Think National, Go Local
Masters Mount Gambier
Combining the best of hardware and home improvement under one roof is the hallmark of Masters’ business model. Hardware Journal finds out how that concept translates in a local South Australian store
On 6 August 2012, the 20th Masters Home Improvement store opened in Mount Gambier following the announcement of the heralded joint venture into Australia’s hardware space between Woolworths Limited and Lowe’s (the world’s second largest home improvement chain operator). It was also the first Masters store to drop anchor in South Australia
The 10,000-sqm outlet is located at Mount Gambier Marketplace, a shopping centre which opened on the same day. As one of three major tenants of the region’s first large commercial development outside the Adelaide CBD, it shares the shopping centre with two hefty neighbours – Big W (8,219 sqm) and Woolworths Supermarket (4,180 sqm) – and 25 other speciality retailers.
Masters Mount Gambier is the home improvement component of Woolworths’ $80 million shopping complex. It sets its ambitious sights within a 200-km ring around its prized location in South Australia’s second most populous city.
Uniquely positioned in what used to be a little more than a paddock on Penola Road, it taps on an urban trade area population forecasted to have reached 66,220 by 2011 (ABS; Planning SA). The region is home to a relatively young demographic – median age of main trade residents is 38.5 years – with slightly above average household income levels (in SA terms) at about $56000 per annum. Trade area retail expenditure is estimated at $792.2 million.
Hit the ground running
At the time of its opening, the store’s manager Adam Fosdike had been an employee for nine months. Coming from the grocery sector, Adam underwent intensive corporate training before he was able to recruit and train up a new team of staff. After employing the operations manager and store support manager, Adam and the new managers split the store into various departments, hired department leaders, and in a staggered fashion, an additional 90-100 staff members, many of whom helped to lay the initial groundwork.
To clock a minimum of 100 training hours per employee, an online resource centre known as “Infoshare” was set up, containing regularly updated training manuals ranging from Staff Induction to Microsoft Outlook, Equipment Use to Safety Reporting. Employees also participated in role-playing activities and sales-based training courses in physical classrooms, in addition to pre-opening coaching sessions.
Adam credits a responsive team and the Critical Path Method – a modelling technique for effective project management – for the store’s timely rollout. Alluding to Masters’ aggressive expansion – 31 stores have mushroomed since its first branch opened in Braybrook, Victoria on 31 August 2011 and 4 more are planned for the latter half of 2013 – he adds:
“As you can imagine with the quick successive store rollouts, it was a challenging yet critical learning journey for us – some things needed updating and we identified areas where information was lacking – simply because we didn’t have the resources that matured businesses do.”
Total Home Improvement
Ten months into the operations, the store has gained remarkable traction – despite a slowing economy – based on preliminary figures. Apart from saying they have done “very strong sales exceeding our forecasts and expectations”, Adam declines to reveal specific details.
He does, however provide clues as to how well the business is tracking with this personal assessment:
“Looking at what this store has been able to accomplish in just 10 months, it shows how positively our “Total Home Improvement” concept has been received by the market, indicating that Masters is well on track to achieve its planned objectives.”
That concept refers to how the Big Box is bringing hardware and specialised elements of home improvement under one roof. On its website, Masters has claimed the title for being “the first Australian online home improvement and hardware retailer”. Offline, it is focusing on niche departments that other hardware groups have not been able to.
Calling range categories like Kitchens, Fashion Plumbing and Flooring “Slow Build” segments, Adam says they present enormous “untapped opportunities” but require long-term vision and effort to materialize. Unlike other hardware retail groups that are now setting up next to specialty retailers to reap geographical economies of scale, Adam says the home improvement giant has gone one better.
“Masters is doing it their own way, under their own roof. With our own brand and buying power – backed by joint venture of Woolworths and Lowe’s – we are able to give best price guarantees on a very powerful home improvement offer.”
Autonomy to go local
Doing on a local level what the Masters brand is rolling out nationally, the Mount Gambier store has been aggressively promoting itself through regional ads in print, radio spots and highway billboards. Within a short time, it has organised several large scale promotional events to drum up local support.
Sitting on a separate site next to the Marketplace that provides at-grade car-parking for over 900 cars offers a distinct opportunity; the store has on more than one occasion held large sales events at the parking lot. These events are characterised by massive displays and innovative vendor stands themed to generate a market festival atmosphere. Customers are given the opportunity to interact with the products on the enlarged premise as staff members in matching event-day apparel explain features and benefits.
Adam says that promotions like these, staged quite independent of the head office, shows that the corporate powers at Masters are willing to listen to the store managers’ feedback from a local perspective.
That support has given Adam and his co-workers the discretion to tailor their in-store promotions to the local tradies. As an example, he says the store has organised Trade Breakfasts that have resulted in membership spikes – the most recent one saw a 500 per cent increase – due in large part to its localised setting.
The open dialogue sessions that encourage tradies to share their buying experiences have not only helped to identify issues – from product ranging to competition pricing and delivery options – but also contributed significantly to building customer loyalty and increasing regular spend.
Conceding that independents have the upper hand when it comes to building rapport with the trade sector, Adam clarifies:
“I agree that it’s a challenge for some corporates however Masters is breaking new ground in my experience. As a big corporate, rather than telling you how to do it, they give a high level of autonomy and are listening to us.”
While nurturing trade relations is a continuing process, it hasn’t prevented the store from engaging tradies through timely offers via the loyalty program. Prizes given away in the branch alone include a $10,000 boat and $2500 worth of free fuel vouchers. Armed with the promotional ammunition, the staff across every department have been trained to deliver the marketing spiel on trade membership benefits to any customer whom they identify as a tradesperson by sight or through conversation.
Revealing that the trade database is growing by the week, Adam confirms: “The engagement of an entire team talking to customers has greatly boosted our success in terms of trade accounts.”
Besides the pro-activeness of the team, Adam adds that the strategy of recruiting locals has paid dividends:
“Local recruitment has been a real win for regional stores like Mount Gambier Masters. That’s because we understand the local area and what it needs – you must factor in the local networks as well. That’s the big difference.”
Slow but rewarding segments
Adam distils the recipe for achieving success in the “Slow Build” categories – which he considers the trade business a part of – as simply to unencumber the needs of the customer:
“There is not one single thing that will make (these categories) a success but lots of little things. The winning formula for kitchens and trade is to take the effort out of the equation for the customer. At every level of the project, you need to dice it up and ask yourself: “Have I done everything humanly possible within my control to take the effort out for the customer?””
Masters’ Kitchens section, Adam says, espouses this theory in practice.
“Just the sheer fact that you can walk into any store with some measurements and we can, then and there, design your kitchen in 3D at no charge or obligations, and give you a quote price on how much it would cost, says it all.”
Although kitchens are renowned for problematic issues – with the slimmest of error margins between design and actual build – the store manager takes pride in his specialist department that employs two kitchen designers each with 10 years of experience, to deliver beyond a customer’s expectation. Going the extra mile, he says, the team offers onsite installations, travelling as far as 200 km just to take measurements.
“We have had limited issues and any issues that we did have, we resolved quickly. Being regional, a negative word-of-mouth can destroy us very quickly. You can’t afford to ever be complacent. We do it as well as any self-respecting kitchen specialist.”
Debunking the corporate myth
Asked to comment on a prevalent notion holding that Big Boxes compete well on price but lose out in customer service, Adam replies:
“That’s always the challenge for a corporate, however we are proving that we can be successful in customer service as well, and the reason for that is because this business is willing to listen to people at store level, and help us implement the things that we need to implement.”
Just weeks fresh from winning a local radio station’s (FM 104.9) survey competition for Best Customer Service Award, the Mount Gambier store successfully shredded the customer-alienating image of a cold and aloof corporate retailer. It has consistently attained close to or perfect scores on independent customer service audits – assessed by anonymous “mystery shoppers”.
New visitors, suppliers and even colleagues from the support office have marvelled at the welcoming atmosphere in the SA branch. It is not uncommon for a store patron to be acknowledged by a wide smiling staff waving from 40 metres away or to see high five exchanges between blue-uniformed personnel. This positive vibe was literally created overnight, says Adam, as the answer to a question he had been asking himself: “How do we create a store culture that gives high acknowledgement to our customers?”
The question was derived from Adam’s reading of the FISH! Philosophy – which is based on a case study of incredible customer service at Pike Place Fish Market.
“To me, the key to outstanding customer service is acknowledging customers in every possible way. If you just do that as a bare minimum, it opens the opportunity for conversation and it helps you understand what they’re after.”
The idea was straightforward: Encourage every staff member to acknowledge one another at every given opportunity, multiple times a day.
“That instantly contributed to a better culture. It’s the constant interaction that helped to bring about a ‘high-level acknowledgement culture’ that we were able to share it across to customers.”
Tip of the iceberg
So far, Masters Mount Gambier’s best performing categories are Kitchens, Appliances, Flooring, and Trade. Although the store is predominantly retail based at present, Adam says the trade component belies the make-up and size of their trade market:
“If you look at that split versus a traditional hardware store, it is quite different. Although the trade side is still growing, the business is also targeting specialist fields like Fashion Plumbing, Kitchens and Flooring – to be a one stop-shop for tradies as much as DIYers. Compared to a hardware independent, the dollars we’re doing in these categories are also not the same.”
Another growth area is in the online space. Between its e-commerce website, a new phone app and the Click-and-Collect online ordering function, Masters is certainly keeping its eyes on the digital horizon.
Many are making the switch to online purchases, says Adam, who shares that one of his DIY customers recently ordered a full kitchen from his couch while watching footy – and posted a comment on its speedy delivery the very next day!
From his vantage position, witnessing first-hand the rapid changes set in motion by the new competitor in town, Adam is stoked by what he sees as Masters’ immense potential.
He gushes: “We’re only dabbling in these massive markets. It’s staggering the amount of home improvement money just sitting there, untapped by Big Box corporates. In my opinion, you’ll find that our competitors will have to change (because of us). We haven’t seen the full impact of Masters at a national level yet.”