Palamont Rotor, a small rotational moulding manufacturer with facilities in Queensland and Victoria, is a leader in their sector – adaptable, technically capable and driven by quality and innovation. Over the past ten years Palamont has undergone a gradual yet total transformation; from a made-to-order, purely functional mindset to a highly entrepreneurial position where the business, in partnership with a team of leading Australian designers, is poised to launch its own branded products directly to market.

Palamont Managing Director Norman Johnson spoke to the ADU about Palamont’s journey, revealing the many not so obvious benefits that can be gained from design integration. Here he explains why he feels that Australian manufactures and designers need to start talking the same language, and how they must step between the sectors, working together to assure one another’s survival.

Business: Palamont Rotor
Type of business: Rotational moulding manufacturer.
Location: Facilities in Brendale, Brisbane, Queensland and Dandenong, Victoria.
Founder: Peter Wakelam
Contact: Palamont Rotor, 32 Duntroon St Brendale QLD 4500. T: (07) 3205  1297.

ADU: Can you please describe Palamont?
Norman Johnson: Palamont is a rotational moulding business and a small enterprise. Today the core turnover is about 11 to 12 million dollars a year, and we employ about 70 people over two plants, one in Dandenong, Victoria, and one in Brendale, Brisbane. The Dandenong business has been going for over twenty years and the Brisbane business was established about seven years ago. The main turnover at this stage is in Victoria, which is a manufacturing state and has a lot more opportunities, although the Brisbane business has shown considerable growth over the last five years.

Can you describe your overall business offering?
Palamont makes proprietary products, or products that we own and manage ourselves. In Victoria those products make up between 40 and 50 percent of the turnover, and in Queensland it is more likely to be 70 percent. The reason for the higher bias in Brisbane is that the turnover is lower and the necessity to develop products in Queensland is greater because there are not a lot of manufacturers in the area of custom moulding. We also like to have a mix because custom moulding is volatile. If we have a proprietary product, or a joint venture product, we are more involved and get to add a much higher degree of the intellect.

Do you feel that Palamont has developed specialist skills and capabilities that are both nationally and internationally competitive?
We export substantial quantities of products now so we are internationally competitive, and nationally we are competitive because we are very dominant in a few market segments and in some we almost have a monopoly. This has all come about because of a passion. Peter Wakelam started the business from very humble beginnings in a little tin shed making a product called the Aussie Rocker that was an innovative compost bin. He wasn’t satisfied with the limit of the process and started travelling to America and Europe and bringing back technology that we would never have developed ourselves in this small market. With his innovative approach, Peter started attracting customers who needed creative solutions and often they were people who were trying to get into the finishes market, rather than the truck or agricultural component market. That momentum has grown over the years and now the company is almost totally driven by finding difficult projects and making the process work to its limits. One of our more recent projects at the top-end of the market is designer Alex Loterztein’s Twig for Derlot (pictured). It needs incredible strength and durability to be able to sit out in the sun, and we have been running a huge number of trials getting the laminate structure for that to work so that he gets not only the look that he wanted to create, but also the structural strength which is not normally achieved in polyethylene under those circumstances.

Palamont is a manufacturing company that aligns itself with the Australian design scene – what was the trigger for that?
It wasn’t long before we realised that while we had good ideas about product we wanted to develop and technical skills, we weren’t able to create the art that was necessary to give the products the right look and feel. So we started with what I call ‘translators’, design people who would take our ideas and translate them for us. So they were technical designers and we realised then that whilst we would do something in a pretty boxy kind of way, they would add compound curves and features that we wouldn’t have. So we started to produce products that would have that kind of design element – in other words our technology, our concept, with someone actually interpreting our idea.

About five years ago I decided to leave Palamont for the world to understand what true designers did – in other words to become more aware of the design process. I have now been cultivating that process and I am now looking for people who are true creators because we can actually engage with them and bring new ideas to reality because we have the skill set.

Can you talk a little bit about the entrepreneurial edge that is emerging out of the design integration at Palamont and the relationships you are cultivating with designers?
We want to encourage a more enduring relationship over a long time because we think designers have a lot to give. It takes time to understand our process and the limitations and advantages of it. So what we are trying to do is to blend those two cultures so there’s an excellent benefit for both of us. I have noticed that in the design world when a manufacturer links up with a designer, the designer often gets only a small royalty. I am not working on that principle. I am actually making designers an equity partner so that if it is very successful they will do incredibly well out of it, if it is not that successful they will get the same results as us, not very much. By engaging them in the business the relationship is a much stronger one, they have an opportunity not only to produce great design, but also to work with a manufacturer who believes in what they are doing. I want the designer to be absolutely engaged and to feel free and unencumbered by the financial relationship because then they will really go for it.

Certainly there is a shift within the world of design, where designers are starting to recognise that they need a much more collaborative business relationship with their manufacturer, in other words co-development beyond royalty alone. Have you found that working closely with designers this has become a natural process?
I think it has been a natural process. Designers are becoming aware that they need to be more than just designers because of the limited future in that. I think designers love the collaborative approach, and they also like to be engaged in the process. They can learn a lot from us, and we can actually learn a lot from them. So it is not just about the design or the product, but the whole blending of cultures and minds that makes it successful and you end up with the ultimate solution. We are pretty transparent about the business and how it is operating and what we are doing, even from a financial point of view because we feel an obligation to give something back. It is an intellectual swap I would say. We want them to give us their full degree of intellect and we are going to give them as much of our intellect as we have, and we are probably both going to end up in a pretty good position.

So if you were talking to other manufacturers of a similar scale to Palamont, what would you describe as the key opportunities within the collaborative design model – is it shifting towards the idea of being a manufacturing brand that looks at wholesaling or retailing their own products?
Yes. We have spent the last couple of years working out our brand and formalising it in collaboration with the creative people we work with and they will be the beneficiaries. They all have their own brand. I believe in brand.

I also believe in participating in a boutique marketplace, China and America can churn out the grist that’s necessary, but we need to be very boutique in our manufacturing and very focused on our product. You have to have a much longer-term view and put your money up a bit earlier than you would like to. We know from the last time we did that we got an enormous growth benefit from having incredibly well-designed product released at the right time, backed by the right names and branding and we just accelerated. So we think we will accelerate even more as a small company.

Now that design is fully integrated within your business, do you find you do more market and technical research – looking internationally at what is going on, what you can put into the market?
In each market segment that we work in we have a design group made up of people within the marketplace, including a manufacturing representative, marketer, and designer. Those focus groups meet regularly, perhaps every quarter, and develop multiple products to concept stage. When we think we are satisfied we then go to foam modelling and we then take the models to the marketplace to see what they think. We actually follow a practical approach and let people touch, feel and become involved, because often we know the customer base, we have got customers and we want to test it directly.

We would then make a few prototypes, and if it works and we get good feedback we go to tooling stage, often with orders in hand. Not necessarily enough to make it a whole financial success but enough to give us inspiration that we should proceed. Then we would go into production and it might take another twelve months to establish full market reputation for that product and market acceptance and then eighteen months before we will be producing successfully at the right price for everybody.

Have the external designers you have collaborated with given you a much more global horizon through their experiences – and do you feel that that feeds back into the business?
They are certainly bringing their international expertise and we have been encouraged to start taking our products to an international marketplace and to build an international reputation. Though we are very much in the infancy of that because we have only just broken down the mindset that we are not going to have to sit in Australia, that we are actually making world-class product. This year we intend to launch a range of products at InDesign and we have a soft launch at DesignEx, and then next year it is our intention to take our products to Milan. There is no doubt about it, we have some wonderful things evolving and some excellent products and we want to take on that opportunity because it is just a fantastic thing.

You have dealt with many designers over the years, do you think designers are commercially astute in the way they approach or understand the needs of a manufacturer – and is there anything they need to shift for it to be a more instantly productive relationship?
I think that it is very difficult for them because often they are not well funded. So they go cap in hand, and to be honest, most manufacturers have the opportunity to take advantage of that and I think that has been the way. It is a bit of an indictment on us, but we have all the resources and sometimes more money. Unless of course they are of the few that have built a reputation – if they have reputation they have something to bargain with because they have a brand. I think that that should change because I think manufacturers should be assessing each opportunity on its merits and therefore making sure that if somebody actually has a great idea, you sponsor them, and you give them the opportunity to get their product created, and you cut them a fair deal.

Palamont obviously invests in designers’ work, assisting with tooling or prototyping for the sake of the eventual product – how do you view that deal in a simple format?
We currently have a substantial number of products under prototyping and construction where we have put up all the cash and that’s OK because the designers have put up their intellect, their ideas and concepts, which have a value. So I see that relationship as being relatively equal at this stage. When the product becomes commercialised, and we are really backing projects that they agree and we agree can be successful. You are going to back some things and they are not going to work out but you have got to take a few risks in life if you are going to continually say you are an entrepreneur. But we probably think we are pretty safe with what we are doing and we have got no hesitation in backing the people we are working with because they genuinely believe in what they are doing and I think that is all I can ask of them. If it becomes successful we don’t need all the money, they should get their fair share of it because then they’ll go on and be productive for a long time. I really want to cultivate that garden, I just want to… it wouldn’t be good long term for Palamont to just take everything and not reinvest in those people who have actually been the genesis of the idea.

If you look at the different manufacturing sectors within Australia, do you think it is still too geared to being a service industry, making to order in comparison to other nations like Spain or Italy – where do you feel the Australian mindset is within manufacturing?
I think the mindset is still really about ‘lets make an order and basically we have got the order in our hands and the money in the bank and we don’t want to build our inventories, we don’t want to risk our tooling money…’ There is a bit of fear and I think they are driven by fear so they don’t want to change. I don’t know that they are all like that but I think a large percentage of them are still like that because that is the way conventional manufacturing has been run in Australia.

However as I sort of venture out a bit further I’m meeting some incredibly talented and creative manufacturers. I was only talking to one this morning who does etching on tooling. They are a creative business and they want to partner with designers because they know their business is about art and not just manufacturing and they have exactly the same views as us.

What is interesting in the ‘making to order’ mindset is that much of the government design policy in Australia is really focused on the idea of getting manufacturers to use more design, so that is working on the assumption that manufacturers are making things and selling them and they should use design to sell more. But it seems that there is another layer that is being missed which is that government policy should be assisting manufacturers to cross that bridge which you have described, which is not only using more design but becoming more integrated and more entrepreneurial in the way they approach the market.
Well you get around, you think about it. How many functions would you go to that are design related that actually engage with manufacturers?

Very few!
Exactly, and if there is a manufacturing function it is usually a more conventional exhibition of goods. When I made the personal decision to try and bridge the gap between designers and manufacturers myself, I went to many design functions and found out that there was an incredible power in that group and so I think what the government should be doing is actually trying to expose that. The Australian industry group that I use very often for a whole range of technical reasons never talks about using design. They talk about ‘lean manufacturing’ and all of the processes to make your manufacturing more efficient. In fact industry organisations are all encumbered to return some percentage of what they do back into industry so in my view, putting up a bit of tooling money for some struggling designer who has got some fantastic idea, that could be my bit of philanthropy as a manufacturer. But that won’t happen because the design industry and the manufacturing industry are actually not very good at talking to each other and probably to some extent I see that as my benefit because we have crossed that bridge already. We actually see it as a bit incumbent on ourselves to say we have found something that everyone else should know about and get involved in because it is actually very rewarding.

If we were talking about your experience working with the designers, what are some of the key steps designers should make to ensure they get their products into manufacture in Australia? What advice would you give to a designer out there who has a good idea?
I think the thing they should be aware of is that they better be damn consistent. They also need to be realistic about their expectations from the process because sometimes those expectations can’t be translated into reality. When you go into full-scale manufacturing it is easy to make one perfect one, but to make a hundred perfect ones? Well sometimes you can make 100 that are 99% perfect but not 100%. I don’t want them to lose their expectations because it drives the process to its limits but there still needs to be some commercial tweaking. So sometimes their perception of commercial realities is not quite clear and that’s when I have arguments about what can and can’t happen and they need to be prepared for that debate because they are going to ask us to do things that are often quite difficult. They also need to realise that while they believe in the product maybe the marketplace doesn’t believe in it and that transition from getting it into the marketplace and actually becoming fully commercialised can be very time consuming and draining and they have to be prepared for that.

And it could be two years until you actually get a really good return on what you are doing, or in their case for their labour and putting their intellect up, it is a long time until they get the return. Some of them aren’t prepared for that.

But I love designers because they are so idealistic and have such high expectations. It is almost like raising the bar so you can’t jump over it but that’s what I want because that attitude actually filters down. I’ve got to say, when you are a manufacturer and you are involved at that level it does trickles through the rest of your business. So I don’t want them to lose that.

Do designers bring other work to you – are they helping you to build your business within their networks?
Absolutely. If I have a relationship with them and they have developed a respect for us, there are two things that happen. One, they actually start designing for the process and encouraging others too, and the other thing is within the network they will give me a high recommendation. That is actually the kind of business we are trying to build – built on reputation, built on quality and built on actually doing what we say we are going to do. It is not all about dollars when you are adding up the books.

Interview by Ewan McEoin. Images by Florian Groehn and George Dedic (www.derlot.com)

© Australian Design Unit. Commissioned and first published by the Creative Industries Innovation Centre.

To read more ADU creative entrepreneur profiles visit here.

Rohan Nicol is a Wagga Wagga based designer with a craft background and a new design enterprise, Lucelux, which launched in 2009. Bridging the gap between manufacturing and design in Australia, Rohan has established an alliance with local manufacturer Precision Signs and is developing a range of commercial lighting firmly founded on the belief that designers need to build bridges and partnerships with local manufacturers, who on the flip side, have a real opportunity to diversify their business offering through design.

Business: Lucelux (2009)
Type of business: Design and manufacture of commercial lighting products
Location: Wagga Wagga, New South Wales, Australia
Founder: Rohan Nicol
Contact: www.lucelux.com.au

ADU: How long you have been practicing as a designer for?
Rohan Nicol: That’s an interesting question really because I supposed I have only thought of myself as a designer in the last couple of years. Prior to that I have always referred to myself as a craftsperson.

What kind of craft did you initially make and what kind of design do you now make?
In 1996 graduated as a gold and silversmith and I made works that were in the tradition of gold and silversmithing – jewellery and vessels, using a wide variety of non-precious materials. In the last couple of years I have been concentrating on designing commercial lighting for restaurants, bars and hotels.

Can you describe Lucelux for us?
Lucelux is a business that I have set up to utilise manufacturing capacities in regional Australia and specifically the city of Wagga Wagga where I live. I have found that a great opportunity exists in regional Australia and in my case I identified a local manufacturer, Precision Signs, who had expertise that was being under utilised. It wasn’t that they were lying idle, it was more that they had expertise that I could see had potential to develop. I was able to marry my skills, with their capacity as a manufacturer, to develop a high-end product. Their main business is illuminated signage for gaming lounges in casinos which in itself is a high-end product and highly technical. However, it is a very different market segment of lighting to what I am now targeting in collaboration with them.

Would you describe Lucelux as a new Australian lighting brand?
Yes. I am working as a design entrepreneur, I am the owner and operator of Lucelux and at this point I am its sole designer. But in the future I am looking to bring in other designers as I know that the more diversity you get in a product range, the more likely the business will have a solid financial footing.

Is the business a joint venture between yourself and Precision Signs, how deep is the collaboration?
In the initial phase I am operating independently. I am my own business and essentially they supply product to me that is produced to my specifications. However, in order to get my business off the ground I was lucky enough to develop an arrangement with them where they invested in the development of the initial products and that has enabled me to develop the first two products, Stretch Light and Peppered Sunlight, and including packaging for them as well.

The investment that they have put in is purely on a goodwill basis, and in the future when I start to generate sales they will recoup their investment.

Can you tell us what your motivation was for starting this business?
Initially I was heavily focused on being a craftsperson, and as a craftsperson I have never really looked at my practice as having any real commercial interest at all. I have purely focused on developing works for exhibition and those works I have often exhibited and never had them for sale. I keep them in my own collection with a view to building that collection over time. I suppose Lucelux is a shift in my craft practice to use the design skills I have to develop a product range and a design brand. About two years ago I started thinking how I might achieve that, and it has been an interesting process that has basically seen me looking for avenues to commercialise my craft practice.

So you founded Lucelux as the container for that commercial practice, as the brand or umbrella under which you can run this project?
Exactly. I suppose early on when I was doing the Springboard entrepreneurship program it encouraged me to think. I began looking at a design practice that was going to be commercial as something that is its own entity and could be sold on at a later point. Early on in the program we were talking about exit strategies that enable you have an entity in itself that is a commercial enterprise that you can cut and run from if your priorities change with time.

How long has it taken to get the Lucelux plan rolling?
It has really been about eighteen months and that really started to roll once I secured the collaborative support of Precision Signs in Wagga Wagga. That meant I could get two products made and the initial investment I required, I couldn’t have afforded it on my own terms.

Did you design the product in response to their process? Or did you design the product and then have to find someone nationally who could make that product?
The first of the two products I designed independently, without knowing the actual process that was available, I then worked with the manufacturer to make my ideas fit with their technology, it was a real collaboration. It was just luck that I found a manufacturer in Wagga Wagga. Precision Signs was only three kilometers from my home office where I designed the product. While I did find Sydney and Melbourne manufacturers that were capable of manufacturing the pieces, none of them were willing to support me in the manner that Precision Signs was. That was key, I needed someone to invest in it because like most designers I couldn’t afford the tooling costs.

How much business experience did you have before setting up Lucelux?
Realistically none, and I was really conscious of that. The main step I took to overcome my lack of skills in that area was to participate in the Springboard entrepreneurship program. It provided me with a lot of material to think about and really allowed me to consolidate what I was trying to achieve with commercialising my creative practice. After that I also set about doing another program through the Business Enterprise Centre in Wagga Wagga called the Commercialising Emerging Technologies program. That helped me consolidate my ideas as well, particularly my whole business model and the relationships that I had with my manufacturers. It also made me consolidate my marketing plans and relationships with retailers.

You mentioned retailers as well, how did you decide who you were going to target in the market? Did you do market research or assess the marketplace prior to designing the products? How did this work?
Through the business training in both Springboard and the Business Enterprise Centre programs I was encouraged to get in contact with retailers and to undertake market analysis. I found that retailers obviously are on the frontline and have an attuned knowledge of what the market is, how it exists, what opportunities exist, and how that might suit the kind of products that I was in the process of developing. So I began to target certain areas that responded to what the retailers shared with me. In my case, they were saying that there was a need for Australian designed and made product that was well supported with effective branding, packaging, and made in Australia as an equivalent offering to overseas brands.

Were retailers telling you the categories of product that were needed?
Yes. There weren’t many big lighting pieces in the market at a particular price point. I was provided with information on those price points, where the products might be well placed or positioned. I then assembled that information and the design was calibrated to the manufacturing potentials of my manufacturer. As the designer I sat in the middle and was the conduit between the retailers brief and the potentials of the manufacturer, and somehow kind of distilled the product out of the knowledge and constraints and information inputs of both of those sources.

Do you see that being a model that is particularly suited to this kind of business in Australia, outside of your own personal experience?
Yes, I think it is the way we need to work in Australia as designers. We need to be highly flexible and attuned to the opportunities that are around us in the retail environment, designing products that are responsive to the opportunities out there and the only way to do that is to access information as broadly and as effectively as you can. Also make a genuine effort to scope for manufacturing opportunities in Australia, of which there are many across all sorts of industries. There are many firms out there that are small, responsive, adaptable and willing and looking for opportunities to diversify their own product bases and product lines. I think in many cases it is a myth that Australia doesn’t have any manufacturing, I think there is a great amount of manufacturing in Australia, I think designers just need to be entrepreneurial and I suppose open-minded and also resourceful with the kind of manufacturing technologies and potentials that are out there.

You touched on this but can we recap, how did you finance the start-up of the business and what were the foundations that you laid?
I brought to the whole exercise very little of my own capital, really all I had to offer was my expertise as a designer, as you say I needed some sort of source of funding or capital. And for me, really the only way I was going to get a product made was to get the support of the manufacturer because they obviously had the materials at hand, the staff and other resources essential to getting a product off the ground.

When you are talking about developing a design product, quite often you are talking about not just the materials and the use of staff and labour but you are also talking about the development of expensive tooling which in itself often would require sophisticated technologies and expertise, they are often very time consuming to put together. So in my case, getting a product off the ground, I did it by simply approaching the manufacturer and securing their confidence in the product I had and asking them to be partner with me in development of it.

In doing that, I found it was really important to indicate to the manufacturer that you had a market for the product as well, that you had thought through those types of scenarios, the discussions that I had with Precision Signs highlighted the commercial potential.

So talking about the business proposition rather than ‘will you help me prototype this idea that I have had?’
Exactly. That in part was about having a really tight story in order to hook the manufacturer into the frame and see their position within the team and seeing their role in it in terms of getting a design enterprise up and running, and for them to support it.

And also illustrating that there is a commercial return available?

Absolutely. When it comes into it, large manufacturers have bigger overheads and they need to pay the bills and keep product rolling out of the factory – so of course that is essential.

There is a traditional view in Australia that there are two key channels of production for a designer – one is that you make it yourself and you manage that process of production, and the other is you do a deal with a manufacturer and they have the path to market. What you have described is quite a different paradigm.
I don’t see a lot of evidence of the royalty model operating effectively for designers in Australia. There has to be another approach if you are working as a designer here and I think the way forward for us is to play a role in orchestrating the process. That is the model that I have developed with Lucelux. The manufacturer has made an initial investment to support me as the designer to get the product off the ground. As that product begins to gain market presence, I will develop a suite of five products that I will have in production by the middle of this year and that will provide Precision Signs with ongoing income.

Then perhaps the best scenario is for manufacturing companies with capital and capability to look at other similar opportunities with designers – so we gradually have new channels between the designer, the manufacturer and the market.
It really is about the designer playing a leadership role if they want to operate in the design industry in Australia. Designers need to be orchestrating the process, and to use the term – they need to be a design entrepreneur – you need to design content, yes but you also need to be entrepreneurial about the means through which you get it to market. That’s about relationships with manufacturers, relationships with your retailer and distribution and how you are going to achieve that. Each model will be different to the next but essentially, if the industry is to grow it needs to be led by designers first and foremost. To do this we need support from other stakeholders in the industry and that goes right through from government support to design industry advocacy bodies, funding and cultural institutions.

Do you think there may need to be some adjustment at a university level for designers to be better prepared for the reality of what they will need to do to work with industry?
I think so, but it’s difficult to kind of nail down one factor or approach and how it needs to change from one position to another. However, a lot of the programs out there have moved so far towards the digital sort of approaches to manufacture that very few of the students or graduates actually have any manual techniques and it is the manual techniques that provide you with the on-the-floor experience. So unless you have been on the tools or handled a product, handled materials and know how they respond to a tool under the process of manufacture you really aren’t well placed to make an innovative product. So if they were to overcome that, that could mean more industry placement and industry involvement with tertiary education through internships or just closer collaborations between industry and tertiary education.

If you were to highlight two or three key steps that a designer should take as the foundation steps to ensure their design ends up being produced, what would you say those steps need to be?
Develop connections with manufacturers that are Australian-based ideally, and design products that are calibrated to their particular potentials. Ensure that those products are based upon market research, that you have negotiated how you are going to finance the operation and whether you do that through support of the manufacturer or by securing capital through loans or grants, or by winning awards. These are all valid channels for funding the operation and funding is an essential ingredient because otherwise you won’t get things off the ground.

Can you tell us what have been some of the major highs and lows in terms of developing Lucelux as a major design brand in Australia?
In terms of the highs, it is getting a product off the ground that is manufactured and production ready and going out to market and selling, and essentially achieving that without any risk to myself. In a sense I think the design of the enterprise has been as important as the design of the product. So that’s been one of the highlights.

However, there are also the hurdles and I think the biggest one so far has been to establish retail distribution. It is probably the one area in the Australian industry that is probably not on message with where everybody else is moving, some of the retailers are a bit slow in identifying the potential of an Australian made product.

In terms of the development of your business, what are the next steps?
I have secured Australia Council funding for the next three products and I have also just finished some studying, so I am now in a position where I can just concentrate on the marketing plan for the business and getting the product to market. Because of the investment of the manufacturer it is time that I fund that relationship and their ongoing support.

Interview by Ewan McEoin. Video: Filming and production by video artist Sam James.

© Australian Design Unit. Commissioned and first published by the Creative Industries Innovation Centre.

To read more ADU creative entrepreneur profiles visit here.

IP Australia Smart Start – 10 Steps

Brian Ling Yanko Design

Top3 by design is a mecca for ideas and a one-stop-shop for a diverse range of design products. As well as stocking items by big international design houses including Missoni Home, Menu and Iittala, the company’s founder Terri Winter has a solid commitment to Australian design. Terri spoke to the ADU about the key things Australian designers should know about design wholesaling, and what it takes to play well with retailers.

Business: Top3 by design
Type of business: Retailer of international and Australian designer home products and personal accessories
Location: Online and Crows Nest and Bondi Junction, New South Wales, Australia
Founder: Terri Winter
Contact: www.top3.com.au

ADU: When did Top3 launch and what was the concept behind it?
Terri Winter: When my husband and I met we both worked in the advertising and design industry. Both of us have a passion for innovative, quality product, and when I became pregnant with our first son we decided that we needed to have a business that did not rely on a client’s 24-hour deadline. Shortly after we were in Germany at a cabaret show that included a variety of acts by performers who were the best in their field, and we got thinking about the things we like, and how we might edit them down to a selection of the best.

As consumers we were constantly frustrated by the ridiculous amount of ‘choice’ on offer from butter, to wine, to stereos and pepper grinders. We simply wanted to know what was good. We discovered that many of our friends also found the amount of choice did not give them a feeling of comfort, but was a source of frustration. Especially with the accompanying lack of information offered alongside the multitude of product.

So began the idea for a store that offered an edited selection of quality design, that followed the mantra of carrying up to three products per category deemed the best in the world by merit of design. We chose the name Top3 by design because we felt it best described the concept and opened the first store in November 2001.

How many stores do you have now?
We have two physical stores and an online store.

How many Australian designers are part of the collection?
We carry pieces by Kain Lucas, Belinda Giles, Charles Wilson, Rowen Wagner, Sarah Gibson and Nicholas Karlovasitis of Design by Them, Rachael Ruddick, Birgit Moller, William Rhodes, Jason Bird, Matt and Jude Ainsworth of Stukon, Cindy-Lee Davies of Lightly, Abi Alice, Marc Newson, Rohan Nicol, Susan Cohn, Robert Foster of F!NK, Ben McCarthy, Danny Cheung, Henri Spaile and Mark Armstrong for DOSH, George Plionis, Tomek Archer, Adam Goodrum, and Marc Harrison of HUSQUE.

How much of your stock do you source from local trade fairs and internationally or is most of your sourcing done through other means?
Given Australia’s geographic distance from Europe, many of the large companies have representation here in Australia through distributors. It makes no sense for everyone to be shipping individually from large suppliers. So all the key large brands are sourced from distributors here in Australia. However, we visit the international trade shows to know in advance what will be available and then we can discuss things with the local importer to ensure suitable stock levels and timing of arrivals.

What should a designer prepare before approaching you about stocking their work?
Anyone approaching us regarding product to be stocked needs to have a price list and samples of their products, including packaging ready for viewing. They also need to be familiar with top3 and the concept of the store, and have a good knowledge of the cost structures of getting a product from wholesale to retail.

They need to be sure that after the product is stocked they have a system in place to be able to re-supply goods in a timely manner, or be aware of the time frames necessary for redelivery and have that outlined on their price lists.

The first step in terms of contacting us would be to send an email with the price list and any relevant product information and images.

The price list should include:
- Item codes
- Wholesale price (excluding GST)
- Retail price (including GST)
- Any special delivery instructions. If there are any special delivery instructions or costs these should also be outlined.

Designers should also put a list of the businesses that they wish to have the product with long term, and a list of any retailers that already stock their product it if it is in the market already.

If we feel the product is suitable for the range we would then contact a designer to view samples or set up a meeting if that were required.

A designer also needs to have the best photography done that they can afford. If we have good high-resolution photographs on file we can send them to media quickly and easily.

In your opinion, how many designers understand the benchmarks of pricing – what a customer is willing to pay for a product based on quality, market sector, and other product competitors?
Most have done some research and some contact us early to ask us if they don’t know which is great. If you don’t know your full costs then you can’t establish the retail price.

What recommendations would you give to a designer in regards to pricing their work?
You need to be fully aware of what the real costs are for you in order to get a product to market. Yes, there are certain price points, but the first step should be to calculate full costs (including your profit) before setting the retail price.

If the price of the product is deemed too high for the market you won’t receive successful sales. You then need to go back and look at your production process to see if you can reduce the costs.

There is no point in simply reducing your retail price to match the market when it does not cover your costs. This will lead to re-supply issues for the store and everyone, including the customer, left waiting for goods and very unhappy.

Sometimes, sadly, the costs of a product are simply too high to be justified by the consumer. This is a sad reality but must be considered before full investment by designer or retailer into a product’s future.

Can you give me some examples of some key mistakes designers have made when approaching you? What are some of your pet hates?
People who have not done any research on our business and do not understand how we can help each other are a waste of everyone’s time and energy.

Achieving successful sales in a retail environment requires a relationship that is more like a partnership – the product needs to suit the store, it needs to have support from both the store and the designer and both the designer and retailer should be able to make money from the product. If a designer has queries about any of the above details, then they should raise them in the first conversation or meeting.

I dislike designers who think that the store is ripping them off taking a margin, who feel hard done by in giving retailers a cut. The retail store is the way to access your consumers, you should work with them in a partnership and support them as much as you can. Don’t make retailers feel that you are hard done by as the designer because you can’t make enough money etcetera.

It is up to you to make your pricing the best and most competitive that you can without losing money. Don’t produce work at a loss unless you have a long-term view in which you can improve unit cost and efficiency to gain your profits later. There is no point putting something on the market at a loss and feeling annoyed the entire time because you feel the retailer is making money and you are not.

A sudden increase in price after the product has gone to market is not good form either. You must think your costs and profit requirements through before getting the product on the shelves. A designer not making ANY money from their product cannot afford to produce any more. For me a relationship is successful if it is a win-win situation for both the designer and the retailer.

Never have a website of your own offering an online retail set up for your products that competes with your retailer on availability or price. While having periodic sales in which you discount your own product I guess is normal I don’t encourage it when you also supply to retailers.

If you are going to have a sale of your product on your own website it is best to let your retailers know in advance, or offer them a reduction on price so they can promote it at the same time.

On the topic of designer’s with online retail spaces within their own websites, a wholesaling designer should not offer a special online price that is different to the recommended retail price as an incentive for customers to buy direct. If you do this the interest in your product will very quickly drop in store among both retailers and their customers.

Do you expect designers to have a thorough understanding of the existing brands that you stock prior to approaching? How much should they know about you prior to getting in touch?
They should understand where they think they might sit in the collection and understand how they could be a benefit to the range.

What are some key pieces of advice that you have for designers getting started?
Think it through, get your costs in order – you can’t produce, promote and successfully sell a product that is not profitable.

Support your retailers, they will provide access to a large number of customers for you.

If you are confident about your product and are having trouble getting into store – offer it on consignment with all paperwork ready for quick entry into the system and you will probably find you get reorders and then payment for your first delivery.

If it doesn’t sell, both yourself and the retail store need to rethink it anyway!

How do you prefer designers to contact you, I guess you are very busy?
Generally we prefer a phone call, then an email with relevant information, then a follow up call after a couple of weeks if they have not heard back. At certain times of the year, as in the lead up to Christmas, designers need to be aware that we just don’t have time to consider new products.

Do you expect designers to supply you with collateral to support the sale of their work – price lists, brochures, packaging, high-resolution images?
It is an absolute necessity to supply a price list and a product overview sheet for staff. It is helpful if you can also provide a digital text version of this document as well so it easy to cut and paste that information to make it available online.

We need high and low-resolution images, including individual images of products in each colour and style. Stands and point of sale material can assist and be helpful when retailing, although this varies on a case by case basis, so it is best to discuss with retailers before investing in support material.

After the initial order, at what point should designers approach you again about a follow-up order?
We are very happy to hear from them a couple of weeks after their product has appeared in-store. Continuous calls can be difficult to manage, although ironically it tends to be card suppliers who call the most frequently!

Do you think there are some common mistakes or areas that Australian designers and suppliers don’t understand about wholesaling that their international counterparts, or distributors that you deal with, take for granted? If so, what are they?
No not overall, the larger Australian distributors are very professional. If anything it is some of the international distributors who don’t understand the geography and scale of the Australian market and don’t realise that the length of shipping times is very different when dealing with Australia compared to their European counterparts.

The difficulty I do come across is when I am working with small-scale distributors who are often running their business as a sideline project and have indented product, which means they do not hold stock but get their manufacturers to manufacture in response to a retailers order. I do not want to work with people who are operating more like an agent or distributor for their own product. I refer to these businesses as ‘indent managers’ and I do not need to pay a margin to ask someone to order for me.

A supplier or distributor is responsible for holding an acceptable level of stock to supply the market. Naturally, there can be colours or styles which unexpectedly sell through, but the collection they represent or supply should be held in the country and be available for reordering.

Do you think there are benefits for working with local designers based on locality and in theory a quicker delivery program?
I love to work with local designers, however it does not really equate to faster turn-around. Small-scale designers generally have supply issues and we work with them as closely as possible to minimise the problems on both sides. Fast efficient turnaround on a regular basis leads to more orders as instore staff are confident they will obtain the items for their customer and will be happy to ‘push’ the product. If experience tells the sales staff that the customer may be let down by erratic delivery, they will suggest something ‘safer’ to avoid a customer service issue.

What is the acceptable turnaround for orders?
Generally within a week unless otherwise stated. If preparation is needed or manufacturing to order is required you need to be clear about the time it will take to deliver so it can be outlined to the customer. A period of two weeks to wait for a special order is fine for customers. If the wait is going to be longer the customer simply needs to be forewarned and often they will have no issue with waiting period, even if it going to be months rather then weeks long.

But knowledge in advance is the key. Don’t be shy about extended delays. Be upfront and advise your retailer as soon is possible. The situation will not correct itself if you keep saying ‘It will be soon, soon, soon’ when you know it won’t be. Be honest and pre-emptive.

If a designer was hoping to have their product stocked in store for Christmas, what would be the ideal time that they should show it to you? How far in advance do you buy for Christmas?
We would want to see it by August/September if they have stock already available. The actual product needs to be available (in the country!) by mid-October to be ready in time for Christmas marketing.

What other key times throughout the year are key buying periods for you?
March is great after the wash-up from Christmas, and ties in with preparation for Mothers Day too. It depends on the product but key periods are Mothers’ Day, Fathers’ Day and Christmas.

What do you consider are the characteristics of a truly professional designer – the ideal model for a happy and successful business relationship?
It requires a good sound understanding of the relationship between the customer, the store and the supplier. They have to all work together. If the designer begrudges the requests of customers or retail stores and is difficult or obtuse with turnaround times the relationship will very quickly be strained.

Suppliers need to understand that the store is under pressure by the customer for product and the supplier needs to back up the store as efficiently as possible on a regular basis. Erratic supply times create problems.

We require an invoice with every delivery. Poor paperwork is not acceptable and is time consuming for everyone!

Do you think the local design industry has matured since you launched? How would you describe the industry here? And what opportunities do you see ahead?
It has absolutely matured. We started in 2001 and back then the concept of a ‘design store’ was not recognised. If I said to someone I had a design store I would constantly be asked which fashion labels I carried. People do tend to broadly understand the concept of a design store now.

Many people were surprised when we opened our store in a Westfield shopping centre complex. However, it has been an important part of our process and philosophy that design is not for an elite group but is for everyone to appreciate.

It is important to us at Top3 that design is not seen as an elitist concept because a design process is involved in the development of every product some are just simply not well considered or are executed poorly.

We are very excited about the future of design in Australia. Customers do understand that you get what you pay for. The ‘get the look’ era of disposable fashion buying has been replaced with an understanding that products that are of good quality, do what they do well by functioning better, enrich our daily lives and are respected and understood to have intrinsic value.

Designers are finally getting the understanding that they deserve – it does not have to be in a flashy superstar designer way, but in the everyday appreciation of what they can achieve. We are excited because we can help people understand that the simple details good design can bring will change their day – it does not have to be in gigantic once in a lifetime purchases of iconic pieces – but in the thoughtful, well considered purchases every day.

We certainly will continue promoting Australian designers shoulder to shoulder with the world’s best. We feel that Australian designers don’t need to be pandered to and pulled out and identified as ‘Australian Designers’ but can stand their ground Internationally. They just need the support of customers and retailers alike.

I was honoured to be involved as a judge in the Bombay Sapphire Design Discovery Awards this year and can certainly say that there are plenty of designers ready to take on the world stage – I hope we can be of some help getting them there!

Interview by Heidi Dokulil and Madeleine Hinchy.

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