Furniture e-tailer welcomes competition
“When Zara launched that big homewares range, we saw that not as a threat, but as an opportunity more than anything,” Milan Direct, CEO and co-founder, Dean Ramler, told Inside Retail PREMIUM. “It grows awareness of the market.”
Zara opened its first standalone Home concept store in Australia earlier this month at Highpoint Shopping Centre in Victoria, with a second store expected to open by mid year in Sydney’s Pitt St Mall.
The opening of Zara Home followed the release of an IbisWorld report that found international fast fashion retailers’ expansion into the homewares category in Australia poses a challenge to established local retailers, with the fast fashion brands expected to enjoy double digit annualised growth in homewares and furniture sales over the next five years.
Ramler believes that Zara’s opening should improve sales.
“These are great retailers, but they’re also at a higher pricepoint and when the market’s tough, like at the moment, people shop around for the best deals.
“Consumers are smart and savvy and even when going to purchase instore, they jump online and do a price comparison.”
Ramler says agility is seen as the key to success in Australia’s competitive homewares category.
Being online, Milan Direct has unlimited floor space and lists thousands of products. The business now lists more than 15,000 SKUs, up from 1000 12 months ago, with plans to ramp this up to 30,000 by the end of 2015, and an eventual target of 50,000.
“Harvey Norman or Zara can only have, I’m guessing, a maximum of around 1000 or 2000 instore,” Ramler said.
“As a pureplay retailer, we have massive advantages over a bricks and mortar store – whether Australian or offshore – because the bricks and mortar stores like Zara are always going to be restricted by floorspace in the amount of products they can display.”
Milan Direct launched into homewares in early 2012 after spotting growing searches and demand for homewares through Google analytics research.
“Homewares is roughly 20 per cent of our turnover and growing. The quantity is quite high as it’s a low value purchase – $20, $30, $40, $50, whereas we sell furniture pieces for anywhere up to $3000 to $4000 a piece.
“Homewares is an easy product for online because it’s visually pleasing, looks good in photos and is easy to ship because its small,” Ramler said.
A main driver of Milan Direct’s growth strategy is the addition of new brands each week across all categories, as well as maintaining the Milan Direct private label product offers.
In the major cities, such as Melbourne and Sydney, the best brands are very popular whereas, further out of the cities, private label products are more in demand.
“Milan Direct has achieved approximately 40 per cent growth YOY in the past three years, so we’re definitely not slowing down,” said Ramler.
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