Presentation on theme: "Supplier Conference May 2013"— Presentation transcript:
1Supplier Conference May 2013 This presentation contains information that is confidential to The Warehouse Group Limited. If you are not the intended recipient you must not peruse, use, disseminate, distribute or copy this report. Please notify Kerry Nickels, on phone to arrange for document retrieval.PRIVATE AND CONFIDENTIAL
2Welcome – Mike Pook Feedback from last years conference Today’s Agenda Your Expectations of TodayUpdate on our strategy from last yearWe’re listening to youWe need you to do some stuff nowYou get a sense of progress
3Feedback from last year We have repeated what you likedThe store visitHearing from the Leadership teamClarity on strategyWe have improved what you didn’t likeSimplified the slidesBigger room / better AVLess presentation; more Q & AWhat’s Next: This Presentation Pack will be ed to you along with a Survey Monkey to get your feedback
4Agenda (and Housekeeping) New Store walk through - TWL Royal OakStrategyMark PowellRed Shed Lead TeamCategory Support Initiatives – Raising the BarJon AdamsSupplier Survey and CommunicationsTania BenyonSir Stephen TindallQ&A SessionWrap UpQuestion session – explain what we want them to doFinally if you liked todays conference Mike the warehouse if you thinks its terrible Mark Powell……speaking of which I’d now like to handover to Mark
6Group Strategy A Trading Group with: multiple business unitsclear core competencies that can add value to each trading business unitDevelop & Leverage Core CompetenciesSourcing expertiseUnderstanding New Zealand Customer, Market, and ChannelsOur people, and a best practice Way of Working/CultureLeveraging Group Synergywhile still remaining “Customer Led, Store Focused and People Centered”Identify and grow business verticalswhere we can leverage core competencies to be number 1 or 2 in that business verticalA multi-focused group of companies leveraging our core competencies
7TWG Retail Brands The Warehouse Warehouse Stationery Noel Leeming Sales FY12: NZ$1.5bTeam: 7,000Stores: 92+ 55,000 SKUs onlineFoot Count: 1 million customersper wkPositioning:-- “House of Bargains”- “Home of Essentials”Markets: NZThe WarehouseSales FY12: NZ$210mTeam: 1,000Stores: 60+ 8,000 SKUs onlineFoot Count: 200,000 customersper wkPositioning:-- “Work, Study, Create,Connect”Markets: NZWarehouse StationerySales FY12: NZ$542mTeam: 1,500Stores: 75+ 4,500 SKUs onlineFoot Count: 279,000 customersper wkPositioning:-- “The Authority in specialty electronics and home appliances”Markets: NZNoel LeemingFinancialServicesThe Warehouse Financial Services Ltd, Various Consumer Finance productsMultiChannelSeamless Multi-Channel:- The Warehouse, Warehouse Stationery, Noel LeemingPureplay Online:- Red Alert, I Love Beauty, Torpedo 7, One DayServicesTech Solutions, Telecommunications, Connectivity
8Clearly Defined Competitive Advantage Customer Led, Stores Focused, People CentredSourcingExpertiseUnderstandingNew Zealand(Market, Channels, Customers)- Way of Work ing- Cultu re- Peop leBoth Leveraging Group synergies and remaining buy / sell trading dominated
9Way of Working Framework – Giving Competitive Advantage Customer Led, Front-line Focused, People CentredLeadership FrameworkStrategic Planning & Deployment FrameworkBusiness PrinciplesTeam ModelRetail PrinciplesBrand StrategyThinking SmarterSupport PrinciplesBrand SpecificsBrand Positioning & PersonalityCompany Working SmarterMarkAs you know, this is a view of our holistic way of workingDrawn from Wal-Mart and Tesco – it’s in their DNA to think long term and to have a clear understanding of how to drive continuous improvement across the businessThis is about making the TWL business bigger than one individual – stronger than charismatic leadershipLeadership framework, team model & thinking smarter – explicit models that we want to be a part of the businessBusiness and retail principles & customer promise – are things that we should never changeExplain we’re adding Support principlesInspiration through brainwavesThe frame work is the anchor, the working smarter bit is how we execute our strategyMerchandiseWorking Smarter Buying SmarterStoresWorking Smarter Selling SmarterPeoplePolicy, Process & Systems
10Group SynergyEach retail brand in The Warehouse Group has and will continue to have its own distinct brand positioning and personalityWhile the retail brands do have some category overlap there is a large degree of distinctness in customers, product range and sales process
12Red Strategy Evolution – Key Result Areas Brand and Price & Promo FrameworkClear ‘Way of Working’ FrameworkMulti Channel and Direct Customer EngagementCategory Strategies and Margin Dollar GrowthStore Experience: Execution and RejuvenationNow here is the updated strategy which has six key result areas. This is in line with what we presented last July but shows broadening and deepening.The first three parts of the strategy are a reaffirmation of the strategy we presented last July.Community and EnvironmentFinancial Services & Other Services
13Warehouse Group Strategy Building Long Term Sustainable GrowthBuilding a 100 Year BusinessBuilding something we can all be proud of…For our Customers, our Team, our Shareholders, our Suppliers and for New Zealand
14Store & Customer Experience: Execution & Rejuvenation Simon TurnerEGM Store Operations
15It starts with the CUSTOMER This is what we want our customers to say…… The Prices are greatI can get what I want, when I want, where I wantService is quick - I don’t wait too longThe Quality is rightI can get help, information and advice I need when I want itI am loyal to the Warehouse and tell others how great it isI enjoy the shopping environment
16Store Experience : Execution and Rejuvenation Strategy 2014Store experience:Increased emphasis on productivity and customer serviceStrategy 2013Store experience:Execution and rejuvenationEvolutionOur primary goal is to improve our in-store customer experienceDeveloping a ‘better (for customers) simpler (for our people) and cheaper (for profit)’ approachStores Working Smarter to deliver increased productivity: Using Westgate as a ‘store of the truth’, with a focus on 3 areas - checkouts, ticketing, night fillingClosing the gap between best and worst stores and driving all stores to excellenceAccelerating the internal and external modernisation programme and refits20 refits completed so far16 modernisations completedStores are improving, but now we have to do more (for customers), with less resources!
17Suppliers can help us to deliver ‘Better, Simpler, Cheaper’ We are focused on Better for customers....Love Your Customer (Behavioural and interaction training)Specialised training (product service, product knowledge)Developing a service style of leadershipYou can help us with Simpler for our people....Productivity improvements e.g. shelf ready packaging, clear product descriptions on outers, appropriate case sizes etcImproving stock flows, replenishment and availability e.g. DIFOT, planning of FIS deliveriesAnd Cheaper for profits...Continuation of focus on Shrinkage e.g. quality packaging to reduce damages in store and tagging
18‘Better, Simpler, Cheaper’ for Store Visits Visiting & Servicing Stores…Merchandising, rep & vendor support in stores is appreciatedThe resource & financial commitment is highStores need help in a consistent wayHow can we help each other…Develop a set of guidelines to use when servicing storesA set of workshops with our suppliers are planned, starting now, completed by end of JulyBuild and agree guidelines - ready for launch 1st AugustProviding consistency of approachFrom you I need…Your attendance & feedback in workshops – let me know if you are interested in attendingOnce guidelines finalized, full communication to your team and eventual compliance’Our primary goal is ‘better for customersPRIVATE AND CONFIDENTIAL218
19Brand and Price & Promo Framework Tania BenyonEGM - Merchandise
20Same Store Sales Trend Continues to Improve The trend of improving Same Store Sales continues with now 8 consecutive quarters for the first time since 2004We are very early in our transformation journey. The scale of change required is significant and there is still much to do – It’s all about Products & Quality, Price, Store Environment and Service, - The Strategy must address these areas
21Brand & Price/Promo Framework StrategyEstablish and drive clear brand positioning, personality andapproach to Price & PromotionStrategy 2014 & BeyondEmbed brand positioning and Price & Promotion framework. Focus on Pointsof differenceEvolutionClear Brand Positioning & Personality to drive “New Zealand's most loved retailer” = relevanceDeeper understanding of customer perceptions/awareness through customer panelDrive brand re-appraisal = price + quality + service + patience: Understand and address inhibitors to re-appraisal‘House of Bargains’ & ‘Home of Essentials’ = differentiationHome of Essentials: Dial UpHouse of Bargains: Continuous ImprovementEmbedding and Evolution of the Price and Promotional Framework = promotional excellence plus guides advertising, pricing & store executionDeeper understanding of customer perceptions/awareness, and inhibitors to re-appraisalAddress inhibitors to re-appraisalMotherbrand activity, Promotional Framework and PR (see appendix)Major Events & campaigns reiterating HOB & HOEHome of Essentials: Dial Up“Always on” Price champion -, EDLP/’Red Price’, Price PerceptorsPromote quality - credible house brands, supported by National brand haloHouse of Bargains: Continuous ImprovementStrong TWL owned and seasonal events to mitigate Ho/Lo retailers and non-traditional channelsBargains: Sourcing (e.g. Parallels) and Channels (e.g. Online)HI-LO, WOW deals, Key Volume Drivers, Compare our Price, Price BreakthroughsClear ‘Promotion & Price Framework’ guides advertising, pricing & store executionUnderstanding key promotional drivers to deliver reappraisalWhilst HOB & HOE have been increasingly embedded over the last 18 months, brand perception (sum of parts) takes a long time to change – to drive re-appraisal by customers
22Competitive Positioning Recent tracking shows positive improvements especially in store, but still requires significant, concerted focus on Product & Quality, Price, Store Environment and Service to really change customer perception, driving greater spend and frequency with existing customers, and reappraisal by those who have stopped shopping with us.We have a unique competitive positioning – and are famous for House of Bargains. We still need to embed Home of Essentials.
23Category Strategies and Margin Dollar Growth General Merchandise and Apparel
24Category Strategies and Margin Dollar Growth Strategy 2013Category Strategies andMargin Dollar GrowthStrategy 2014Category Strategies and Margin Dollar Growth through continuous improvementEvolutionProduct the key to making TWL the “House of Bargains” and “Home of Essentials”Category Strategy Guidelines: Win-Lead, Play-Grow, Play-Dominate, Play-ShowClear Brand Matrix and Price Architecture (Very Basic, Basic, Better, Best) , Brand and Private Label FrameworkTrading Triangle Framework – commercial thinking to drive GMROI, reduce COGS and optimise retail priceFocused on where we can leverage competitive advantagePrice and Promotional Framework; clarity on traffic drivers, sales drivers and GP$ driversCommercial ThinkingShape ChangersMerchandise ZonesA Unique Category Mix and Offer in the Market.
25CSB High Level by Category Some categories have shifted location within the CSB framework. More refinement (including at sub category level) will follow driven by continuous improvement and deepening of our strategic thinking.
26Shape Change Strategies Cross Category Defensible ThemesLeverage multiple categories for an advantage in the marketplaceZonesLeverage our ability to bring together consumables and general merchandiseTechnology and Entertainment For Everyone – Sales driverHelping everyone connect and entertain with their favourite ‘Big Brands’ at TWL pricesEverything for Home – Sales and GM$ driverEverything you need and want for your home under one roof at a price you can affordEnjoying Outdoors – Sales and GM$ driverDelivering NZ’s best outdoors range under one roof making everything affordable for everyone to enjoyCelebrations For Everyone – Sales and GM$ driverMaking it easy for people to celebrate the important events in their lives with everything available to make parties, gifting and treating themselves or others easy and affordableHome of Apparel Essentials – Sales driverAll the family’s essential clothing and everyday footwear needs, of a fit-for-purpose quality at a price that excitesPet Zone – Sales and GM$ driverProviding a “One Stop Shop” for all your pet needs and wants, at prices you can afford with quality you can trustBook Zone - Sales driverThe books your family wants at NZ’s lowest prices always availableBaby Zone – Sales and GM$ driverProviding a “One Stop Shop” for all your baby needs, at prices you can afford with quality you can trustAccessories Zone – Sales and GM$ driverCreating a one-stop women’s accessories shop – the first choice for a woman to enhance her wardrobe.Jewellery Zone – Sales and GM$ driverDelivering NZ’s best value fine jewellery range, offering gifting solutions, for others and self, at affordable pricesWe have made good progress and the shape change strategies will continue to evolve
27Quality Support Evolution Strategy 2013Build on Direct Sourcing, andstop the brand damage in qualityEvolutionStrategy 2014Leverage sourcing strengths, and improve fit for use quality when sourcingProduct Quality Improvement - immediate action taken & long term strategy developedMeasurement and PARs drive continuous improvement in qualitySimplify quality processes and ensure fit for use prior to purchaseMarket leading quality and ethical processes to be proud ofPre-qualification for quality and ethical sourcing in place for new sources, an accredited partner network beyond China, and QC in place for all sourcesContinue to reduce return rates (thresholds dropped to 5% from 20%, 52% (232k) less units returnedFit for use specifications in place prior to placing orders for priority categoriesSuppliers have a key role in delivering quality products that match our specifications and meet our Customers expectations
28Multi Channel and Direct Customer Engagement Multi Channel StrategyAndrew BuxtonCEO – Multi Channel
29Multi ChannelStrategy 2013Multi Channel and Direct Customer ProgramsEvolutionStrategy 2014Multi Channel ExpansionMultiple new online stores and extended rangesOnline entry into international salesMaking the in-store/online brand experience seamless, including click & collectRetail principles still apply for customer experienceIncreasing speed of growth encouraging 135% increase in online sales in H1 F13Multiple initiatives delivered in H1 F13 such as Red Alert, Your Warehouse, Longtail books.Fulfilment for full range online established – 3 store FC’s, apparel DC, Red Alert DCMargin, operations and operating costs learnings and challenges with high growthBringing Essentials and Bargains through all channels to NZ
30Multichannel Strategic Focus Leverage existing stores and brands for online/offline growthDevelop/acquire new online stores to capture market shareGrow internationally with limited investmentAlternative ChannelsContinue growth of bargain sourcing to support traditional/new businessesDevelop event/pop-up physical channel whilst retaining profitabilityInvest for revenue and margin growth
31Direct Customer Engagement Strategy 2013Multi Channel and Direct Customer ProgramsEvolutionStrategy 2014Customer Loyalty, Contact, EngagementBusiness focus using BizRewards across brandsGrowth of BizRewards by targeting segmentsBuilding consumer information to use for increased segmentation and business growthDeveloping deep customer interaction into a competitive strengthLinking consumer info with services and financial servicesBizRewards growing at 40% more than the $43m in FY12BizRewards launched and growing in TWLDeveloping target segments and initial acquisitions/comms for BizRewardsLaunched Your Warehouse as initial personalisationDeveloped contact centre improvement planCRM being implemented but progress slowCustomer database grown 50% in TWL (over 260k)Getting closer to our customers so they love us!
33Category Strategies and Margin Dollar Growth Support Initiatives Jon AdamsEGM Merchandise Support & Logistics
34Red Strategy Evolution – Key Result Areas Brand and Price & Promo FrameworkClear ‘Way of Working’ FrameworkMulti Channel and Direct Customer EngagementCategory Strategies and Margin Dollar GrowthStore Experience: Execution and RejuvenationNow here is the updated strategy which has six key result areas. This is in line with what we presented last July but shows broadening and deepening.The first three parts of the strategy are a reaffirmation of the strategy we presented last July.Community and EnvironmentFinancial Services & Other Services
35Category Strategy–Support Initiatives Building and prioritising our plan, focusing on improved ways of workingStrategy 2014Delivery of key priorities of our plan ensuring they are embedded and sustainableEvolutionImprove Merchandise Ways of WorkingRange and Space ResetBetter Gross Profit ManagementSimpler Promotions and Ticketing processesEmbed Value Streams and Better Stock ManagementLogistics DevelopmentsImproved Supplier CollaborationYear 1 of our 3 to 5 year journey is complete and we are broadly on track.
36Supplier Challenge Get the Basics Right Delivery Frequency& Channel Our Suppliers Are Critical to our Joint Success and We Need to Raise the BarWe are committed to working with suppliers to fix the basics and drive improvements.Distribution CentreStoresSupplierInbound TransportOutbound TransportSupplier Challenge Get the Basics RightDelivery Frequency& ChannelLead TimeEDIMOQ’sService LevelsOn Time DeliveryStock LevelsShelf LifePack SizeEvent PlanningSupplier performance is very critical to our overall success. We are working with the suppliers to get the basics right and deliver fundamental capabilities that are core to our joint success. Without these basicsDelivery frequency – increasing delivery frequency to drive improved stock levels, lower inventory, and improved freshnessLead times – shrink order lead-times to better align to actual demand requirementsMinimum Order Quantities (MOQ) – Reducing minimum order quantities to enable frequent orders aligned to actual demand, improving availability and inventory levelsEDI – implementing the basic EDI principles such as ASNs, etc, to improve product visibility and information sharingService levels above 95% - basic requirement to serve our customersOn-time deliveries
37Supplier News – What’s Coming Replenishment Review:Delivery Frequency and Lead timesPack sizesUnit pickDelivery channelData integrity: Improved Supplier Data Capture SheetReverse Logistics: sign up to the CRC (if not already)Supplier Scorecard: Raise the Bar e.g. DIFOTE- Supplier: ramp up EDI and ASN roll out
38E-Supplier – now LIVE in TWL 19 local suppliers are live on EDI and ASN’s which is over 20% of our local purchasesFeedback from “live” suppliers is on-boarding has been easier than expectedThis is a win-win for TWL and our suppliers.Improving data accuracyReducing ordering lead times driving availability and salesReducing the cost of doing business for both supplier and TWL,Simplifying ordering and payments processesWhat’s next?Top 100 suppliers (accounting for around 90% of our local purchases) on line by the end of 2013.Trading electronically with all local suppliers by the end of 2014We have contacted you already but if you have any queries please contact Ray Renner, our EDI On-Boarding Project Manager on
39WE CAN DO BETTER FOR 2013! Christmas is Coming! Last year we step changed our focus on jointly executing a successful plan. This included:Key contacts over peak periodStaying open and delivering on time and in fullHighlighted closed daysFocus on post Christmas recoveryResults were an improvement year on year but were still mixed27 of our top 100 suppliers didn’t provide us requested details/plans25 of top 100 suppliers still closed for 4 days or moreOn shelf availability dipped nearly 3% during January recovery periodFlag up Marians ?WE CAN DO BETTER FOR 2013!
40Suppliers and TWL: Working Together Tania Benyon
42OverviewThe Warehouse conducted a survey of our suppliers to get a better understanding of how you rated us across various performance attributes.It was decided to use Coalface Consulting, an independent market research company, to carry out this research to ensure objectivity and confidentiality.We plan to make this an annual survey to allow comparisons to be made year-on-year.Warehouse Stationery have been doing this since 2008 and have made significant year on year improvements.Response RateTotal Response rate of 73% (83 of 113)By survey industry standards this is deemed to be a good response rate for a first survey – Thank you for your responses
43HeadlinesGood set of results: you mostly are happy with our interaction (once you get hold of us!)Good Feedback from you regarding our direction - the future is bright!Some good ACHIEVABLE opportunities for us to work onKey Opportunities for the TWL teams:Speed of Response: respond to suppliers quickly even if its bad news for themVisibility of Strategy: share our strategy more effectively with you; we have a strategy but we don’t share it
44Summary of All Survey Questions Suppliers were asked to rate The Warehouse Store Support Office using a 5-point scale(Strongly disagree in RED to Strongly Agree in BLUE)Our objective is to move the BLUE further along the scale to the left next yearSolutions:SharingStrategiesSpeed toMarketCommunication
45You were asked to list three things you think TWL should stop doing; Your Comments included:Not involving key suppliersLittle time to meet with suppliersSlow decision makingDepartments not communicating with each otherPoor store complianceMaking mistakes with dataHigh staff turnover and use of inexperienced staffParallel importing major brandsStop being so greedy on marginDiscountingWe are addressing these in our Action PlansSorry but this is the way we work!
46Next Steps for the TWL team We asked our teams to: Review the detailed feedback as a teamAgree an action plan for their team focusing on the big wins not individual commentsNot take the feedback personally, and to use it as an opportunity to improve and work with suppliers more effectivelyEach team has built an action plan; ask about it next time you talk to us
47Supplier Survey – Team Action Plan Highlights Quick response to Supplier s/Phone calls – Implement a two day turnaround rule to reply to any and all supplier s and telephone calls even if to advise further time requiredCommunicate how long things will take (in order to manage expectations).Calendar of Supplier meetings based on strategic importance of Supplier – some Supplier meetings to be in storeShare Promo and Range strategies with key Suppliers so they can review and tailor submissions as appropriateStop slow / no decision making; quick, direct answers.Stop taking so long to discuss & implement ideas through TWL
48Supplier Engagement – New News for 2013 Supplier PromiseSupplier BrainwavesSupplier Communication Plans
49Supplier Promise What we expect from you What you can expect from us We operate ethicallyWe will treat you fairly and with respectWe will support you to meet high labour standardsWe buy and sell our products responsiblyWe abide by our terms of TradeWe will work with you in good faith to resolve any escalated disputesWe will abide by our Ways of WorkingWe will use language and behaviour that supports our guiding principlesWe seek to continuously improve our ways of working with suppliers by acting on Supplier BrainwavesWe commit to responding to suppliers in a timely fashionOur answers will correspond to the successful delivery of our strategyOperate EthicallyEmployment is freely chosenWorking conditions are safe and hygienicChild labour shall not be usedLiving wages are paidNo discrimination is practicedNo harsh or inhuman treatment is allowedTo abide by our terms of trade;Be knowledgeable about the regulatory body that you are operating withinOperate fairly and responsibly and with transparencyEscalate disputes appropriatelyTo support TWL in delivering our strategyThrough appropriate price, product and promotion submissionsSupply products that match our customer promise on quality standards
50We will email registration instructions by the end of May We want to hear your ideas! From the end of May we will have secured our brainwaves website so only existing suppliers can access it and submit ideas to usSupplier BrainwavesYou can currently access the supplier brainwaves site via the supplier section on the TWL website BUT from the end of May to get access first you’ll need to register as a supplier.This password will also give you access to the Supplier notices section of the website which we will use to communicate any information to you.All brainwaves will be reviewed by Tania Benyon and allocated to the appropriate team member for a responseWe will registration instructions by the end of May
51Other Supplier Communications Strategic Supplier Sessions being planned:-Strategic touch points to foster closer working relationships, expedite feedback channels, improve access to TWL leadership group, work on issues and opportunities jointly.Supplier ‘check-ins’ – “The Breakfast Club”Strategic Supplier Focus Groups – targeted feedback sessions with small selected groupsTopics such as eg. Ethical Sourcing, vendor refillsSupplier “Ways of Working”Improving our way of working together, utilising group skills and expertise to drive continuous improvement“Thinking Smarter” for Suppliers – pilot in JuneBut wait – there’s more!!The Supplier Website is being reviewed and revamped – watch this space!Next Supplier Survey - November 2013Supplier Charity Dinner – November 2013Charity Golf Day – March 2014Next conference – May 2014
54Q&A with the Red Shed Leadership Team Mark Powell – CEOSimon Turner – EGM Store OperationsTania Benyon – EGM MerchandiseJon Adams – EGM Merchandise Support and LogisticsAndrew Buxton – CEO Multi ChannelMike Pook - MC
55Q&A with the Red Shed Leadership Team Questions answered on the dayWhy do our teams have to attend so many internal meetings? – it stops them doing stuffOur internal meetings are where we do our work – we don’t have any other forums to make decisions about trading the business or driving improvement. This is part of our way of working. We do recognise that suppliers would like more time with category managers/buyers which is why we would like to create calendars with you that set agreed frequencies for meetings relevant to your business with us.Any plans for gathering customer data similar to club card like Tesco in the UK?We have had some debate about this internally but no decision has been made. We recognise that we are a different business to Tesco (and other international brands) so we are careful that we assess ideas against our own criteria in order to translate for TWL, not transfer.Why do we do parallel imports?The primary reason is because this supports our House of Bargains positioning and allows us to bring NZers the low prices enjoyed by consumers in other countries. Another strong reason is that some brands have historically refused to supply The Warehouse and so PIs have enabled us to offer branded items to our customers at great prices.Do we plan to centralise more products from direct store deliveries to delivery via DC?The answer is we should supply in the most customer centric way. Usually this is via DC as it allows us to ensure product is delivered ‘store friendly’ (faster to shelf) and we can make sure it is delivered on time for promotional activity. FIS vs. FID delivery will also be assessed on a cost basis.Plans for delivery to customers for website?We are working through different delivery options and these will also evolve over time. Currently we pick from fulfilment centres for ranged items and drop ship from suppliers for other items.
56Q&A with the Red Shed Leadership Team Questions not read on the dayBetter, simpler, cheaper. The ticketing process should be owned by TWL. At the moment it is a 4-step process that involves suppliers - extra time; extra communication; extra complexity. Suppliers should concentrate on servicing.Sorry, we are not clear on the process you are referencing here. We really want to answer your question so please submit a brainwave with a bit more detail, or send me an and we will provide an answer.Over a number of years with changes of buyers we have noticed/experience quite large reduction sin key promotions & volumes, e.g. BTS – 5-6 years ago we would expect 20-30K units sales for BTS. With the course of time and changes in buyers, BTS 2013 volumes were 4-5k. Q: Is this information we should be alerting you to? And to who? From a supplier point of view, TWL is giving up market share without a fight or though ignorance?Any concerns you have with volumes changing should be initially raised to the category manager/buyer, and then to the merchandise manager if you do not think they have been addressed. There are many reasons for volume changes such as the market changing in size or trends. In the example above our BTS share has actually been growing so potentially the business may have shifted to another supplier. Your category manager would be able to confirm this for you and advise the reasons.Do you see any product lines/opportunities to be brought back to NZ, leading to job creation, investing in NZWe do not have any view currently on production that can be bought back to NZ. We remain supportive of NZ made items that fit with our category strategy.
57Q&A with the Red Shed Leadership Team Will BizRewards expand to Noel Leeming and Torpedo 7 products and ranges?BizRewards is a great scheme for businesses. Nothing has been decided yet but we are reviewing whether to extend BizRewards to Noel Leeming as it seems like a good fit. We don’t plan to expand BizRewards to Torpedo7 due to it’s sporting/adventure range not being relevant (largely) for businesses.Why did you buy Torpedo 7? Do you intend to use it as an online bridgehead into Australia?Torpedo 7 has the largest deals business in NZ with 1-Day.co.nz and has a great brand and existing sporting adventure business backed up by a great team with the opportunity for much more expansion from this base. Torpedo 7 has a significant portion of its business in Australia which we can learn from with other online retail brands we may launch there.With the acquisition of Torpedo 7, how do you see range differentiation?Torpedo 7 is a pure play online specialist with a different brand personality and range position strategy to TWL. Torpedo 7 has a wider, more branded, adventure sports range focus. TWL will continue to build category strategies and range plans based on our category strategy box thinking including very basic, basic, better and best brands delivering a range of price points across multiple segments.Will OEM brands be sacrificed (which TWL) built its business on in the quest for brands?No, within our brand matrix there is room for both house brands and national brands. Both are important to deliver our house of bargains and home of essentials positioning. We are working towards having strong house brands in almost every segment.Re: focus on training product knowledge. How do we support you? Online training; store after hours, during hours; training events?The PK training we need will vary by category. To date our approach has been ad hoc, supplier by supplier – particularly as we have rolled out brands. We will form a view on our preferred approach over the coming months and it is likely to include elements of all the options you have listed.
58Q&A with the Red Shed Leadership Team What categories are you looking to strengthen local supply baseWe are reviewing our sourcing to ensure that we are clear on the best way to source for each product i.e. buying or selling agent, direct , or local supplier. We have no view on which categories should be sourced locally, rather we want to source appropriately to ensure ethical, lowest COGS, quality and delivery standards are met.What is the strategy to use local supplier vs.. Shanghai buying office? %. Particularly in apparel.Our strategy is to use agents/local suppliers where they offer a clear advantage over SRO such as technical expertise in a particular segment. There is no set %.How do we as suppliers handle the quality price issue when there seems to be an obsession with Kmart whose margin expectations are much less than TWL?As suppliers you need to be honest with your category manager/buyer so we can make informed decisions. We are not obsessed with Kmart as we ‘follow our customer’, however we recognise they have engineered product to particular key price points – this is why it is important for us to establish the very basic segment in our brand matrix. We will have an (market) opening price point within our offer and it will be marketed authentically. I.e. fit for purpose and worth what I paid.Buyers still focus on themselves and are not leveraging efficiencies or productivity advantage with the suppliersThis is not really a question but it sounds like you are frustrated. My suggestion is to contact either the merchandise manager or myself with your specific concern so we can understand the issue. It will be important to also understand where your category is located in the category strategy box as this could help explain some of our actions.Business strategy is great. Is there a plan to communicate the category strategy to suppliers.Our category strategies are detailed plans that support the overall business strategy – every category manager has a strategy and they will be able to talk you through the key points. I suggest you ask for the category strategy box placement and retail principles, the brand matrix, and the value cocktail to get a good overview.CRC return centres, are those being reviewed at all for performance (not good to date)We have one CRC (Centralised Returns Centre) which is a key part of our supply chain. This is operated by an experienced 3PL (TIC) who operate returns operations for major retailers across Australasia, but it is also managed closely by our Logistics team, including on site support. It has been open since September and we are pleased with progress to date, although as in all areas, there is always more to do. One challenge that has come through is returns stock from suppliers yet to sign up creates capacity issues – so it is critical that all suppliers sign up, as this forms part of the way we do business at TWL.
60Conclusion: The Warehouse (Red Sheds) No economic headwind or tailwind is expectedLong term declines in sales have been reversed and market share stabilisedKey customer concerns are Price, Store Environment, Service, Products & QualityCustomer perceptions are very slow to change, but improvement is detectableWe are very early in our transformation journey. The scale of change required is significant and there is still much to do – It’s all about Products & Quality, Price, Store Environment and Service, - The Strategy must address these areas and does…6060
61Red Strategy Evolution – Key Result Areas Brand and Price & Promo FrameworkClear ‘Way of Working’ FrameworkMulti Channel and Direct Customer EngagementCategory Strategies and Margin Dollar GrowthStore Experience: Execution and RejuvenationNow here is the updated strategy which has six key result areas. This is in line with what we presented last July but shows broadening and deepening.The first three parts of the strategy are a reaffirmation of the strategy we presented last July.Community and EnvironmentFinancial Services & Other Services
62Warehouse Group Strategy Building Long Term Sustainable GrowthBuilding a 100 Year BusinessBuilding something we can all be proud of…For our Customers, our Team, our Shareholders, our Suppliers and for New Zealand