Knees has completely reinvented its business model with a move to a local retail park, where it has retained its furniture offering and combined it with premium electricals. Chris Frankland talks to retail director Ian Vidler
Anyone who had come away from ERT’s Turning Point Summit with a bullet point list of how to survive as a retailer in the years ahead, would find that all these points have already been actioned by Knees Home and Electrical in its Spitfire Retail Park store in Trowbridge, Wiltshire.
You need a second speciality – check. It sells furniture and cookware as well as premium freestanding and built-in appliances.
You should be a destination store – check. When visiting its retail park location, Knees customers can browse furniture and electricals, grab something to eat at McDonald’s, do some clothes shopping or pick up some cat food.
You need to create ‘retail theatre’ – check. Knees holds in-store cookery events with chefs every month.
You need a fully-formed online strategy that supports your in-store activity – check. It has a transactional website that brings in new customers it would not otherwise have had and which it plans to develop further.
Since its move to the Spitfire Retail Park, under the stewardship of retail director Ian Vidler, Knees has improved its profitability by downsizing from a five-floor, town-centre department store with all the overheads that entails and slimming down to furniture, cookware and premium electricals.
Knees now employs some 20 staff across Trowbridge and its high-street store in Malmesbury, which has seen its sales leap 20 per cent after a recent refurbishment.
ERT caught up with Mr Vidler at its superstore in Trowbridge.
Q: What prompted Knees to completely re-evaluate its retail model?
Ian Vidler: We needed a profitable model. Where we were in the town centre was on five floors. It was staff-heavy, so the overheads were high. Pedestrianisation meant that parking was a problem and then the council decided to charge for parking – all things that drove footfall down. Then we had the rise of the supermarket and the internet. It was getting worse and worse and we had to decide what to do – that drove the change to where we are now.
We came to the retail park in 2014. We have free parking outside and a well-lit, clean building that you can run with a lot fewer staff.
All over the country, regional department stores have been closing. We were always known for being the place to get small bits and pieces, but these days you go to Amazon.
We have hybridised our range of electricals – it is more products that you want to touch and feel. Would you buy a £2,000 range cooker off the internet without wanting to touch and feel the quality? They want to see what separates a Stoves from a Belling, or a Belling from a Smeg or a Rangemaster. Why spend £4,000 on a Britannia? As long as our prices are aligned, our staff are knowledgeable and the backup is there, there’s no reason we can’t sell from bricks-and-mortar.
Although we have gone more premium, we struggled with some top-end products, although we have just recently taken on Miele. Miele is investing in us and we are investing in them. We are sending a multitude of staff off to them for training, myself included. We have built relationships with many brands and that has stood us in good stead through the rough and the smooth.
Q: Did sales increase when you moved to the retail park?
IV: Definitely an increase in the home section. It needs to grow more to get to the point where we can do everything that we want to. We are expanding ranges and there will be more home products online. On electricals, in the past 12 months things have taken a step down. Less turnover, but we have made sure we are profitable. It has to be sustainable. We need a reasonable amount of profit to reinvest and provide that great service we offer. We have a great engineering business and property portfolio – and so if retail has its peaks and troughs, the property and the engineering can prop that up.
Furniture is more profitable, but support from manufacturers is less. In electricals, support is better, but margins are lower. The first floor [electricals] does about double the turnover of the ground floor [furniture and cookware], but they both generate about the same levels of profit.
Q: When you moved here, what determined the precise product mix?
IV: In the beginning it was about what we were always strong in. We were always known for furniture. In electricals, we always delivered what the customer wanted. We brought the best here from the town centre and we have grown that to include more built-in. We also added a kitchen shop, so that ties into electricals and furniture.
Q: Do these products complement each other?
IV: To start with, it was quite hard for me to get my head round how furniture would complement electricals, but it does. In the modern world, many homes are open plan, with a bigger kitchen/dining space and you will have possibly a range cooker, a built-in oven, a dishwasher and a microwave, plus add-ons like a bin, a nice kettle – in matching colours. That then leads into the dining side with knife blocks and plates, and that leads to a sofa or an occasional chair.
Q: Was it your intention to create more of a ‘destination’ store?
IV: Yes. We are still what we were – a retailer of furniture and electrical products – but we have become a destination store. What separates us from going online or going to Currys? We have the knowledge and great products at prices that are keen – against online too. And the retail park location works for us. There are a lot of reasons to come here. You can have lunch, buy your groceries, there’s a pet shop, a carpet shop and TK Maxx – and we offer another good reason to come here.
Q: A lot of independent electrical retailers suffer from quite an old customer profile. Has being here changed that?
IV: Yes, we are getting younger customers. We have got a marketeer on board and we have looked at demographics. We have our core, traditional customers, but we are also looking to target a section that’s 45 to 60 and younger too.
Furniture brings in younger customers. We haven’t massively tapped into the first-time buyer market, but we have got better with our marketing. Who are the people living in these open-plan houses? We are slowly beginning to target them and find out who they are and what they want.
Our new marketing person has been with us for nine months. Has it changed things? Yes, it has. We were bad at SEO and if you searched furniture in Wiltshire, we would pop up on the third page. Now we are on the first page and sometimes at the top. If people go online who know your brand name, and they can’t find you, they won’t come to the store.
Q: Have you been growing the transactional side of the website?
IV: We have had a website for a few years but haven’t utilised it as much as we could. We made it transactional about six or seven months ago, mainly in electricals. We are investing in the future and the web will be better, bigger and stronger.
Has it affected the balance of sales? Yes, we have seen incremental growth, attracting people who perhaps wouldn’t under any circumstances travel to a shop. It has created its own sales. We had one customer who said he never got the time to go shopping, but still liked to shop with good, honest local retailers. He said we wouldn’t have got his business without the website.
Q: How else do you try to engage with your target audience?
IV: Social media is something that our marketeer has also been looking at. Old-style marketing – advertising, radio, etc – is costly, but on social media you can target exactly who you want to talk to, grow an audience that wants to shop with you and it is a very well-priced medium.
We also draw customers in-store with events. This past weekend we had a chef in-store. Yes, we want customers to come in and spend money, but with these events they get an experience – they will learn to cook, how to sharpen a knife… We do these at least once a month. They may not buy straightaway, but they could buy six months down the line.
Q: Is the smart home an area you have been looking at?
IV: The market through 2017 is supposed to be huge. I have always been cautious, so we have a few products, but it is not yet as big as I thought it would be. We have dabbled with Hoover, Bosch and Siemens.
If it’s overpriced it won’t sell, if it’s too gimmicky, it won’t sell, but I am convinced that with the right USPs it will. Whether we do it as a connected area, I am not sure. As we refit certain areas, we will include connected products and highlight those. Having it in-store, being able to demonstrate it and offer that interaction with a real human being will make all the difference.
Q: So where does Knees go from here?
IV: First to get the range of products on the shopfloor to flow – electricals, kitchen shop to furnishing. Then it’s investment online. That’s key for us. We have also looked at retail apps for mobile phones.
We also need to invest in analysing trends. To stock the things people expect to see when they come in. That’s something the smaller independent retailer needs to be very much aware of. You can’t sit in your small shop space and wait for customers to come through your door, you’ve got to give them a reason to come in. You’ve got to be bright and vibrant and competitive on price. And anyone who is under any illusion that it is going to go back to where it was 10 years ago is slightly silly. There may be loyalty out there, but there isn’t the loyalty there once was. There are a lot of people giving some great service out there. Everyone has had to step up their game.
If we grow our online presence, I believe that this will naturally lead to an expansion of our retail premises.