CANDLE producer and retailer Dusk is something of an anomaly in a stagnant retail sector – expanding its store base, establishing an international retail presence and developing a direct-sales arm.
Perth-based Dusk recorded its strongest financial results in the 2010-11 year, while sales fell slightly in 2011-12 to $70 million, despite the store network expanding from 70 to 90 in the past two years.
With backing from its private equity owners, it is planning to expand its bricks and mortar base to 106 stores across Australia by focusing on regional areas in the next couple of years.
It is also currently recruiting between 30 and 50 direct sales consultants to sell its products through the ‘party plan’ model, whereby customers sign up to become consultants, go through training and sell Dusk’s candles in people’s homes, similar to the Tupperware or Thermomix model.
Managing director Greg Milne told WA Business News Dusk manufactured about 7,000 products and not all would be sold through the direct-sales model, although new products would be developed to offer customers more than just the in-store range.
Dusk developed the model because of customer demand, and Mr Milne believes Dusk is the second mainstream retailer after The Body Shop to employ the direct-sales model as well as having bricks and mortar stores.
The model is being trialled in WA before it is expanded across Australia. Most of Dusk’s 90 stores are in the eastern states, although Mr Milne said this wasn’t why Perth was first to get the direct-sales option.
Mr Milne estimated that the direct-sales model could have the potential to add $20 million to turnover, but suggested this would be more likely in five years or so.
Although the retail sector is struggling, Mr Milne said Dusk’s business model helped it remain buoyant.
“We are true vertical retail, we manufacture our own product and sell it in our own stores; we are not a franchise we are company owned,” he said.
“That means we can maintain quality but also that we can afford to pay rent that shopping centre landlords charge us; that’s why a lot of competitors have disappeared.
“Retail is tough, but as long as you offer outstanding customer experience and keep coming up with new products, it is going well.”
Cape Town, South Africa, is potentially going to be the first international location for Dusk, with plans to open that store in 2013.
Mr Milne said there was potential for 30 international stores and Dusk could build its international base on the fact the business manufactured all its candles in Perth and developed all its fragrances in its Perth research facility.
Dusk was founded in WA in 2000 and after growing organically was bought by BB Retail Capital, a private investment company established by retailer Brett Blundy.
In 2010, BB Retail Capital sold a majority shareholding in Dusk and another of its businesses, homewares retailer Adairs, to private equity fund Catalyst Investment Managers.
Senior managers at Dusk and Adairs are also shareholders in the business.
