New Zealand isn’t just a smaller version of Australia, Freedom Australia managing director Tim Schaafsma says. Speaking at Retail NZ’s shop.kiwi event, he explained the distinctions between the two markets that led to Freedom positioning its brand differently in each country.rn
Freedom’s origins go back to the 1981 in Australia, where it begun as a cooperative between several furniture stores. Freedom New Zealand joined the fray in 1995.
When Freedom was founded, Schaafsma says furniture stores simply sold furniture, with no such thing as a homeware store.
Freedom promoted its point of difference as being good design, with great prices.
However, as the marketplace became increasingly saturated, he says Freedom realised it needed a new brand position.
The crowded marketplace in Australia
The same brands in the New Zealand market
“Freedom had lost its way. It had been an inspirational brand that had relied on the fact it was the only one doing what it was doing and all of these competitors, many of who didn’t exist before, had come along and taken a share of Freedom’s business,” he says.
The company began looking at ways it could differentiate itself in the cluttered marketplace.
It started by at identifying customers by their attitudes, rather than by geography, demography, income and gender.
“This is one of the most powerful things we did with our customer base,” Schaafsma said.
“It was critical that we understood what life stage the customer was at when they were buying from Freedom.”
What they found was in Australia, a lot of their customers were incredibly proud of their homes and didn’t need Freedom to inspire them, as they were in control of the way it looked.
On the other end of the spectrum, there were a large number of customers who didn’t have a clue what to do and needed a safe shop environment to be inspired in.
With its New Zealand brand positioning, Freedom had found it was only appealing to a tiny slice of the market.
It found that only seven percent of Kiwi households at the time of research (2010) had an income of $100,000 or more.
Schaasfma says this discovery showed the earning potential of Kiwi household versus an Australian household was remarkably different.
“We were doing a great job of targeting seven percent of New Zealand and kind of being irrelevant to the 93 percent that felt it was too expensive,” Schaafsma said.
It was decided two different approaches would be taken for the two different customer bases.
In New Zealand they wanted to get more customers to spend with them, he said, while in Australia they wanted their customers spending more.
In 2011, Freedom New Zealand moved into an everyday low price model and kicked off its new market positioning with a ‘Price Drop’ event.
It dropped its most popular sofa model price in New Zealand from $1499 to $799, the same price as it was in Australia.
Freedom was often being questioned about the difference in prices between the two countries thanks to the rise of online shopping, Schaafsma said, so this was a way to introduce its new pricing model.
He says the new market positioning means that Freedom New Zealand isn’t as sales crazy as other furniture retailers in the market, as it doesn’t go on sale in January or June.
Instead, it focuses on ‘everyday low prices’ so there’s not a need for constant discounting.
“What I’m a firm believer in is the customer at the end of the day sniffs out a rat, and its something retailers need to be very clear about when they approach a discount or sales-led model,” he said.
“What we’ve found since is a high-growth model on the back of customers truly believing your prices are the correct prices. Half of the retailers in our segment are saying, ‘50 percent off prices’ and we’re saying, ‘these are the best prices.’”
In Australia, he says Freedom’s marketing is focused on “promotion with integrity”.
It has four sale dates a year, and in between that, it focuses on what makes it unique.
“Australia want their homes to look beautiful and we’re the retailer that can achieve that. We don’t sell rows of products, or even rooms of products, we sell a whole home of products. ‘Love coming home.’ That’s the message we’re focused on.”
He said the love coming home ad, which is now about six months old, had been successful.
“It’s been one of the most well received and best ways to drive traffic to our stores in Australia without a single message about a call to action,” Schaasfma says.
He also touched on how stores are being refitted to appeal to changing customers.
Its flagship store in Sydney led the charge, with tiled, timber and carpet floors being taken away and replaced with a polished concrete floor.
Fixtures were changed to be on wheels so displays can be extended or moved with ease, while merchandising has gone in a completely different direction from what it once was.
Every store they touch, there’s at least a 25 percent increase in sales, he says.
There are plans to upgrade every single store in the next 18 months.
With Freedom’s online store, it also plans on launching an omnichannel offering very soon that will offer click and collect options, as well as converting quotes received instore online.