How To Survive The Wrath Of The Retail Giants
How do you survive the demands of the retail giants?
Our client Cognescenti Pty Ltd has been operating for over 30 years, providing bath & body care, skincare and home fragrances to the Australian and International home wares market. So how do they stay on top? In our latest video they share how they tackle challenges, tips for keeping a business in the family plus give a rare insight into surviving the world of retail.
For an appointment with a Product Specialist call the office on 1300 652 158.
Watch the video and/or read the transcript below
Question: What is your best seller?
Sarah: My best seller. Well, there are quite a few, but the main one
in recent years has been aroma reeds.
Daniel: Aroma reeds?
Daniel: [inaudible 0:14] I think you gave them to me. It works pretty
Sarah: Yeah, they do work well. I mean, you get used to the smell
after a while, so you actually don’t smell it so much, but other
people smell it. It’s like a perfume. You don’t smell your own
perfume after you’ve worn it a few times.
Question: You are a family run business. How do you make it work?
Sarah: Perseverance, forgiveness. I suppose if it’s in the family, you
know, everyone argues and fights. But if it’s in the family, you
know you’re going to forgive each other. So you’re probably a
bit more honest than you are if it’s an employee. Or it’s
someone who is a partner, you’re probably a little bit more
honest. It’s could get you in more trouble, but it also can work
to your benefit.
Question: How do you keep things fresh and stay ahead of the fierce
Sarah: Constantly looking at what other people are doing and what is
happening in the marketplace. I travel quite a lot. So I usually
go overseas at least once or twice a year just to do market
research. So, for instance, I was in the States last week
looking at stores. You don’t just look in your area. You look at
other homeware stores and see what the trends are, whether
things are going more natural looking. It’s all about the look
of the product really and what people are putting in their
homes. If they’re going bright colours in their homes, then
they’re going to want labelling and packaging to reflect that.
Question: Where do you get your inspiration from?
Sarah: Just looking in the market, looking on people’s blogs,
websites. There are some really good websites you can look at to
see what’s coming up in trends, even in fashion. So you can see
what’s coming through in fashion, whether it’s bright colours,
because then that will in turn lead into homewares which will in
turn lead into other areas. Fine fragrance, if florals are
really big coming through in fine fragrance, then you tend to
find that florals are quite big in homewares or home fragrances.
Question: What’s the biggest challenge you face daily running your
Sarah: Getting deliveries from other people, getting feedback from
people. So having a customer actually place the order on time
rather than run up and go, “Why don’t I have any of this?” Then
you know because you actually haven’t ordered any. So there are
a few customers who are like that. Getting people to pay is very
difficult at the moment.
Question: How do you tackle it?
Sarah: Well, we’ve gone to you, because then it doesn’t affect our day-
to-day business quite so much because cash flow is so important.
So that’s why we use a factoring house because it just means
that we can get the cash. It might cost us a bit more money, but
when we don’t use one, if a customer doesn’t pay us for 60 days
and it’s a large amount, then that can really put a hole in our
cash flow. Then that, in turn, leads to more problems because it
means that I can’t buy the stock that I need to supply other
orders, and it’s a really bad roll-on effect.
Question: Your products are available overseas. Was the overseas market
hard to crack?
Sarah: We’ve been quite lucky because one of the biggest clients we
had contacted us, and we’ve been supplying them for about 12
years. They’re a big multinational chain overseas, based in
America, Canada, the UK, and Europe. So that was quite lucky.
Most of the other ones, we have done trade fairs in Hong Kong.
You get a lot of people who come to those. But again, for every
trade fair you do internationally, you really only pick up one
or two clients. You’re constantly looking for new ones because
they constantly change as well. Even in the Australian market, a
new buyer comes in, they want their own people or the supplier
that they had at last company they worked in. So you’re
constantly having to look for new markets, look for new
Question: Biggest challenge with overseas customers?
Sarah: Communication can be, especially with some of the Asian
customers, just trying to get feedback on things or getting
emails which you just cannot understand. Probably communication
can be the hardest. Sometime their demands. They’ll place an
order today, and they’ll go, “We want shipment next week.” You
go, “No, this is a special product. It’s going to take me six
weeks to get the bottles.”
Especially in other countries a lot of what they want is easy to
obtain. So in Asia, for example, they have hundreds of
manufacturers of bottles and caps. So they can’t understand it’s
quite limited in what we can get here. So they’ll go, “No, I
want a bottle like this.” Well, we don’t have that available in
Australia. I’ll have to get it from China, which is a six week
lead time and then a four week shipping time. So it’s going to
take me three and a half months to deliver. But that’s
unacceptable to them. So sometimes the limitations of what’s
available here can be more difficult.
Question: You have stockists all over Australia. How do you get retailers
to agree to sell your product?
Sarah: A lot of it’s connections. A lot of it’s if you get on with a
buyer. A lot of it’s you have the right price, that they all
want really . . . they’re tough on their margins these days. So
with the main retailers, you have to be able to offer the
service. You have to be able to do EDI. You have to be prepared
to hold stock for them.
Question: Is holding stock a challenge?
Sarah: Well, it can be because then they sometimes will just say, “No,
we don’t want that anymore.” They won’t commit to things. So
they just expect you to hold it, and if they decide they don’t
want to do it, then you’re stuck with the stock.
Daniel: So what do you do with the stock then?
Sarah: Try to sell it to other people. We’re actually moving away from
doing that so much. We had a couple of major retailers who their
demands just become unworkable. They want this, they want that.
Our minimum manufacturing of anything is a thousand, and they’ll
commit to 350, and they expect you to hold the stock on spec. So
we just can’t do that anymore.
Daniel: Can I just ask you a question on that. They’re demanding that
of you. Do you think they’re demanding that of other suppliers?
Sarah: Yeah, they do. That’s why they keep changing all the time.
Daniel: And do you think that they’re just trying to find the next
sucker to come up and take . . .
Daniel: Not bend over, but . . .
Sarah: But basically, yeah, that’s exactly what it is. That’s exactly
what that is.
Daniel: Do you think, though, that we’ll get to a point where everybody
sort of has enough, or do you think there’s someone else willing
to go broke around the corner all the time?
Sarah: There’s always new people who think it’s easy. There’s always
new people who come up and think, oh great, we just got into
Myers or got into David Jones or any of those people. Then a
year later, it’s like, oh, that could have been a mistake.
Question: What’s the next opportunity you have coming up?
Sarah: More business in China with a couple of other retailers, one in
the U.S., one in Asia. That’s at the moment where we see our
biggest growth purely because we can meet their prices. To get
into those industries, you need to be able to meet the prices
they want. It’s really hard in Australia when there’s a lot of
labour involved. We do do a lot of single products out of
Australia for those customers, bottles like this. We fill them,
we label them, and we dispatch them. But the labour is minimal
on that. But when it comes to a gift set, something like that
one up there, where there’s just so much labour in it, you can’t
compete out of this country.