Whitcoulls: more than just books in market share war

By Karyn Scherer

For most New Zealanders, the name Whitcoulls is synonymous with books. For a while, it was also synonymous with stationery.

Thanks to the Big Red Sheds and their sister stores, the Big Blue Barns, one of New Zealand's best-known retailers is focusing on books again.

"The Warehouse" is not a popular phrase around Whitcoulls these days. The company that prides itself on giving everyone a bargain has made a big push into books and stationery over the past few years and, in books alone, it is believed to have already snared around 10 per cent of sales. In a market estimated to be worth around $200 million a year, this is a significant slice.

Whitcoulls' new general manager, Fran Stanley, is refreshingly honest about the challenges she faces.

"It's a little bit of an issue because The Warehouse is now the largest retailer of music in the country," she says.

"We don't want them to be the largest retailer of books, so we've had to take some new strategic directions in order to make sure we protect our business."

In fact, the company does not just focus on books - it now sees itself as a "media delivery company".

After four years as marketing manager of the Whitcoulls Group, Stanley has taken over the top job previously held by Stefan Preston. Preston wanted a change, she says, although he is continuing to run its Internet business for a while as a consultant.

Stanley, who is 39, began her career as a journalist on trade magazines such as the Pork Industry Gazette before moving into marketing. She handled product management for a pharmaceutical company and was a brand manager for Tip-Top before moving to Lion Nathan, where she helped develop its joint venture in China.

She also did a stint with Palmer's, at the time of the Skellerup fiasco. She can laugh about it now, but it wasn't so funny back then. "It was the nightmare job from hell," she grimaces.

When she joined Whitcoulls, it was owned by Graeme Hart. Not long after, Hart sold it to the Blue Star Group. Now speculation is rife that it could soon be up for sale again. Stanley agrees it is a possibility.

"The good thing for us is the company right now is in good shape and it's quite profitable. Therefore, if it's sold, it's much more likely to be to someone who is interested in carrying on investing."

Of greater concern to her is protecting the company's market share, which has been static at around 50 per cent for several years.

Her main strategy has been to gradually phase out the poorly performing London Bookshops chain and develop three distinct brands. At the discount end is its joint venture with NZ Post, the Books & More chain, which has only just been launched. In the middle is the 63-store Whitcoulls chain, aimed at families, and at the top end, competing directly with Australian chain Dymocks, is another new brand, Bennetts.

While Dymocks' problems in this country are well-known, Stanley is not being complacent about American chain Borders, which plans to open its first megastore in this country in Auckland's Force Entertainment Centre later this year. Unlike New Zealand bookstores, the American chain is used to working on a sale-or-return basis, so its economics will be quite different, she says.

"They are a class act. I think it will help focus us on what we have to do."

Meanwhile, Whitcoulls is also getting a revamp. Stanley says the company has taken a leaf out of some of America's best bookstores, but it has also made a big effort to listen to customers.

It has a team of full-time researchers who spend a large chunk of their time in the stores talking to customers. It also gets regular feedback from focus groups.

"We have tried to gain an understanding of exactly what it is that makes our customers tick. Not in the usual market research way by using big words, but by understanding that bad air conditioning drives customers crazy, for example."

According to Stanley, the decision to launch Bennetts as a standalone chain came from customer feedback, as have several promotional ideas.

Bookshops are a bit like wine stores, she says. Thousands of new titles come out each month, but to customers they all look much the same. To make selection easier, Whitcoulls has created several promotions, including Try Buys, which encourages customers to try new authors; the Whitcoulls List, which encouraged customers to vote for their favourite books; and Staff Picks, which are recommendations from staff.

Another promotion, Kiwi Kids, encouraged children to vote for their favourite books. The promotion was so successful, it prompted another initiative: a book which recommends what books to buy for different age groups.

"It's Marketing 101: ask customers what they want and give it to them," she says.

Children's books is one area where demand appears to be growing - a trend Stanley partly attributes to Alan Duff's Books in Homes scheme. She believes the surge in interest in children's education will eventually spill over into software, but believes high prices have dampened demand until now.

While Stanley is proud of what she has achieved over the past four years, she concedes there is still room for improvement.

"While we've learned to do very cost-efficient advertising and promotion, I don't know that we've always done a good job at telling a story that's clear to our customer. Our sales have gone up and our profits have gone up, but I feel we've missed some opportunities for development."

One category the company has been slow to exploit, she believes, is videos, software and digital video discs (DVDs). She is particularly optimistic about the potential of the Internet for multi-media sales.

From early July, the company will begin installing Web browsers in its stores. The idea is that customers will be able to use Whitcoulls' Web site to order copies of books not available in-store.

Stanley is a realist and does not expect Internet sales to be a big money-spinner in the short term. But, like Stefan Preston, she believes the investment will eventually pay off.

"Sure, we're up against people like Amazon and they've got a squillion dollars to spend, but at the same time we've already proved in early trials that we can deliver cheaper and quicker."

Meanwhile, she believes she has finally found a way of bringing down software prices.

"Developing a way for New Zealanders to access multi-media product at reasonable prices has been something I've wanted to do for three years and I've only just figured out how to do that. That's really about two-and-a-half years too long, to be honest."