But there have been no sacred cows. Together, Sophie and I have looked at every possible way Oroton can become more accessible, available and relevant to both Australian and international consumers, which is a part of our near future growth strategy.
We’ve had Covid-19 amongst this, too. It’s been two and a half years since voluntary administration (VA) and we’ve had 12 months of Covid-19. Leading up to it, we were already doing incredibly well. The turnaround was quite rapid.
The results of Sophie’s work has led to our key fashion stores in the business trading between 20 and 70 per cent like-for-like, mainly driven by making the product relevant, modern and appealing to a wider range of customers.
We have an owner who is very innovative and supportive of change and a really dynamic team to help drive the business forward. Our success to date has been wonderful. We’ve had landlords in the past who haven’t wanted Oroton in their centres because they weren’t trading that well, but now we have a range of landlords who want us back, because they’re seeing what Oroton stands for again. It’s very exciting that we’re getting the industry and landlord credit and a lot of great feedback from our engaged customer base.
IR: What are some of those micro and macro focuses?
DK: Over the last two years, we’ve been able to build a new executive team, a lot of whom are the best in their field in retail.
We’ve also changed so much technology. This business unfortunately was a little antiquated with a lot of its systems. In the last two years, we’ve built a whole new e-commerce platform, we’ve rebuilt the CRM database, we’ve built an internal IT team, and we’ve employed data scientists who are now using that information more proactively.
We’ve modernised the product offering as well. When I started, we had a lot of loyal and dedicated customers who loved the brand, but the age range was moving further up and we weren’t getting enough of the new, independent, style-driven customers.
If you stand in an Oroton store today, it’s vastly different to see who is shopping at Oroton, to the point where 25–34-year olds are now the largest sector for us. Going back three years ago, you could have added 10 years to do that [age demographic]. It’s been a real focus for us to be more relevant to a more fashion-conscious, younger, style-driven consumer. Sophie’s work has achieved that.
Sophie Holt: When I arrived at Oroton, it was a bit of a shock, it was very serious and very ‘leather-y’.The mannequins were leather, the bags were leather, the stores were leather. It was a heritage Australian brand that needed to be lightened up and relaxed. What Oroton has always done so well was quality — it was absolutely beautiful — and the functionality was very well done.
What they lacked was any sense of ranging and balance from building a large range and any relevance to a young, modern customer. If you were older or you were going to work, it was ticking those boxes well, but it wasn’t ticking a box for me or my daughter or anyone in between who was fashionable.
It was clear to me that [the brand] needed modernising, so we introduced canvas and drill, honest, simple materials and we introduced print silk scarves that added colour and spirit. Then because this is a heritage Australian brand with a great story and it deserves to have it fully told, we decided to launch apparel.
It goes from casual shirt dresses to beautiful lace shirts, there’s a little bit of tailoring, but largely, it’s trans-seasonal. We do knitwear, but it’s really somewhere in between casual and evening. I’d describe it as daywear. We don’t do a lot of strict workwear, although we do tailored separates that can be mixed and matched with shorts or a blazer over a dress.
I’m a very detail focused person, so I’ve spent a lot of time flitting between Sydney and Melbourne, making sure everything coordinates, from the product and stores to the marketing and it all tells the customer the story of the brand.
We love detail and it’s what sets us apart — fabric, detailing and colour have always been a passion for me. You have to stand out in the marketplace, you need to give customers a reason to want it. We spend an embarrassingly long time going into the details at an excruciating level.
IR: If you were to describe the Oroton story, what would it be?
SH: I think the message is that Oroton is luxury, but it’s Australian lifestyle luxury and it’s everyday luxury. Yes, we’d all love to have 10 Balenciaga or Dior handbags, but who can afford it? I live my life in Oroton — it’s beautiful quality but it’s accessible and they’re easy pieces. My daughter and I both wear it — I think there are pieces for everyone that can fit in their lifestyle. It’s about appreciating luxury, quality and being proud of the history of the brand. And having some spirit and not being too serious!
IR: While there have been quite a few insolvencies in the past couple of years, it seems there are some businesses that come out of VA better than before.
DK: It’s one of those things where it’s a necessary evil if a business is to survive, or the whole thing closes down. There are always casualties with VA. It’s a legal tool that’s necessary, rather than having every creditor and every employee walking away from a total mess.
We rarely talk about VA now because it’s something that is so foreign to us now. We’re a whole new team with a new product and so forth. With a new owner in a private environment, VA allowed us to do anything we wanted to get the business back to being relevant again. The brief to Sophie and I was to revitalise the business and make it the best it can possibly be. VA gave us the opportunity for a fresh start.
SH: [When] we can come out of VA and plunged into apparel, 90 per cent of the people in the business thought we were mad. It’s normally a time for consolidation, it’s a time for being cautious, getting back to your knitting, but we had the support from the owner to take a huge leap of faith, actually go out there and make a big noticeable change to the brand at a time when you would expect a business to be cautious. We didn’t do that. We did the opposite.
I think that was a fundamental mindset that really gave us a great kickstart to launch us quickly out of VA. I often think back to that because it’s an unusual thing that we were able to do.
DK: We’ve been a business in the last two years that has swum against the tide. We’ve been in a massive investment transformation phase, setting up the foundations — our technology and apparel — so very soon, we’ll be ready for that next international launch.
If you look at our trade, when we closed our stores in March 2020, we were concerned about when they’d ever reopen and what would happen. But like a lot of businesses, online went through the roof. We were shocked and we struggled at times to keep up with our customer orders in a timely fashion.
Then stores opened and we had significant, worrying decreases in traffic, but our conversion rates were phenomenal. If someone was prepared in that half-Covid time to go into a store, they had a real intent to purchase — they weren’t there to browse and shop with friends. Our conversion rates were up to 70 or 80 per cent at times and our traffic in the key CBD stores were down at similar levels, but in the suburbs, our traffic counts haven’t gone down — but the customer intent still went up. We’ve had double digit like-for-like growth in a range of stores that have been outside the Sydney and Melbourne CBDs, which has been really pleasing. We’ve got through very well.
We’re really excited about where we’re at now. Just two years ago, apparel was a thought in Sophie’s head and in the space of nine months, it was delivered into 12 boutiques. Then because of the success of those boutiques, it’s next season is going to be into 21 stores and online.
Apparel takes up part of the floor space that was originally allocated to accessories in our stores, so we had to shrink down our accessories offer to accommodate the arrival of apparel, but the sales per metre in the smaller area was actually much larger than it was before. Bringing in apparel has brought more people to our store, our traffic counts went through the roof and because of that, our returns in the smaller accessories space went through the roof. Now we’re finding people are buying the bag to go with the clothing item. We aren’t just an accessories brand, we are an accessories and luxurious apparel brand.
We’re talking about our next steps of international growth, we’ve moved with such great success so quickly, we’re now over to the next 12 months, ready to take that next step.
Looking back at Covid-19, one of the areas we were able to action quickly was international wholesaling. When Oroton came out of VA, there was the dream of being a relevant international brand and here we are now, with a range of orders from places like Selfridges, Bloomingdales, Bon Marche and we’re on Net-a-Porter. That international demand is there, which excites us, in addition to the growth we’ve achieved locally during Covid-19.
In Asia, we’ve got two stores in Malaysia, both very successful and just before Covid-19 hit, I had a trip booked to go to Southeast Asia to look at that area from a growth perspective. Because of Covid-19, that’s been put on hold and now we’ve moved to an aggressive online international growth.
IR: Can you tell me more about the pivot towards international for Oroton?
DK: We all got dizzy from the number of pivots that took place when our stores closed. We engaged with quite a few daigous [Chinese resellers] here and we tested Oroton on WeChat, targeting Chinese customers in Australia — there are 2.1 million people who could be potential customers. We’ve had private sessions with them in-store, where they walk around our stores and [film themselves], sending their followers to our brand. Throughout that process, we’ve increased brand awareness and got a new customer with some success.
Lots of tests took place. We had a board meeting where we said we’d try eight things and two would stick. So rather than being in our PJs at home last year, we went out and did testing. We had some great results from the WeChat and daigou channels.
Daigous came out of the woodwork last year, but they were recently in our Chadstone store, where they did a livestream for four hours of the whole product range. We got some significant sales out of that, both here and internationally. It’s an area of great opportunity as part of that overarching international awareness piece.
I see it as being something that we have to explore more and deploy because of the number of followers that daigous carry. Everyone knows Oroton in Australia, but we want to be a brand that everyone in the world knows.
IR: It doesn’t always work for brands when they go overseas. Where do those challenges lie?
DK: There are a range of areas. For the small designer brands, it’s difficult because of the set-up costs to venture overseas and the marketing of the brand. If you’re an unknown brand internationally, you have to be relevant to a lot of people. You have to get the right trade partners, you have to get the pricing right, you have to understand international cultures in different regions, you’ve got to understand different tax laws, returns, distribution chains and so forth. There’s a lot to think about. There’s a lovely theory of ‘let’s go overseas and all will be well’, but there are so many elements to consider.
For the smaller guys, it’s difficult because the costs are huge, so unless you’ve got really good sources and cash management capability and an individual unique proposition, businesses are going to struggle. It’s something that needs a laser-like focus to get right.
We’re looking now deeply at all those avenues internationally. During Covid-19, we tested with wholesale, and we immediately got bites, so we’ve ended up on Net-a-Porter and now we’re in Selfridges and On Pedder in Singapore and there are boutiques in Japan and Korea. Our bricks-and-mortar growth internationally is on hold because we don’t know what the new normal will be post-Covid.
But if you’re entering a market like China, you may need some form of physical presence to support that brand awareness and that’s expensive. You’ve really got to know how much you’re in for and the period of time that you can support the growth strategy. There are a lot of initial costs where you won’t get return — that comes after you’ve set up the business, educated your new consumers and so forth.
So for small designers going overseas, it’s tough because a lot of them don’t necessarily have their backhouse in order. They struggle with margins internally, they struggle with delivering on time. If you deliver late, the penalties can wipe out whatever margin you might have. It’s a real challenge.
You’ve got to have a bit of size around you, with a lot of smarts and not rush into it to make sure it’s done in a staged process.
IR: David, you were CEO of Cue for 12 years and Sophie, you’ve worked at Country Road, Sportsgirl and Witchery. What’s it like working at such well-loved brands with such passionate customer bases when you’re trying to take the business into the future?
DK: I had a long time at Cue [22 years] and when I started there, it had 40 stores and when I left, it had 235 stores across a number of brands. I was there for a great growth journey. The guy who founded the business, Rod Levis, is an incredible retail entrepreneur and that era set me up to help the transformation of Oroton. Cue knew their customer and looked after them. We’ve had the challenge here where we’ve got our classic customers who have been there for the journey, but we’ve ventured out to secure new customers.
SH: I feel lucky, I’ve worked for big retailers my whole life. When I was 25, I started at Sportsgirl, then I went to Witchery, then I started Seed, then I went to Country Road, which was a turnaround job. Then I started Trenery because we didn’t want to lose the older customer as we did that big turnaround at Country Road. At each of those brands, I either started them or turned them around.
People have asked me recently why I haven’t started my own brand, but what I find exciting is [these brands have] allowed me to tell so many stories. You have to think of everything from the stores to the customer and the product. I feel lucky I’ve had the ability to go into these big retailers with incredible support from all the CEOs who have allowed me to be brave, basically jump off a cliff and go in there hard.
I don’t believe you can turn around a brand in increments. The customer won’t let you. You have to go in, hold on and change it. I think the stronger your convictions are, the more brave you are, the more passionate you are, the more determined and resilient you are — you have to love it — the more chance you’ve got at success.
IR: Go hard or go home!
DK: That’s what’s happening right now at Oroton.