Andrew Patterson talks to the new leader at Pumpkin Patch about how she plans to revive the business

Andrew Patterson talks to the new leader at Pumpkin Patch about how she plans to revive the business

By Andrew Patterson

To say it’s been a roller coaster ride for Pumpkin Patch shareholders in recent years would be something of an understatement.

From a high of $4.95 in January 2007, the company’s shares crashed to an all-time low of just 55c in November 2011 following a disastrous foray into the UK and USA that was rapidly axed in the aftermath of the global financial crisis (GFC).

Today, Pumpkin Patch shares trade at around $1. It all seems a long way from those heady days in the late 90s when the brand seemingly could do no wrong.

Cute, fashionable and hard wearing, Pumpkin Patch became a home-grown clothing brand for kids synonymous with quality, and young mothers were hooked.

Founded in 1990 by Sally Synnott, who remains a director and shareholder, Pumpkin Patch badly misread the market in 2004 embarking on a strategy of rapid expansion just as many other retailers were beginning to switch their focus online. When the GFC hit with full force in 2008 the company was fully exposed to the ravages of the crisis which saw retail sales globally plummet rapidly.

Five years on and customers have become much more price conscious and less willing to pay high prices for children’s clothing which in turn has squeezed margins.

New leadership

Recently appointed CEO Di Humphries seems completely undaunted by the challenge she faces saying she wants to revive the brand and return it to those halcyon days of the 90s when Pumpkin Patch was in its ascendancy.

With a 24 year career in retail, including time as Managing Director at clothing retailer Glassons, she says she was attracted to the role by the opportunity to take the product and the brand back to its roots.

“I bring with me a real customer focus through my time at Glassons. One of my strengths is around product, getting to know the customer and knowing who the customer is, and delivering on what the customer's needs are.”

Becoming the only woman to currently be heading an NZX50 listed company, something she adds modestly she didn’t actually realise until it was pointed out to her 24 hours after her appointment, Humphries says she’s excited by the challenge she faces reviving the company’s flagging fortunes.

“Before I started with Pumpkin Patch, I really wanted to understand more about customer perceptions of the brand so we undertook some external market research on where the customers were and what they thought of us. What came back strongly was that the brand is held in very good stead in peoples' minds in terms of what it stands for. But what also came out quite solidly was the fact customers hadn't really heard a lot about Pumpkin Patch recently, particularly about its direction and where the brand was headed in the future and I guess that starts blurring the line as to what the brand actually means to our customers. So the first stage is that we have a strong brand, but we need to start communicating and delivering what our customers want from us. That's really the start of the strategy we’ll be embarking on.”

The problem

So has Pumpkin Patch perhaps fallen into the trap of becoming just another clothing brand?

“I think so. I mean for such a young business it’s already been through a lot. It rolled out very quickly, it was one of the first children's wear operators across Australasia, and also rolled into the UK and the US. The GFC hit, and whether that was part and parcel of what went on, the fact is that they've gone through huge growth, they've had to pull back on that global growth strategy and get rid of the non-profit centres within the business. As it turned out, that was a very good decision for the business to pull out of those markets.”

“However, we still own the customer database from the US & UK which have been valuable in developing our online business. Turnover through our online sites is still high so if there's any positive that came out of that it was that our customers still love us over there. The fact that we haven't got bricks and mortar there doesn’t seem to have impacted customer perceptions of the brand.”

Ask any parent about what they want in a clothing brand aimed at young children and it’s likely they’ll tell you quality, fit and a contemporary look are at the very top of the list. These have been hallmarks of the Pumpkin Patch brand in the past but market perceptions these days suggest the company has work to do to re-establish this positioning in the future.

The revival

Humphries believes that defining the essence of the brand and then reflecting that in the product will be critical for reviving revenue growth.

“The brand is defined around knowing about kids and celebrating children, and celebrating that children's space. That’s our core strength – we’re a children’s brand. There are plenty of operators internationally, as well as in the local market, that are primarily adult brands with a side-line operation in children's wear. So the whole value equation is really diluted down from adults wear.”

“Pumpkin Patch is a brand that began life initially around the love of children and trying to provide what kids and parents alike really wanted. That is being redefined, which is around quality, ensuring that our garments are absolutely the best available so they can be handed down throughout the family.”

Young children though are notoriously fussy about what they like and don’t like as any exasperated parent will tell you when trying to dress them at the start of the day. Get one aspect of the purchase decision wrong and it doesn’t matter how much you’ve paid for the item, if it gets the thumbs down from the wearer its game over.

“Comfort and movement is really important and no matter how good things look, if they've got anything connected to them, or they're too tight, or they're scratching against the skin they won’t wear it. Kids are really all about imagination and play and that whole evolution of children is about being able to be out and about and doing things.”

“We design the garments around that philosophy while also focussing on gender and age specific clothing. We definitely don't promote and don't stand for children being dressed up in little adult's clothing. We have targeted designs and the functionality that is needed for younger age demographics through to an eight to twelve year old who, from a trend orientation point of view, are more into digital prints or pony rides or whatever it is. So it's about attracting them into whatever space they're into and for that reason we focus very specifically around targeted age groups.”

Understanding children as decision-makers

While pitching the product at the adult purchaser is one aspect of the business, how much focus goes into understanding what it is the kids themselves want?

Humphries says that’s an important aspect of developing the product range and she regularly spends time behind the counter in the company’s retail stores gleaning information from kids and parents while also gaining valuable insights about their buying habits.

“We've done quite a lot of internal research around this aspect and what you do find is that children are making decisions earlier, and there are differences with the gender into the decision-making process. Also, who makes the buying decisions for the family has an impact. These days with lots of parents working it’s actually grandparents who are increasingly doing the buying for children so that adds another dimension to the purchase decision. Definitely, kids that are at particular ages are making decisions on what they want to wear, and there's often a no holds barred approach where they effectively say: ...that's what I want and if you haven't got it then I'll find somewhere that does."

Following the closure of its UK and US retail operations Pumpkin Patch has increasingly moved to switch its focus from bricks and mortar to online. But will there come a day where the company’s sales and distribution strategy is solely online?

“Personally I don't think that bricks and mortar will ever go. I'm a really strong advocate that a brand has to have different connections and part of that is through bricks and mortar. Every touch point that the consumer has with us is about experience, so whether that's being able to touch the brand and understand the brand through walking into a store and touching and feeling garments, and interrelating with staff and seeing the creative installations in there through to seeing what everything's about is all part of the experience. Obviously websites need to portray the same image of the brand and how connections are with the customers and really all those spaces have to be there to create a cohesive brand proposition.”

“Regardless of what channel you're in, the brand needs to be in synergy across all those spaces. Therefore it doesn't matter to the consumer, they shouldn't have to worry. At the end of the day, we're there to ensure that we make it easy for the consumer and whatever way they want to shop with us they should be able to understand the brand. It's our job to ensure they do understand the brand and that we're catering to their needs.”

The new focus

As Pumpkin Patch moves on from its previous problems, Humphries is under no illusion about the challenge she faces to rebuild the brand and return the company to a growth trajectory.

“Obviously we have been through a lot of ups and downs and I can say that in the last two to three years we have dealt with the badly performing areas of the business. The markets are tough in New Zealand and Australia, but we're operating in a multi channel environment globally. We have lots of opportunities ahead of us with our international partners, both wholesalers and franchisees.”

“My focus will be ensuring that our foundations are in place to take advantage of those opportunities but only when I think that we can leverage forward. We've got a very good supply base, but I want to make changes to the business model to make it more fluid, to ensure that we're totally engaged with our customers' needs, to be more light-footed when it comes to stock and finally be more in tune with the customer.”

“It’s not about trying to take the brand in new directions, it’s about leveraging off what our brand originally stood for and the only change to that is that consumers have changed their behaviour. Making sure that our connections with our consumers are more light footed, and that we can deliver on what the consumer wants from us are key. But the essence of the brand is really back to its origins, which is about children, celebrating children, and everything that we do is about children.”

Weary investors and shareholders will be hoping Humphries is the game changer they’ve been waiting to arrive on the scene.

The company will announce its year end result in the coming weeks and hold its AGM in November.

 

KEY FACTS

Sector: Children’s clothing manufacturer and retailer
Founded: 1990 (Listed 2004)
Market capitalisation: $178 mln
Turnover: $301 mln (July 2012)
Net income: loss of $27.5 mln (July 2012)
after taking a $37 mln charge on the closure of its US and UK operations
Staff: 2,050
Ownership: Publicly listed
Website: www.pumpkinpatch.biz

 

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