PODCAST EP 22
Simon chats with Mel Kettle, Author of The Social Association.Listen Now
Simon Dell: Welcome to the show today, Anna Kerwick from Merlo. Welcome.
Anna Kerwick: Thank you so much for having me. It’s great to be here.
Simon Dell: Now, for those people that are perhaps not Australian, I want you just to give us the little bit of information about who Merlo is and what they do.
Anna Kerwick: Merlo is one of Australia’s and quite definitely Queensland’s largest independently-owned coffee roasters. We started out in 1992, so 26 years ago next week, actually. Dean Merlo started the business and effectively we’re coffee roasters. We buy beans from all over the world, we roast them, we have cupping teams and expert roasters who source and create the best blends that you can possibly purchase. We run 16, soon to be 17 retail outlets ourselves as Merlo-owned stores.
But the biggest part of our business is actually the wholesale division. So, we supply wholesale beans to 1,500 cafes around Australia. So, we’re roasting 20 tons of coffee every week. We have concentration in South East Queensland, but we have customers in Adelaide, Melbourne, Northern, New South Wales, Sydney, and we also have an online store that has all of our products available. So, we’re pretty much anywhere in the world, to be totally honest. We’ve got some pretty diehard coffee fans who know their blends and what they like, and so they’ll purchase online, especially those who are originally from Australia, and get the taste for it, and then decide to move overseas for work but still want to get great coffee.
Simon Dell: Fantastic. Now, I’m not going to go too much into the Dean Merlo story because there’s quite a big story about him in terms of the business and all those kind of things because he’s not on the show, you’re on the show. And you’ve got a very interesting background yourself. But I also just want to touch on, because I have had experience working with a couple of competitor brands in my past. I just want people to understand how competitive and cutthroat the coffee industry is in Australia.
Anna Kerwick: Oh, it’s incredible. I mean, every single week, there is another boutique roaster popping up. There’s millions and millions of cups of coffee sold in cafes around Australia every single week. It’s huge and it’s got its own market, it’s like a stock exchange. There’s people constantly trading online for beans, and watching the bean prices, and how the dollar and the exchange rate affects that. And there’s so much that goes into what you buy every morning on your way to work. We have bean brokers who contact us, and our head of operations, Simon, who is also a qualified Q grader, that’s actually in its own right a very specialized role. There’s less than 70 in Australia who’ve actually got that qualification.
He works closely with the suppliers. He actually goes to origin, and goes to the farms themselves sometimes, and visits the growers in Colombia or all around the place. He’ll work with our CEO, James, to source the best beans and then we’ve got a cupping team who are constantly tasting, and tweaking, and they work obviously — the roasters are always making little adjustments to come up with the best taste.
So, we try and cater for every taste bud. It’s just incredible; there’s constant competition, and changes, and machinery, and even machinery trends. There’s beautiful machinery that comes on the market and people always want the latest and greatest, obviously. So, keeping up to date machinery and supplying that to customers is a constant, not battle, but it’s a full-time job just doing that in its own right, and being aware of trends. We’ve had everything from turmeric lattes, to coffee served in waffle cones, and some people will serve it in avocado shells.
The thing about coffee is that it’s a lifestyle. It’s part of everyone’s lives. I mean, I didn’t have my first cup of coffee I don’t think until I was in my 20s, whereas now we’ve got high school students who are in every day. So, the range of age of customers has increased. The competition in terms of loyalty has definitely increased and that’s a huge part of what we do. I mean, we worked so hard to get new customers both in our wholesale and our retail divisions, but keeping the customers is probably more important to us than anything. So, service, and delivery, and just being friendly and being nice. When people buy their coffee, they want to see a smiling face at the end of the exchange.
Simon Dell: Do you think there’s a problem with, first up, just… I was going to say what you was saying was that there’s not a lot of people outside Australia would understand Starbucks kind of invaded Australia however many years ago and it unceremoniously got booted out. Not completely booted out, but almost totally booted out.
Anna Kerwick:And yet, they’re massive in China and the Asian countries. I think in China alone this year, they will open over 600 stores.
Simon Dell: But I think that that was one of the reasons that that happened, was their inability to… Two things, I believe, was their inability to judge the local market, and the second thing was that I think the Australian taste for coffee is much more sophisticated than perhaps the North American market and I would argue the Chinese market as well.
Anna Kerwick: Well, if you talk to anybody who travels overseas, normally the first comment they’d say is, “Oh god, it was so hard to get a decent coffee.” And I think in other countries, it’s potentially about brand and the volume as opposed to the taste. Whereas here in Australia, as I say, the customers really know what they like and what they don’t like, and they have very acquired taste, and that’s potentially where the loyalty comes into play. It’s pretty much common knowledge, really, that customers will drive past five cafes to go to their preferred cafe because they like the way the barista there makes their coffee.
So, yeah. You have to have the best coffee. It has to be roasted the best way and it has to be fresh. And I think from Merlo’s perspective, that is the key, is that we roast daily. Our coffee is sent immediately after roasting so that it’s as fresh as absolutely possible, whereas Starbucks… And I can’t say for sure. I don’t know their operations and how it all works, but a lot of other coffee companies are dealing in such huge volumes, they can’t keep it fresh. It’s just physically not possible and they don’t have the distribution to do so.
That’s why we’re sort of against pods because the coffee that you find in pods, as much as Nespresso is massive, and they’ve done an amazing job in what they’ve done in selling the whole pod machine at home kind of campaign, the coffee that you get in those pods is nowhere near what you’ll get from your local barista down the road because it’s probably roasted six months ago and it’s completely different. So, I think that’s our USP, is that it’s so fresh, you can’t get much closer to the source, really.
Simon Dell: Just a slight anecdote there. My brother is one of those coffee tragics and he lives in New York. So, he struggles to find…
Anna Kerwick:Oh, he must struggle.
Simon Dell: Yeah, he did, and he actually goes… He’s been going to the same store for absolute years, in fact moved, got an office based on the fact that it was close to where the store was because he runs his own business in New York.
Anna Kerwick: And even in real estate now, I mean, that’s a crucial thing. Real estate agents are selling properties or leasing properties from the strength of the coffee shop in the building. It’s a definite, there’s no question, because it’s really important to people. Our head office is currently at Bowen Hills. We’re just about to move over to Eagle Farm to a much bigger premises, but we’re lucky that we’ve got the head office around the corner, and we sometimes joke with some of the staff that are in every day and we’re like, “We don’t know how you guys get any work done. I just spend so much time over here.”
But I think their culture is all about conversation, and networking, and group meetings, and so, they’ll have a lot of their meetings over here. And when they heard that we were moving, they were really quite concerned and were like, “But where are we going to get our coffee?” And we’re like, “Don’t worry. We’ll keep the coffee shop open and that’s fine.”
Simon Dell: I was going to say, you’re keeping the one in Bowen Hills.
Anna Kerwick: Yes. So, we actually will still operate the roasting facility out of this building. The factory at the new building is multiple times the size and will give us a lot more options. So, the packing and delivery.
Simon Dell: Just on one of those earlier points you made about the competitiveness. In an environment or in a business where there is such strong competition and such strong competition from good brands, there’s other good coffee brands out there. I don’t think there’s any other coffee manufacturer would say that there’s other people who are doing it well out there. Does there become a danger that even with a premium product and a high quality product such as you guys are producing, that it starts commoditizing the brand? And if it does or if it doesn’t, how do you maintain a price when there is such competition out there?
Anna Kerwick: That’s a good question. I think the key thing for us is packaging it as more than just a product. We’re very much about service. So, when you buy a product, you also get the staff who will do, whether it’s in store, they’ll do – whether they know your name by heart and they’ll call you by name, so it’s actually about the full picture. And we don’t discount. We prefer to say we will value add, so you will never get a special on Merlo Coffee because we really believe in the product. We don’t overprice it in the first place. We make it reasonable and it’s a quality product. So, we’ll always value add rather than discount it.
There’s a lot of competition, and sometimes, especially in the wholesale area that’s hard because there’s new coffee companies who desperately want a bigger slice of the pie of the market and they’re very competitive. And so, they will undercut or discount heavily at their own expense for the sake of getting the business on from a volume perspective. Because obviously, the more volume they have, the more equipment they can justify and finance and so forth, so it’s a sort of never ending cycle I think when you are always keeping relevant and you’re…
I think it’s answering customer’s needs. If they’ve got the option of five different suppliers, why are they going to keep coming back to us? And loyalty is key. Our whole marketing department is pretty much run around loyalty.
Simon Dell: You mentioned value add there. Can you give us some examples of how you guys would value add to a wholesale customer? Not necessarily to an end user, but to somebody who’s starting a cafe, or has got a small chain of cafes. What other things would you do in order to keep their business?
Anna Kerwick: Well, the value add for wholesale is obviously experience in the coffee industry. So, there’s a lot of new customers who will be starting a coffee shop for the first time. So, we employ the most qualified roasters and the most qualified account managers who know heaps of information about machinery, and store layout, and workflow. We offer free training. So, when you come on as a customer, you’ll always get a qualified trainer who’ll come in and sit there with your own staff and actually make coffee on your own machine in your store so that it’s not our training operations that you’re coming to visit, and our super-dooper machines. You’ll actually be making it within your own store.
So, that whole process of where you get your milk out of your fridge, and where it sits in the bench, and what side of the machine your grinder sits on. You’ll get very hands-on help in that regard in terms of how to operate your best way every day when you’re operating the cafe. They are all very personable people who literally become part of the family, actually. They know the customer’s kids’ names. They know their birthdays. They’ll be dropping in a couple of times a month.
They’re at the end of the phone all the time. They all give their personal phone numbers. So, for the customer, it’s really good for them to know that they’ve got that person there whenever they have an issue. And you know, things happen. Dealing with water, electricity, steam in terms of machinery, there’s quite often issues, and so to have that person who is literally a phone call away is always a massive value add, and it gives people a lot of reassurance that they’re not doing it on their own.
The big thing I think too is consistency. So, our coffee blends will always pretty much taste the same. They’re not going to be affected by outside factors as much. We’ve got a pretty streamlined massive professional operation, so if you order particular blend and that’s the blend your customers become accustomed to like, you can be pretty much guaranteed that you’re going to get the same taste all the time. Things like the grinder settings and so forth, we’ll change that and so that’s where our account manager will come in and adjust your grind for you.
Like on a windy day, you’ll have to adjust your grind. So, little factors like that for someone who’s coming into the business without much background knowledge is crucial to have. It’s just backing them up in that personal way, and obviously giving them the access to further training, and more information, and cuppings with us. Cupping is pretty important because you get to find out more about…
Simon Dell: Explain to people who might not know what a cupping is.
Anna Kerwick: Okay. So, a cupping is a very controlled environment. In the real professional sense, you don’t eat beforehand, you don’t affect your taste palates. So, the coffee will be there in a grinding state, it’s then… You then have the roasted state and you taste it in different forms. Like, you put the hot water in, it mixes, you break the crust, you smell it, and through the process you’ll get different things like…
I can taste cherry, or I can taste Mandarin, and it’s just getting that acquired taste of the different aspects and the tasting profile of the coffee itself, which is really important for whole sale customers because then they can establish the blend that’s best suited to their style of cafe and what their customers like. So, it also gives them a bit more of an idea of the process of what happens from the time it leaves the farm until it gets delivered to their door.
Simon Dell: If you guys as a business were to lose a customer, and I don’t think anyone’s in any illusion that even big brands lose customers and win customers, and maybe that’s a better way of asking this question. If you were to lose a customer or win a customer, what would be the basis of that, do you think? What sort of switches people?
Anna Kerwick: Sometimes, obviously businesses get sold and new owners come in. And if they’ve got a pre-established relationship with another supplier, that quite often comes into play. Machinery, different machinery requirements will sometimes affect it. Obviously, we do lose customers. We don’t lose them often and we don’t like when it happens. We do really do a lot of self-assessments afterwards in terms of contacting them and saying, “Was there anything we could’ve done differently? Is it a personal issue? Was it a price thing?”
When it comes to price, what I was saying before, anyone can discount or drop the bottom out of their product pricing. We really don’t like to do that because we believe in our product and what it’s worth. But you know, we’ll always try and be competitive, and I think it’s about making sure that we’re offering all of the other things like service, and delivery, and consistency. We do everything from sugars, and milks, and accessories, and all of that. So, potentially sometimes, it comes down to even a branding conflict with other people in that we might already have a customer very close to them and they feel like it’s too close. That actually is probably the main reason why that happens.
We actually have quite a bit of saturation in South East Queensland, so it’s a bit of a juggle, really, actually making sure that we’re not compromising existing customers when new customers would come on. And sometimes, customers do just go, “I feel like it’s time for a change. I want to see what else is out there.” Quite often, they’ll come back and that’s what we hope, but you can’t guarantee that’s going to happen all the time and it’s just a fact of life. Obviously, whenever we lose a customer, we do like to make sure we did everything possible to keep them on.
Simon Dell: The branding side of things, you just mentioned there as well, I just wanted to touch on. And I think more than any brand or more than any category, the coffee category has created this huge amount of add-ons that branded things. So, I mean, I say the big category is probably fairly similar as well but category… With the coffee, it could be anything from little sugars, milks, up to cups, to umbrellas and wind breakers and all those kind of things. Do you guys still produce a lot of that?
Anna Kerwick: Yes. I mean, not physically locally ourselves.
Simon Dell: What’s your reason for giving those kind of things out?
Anna Kerwick: It’s the full package. As I’m saying before, customers are busy. They’ve got families. They’re working really long hours. The one stop shop is quite often really handy. It means that there’s not having to chase around eight different suppliers that can get their sugars, their syrups, their ceramics, their tea. We sell tea. They can get everything from us, and it means that then we’re responsible for helping them with all aspects of that side of the business for them.
But the branding is… It’s funny, actually. I say to people a lot, for as many Merlo cafes they see with Merlo signage, there’s just as many that don’t have our brand. Sometimes, that happens because they choose to do their own custom branding. So, we will actually offer our customers, they’ve got the option to actually have a craft bag with their own logo on it, and we do that in our own factory so it actually comes across as their brand as such. And we’ve got lots of customers who do that because it’s their point of differentiation and it’s establishing their own brand as well.
Simon Dell: Do you ever go into some customers, and they’ve produced their own point of sale, and they’ve used your logo, and you sit there and go, “Oh my god.” And you have to have that really awkward conversation.
Anna Kerwick:The version of our logo?
Simon Dell: Yeah. They maybe changed the color or something, or stretched it, or all the great things that people do to fuck up logos.
Anna Kerwick: Yeah. It’s funny you should say that because if you ask my CEO, he would call me the brand Nazi and it’s a bit of a pet peeve for me because your brand is everything, and keeping it on point, and keeping it to brand, and positioning it properly is really crucial. So, a huge part of what our team does is working with customers and their account managers to manage that branding process. They don’t get that just writing out to a sign writer and developing their own signs with our logo on it. It doesn’t actually always work.
And it’s hard to explain sometimes, but we’re actually doing it for their good just as much as ours. By keeping the consistency of the brand, and the quality, and the level of professionalism, it maintains that standard for everybody, not just us but for the customers that use it as well. So, we do really try and emphasize with all customers that everything to do with any production of goods with our logo on it has to be approved by us. And it happens, it slips through the cracks and it does happen that people…
Simon Dell: What’s the worst you’ve seen?
Anna Kerwick: We’ve got a very prominent color. I don’t know I can say it without implicating particular people, but we have very a strong blue color, and it’s actually quite a difficult blue to match. So, we have a set PMS color. I think people think, “Oh yeah, that looks the same.” And it doesn’t.
Simon Dell: That’s close.
Anna Kerwick: Yeah. It’s pretty blue. And so, that’s the thing. People have painted their whole entire buildings in the color, and I go, “Oh yeah, you’ll be able to see that from space because it’s so full on.” And I’ve had some pretty bad instances of dragging with a mouse to make something bigger and that’s completely distorted the logo. And look, with all due respect, I’m not saying that people in the more regional and country areas don’t know what they’re doing, but they don’t have the access to a lot of the really big end production companies and all of that kind of stuff.
So, if they’re going local, obviously, they supply to the local suppliers and they may not be aware of what we’re doing here in Brisbane and other places, and then they’ll just produce their own version. It doesn’t actually always look great. So, I do sometimes drive down streets and see something and go, “Oh my god, how did that get out? Who did that? How has that happened?” And then sometimes even in publications, I’ll find someone has gone on to a website, or a version of a page of one of our websites and copied content, and then they cut and edit it the way they think sounds right but it’s actually not right, and I just go, “I don’t even know how that message got out.”
And look, you can’t really do much once things are done, and it’s hard to go back after the fact and say to people ‘why’ without sounding like a nag. But I think by being proactive and setting the mark our own way, we’re trying. I mean, we just rebranded in the last year, so we’re still transitioning over to our new logo and branding guidelines for all customers. There’s a lot of customers who’ve been with us for 20+ years, and so their signage is quite dated. And that’s not their fault. And then again, it’s a very expensive process to go out and just replace every single person who’s got anything with Merlo on it. It’s a gradual process that we’re refreshing everything, I think, and just scaling back a little bit on the very bright in your face messaging, and branding, and colors that used to be the way everyone did it.
There’s a lot of… As I was saying before, it all comes back to competition, some really, very schmick brands out there who are spending a fortune in their branding. We’ve got to stay relevant, but we’ve got to stay more modern and fresh as well.
Simon Dell: I’ll digress slightly because I used to work years ago at Four X. We would obviously have exactly the same issues as you because there’s a very specific way of which the Four X Blade logo should be treated and et cetera. I mean, you go into every pub and they’ve done something on it, Matrix printed on a piece of A4 and it’s just like, oh god. You know, you wanted to die. There’s a famous urban myth in Four X about a regional sales rep who decided that he was going to run a Four X competition in a bottle shop, and he got a chainsaw branded up with the Four X logo on it and gave that away as a prize for anyone. You got an entry into a draw if you bought a carton of Four X. And of course, there was no terms and conditions and he at no point realized the implications of mixing a chainsaw with alcohol.
Anna Kerwick: Oh, yeah. That is dangerous. It sounded good at the start.
Simon Dell:So, they used to use that one as an example to say in the best of intentions, people need to think how brands should be treated, not necessarily all the time just with the logo, but with the associations as well. Four X used to get requests every week about fathers that were coaching under 9 football teams and say, “Can we put a Four X logo on our kids’ jersey?” And they were going, “Yeah, no, that’s probably not appropriate.” People don’t realize how sometimes brands should be treated and preserved.
Anna Kerwick: Absolutely, and it is always quite a difficult conversation to say no because… As you were saying, the dot matrix printer, we’ve had customers who’ve taken products and printed out our logo on their local color printer, and then laminated it onto something else. And telling them that their idea is not great and doesn’t look good is really difficult because you don’t want to hurt people’s feelings. I mean, they were doing their best. They obviously didn’t want anything to look bad. Potentially, it’s just not their forte. They don’t spend every waking day looking at branding and checking out what other people do. They just need to get something done.
Or in a lot of cases, we have staff who do stuff and then the owners at the business don’t really have a chance to think about the implications. I mean, obviously, our logo gets used a lot on menus in cafes. And just even the spatial placement and where it’s put next to can sometimes be a bit different. So yeah, it’s a constant… I wouldn’t say battle. It’s a constant task for us.
Simon Dell: Constant vigilance? Consistently a vigilant?
Anna Kerwick: That’s a good term, actually.
Simon Dell: I just want to ask some more technical teams about you guys as a marketing department. And to be honest with you, 41 podcasts in or 42 podcasts in I am now, and I have gone completely off topic with you, all the sequence of questions that I normally ask, what normally goes in a time from start to finish, but there’s so many questions about Merlo because of the quality and the brand that we’ve gone completely off topic.
Anna Kerwick: That’s fine. I like impromptu.
Simon Dell: I understand. I did want to understand from your perspective is: What sort of size team do you guys operate?
Anna Kerwick: It’s funny, actually.
Simon Dell: What sort of skills do you have within that team?
Anna Kerwick: Okay, so people are quite often amazed by the fact that we don’t have a massive team. At the moment, I’ve only got four in my team. We have five and we obviously do a lot of events. So, depending on events, that can change and fluctuate a bit. But in terms of hands on day-to-day staff in the office, there’s just the four of us, loyalty is a massive component of our team as I was mentioning. So, we have someone who pretty much just deals with the system that records their loyalty. When I say loyalty, that’s the transactions in store, you get a point — when you buy a coffee, you get every 11thcoffee free.
Simon Dell: What system do you use for that? Is it something you’ve custom-built or something you’ve bought off the shelf?
Anna Kerwick: No, we haven’t got a custom-built system. We have bought off the shelf from a US-based Givex program and we actually have quite a few systems. We have an accounting and products-based system, Epicor, which feeds into our website.
Simon Dell: That was one of my next questions, was about the software. So, you guys actually use Epicor. I have some experience with Epicor as well.
Anna Kerwick: Yes. Epicor is our CRM that we do all of our accounting in. We also have all our products stored in Epicor. So, all of our wholesale orders go through Epicor, all of the wholesale customers details are stored in Epicor. Look, there’s a lot of other little subsystems that go off that. We obviously then have a PoS system which operates the tools in our retail stores and that feeds back through to Givex so that the loyalty from the customer’s transactions gets fed back into that CRM.
We use Campaign Monitor for a lot of our EDMs. We have customized management of the lists and so forth. We work very closely with an IT firm who aren’t in hands but they do a lot of work for us developing our sites, and our connections, and our plugins.
Simon Dell: What are the sites built in in terms of the e-commerce?
Anna Kerwick: We’re actually at the moment working on the WordPress website for our online store. We’re in the process of going to Tenda and sourcing details and researching best system moving forward. Because with grow, you also have to plan ahead. So, it’s funny you ask that because we are literally right in the thick of assessing the next step in whether we potentially move to a Magento-based site for the e-commerce and how that links into other systems. So, that’s sort of a side project that I’m involved in at the moment, their IT department.
Simon Dell: We can talk offline about that because I’ve built a few Magento websites in the last 18 months. And to be honest with you, what I don’t know about building a Magento website, you could write on the back of a cigarette packet.
Anna Kerwick: Oh, wow. Maybe we need to talk.
Simon Dell: Well, and I’ve done them in various different industries as well, so I’m like, yeah, pros and cons. I’ve got a long list of them, Anna. Long list.
Anna Kerwick: That’s interesting. You know, from a retail perspective, I’ve dealt with Magento, I’ve dealt with Salesforce systems, I’ve dealt with automative programs like Car Doc depending on what you’d like to call it. There’s just so much and it’s constantly changing.
Simon Dell: I know. We get tasked with a lot of marketing automation at the moment and we’ve been doing things in Pardot, Salesforce, ActiveCampaign we’ve just started using. But the problem is, there is no one-size-fits-all, so you have to… With most clients, we sit there and try and assess what do they actually need, what are they going to use this for. And to be honest with you, even when you sit there and do a very, very in-depth briefing and understanding is that you get three weeks into the project and they’ll sit there and go, “Oh, can it do this as well?” And you go, “It can, but it would’ve been good if you’d said this three months ago.” But that is the nature of the beast. You see what things can do and all of a sudden other ideas occur to you.
Anna Kerwick: True. And I think for us, we’ve built our database of Friends of Melo, we call them, which is our loyalty program to over 65,000 very active members who are transacting with us on a daily basis. So, it’s really important that we don’t disrupt their transactions or their experiences, but we want to value add. And so, you know, then you look at apps, and then you look at order ahead things. There’s a lot of opportunities but it’s a timely process as you would know.
Simon Dell: Yeah. We’re going to wind up soon, but the one really thing I wanted to ask you about in your past history, because for those who don’t know, you’ve done a few jobs in the different industries.
Anna Kerwick: I’m a jack of all trades. I am literally the jack of all trades. I’ve done everything. I’m a journalist by trade. That’s what I studied at uni, and then I went into PR. And then I’ve had quite a heavy sales background in a lot of my roles. I worked for not-for-profits for a while. A lot of marketing and events. I had my own business as well. I’ve done a lot of freelance work.
Simon Dell: Last question I’m going to ask you about one of your other previous roles, was you’re owner of Bark Accessories.
Anna Kerwick: Yes, which was a really fun time in my life. I actually loved it and I could very well go back to doing something similar like that again.
Simon Dell: Explain just very quickly what you were selling there and what you were making there.
Anna Kerwick: I was getting handbags, and jewelry, and quite different and exclusive ones made overseas. I had a tailor from Java who I would meet over in Indonesia, and I’d go to the leather factories, and I’d pick beautiful leathers. A lot of it was python leather so it was quite unique and very different to what was happening here in Australia. And I think it really just… Look, I love retail. I love fashion. I had young children. I wanted flexibility. I used to, like many, many ozzies, go to ballet a lot, and would come back, and I’d get things made while I was over there.
And look, I’ve been to ballet over 30 so I know it pretty well, and I know where to go and where not to go. And I’d established some really good contacts in the years going over there. And so, what happens is I’d come back and I’d have maybe a new dress I’d have made, or a handbag, and people would say, “Oh my god, I love it. It’s so different. Can you get me one of those next time you’re over there?”
And so, it just sort of started from there. I mean, I wanted to create a business that worked in with my young kids, gave me flexibility, meant that I could legitimately travel and claim it. I just loved it. I loved everything about it. I’d pour over magazines for the latest in trends. I’d watch influencers and see what they were doing. And it was probably more of a hobby business. Like, I didn’t take a big scale. I’d do local pop-ups. I had a website I sold online and I did wholesale to a few stores.
But I also was doing it before some of the big chain stores like Adorn, and Lovisa, and that’s when I decided to get out because I could not compete with the volume and the pricing. So, I was paying more wholesale to produce a pair of earrings than they were selling retail and it wasn’t worth it because people don’t always pay for quality. So, if I was selling at a python handbag for $350+, I wasn’t at the Louis Vuitton level. Let’s just put it that way. So, I didn’t have the brand behind me to, in other, in customer’s eyes, go, “Why would I spend that money when I can go to David Jones?”
And it might not be real but it looks real, but it’s under $100. And it was just… It was fun while it lasted and I missed the corporate world. I missed being in a professional environment and then my kids got older. I did it for nearly seven years, I think. It was great while I did it and I loved it, but you just have… I think that’s the key too to making the most of it. You know what they say, make hay while the sun shines. When it’s good, you go for it. When you can see the market changing, you re-evaluate. Is it still going to be viable? What’s the cost to me personally and financially to continue to compete with these people who’ve got much bigger buying power?
Simon Dell: We’re going to have to wind this up otherwise you and me will be here all day.
Anna Kerwick:I love a chat, did you notice that?
Simon Dell: So do I as well, sadly. I’m turning into my father. My father will talk to anybody, anywhere for any length of time. It’s terrible.
Anna Kerwick: I can say exactly the same thing. My dad’s a chatter from way back.
Simon Dell: There is a couple of other questions I wanted to ask you that I normally ask at the end. One of them is… I normally ask what’s next for you personally. And as much as I’d like to know that, I kind of want to get your feeling is: What’s next for coffee? Because we’re in 2018, what do you see happening in the industry in the next 5 to 10 years?
Anna Kerwick: I don’t think demand is going to decrease. I really can’t see that happening. I think people will want the experience more in that they will want to walk to their local coffee shop or to be able to very easily order ahead, or have systems in place that it’s just so easy that you are providing these products and experiences without them even having to do much. So, from that customer experience I think you’re going to see… I wouldn’t say robots making your coffee because that’s not what I’d like to see, but I think you’ll see a lot more ordering ahead. I think you’ll see a lot more customization. Personalization is huge already. There’s a lot of competition in our industry to customize cups, and bags, and packaging for brands but also for people as individuals.
Simon Dell: Do you see voice recognition as being a potential opportunity for you guys to talk to Siri and say, “Order me a Merlo in 30 minutes’ time.”
Anna Kerwick: Yes, absolutely. Yes, we’ve thrown up the option of UberEats. It’s hard to do without compromising because you don’t want to deliver cold coffee. I think it’s staying relevant, and in a very competitive environment, the sustainability thing is massive. We actually have a very exciting campaign that I can’t really elaborate further on, but stay tuned. Later this month, we’ll be announcing something that’s pretty massive here around the sustainability theme. Because from a takeaway cup perspective, we have a lot of responsibility to contribute to a positive impact on the environment rather than a negative.
Simon Dell: Well, absolutely. The whole plastic single use item is obviously getting a lot of coverage at the moment and something that everyone should be thinking about irrespective of the business they’re in.
Anna Kerwick: Absolutely. As I said, how many millions of cups of coffee are sold? They all have to be delivered in a cup. So, that whole thing about reusable cups and borrowing a library system for ceramics and all that kind of thing has already been discussed. We’ve got things in play and in motion that will hopefully have a pretty good impact, we’re hoping so. So, stay tuned. We’ve got a lot to involve there, but packaging, people… There’s nothing nicer than getting something that looks great. So, packaging is crucial and I think already we’ve seen huge improvement and growth in the way people package products.
I’m a sucker for packaging. I love nothing more than buying something online and being completely blown away when I open the package and what’s inside. And delivering that daily, obviously not to the same scale, is pretty important. But yeah, it’s the experience. I mean, really, it’s telling the right stories and creating the connection for people so that it’s just always cool to buy from your brand. People want to be cool. When you look at things like Kmart, Kmart was a discount retail store and they’re suddenly so cool that they’ve got cult following, and closed Facebook groups, and products sold out before the first day is over of trading when they’re released.
Simon Dell: I will ask you one of the questions that I was going to skip over, but I thought, bug it, I’m just going to ask you anyway: What are some of the other brands you really like out there, outside of the coffee space, and maybe outside of the beverage space?
Anna Kerwick: I think The Iconic is an amazing brand. I think the way they’ve established themselves and their service and delivery is incredible, but their packaging is great. Their range is fantastic. They’re really great at that storytelling process. They suck you in and they tell a great story which makes you buy of them. TDE, I actually listen to the lady who established that at the Business Chicks Forum recently here in Brisbane. She’s young and she’s so smart.
Simon Dell:What was that? Sorry, TV, TD…?
Anna Kerwick: TDE, The Daily Editor, and that comes back. So, that’s leather, accessories, phone cases, and personalized bags, makeup bags, compendiums and all of that thing. And I think the personalization, so being able to customize it to the customer right in front… And you can go into Myer stores and order on the spot and they will literally monogram it in front of you. So, I think what they’ve done as a brand and their social media is brilliant. I mean, social media is so crucial to the brand of things now, like how brands are positioned. I love Kmart. I think what Kmart has done and the way they’ve revolutionized themselves is literally incredible. I mean, they were nearly going to be shut down and sort of merge with Coles, and now, as I said, they’ve just got this cult following. I mean, people are bashing the doors down to get their vacuum cleaners. It’s pretty incredible.
Simon Dell: I’m still struggling to deal with the new store layout.
Anna Kerwick: I don’t love the store layout.
Simon Dell: I just don’t get the whole checkout in the middle of the store thing.
Anna Kerwick: I think it’s funny, but then you ask the question from a marketing perspective, “Are they creating the feeling of trust?” Because I always walk out feeling like, “Don’t need to show you my bags. I have paid for this, I have paid for this.” Because you’re walking past the rest of the store to get out, but you’ve already paid right at the back of the store. It doesn’t make sense from a logistical perspective. But it’s not… I can’t say that I haven’t heard that they’ve got a downturn in sales. I think it’s re-educating customers to the traditional store layout.
Simon Dell: There must be some reason, and I don’t know what it is, but there must’ve obviously been a fair amount of thought gone into the reason they’ve decided to put the checkouts in the middle of the store.
Anna Kerwick: Yeah, I don’t know what that is.
Simon Dell: For me, I don’t understand it.
Anna Kerwick: I would tend to agree with you there. I suppose it’s a matter of getting used to it. Even my son who is 13, he said, “I don’t like this store setup.” He said, “I don’t like the way they’ve done this.” He said, “It’s so weird how you have to walk back through the store with all your bags, and no-one wants to check whether I’ve actually paid for it.”
Simon Dell: I find that really confronting when people ask me if they can check my bags, because it’s an assumption of guilt that you’ve been up to something when you’re just having a look around, you’re having a browse. That, I think, is one of the reasons that retail shoots itself in the foot sometimes in terms of that customer experience.
Anna Kerwick: True, but I think it’s the catch-22. Because remember the old days where you always had your returns and exchange desk at the front, and your register’s at the front? And so, as you walked into the store, that’s the first thing you saw. Whereas now, they’re creating it that ambiance of, “Come in.” It’s like we’ve set these shelves up. It’s almost like your living room.
Here, we’ve got the latest doorstop and we’ve got these marble… I think they’re actually trying to create the notion of, “This is your home away from home. We’ve got all of the latest and greatest things for you to buy,” so you’re not just bombarded with the transactional aspect of the traditional store layout. You’re sucked in by the products first and then you worry about it later. I don’t know. I mean, I don’t know if that’s just essentially my view on why they’ve done it.
Simon Dell: We can debate this in more detail at another time.
Anna Kerwick: Those store layout and visual merchandise is involved in the conversation, the big why.
Simon Dell: I need to find someone from Kmart that I can interview for the show. That’s going to be my next challenge.
Anna Kerwick: I heard that they’ve got the ex-head of consumer and products management to come in as the consultant, and that’s when everything started to turn. So, whether they wanted to have the upmarket look at the everyday price, I don’t know.
Simon Dell: I guess your country road… They’re not…
Anna Kerwick: And they’ve been around forever.
Simon Dell: I guess most department stores there, yeah, they’re… It’s funny that for some unknown reason, you’re quite happy to pay at Myer or a DJs at a cash register that’s deep inside the store, but then Kmart do it to you and you’re like, “Hold on a second, this doesn’t feel right.” It’s strange that there’s that contrast against two brands that are offering exactly the same thing.
Anna Kerwick: Yeah, it is interesting, isn’t it?
Simon Dell: We could be in deep thought about this for hours, but last question: If anybody wants to get a hold of you, they want to ask you a question, I’ve just seen on your LinkedIn that you’ve got a job available for a marketing superstar as well.
Anna Kerwick: I do.
Simon Dell: If they’re interesting in applying for that or they just want to talk to you, where’s the best place to get a hold of you?
Anna Kerwick:I’m on LinkedIn, obviously. We have that position advertised on Seek. If you contact… If you’re on the Merlo webpage, you’ll see me listed under the senior management team. I’m always open to receiving emails. I’m on Facebook, Instagram, you name it, I’m there.
Simon Dell: People will be stalking you now.
Anna Kerwick: I know, that’s a bit dangerous.
Simon Dell: Thank you very much for your time today. It’s been very enlightening. We have gone completely off topic with everything that I was going to talk about.
Anna Kerwick: I hope I didn’t lead you astray.
Simon Dell: Honestly, it’s been very interesting. So, once again, thank you for being on the show.
Anna Kerwick: Thank you. I really enjoyed it.