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Ambiente: A different retail world

In 2015, 504 million European Union citizens spent €111 billion on the kinds of goods which are exhibited at the Ambiente trade fair in Germany, according to Ambiente organiser Messe Frankfurt’s ‘Consumer expenditure in Europe’ report. The list of goods this spend encompasses reflects the fair’s diversity: glass; porcelain; ceramics and household goods; small electrical appliances; small furniture; garden furnishings and decoration; leather goods and accessories; and jewellery.

By comparison, actual sales for New Zealand’s entire retail sector were $22.8 billion for the fourth quarter of 2016, according to Retail NZ’s latest ‘Retail Radar’ report. The most-similar category measured, that of ‘Furniture, textiles, floor coverings and houseware’, was worth $610 million – the equivalent of €395 million or 0.35 percent of the EU citizens’ consumer-goods spend.

The super-sized infrastructure of suppliers and retailers which feeds this EU consumer-goods market requires a suitably mammoth trade fair to make connections. Ambiente ran from February 10 to 14th in 2017, attracting more than 142,000 visitors from 154 countries. The fair itself spans 308,000 square metres across 27 exhibition halls.

“Ambiente is the international summit meeting of the consumer-goods industry”, says Detlef Braun, member of the executive board of Messe Frankfurt.  “Also particularly impressive is the increase of almost four percent in the number of visitors, which was split equally between German and international visitors. At Ambiente, representatives of the trade from all over the world expand their networks of contacts and place orders.”

This year, two of the 4,454 exhibitors were from New Zealand – Wishbone Design Studio and Sistema Plastics.

Wishbone Design Studio chief executive Jenny McIver and design director Richard Latham.

Wishbone Design Studio: The business that trade fairs built

Wishbone Design Studio is a trade fair veteran. It’s exhibited at the Spielwarenmesse toy fair in Nuremberg nine times; appeared at Kind + Jugend and Eurobike, but this year, it came to the Ambiente homewares fair for the first time.

The first Wishbone balance bike was created 10 years ago, when design director Richard Latham was a stay-at-home dad in New York and chief executive Jenny McIver was working as a diplomat. When Latham found it hard to re-enter the job market upon the couple’s return to New Zealand, the pair began to think commercially about the bikes, and made 100 units by hand to sell locally.

McIver can pinpoint the real beginning of Wishbone as a business: it was when she and Latham took it to their first German fair during February 2008.

At that show, McIver recalls, she stayed at a homestay for NZ$30 per night; rented the smallest booth available; and took along a single unit of Wishbone’s only SKU.

“That one unit of that one SKU was, in fact, our only unit.”

This was due to an issue with the Chinese factory, which had produced an unsatisfactory prototype. Latham temporarily addressed the issue by purchasing some raw materials and making an acceptable display unit in the couple’s garage. They had yet to sort out the issues with Wishbone’s Chinese manufacturer, but McIver was confident it would all work out.

“I told the distributors we can deliver in May,” she says.

Her bravery paid off. The lone unit impressed fair-goers, and McIver collected enough orders to fill four 20-foot containers. Each container fits around 600 Wishbone balance bikes.

“We’d never made the product at all, in a mass sense, at that point.”

Despite their inexperience, McIver and Latham found a way to follow through on the orders, and a thriving global business was born. 

Less than 10 percent of the company’s business is from New Zealand. Latham says more than 50 percent of Wishbone’s total turnover is now generated from sales made in Europe, which are driven by the trade shows. Its most successful Antipodean show is Life Instyle in Melbourne, but Latham says the German trade shows are beneficial in that they’re “truly international”.

These international shows have the potential to generate unexpected business connections, Latham says. By way of example, he shares that last year, Wishbone’s biggest sale was 10,000 ‘Flip’ units for a South Korean book club.

“These shows reveal markets to us that we would never have dreamed of,” McIver says.

Further unexpected sales opportunities from international trade fairs have included Whole Foods in the US and Lufthansa’s WorldShop catalogue, which offered a special-edition balance bike decorated with koru patterns.

“It just went off in Germany, people loved it,” McIver says.

However, this success doesn’t mean trade shows necessarily deliver a reliable return on investment, cautions McIver. Asked how many orders she would expect to receive after attending an average German trade show, she says, zero.

“[A successful show] relates to sales, but there’s other stuff going on that has nothing to do with sales.”

The non-financial benefits for Wishbone have included learning from other booth operators about local business conditions – shipping expectations, warehousing recommendations, set-up structures and more. McIver and Latham have developed their business a lot based on intelligence from other operators, and McIver says word of mouth can’t be beaten for finding out what’s on the market, which other brands are important and what new market entrants should know.

McIver makes a point of always befriending competitors: “We’ve always viewed that there is enough space in any sector for all the companies that want to be in it, and we can help each other grow the sector.”

Brand recognition is also an important benefit of trade shows, and can turn into orders later on. Generating orders out of leads can take anywhere from three months to three years, McIver says.

“I was once told you have to do a show three times to get value from it, and it’s true.”

At that first fair in 2008, McIver says, she was unable to follow up on a number of smaller sales leads because Wishbone would have needed to ship their goods out of a base in Europe. The company didn’t have those connections at first, but by its second year, McIver and Latham had established a relationship with a third-party logistics company in Holland.

“We knew the orders would come.”

Premium retail boutiques around the world are Wishbone’s bread and butter, says McIver. She believes the best retailers are small but ambitious, noting that it takes serious commitment to come to an international trade fair.

“We do good business through small boutiques because they’re out there finding the great stuff.”

Besides New Zealand, Wishbone now has third-party logistics partners in Australia; the United States; Canada and Holland, and its manufacturing base is in China.

McIver and Latham have structured Wishbone’s fulfilment capabilities to be flexible. It supplies orders at distributor level; to retail outlets at anywhere from four units upwards; and direct to consumer sales through its website.

Latham says their ecommerce website allows Wishbone to present its full range of products to consumers, as well as letting it benchmark price points and offer spare parts and accessories, which aren’t economically viable for distributors to supply.

“We’re not there to take sales away from retailers,” he says.

Wishbone was honoured in the German Design Awards at Ambiente this year for its ‘Recycled Edition’ balance bike. Unlike the standard wooden Wishbone bikes, the recycled line is made from 100 percent recycled plastic made from post-consumer residential carpet.

Sustainability is an important part of Wishbone’s identity.

As well as the recycled edition bikes, Wishbone’s limited-edition series covers structurally sound yet visually flawed plywood frames with a variety of child-friendly prints. These always have deeper educational meaning – past series have covered healthy living; technology and space; endangered species, and more.

“At some level, we’re trying to make the world a better place and our product is out there, filling a void,” says Latham.

Latham says the bikes are intended to never end up in landfill. They’re intended to encourage a circular-economy-style “anticonsumption philosophy” which is summed up across three action points:

  1. The balance bike is able to be adjusted so that it grows with the child.
  2. Each bike is designed to replace three other toys.
  3. Every part of the bikes is replaceable, so they can be refurbished for each child.

“Buy it for life,” says McIver.

McIver says Wishbone was lucky enough to be in the right place, with the right product, at the right time for their first German trade show. Buyers were aware of balance bikes as a growing trend, they wanted in, “and then we arrived with an added-value balance bike.”

Sistema: Big, bold and ‘gram-friendly

Experienced Ambiente exhibitor Sistema chose to add a rainbow-coloured ‘power wall’ of ‘Hydrate’ drink bottles to draw passers-by into its booth at the show this year.

“We thought the black would make the colour jump off the shelf and show the glass-like qualities of the Tritan plastic,” says Sistema creative director Cameron Lindsay.

Five members of Lindsay’s 12-strong design team worked on the wall for months as part of Sistema’s overall booth design. They mocked it up in New Zealand, decided how high it should be, then sent the designs to Germany to be fabricated locally before installing it in Sistema’s booth at Ambiente. Lindsay’s well aware the wall photographs well – it’s even angled out slightly so it faces foot traffic head on.

The Hydrate range shares its star billing at Sistema’s booth with more than 272 innovative SKUs, including a microwave bacon cooker. The New Zealand-based plastics manufacturer has traditionally used its 108-square-metre stand to launch new products each year.

It also holds meetings on-site with international retailers and distributors – Sistema has 40 distributors operating in around 70 countries, and for most of the world, Germany is a much more convenient destination than New Zealand.

Sistema general manager – international sales Scott Hamilton says 2017’s batch of new products represents “probably the most innovation we’ve brought to the show.”

He credits the advances to a continued focus on consumer-led innovation.

Hamilton says retailers around the world are typically hesitant to commit: “They’ll look at a company for two or three years.”

However, the Sistema brand is winning them over around the world, gaining greater acceptance in Europe, North America and Africa.

Hamilton is proud of how forward-thinking Sistema’s design team is. He says the pipeline of innovation with regards to product design is years deep, giving the company a strategic advantage over competitors.

“Cameron’s working on things now that you won’t see until 2020.”

Part of Lindsay’s mission at Ambiente is to tour the other plastic household goods exhibitors and compare Sistema’s product to theirs. Asked how he felt about that comparison in 2017, Lindsay confirmed he was “absolutely” happy with what he saw. He considers Sistema to be best in class for its category.

“We started with food storage and it’s just category after category, they took over.”

Lindsay sees Sistema’s future as having products “in every part of the home”.

He’s installed a subtle design reference into Sistema’s booth this year, adding coloured blades vertically across the display shelves. Each colour represents a new product range, and the blades themselves echo the shape of Sistema’s clips.

“We’re just trying to echo the product values,” Lindsay says.

Regarding Sistema’s $660 million sale in December 2016 to US company Newell Brands, Hamilton says it’s “business as usual”. The new ownership takes over in April, after which Hamilton expects little change: “They don’t want to interrupt what’s already been coming out of this business, they want to continue it.”

Newell Brands has agreed to continue manufacturing Sistema products in New Zealand for the next 20 years.

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