Mitre 10 is one of Australia’s largest hardware store chains. It manages an independent local retail network of over 300 Mitre 10 and True Value Hardware stores. Supported by the wholesaling part of the business, Mitre 10 stores are privately owned by a diverse group, ranging from small single-store operators to large multi-franchise conglomerates.
Supply chain leakage amongst stores was rife within the network and Mitre 10 was not augmenting their buying power with a number of suppliers, both locally and overseas. Store owners were buying directly
from suppliers rather than going through Mitre 10’s Distribution Centre – a financial leakage having a significant impact on Mitre 10’s growth plans.
212F was appointed to design a self-funded program that would help Mitre 10 with their supply chain performance and in turn, increase sales. Mitre 10 needed an incentive for store owners to change their
behaviour and buy from them. The brief was:
• Grow sales
• Increase purchases from preferred suppliers
• Improve their buying power to augment rebates and better margins
• And be self-funding and provide profit retention
Being privately owned, individual stores can purchase products directly from suppliers, rather than through Mitre 10’s National Distribution Centre. Stores would purchase directly from suppliers because of their personal relationships with them, or because they believe they could negotiate better price discounts or terms by buying direct.
These purchases obviously do not result in any return for Mitre 10 but has also contributed to a great deal of buying slippage over the years. Additionally, it has also resulted in many stores stocking non-core supplier brands and ranges.
212F designed an incentive and behavioural strategy focused particularly on shifting stores misguided perceptions of price discounts and challenged stores to drive purchases through Mitre 10. The program was also designed to strengthen the relationship between the company and its franchises.
The incentive was targeted at store owners who would have the opportunity to secure a spot on a five-star travel experience by reaching their purchase targets. 15 preferred suppliers were selected to participate in the program and stores had to not only meet their overall growth target with Mitre 10 but also with a minimum of 50% of the preferred supplier targets.
The program, known as “Simply The BEST” had a strong communications strategy and the theme was creatively weaved throughout the entire program. Simply the BEST focused on rewarding the BEST… channeling sales purchases and supporting Mitre 10’s BEST Suppliers and ranging the BEST products. The program also offered participants the BEST choice of rewards, including an amazing travel reward for the BEST performing stores to achieve their targets.
In order to qualify to earn a spot on the trip, store owners had to achieve their targets. The program criteria also offered the next best 50 stores the opportunity to earn some fantastic merchandise rewards, including BBQs, golf clubs, luggage sets, and coffee machines.
212F’s iChange web platform was used to drive the program. Stores could monitor their purchases and tracking towards target. A leader board was displayed to rank the top performers. Most importantly the platform was a detailed reporting destination for Mitre 10 and suppliers to see how they were performing throughout the program to achieve their objectives and track participation.
A further driver for the program was the offer of “MitreBucks”. Suppliers were able to award stores with bonus bucks for purchasing special offers, clearing end of line ranges, and taking up promotional deals. Stores had their bucks loaded to a Mitre 10 branded Visa Prepaid Gift card. MitreBucks created significant engagement amongst both stores and suppliers; and sales attributed to the overall Simply the Best targets. By taking up the deals, store owners could be further rewarded for purchasing through Mitre 10 and helped to drive the desired supply chain purchasing behaviour.
To much delight, the program generated sales growth of 10% over the previous year across 390 stores registered to participate. This was a significant return considering the market was regarded as generally flat and not expected to grow. The program was a success and delivered on many fronts:
Incremental Preferred Supplier Partner Sales
These results obviously delighted suppliers – not only were they recognized as Mitre 10’s preferred vendors, but they were also developing stronger relationships with individual store owners, as well as increasing sales and seeing a return on their investment into the program. On average, the suppliers received an 8:1 return on their investment into the program (The highest individual supplier experienced a return of 24:1).
Better Buying Power and Rebates
Buying slippage was significantly reduced and Mitre 10 was able to generate considerably increased rebates from suppliers. These rebates contributed an extraordinary return to Mitre 10’s bottom line and were the ultimate reason for the introduction of the program. As Mitre 10 continues to develop preferred vendor status with its suppliers to negotiate stronger margin and rebate control, it will provide them with a sizeable ongoing revenue stream.
The program was well and truly self-funded. Supplier funding generated covered the running costs of the program and in fact, netted a further $400,000 bonus profit for Mitre 10… on top of the increased sales growth! A truly remarkable return on investment and objectives for Mitre 10.
Unforgettable Memories Attached to the Brand
212F delivered an exceptional travel experience that members will remember for a lifetime. Mitre 10’s top achievers traveled to several cities throughout the USA. Attendees were flown into San Francisco to celebrate their success, then on to Las Vegas to experience one of the world’s largest industry trade shows and concluded in Chicago to continue the celebrations and being rewarded with simply the best Americana experience.
One of the biggest achievements was creating a culture and a brand around Simply the BEST. From this trip onwards, no matter the destination, Simply the BEST has an incredible reputation – with store owners across the network and suppliers eager to attend each year. Participants know that it will be a first-class trip and networking opportunities will prove to be invaluable. Regardless of the destination, it is sure to be Simply the BEST experience!
In summary, 212F developed a program which not only increased the buying power required through a reduction in buying slippage but also increased overall sales and ramped up growth with a self-funding rewards program. It achieved an average ROI of 8:1 and delivered an amazing travel experience which saw Mitre 10 running similar programs during the next three years to grow their network relationships and sustain the achievements the program realised.