From the source: Shane Anselmi, Merchant 1948

Inside Retail Weekly: When did you guys enter Australia and why did you decide to make that move?

Shane Anselmi: It was about seven years ago. We had 50 stores in New Zealand. The brands we have are Overland, which is a unisex offering for the middle to upper market, and we have a boutique top-end business called Mi Piaci  – it means ‘I like you’ in Italian – and we have 15 boutiques here as well.

So having accumulated mainly Overland and Mi Piaci stores, we had run out of places to open, and we wanted to keep growing the company, so Australia seemed logical. Since I’ve been involved in the concept, we’ve doubled in size five or six times. When I was in my 20s in the late 1980s, we were a $4 million business – we’re a $65 million business now.

IRW: Why did you rebrand your Overland stores to Merchant 1948?

SA: We realised that there was a disconnect with the name Overland. I travel a lot as we have suppliers all over the world and if I met someone new and told them I had a chain called Overland Footwear, the immediate assumption was we sold outdoor shoes. So we wanted to come up with a new name that would suit us and in order to do that, we cast ourselves back in time.

My grandfather Guiglielmo was an Italian immigrant in the ’30s and he was the one who got the family into footwear. He was a true merchant and was fantastic at buying and curating product and selling it, so we looked back in history and saw my grandfather bought three footwear shops in 1948. He lent someone money and couldn’t pay them back, so he ended up keeping their businesses and that’s how the family got into shoes. He was an amazing merchant, and the company was incepted in 1948, so we thought Merchant 1948 was pushing the buttons of history, heritage and provenance.

We also got one of NZ’s top architects to look at our store design to evoke history, heritage and provenance – and that’s the Merchant fitout we have now.

We’re renovating our stores in New Zealand and turning all the Overland fitouts into Merchant 1948. A lot of our stores were quite iconic – changing it over was a risky thing to do. So we‘ve taken our time doing it and we’ve talked to customers about our reasons for doing it.

IRW: What’s it like working in a family business?

SA: There’s lots of wisdom. My father Tony still owns a bit of the business and is a major shareholder. He expanded it and became the biggest footwear manufacturer at one stage in the ’70s and early ’80s. From the three shoe stores my grandfather inherited, my dad took the business over and grew it to eight discount shoe stores, as well as quite a lot of factories.

Back then, 90 per cent of the footwear sold was made in New Zealand, and it was the same in Australia. Australia had a huge number of manufacturers then, but as duties on footwear came off and the protection for the industry was eliminated, successful manufacturers closed down and my dad closed his business down 10 or 15 years ago. The same thing has happened in Australia. Melbourne was filled with very competent footwear manufacturers, but very little manufacturing is left – it’s all gone offshore.

IRW: How would you describe the Australian retail landscape?

SA: It’s probably a bit over-shopped – there’s a bit of sameness about it. There are some good operators in Australia – I certainly have my absolute respect and I find it hard to compete, but it’s a mature business. The challenge is it’s all about coming up with fresh and new products and the ability to surprise and delight. You have to keep on taking risks and as fashion goes through cycles and it gets tough, people retreat to doing just a few things that work, but once you stop taking risks, sales go down. You need to keep trying new things and searching for the fresh.

IRW: Merchant 1948 has been voted as one of New Zealand’s best workplaces several times. What do you think is behind that?

SA: There are two things an organisation needs. A purpose – why do we come to work? It’s not about selling shoes or making more money. It has to be loftier than that. The second thing is values. Values are about how we treat each other, our customers and the people who come into contact with us.

Fourteen years ago, I did a course when I was learning how to be a better CEO and manager. One speaker came from the HR industry and all of us thought it was all soft, fluffy stuff and not terribly relevant, but something really resonated. You need to take a health check on your organisation and one of the best ways is to use the 360 review. I got a hold of that guy and he did 360s right around the company. We were a third of the size we are now.

What came back confirmed my concerns – while [employees] did like the goals and energy and what we were doing, there wasn’t a lot of recognition, so it prompted me to hire a really competent HR manager from North America who has now been with us for 10 years.

The first thing she said was that we had to work out our values. I’d never heard much about that before. We asked everyone what they thought we should do, too. Values are all about behaviours, and we came up with six. So many organisations do what we did back then – they come up with values, put them in a drawer and promptly forget about them.

But we are different. We’ve found a way to celebrate our values every week. Every week, we ask staff for value nominations. For example, if you and I were working in our stores and you wanted drop a pair shoes at a customer’s house, I might nominate you for productivity, which is one of our values, and I’d write a sentence or two about what you did.

One of our values is about being accountable. The other is to be inspiring, the other is to act with integrity. Another is inclusivity – always share information and don’t keep it to yourself. Another value is to innovate, and the last one is to be productive. The great thing about the nomination system is that it reinforces those behaviours and you get recognised as you show those behaviours.

Those value nominations get published every week in a 12-page newsletter. We get 140 to 180 values nominations every week.

The bottom line is recognition is such a key part of what we do. As humans, we just love recognition. It’s a self-enforcing system and one of the key things people enjoy about working with us.

We put the same system in our plant in China so we could catch people doing the right thing. It was a very strange thing for the staff, but every month I’m there, we’re always calling people out and celebrating what we’re doing. The values in our factory are different, but it’s the same sort of thing. People are responding really well.

There’s a prize every week – it’s a peanut slab. We give so much chocolate each week that at one stage we tried to do something healthier but people hit the roof, they wanted the chocolate!

IRW: How did the nomination process impact the business?

SA: The company really took off from there and started to grow. If you have happy and focused staff and instil this energy that’s been created, customers feel it. We ‘re known in the industry for having the best people because we’ve got a training school and our people are some of the happiest in retail – we hear that all the time. If you look at our NPS scores, we’re over 90 per cent. For retail, it’s usually 57 per cent.

IRW: Sustainability has been something important for your business from the start, hasn’t it?

SA: Sustainability is well on our radar and we’ve always owned ethical factories. My team and I are in there all the time. We don’t want to deal with factories that don’t have a focus on sustainability. But it’s an ongoing journey, like our packaging – we try to make it as sustainable as possible. One of the great things about working in the quality end of the business is our shoes last three or four times longer than if you go to a discount operator. Shoes that sell for under $100 are more often made from a petroleum-based product – they don’t last anywhere near as long.

We’ve got a merchant workshop in our Chadstone store, which is all about encouraging sustainability. We partnered with Vibram, the best rubber-sole company in the world. In our workshop, if you buy a pair of our shoes, you’ll buy a good quality pair of Portuguese shoes with a sole that will last well. It might be $220, but for another $30, we’ll put on Vibram soles front and back and your shoes will last two or three times longer. We’ll do the work in our workshop and upgrade the shoes for you straight away.

We also have the ability to shoe shine and we have repair stations, so we encourage people to get more wear out of their shoes to make them last longer. We can monogram and personalise our sneakers as well. The workshops are permanent and we’ll be rolling more of them out.

IRW: Tell me about the digital transformation and what it involves.

SA: Our digital transformation has been one of the big things we’ve been working hard on and growing our online platforms is a big focus for us. Our site is three or four times the size it was three years ago, but it could probably be twice as big as it is now, so we’ve got a way to go.

We’ve got 50 stores in New Zealand that cover most areas but we’re still growing our digital side. [The transformation] involves the philosophy of [our] competency and warmth, trying to portray that through online, our EDMs, talking about our charities and the other initiatives we do. We’re not doing it well enough at the moment. Social media is not just talking about showing the product, but the charities we’ve got as well – I don’t think we’re doing it well enough just yet.

IRW: Tell me about the charities that Merchant 1948 supports. Why is side of the business important to you?

SA: We’ve got a charity called Young Hearts that I set up four or five years ago because I just wanted to do something about the appalling youth suicide rate in New Zealand – we have one of the highest rates in the world.

Every time we sell a full-price pair of Deuce sneakers, $5 goes to that project. We’ve raised over $1.3 million so far. The Young Hearts project supports three youth charities in New Zealand. We’re mentoring kids in South Auckland in depression and mental health and we’ve partnered with Headspace in Australia. We’ve already raised $50,000 in Australia.

A big part of what we’re trying to do is being a warm organisation – we have 60 kids at the moment – every store has a child in Africa that they take care of.

For me personally, it’s about having an opportunity to give back and make a difference in the world. I get more joy out of that than anything, and our people love it as well.

We employ mainly millennials, and one of the key things is that they want to feel like they’re working for a purpose-oriented organisation and they want to make the world a better place. They don’t want to just be chasing the dollar. We spend a huge amount of time teaching our people life skills as part of their leadership development, because the two go hand in hand.

People judge brands and organisations much the same way that we judge people. We judge people based on two things – one is their competency and the other is their warmth. And if you meet someone who is incredibly competent but there’s no warmth, it brings up feelings of envy and suspicion. If you meet someone who is very warm but incompetent, you feel very sorry for them.

But if you meet people who are both those things, they’re people you want to be friends with, have relationships with and do business with. It’s the same with brands – you want your organisation to be very competent but you want it to have a real warmth about it as well.

So we try to teach our people life skills and teach them competency. My message to our people are that there are shoe shops everywhere, but people make buying decisions based on emotion. And if we want to be successful, we have to have an emotional connection with customers. One of the best ways I know to develop that is through story. Stories are only interesting if you talk about the tough stuff and the challenges.

I tell our guys to believe you’re living your own hero’s journey. It allows you to suck up the tough stuff and it helps you build up resilience, strength and competence, like when you go to the gym and stretch your body. It makes you stronger.