2013 CORPORATE REVIEW
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ABOUT THIS REVIEW
CONTENTS ABOUT US..............................................4
This review is designed to be an easy to read record of our achievements against the objectives and deliverables of our strategic plan. It also sets out our financial position for the 2012-2013 year. Each chapter outlines the performance, challenges and key initiatives within our core business units during the past twelve months. The Corporate Review, along with our Annual Report, is one of the methods we use to report on our activities to our stakeholders and the general public. This review and past reviews are available to view online at www.superretailgroup.com
OUR NETWORK......................................6 YEAR IN REVIEW....................................8 GROUP DEVELOPMENT.........................12 CORPORATE RESPONSIBILITY................13 ENVIRONMENT......................................14 COMMUNITY.........................................16 SYSTEMS................................................18 SUPER RETAIL COMMERCIAL.................19 INTERNATIONAL OPERATIONS...............20 LOGISTICS..............................................21 AUTO RETAILING....................................22 LEISURE RETAILING................................24 SPORTS RETAILING.................................30
Only 700 copies of this review were printed, using forestry sustainable paper.
OUR people..........................................32
Š 2013
PERFORMANCE TRENDS........................37
Super Retail Group Limited 751 Gympie Road Lawnton Queensland 4500 AUSTRALIA
APPENDIX..............................................36 FINANCIAL STATEMENTS.......................38
www.superretailgroup.com
FEEDBACK We welcome your feedback and suggestions on this review. Please refer any comments to our Group Communications team: Telephone: +61 7 3482 7900 Fax: +61 7 3482 7161 Email: communications@superretailgroup.com
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ABOUT US OUR MISSION To provide solutions and engaging experiences that enable our customers to make the most of their leisure time. Super Retail Group is one of Australasia’s Top 10 corporate retailers and is listed on the Australian Stock Exchange. Our portfolio of retail brands includes Amart Sports, BCF Boating Camping Fishing, Goldcross Cycles, FCO Fishing Camping Outdoors, Ray’s Outdoors, Rebel and Supercheap Auto. In addition to our retail brands, the Group’s business-to-business division, Super Retail Commercial offers a single point of contact for corporate clients throughout Australia, New Zealand and Asia Pacific to leverage off the Group’s sourcing and supply chain capabilities and purchase products across multiple specialised categories available within our retail brands. Started in 1972 and publicly listed in 2004, the Group has grown to become one of Australasia’s leading specialty retailers with more than 600 stores and annualised turnover in excess of $2 billion.
OUR VISION To be Australasia’s most highly regarded specialty retailer.
With operations in Australia, New Zealand and China, Super Retail Group’s success is underpinned by a continued focus on maintaining and enhancing our culture, products and core values, which are embodied by our passionate team of more than 12,000. Our ability to deliver great value, choices, products and service to our customers, in whichever manner they prefer to experience our brands, is achieved through our continued focus on new product introduction, sourcing and supply chain initiatives, and the further development of our integrated multi-channel customer offer. The defining principle of our businesses is to offer products and services that will enhance our customers’ leisure time. In many cases we are selling products to enable our customers to enjoy their passion, whether it’s the car that’s their pride and joy, taking the family fishing or training to take part in a triathlon.
OUR GOALS • To be one of the five largest Australasian retail companies • To achieve the highest team member engagement across the retail sector • To achieve higher customer satisfaction ratings than our competitors in the markets in which we operate • To provide returns to our shareholders that exceed the benchmark ASX200 by 5%
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DIFFERENTIATORS PRODUCTS & INNOVATION
Identifying and launching innovative brands, products, services and concepts quicker than our competitors whilst maintaining the relevance of our core range
PASSIONATE TEAM MEMBERS
Providing opportunities and maintaining a culture that attracts, develops, engages and retains loyal and passionate team members
CUSTOMER ENGAGEMENT
Having a clear understanding of our customers’ requirements and delivering friendly, informative, engaging experiences which allow them to shop their way
PARTNER ENGAGEMENT
Developing collaborative business relationships with our partners to enable delivery of mutual goals
BUSINESS SYSTEMS
SPEED & DISCIPLINE
Leveraging our core systems, infrastructure and processes to provide agile and cost effective multichannel solutions
Executing our plans with speed and discipline to ensure we achieve our objectives
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OUR NETWORK
EUROPE
STORE NUMBERS BY STATE LEGEND AMART SPORTS
BCF
FCO
GOLDCROSS CYCLES
RAY’S OUTDOORS
REBEL
SUPERCHEAP AUTO
INDIA
ACT
NSW
NT
QLD
SA
TAS
VIC
WA
NZ
TOTAL
AMART SPORTS
BRAND
-
2
1
26
6
-
7
-
-
42
BCF
3
30
1
31
6
-
18
16
-
105
FCO
-
-
-
-
-
-
-
-
13
13
GOLDCROSS CYCLES
-
-
-
7
-
-
-
-
-
7
RAY’S OUTDOORS
1
8
-
11
5
3
20
7
-
55
REBEL
2
35
-
10
6
1
27
11
-
92
SUPERCHEAP AUTO
4
63
3
77
17
5
49
26
44
288
TOTAL
10
138
5
162
40
9
121
60
57
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OUR SUPPLY CHAIN
CHINA
LEGEND super retail group distribution centre shipping
A
ROAD FREIGHT
THAILAND
AIR FREIGHT
VIETNAM
SINGAPORE
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YEAR IN REVIEW We are pleased to be able to report on a further year of growth and achievement for our company. The key drivers of performance continue to be merchandise renewal and presentation, private brand development, engaging marketing, sourcing and supply chain execution and the passion of our team members.
In a generally flat retail environment, the Group’s focus on retailing products that our customers predominantly use as part of a leisure experience has served us well. We believe that our customers will continue to spend on their passions deferring expenditure in other areas.
Information Technology systems. Traffic to the Group’s websites increased by 50% compared to the previous year as our customers increasingly research potential purchases before visiting stores.
Group Results Each of the Group’s larger businesses (Supercheap Auto, BCF Boating Camping Fishing, Rebel and Amart Sports) performed well; opening new stores, delivering strong like for like sales growth and generating improved profit. We have completed a review of the Ray’s Outdoors, FCO Fishing Camping Outdoors and Goldcross Cycles businesses and a number of business improvement initiatives have commenced to grow their sales and profit. Early results are encouraging. Associated non-recurring restructuring costs of $16.2 million have been recognised. Last year, the Group commenced a program of initiatives to develop the capabilities that our businesses will require to successfully operate as integrated multichannel retailers. During the year, the Group invested circa $53.9 million in capital expenditure and $4.1 million in operating expenses on these programs. Progress to date is on track with notable achievements during the year including the launch of the Supercheap Auto loyalty program in Australia, the implementation of integrated real time information systems across the Group’s functions, the development of an integrated freight solution for internet and trade customers and the foundation for the integration of the Sports businesses onto the Group’s
Group sales grew by 22% to $2.02 billion and profit after tax also grew by 23% to $102.7 million. This strong overall growth reflected solid growth in the Auto and Leisure Retailing Divisions and a full year’s contribution from the Sports Retailing Division (as compared to eight months contribution in the prior period). Costs of $16.2 million relating to the restructuring of the Ray’s Outdoors and Goldcross Cycles businesses were expensed during the year while costs of $11.7 million associated with the acquisition of the Sports Retailing businesses were expensed in the prior period.
Each of the Group’s larger businesses performed well; opening new stores, delivering strong like for like sales growth and generating improved profit. The Group’s larger businesses generated strong like for like sales growth, opened new stores and delivered improvements in gross margins. This was achieved through a combination of new product introduction,
private brand development and marketing, sourcing and supply chain initiatives. The Group has continued to invest in the development of the Group with $63.1 million capital expenditure and $4.1 million operating costs associated with the Group’s multi-channel development projects and $43.6 million capital expenditure associated with new and refurbished stores. Despite this investment, Group Net Debt at $329.3 million was $11.7 million below the prior year reflecting the strong operating cash flow generated across the Group.
Auto Retailing The Supercheap Auto business has continued to perform strongly with its strong like for like growth driven by increases in transaction numbers, units sold and average unit value. EBIT margins reached the target of 11%, growing by 0.4 percentage points over the prior comparative period. Further gross margin improvement driven by ranging and sourcing initiatives was partially offset by increases in the cost of doing business as a result of increases in power costs and investment in the development of business’ multi-channel capabilities. The business launched its customer loyalty program Supercheap Auto Club Plus in Australia in October 2012 following the successful trial of the program in New Zealand earlier in the year. Club membership had grown to over 500,000 by June 2013 and incremental club member spending contributed circa 1% sales growth. The business expects to grow membership in excess of one million members over the next three years.
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The business has continued to focus on store refurbishment, ranging initiatives, private brand development, partnering with the world’s best automotive brands and team engagement as drivers of underlying consistent growth. All the major product categories performed well during the year with particularly strong growth being achieved in the car care, lubricants, electrical and power categories. Positive like for like growth was achieved across all states and territories of Australia and in New Zealand. The Western Australian performance was particularly strong reflecting both a lift in team member engagement and retention and the benefits of the increase in Sunday trading. The business opened a further nine stores and closed two stores during the year while 25 stores were refurbished and seven were converted to superstores. At the end of June there were 288 stores across Australia and New Zealand with the business targeting an additional 30 stores over the next 4 years. The business expects to refurbish around 32 stores in the coming year which will bring the current round of refurbishments to a close. Towards the end of the year, the business refurbished two of its superstores on the north side of Brisbane as concept stores to test a number of initiatives which are designed to create a more engaging interactive shopping experience for the customer. The business also intends to test similar ideas in two mid-size stores and two small stores in the coming year before determining which initiatives to rollout across the rest of the network.
The business has continued to focus on store refurbishment, ranging initiatives, private brand development, partnering with the world’s best automotive brands and team engagement as drivers of underlying consistent growth. The division commenced the trial of its new trade supply business, Auto Trade Direct in the North Island of New Zealand in November 2012. The division is testing the opportunity to supply auto parts and accessories to auto mechanics from a number of hub stores and directly from its distribution centre and from trade partners. Much of the supply chain capability required to support this line of business is consistent with the capability required to service retail customers ordering products for home delivery. Experience to date has highlighted areas in which the business model needs to be adapted and further trials will be conducted in the coming year before a decision is made on further rollout.
Leisure Retailing The BCF Boating Camping Fishing business had a solid year with like for like sales growth of circa 2% and improvement in gross margin. Like for like customer
transactions were in line with the prior year, units per transaction were lower while average unit value increased. This reflected the performance of the fishing category as adverse fishing conditions during the year resulted in flat sales growth. The Boating, Camping and Apparel categories all delivered solid growth. The business opened 14 stores during the year taking total store numbers to 105. The business expects to reach 120 stores in the next four years. One store on the north side of Brisbane has been refurbished as a trial store to test initiatives designed to provide a more interactive and engaging experience for the customer. A number of new ranges were introduced during the year including the initial testing of a boat, motor, trailer offer, which will be rolled out across all stores in the new year. The business successfully trialled a new inventory demand planning and replenishment system in the fishing category and this will be rolled out across the business in the coming year with objectives of supporting improved ‘in stock’ position, reduced inventory and store space rationalisation. The repositioning of the Ray’s Outdoors business continued during the year and following successful trials at two stores, it was decided to focus the business on four core categories; camping, footwear, outdoor apparel and travel. As a result, it was decided to commence a clearance program to exit the outdoor furniture category, reduce the range of BBQs and to reposition the apparel and footwear offer. Costs associated with the restructure of $6.0 million have been recognised.
The key drivers of performance continue to be merchandise renewal and presentation, private brand development, engaging marketing, sourcing and supply chain execution and the passion of our team members. YEAR IN REVIEW 9 COP709 Corporate Review.indd 9
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The repositioning of the business has generated positive momentum. Total like for like sales growth was circa 5% but after adjusting for the decline in sales of BBQs and Outdoor Furniture underlying like for like sales growth was 8%. Particularly strong growth was achieved in both the Apparel and Footwear categories. The business also delivered good growth in gross margin through ranging initiatives and management focus.
The Group has also maintained its focus on a number of environmental initiatives including reducing packaging and power consumption and increasing recycling. The Group was recently recognised by the Australian Packaging Covenant in their 2013 annual report ratings for being the highest achiever in the retail industry. Five new stores were opened and two stores were closed during the year resulting in 55 stores trading by the end of June. It is anticipated that total store numbers will grow to around 75 over the next four years. Following the successful trial of a new concept store at Frankston in Victoria, the business will commence a wider store refurbishment program in the new year. The business has commenced a program of store right sizing to exit excess space across the store portfolio. In New Zealand, the FCO Fishing Camping Outdoors business traded through its first full year following the launch of the business in November 2011. Thirteen stores
traded throughout the year. Although like for like sales growth was pleasing at circa 14%, average sales per store was below target, reflecting a shortfall in customer traffic.
There were nine Amart stores refurbished during the year. At the end of June there were 134 Rebel and Amart Sports stores with a potential of 185 stores in the next 5 years.
A business review was conducted in the second half of the year which highlighted improvement opportunities including adopting a more aggressive pricing and promotional strategy and changes to brand marketing. The review also identified opportunities for the business to extend its range into adjacent areas. Consequential changes to the business are underway and will continue into the new year targeted towards improving sales per store and lifting operating margins.
Following a strategic review of the Goldcross Cycles business, it was decided to convert the business to a store within a store concept inside an Amart Sports store. Five stores were converted into Amart Sports stores during the year and a further two stores were converted into a Supercheap Auto store and a BCF store.
Sports Retailing The Group benefited from a full year contribution from the Rebel and Amart Sports businesses as compared to eight months contribution post acquisition in the prior comparative period. The Goldcross Cycles business was transferred into the Sports Retailing Division at the start of the financial year. Growth was strong in all the major categories in the Rebel and Amart Sports businesses with Sport Equipment and Fitness Equipment particularly strong. New ranges, better inventory and promotion management, stronger relationships with trade partners and a more engaged team continued to be the drivers of the strong performance. Both the Rebel and Amart Sports brands were relaunched during the year and revised store designs completed. Nine Rebel stores were refurbished, four stores were relocated and two new stores opened and one store closed during the year. The Amart Sports brand was launched in Victoria with eight new stores open by the end of June, five of these stores being former Goldcross Cycles stores. A further Amart Sports store was opened in Queensland and one store was closed.
The remaining stores will be converted or closed during the next financial year and $10.2 million costs associated with the restructuring of the business have been recognised. Four new Goldcross Cycles store in store concepts have opened in other Amart Sports stores. The performance of the Goldcross Cycles store in store concepts to date has been promising.
Sustainability The Group has continued its support of a number of charitable organisations during the year. At the Group level, the focus is on raising funds for children’s healthcare charities while at a business level, support is provided to organisations in areas related to the activities serviced by the business’ products, for example safe driving at Supercheap Auto and Coastguard at BCF Boating Camping Fishing. The Group has also maintained its focus on a number of environmental initiatives including reducing packaging and power consumption and increasing recycling. The Group was recently recognised by the Australian Packaging Covenant in their 2013 annual report ratings for being the highest achiever in the retail industry. Since the establishment of its international sourcing operations in China in 2006, the Group has been committed to ethical sourcing. The Group undertakes audits of
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The results and performance of the Group are testament to the passion and commitment of our team members and we would like to thank all of them for their contribution during the year. all factories manufacturing products for the Group to ensure compliance with the Group’s ethical sourcing policy, a copy of which is set out on the Group’s website. The audits cover a number of factors including workplace health and safety and employment and payroll practices.
Particularly encouraging was the improvement in team member engagement which was measured at 66% during the year compared to 60% in the prior year and compared to a retail industry average of around 55%. Team Members There are now close to 12,000 team members employed by the Group in over 600 locations across three countries. Retention rates have continued to improve and were at 72.7% at June 2013, an increase of 1.2 percentage points over the prior year. Particularly encouraging was the improvement in team member engagement which was measured at 66% during the year compared to 60% in the prior year and compared to a retail industry average of around 55%. It was especially pleasing that team members of the Rebel and Amart Sports businesses recorded an engagement score of 60%, which was a
dramatic improvement on the score of 43% in a survey conducted for the previous owners of the businesses some 18 months previously. The Group is reviewing the measures that it uses to assess safety performance and to ensure these are consistent with industry best practice. A number of initiatives are underway to improve safety performance which was below industry averages during the year, in particular, focusing on the safe handling of stock in the retail environment. The results and performance of the Group are testament to the passion and commitment of our team members and we would like to thank all of them for their contribution during the year.
Looking Forward The year ahead will be another year of growth and development as we maintain our focus on growing our existing businesses and building our multi-channel capabilities.
We will continue to enhance our information technology platform with the development of our customer relationship marketing system, the further rollout of the JDA forecasting and replenishment system and the completion of the Group wide SAP integration amongst the major projects for the year. We will relaunch a number of our loyalty programs and increasingly use data analytics to develop targeted marketing campaigns. We will also continue to develop our fledging Auto Trade Direct and Super Retail Commercial businesses. We have a full agenda but our team are excited by the challenge and committed to maintaining the strong performance of the Group. We look forward to reporting on our progress in the year ahead.
Peter Birtles Group Managing Director and Chief Executive Officer
We will be investing in opening new stores and refurbishing existing stores in all of our businesses, with around 25 stores opening across the Group. Although retail conditions are forecast to remain patchy, we expect to continue to deliver solid like for like sales growth across our businesses and to maintain or grow operating margins while generating working capital improvement. We will complete the development of two new distribution centres at Brendale in Queensland and Erskine Park in New South Wales.
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GROUP DEVELOPMENT In order to differentiate ourselves from our competitors and to provide a seamless customer experience regardless of the channel they use to engage with us, as a Group we must ensure: Given the rapid pace of change occurring in the retail industry, we recognised the need to further enhance our capability in the areas of customer insight and engagement, supply chain effectiveness and productive working arrangements, at the same pace we have historically rolled out brand-specific growth projects such as new and refurbished stores. To achieve this, the Group established a dedicated program and project management team in 2011/12. The team, comprising three full-time program managers and a number of internal and contracted project managers, has two broad objectives: 1. Implementation of a standardised methodology to implement change projects throughout the Group. The use of the methodology is intended to ensure projects are delivered on time and budget, and realise the expected benefits; and 2. Delivery of a number of change projects to build the multi-channel capabilities of the Group. We are pleased to say the program management team successfully implemented a number of significant change projects in 2012/13 to improve the Group’s multi-channel capabilities. From a customer understanding perspective, we have continued to develop our customer relationship management system and leverage its capability to execute a number of marketing campaigns for BCF and Supercheap Auto Club members during the year. These campaigns
• We understand our customers’ needs and wants at a detailed level and we communicate with our customers in a timely and relevant way; • Our supply chain has the capability to deliver products to customers in line with their expectations, while ensuring our inventory levels are as efficient as they can be; and • We work productively as an organisation, to maintain our cost competitiveness and maximise the time we spend in value-adding activities, such as product & range selection and customer interaction.
are delivered via direct e-mails (eDMs) to club members and allow the Group to generate additional sales without the costs of catalogue or TV advertising; thereby generating excellent returns on marketing spend. In the previous year, we provided our customers with ‘Click & Collect’ functionality, offering the capability to order the product online and collect it from their nominated store. We also reduced delivery times for online orders through the establishment of hub fulfillment stores in the network. In 2012/13, we built on this customer experience by providing dynamic freight costs for online orders, giving customers the most cost-effective and timely options for home deliveries. To ensure we provide customers with upto-date information about stock availability across all channels, we have invested to ensure we get near real-time sales and inventory updates. Finally, ongoing development has continued to ensure our various brand websites provide an engaging experience when customers are researching or purchasing products online. It is pleasing to note the Group’s share of online traffic is at least equal to that of physical store traffic, across all our brands. The 2012/13 year represented the second of our five year plan to transform the Group’s supply chain operations. The projects are broken into two broad areas – development of the Group’s distribution centre (“DC”) network, and improvements to our inventory management systems and processes. During 2012/13, the Group commenced the construction of a
new DC in Sydney, as well as completing the selection of a site for a larger DC in Brisbane. This site will ultimately replace the two distribution centres currently in Brisbane. These new DCs, when combined with recent upgrades in New Zealand and future upgrades in Melbourne and Perth in 2014/15, will deliver multi-million cost savings to the Group as well as enhancing our ability to meet customers’ expectations in terms of delivery times. A re-engineering of our secondary freight operations was completed during the year to assist in meeting our targets. Other significant achievements include the upgrading of the inventory forecasting system in our Leisure Retailing Division and enhancing our stock receipting process in BCF and Ray’s Outdoors stores. These activities are designed to grow sales and reduce out-of-stock while investing less in the way of inventory purchases. Finally, we have trialled the use of ‘drop ship’ functionality for our Auto Trade Direct business, which is intended to enhance our range without the consequent investment in inventory. Lastly, the Group embarked on the integration of the Sports Retailing Division into the broader Group, including the major project of moving the division onto the same IT platform as the rest of the Group. Our finance and property areas were completed during the year, with all other functions to be completed prior to Christmas 2013. The IT platform will underpin the growth of the Sports Division over the long-term, enabling the division to fully benefit from the Group’s supply chain and sourcing capabilities.
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CORPORATE RESPONSIBILITY With our fourth group value defined as ‘Care’, we strive to lead by example and invest our time, financial support and resources in a variety of initiatives. We are committed to achieving and demonstrating profitable and sustainable growth in a manner consistent with our group values and with our commitment to social and environmental initiatives for the benefit of our team, customers and suppliers and the communities in which we operate. Examples of this philosophy in practise include:
ENVIRONMENTAL INITIATIVES
We have a commitment to: paper usage reduction, power usage reduction, catalogue paper reduction/recycling, and customer oil and battery recycling. In addition, we are a proud signatory to the Australian Packaging Covenant, working towards reducing the volume of packaging used across the Group.
SOCIAL EDUCATION & PHILANTHROPIC INITIATIVES
We have a commitment to supporting several children’s charities, responsiveness in times of community crisis, e.g. natural disasters (fires, floods, earthquakes) and active participation in improving community wellbeing, e.g. safe driving and safe recreation initiatives.
ethical working & employment practices
We have a commitment to: equal employment opportunities and to a bullying, harassment and discriminationfree work environment, open door communication and the gathering of team member feedback, fair trading practices, team member development and involvement in negotiations over pay and conditions, product quality standards, workplace health and safety and ethical sourcing.
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ENVIRONMENT Ethical product sourcing Super Retail Group has continued to develop our compliance frameworks governing our sourcing of product from overseas, including our Ethical Sourcing and Imported Goods Policies for all our trade partners. This policy addresses environmental and socioeconomic criteria including labour relations, packaging and environmental requirements. In addition, the Group has invested in developing our own quality assessment team in China to support the specialist independent auditors periodically engaged to ensure that requirements are understood and that compliance is maintained by trade partners.
Packaging optimisation project In addition to the above, our packaging team overseas liaises with suppliers on a regular basis to ensure they are complying with our packaging specifications. To this end, last year we reduced a significant amount of waste through our overseas packaging optimisation project, which involved reducing air space and changing packing methods to reduce the amount of packaging material. The Group’s existing compliance and quality assurance programs include use of accredited auditors to inspect and test to certify that products meet Australian legal requirements, to ensure that good quality, safe and innovative new products are provided to customers and are good value for money.
Environmental Management System (EMS) As part of the Group’s EMS development, a Committee has been formed to assist with the EMS implementation and drive environmental initiatives including the reduction of waste, packaging and energy consumption.
Australian Packaging Covenant (APC) The Group is committed to establishing a framework for the effective life cycle management of consumer packaging through an educational approach with our team, our trade partners and our customers. Since becoming a signatory to the Australian Packaging Covenant in July 2008, the Group has embraced the principles of product stewardship to ensure the environmental impact of new or existing packaging is continuously monitored and minimised, via a collaborative approach with our trade partners. During the year, the Group has continued to develop processes that embody the principles of product stewardship with an aim to continually improving our environmental impact with respect to packaging and waste management via: • Development of internal policies and procedures, such as the Sustainable Procurement Policy, to govern product packaging and operations in accordance with the Sustainable Packaging Guidelines; • Extension of recycling processes within current waste management activities to reduce waste disposal; • Promotion of existing recycling activities to customers and team members to improve knowledge and awareness of recycling options; • Use of recycle logo in our packaging and catalogues to encourage waste recycling; • Regular articles on waste and environmental topics in our internal media to increase our team members’ awareness; • Engaging with our waste management provider on a regular basis to improve our waste management practices; • Inclusion of environmental and APC compliance checks in our internal audits;
SUPER RETAIL GROUP WAS RECOGNISED BY THE AUSTRALIAN PACKAGING COVENT AS A HIGH ACHIEVER, WITH OUR ANNUAL APC REPORT RATING INCREASING TO 4.3 STARS OUT OF A POSSIBLE 5. • Monthly waste reports to the Board and retail managers to monitor and improve our recycling rates; and • Development of a Waste Management Plan to reduce waste and increase recycling. In July, the APC released their annual report ratings for signatories to the Australian Packaging Covenant. The APC congratulated 22 signatories that have achieved the highest results in their industry category. Super Retail Group was recognised as one of two high achievers in the Retail category, with our annual APC report rating increasing from 3.7 to 4.3 stars (out of a possible 5).
Customer Automotive Battery Recycling In accordance with our Environmental Policy, the Group continues to explore options to offer our customers the ability to return directly to our retail stores selected products which will be collected and distributed to recycling facilities. Supercheap Auto now accepts used car batteries in all retail stores. These are collected and returned to a recycling facility where the lead and plastic is reused in manufacturing new products. In addition to this, the Group continues to explore other recycling opportunities as an added service and convenience to our customers in support of the environment.
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Catalogue Paper Reduction/ Recycling Super Retail Group is committed to using recycled paper for catalogue printing and reducing advertising waste through greater targeted delivery. Through our major printing and distribution partners, Super Retail Group uses paper which is PEFC certified and comes from sustainably managed plantation forests. Similarly, our use of customer targeting software and greater emphasis on email marketing has enabled us to reduce catalogue distribution quantities with little or no loss in effectiveness. A great win for the environment and our business.
Power Usage Reduction We continue to explore opportunities to reduce power usage and monitor company performance. These include: • Organisational culture initiatives educating team members on how to reduce power usage; • Structural initiatives – building specifications, e.g. Super Retail Group is currently trialling heat reflective roof paint and efficient lighting fixtures to assess the benefits; • Energy saving devices and control equipment, e.g. ‘smart’ thermostats, light sensors; and • Procedural initiatives – optimising the hours of operation of equipment, e.g. air conditioning, lighting and illuminated signage through timers & PE cells.
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COMMUNITY Super Retail Group is a corporate supporter of children’s charities including @Heart Inc. (NZ), CanTeen (Bandanna Day), SIDS & Kids (Red Nose Day) and BrashA-T; raising over $350,000 in 2012/13. The Group’s involvement with the charity BrAshA-T includes developing a range of promotional products sold exclusively throughout our Australian retail stores each year. This promotion assists in raising awareness and much needed research funds for the disease Ataxia-Telangiectasia (A-T) which is a rare degenerative disorder that first shows during early childhood. It is a complicated illness that affects a number of different parts of the body, particularly the brain and the immune system.
Amart Sports takes great pride in supporting its Community Kickbacks initiative. Free to join and open to all registered clubs and schools, the program offers a 5 per cent rebate on all member purchases. Clubs and schools accrue credits that they can then redeem to buy or upgrade equipment. Last year, through the Community Kickbacks initiative, Amart Sports contributed $750,000 to grass roots sports and will continue in its mission to encourage young people’s participation in sports and activities.
As part of BCF’s community sponsorship program for the Australian Volunteer Coast Guard (AVCG) and Marine Rescue NSW (MRNSW), the team has raised over $220,000 through its in-store “round-up” initiative throughout the year. This is a significant achievement for the BCF team and we are proud to assist in raising funds and awareness for the role the Coast Guard and Marine Rescue play in marine safety and protecting the wellbeing of Australians; many of whom may be valued BCF customers. The funds raised will be distributed between the flotillas and will assist AVCG and MRNSW in search and rescue, purchasing vital rescue equipment and public boating education. In addition to supporting the AVCG and MRNSW as well as numerous other charities, BCF continues to hold a strong affinity with the environment by promoting sustainable fishing practices and a generally environmentally responsible ethos. This is underlined by our decision in 2010 to remove plastic bags from the business, which has been well received by customers and is now being emulated by other retailers.
In 2012 FCO announced a partnership with New Zealand’s primary maritime search and rescue service, Coastguard NZ. The organisation comprises more than 2,140 dedicated and highly trained volunteers, 92 dedicated search and rescue vessels and two small fixed wing single engine aircraft. FCO supports the Coastguard’s fundraising efforts via an in-store ‘round up’ function. This allows customers to simply roundup the value of their transactions to the dollar value they nominate. A number of additional activities are undertaken throughout the year such as the Mayday appeal, which assists Coastguard NZ in raising additional funds to make New Zealand’s waterways a safer place for boaties. The initiative has so far raised over $38,000. 16 COMMUNITY COP709 Corporate Review.indd 16
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Goldcross Cycles has continued its strong community focus supporting State Cycling bodies and the National Cycling Promotional Fund via promotional activity on the Goldcross Cycles website, email, catalogues and in store. Goldcross Cycles has supported mass participation bike rides such as Brisbane Bike Week, Ride to Work day, Brissie to the Bay, Victorian Schools Cycle Championships, BSX and many other smaller events. The Goldcross Cycles team has visited local schools and businesses to run free cycling clinics and donate products to school raffles. We continue to run our free Smartrider courses, which are open to the community and teach safe cycling and basic bike maintenance techniques.
Since July 2011 Ray’s Outdoors’ customers have assisted us in our support of Cancer Council Australia’s vision to minimise the threat of cancer to all Australians. The generosity of customers has contributed much-needed funds for cancer research, prevention and support services by simply rounding up the value of their purchase, or by making a standalone donation at the register. Ray’s Outdoors achieved approximately $135,000 in the first year of the Round-up program and in our second year we raised an additional $174,000.
Rebel is excited to partner with The Heart Foundation and its iconic Jump Rope for Heart Program. Rebel’s support for Jump Rope for Heart includes providing sporting goods and equipment as part of the fundraising prize incentives and leverage of our communications channels to further help the Heart Foundation raise awareness of heart disease. Over the past year this has amounted to $600 000 towards the cause. Fundraising support is also provided to Blue September, which raises awareness about cancers that affect thousands of Australian men each year; some of which may be preventable through lifestyle choices. Funds raised assist Blue September in their continuing efforts to increase awareness of cancer in men, whilst supporting the Australian Cancer Research Foundation and Australian Prostate Cancer Research in funding vital cancer research. Rebel is also the major sponsor of the NewsLocal Junior Sports Stars awards. The program recognises and celebrates junior sporting talent aged between 10 –16 and brings the endeavours and successes of these future champions to the attention of their local area, giving the community the opportunity to embrace and support their sports stars of the future.
Following Australia’s highly-successful Supercheap Auto – Driving Home Road Safety campaign, Supercheap Auto has continued the partnership with driversafety.com.au and V8 Supercar champion Russell Ingall to support CARMA, a landmark national road safety campaign aimed at improving road users’ awareness, behaviour and attitude to driving on Australian roads. A series of community service announcements and a dedicated CARMA website www.yourcarma.com.au feature useful driver tips and avenues to practical driver training for all Australian drivers. Supercheap Auto has also embarked on a behavioural and skill-based road safety education campaign for Queensland schools. The school education initiative is designed to better equip both young drivers and their parents with well researched skills and techniques to create better drivers on our roads. COMMUNITY 17 COP709 Corporate Review.indd 17
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SYSTEMS Super Retail Group’s IT Systems are being strategically developed to meet the demands of a major specialty retailer undergoing significant growth and dynamic change as part of our ongoing shift to becoming a multi channel retailer.
channels as well as choices in how the customer’s order can be fulfilled. Our customers can buy products through our online or physical stores as well as through online aggregators such as eBay.
Our current IT strategy addresses the following critical needs:
We help our customers “shop their way” by providing shopping choices across multiple channels as well as choices in how the customer’s order can be fulfilled.
• Support our team members in providing the best possible service to customers; • Deliver a platform that leverages group scale to support consistent business processes across all brands; • Develop business processes to maintain the unique characteristics of each brand; • Provide appropriate security and resilience to keep the business operating effectively and efficiently; • Scalability to support future organic growth; • Simplify the integration of new businesses as opportunities occur; and • Contribute business value by using IT to solve existing problems or provide new opportunities. We took the first step in delivering this strategy in 2002, with the installation of SAP as our core Enterprise Resource Planning (ERP) system. SAP is a leading ERP system and provides key merchandising, finance, human resources and customer relationship capabilities. Our focus is on enhancing the Group’s multi-channel capability, improving the effectiveness of our supply chain and supporting our retail divisions in the development of their customer offers. We help our customers “shop their way” by providing shopping choices across multiple
The suite of applications we use, from leading vendors such as JDA, Manhattan Associates and SAP, integrated with our own developments, help customers to choose and get the product in the most convenient way. We have the ability for our customers to “click-and-collect” the product from a store or to deliver direct to them from our hub stores, distribution centres or to “drop ship” products from third parties for a limited range of products.
• We will extend our data warehouse capabilities using SAP’s HANA infrastructure to introduce a real-time analytics and visualisation capability.
Our core SAP environment is augmented by industryleading applications and partnerships in other areas, including: • Manhattan Associates’ system continues to support our significant growth in warehouse management needs; • JDA systems are being introduced and extended to improve our supply chain planning and execution; • Optus will be taking on our Australian telecommunications services with our New Zealand needs delivered by Vodafone New Zealand; • IBM delivers our robust, scalable and reliable server infrastructure; • Cisco Systems provides IP networking technologies and services; and • LANDesk’s suite of support tools allows a small support team to administer a network of over 4,000 devices.
During 2013/14, we will develop our capabilities in the following areas: • Our initial ‘store of the future’ trials will be rolled out to additional stores; this supports customer access to rich media in stores to support the new store layouts focused on customer solutions. This is supported through touchscreens in store as well as wifi access for customers; and
Information Technology has been, and will continue to be, a critical success factor for Super Retail Group by providing a major competitive advantage. 18 SYSTEMS COP709 Corporate Review.indd 18
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SUPER RETAIL COMMERCIAL Super Retail Commercial (SRC) is the trading arm of Super Retail Group which is focused on developing new business opportunities across a variety of non-retail channels that deliver incremental sales for the Group and its brands. The business was launched in 2012 to leverage off the Group’s sourcing and supply chain capabilities, and to focus on building long term commercial relationships with a range of businesses throughout Australia, New Zealand and Asia Pacific. Super Retail Commercial prides itself on delivering value via innovative business solutions through strong partnerships that are supported by a passionate team offering excellent customer service. Over the past year Super Retail Commercial has been focused on developing business and capability within three important sales channels, as listed below.
REWARDS & INCENTIVES Our rewards and incentives arm, Supergifts, is a web based business that allows commercial customers to purchase gift cards from all of the Group’s retail brands. Over the past three years this area of the business has enjoyed steady growth for our brands along with the addition of the Rebel and Amart Sports brands. The addition of recent digital gift cards into the SRC offer will add another dimension and enable us to provide low cost fulfilment in the B2B channel and the ability to target new customer sectors. Coupled with our high level of customer service and the ease of use via the Supergifts website, this should see us achieve further growth in this channel.
INSURANCE Over the past year Super Retail Commercial has developed a successful product replacement program for a number of Australian insurance companies. SRC supplies gift cards and products via Super Retail Group’s store network to assist insurance claimants rebuild or restore their possessions. In the upcoming year we plan to extend our operations by partnering with new insurers within Australia and New Zealand and leveraging a combination of Super Retail Group’s high-profile brands.
WHOLESALE & EXPORT In 2013 Super Retail Commercial began exporting automotive products to retailers in Nauru and Papua New Guinea. In 2014 we will continue to develop our export capabilities and expand the distribution network for the Group’s retail brands’ products across the Pacific Rim. In 2014 we also plan to develop a wholesale distribution program and explore opportunities in the convenience market.
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INTERNATIONAL OPERATIONS The International Operations team continues to explore new horizons seeking new products and new ways to add value to the business. The year saw our attention turn to supporting the Sports Retailing Division and introduce new exclusive ranges to Rebel and Amart Sports. To accommodate the pace of growth and change within the business and inside the engine room of China, we expanded our office space in Shanghai and are presently relocating to new facilities in the developing new CBD of Hangzhou. This year International Operations built on last year’s extended breadth and scope of services to enable efficient international source-to-store supply chain capability. We leveraged international store-ready processing facilities in Singapore and Hong Kong to further streamline the movement of goods from source to store for Rebel and Amart Sports. This year, the team rose to the challenge of handling significant growth in imports within Leisure Retailing, as the BCF business grew and new categories were introduced in Ray’s Outdoors.
The off-shore expansion of our logistics services has leveraged international store-ready processing facilities in Singapore and Hong Kong to further streamline the movement of goods from source to store for Rebel and Amart SPORTS. Our team continued to develop product category specialisation and leverage cross-brand knowledge and skills to tailor products to best suit customer requirements. Team development and high retention rates allowed for internal team member promotions as Supercheap Auto continued to power ahead, requiring additional resources to manage the many exciting product opportunities.
CONTINUAL IMPROVEMENT Productivity improved at so many levels throughout the supply chain whilst the team continued to seek the best sources of supply. Auditing factories, designing packaging and artwork, co-ordinating production schedules, quality assurance and border management right through to pre-shipment inspections underpins the effective dispatch of goods to Australia and New Zealand.
The year ahead will offer exciting opportunities to not only deliver good product and extract value from our supply chain infrastructure but to work closely with valued international trade partners as they manage other regions’ volatility. Our packaging optimisation program consistently achieved 18.1 per cent pallet utilisation improvement and 7.8 per cent container utilisation improvement, reflecting the Group’s commitment to sustainability and responsible approach to reducing packaging waste whilst delivering commercial benefits. The continued alignment of off-shore capabilities and integration to process productivity programs will support the new domestic DC network under development in Australia. The year ahead will offer exciting opportunities to not only deliver good product and extract value from our supply chain infrastructure but to work closely with valued international trade partners as they manage other regions’ volatility. Our strong relationships and consistency is paying dividends as suppliers also help us to identify new products with the new features and value propositions for our customers.
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LOGISTICS Investment in our supply chain is entering the most critical and important development period in the Group’s history. We have commenced the construction of two new distribution centres (DCs), the first of which is based in Sydney and will open in the first quarter of 2014, followed closely by the second site, in Brisbane, in the first quarter of FY15. The re-engineering of the existing distribution centre at Altona in Melbourne has also commenced.
Both the refreshed physical infrastructure and systems add to the ongoing investment in safety, capacity and capability to support planned growth over the next ten years, with resulting lower overall supply chain costs. The introduction of a new voice picking system at all distribution centres commenced in August 2013. Both the refreshed physical infrastructure and systems add to the ongoing investment in safety, capacity and capability to support planned growth over the next ten years, with resulting lower overall supply chain costs. In preparation for the commissioning of the new distribution centres, secondary freight services (DC to stores) was tendered and finalised in 2013, resulting in reduced costs and enhanced capability. Our focus also continues on the development and implementation of enhanced online / B2B transport and fulfilment capability, especially service experience.
Optimum inventory levels and a supporting forecasting and replenishment system are an adjacent enabler for the new DC and freight network, helping us achieve our speed to market and stock turn objectives. Inventory stock turns are improving across all brands and will continue to be a main focus (with quantified targets) into 2014 and 2015. Optimum inventory levels and a supporting forecasting and replenishment system are an adjacent enabler for the new DC and freight network, helping us achieve our speed to market and stock turn objectives.
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AUTO RETAILING
The Supercheap Auto business is a thriving specialty retail business, with 288 stores across Australia and New Zealand, specialising in automotive parts and accessories. We also stock a wide range of tools and accessories for the DIY home handyman as well as products for travel, touring, outdoors, garage and the shed. There are many and varied activities that continue to drive and grow the Supercheap Auto business; below are some of the key strategies along with a preview of some new and exciting initiatives.
MULTI-CHANNEL CAPABILITY Our range is now available for sale online in both Australia and New Zealand, which we see as a key growth platform for the future. We have also recently launched a “Click & Collect” (order online and pick up from your local store) service and strongly believe we must continue to improve and develop our multi-channel capability, allowing our customers to shop their way.
BRANDS AND NEW PRODUCTS Driving quality known and private brands is a very important element in growing our business and building integrity and trust with our customers. We continue to launch thousands of new and innovative products each year faster than our competitors and we firmly believe that new products are the lifeblood of any good retail business.
FITMENT PROGRAM The fitment program was launched in 2007, driven by customer demand for basic items to be fitted for them at the time of purchase. The fitment program continues to be strongly supported by our customers, with over 233,000 fitments performed last year alone. Our friendly team loves to
go above and beyond and this service is another great way for our team members to engage, surprise and delight our valued customers.
CLUB PLUS LOYALTY PROGRAM Following the success of the New Zealand launch in May 2012, we launched the Club Plus loyalty program to our Australian network in September 2012, leveraging our Bathurst 1000 sponsorship as the major launch platform. We set what we thought would be a challenging target for year one at 400,000 club members. The response to our club program has been overwhelming and it is pleasing to say we underestimated the initial target - our club is now 500,000 strong. Some benefits for club members are the ‘Price Promise’, which provides a credit to the member’s card when items they purchase go on sale at a better price, along with receipt-free warranty and much, much more planned for this year. The program rewards loyalty and provides a window into individual purchasing habits. This gives us the opportunity to send targeted offers to members without large marketing costs attached, increasing the frequency of these customers’ visits to our stores.
SUPERCHEAP AUTO STORE OF THE FUTURE PROJECT Our store refurbishment program commenced in 2006 and is now drawing to a conclusion, with more than 270 stores now completed. This has coincided with the Group’s launch of the Engaging and Integrated Customer Experience program, creating a platform for us to review and redefine the in-store experience of the future.
The program vision is “to build an engaging and integrated customer experience that provides solutions and real reasons to shop in-store, supporting our customers getting the most out of their shopping experience and leisure time”.
Driving quality brands is a very important element in growing our business and building integrity and trust with our customers. We continue to launch thousands of new and innovative products each year faster than our competitors and we firmly believe that new products are the lifeblood of any good retail business. We took this opportunity to ensure Supercheap Auto stores remain the first choice destination in the categories in which we operate, launching the store of the future project in September, 2012 with our target to develop the best auto store in the world. As a result of this initiative, we launched two prototype stores in Queensland during April and May 2013, the first at Caboolture and the second at Lawnton.
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The response to our club program has been overwhelming and it is pleasing to say we underestimated the initial target - our club is now 500,000 strong.
Store Features Updated look and feel: • Updated external signage and finishes to reflect the new store; • Revised store layout sorting and grouping products by usage occasion or project; and • Improved store navigation signage, aisle markers and internal signage with updated colour palette. Customer engagement: • Customer solutions kiosk providing in-store access to a wide range of product and “how to” information; • Product feature displays incorporating informational touch-screens or TVs; • Free wireless internet access for customers combined with use of QR codes to provide in-store access to “How to” and product information; and • Engaging displays incorporating fun and theatre. New and improved services: • Vehicle diagnostics service providing fault code reading, reset and analysis, supporting increased customer involvement in their vehicle’s care and maintenance; • Paint mixing service providing over 74,000 auto paint colours mixed in-store; • Home delivery of bulky and heavy products; and • Designated Click & Collect pick up point for online purchases. Improved customer service: • Team member development program; • Solutions-focused service model; • Increased frequency of stock deliveries supporting improved in-stock position; and • Customer call-buttons linked to team member walkie-talkies for improved service. All new elements will be trialled and the successful initiatives rolled out to future stores. AUTO RETAILING 23 COP709 Corporate Review.indd 23
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LEISURE RETAILING
With more than 100 stores, BCF Boating Camping Fishing is the largest outdoor retailer in Australia and is recognised for having the widest quality product range and most helpful team members in the market. BCF offers everything customers could possibly need for their next outdoor adventure under one roof, with the same honest and reliable advice that you would get from a ‘mate’.
AUSTRALIAN CATALOGUE AWARDS BCF was recognised at the 2012 Australian Catalogue Awards, which were held in August. These awards were judged by a group of more than 40 industry experts drawn from the print, advertising and retail sectors. From over 650 entries, BCF was selected the winner of the ‘Technology on Paper’ category (up to 250,000 catalogues) for our ‘Barra Championship’ entry. We also ranked highly for our ‘Father’s Day’ catalogue, securing a place as a finalist. The judges stated that this year brought a high level of innovation and quality.
NEW STORE OPENINGS This year marked a milestone for the BCF business, with the opening of our 100th store in Cleveland, Queensland. The event was marked by a national club night (a long journey from the inception of BCF in 2006). During the financial year, BCF extended our physical network with the opening of several new stores, including • • • • • • •
Emerald, QLD Busselton, WA Taree, NSW Nerang, QLD Port Adelaide, SA Mt Barker, SA Griffith, NSW
• • • • • • •
Cleveland, QLD, Kingaroy, QLD Belrose, NSW Gympie, QLD Belconnen, ACT Glendale, NSW Smithfield, QLD
PLANOGRAM PROJECT In the coming year, all BCF merchandise categories will be fully planogrammed, which will offer: • Improved space efficiency in store; • M aximised sales opportunities for new initiatives; • C onsolidation of current range and stock display leading to an improved shopping experience for customers; and • G reater consistency in all stores and aid the store team in merchandising efforts. Planograms will link to range review process to enable stronger focus on range planning and inventory metrics.
STORE OF THE FUTURE BCF’s commitment to delivering an engaging store environment for our customers requires continual assessment and adaption. During the year we made the decision to pilot a concept store, with the internal working title, ‘Store of the Future’, as a platform to trial new technologies, layouts, fixtures, fittings and signage. One of the major focus points of the concept was to increase customer engagement in store by increasing the level of information provided about product selection and use, communicated through technology and signage. Another aspiration of the concept was to enable customers to readily touch and feel products that were previously housed in a cabinet, while still retaining product security. Particular attention was paid to putting the fishing reel category in front of customers to enhance their tactile experience. After experiencing the product first hand, the customer then takes a selection card to
the front counter. From here the register operator can quickly and easily access the product, which is located behind the front counter. So far, feedback about the new store format has been incredibly positive from both our team members and customers. The format will continue to be assessed before any future rollouts are committed to, but as many aspects have been hugely successful, it is likely that the new store concept will naturally feed into the existing network.
This year marked a milestone for the BCF business, with the opening of our 100th store in Cleveland, Queensland.
LOCAL LEVEL MARKETING This year BCF launched ‘Think Global, Act Local’, a new sponsorship initiative designed to help build mutually beneficial relationships between our stores and local organisations. To encourage team members to get involved with their local community, an annual sponsorship budget of $1,000 was allocated to each BCF store. With the final approval of their Area Manager, team members are now empowered to select which local boating, camping and fishing clubs and organisations they would like to sponsor. With over 300 local level events being supported throughout the year, the initiative has been very positive for both the local community and team members.
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With more than 100 stores, BCF Boating Camping Fishing is the largest outdoor retailer in Australia and is recognised for having the widest quality product range and most helpful team members in the market. CLUB BCF Our club team has been busy this year with approximately 18,072 members attending the 82 club nights hosted Australia-wide. This year we also launched nation-wide club events, with two held throughout the year, and introduced exclusive everyday club deals. The ‘Swipe to Win’ competition, which kicked off in January 2011, has gained further momentum, with one lucky BCF customer per store scoring a $50 BCF gift card each month. With $50,000 worth of prizes distributed so far, the initiative has encouraged increased participation by members in our Club BCF activities. Throughout the year, our club members have enjoyed access to more exclusive competitions than ever before! Among the many impressive giveaways, one lucky Club BCF member won a trip to XXXX Island with a mate, valued at $5000, while another claimed the Barra Champ title, taking home a BCF fishing pack, valued at $1000, 25% off all in-store purchases for a year, plus the ultimate bragging rights of being the BCF Barra Champ!
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LEISURE RETAILING
As ‘the gateway to your next getaway’, Ray’s Outdoors offers families everything they need to enjoy the outdoors, from the backyard to the bush. Recognised as the market leader for quality camping and outdoor apparel products and with more than 50 stores across Australia, Ray’s Outdoors provides a vast range of camping gear, tents, outdoor furniture, barbeques, kayaks and apparel including footwear and work wear. This year the business has further expanded into Tasmania, with three stores now trading in Launceston, Moonah and Devonport.
NEW STORE OPENINGS Ray’s Outdoors opened three new stores this financial year, extending our presence to Hervey Bay in Queensland, Traralgon in Victoria and Devonport in Tasmania. The Mackay Camping World store was acquired during the year and was rebranded as Ray’s Outdoors Mackay. The 600sqm tenancy is located in a busy bulky goods precinct and boasts a long history in the region, celebrating its centenary in 2012.
NEW LOGO/ BRANDING REFRESH This year we evolved the Ray’s Outdoors identity to better communicate the brand essence and what we offer to our target audience. Activities undertaken during the rebrand project included: • Logo refinement With slimmer text and a grey element added, the updated Ray’s Outdoors logo appeals to both male and female customers while remaining true to the original character.
• Tagline ‘Make the outdoors yours.’ The new tagline sends a positive message to inspire our customers and encourage them to get outdoors. • Store restructure A Ray’s Outdoors pilot store has been refitted to match the new branding. The outside authenticates the look and feel of the new logo. The use of shadow images and grey and red work together to demonstrate the adventures awaiting our customers. The refit also includes an improved store layout to focus on our Apparel, Footwear, Camping and Tent ranges. • Rewards program rebrand Ray’s Outdoors appeals to the average Australian family and for this reason, the retitled Ray’s Rewards communicates a more down to earth program for our loyal customers. The rebooted program structure will also be more financially beneficial for the brand. • Catalogue The new catalogues have a personal feel and feature images that depict a positive outdoors lifestyle. The flow and structure of the catalogues promote the elements that are of most interest to our customers. • Television ads Our new television commercials have a strong family focus, linking families to the outdoors. We have looked to position Ray’s Outdoors within the great times that families have outdoors. Our key focus was to be clearly recognisable as the enabler of great outdoor experiences. Ray’s Outdoors’ target audience is families (parents aged in their late thirties to mid-forties). Our audience can range from experts to novices, but primarily they are looking for enjoyable outdoor experiences.
It’s part of wanting to get the family “off the grid” and away from television and computer games. At Ray’s Outdoors, we want to both inspire and enable these experiences. Previously the brand had maintained a very broad product focus and was struggling to connect with customers and establish itself as the destination for camping equipment and outdoor apparel, as the offer was often diluted by a focus on outdoor furniture and barbeques. Our aim now is for customers to engage with us on a more meaningful basis, beyond a basic transaction. Becoming more aligned with their inspiration and experience allows Ray’s Outdoors to become a key component of our customers’ leisure passions.
STORE OF THE FUTURE Ray’s Outdoors’ first refitted store, in Frankston Victoria has set the tone for our new direction. The store incorporates all new branding, including the logo and external and internal signage. The Frankston store layout is tailored to suit our target audience and showcases our first camper trailer range and expanded travel section, which includes the Deuter and Tatonka range. Outdoor furniture has been removed and the barbeque range reduced. The layout of our Frankston store focuses on first impressions by locating our ‘stand for’ categories - camping, footwear and apparel - at the front of the store. The new look and layout has received a positive response at our new store openings in Devonport, Hervey Bay and Traralgon. Ray’s Outdoors Frankston demonstrates our direction as a family-orientated and accessible brand and is another element of our integrated marketing approach.
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‘MAKE THE OUTDOORS YOURS.’ THE NEW TAGLINE SENDS A POSITIVE MESSAGE TO INSPIRE OUR CUSTOMERS AND ENCOURAGE THEM TO GET OUTDOORS.
APPAREL AND FISHING REFRESH A key strategic initiative saw an apparel and fishing merchandising refresh project commence in February 2012. Every Ray’s Outdoors store received new fixtures to better display apparel; ‘call-out’ brand signage was supplied for the new fixtures and for the existing four-way fixtures, to help differentiate products and brands. There was also a complete refresh of the store flow, incorporating a larger and more comprehensive work wear section. Our fishing range was extended and on average each store gained an additional ten gondolas to reflect this expansion. We have found the Ray’s Outdoors customer wanted more variety and a greater family focus in their fishing gear. All stores have now undergone the apparel and fishing refresh, and feature the extended product ranges and new fixtures.
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LEISURE RETAILING
FCO Fishing Camping Outdoors is a specialist outdoor and leisure retail brand unique to the New Zealand market. FCO offers a true one-stop customer experience and a comprehensive product range with a specific focus on fishing, camping, tramping, boating, kayaking and outdoor apparel. The FCO brand was officially launched in November 2011, after a period of extensive planning and research into the New Zealand market.
CLUB FCO There have been many FCO success stories during FY13 but arguably none greater than the continued success of Club FCO. Last year our loyalty program had just over 27,000 members, of which 14,000 were available to communicate with via email. Due to some great work by the store teams and some behind the scenes work from the marketing and CRM teams, club numbers have continued to soar. Today Club FCO membership sits at more than 50,000, of whom, 31,000 are subscribers to our email communications. Initiatives such as the Product Guru program, exclusive club products, informative eDMs and superb member-only offers ensure that our FCO club members are among the most engaged in the leisure business. These efforts are reflected each week in the club sales numbers and the thousands of Club FCO members who attend the many club events at their local store. As the club continues to grow, so in turn will the Club FCO offering. The FCO team will continue to deliver new and innovative
ways to ensure our club members keep their membership cards at the front of their wallets.
INITIATIVES SUCH AS THE PRODUCT GURU PROGRAM, EXCLUSIVE CLUB PRODUCTS, INFORMATIVE EDMS AND SUPERB MEMBERONLY OFFERS ENSURE THAT OUR FCO CLUB MEMBERS ARE AMONG THE MOST ENGAGED IN THE LEISURE BUSINESS. THESE EFFORTS ARE REFLECTED EACH WEEK IN THE CLUB SALES NUMBERS AND THE THOUSANDS OF CLUB FCO MEMBERS WHO ATTEND THE MANY CLUB EVENTS AT THEIR LOCAL STORE.
Eligible videos were required to be between 30 seconds and three minutes in length and were uploaded to the FCO website, for the public to scrutinise and cast their votes. The top ten most popular videos were selected by a panel of FCO and Super Retail Group judges, who selected the winning entry based on brand alignment, creativity and overall impact. In total, the entries received more than 4900 online votes and more than 2000 Facebook likes. The judges were in unanimous agreement, declaring Nick Binks’s video montage titled “Living for the next mission” the embodiment of the FCO brand and the ultimate winner. As reward for his great work, Nick received a $5000 FCO gift card and a $5000 travel voucher that he used for an 11 day trip to Steward Island (a true outdoor champion’s destination!) FCO plans to capitalise on the success of the inaugural competition and build a bigger and better competition in FY14.
OUTDOOR CHAMPIONSHIPS Following the success of our ‘Outdoor Championship’ photo competition, which offered FCO customers the chance to submit their best outdoor adventure photos and win great prizes, we then took the promotion to the next level, encouraging customers to submit outdoor video footage and mini-films. This competition was designed to showcase the creativity and talents of FCO customers doing what they love.
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FCO offers a true one-stop customer experience and a comprehensive product range with a specific focus on fishing, camping, tramping, boating, kayaking and outdoor apparel.
SOME FUN FACTS This year alone FCO has: • served 300,000 customers; • sold 1.5
MILLION items; and
• sold nearly 2,000 Monster 250 Tackle kits.
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SPORTS RETAILING
The Sports Division (incorporating Rebel, Amart Sports and Goldcross Cycles) has had an outstanding year with like-for-like (LFL) sales of 8.0 per cent. This growth was on the back of 5.6 per cent growth the prior financial year, and was underpinned by several significant achievements: • Every geographical region achieved its budget for the year • Ten stores achieved sales growth above $1m on the prior year • Four stores achieved sales growth above $950k on the prior year • 41 stores achieved sales growth above $500k on the prior year • 26 team members achieved “Platinum Club Status,” each delivering over $200k in GP$ as our best sales performers for the year. Aside from this outstanding financial performance, several pieces of work were identified as critical to rebuilding the business upon acquisition, which are outlined below.
AGED INVENTORY CLEARANCE From the moment we acquired the business, a lot of work was undertaken to identify and clear aged inventory which at the time of acquisition represented 14 per cent of Rebel’s inventory and 18 per cent of the Amart Sports inventory. We set ourselves a goal of reducing aged inventory to five per cent as an industry-best benchmark, and we are pleased to have achieved 3.5 per cent at year-end in both brands. As a result new product ranges are able to take front and centre in stores, much to customers’ delight.
TEAM ENGAGEMENT AND CORE VALUES Just prior to acquisition, the Rebel and Amart Sports businesses participated in an engagement survey which delivered a low score of 42 per cent (the retail industry averages at 55%). Over the past twelve months we have worked hard to identify the most significant issues and whilst we still have a lot of work to do in this area, we have made some progress with the survey result for 2013 coming in at 60 per cent. Analysis shows our stores with higher engagement scores have higher average transaction values and lower shrinkage rates than stores with lower engagement scores; so not only do we see a financial benefit in improving our team member engagement, our team members will enjoy working for us as we strive to become an employer of choice.
SYSTEM UPGRADES With ambitious plans to grow the Rebel and Amart Sports brands, we realised the systems we were using were inadequate, constraining our potential future store, sales and margin growth. They would also restrict our ability to tap into group resources that would deliver cost benefits to the business such as supply chain, logistics, CRM and the merchandise sourcing office in China. SAP has already been rolled out to the Sports Retailing Finance department, which has enabled a greater level of control and visibility around our financial accounting. Meanwhile, a very capable project team from across the Group has been working
on the broader SAP implementation project which will see SAP rolled out to the rest of the business in September 2013.
The key word for the Sports Division in FY14 is ‘consistency’ and we want our customers to enjoy world-class shopping experience with us every time and everywhere they shop with us. In addition to SAP we will be rolling out a new stock allocation system which will allow us to interact with our trade partners much more efficiently when ordering stock, and see a significant reduction in hours spent on administrative tasks within the merchandise buying team. This system will also be implemented in September 2013.
SUPPLY CHAIN AND EXCLUSIVE BRANDS We are working in particular with our apparel trade partners to have 70 per cent of our apparel ranges delivered to store already ticketed and on hangers. This will allow us to get product from the receiving dock to the shop floor much more quickly and therefore maximise sales opportunities. There is also a lot of work being done in exploring ex-Asia freight consolidation where we can capitalise on the Group’s sophisticated supply chain and logistics capabilities to pick up our stock direct at
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we will be rolling out a new stock allocation system which will allow us to interact with our trade partners much more efficiently when ordering stock, and see a significant reduction in hours spent on administrative tasks within the merchandise buying team. the trade partner’s source in Asia and deliver it directly to store or into our distribution centre much more efficiently and cost effectively. In particular, we are looking to do this with our exclusive product, a portfolio which has grown recently to include Reebok, Umbro, New Balance apparel, Super Natural and Under Armour, among others. We are also producing our own-brand product via the sourcing office in China which allows us to not only tap into better supply chain and logistics processes, but better pricing and more consistent quality from having our own highly capable team based at directly in country of origin.
MARKETING OVERHAUL During FY13 the Sports Division created our own in-house graphic design and content management team which has not only allowed us to operate more cost-effectively than outsourcing work to agencies, it has allowed us to generate a greater quantity and quality of content much more quickly. Additionally, we have reworked our social media strategy with segmented Facebook communities (Amart Sports, Rebel Women, Rebel Running, Rebel Football) and Twitter. We have also sampled a lot more digital advertising including YouTube, a space we will look to move more into in FY14. Our online stores for Rebel, Amart Sports and Goldcross Cycles continue to deliver “more than just a store”. With engaging content, product and brand information, we will be moving the websites onto the common group platform following the SAP implementation and this will deliver an even more robust environment in which to grow our business this year. SPORTS RETAILING 31 COP709 Corporate Review.indd 31
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REBEL REBRANDING Rebel had a logo and name change during FY13, along with new store designs to better showcase fresh and innovative product, as well as the rollout of our head-to-toe footwear and apparel ranges. This world-best store design has been deployed in our Warringah Mall, Macquarie Centre, Mid City Centre, Brisbane City, Canberra Civic and Fountain Gate stores and the new Warrawong store.
amart sports expansion Amart Sports launched seven stores into Victoria, with another three to open very quickly during the first half of FY14. Many of these stores were converted from Goldcross Cycles stores, which has allowed us to deliver a better overall result to the Group as well as quickly establishing the Amart Sports brand in Victoria. This rollout has demonstrated the ‘two-customer two-brand’ strategy that we developed at the time of acquisition was the right one and with the Rebel business unaffected by the launch of Amart Sports into the Victorian marketplace, we are now focussing on launching the brand into Sydney, starting with a new store in Penrith in October 2013.
GOLDCROSS CYCLES INTEGRATION Goldcross Cycles has been wholly integrated into the Sports Division which offers many more avenues in which to showcase the brand: ranges in all Rebel and Amart Sports stores nationally (over 150 stores), 150sqm store-in-store concepts within all new and refurbished Amart Sports stores nationally, as well as the Rebel, Amart Sports and Goldcross Cycles online stores. The aged inventory in the Goldcross business has been cleared, and we have new ranges and brand strategies that will roll out to all of these store formats in FY14.
FY14 The key word for the Sports Division in FY14 is consistency and we want our customers to enjoy world-class shopping experience with us every time and everywhere they shop with us. We will achieve this through an exciting and engaging in-store experience in all store formats (whether they be in the traditional format or the new store design), and there are new signage packs, visual merchandising standards and informative point of sale materials being introduced to all stores nationally in October 2013. We are also rolling out sales and product training modules via an online learning management system which will allow us to better service our customers’ needs in store as we become known as a knowledge base for all things sport.
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OUR PEOPLE The culture and people within Super Retail Group make this a fantastic business to be a part of. We foster growth and development from within and allow the opinions and ideas of team members to be heard and considered. We are passionate about our team members, who are the foundation for our success. We create an environment where people can live and breathe their passions inside and outside of work. Most of all, our team members take pride in helping our customers make the most of their leisure time. We are committed to our team-based culture in which each individual team member is encouraged to contribute to the success of the company and to pursue their own personal development plan. Our culture is underpinned by a set of five values:
passion
We create an environment in which we share a passion for our business and our contribution and successes are recognised. This means we: • are committed • show enthusiasm • recognise others’ contribution • celebrate success.
openness
We are committed to open and effective communication and respect others’ opinions. This means we: • share information • confirm understanding • have our say • listen openly.
INTEGRITY
We only say things that we know are true and we only commit to things that we can do. This means we: • are truthful • maintain confidentiality • deliver on our commitments • accept responsibility.
CARE
We value each member of our team and have a commitment to ensuring our business is safe for everyone. This means we: • work safely • are considerate • encourage each other • consider the impacts of our actions.
DISCIPLINE
We commit to the plan, resource effectively and follow the agreed processes and standards. This means we: • explain expectations • collaborate as a team • take pride in all that we do • monitor progress and take action. OUR PEOPLE 33
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culture and core values, and the way that we do business. We provide a range of health and wellbeing activities and initiatives designed to educate and assist team members to live a safe and healthy life. Our ‘Get Active’ framework focuses on bringing information, promotions and offers, tools and tips to support team members in achieving a healthy and active lifestyle.
TEAM MEMBER EMPLOYMENT STATUS
COMMUNICATION AND ENGAGEMENT Our people shape our business. We care about our team members’ opinions and what they have to say. As a business we are committed to providing a great place to work for every member of our team. 49%
CASUAL
31%
PERMANENT FULL TIME
49% 31% 18%
CASUAL PERMANENT FULL TIME
PERMANENT PART TIME
PERMANENT PART 18% TEMPORARY FULL TIME 1%
TIME
TEMPORARY PARTFULL TIME TEMPORARY
TIME
1% 1%
LEARNING ORGANISATIONALPART DEVELOPMENT 1% ANDTEMPORARY TIME We are committed to growing our team members and focus on both succession planning and personal growth. We encourage our team members to make the most of learning opportunities available to them, including: retail training, management training, leadership development programs, post graduate and personal development programs. Super Retail Group operates as an Enterprise Registered Training Organisation which allows us to offer a range of qualifications aligned to our internal development needs. Our overarching focus is to provide our team members with the opportunity to have a career in retail. We truly value investing in and developing our people and offer an extensive range of internal and external opportunities. We empower our team members to define their own pathways to success; working with their manager to identify how well they are performing, how they can improve, and what skills they need to achieve that success.
SAFETY, HEALTH AND WELLBEING We are committed to providing a healthy and safe workplace for our team members and customers. To that end, our Health, Safety and Wellbeing Strategic Plan ‘Healthy, Safe & Productive Lives’ reflects a proactive behaviour-based approach. We integrate health, safety, wellbeing and injury management into our team
The Group introduced a new engagement survey in 2012 and we are proud of our second year results which see us exceeding the Australia/New Zealand retail average by six per cent and entering the ‘High Performance/Best Employer’ range. The feedback provided by our team helps us make a real difference for our people, culture, communications, leadership behaviour and training. As a business we have set aggressive targets for the future and aim to be one of Australasia’s best employers.
ATTRACTION AND RETENTION In a period of growth, we are committed to attracting and retaining the best people. We are committed to providing the best start for our team and assisting them to be the best they can be. We are passionate about providing tools to our team to assist them in their day to day role. We continue to review our approach to ensure we are providing a range of mechanisms to support the recognition, reward, attraction and retention of our team. Our annualised retention rate for the Group in 2013 increased to 72.72% with this figure including both permanent and casual team member turnover. We are continuing to build on our retention rate and are proud that this continues to increase year on year. We benchmark ourselves against the industry to ensure we continue to deliver a rewarding experience to our team. Our commitment to attracting the best candidates has led to innovation in our recruitment processes, allowing us to identify the person that best suits our culture and our business.
WORKPLACE GENDER EQUALITY Super Retail Group lodged a report with the Workplace Gender Equality Agency (WGEA) for the 2012/2013 reporting period that includes a workplace profile and a commitment to complying with the new notification and access requirements of the Workplace Gender Equality Act 2012 (Act). Super Retail Group is committed to meeting our WGEA reporting requirements on an annual basis.
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team members by brand
REBEL REBEL 33% 33% 30% 14% 9%
30%
SUPERCHEAP AUTO
14%
BCF
9%
AMART SPORTS
SUPERCHEAP AUTO BCF
AMART SPORTS
6% 6%
RAY’SOUTDOORS OUTDOORS RAY’S
6%
GROUP SERVICES
6%
1%
1%
1%
1%
GROUP SERVICES
GOLDCROSS CYCLES
GOLDCROSS CYCLES FCO
FCO
TEAM MEMBERS YEAR ON YEAR 2013 2012 2011 2010 2009 2008 2007
11793 11387 6041 5616 5557 4990 4469 TEAM MEMBER RETENTION
2013 2012 2011 2010 2009 2008 2007
73% 72% 71% 65% 68% 55% 54% GENDER BY BUSINESS UNIT
53% 64% 60% 88% 60% 49% 45% 62% MALE
47% AMART SPORTS 36% BCF 40% FCO 12% GOLDCROSS CYCLES 40% GROUP SERVICES 51% RAY’S OUTDOORS 55% REBEL 38% SUPERCHEAP AUTO FEMALE
OUR PEOPLE 35
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APPENDIX 2012 - 2013 FINANCIAL SUMMARY
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JUN 08
JUN 09
JUN 10
172.3
140.7 JUN 07
87.5
1654.1
2020.0 JUN 13
65.8
SALES ($m)
JUN 12
55.1
JUN 11
45.7
JUN 10
38.1
JUN 09
1092.3
JUN 08
938.0
715.4
JUN 07
828.8
624.8
PERFORMANCE TRENDS
JUN 11
EBIT ($m)*
JUN 12
JUN 13
12.6
15.9
17.3
JUN 13
JUN 10
JUN 12
JUN 11
JUN 12
DIVIDEND (¢)
38.0
32.0
29.0 JUN 11
JUN 13
16.1
JUN 09
21.5
18.0
329.3
JUN 08
18.8
33.1 JUN 10
JUN 07
19.5
JUN 09
JUN 13
JUN 12
19.4
JUN 08
JUN 11
19.5
22.6 JUN 07
JUN 12
JUN 10
POST TAX ROC (%)*
22.0
NET DEBT ($m)
10.5
JUN 11
JUN 09
* return calculation adjusted for goodwill impairment, acquisition costs and restructuring provisions
18.8
JUN 10
JUN 08
31.0
73.5
114.7 JUN 09
78.8
117.8 JUN 08
42.3
43.3
JUN 07
46.7
93.5
341.0
* historical EPS adjusted to take into account the bonus element in the 2011 entitlement offer
JUN 07
16.8
JUN 13
15.4
52.3
46.4 JUN 12
14.1
EPS (¢)*
JUN 11
13.0
JUN 10
40.9
32.1
28.1 JUN 09
19.8
JUN 08
13.9
JUN 07
22.6
19.5
*excludes goodwill impairment charge in 2010
JUN 11
GEARING RATIO (%)
JUN 12
JUN 13
JUN 07
JUN 08
JUN 09
JUN 10
POST TAX ROE (%)*
JUN 13
* return calculation adjusted for goodwill impairment, acquisition costs and restructuring provisions
PERFORMANCE TRENDS 37 COP709 Corporate Review.indd 37
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FINANCIAL STATEMENTS INCOME STATEMENT Revenue from continuing operations
2013 $m
2012 $m
2,020.0
1,654.1
(1,121.9)
(929.5)
(751.3)
(604.5)
Profit before income tax
146.8
120.1
Profit attributable to Members of Super Retail Group Limited
102.7
83.5
Cost of sales of goods Operating expenses
BALANCE SHEET
2013 $m
2012 $m
Current assets
517.2
492.3
Non-current assets
962.3
893.1
1,479.5
1,385.4
Current liabilities
313.3
226.9
Non-current liabilities
434.7
469.8
Total liabilities
748.0
696.7
Net assets
731.5
688.7
542.3
541.8
Total assets
Total assets Contributed equity Reserves
9.5
(0.8)
Retained profits
179.7
147.7
Total equity attributable to equity holders of Super Retail Group Limited
731.5
688.7
CASH FLOW STATEMENT
2013 $m
2012 $m
225.1
135.3
Net cash (outflow) from investing activities
(109.4)
(681.9)
Net cash inflow (outflow) from financing activities
(140.5)
567.9
(24.8)
21.3
22.3
47.0
Net cash inflow from operating activities
Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at end of year
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www.superretailgroup.com
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