Kat Gee is the founder of New Zealand fashion jewellery company Kagi. She shares a lesson about the importance of knowing your market with The Register.
After running Kagi for 10 years, Kat Gee says she’s had her fair share of mistakes, but one stand-out came on the back of initial success. After launching a kiosk in Auckland’s Milford Shopping Centre, the Kagi team decided to open another one at New Zealand’s most-patronised mall: Sylvia Park.
“I assumed all foot traffic is created equal,” Gee says. “We based all our decisions on what we now know was a flawed logic – Sylvia Park has four times the visitors as Milford mall so you would expect at least double the sales as any given time, wouldn’t you?”
Gee’s team ran all their cost modeling based on this assumption, and ended up over-investing on the kiosk as a result.
“From the world-class designer fit-outs that would make Gucci proud, to eye-wateringly expensive rents and over-staffing, we felt confident we were onto a winner and pressed the green button.”
What Gee soon realised was that all those feet walking past Kagi’s kiosk didn’t necessarily belong to Kagi customers. The shoppers at Sylvia Park were more bargain-oriented than those in Milford and viewed the brand as “too expensive and high-brow”.
The majority of Kagi’s customers just didn’t shop at Sylvia Park, and those that did felt trapped and preyed-upon by the new donut-style layout Kagi experimented with there. This was compounded by the poor location Kagi had secured.
“We had a massive Christmas tree blocking our site line in the busiest sales period of the year, not to mention the cardboard-fronted paint ball merchant beside us and the cheap perfume pushers around the corner,” Gee says.
The kiosk’s position in a thoroughfare also did not suit Kagi. Customers walking past were on a mission, and in order to get their attention, staff needed to either accost them or put out a large specials table with bold ‘sale’ signage. Neither of these actions was on-brand for Kagi.
“The regular Kagi styling experience that customers have come to love and enjoy became compromised and was replaced with a quick-sale focus,” Gee says. “Our Kagi stylists had to operate more as promo girls, handing out catalogues and doing everything in their power to get people to stop powering past us.”
One Sylvia Park staff member also seemed to take pleasure in issuing Kagi with infringement notices for breaching the mall’s display restrictions, Gee says. Whenever the offending items – a hand mirror and display card – were confiscated, Kagi would simply replace them and carry on trading. The kiosk wasn’t getting enough sales to justify its existence, but the ongoing cat-and-mouse game at least kept Gee entertained.
“I used to look forward to my weekly incriminating emails, complete with photo evidence. This woman appeared to have a lot of spare time and took her job very seriously.”
In the end, Gee says, the Sylvia Park kiosk was able to hit some acceptable sales figures, but that victory was achieved in a way that “just wasn’t Kagi.”
“To succeed in the position we were in and to appeal to the foot traffic walking past, we may as well have been ‘Kat Gee’s beads and baubles, where everyone gets a bargain!’”
The team felt it was losing too much of what made the brand special, and in the end, Gee decided to pull the pin on the Sylvia Park kiosk and refocus on continuing to service existing channels. The gorgeous Gucci-style kiosk now graces the floor of other retail partner stores, and Gee says she will now think twice before jumping the gun on any further retail commitments.
This story originally appeared in NZ Retail magazine issue 745 August/September 2016