How Dyson almost killed Godfreys vacuums
<p>Despite Godfreys being an authority on vacuums in decades past, recently the Aussie retailer has been struggling.</p>
<p>Local retail experts have pinned the struggle on low-priced online competitors and the most popular vacuum brand, Dyson.</p>
<p>The experts believe that Godfreys needs to innovate quickly to keep up with current vacuum trends and generate profit.</p>
<p>Last week, it was announced that Godfrey’s 99-year-old co-founder John Johnston will take over the company, after securing a 91 per cent stake in the group.</p>
<p>The company will be removed from the ASX as part of an effort to fix the struggling company.</p>
<p>In April, Mr Johnston first announced his plans to buy back the company through Arcade Finance, which is owned by the Johnston family.</p>
<p>Godfreys was founded by Mr Johnston and Godfrey Cohen more than 80 years ago, before it was sold to private equity investors CCMP Capital Asia and Pacific Equity Partners (PEP) in 2006, for around $300 million.</p>
<p>However, in May, Mr Johnston bought the stakes of two major shareholders after he raised his previous bid from $13.1 million to $13.7 million.</p>
<p>Now that Arcade Finance has a 91.21 per cent stake in Godfreys, Mr Johnston will begin the compulsory acquisition of the rest shortly.</p>
<p>After a historically low share price drop in April, Mr Johnston said the slump in sales was due to a new series of ads which focused on product features rather than discounts and sales.</p>
<p>But retail expert Brian Walker, from the Retail Doctor Group, believes Godfreys’ problems run much deeper than a failed advertising campaign.</p>
<p>“Godfreys has been a very traditional, bricks-and-mortar-type retailer, but meanwhile the world around them has kept moving on,” he told <a href="https://www.news.com.au/finance/business/retail/vacuum-retailer-godfreys-battling-to-survive-thanks-to-competition-new-trends-and-the-rise-of-dyson/news-story/1550461652c4a1454eae71cd3ea2fb0a" target="_blank"><strong><span style="text-decoration: underline;">news.com.au.</span></strong></a></p>
<p>“They haven’t kept at the forefront of product innovation and development — they haven’t had a lot of new things to say for a few years.</p>
<p>“You need to keep your offer fresh with new products and it’s about creating stories — in their case, they had an invitation to be the experts, but I think they didn’t take that strongly enough.”</p>
<p>Mr Walker said the company had missed out when they failed to sell Dyson cleaners, a brand which regularly makes headlines because of new products and partnerships, including Aldi’s Special Buys.</p>
<p>Dyson has created a cult-following and Godfreys’ failure to stock the products impacted the company.</p>
<p>“In an age where there is more brand consciousness and awareness than ever before, retailers need to carry winning brands within their category,” Mr Walker said.</p>
<p>“There’s also been a significant level of underinvestment too; the shops look the same, feel the same and are the same as 10 years ago.”</p>
<p>Queensland University of Technology retail expert Dr Gary Mortimer told news.com.au that the company suffered by failing to present themselves as a vacuum expert.</p>
<p>“Like any business that specialises in one product, whether it is toys, sporting goods or vacuums, there needs to be a point of specialisation; you’ve got to own a brand and have exclusive rights to clearly insulate you from competition within the marketplace,” he said.</p>
<p>“When we see Dysons sold at Aldi occasionally, there’s no reason to walk into a specialty vacuum store if you can get the brand at a German discounter.</p>
<p>“You can get the brand anywhere, there’s no exclusivity or specialisation, so essentially there’s no point of difference, and no need to go into a specialty vacuum cleaner retailer.”</p>
<p>Dr Mortimer said that the options facing Mr Johnston included closing unprofitable stores, changing the distribution model, moving online or opening concession stalls with retailers such as Myer. </p>
<p>What are your thoughts? Let us know in the comments below. </p>
