in kitchen options, currently one of the largest growth areas in hardware retailing. So great has the interest been that they offer an extensive range of choices. These include made-to-order kitchen fittings (tailor made), flat packed kitchens ready for self assembly (entry price point), and Italian modular kitchens (pre-fabricated and boxed ready to install). A café deli is also being built.

“The initial reaction from customers certainly exceeded our expectations,” says Stuart. “We serviced nearly 7000 customers in the initial two day launch. The most common comment we’ve had from our customers is ‘at last we now have another choice.’ They agree that competition is very healthy in the market place.”

This successful strategy hinges on several things, one of which is the implementation of a competitive everyday low price strategy. Rival catalogues are continuously checked and anything cheaper is matched. If anything is missed it is beaten by 10%. Inside the store, loud signs dot the floor, often with hand written prices, adding to the message of affordability.

The store also promote “WIGIGS” – an acronym for “When It’s Gone It’s Gone”. WIGIGS are unique one-off consignments that sell for very low prices. A recent example was a batch of lawn mowers that could not be shipped to New Zealand because of copyright issues. They were prominently displayed and sold for $199 – at least $50 under a comparable product. WIGIGS add further colour to the low price strategy and spark curiosity from customers. The consignments come and go all the time, in all shapes and sizes, form stainless steel kitchens to dishwashers to sinks. “But remember,” says Stuart. “When it’s gone it’s gone.”

A large number of hard to miss large impulse palette bins are also located throughout the store. There are 150 of them and each one contains high value low price items of all descriptions. These range from toilet paper to torches to dinner plates to drill bits. One recently sold out bin had 15-bottle water packs for $7, another had six-outlet power boards for $ 2.95. The impulse bins constantly add value but they’re no small feat either. “If they were a department it would be our biggest one,” says Stuart.

Surprisingly, at the time of writing most of the business comes from DIY retail. This is a deliberate move to keep a low trade profile (but not for long). Good relationships in trade are vital so they are waiting until they are truly ready to offer the highest possible service level. “We’re strengthening the skill level of our staff,” says Stuart. Not that they aren’t accepting trade offers already – just that they aren’t actively promoting this side quite yet (at the time of writing trade was to actively take off in a couple of weeks time). “We have a motto,” says Stuart. “In full, on time, every time.” It’s a motto they want to live up to.

The store also makes use of sophisticated SYM-PAC technology. Before opening, portable SYM-PAC PDAs came into their own after numerous power outages were caused by unplugging computer power points. The store currently uses a system comprising more than 25 computers. Store performance reports are instantly available, giving management a lot of flexibility by showing performance data against budget and breakeven.

To date the reaction from customers has been highly positive. “We try to offer the service levels of a true Mitre 10 store,” says Stuart. “Which is something our customers pick up on. We’re different. We’re deliberately bright and orange,” he says. Strong growth is predicted over the next few years, with the local word of mouth a strong factor about this new kid on the block. “It’s going to be a tough battle because we’re well behind. It’s an enormous task but we’re ready for it,” he says.

Indeed, challenges abound for this bold competitor, and the promise of what lies at the end has much to offer. “Our task is to achieve success in a long hard road and to show our fellow Mitre 10 stores the way,” he says. “Once we get strength in numbers we’ll be a true competitor.”