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Published 17 May 2012 05:02, Updated 17 May 2012 10:12
Back in 1998, the BRW and AMP Capital Shopping Centres Outstanding Retailer of the Year for 2012 was a high-profile independent wine shop with five stores in Victoria. Founded in 1968, it was sold in 1998 after the final negotiation took place in the home of the store’s 80-year-old founder Dan Murphy.
Woolworths bought Dan Murphy’s for $45 million and promptly began expanding the brand. It is now the undisputed powerhouse in liquor retailing, with 160 stores contributing a large chunk of Woolworth’s $5.9 billion sales from alcohol. According to one of this year’s judges, retail consultant, Stephen Kulmar, it is the best retail business in Australia.
“It is best in class worldwide for what it does,” Kulmar says. “It takes advantage of a growth category and delivers the most dominant and well-considered product offering on the market. It compromises on nothing, whether it’s an $8 bottle of wine or a $1000 bottle of wine.”
Dan Murphy’s general manager Martin Smith says it has always been run as a separate business and attributes its success to the culture the founder built. “Murphy, by himself, fostered a focus on wine and wine education with a lowest price guarantee,” Smith says. “That combination of a great product range with staff who know their stuff and a determination to make it available to the general public, not just the affluent, is something we’ve worked to maintain as we’ve expanded.”
When Dan Murphy’s opened its first store in Sydney in 2003 Smith says “we were a bit surprised by how well received it was. The name seemed to go before us and there was a level of trust that the lowest prices were guaranteed and we stocked an amazing range.”
While not every customer wants to regularly spend a few hundred dollars on whisky, they enjoy being able to browse that range.
“Whether it’s wine or spirits, people like having access,” Smith says. “A lot of our customers might usually buy a standard wine or spirit but they don’t hesitate to stop and look at the special cupboard for a special birthday present or occasion.”
Having that trust from consumers is valuable and something Smith says can only be achieved through consistency. “You can advertise all you like but at end of day you have to do something,” he says. “Every store we’ve opened has the same range, the same service and the same prices and customers experience that.”
For this photo hundreds of bottles of alcohol were blu-tacked to the floor before Martin Smith climbed on top.
Since its inception, Dan Murphy’s has not wavered from its commitment to give consumers the lowest prices on the market. Smith says that price guarantee matters because of the trust it engenders with customers, more than any dollar value they save. “People aren’t worried about price as long as they know they’re getting good value because no one wants to get overcharged. We pro-actively price check to ensure our prices are the best so we’ve built up trust. It doesn’t matter what a competitor has, customers know we’ll have that product at a better price.”
Smith says pricing is just one reason the brand resonates with consumers. “If the price is right, it’s not important but if it’s wrong it’s the most important thing,” he says. “Successful retailing is about the combination of the best price with the best range, the best store layout and the best customer service. Ignoring any one of those elements is dangerous. It’s like the recipe for your grandmother’s sauce. If you leave out even one ingredient it won’t taste as good.”
Last year Dan Murphy’s opened its first online store and, while sales aren’t substantial, almost one-quarter of all customers use the site before they buy. “The website reflects what’s available in the bricks and mortar world, so customers log on to check their store or do some research and then shop with us. The other dynamic is people who do the actual shopping online.”
Smith expects sales through the site to grow but is satisfied to be giving customers that choice. “Customers can choose which method they want to use but the most important thing at the moment is they come on to our website,” he says. “As a traditional retailer you open your doors and people will come in but online retail is very much a direct marketing exercise. You have to take things to them.”