Start Up Blog

Why Krispy Kreme failed in Australia

Posted in entrepreneurship by Steve Sammartino on November 3, 2010

No doubt you’ve heard the news about Krispy Kreme going into administration in Australia. Many people seemed surprised at the news given it was a such a successful launch. But when we look a little closer it’s pretty clear why they failed. They broke a few simple retail rules which are worth considering.

Why Krispy Kreme failed:

Firstly, they failed to understand that in this country they needed to operate as a specialty retailer. Instead they opened 50 stores in a few short years. When Krispy Kreme first opened their doors in this country (Sydney) it was a real treat and the store became a destination outlet. People would travel many miles to the store to buy a dozen doughnuts. You’d even see people returning on airplanes at Melbourne airport with big bags of Krispy Kreme doughnuts. It suggested that Kripsy Kreme had a strong novelty value in Australia. But it can be very misleading when people from wide spread geographies come you as a retailer of non essential items. Contrary to what the ‘spreadsheet’ might intimate, it’s rarely a good idea to take your retail offer to where they live.

To give you some perspective of the expansion folly, let’s consider this:

USA has 224 store serving population of 311 million. (1 store per 1.4m people)

Australia had 50 stores serving a population of 21 million. (1 store per 420K people)

The numbers are mind blowing and it doesn’t even take into account our vastly different food cultures.

The expansion was far too wide far too quick, and KK didn’t allow enough time to understand what their sustained demand would be prior to expansion. No doubt the temptation to expand rapidly during growth would be tempting, but sometimes the best decision we can make is to limit distribution and keep the brand exclusive.

twitter-follow-me13

When we get big

Posted in entrepreneurship by Steve Sammartino on August 1, 2010

There are many things we’ll implement when we get big enough. When our footprint is big enough to deserve the investment of the bigger, game changing idea. When we achieve X, we’ll implement Y.

Maybe we ought implement Y now and skip X altogether?

twitter-follow-me

World of Venn

Posted in entrepreneurship by Steve Sammartino on January 18, 2009

While we are bootstrapping our startups, it’s worth bootstrapping our lives simultaneously. We should be building projects with overlaps, to the extent that we end up living in a ‘World of Venn’. For the ‘un-nerds’ who can’t quite remember the Venn diagram, here’s a simple explanation:

Venn Diagram:
n.   A diagram using circles to represent sets, with the position and overlap of the circles indicating the relationships between the sets.

[After John Venn (1834-1923), British logician.]

The reason for doing this is simple. By living in a ‘World of Venn’, we are building intellectual assets which have synergy. Assets which are connected metaphysically. Constructs with similar ideals which can be shared, borrowed or stolen. The people in these worlds often overlap too. They’re often interested in learning about and helping in other areas of our Venn worlds. And importantly when one set dies or withers, it has an overlapping intersection on which we can refocus our efforts without having to start from the beginning.

Here’s a sample of parts of my world and the Venn relationships.

ss-venn-diagram

As you can see my worlds overlap and all build revenue streams.
–    Ideas and experiences from rentoid.com, give me great writing fodder and intellectual stimulation for this blog you are reading right now.
–    Startup blog has lead to more professional business writing I do for magazines and journals
–    My academic career at Melbourne University has lead to more Business writing and an upcoming book on marketing & investing.

The point is – they all feed each other, build on one another and leverage my personal areas of expertise.

Each success in one section adds credibility and strength to an overlapping area. The more overlaps we have, the larger our sweet spot becomes. When we have a great number of overlaps, life gets sweeter and the rewards are greater. This is why ‘work life balance’ is simply a hoax. Work is a large part of our life and should be joyous. To try and find time for things outside of work we actually ‘enjoy’, means we’ve got our life wrong. Once we live in a world of Venn our personal and financial growth is inevitable.

Venn is Zen. How Venn is your life?

twitter-follow-me12

Follow

Get every new post delivered to your Inbox.

Join 1,166 other followers