Optimistic about the future of the retailer, Brookes believes that with investment in digital and a better in-store experience, sales will follow.
“The business will do somewhere between $35 and $40 million in turnover and we’ll be profitable very quickly,” Brookes tells Inside Retail confidently.
Here, Brookes shares the reasons behind Colette’s demise, the recovery plan, and his learnings from a long career in retail.
Inside Retail: What was it about Colette by Colette Hayman that attracted you and the investor team to this brand?
Bernie Brookes: The first thing was that it’s a very strong brand that’s been built up over an extended period of time. I think the second thing was that because it’s a private label, it doesn’t depend on other brands to onsell. That means you get the full margin as a private label. And the third thing was the growing online business, which is now up to 30 per cent of the business a month and has enormous opportunities. They’re probably the three big reasons.
IR: Slowing footfall and low consumer demand due to Covid-19 were among the reasons given for the collapse of the brand. What are your thoughts on any other contributing factors that led to its downfall?
BB: I think the first thing is that the business was over expanded too quickly. There were 140 stores across a multitude of countries and that was very much capital intensive and refurbishing the store was capital intensive, so there’s no doubt that the heavy expansion plans probably took what was a really good business and made it marginal. It required big pockets to invest for a period of time and there wasn’t interest in doing it.
IR: Are there any key things you want to do differently with Colette?
BB: I think firstly, there’s no doubt that we have to move more towards what I would call ‘beaming’ the stores rather than just selling product. There’s some storytelling that needs to be undertaken in the stores, whether it’s a theme, a costume gold theme or a handbag theme.There’s no doubt that rather than just selling commodities, we’ve got to tell some stories and look at the opportunity to get fresh stock in, which will be another important part. The third thing is to know exactly what we stand for on everything from our target market to sustainability to value for money offering. There is a number of initiatives that we have underway and in trial to test what would be the most logical way forward for the brand.
IR: Many would say it’s a big risk to take over a new brand at a time like this. How are you feeling about the current retail environment? What challenges and opportunities do you think it brings?
BB: I think there’s no doubt that bricks-and-mortar retailers are going to continue to reduce their store footprint and look for higher productive stores – we’re no different. When you go from 140 stores to 35, then logically, you’re going to have a situation where you’ve taken the very best stores. If you think about a retailer today that exists, any of the retailers in shopping centres that have multiple chain stores in fashion or fashion accessories, they’d be looking to take their footprint down by half, maybe by two-thirds and then focus online. We’re fortunate that through the process of buying the business from voluntary administration, we picked up obviously the highest volume of highest productive stores at the best rents – that puts us into a position where most companies would like to be in three to four years’ time.
IR: Colette has continued trading through the period of administration and in the midst of this pandemic, how has trading been in that time?
BB: It’s pretty difficult to give figures because there were stores closing by the administrator all through that period, but I was surprised how individual stores traded at similar levels, compared to last year, which is really odd when you think of the number of closures and the fractured nature of retail of demand by the consumer because of what was going on with the pandemic. To me, the brand is incredibly robust and well trusted to trade during the pandemic period. That gives me a lot of warmth [to know] that there’s an even better [way to] go forward once we get fresh stock and all the stores fully open.
IR: You’ve had a long career in retail. Are there any key learnings you’re applying to this venture?
BB: I think firstly the learnings are that good businesses in retail today are about a very low cost base. They’re about a very strong focus on digital and omnichannel. And they’re about building a good sustainable brand over a period of time and understanding what the target market is. For us, we’ve got a great target market that’s more towards millennials and young females. We think that’s a great target market to focus on, but the brand will switch to any sort of age or lifestyle demography. I think we’re comfortable that we refocus the business on what it does best, which is [serve] young girls who want a value-for-money bag and costume jewellery.
IR: You’ve managed to secure 300 roles, 100 of which are permanent. Was it important to you to retain many key leaders in the business?
BB: Definitely. There was nothing wrong with the people that were in the business; it was some of the fundamental strategies and the lack of cash that caused the business to fail. It wasn’t an issue with the quality of people. In my first few days, I saw that we’ve got an exceptional quality young team, predominantly female, and they know what has to be done and they know how to run the business, so let’s empower them and reward them for doing exactly that.
IR: A strong online store is in the plans for Colette. How are you planning to reinvigorate that e-commerce offering?
BB: I think it’s not only the e-commerce offering, it’s what I would call the digital offering. So we’re significantly refocusing on all social media forms and we’re refocusing on the VIP customer program. There are a million customers in the VIP program so immediately, that gives us a great opportunity to take advantage of the sticky customers we already have and make a number of offers to them. So I think firstly, [we need to] capitalise on the VIP customers, the second is building a really good business in an omnichannel, online and website. Then I think the third component is going to be driving very hard through a strong social media presence as well.
IR: Are you hoping to create more personalised offers and experiences using the data of those VIP customers?
BB: Yeah, I think you summed it up really well. We know already what they buy and what they don’t buy, we know how we can target them. I think it’s a great opportunity for us; a very, very strong franchise with customers that have been with us and may be dormant, customers that haven’t been back for a while and customers who have lowered their average sale. Because of the data that we have from the loyalty program, there are some really strong opportunities for target marketing.
IR: Colette previously had a number of international stores. Are you planning to keep the business within Australia, or do you think there’s hope to expand again outside Australia at some point?
BB: We’ve kept the franchise model into South Africa through the Foschini Group, so there’s a number of stores, that Foschini look after in South Africa and they’re one of the largest retailers there, they look after the Colette franchise there and will continue to hold the head franchise for South Africa and will continue to make the franchise available to any parties over the next couple of years.
We wouldn’t look at taking the business overseas. The amount of capital required and the risk required is too big, so what we do is simply provide the rights to the brand into areas like the United Arab Emirates, Europe or Asia. I think that that’s probably on our books more than opening stores around the world.
IR: What are your key goals for the business in the coming months?
BB: I think the staff has been in administration since February. They’re very tired and fatigued with the administration and the constant financial management, so I think reinvigorating the team is the number one priority. The second thing is getting some nice fresh stock in and I think those two will please both the team and the customers at the same time.