No mid-life crisis for 40-something co-op

By Steve Bohling March 03, 2014 Hard Talking - Industry Interviews

Some say life starts at 40 while for others it’s the jump over the hill. What is the outlook of Mitre 10’s new CEO, Neil Cowie, as the cooperative approaches its fifth decade? Steve Bohling reports.

To view a PDF of the complete feature as it appeared in NZ Hardware Journal magazine, click the download this story button at the bottom of this page.

By way of background, Neil Cowie joined Pumpkin Patch as COO in 2008 and left as CEO late last year to join Mitre 10. His earlier CV includes almost a decade at The Warehouse Group (1995-2004), including time as General Manager Retail Operations, followed by a spell at Big W, the Woolworths-owned Australian retailer.

He is an experienced retailer with a track record in both large and small scale format, locally and across the ditch. His earlier years were also spent in retail: “I have been in retail all my life. I started my retail career on the shop floor in South Africa selling cameras and watches in a discount department store”, says Cowie.

From there he worked his way into retail management before moving to New Zealand in 1993 with his Kiwi wife, Joanna. Then came the best part of a decade at The Warehouse Group as GM Operations.

“It was a fantastic time. It was a relatively young business but growing. We were opening big box stores around the country, which allowed me to learn about New Zealand as a retailer and really understand the Kiwi way – for me there is no better way to get to grips with the local industry than to travel to towns that some New Zealanders never get the opportunity to visit.”

 

STRENGTHS AND WEAKNESSES?

A decade later, Neil Cowie’s business style remains similar. After joining Mitre 10, his first three weeks with the business included spending time in-store, including attending the openings of the new Porirua and New Lynn Mitre 10 MEGA stores.

“Retail is about walking the tiles and understanding the customer and what’s going on at the checkout. As a retailer if you don’t ‘get’ the shop floor then you don’t ‘get’ retail, simple as that.”

This is a highly hands-on, travel-intensive outlook… “That’s retailing! – if you don’t understand the shop floor, how are you ever going to be able to develop a customer focused strategy that grows your business?”

So now that he’s had a chance to visit stores and meet with the Mitre 10 Membership what is Neil Cowie’s view on Mitre 10’s biggest strengths and weaknesses?

“I think our biggest strength is being a cooperative. At the end of the day our Members are the best DIY operators in their town and in many cases you’re talking second or third generation operators in those towns. They’re innovative, they’re committed to the areas they operate in and live and breathe iconic Kiwi values. No corporate is ever going to be able to achieve that.”

As for weaknesses, Cowie says the ever-changing retail landscape is of more concern: “The way customers are shopping and how they’re interacting with retailers is changing and continually evolving as the digital word increasingly becomes a part of the retail landscape. It’s more of a risk than a weakness but is definitely something we need to be aware of as it is only just starting to impact the DIY sector.”

 

COOPERATIVE VERSUS CORPORATE?

On the topic of risk, we turn to the subject of company-owned stores. In the past, Mitre 10 has been clear that their long term strategy is to not have Mitre 10 owning stores. With seven stores currently owned by Mitre 10 we wondered if this outlook had changed.

“Not at all,” he says: “These stores will be divested over the next few years – there’s a strategy in place for that to happen. We are a cooperative first and foremost.”

Neil Cowie is confident about this divestment, which he says will involve both new and familiar faces: “We know there will be a lot of interest from existing members as well as prospective members, so we are excited about that.”

Of late we’ve heard a lot about the expansion of the Mitre 10 MEGA network, but what is in store for the smaller Mitre 10 stores? “We’re continuing with our Mitre 10 store upgrade programme, transforming them from blue to orange. We’ve got a dozen more conversions planned to take place over the next 12 months as this programme is really bearing fruit.

“The stores that have converted to orange have seen the benefit in terms of sales and customer feedback, so there is certainly a good future ahead for the Mitre 10 store network”

“It is a massive shift for a store to make the switch and requires a significant investment from the member. When we move a blue store to an orange store we don’t just give it a new coat of paint, we effectively re-lay the whole store and that includes improved product range, merchandising and customer experience.

“The stores that have converted to orange have seen the benefit in terms of sales and customer feedback, so there is certainly a good future ahead for the Mitre 10 store network. As with the Mitre 10 MEGA network we’re always looking for ways to improve the experience the customer has with us and will respond to the changing retail landscape.”

Asked about future openings, Cowie is understandably reserved: “We are currently reviewing our network plan for the next tranche of stores and what those will look like will be unveiled to the market at the appropriate time.”

When asked if all future openings will be Mitre 10 MEGA stores, Neil Cowie is tight-lipped. “Could be, could be… At this stage, that is not determined. The network plan is still to be completed.”

Still, there are Mitre 10 MEGA stores to be opened: “We see that number sitting at around 41-42 stores,” he says. The current Mitre 10 MEGA tally stands at 37 and the Mitre 10 count at 44.

 

COMPETING TOOTH AND NAIL

What about the opposition? Having returned from a visit to the cooperative’s second cousins in Australia, Neil Cowie is under no illusions that competition will reduce any time soon.

“It was fantastic to look at what is happening in the Australian market – there is a formidable competitor over there that also operates in this market and we have to respect them. But we won’t be stepping back in terms of what we need to do to compete here. We are going to fight tooth and nail to make sure we maintain our dominant market position.

“While my immediate priority with Mitre 10 is to ensure business as usual, we won’t be standing still. Retailing is about evolving the model and coming up with new ideas all the time.”

So, how will Mitre 10 do this? “We’ll be looking at different ways of engaging with the customer, different channels and different ways of connecting.

“A good online strategy will engage a bricks and mortar customer vice versa a good bricks and mortar experience will engage them online, so it’s all about working around all the different options to connect with your customer. Connecting with the customer more frequently than your competitor is at the centre of everything we do.”

 

MORE PER SQUARE METRE

Another part of Mitre 10’s strategy is seeking more than just organic growth from store openings. Says Neil Cowie: “One of our key focus areas is to look at opportunities to grow the return per square metre and we are currently going through a review that will allow us to refocus on areas where we think there are opportunities for our membership.”

Getting more bucks per square metre also involves keeping the pedal to the metal when it comes to the cooperative’s more rigorous approach to retailing of the last handful of years: “MEGA has brought discipline to our ranging and our executional focus,” he says. “Now the key is to have a look at our footprint and look for those opportunities.”

Neil Cowie also says there will be work around further developing Mitre 10’s trade offer, and around new categories that he calls “the softer areas of our business”, as has recently been seen in the inclusion of wall art and carpet in some stores.

Talking about seeing rewards – and with retailer-supplier relationships very much in the news right now – from the supplier’s perspective are there more demands to be made of suppliers? “We take our role and our responsibility in our partnership with suppliers very very seriously. Without our supplier partners supporting us, we don’t have a business – it’s as simple as that. It’s a two-way relationship.”

As for the cooperative’s pending 40th birthday Neil Cowie says 40 is definitely not over the hill! “Mitre 10 is an incredible Kiwi success story and a great Kiwi brand. We’re trusted by Kiwis and that’s a big part of why we are where we are today. Mitre 10 is firmly committed to New Zealand and, while we may have matured a lot over the years, we’ve got no plans to slow down anytime soon.” 

 

Photo by Mark Tantrum Photography (http://marktantrum.com/).

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