While many retailers struggle to survive the online onslaught, one group is bucking the trend – and thriving.
Should Super Retail Group even exist? This is the era of the online retailer, of Amazon and eBay and Kogan. Retailers with physical stores and car parks and shelves that customers can browse have been fighting for life. In Australia alone, just one month – January 2016 – saw electronics retailer Dick Smith and the local arm of Laura Ashley tumble into administration, while Woolworths announced it would offload struggling hardware venture Masters.
Yet Super Retail Group has thrived by herding together a collection of outdoorsy specialty retailers: Supercheap Auto, Amart Sports, BCF Boating Camping Fishing, Rebel, Ray’s Outdoors and more. It hasn’t been all plain sailing: 2015 profits dropped 25 per cent as the company closed New Zealand-based Fishing Camping Outdoor and restructured the Ray’s brand. Nevertheless, in the past decade the company has grown from 200 stores with a A$500 million turnover to more than 640 stores turning over A$2.3 billion.
On one measure, it is now Australia’s sixth-largest retailer. Not bad for a firm that began in 1974 as a car parts mail-order service.
How did it happen? Part of the answer has to be found in the man who has set the company’s direction for the past decade – Peter Birtles.
Taking the helm
When Birtles joined the business as chief financial officer in 2001, from UK pharmacy chain Boots, he came with experience across product, logistics, IT, HR and marketing. His new firm was still a relatively small single brand, with 60 Supercheap Auto stores in Queensland and New South Wales and sales of about A$150 million a year. It had ambitions, however, for fast growth and a listing on the Australian Securities Exchange. Those growth plans attracted Birtles, and under managing director Bob Thorn he helped make them happen.
“If people are less likely to go into a store, stores need to make them want to visit.”
When Thorn stepped down unexpectedly in 2005, Birtles was the natural successor. He says he had to consider whether the style of leadership he would bring to the business would work, and he felt the responsibility of continuing what Thorn had started. In January 2006, Birtles took on the top job.
Shifting to value
One of Birtles’ first big challenges as CEO was to address the company’s financial performance. Rapid growth was proving unsustainable.
“We needed a cultural shift in the organisation from one that was absolutely all about growth and making things happen quickly to actually doing things well and building for the long term,” says Birtles.
He also moved to broaden the company’s focus beyond price – “it was all about super cheap” – to value and quality. Supercheap Auto made small investments in quality, he says, and made clear to suppliers that the minimum specifications could not be eroded.
The management team also started building its own sourcing team to improve the quality of its Chinese-made goods and speed up the supply chain. In 2005, one in every 20 items manufactured or sourced directly was returned by customers because it didn’t work; now that figure is better than 1 in 200.
a small difference in cost price, we were able to make a huge difference in quality,” says Birtles.
Talent on the ground in China turned out to be an important factor in the success of the strategy. Birtles judged that success required the company to be “a bit more commanding and in control with our China team” than in the rest of the organisation.
“We were fortunate that we had a guy in the organisation who was keen to go and set this up,” he says.
“He has been absolutely fantastic, and taken on all the challenges of living in China and dealing with the administrative aspects that go with that, which are incredibly complex.”
Building up the team
Team-building was another challenge that Birtles sought to address. Half of the company’s staff was moving on each year, a common retail problem but one that was imposing a significant cost. In the past three to four years, the retention rates have soared to almost 75 per cent – well above industry standard. Engagement and purpose were also on Birtles’ hit list.
The business had operated under a “very directive” leadership style; Birtles sums it up as “here’s the direction everybody – charge”. That was probably appropriate for the company in its early days, he says, but with turnover passing A$500 million, the company needed to attract stronger people to a leadership group. That demanded a change to a more collaborative style.
Soon, he says, “there was a lot more coming up from within the organisation as opposed to everything being top down”. That approach extended to frontline staff. Dealing with a frustrated customer can be a confronting experience, he says; good leadership creates an environment where team members feel they have input. An intranet where staff can feed information back to management has attracted a strong response.
Retail in a digital age
Birtles has had to face the same challenge that almost every bricks-and-mortar retailer has confronted in the past decade: how to deal with online competition. Super Retail Group has concentrated on selling products that enable their customers to “experience their passion”. It has helped that those passions centre on cars, sport and outdoor leisure – products that the typical consumer wants to hold, feel and test before hauling out their credit card. Online retailers also struggle to deliver products like kayaks and outdoor dining settings.
What Birtles has seen, though, is that online retail can breathe fresh life into many of those stores still built of bricks. He sees instore and online services coming together in a “symbiotic relationship” to give customers better solutions. People are browsing online but heading to their local store for pick-up, shopping instore then signing up for the retailer’s online specials or using the retailer’s instore app to order out-of-stock items.
In a physical store, customers can get service they can’t get online.
At Supercheap Auto, for instance, they can buy their windscreen wiper and have it fitted, too. At BCF, they can sign up for a fishing charter when they pop in to buy a new reel.
These offerings are part of the more engaging and even entertaining service that Birtles wants to provide. If people are less likely to go into a store, he suggests, stores need to make them want to visit. Super Retail Group has now begun trialling “concept stores” to test these more engaging ideas. The company has also added two digital start-ups – a camping booking website and a price comparison site for car services.
The next step, says Birtles, is to explain to Super Retail staff how they need to change what they do as online commerce spreads. “You have people who have worked for many years in a traditional retail model and now you are telling them ‘work this way’,” he says.
Related: Top 4 ways the finance team adds value in a retail business
What’s in store for retail?
Birtles admits that riding the wave of change in retail is a little scary because it is unknown, and a lot will come down to taking a chance and seeing if it works. But he says the world is changing so fast you have no choice but to take risks if you want to stay ahead of the game.
“What better time is there to be in the retail industry?” he asks, with an edge of excitement in his voice. “You are not just doing the same thing anymore.”
Who is your favourite business thinker, and why?
“Don Meij who runs Domino’s Pizza here in Australia has done an incredible job taking a pizza company and effectively turning it into a technology company. He has created an environment in which his whole team is constantly coming up with innovation and ideas as to how to improve their business, but at the same time they are also very customer connected.
“It is a real benchmark for all of us as to how we can operate in this new world in a very successful way.
“What Domino’s has done particularly well is understand customer frustrations and then solve those customer frustrations, and that is something we are trying to learn from, because to solve it breeds loyalty.”
The plan is what matters
Knowing the right time to make strategic decisions is always a challenge, but Peter Birtles says having the right plan on how to deliver on your vision is more important.
“Sometimes circumstances mean you might need to change the actual timing of how you deliver that plan, but you are still aiming for the same place; you still want to get there,”
he says. Birtles describes it as travelling down a road: one day you have a clear run; the next day the road is chock-a-block and the pace has slowed.
“For quite a small difference in cost price, we were able to make a huge difference in quality.”
“You have to go according to what the conditions are sometimes, and you need to be willing to adapt and evolve,” he says.
“You can have the right strategy but sometimes you don’t necessarily operationalise that strategy as well as you might do.
“We have made mistakes along the way where we have got things wrong and then you have to rectify that.”
The numbers on Super Retail Group
- 8 retail brands Amart Sports, Avanti Fitness, BCF Boating Camping Fishing, Goldcross Cycles, Ray’s Outdoors, Rebel, Supercheap Auto, Workout World.
- 645 stores
- 6 distribution centres
- 12,000+ employees
- A$2.3 billion turnover
This article is from the March issue of INTHEBLACK.
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