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1 September 2015
Retail Strategy 2015
EXECUTIVE SUMMARY
The Royal Botanic Gardens Victoria (RBGV) is at the beginning of a new journey, with
its new visual identity and brand.
In this context, the Retail Strategy 2015 will identify opportunities available to the
RBGV over the next five years in terms of its role as a consumer brand and retailer.
The Strategy discusses retail, licensing, retail marketing, brand positioning, social
media and e-commerce, both direct and indirect, looks at how the RBGV brand
translates commercially, and what the drivers are that will allow RBGV to become a
respected and profitable brand through its various avenues while maintaining cultural
integrity.
RBGV’s strategic focus for the next five years (2015 to 2020) is encapsulated in the
four themes supporting our vision and mission:
1. Discovery and sharing knowledge
2. Inspiring plant learning
3. Creating special places
4. Towards a sustainable future.
Our retail offer and our brand partnerships need to provide the opportunities to support
these four themes.
This Strategy canvasses the business models available to the RBGV as a consumer
brand and how these can support the organisational focus, and considers six retail-
specific goals in determining the proposed direction, as follows:
1. Increase sales revenue by 20% in 2016-17
2. Increase market share to 5% by 2020
3. Expand into new markets nationally and internationally by 2020
4. Increase prices to ensure minimum 56-62% margins immediately
5. Increase social media for consumer brand by December 2016
6. Improve mobile and e-commerce technology by 2020.
In order to achieve these retail goals, several strategies need to be considered,
including:
(a) Product Price – margins need to ensure that costs are covered, while noting
there are exceptions where products hold significant cross-branding and
marketing opportunities.
(b) Strategic Alliances – allow RBGV to grow into avenues it has not previously
explored.
(c) E-commerce – opportunity to align with other online retail channels, for example
FANCY.COM, Instagram and Pinterest.
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(d) Research – who is the RBGV retail consumer and does this consumer vary
between the local and the international at each site.
(e) Corporate Social Responsibility (CSR) – consumers are drawn to retailers that
invest in CSR. Does RBGV want to become certified as a ‘B-corporation’?1
(f) Product Mix – reflecting a minimum 60% to 70% RBGV private/licensed product,
allowing improved margins as RBGV product is considered a premium product,
due to limited availability and brand association. Product categories to have less
breadth and more depth, with sales and merchandise reporting to determine
stock and profit performance.
(g) Brand Awareness – increase via specific marketing channels, PR, social media,
print editorials. Improve staff sales training and product knowledge.
(h) Product Planning – implementation of forward promotional planning by season at
least 12 months in advance (overview) and 6 months in advance (detailed) to
improve the integration of RBGV licenced/branded products, generic products
and other-branded products with product promotions.
(i) Reporting – review of key stakeholders’ reporting requirements to ensure
performance is measured in a regular and meaningful way, to increase the level
of transparency and accounting of the RBGV’s retail operations.
1
B-corporation certification is a third party standard requiring companies to meet social sustainability and
environmental performance standards, accountability standards, and be transparent
(https://www.bcorporation.net/).
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1. BRAND AND PRODUCT
1.1 Background
In June 2015, the Gardens introduced Royal Botanic Gardens Victoria (RBGV)
as its single unifying name incorporating Melbourne Gardens, Cranbourne
Gardens, the National Herbarium and the Australian Research Centre for Urban
Ecology (ARCUE).
RBGV’s retail business operates in two different segments: retail and licensing.
Goods are sold in wholly owned and operated retail stores, and through carefully
selected co-branding collaborations with Australian Retailers and licensing
partners who distribute to leading department and specialty stores, both nationally
and internationally.
The 2010 retail and marketing strategy concentrated on consolidating and aligning
retail with the RBGV vision, mission and values through its product offer, and with
the aim of being the best retailer within a cultural institution’s retail space.
The overall objectives of the 2010 Retail Strategy and Marketing Plan were to:
define a unique selling proposition (USP) that is consistent with the
organisation’s corporate objectives and branding
enhance visitor opportunities to learn about botanic gardens and the RBGV
encourage visitors to actively participate in gardening and sustainable living,
and
operate a high quality retail outlet that is one of the best of its kind amongst
national cultural institutions.
“The core strength of The Gardens Shop is its association with the
RBG’s USP of horticultural excellence, gardening and sustainable
living.”
These objectives are still very relevant and the RBGV’s retail offer has been
successful in implementing them using product specifically purchased/developed
for the RBGV’s retail locations. The RBGV places precedence on ethical,
environmental and Australian credentials when purchasing or developing RBGV
branded products and on ensuring that licensing partners’ manufacturing /
ingredients have certifications and reputable, transparent production processes.
Into the future, the RBGV brand and products also need to consider the
commerciality of the product. Once the market has been developed, the RBGV
brand can commence diversifying into more targeted products for specific markets.
1.2 Commercial Brand
The RBGV is now in a position to focus on the new Royal Botanic Gardens Victoria
brand, a brand that has been 169 years in the making and has a reputation for
quality and prestige on a global scale.
This global recognition, arising from international awards in both science and
horticulture has established the RBGV as one of the most recognised and highly
regarded botanic gardens in the world. RBGV is an international tourist destination
and as such holds a presence in consumer consciousness. Importantly, we must
ensure that this international awareness is reflected in the RBGV’s products and in
its retail and consumer brand.
According to Jeff Haden, Contributing Editor, Inc, licensing and branding are all
about emotion. “If a brand doesn't evoke some sort of emotion, it's not a brand. If a
brand doesn't create a reaction, it's not a brand”. The RBGV may not have a strong
physical presence on retail shelves around the world, but RBGV does have
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emotional positioning in 93 different countries represented in purchases made in
our three retail locations during 2014-15.
2. PRODUCTS/DESCRIPTION OF SERVICES
2.1 House-branded Products
The RBGV currently offers a variety of RBGV house-branded and other recognised
branded products. This offer covers clothing, fashion accessories, fragrance,
body/bath, food, homewares, giftware, gardening products, bags, napery,
tableware, artwork originals/art prints, stationery, cards, jewellery, wet weather
accessories and books, and ranges for children including toys/games, books,
apparel, hats, accessories, bags and gardening. The price range is from $0.80 (for
a souvenir postcard) to $3,600.00 (for original artwork).
The majority of products stocked in all the RBGV retail locations are branded
products, be it recognised brands or generic brands. The current product split is
75% non-RBGV branded product to 25% RBGV-branded product.
Since 2013 the RBGV has developed the following house-branded products with
prices ranging from $4.95 (for house number tiles) to $149.95 (for lights):
Cranbourne Collection – art prints, cards, calendar 2014, cushions, tea towels,
aprons, calendar 2016
Euphemia Henderson – art spots, pocket mirrors, cards, wine glass shades,
light shades, house number tiles, calendar 2016
RBGV brand – soap, gardeners range (hand balm, soap, moisturiser), glass
bauble decorations
Algae Varley Collection – pewter tea lights, candle lids, bottle stoppers, napkin
rings, trinket bowls.
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2.2 Licensed products
(a) Tableware and Giftware – RBGV has licensed this category to HAG Import
Corporation (Australia) Pty Ltd under its Maxwell & Williams brand since
2005, during which time this licence has generated $600,000. The products
are made in China, and are sold in RBGV retail stores and to wholesale
customers within Australia and internationally. The current ranges consist
mainly of mugs, plates, coasters and placemats and are based on images of
native flowers. A new range will be released in 2015 based on the flower
paintings of Euphemia Henderson. The ranges are priced from $9.95 to
$12.95. The new licence agreement negotiated in 2015 provides RBGV with
the opportunity to operate in the same market as Maxwell & Williams but at a
higher price point. This has allowed for repositioning of like products at a
premium price level (see section 7, Samantha Robinson).
(b) Stationery – The RBGV has licensed Customworks Australia Pty Ltd to
produce a range of stationery products using eight images. The majority of
these products are made in Melbourne, and a few in China. This range has
the ability to sit across a variety of retail segments due both to its retail price
points ($5.95 for a fridge magnet to $13.95 for a set of six mini-magnets) and
its product lines. Since 2006 this licence has generated $7,500. RBGV is
currently looking at new designs and working with Customworks to grow the
range.
(c) Art Prints – The RBGV licensed The Designer Boys Pty Ltd in 2014 to
produce bespoke art prints that are handmade in Sydney. They are sold to
order in RBGV retail stores, and wholesale to interior decorators, and design
and architecture customers. They are priced from $490 to $1,500. The
current range is based on the dried algae specimens donated to RBGV by
the Varley family, with revenue estimated for 2015-16 at $8,000. To date, the
Designer Boys have selected six new collections based on RBGV intellectual
property from both the Library and Herbarium collections. Annual RBGV
revenue from this licence is estimated to increase to between $36,000 and
$48,000.
(d) Fashion accessories – In 2015 the RBGV has collaborated on a co-branded
retail collection with Henry Bucks Pty Ltd, with the products being made in
Italy. Henry Bucks has produced a range of men’s silk ties, bow ties, pocket
squares and a women’s scarf, which is retailed exclusively through the RBGV
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and Henry Bucks stores and catalogue. The products are priced from $55
(pocket squares) to $269 (women’s scarf).
(e) Bedlinen – The RBGV licensed this category to Lazybones and Homebodies
Pty Limited in 2013. The products were printed in China and made in
Indonesia. The range of quilts, pillow cases, wallpaper, sleepwear and
cushions sold in RBGV retail stores and to wholesale customers within
Australia. This licence generated $4,200. Unfortunately, due to the time
limitations of this small business, Lazybones will not be producing another
range with RBGV. However, having achieved success with the Lazybones
range, RBGV now has the opportunity to approach other related
manufacturers.
(f) Ceramics – The RBGV licensed Samantha Robinson in 2015 to produce a
range of dinnerware, vases, illuminators and limited edition babushka dolls.
This premium ceramic range is made in Australia, and is priced from $35 (tea
cups) to $600 (bowls).
3. RBGV RETAIL CULTURE
The organisation culture of RBGV retail is more customer service focused than
sales focussed. While there is a high level of respect for the organisation amongst
retail staff, they are more gate keepers than sales people. This is evident when
entering the retail stores in the way a customer is greeted and treated.
However, greater emphasis is needed on pleasing the customer and finding the
right product(s) for him/her. Each staff member needs to be trained in the brand
and in how to properly convey the correct image. Recent mystery shoppers have
identified a need for staff sales training and for staff to be more active in
approaching customers.
4. MARKET POSITION
The RBGV is a leader in the horticulture, scientific and cultural institution market.
RBGV retail is widely respected and referenced among cultural institution retail
outlets, but outside the cultural institutions it does not have strong positioning.
Consumers want quality, transparency, and values, which mass-market retail
brands are not providing. As a consequence, the RBGV is perfectly positioned to
create a brand that is in line with what consumers are looking for.
Currently, there is strong differentiation between the market positions of each
RBGV retail location, and no recognition to speak of in national magazines or
newspapers.
While the Cranbourne shop does have a local following, notwithstanding the
challenges attached to being located away from the Cranbourne shopping strips,
Melbourne is not known as a destination for locals in preference to other retailers
in the same market.
If RBGV retail is to prosper, its market position must be improved to become a
destination shopping location for local consumers.
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5. INTERNAL ENVIRONMENTAL SCAN
5.1 SWOT Analysis
STRENGTHS
Cultural institution, free entry, globally
recognised
Not for profit
High quality goods/suppliers
% Australian made
Segmented brand
Transparency
Heritage/Royal status
WEAKNESSES
Not as well-known nationally and
globally as a consumer brand or
retailer
Retail locations away from shopping
centres or strip shopping areas
Not enough product differentiation to
better known local retailers
Considered a tourist shop
Employee reluctance to proactively
engage with customers
OPPORTUNITIES
Become more well known locally and
globally
Gain market share
Position brand as premium
Further develop licensed products
Further develop house-branded
products
Has the prerequisites for B-
corporation2
status
THREATS
Unstable global retail markets
Licensees who cancel or stagnate
RBGV brand
Brand linked to older generation
Culture of institutional thinking
Slowness to react to opportunity
5.2 Discussion
(a) Strengths
Cultural institution – the Royal Botanic Gardens Victoria (in Melbourne)
has been a free entry public cultural institution for 169 years. In 2014-15
RBGV had over 2 million visitors from over 93 different countries.
Not for Profit – consumers are more informed and empowered than ever
before, feeling a greater sense of personal impact through their
purchasing decisions, and also through their ability to make sacrifices in
their own lives to amplify social and environmental change. As a not for
profit, RBGV can tap into this growing social and environmental
consciousness to help consumers make positive choices when
purchasing like products.
“Emotional benefits provide customers with a positive feeling
when they purchase or use a particular brand. They add richness
and depth to the experience of owning and using the brand.”3
High-quality goods and suppliers – RBGV is known for producing high
quality goods, which is also reflected in the suppliers RBGV works with.
2
B-corporations are in 41 Countries, 121 Industries, and have 1 Unifying Goal. B-corporations are a new
type of company that uses the power of business to solve social and environmental problems.
3
Aaker, D.A. (1996). Building Strong Brands. New York: Free Press.
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The licensing arrangements with Henry Bucks, Samantha Robinson,
Lazybones and Designer Boys are examples of this as these brands have
excellent reputations and enhance the overall quality of RBGV’s retail
offer.
% Australian made – the RBGV product offer always has a reasonable
number of Australian-made products. It is well known that for Asian
consumers the preference is for product made in the country visited. It
would be of greater benefit for RBGV to also, where possible, produce in
Melbourne and to ensure such product branding states that it is produced
in Melbourne.
Segmented brand – RBGV offers the opportunity to create a variety of
product lines allowing the brand to reach a larger audience. In the main,
RBGV products are accessible to the general population, with affordable
lines that are still considered to be of high quality, while collaborations
such as Henry Bucks sit at a higher price point. This allows RBGV not
only to reach trend-influencing consumers, that is those who can afford
the Henry Bucks collection, but also to enable those not in that price
range to feel they are part of the RBGV brand. Reaching a larger
audience via different avenues enables RBGV retail to achieve greater
recognition and popularity.
Transparency – society is entering a communications era in which
consumers more than ever before develop a vested interest in what a
brand stands for and demand greater access to brand information.
Transparency seeks to involve stakeholders in the processes and
information of a brand to make them feel involved as part of the brand.
For marketers, this means that transparency is crucial for engagement
and ‘brand love’, in essence it is the new business model. Patagonia, the
outdoor apparel brand, exemplifies this model by laying bare the
environmental and social footprint of its product line and marketing supply
chain, rather than producing slick fashion ads to communicate with its
customers.
The RBGV has 169 years of being a transparent brand. To extend this
transparency into its product offer will provide a greater platform from
which to promote its objectives. This makes good business sense.
Heritage/Royal status – technology provides the opportunity for
consumers to gain knowledge about brands and their heritage. The
Gardens’ Royal status strengthens the opportunity for the RBGV brand
and its products by providing a sense of history, trust and respect of
authenticity.
(b) Weaknesses
National-global impact – RBGV has a global reach as a world renowned
botanic garden, but little recognition as a consumer brand,
notwithstanding it has products distributed internationally (Maxwell &
Williams). Even locally, the brand does not resonate in terms of retail
products.
To increase this presence, more private brand products, licence
opportunities, wholesale ranges and retail pop-up stores are required,
along with heavy below-the-line (BTL)4
marketing across all segments,
4
Below-the-line marketing represents activities that can be undertaken at minimal cost to the
organisation but can potentially have a high impact, for example free editorials in magazines and
newspapers. On the other hand, above-the-line (ATL) marketing represents activities that have a
specific cost allocated to various marketing channels/activities, for example paid-for advertising in a
magazine.
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but particularly in social media, to increase awareness of the brand and
products.
Retail locations – RBGV currently has three physical locations, which
are all removed from shopping centre and strip shopping locations. To
increase awareness of these retail locations there is the opportunity to
open small pop-up stores within key shopping centres and strip shopping
locations. Working together with marketing campaigns to raise brand
awareness and product availability, there is also opportunity online with
sites such as FANCY.COM, which allows retailers to run a store within its
website.
Product differentiation – RBGV currently has limited RBGV house-
branded products. Most products stocked are generic or other-branded
products and available in retail locations throughout Melbourne and
online, not only through other retailers but also direct from the brands’
own online portals, also limiting RBGV’s ability to differentiate on price.
The RBGV ‘retail product group’ determines products that RBGV is to
develop as house-branded to replace generic stock items. The first
product will be a RBGV branded soap, replacing a generic soap that sells
4,000 units per year and is available in supermarkets at a lower price.
For RBGV to become a sought after brand, the products that are stocked
in our stores and offered online need to offer a point of difference to other
retailers, something that is not available to retail competitors, thereby
eliminating any negative consumer behaviour should they see the same
product at a lower price elsewhere.
Tourist shop – RBGV retail needs to move away from the cultural
institution retail sector and work towards positioning itself as destinational
shopping. Stocking RBGV-developed products and limited edition
products, along with creating retail collaborations with quality Australian
retailers and international brands through pop-up stores, will offer RBGV
the ability to increase its brand positioning, as will increasing the use of
social media.
Proactive engagement – in order to promote products and increase
sales RBGV retail staff must overcome their reluctance to proactively
engage with customers. RBGV has recognised the need to develop
selling skills and is currently organising appropriate professional
development training for retail staff.
(c) Opportunities
Brand expansion – there are opportunities for expansion through
licensing, wholesaling, retail collaboration and opening retail pop-ups,
enabling enhanced brand positioning, increased brand awareness, brand
messaging, and product offer. For example, the recent Henry Bucks
collaboration has created opportunity for brand positioning and
awareness in the local market, and on an international scale initial
discussions have taken place in terms of a collaboration with Royal
Copenhagen.
Market Share – RBGV must look at the various ways that it can grow
market share through product development, licensing, wholesale, retail,
social media, editorials, and database management. Analysis of
competitors, and research as to who the RBGV customer is and the
opportunities for increasing the customer base across current and new
demographics is required. In the RBGV shops we must continue to
replenish sold inventory, particularly core merchandise, ensure all best
sellers of all brands are re-ordered and focus on continual training,
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including product knowledge reviews, specific training in products/brands
and sales refreshers. In the current soft market, add-on sales are
important. For example, shoe retailers try to sell shoe trees, a pen
company will try to sell additional refills – we should look at categories
that can be added to each sale.
Brand Positioning – “Smart brands utilise strategies to create and
sustain a meaningful difference that helps consumers justify spending
more. By identifying your audience, understanding your competition, and
knowing your brand's meaningful difference, you can ensure that
consumers perceive your brand as premium and worth a higher price.”5
.
RBGV is now a unified brand with its new identity. Consequently, there is
now opportunity to create brand positioning by means of social
empowerment, collaborations with aspirational designers and other retail
brands, and specially curated pop-up stores at the RBGV Lakeside store.
Introduction of new product lines, and updating of the physical and online
stores to reflect the new RBGV brand and message, will work together
with the elegant and sophisticated packaging that Cato has designed for
the RBGV. We must ensure that the brand, across retail, licensing and
wholesale, offers a strong brand presence and consistent brand message
to the consumer no matter the retail environment. RBGV is developing a
brand guideline manual to ensure that branding and packaging
requirements across all product and packaging lines are understood and
adhered to by RBGV’s current and future licensees and retail locations.
Licensing – we must develop more licensing opportunities with
companies both in Australia and overseas. To do this, we must research
product areas in which the RBGV brand is a logical fit and the best
supplier in each category that aligns with the RBGV. This has capacity
not only to increase sales and profits, but also to add variety and support
brand positioning.
House-branding – more house-branded products must be developed to
move the stock mix to 70% RBGV branded products and 30% other-
branded products from the current 25% and 75% respectively. This will
allow RBGV to increase margins, both ensuring that costs are covered
and achieving profits, while creating a premium price expectation for the
brand and opportunities for limited editions.
CSR6
and B-corporation7
– consumers today are more sensitive than
ever, wanting to know if the money they spend is going to make a
difference to society. For a retailer to succeed it is important to have a
good CSR strategy in place that a consumer can feel positive about.
RBGV might look at undertaking the B-corporation Impact Assessment, to
gain B-corporation certification. To achieve this, the organisation needs to
score over 80, and sign a term sheet that declares they will consider all
stakeholders. It is a rigorous assessment that explores a company’s
governance, transparency, and environmental and social impact. B-
corporations voluntarily hold themselves to a higher level of accountability
in these areas.
5
Nigel Hollis Chief Global Analyst Millward Brown, https://www.millwardbrown.com/Insights/Point-of-
View/How_Smart_Brands_Command_a_Premium_Price/default.aspx.
6
Corporate Social Responsibility.
7
B-corporation certification is a third party standard requiring companies to meet social sustainability and
environmental performance standards, accountability standards, and be transparent.
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(d) Threats
Unstable global markets – the debt crisis and economic turmoil that is a
constant of daily news is a threat not only to local but also to international
expansion. When the economy takes a downturn, people no longer spend
the way they used to. This has a negative impact on brand expansion.
RBGV must market products in a way that makes them desirable
aspirational but still affordable purchases. It is important to show that the
brand is a high quality purchase.
Cancelled contracts – Maxwell & Williams, Designer Boys, Henry
Bucks, Customworks and Samantha Robinson are all important as
partners with the RBGV brand. If contracts with any of these companies
were cancelled it would put RBGV into a situation where it would have to
find new partners. Due to the small local supplier pool, it may take time to
find and develop new partnerships. Should this occur, RBGV must
manage the termination to avoid tarnishing the RBGV’s image and/or
lowering the quality standard of the replacement suppliers. That said, in
the recent renewal of the Maxwell & Williams contract, RBGV made it
clear it would cancel the contract if its reasonable demands were not met.
Generation gap – currently, RBGV is popular with certain generations,
specifically retirees. This is beneficial in terms of them having expendable
cash, but the question remains as to how well the brand will do when this
market is no longer able to make purchases. Will the next generation
embrace RBGV in the same way the current one does?
Cultural Thinking – with the need to increase sales within the retail
environment and be able to promote the products and the RBGV’s
objectives, retail staff need to be more than just serving people – they
need to be proactive both with sales and in how they approach all
customers.
5.3 Summary Outcomes
In summary, based on this SWOT analysis, it is evident that the RBGV brand
has many strengths, which will form the building blocks for future growth. The
RBGV’s status as a heritage cultural institution is an asset to the brand,
allowing the brand to gain both notoriety and popularity. The current
economy is not only a weakness, but influences the feeling of uncertainty in
how businesses look for growth opportunities and consumers look for
purchases. However, this factor is affecting the entire retail industry and is
not unique to RBGV. RBGV should increase its licensing, targeting
manufacturers that have both national and international distribution channels,
develop a small wholesale product range, invest in RBGV-branded retail pop-
ups, and continue to utilise the Lakeside shop as a curating opportunity to
align the RBGV brand with aspirational local and international brands.
6. EXTERNAL ENVIRONMENTAL SCAN
6.1 Industry Analysis and Trends
The ongoing uncertainty both locally and across global economies has a direct
effect on consumer confidence and spending.
“The Consumer Goods Retail subdivision has struggled with tough retail
conditions over the past five years. Weak economic growth and volatile
consumer sentiment due to instability in financial markets resulted in a
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tense time for subdivision operators, as households scaled back
discretionary expenditure on non-essential goods.
As consumer goods retailers face intensifying competitive pressures, many
firms are expected to close underperforming stores or exit the retail sector
altogether. Retailers that remain will focus on consolidating operations in
order to reinforce brand image and grow market share.”8
“With Australia's once-in-a-century commodity boom (unsurprisingly)
reversing, there is a serious risk of a recession in 2015. Under almost any
scenario the outlook is for a lower Australian dollar, lower interest rates and
under-performing equities," says Mr Minack, the former global head of
developed market strategy for Wall Street giant Morgan Stanley.9
The performance of retail businesses is mixed. There has been a slowdown in total
retail sales growth since 2008-09, and from 2008-09 to 2013-14 average growth in
retail trade turnover was about 2.4 percent per year, compared with an average
growth rate of about 3.4 per cent per year from 2003-04 to 2008-09. Net retail
margins (profits) have remained relatively stable for the whole industry over the
past two decades.10
Performance across retail subsectors is mixed (table 2.2), for example in 2012-13
retail profit margins averaged 4.9 per cent, while the average profit margin for food
retailing was 6.3 per cent and the average profit margin for other store-based
retailing (which includes clothing and footwear, household furnishings and other
goods of a more discretionary nature) was 4.8 per cent.11
8
Consumer Goods Retail Market Research Report | ANZSIC G4200 | Jul 2015, http://
www.ibisworld.com.au /industry/default.aspx?indid=1720.
9
ABC by business reporter Stephen Letts, http://www.abc.net.au/news/2014-12-17/australia-out-of-luck-
odds-of-recession-rise/5972732
10
Productivity Commission Research Report on Relative Costs of Doing Business in Australia, Chapter 3,
September 2014.
11
http://www.pc.gov.au/inquiries/completed/retail-trade/report.
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6.2 Market Segments
RBGV serves more than one market due to its wide variety of products and pricing.
The brand allows the opportunity to serve both high-end clientele, such as the
collaboration with Henry Bucks, and the middle class through licensees such as
Maxwell & Williams. It does not appear to affect the image of the RBGV brand, as
long as the quality of the product remains high.
The Market Segments can be broken down as follows:
(a) Local Market Segment – local supporters of the RBGV who are returning
customers, including South Yarra, City of Melbourne and Cranbourne
residents.
(b) Gender Market Segment – the majority of RBGV’s retail customers are
female.
(c) Age Market Segment – the majority of RBGV’s retail customers are in the
55-65 years and over age bracket.
(d) Geographic/Tourist Market Segment – in calendar 2014, over 12,000
purchases were made at RBGV by overseas tourists, particularly visitors
from Great Britain, China and the USA, and 35,000 purchases were made by
Australian tourists.
6.3 Customers’ Purchasing Behaviours
When it comes to purchasing behaviours for the RBGV brand, there are four main
groups of customers. These customers buy based on their values, which are as
follows:
(a) Price Consideration – these consumers buy based on their income. They
spend in accordance with what they earn and attempt to purchase products
that reflect value for money, or are priced according to their value equations.
They look for details and discounts. These careful spenders will purchase
RBGV products as they feel as if they own the brand, which reflects social
status, however they wish to pay a lower price for it and can, because the
RBGV product offer and prices vary allowing accessibility to the brand.
(b) Quality Consideration – this group of customers consists of those who buy
based on the quality factor. RBGV products hold an expectation of quality
material. For this group, craftsmanship and manufacturing processes are
important factors when purchasing products. This group will purchase a
brand because they know the goods are not going to fall apart and will age
well over time.
(c) Social Consideration – this customer group is growing. Their purchases
reflect their need for social empowerment. Eighty-seven percent of global
consumer’s factor CSR into their purchase decisions12
.
(d) Purpose Consideration – this customer group is focused on the purchase
as a gift or for a specific purpose. If for a gift, or as a memento of the visit to
the Gardens, these customers look for products that will reflect quality and
hint at being expensive, but actually are not priced as such. If for a purpose,
these customers enjoy feeding their ego through the purchase of items that
reflect finding something new, something that their friends do not have.
12
Survey by Cone Communications and Echo Research.
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6.4 Competition
Formerly, the consensus has been that RBGV primarily operates in the museum
and cultural shops retail sector. However, retail competition comes from all
retailers offering similar products, whether ‘bricks and mortar’ or online stores.
RBGV retail is slightly removed from the general idea of a museum shop as not all
its stores sit within ‘the museum’, there is no entrance fee, and the merchandise is
not generally developed or purchased to reflect the specific exhibition being
marketed. An additional consideration is that not all RBGV retail locations are
easily accessible by foot or near frequented shopping or culinary destinations, for
example Cranbourne, which is a planned destination relying largely on the tourist
trade.
For this reason, the RBGV has a greater number of direct competitors ranging from
local boutiques, to Swanston Street tourist stores and cultural shops. As local
customers are the majority purchasers at RBGV retail locations, when considering
the competition we need to look at retailers who are close to the RBGV Melbourne
and Cranbourne sites, who set high standards, and who dominate the market
positioning that RBGV itself wishes to aspire to in the lifestyle sector.
For Melbourne Gardens, these competitors include Turner and Lane, Top 3 by
Design, Home and Abroad, and the NGV International Shop. For Cranbourne
Gardens, these competitors include Matchbox, Bed, Bath and Table, Bon Décor
and King of Gifts, all of which are located in either the Westfield Fountain Gate or
Cranbourne Park shopping centres.
7. TECHNOLOGY AND INNOVATION
Constantly changing technology means that unless you invest capital in developing
websites and applications to market your brand, it will disappear.
Millennials are one of the largest population segments, on a par with the Baby
Boomers population segment. These consumers (aged 18-34) are the largest
group of smartphone owners. In second-quarter 2014, over 85% of Millennials
owned devices, up from 77% in second-quarter 2013. While age plays a role in
smartphone ownership, this technology doesn’t have a gender divide.13
“By the next decade, the Millennial generation, roughly ages 18 to 34, is
expected to displace the Baby Boomers as the nation’s biggest consumer
buying group, generating a projected $1.4 trillion in spending by 2020.”14
RBGV does not have the technology needed to support its brand and compete in
this space. As a consequence, it is currently losing opportunities to engage
consumers who are moving to online and mobile shopping. If RBGV is to grow brand
awareness, brand positioning and retail sales, it must look for opportunities to further
develop its online and mobile shopping capabilities.
Innovation does not necessarily need to be product-driven, it can be the overall
experience delivered by the brand, for example making the customer feel
comfortable and welcomed, which also enhances the brand image.
In 2014, RBGV retail began to look at opportunities for its retail locations in terms
of how they could deliver a different retail experience, support licensees and
promote new collections. The intent is to gain valuable media attention through
13
http://www.nielsen.com/us/en/insights/news/2014/mobile-millennials-over-85-percent-of-generation-y-
owns-smartphones.html.
14
Accenture research
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changing the face of the Lakeside store and implementing small ‘concession’ areas
that support the concept across all RBGV store locations.
This innovation allows RBGV retail the opportunity to use the Lakeside store as a
curated space for brand and designer collaborations, showcase the licensees’
products along with releasing their RBGV collection, and create a store that can
support a specific concept or range. In the online space, RBGV e-commerce is
currently far from capable of working with the retail stores and licensees in this
way.
Commenced in 2014 with the launch of the Euphemia Henderson collection at
Lakeside store, Lakeside has now seen its first pop-up store installed by Henry
Bucks. The store supported the launch of the Henry Bucks’ brand collaboration on
a men’s accessory collection, which will also be sold through Henry Bucks retail
stores and their annual Christmas catalogue. This collaboration allows RBGV to be
part of the Henry Bucks retail experience, enhances RBGV’s image and brand, is
exposed to a possible 20,000 Christmas catalogue consumers and creates a
unique retail experience that enables the RBGV the opportunity to promote and
drive consumers to the Lakeside store location.
The next pop-up store in the Lakeside location will be Samantha Robinson in
October 2015. Ms Robinson is a highly regarded ceramic artist who will be curating
the Lakeside store and an area within the Observatory store. Along with her own
ranges and the RBGV algae range she has designed and produced, the store will
also showcase Ms Robinson’s cult babushka dolls.
A limited number of collectable babushka dolls will be produced as part of the
RBGV range.
While the concept of the pop-up store is not new, the way in which it is being used
is changing. For example STORY, in Manhattan, is disrupting its retail space as if it
is taking the point of view of a magazine, changing like a gallery and selling things
like a store. Every four to eight weeks, STORY completely reinvents itself – from
design to merchandise – with the goal of bringing to light a new theme, trend or
issue.
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This retail model should be implemented at the Lakeside Shop, whereby a product-
themed or concept-themed shop can be used to provide a point of difference
between RBGV’s Melbourne stores.
8. STRATEGIC RETAIL PLAN
8.1 Goals
1. Increase sales revenue by 20% in 2016-17
2. Increase market share to 5% by 2020
3. Expand into new markets nationally and internationally by 2020
4. Increase prices to ensure minimum 56-62% margins immediately
5. Increase social media for consumer brand by December 2016
6. Improve mobile and e-commerce technology by 2020.
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GOALS STRATEGIES ACTIONS
INCREASE SALES
REVENUE BY 20% IN
2016-17
Increase price of RBGV
product
Increase awareness
Find new channels
New Product innovation
Product planning
Retail sales and store
format
Position as premium brand
Social media/PR BTL
Licensing and collaborations
Research and development
of New Product and ranges
Forward planning of product
purchasing and development
Update store layout and
sales training
INCREASE MARKET SHARE
TO 5% BY 2020
New channels
Product differentiation
Open pop up stores
Develop wholesale ranges
Increase licensing
Improve online presence
Demonstrate unique features
and designs
EXPAND INTO NEW
MARKETS NATIONALLY AND
INTERNATIONALLY BY 2020
Product innovation
Strategic alliance
Product expansion
Use RBGV IP
Designer and retail
collaborations
New wholesale ranges
INCREASE PRICES TO
ENSURE MINIMUM 56% TO
62% MARGINS
IMMEDIATELY
Maintain brand integrity
Limited editions
Supplier requirements
Product development
Ensure quality
Increased price for limited
lines
Aim to become collectable
Supplier contracts to ensure
they meet margin
requirements
Designs to meet margin
requirements
Quality control
INCREASE SOCIAL MEDIA
FOR CONSUMER BRAND BY
DECEMBER 2016
Increase awareness
Create new social media
Promote products
Collaboration with other
social media users
RBGV retail brand to have
separate social media
account
Demonstrate unique designs
Other online/offline
IMPROVE MOBILE and E-
COMMERCE TECHNOLOGY
BY 2020
Increase awareness
Omnichannel
Product development
Use social media
promotions and
collaborations to direct traffic
to online
Redevelop current web shop
to be in line with aspirational
brands (eg Temple and
Webster), create mobile
shopping app
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8.2 GOAL 1 – Increase Sales Revenue by 20% in 2016-17
(a) Increase Price of Product
In order to increase prices of products RBGV needs to position all its house-
branded products at a premium price. To do this, it must start to design and
develop like products that are perceived to be higher-quality than either current
licensed product or other-branded product currently retailed. Good retailers who
produce house-branded lines offer good, better, best price and product
differentiations.
(b) Increase Awareness
Women are far more likely than men to talk on social media about what they
bought. Eighty-two percent of female baby boomers and 83% of female millennials
share their retail experiences on platforms such as Twitter, Facebook, Pinterest
and Instagram.15
Social media, product placement, collaborations and public relations are all actions
that support this strategy. By creating a buzz, especially online, the brand starts to
become prevalent as a retail brand rather than a tourist brand. Social media
combined with a word-of-mouth campaign will be implemented to combine RBGV
brand heritage, social responsibility and premium factor. An option is an online
contest, either through RBGV or in combination with Instagram/Pinterest, for
customers who purchase products and share their experience through images
being entered to win a VIP day at the Gardens.
Other BTL advertising is possible through media releases to newspapers and
magazines, and TV what’s on segments such as ‘The Project’.
(c) Find New Channels
Currently, the most promising opportunity for a new channel is RBGV wholesale.
This opens up both local and international channels, with RBGV now able to
position itself as a retail brand in the wholesale market, using the elegant and
sophisticated designs developed by Cato brand partners for the new visual identity.
The RBGV can now project this brand image consistently across the world.
15
http://www.businessinsider.com/sc/how-millennials-and-baby-boomers-shop-2015-4?IR=T
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(d) New Product Innovation
Research and development for new lines must be undertaken in categories that
have positive sales data and reflect opportunities for the RBGV brand to pursue. In
addition, we should explore categories that have strong sales but are not currently
represented by a RBGV-branded product.
In 2014, RBGV developed a glass bauble to replace a previous generic line that
was a ‘top 10’ selling product. The initial development was produced through a
wholesale supplier, allowing only a 50% margin. The new 2015 range was
developed directly with the manufacturer allowing a 75-80% margin compared to
the retail price of the former generic brand. This product will allow RBGV to test the
wholesale market through a single product line that has capacity to be offered
across a variety of designs, and already has strong sales within the domestic
wholesale market.
Using agents as resellers, the RBGV range can be sold off production samples so
that only the highest selling designs are produced, thereby limiting risk by not
holding stock in poor selling styles.
8.3 GOAL 2 – Increase Market Share to 5% by 2020
(a) New Channels
By expanding into different distribution channels the RBGV’s customer base will
expand and market share will steadily increase.
In addition to the previously discussed wholesale channel (see section 8.2(c)),
another channel would be to open up RBGV retail pop-up stores in researched
locations, or in areas where RBGV would like to increase awareness.
For example, a ‘Pop-up’ store at Melbourne Airport would not only allow RBGV to
position itself at the first and last port of call for international tourists, but give the
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RBGV a visual opportunity to draw attention to tours and activities operated by the
Gardens, maybe even taking bookings.
The strategic placement of pop-up stores is important, but due to their short-term
nature they will allow the RBGV to test locations at minimal risk as no long-term
lease contracts or large amounts of additional stock are required.
Henry Bucks pop-up at RBGV Lakeside store
(b) Product Differentiation
In order to gain new market share the products offered must have a point of
difference, or offer the consumer a reason to buy the brand. Demonstrating quality
and unique features is a must. By not discounting and by limiting the products, the
customer will see value in the brand, viewing it as premium rather than something
that could be found in a ‘bargain bin’.
RBGV products must be promoted through suppliers, media, staff blogs and
websites detailing the innovations that separate RBGV from other brands. The
collaboration with Henry Bucks is a point of difference in this respect, with RBGV
being the first retailer to partner with them in this way.
RBGV must outline the key features or ‘buy in’ for its products, such as social
responsibility, and limited editions/designs based on RBGV intellectual property.
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8.4 GOAL 3 – Expand Into New Markets Nationally and Internationally by
2020
(a) Product Innovation
Not only is it important for RBGV to introduce new products, it is also necessary to
create products that are innovative and/or different from those offered by its
competitors. Innovation in any industry will be copied as soon as it is implemented,
providing an imperative for conducting research and developing products
according to market needs. RBGV can do this by aligning with new licensees or by
creating opportunities to work with ‘creatives’ in a way that supports product
innovation.
(b) Product Expansion
Rather than simply creating new products, it is also necessary to expand upon
existing products. Research and development is again key to success in this
respect. Existing products and designs can become ‘old’ once they have been in
stores as there are new lines continuously being introduced.
Updating old ranges with new designs and adding new lines that RBGV has not
previously undertaken will create both growth in existing segments and open
entirely new market segments. Expansion must make sense, for example, while
RBGV could develop a children’s range, combining this area of product
development with public programs would allow for the product to have a purpose.
(c) Strategic Alliance
Aligning with other retailers, social commentators and designers has worked well
for other companies looking to develop brand position, market share or attract a
new demographic both locally and globally. For example, Target Australia has
teamed with Australian designers such as Dion Lee, but has also worked with well-
known international luxury design houses such as Missoni.
In order to build brand positioning and awareness RBGV must take opportunities to
align with other premium retail or social media brands allowing access to those
brands’ customers.
RBGV’s brand collaboration with Henry Bucks is a good example of a strategic
alliance, with both RBGV and Henry Bucks sharing heritage, positioning and
customers. This allowed the RBGV retail brand to position itself with a high quality
product and in a premium position with the 125-year old Henry Bucks brand.
This collaboration could be short-term or could continue based on sales, market-
response, customer interaction and demand.
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8.5 GOAL 4 – Increase Prices to Ensure Minimum 56% to 62% Margins
Immediately
(a) Maintain Brand Integrity
To position the RBGV brand as premium, brand integrity must be adhered to and
monitored. Prices for RBGV branded products must be raised to ensure the brand
does not assume a ‘cheap’ image or be considered as entry level for a product
category. The current Maxwell & Williams RBGV ‘natives’ mug collection is an
example of what not to do. RBGV unsuccessfully requested that Maxwell &
Williams raise the price for RBGV-branded product, which has stayed at the same
price for 10 years and does not reflect the current position of RBGV as a brand.
Creating limited edition lines and ensuring that licensees understand and work with
RBGV in terms of price and brand positioning, will ensure that the RBGV retail
brand is able to meet its margin requirements and be seen as a premium product.
(b) Limited Availability
Limiting availability, range size and producing limited editions for new collections
will allow the RBGV retail brand to create a ‘buzz’ in the consumer’s mind. Creating
opportunities for the consumer to have a collectable item or a part of a range that
can be added to at a later date, will place high demand on the products.
(c) Supplier Requirements
RBGV must review suppliers’ terms and conditions, creating new supplier
contracts that stipulate minimum margin expectations. On average, this should be
5%-10% discount off wholesale price lists. Do not stock suppliers who cannot meet
this requirement.
(d) Product Development
Products developed must be costed and retailed ensuring that the minimum
margin requirement is met, and they have a unique selling proposition, as follows:
1. Products using designs commissioned by RBGV based on RBGV intellectual
property.
2. Working with suppliers that are able to use RBGV’s raw materials, for example
felled timber.
3. Limited Editions – working with designers and artisans to develop products that
are limited in supply and collectable, for example Samantha Robinson.
4. Products using RBGV intellectual property to ensure authenticity and provide a
point of difference from other brands or retailers who have similar product lines.
8.6 GOAL 5 – Increase Social Media for Consumer Brand by December
2016
(a) Increase Awareness
Use and optimisation of social media is imperative for increasing awareness of the
RBGV retail brand. It is key to survival and growth for a retail brand.
It is important that RBGV within the next five years seriously invests in a social
media strategy encompassing the RBGV retail brand. Significant additional funding
will be required to facilitate this opportunity. This is not optional.
(b) Retail Brand-specific Media
Increasing awareness is easy when a brand is clear and authentic. For the RBGV
retail brand to achieve traction and create its own followers who look to the brand
as a leader in beautifully designed and stylish products, the RBGV brand requires
its own social media accounts, primarily on Instagram and Pinterest.
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As both these social media tools are entering into retail, having a separate
account for the RBGV retail brand would allow for more product images to be
uploaded and for retail sales to be a direct link from those images.
Keeping RBGV retail combined under the general RBGV account may lose retail
sales opportunities as most consumers would not look to these accounts for
product or style inspiration.
(c) Promote Products
Websites such as FANCY.COM are a curation of products by designers and
brands from all over the world. Users create a profile and upload products that they
like or scroll through the images already on the site. FANCY.COM allows retailers
to gain another touch point and place their products in front of millions of users
globally.
This site could allow the RBGV retail brand to have a global shopping portal, which
already has over a million active users.
8.7 GOAL 6 – Improve Mobile and E-commerce Technology by 2020
Technological changes, such as development of online shopping, have given
consumers greater scope to shop according to their preferences. Australian
consumers are avid online shoppers, making Australia one of the most attractive
cross-border e-commerce markets for retailers.16
Technological advancements have been significant drivers of change and have
expanded the retail market for Australian consumers. As noted by the National
Retail Association, this new retail world allows an independent boutique retailer to
have impact on a global scale. However to do this, technology must be embraced
and put at the forefront of the retail experience, creating merchandise specific to
your retail brand and still placing the customer as ‘number 1’, but offering a
streamlined customer experience across all channels.
16
Borderfree 2013.
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9. REPORTING
Aligned with aspiring to the six stated retail goals, retail performance reporting
needs to be improved. This will be achieved by:
undertaking a gap-analysis of Pronto reporting
implementing a reporting timeline for post seasonal analysis, and
identifying the budget spend required to more accurately determine resource
allocation,
in order to:
improve merchandising reporting by Pronto
improve stock-turn and weeks’ cover reporting
improve post-seasonal analysis reporting, and
generate an automated budgeting and ‘Open to Buy’ system.