Inside Retail Weekly: I feel like this time of the year must be really busy for you guys. Of course, there was Christmas, but then there’s New Year’s, Chinese New Year and right now, Mardi Gras.
Dean Salakas: Halloween is probably the biggest event for us, but cultural events like Oktoberfest and St Patrick’s Day are all growing in popularity. We see it in our sales; we see it in the competition. All the department stores and discount retailers are all doing them too.
We’re based in Sydney and work pretty closely with the partners at Mardi Gras. We’ve sponsored a few events and sold product at Mardi Gras over the years. Some of the products that are sold around the streets are from us – rainbow glasses, glow sticks – it’s just a really fun time and it’s been growing every year.
IRW: You had some pretty major pop-up stores last year during Halloween and Christmas. I especially feel like Halloween is getting more and more popular every year.
DS: It’s growing every year and I just feel like the retail market itself needs to adapt. So we changed our offer. Now Big W and K Mart are doing it – everyone’s doing Halloween. Competition is tough and we felt we needed to evolve our offer to cater to it.
So last year, we decided to trial a specialist Halloween pop-up store with a Canadian retailer called Halloween Alley. The pop-up was called Halloween Alley too. It was a 3000sqm store at Westfield Knox in Victoria and offered over 15,000 costumes, costume accessories, candy and decorations.
Many retailers dabble in Halloween by allocating a portion of their store floor space for it. This results in the range being limited and often made up of high-volume popular items which means that most of the party stores, discount retailers, discount department stores and supermarkets offer similar products. As a Halloween specialist, our range is modelled from North American Halloween pop-up stores, which results in very unique products the customers cannot find anywhere in Australia. We have a long tail of niche products that allow the customer to find exactly what they are looking for, which cannot be achieved at any other retailer of Halloween in the country.
The store was decorated with Halloween decorations, animatronics and displays. It was designed so people could enjoy their shopping, play with the products and interact with them. We had a Haunted House built in the middle of the store with lots of scares inside to provide an experience for customers so it was more than just a shopping destination. All staff were either cosplayers, actors, makeup artists or lovers of Halloween to ensure customers received service from experts who understood what they needed. They were encouraged to dress up in costumes and “act” the character they were dressed up as. For example, sales staff might have dressed as a pirate at checkout and said to customers, “Show me your treasure!” when taking their products to scan.
While physical changerooms were available in the store, we also had a virtual mirror where people could try costumes in front of a mirror without getting changed. The mirror also guided the user to make the purchase online if they wished to check out that way and have the product shipped directly to them.
[The Halloween pop-up] got us thinking about Christmas. We’re a party store that does Christmas quite well, but how do we provide an offer that makes customers want to come here for Christmas? Why would they come here if they could go anywhere else? We needed an offer that’s compelling enough to get customers super pumped to drive all the way to our stores instead of their local K Mart or Target.
That’s when we said we’d do a full-on Christmas offer and focus on just that. It went well – people came into stores and sales were good. It was an interesting experiment.
It was a 3000sqm Christmas store and certainly one of the largest in the country – there were Christmas trees, decorations, lights, inflatables for the yard – everything you could think of to decorate your place. It was in Westfield Knox, and it was open for six or seven weeks.
IRW: Given their success, do you see yourself doing more pop-ups this year?
DS: We’re planning to do Halloween pop-up stores again. The numbers looked good.
Christmas ran off the back of the Halloween stores but it was more difficult than I thought. I thought it was going to be easy to keep going, but Christmas has different challenges, especially with leases and staff. You need to sign a short-term lease, which landlords don’t like, given they could be renting the space out for thousands of dollars. Then you’ve got staff who want to go on holidays, so you have to hire other staff. You end up stretched in terms of people.
There were a lot of challenges, but we wanted to test the pop-up in terms of execution. There were things like, how do people know about the store in such a short period of time? How do we get them walking in from day one?
But sales were good and people were coming in.
IRW: And now you’re looking at a long-term relationship with Halloween Alley in the future?
DS: One hundred per cent. We’ve agreed in principle to do it again with them this year – we’re in love with each other.
But at the time, you don’t know how it’s going to work out.
There are relationships that don’t work out if people have different views and it’s about who wins the war, or if one partner sees money [from the partnership] but the other doesn’t. But they were excellent. The CEO and I had the same mindset – we both wanted to create a win-win situation. There were actually a lot of components that weren’t fleshed out in the beginning, which is where it can go wrong, but between us, we were able to work through the issues easily as they came up which is the test of a good partnership. [Halloween Alley] had our best interests at heart, just like we did with theirs.
We’d gotten the lease on Wednesday and we opened up 2.5 weeks later – we just had no time to learn. But Halloween Alley just came in, I worked with them the whole time and together we ordered the troops around, motivated people and got it done.
Halloween Alley brought their IP over here and we used it all, their branding and logo.
They do 20-30 pop-up stores in Canada and we thought we could do it ourselves, but given they’re doing them on that scale, we thought they might know something about doing a pop-up! They brought their expertise and skills but also their funding, infrastructure and contacts, which would have taken two or three years to get right on our own!
We shared the financial rewards of the deal…They were amazed at some of the things we did in terms of the marketing we did on a shoestring budget that got really great results.
We had a lot of awareness from a local community perspective and we worked with Westfield to leverage their contacts and databases as well.
IRW: What was the digital strategy like around the Halloween Alley pop-up store?
DS: There wasn’t a separate site for the Halloween Alley store – we just traded through the Party People. Ideally, I would have liked a separate specific Halloween Alley AU site. The product mix is different to Party People, which carried about 70 per cent of its range.
Because Halloween Alley is Canadian, [our pop-up with them] had North American products you can’t get here – they’re niche. For example, Party People might sell one large animatronic for $500, like a giant skeleton that moves around and screams, but our Halloween Alley pop-up had 10 of them in-store, plus inflatables. We had specialist products in-store that you can’t get in your local party store.
Our customers came to Halloween Alley because we’re specialists and we wanted to translate that online as well. We wanted a separate site that was made for the pop-up and specifically works for people who love Halloween.
We were really embarrassed by our pop-up’s digital strategy and this year, I’m not even sure how far down the line we’ll get with it, given how much is involved in getting a separate site when we’ve got other planning to do on the [Party People] site. There are so many unknowns, such as coronavirus. We’re not sure about supply issues if we’ll get stuck in China, the US or Canada. Our stock won’t even come in until July or August. It just doesn’t give us enough time to get it all online when your stock inventory is only just landing and going straight to store. Everything’s normally a bit late – we’re always getting delays from China because Australia gets pushed to the bottom of the product line. But with coronavirus on top of that, this year they’ll be at full capacity and if anyone gets bumped, it’ll be Australia.
There are a lot of challenges and we need to do it and want to do it, but we want a bricks-and-mortar-led strategy with e-commerce being just a piece of that puzzle.
It was interesting given the pop-up store traded so well without any e-commerce behind it. A lot of people think you can’t survive without online – and I think the same to be honest – in terms of strategy. I do think you need both, but it was interesting that it did so well.
If you get the offer right for the customer, you can afford to be substandard in other areas. With ours, they didn’t value e-commerce as much as they did a great offer. Our customers wanted to go somewhere to find what they were looking for, they didn’t want to go to a department store with just a few bits and pieces.
IRW: Tell me about the bricks-and-mortar stores you’re planning to open this year. And what have you learned from the pop-ups that can inform the new shops?
DS: I don’t know the full strategy just yet, but it’ll probably be between two to four stores in Sydney, Melbourne and maybe Brisbane. The whole concept is a large-format Halloween store. The pop-up was a haunted house in a store with some cool tech to get a great buzz. A lot of the time, it does come down to marketing.
In terms of what we learned, we popped up the store and did marketing on steroids with no budget and the results were phenomenal. On the opening day, we did a giant party and there were all these experiences in the haunted house like the giant animatronics. We wanted people to go in and just go ‘wow’ so word-of-mouth spread quickly. We didn’t have to do much on social media, but the power was in people telling their friends. People were walking away and saying, ‘Have you been to that store? I’ve never seen anything like it!’
There are a lot of Halloween fanatics out there, they latched onto it and the conversation was great.
We asked ourselves, ‘Why don’t we do this for our normal bricks-and-mortar business? Why don’t we employ similar strategies and the same focus and aggression towards that part of the business?’
IRW: I can imagine the staff that you recruit are particularly passionate about dressing up, too.
DS: One of the really interesting things we found was we were able to recruit 30 staff [for the Halloween pop-up] in just two days from a Facebook ad. I had hundreds of resumes, it just freaked me out. All of the applicants said they love Halloween, or they did cosplay on the weekend or they were makeup artists. They were the best staff we could get – the ones who really love Halloween.
IRW: Tell me about the work you did at Woolies before you launched The Party People.
DS: I was a business analyst. [The Party People] probably goes back to my role at Woolies, what I did and how I did it that got me to where I am today. I couldn’t be where I am without that experience.
To start, my role wasn’t very exciting. I walked into a warehouse one day and saw a packet of Boost chocolate bars, one carton of them on a whole pallet that was being moved around. I thought, ‘What’s the go? Surely we can put more product on that pallet. How much money do we make? $2. How much does it cost to move it around the warehouse? $6.’
I went to management and asked them about it but they said ‘Ít is what it is’.
It was stupid, they were losing money, but we had to keep inventory levels down. It was inefficient so I proposed a way to solve it using a mathematical equation.
Within three months, my idea was implemented and saved $4 million in costs. With a company like that, where there’s so much governance, you need to go around it. And if you can make people believe in something, they can make it happen, even in a big business. That’s what set me off on an entrepreneurial path. After that, my role involved finding problems and solving them without going through governance.
I was a kid straight out of uni and often they’d say about my ideas, ‘That’ll never happen’ but I’d find a way to make it work. Towards the end, I’d come up with a crazy idea and the managers would say, ‘I don’t know how you can achieve it, but I’ll back you.’
Then my parents were retiring and wanted to sell their business, The Party People. I had a good career at Woolies, but I couldn’t pass up the opportunity to do my own thing and be an entrepreneur. I saw it as an impossible challenge, I didn’t want to die wondering [what it would be like if I took over].