Folders in Kaitaia an unlikely - but successful - entrant to competitive retail appliance market.
If ever there was a Kiwi underdog story, it belongs to the Walker family and Folders – the appliances, furniture, and technology company based in Kaitaia (yes, Kaitaia) taking on the 600-pound corporate gorillas of Harvey Norman and Noel Leeming.
Why Kaitaia? Because that’s where Ian and Anne Walker were dairy farming at the time when The Warehouse opened a store in the town – and smaller local retailers began dying off. Anne and Ian’s competitive instincts kicked in: “Local retailers were just giving up and drifting off. Shops were becoming empty and locals were being forced to buy out of town – and we just wanted to prove it didn’t have to be that way. To retain a strong growing community, we needed locals supporting locals”
They also loved a challenge, Ian says, but while everyone, including the media, were describing the difficult challenges facing rural towns, no one was actually addressing them. They began by purchasing a small stationery store selling books, toys and stationery in the 1990s, still thriving today.
After that came Folders; the Kaitaia community wanted them to open another outlet selling laptops, computers and other goods. So they did, buying a tiny computer store. “Folders started in a shoebox with one employee,” Ian says.
From that simple beginning has grown a national operation with its roots still firmly based in Kaitaia, but with smart and nimble digital technology and a transport system that sees about 60,000 lines of products available online distributed throughout the country – and which is giving bigger retailers some cause for concern.
But in case we are giving the impression that Ian and Anne walked off the farm and number-eight-wired their way into retail, we should open the door a little wider on the brains behind Folders. Both had successful marketing backgrounds. Ian was a former managing director of advertising company Ogilvy & Mather and Anne was a senior media executive with one of the most successful advertising agencies in New Zealand. Both decided to leave the rat race to start a family and go farming.
Once Folders – they liked the name because it is simple and sticks out – began unfolding, they enlisted the help of both sons. One was a research scientist in bio-medical engineering and the other a chemical process engineer climbing the corporate ladder.
They provided the technological wizardry which is Folder’s mainstay – a website and customer-first technology and service which Ian says gives Folders more of a level playing field with the corporate giants and a few other innovative technical advantages they don’t wish to disclose.
Later came the purchase of a small independent appliance store in Kaitaia, giving access to a large Australasian wide buying system, allowing Folders to increase their range and competitiveness.
“It’s not easy competing with the giants. It’s high volume, low margin stuff. Our philosophy to succeed and get customers to switch allegiance from the big guys to small independents meant we needed to give better service, offer products they want, and at low prices they can get elsewhere. We can do that.”
As they were expanding, Covid hit. The lockdowns provided the perfect opportunity to upscale the technology and things went “through the roof”. People began noticing Folders and its range and prices.
“In the first month of lockdown, we only did 50 per cent of expected sales,” says Ian. “In the second month, when our technology started to kick in, we were ahead of budget, and it’s gone on from there. Like coffee machines, for example. We started out with one or two coffee machines and might have traditionally built that up to six. By the end of our first 12 months, we had 56 different coffee machines in store and on site - all selling well.”
The company works hard to provide customers great service with good communication and speedy delivery. When transport problems recently hit New Zealand, they reacted quickly by opening a collection centre in Auckland last December – a click and collect system that Ian says is going “gangbusters”.
But why would customers come to Folders in the first place? Walker says that, apart from price, word is getting around that it is 100 per cent New Zealand family-owned and has a customer service ethic reminiscent of yesteryear New Zealand.
Anne says: “In a small town, if you upset someone everyone knows by lunchtime. With a small population, customers are not easily replaced. We have attempted to implement the same local retail philosophy nationwide. We are still not perfect, but we are constantly striving to do better”.
If something goes wrong, she says, they fix it: “When people ring us with a problem or a question, they are often surprised to be talking to a real person – clearly based in New Zealand — and a real person who is knowledgeable, can make decisions, and who doesn’t need to refer everything to a superior. In the rare case a refund is required, the only delay is the speed of the banking service.
“That’s what we’ve got over the big guys. They are massive, billion-dollar companies with enormous amounts of bureaucracy. We are tiny, still making our way up the ladder. They are serious adversaries but they are also large corporations with huge overheads and, in my opinion, are losing contact with their customers.
“They sell cardboard boxes with things in them; they spend millions a year on advertising, selling price discounts that “must end Monday”. We sell products that match their prices every day but, more importantly, build relationships with our customers that result in very high customer retention rates. We treat our customers as part of our Folders family.”
Folders is now looking into opening new collection centres in the South Island and maybe the lower North Island. The commitment to leading-edge technology is such they are continually developing and trialling systems to disrupt the market and give customers a better retail experience.
But perhaps the biggest signal that Folders is making a dent in the business consciousness of the giants of the industry came when Noel Leeming (part of the Warehouse Group) opened a new store just over the road in Kaitaia.
Ian noticed a Noel Leeming executive in the Folders store, taking photographs and making notes. He engaged the man in conversation and was told that he thought Folders would “still do okay” as they had enough lines Noel Leeming didn’t stock to survive.
“I found that a little, well, arrogant,” says Ian. “But he was correct in one way, we have survived but not how he thought. Having a Noel Leeming in town gave us greater credibility. Ironically, we started this retail journey because large box retailers were forcing the closure of local retail and destroying the vibrancy of our town.
“This time it reinforced customers’ understanding that their local retailer was more than the match of the big guys. The Folders local business and market share has soared. With technology and a can-do attitude’ the little guy and rural communities can now fight back.”
For more information: go to Folders website.