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Supplier ConferenceMay 2013 This presentation contains information that is confidential to The Warehouse Group Limited. If you are not the intended recipient you must not peruse, use, disseminate, distribute or copy this report. Please notify Kerry Nickels, on phone +64-9-489 7000 to arrange for document retrieval. PRIVATE AND CONFIDENTIAL
Feedback from last year • We have repeated what you liked • The store visit • Hearing from the Leadership team • Clarity on strategy • We have improved what you didn’t like • Simplified the slides • Bigger room / better AV • Less presentation; more Q & A What’s Next: This Presentation Pack will be emailed to you along with a Survey Monkey to get your feedback
Agenda (and Housekeeping) • New Store walk through - TWL Royal Oak • Strategy • Mark Powell • Red Shed Lead Team • Category Support Initiatives – Raising the Bar • Jon Adams • Supplier Survey and Communications • Tania Benyon • Sir Stephen Tindall • Q&A Session • Red Shed Lead Team • Wrap Up • Mark Powell
Group Strategy • A Trading Group with: • multiple business units • clear core competencies that can add value to each trading business unit • Develop & Leverage Core Competencies • Sourcing expertise • Understanding New Zealand Customer, Market, and Channels • Our people, and a best practice Way of Working/Culture • Leveraging Group Synergy • while still remaining “Customer Led, Store Focused and People Centered” • Identify and grow business verticals • where we can leverage core competencies to be number 1 or 2 in that business vertical A multi-focused group of companies leveraging our core competencies
TWG Retail Brands Warehouse Stationery The Warehouse Noel Leeming Sales FY12: NZ$1.5b Team: 7,000 Stores: 92 + 55,000 SKUs online Foot Count: 1 million customers per wk Positioning:- - “House of Bargains” - “Home of Essentials” Markets: NZ Sales FY12: NZ$210m Team: 1,000 Stores: 60 + 8,000 SKUs online Foot Count: 200,000 customers per wk Positioning:- - “Work, Study, Create, Connect” Markets: NZ Sales FY12: NZ$542m Team: 1,500 Stores: 75 + 4,500 SKUs online Foot Count: 279,000 customers per wk Positioning:- - “The Authority in specialty electronics and home appliances” Markets: NZ The Warehouse Financial Services Ltd, Various Consumer Finance products Seamless Multi-Channel:- The Warehouse, Warehouse Stationery, Noel Leeming Pureplay Online:- Red Alert, I Love Beauty, Torpedo 7, One Day Financial Services Multi Channel Services Tech Solutions, Telecommunications, Connectivity
Way of Working Framework – Giving Competitive Advantage Customer Led, Front-line Focused, People Centred Strategic Planning & Deployment Framework LeadershipFramework Business Principles Team Model Retail Principles Brand Strategy Support Principles Thinking Smarter Brand Specifics Brand Positioning & Personality Company Working Smarter Merchandise Working SmarterBuying Smarter Stores Working SmarterSelling Smarter People Policy, Process & Systems
Group Synergy • Each retail brand in The Warehouse Group has and will continue to have its own distinct brand positioning and personality • While the retail brands do have some category overlap there is a large degree of distinctness in customers, product range and sales process
Red Strategy Evolution – Key Result Areas Brand and Price & Promo Framework Clear ‘Way of Working’ Framework Store Experience: Execution and Rejuvenation Category Strategies and Margin Dollar Growth Multi Channel and Direct Customer Engagement Community and Environment Financial Services & Other Services
Warehouse Group Strategy • Building Long Term Sustainable Growth • Building a 100 Year Business • Building something we can all be proud of… • For our Customers, our Team, our Shareholders, our Suppliers and for New Zealand
Store & Customer Experience: Execution & Rejuvenation Simon Turner EGM Store Operations
It starts with the CUSTOMER This is what we want our customers to say…… The Prices are great I can get what I want, when I want, where I want Service is quick - I don’t wait too long The Quality is right I can get help, information and advice I need when I want it I am loyal to the Warehouse and tell others how great it is I enjoy the shopping environment
Strategy 2013 Store experience: Execution and rejuvenation Stores are improving, but now we have to do more (for customers), with less resources! Our primary goal is to improve our in-store customer experience Strategy 2014 Store experience: Increased emphasis on productivity and customer service Store Experience : Execution and Rejuvenation Evolution • Developing a ‘better (for customers) simpler (for our people) and cheaper (for profit)’ approach • Stores Working Smarter to deliver increased productivity: Using Westgate as a ‘store of the truth’, with a focus on 3 areas - checkouts, ticketing, night filling • Closing the gap between best and worst stores and driving all stores to excellence • Accelerating the internal and external modernisation programme and refits • 20 refits completed so far • 16 modernisations completed
Suppliers can help us to deliver ‘Better, Simpler, Cheaper’ We are focused on Better for customers.... • Love Your Customer (Behavioural and interaction training) • Specialised training (product service, product knowledge) • Developing a service style of leadership You can help us with Simpler for our people.... • Productivity improvements e.g. shelf ready packaging, clear product descriptions on outers, appropriate case sizes etc • Improving stock flows, replenishment and availability e.g. DIFOT, planning of FIS deliveries And Cheaper for profits... • Continuation of focus on Shrinkage e.g. quality packaging to reduce damages in store and tagging
‘Better, Simpler, Cheaper’ for Store Visits • Visiting & Servicing Stores… • Merchandising, rep & vendor support in stores is appreciated • The resource & financial commitment is high • Stores need help in a consistent way • How can we help each other… • Develop a set of guidelines to use when servicing stores • A set of workshops with our suppliers are planned, starting now, completed by end of July • Build and agree guidelines - ready for launch 1st August • Providing consistency of approach • From you I need… • Your attendance & feedback in workshops – let me know if you are interested in attending • Once guidelines finalized, full communication to your team and eventual compliance ’ Our primary goal is ‘better for customers 2 18 PRIVATE AND CONFIDENTIAL
Brand and Price & Promo Framework Tania Benyon EGM - Merchandise
Same Store Sales Trend Continues to Improve The trend of improving Same Store Sales continues with now 8 consecutive quarters for the first time since 2004 We are very early in our transformation journey. The scale of change required is significant and there is still much to do – It’s all about Products & Quality, Price, Store Environment and Service, - The Strategy must address these areas
Brand & Price/Promo Framework Strategy 2011 - 2013 ---------------------------------------------------- Establishand drive clear brand positioning, personality and approach to Price & Promotion Strategy 2014 & Beyond ---------------------------------------------------- Embed brand positioning and Price & Promotion framework. Focus on Points of difference Evolution Whilst HOB & HOE have been increasingly embedded over the last 18 months, brand perception (sum of parts) takes a long time to change – to drive re-appraisal by customers • Clear Brand Positioning & Personality to drive “New Zealand's most loved retailer” = relevance • Deeper understanding of customer perceptions/awareness through customer panel • Drive brand re-appraisal = price + quality + service + patience: Understand and address inhibitors to re-appraisal • ‘House of Bargains’ & ‘Home of Essentials’ = differentiation • Home of Essentials: Dial Up • House of Bargains: Continuous Improvement • Embedding and Evolution of the Price and Promotional Framework = promotional excellence plus guides advertising, pricing & store execution
Competitive Positioning We have a unique competitive positioning – and are famous for House of Bargains. We still need to embed Home of Essentials.
Category Strategies and Margin Dollar Growth General Merchandise and Apparel
Category Strategies and Margin Dollar Growth Strategy 2013 ------------------------------------------- Category Strategies and Margin Dollar Growth Strategy 2014 -----------------------------------------------Category Strategies and Margin Dollar Growth through continuous improvement Evolution • Focused on where we can leverage competitive advantage • Price and Promotional Framework; clarity on traffic drivers, sales drivers and GP$ drivers • Commercial Thinking • Shape Changers • Merchandise Zones • Product the key to making TWL the “House of Bargains” and “Home of Essentials” • Category Strategy Guidelines: Win-Lead, Play-Grow, Play-Dominate, Play-Show • Clear Brand Matrix and Price Architecture (Very Basic, Basic, Better, Best) , Brand and Private Label Framework • Trading Triangle Framework – commercial thinking to drive GMROI, reduce COGS and optimise retail price A Unique Category Mix and Offer in the Market.
CSB High Level by Category Some categories have shifted location within the CSB framework. More refinement (including at sub category level) will follow driven by continuous improvement and deepening of our strategic thinking.
Shape Change Strategies Cross Category Defensible Themes Leverage multiple categories for an advantage in the marketplace Zones Leverage our ability to bring together consumables and general merchandise • Technology and Entertainment For Everyone – Sales driver • Helping everyone connect and entertain with their favourite ‘Big Brands’ at TWL prices • Everything for Home – Sales and GM$ driver • Everything you need and want for your home under one roof at a price you can afford • Enjoying Outdoors – Sales and GM$ driver • Delivering NZ’s best outdoors range under one roof making everything affordable for everyone to enjoy • Celebrations For Everyone – Sales and GM$ driver • Making it easy for people to celebrate the important events in their lives with everything available to make parties, gifting and treating themselves or others easy and affordable Home of Apparel Essentials – Sales driver • All the family’s essential clothing and everyday footwear needs, of a fit-for-purpose quality at a price that excites • Pet Zone – Sales and GM$ driver • Providing a “One Stop Shop” for all your pet needs and wants, at prices you can afford with quality you can trust • Book Zone - Sales driver • The books your family wants at NZ’s lowest prices always available • Baby Zone – Sales and GM$ driver • Providing a “One Stop Shop” for all your baby needs, at prices you can afford with quality you can trust Accessories Zone – Sales and GM$ driver • Creating a one-stop women’s accessories shop – the first choice for a woman to enhance her wardrobe. Jewellery Zone – Sales and GM$ driver • Delivering NZ’s best value fine jewellery range, offering gifting solutions, for others and self, at affordable prices We have made good progress and the shape change strategies will continue to evolve
Quality Support Strategy 2013 Build on Direct Sourcing, and stop the brand damage in quality Evolution Strategy 2014 Leverage sourcing strengths, and improve fit for use quality when sourcing • Pre-qualification for quality and ethical sourcing in place for new sources, an accredited partner network beyond China, and QC in place for all sources • Continue to reduce return rates (thresholds dropped to 5% from 20%, 52% (232k) less units returned • Fit for use specifications in place prior to placing orders for priority categories • Product Quality Improvement - immediate action taken & long term strategy developed • Measurement and PARs drive continuous improvement in quality • Simplify quality processes and ensure fit for use prior to purchase • Market leading quality and ethical processes to be proud of Suppliers have a key role in delivering quality products that match our specifications and meet our Customers expectations
Multi Channel and Direct Customer Engagement Multi Channel Strategy Andrew Buxton CEO – Multi Channel
Multi Channel Strategy 2013 ------------------------------------------------ Multi Channel and Direct Customer Programs Strategy 2014 ---------------------------------------------- Multi Channel Expansion Evolution • Increasing speed of growth encouraging 135% increase in online sales in H1 F13 • Multiple initiatives delivered in H1 F13 such as Red Alert, Your Warehouse, Longtail books. • Fulfilment for full range online established – 3 store FC’s, apparel DC, Red Alert DC • Margin, operations and operating costs learnings and challenges with high growth • Multiple new online stores and extended ranges • Online entry into international sales • Making the in-store/online brand experience seamless, including click & collect • Retail principles still apply for customer experience Bringing Essentials and Bargains through all channels to NZ
Multichannel Strategic Focus • Multichannel • Leverage existing stores and brands for online/offline growth • Develop/acquire new online stores to capture market share • Grow internationally with limited investment • Alternative Channels • Continue growth of bargain sourcing to support traditional/new businesses • Develop event/pop-up physical channel whilst retaining profitability Invest for revenue and margin growth
Direct Customer Engagement Strategy 2013 ------------------------------------------------ Multi Channel and Direct Customer Programs Strategy 2014 ---------------------------------------------- Customer Loyalty, Contact, Engagement Evolution • BizRewards growing at 40% more than the $43m in FY12 • BizRewards launched and growing in TWL • Developing target segments and initial acquisitions/comms for BizRewards • Launched Your Warehouse as initial personalisation • Developed contact centre improvement plan • CRM being implemented but progress slow • Customer database grown 50% in TWL (over 260k) • Business focus using BizRewards across brands • Growth of BizRewards by targeting segments • Building consumer information to use for increased segmentation and business growth • Developing deep customer interaction into a competitive strength • Linking consumer info with services and financial services Getting closer to our customers so they love us!
Category Strategies and Margin Dollar Growth Support Initiatives Jon Adams EGM Merchandise Support & Logistics
Red Strategy Evolution – Key Result Areas Brand and Price & Promo Framework Clear ‘Way of Working’ Framework Store Experience: Execution and Rejuvenation Category Strategies and Margin Dollar Growth Multi Channel and Direct Customer Engagement Community and Environment Financial Services & Other Services
Category Strategy–Support Initiatives Strategy 2013 -------------------------------------------------------- Building and prioritising our plan, focusing on improved ways of working Strategy 2014 -------------------------------------------------------- Delivery of key priorities of our plan ensuring they are embedded and sustainable Evolution • Improve Merchandise Ways of Working • Range and Space Reset • Better Gross Profit Management • Simpler Promotions and Ticketing processes • Embed Value Streams and Better Stock Management • Logistics Developments • Improved Supplier Collaboration Year 1 of our 3 to 5 year journey is complete and we are broadly on track.
Supplier Challenge Get the Basics Right Our Suppliers Are Critical to our Joint Success and We Need to Raise the Bar We are committed to working with suppliers to fix the basics and drive improvements. Stores Distribution Centre Supplier Inbound Transport Outbound Transport StockLevels ServiceLevels Pack Size EDI DeliveryFrequency& Channel EventPlanning ShelfLife On TimeDelivery Lead Time MOQ’s
Supplier News – What’s Coming • Replenishment Review: • Delivery Frequency and Lead times • Pack sizes • Unit pick • Delivery channel • Data integrity: Improved Supplier Data Capture Sheet • Reverse Logistics: sign up to the CRC (if not already) • Supplier Scorecard: Raise the Bar e.g. DIFOT • E- Supplier: ramp up EDI and ASN roll out
E-Supplier – now LIVE in TWL • 19 local suppliers are live on EDI and ASN’s which is over 20% of our local purchases • Feedback from “live” suppliers is on-boarding has been easier than expected • This is a win-win for TWL and our suppliers. • Improving data accuracy • Reducing ordering lead timesdriving availability and sales • Reducing the cost of doing business for both supplier and TWL, • Simplifying ordering and payments processes • What’s next? • Top 100 suppliers (accounting for around 90% of our local purchases) on line by the end of 2013. • Trading electronically with all local suppliers by the end of 2014 We have contacted you already but if you have any queries please contact Ray Renner, our EDI On-Boarding Project Manager on EDIEnquiries@thewarehouse.co.nz
Christmas is Coming! • Last year we step changed our focus on jointly executing a successful plan. This included: • Key contacts over peak period • Staying open and delivering on time and in full • Highlighted closed days • Focus on post Christmas recovery • Results were an improvement year on year but were still mixed • 27 of our top 100 suppliers didn’t provide us requested details/plans • 25 of top 100 suppliers still closed for 4 days or more • On shelf availability dipped nearly 3% during January recovery period WE CAN DO BETTER FOR 2013!
Suppliers and TWL: Working Together Tania Benyon
THE WAREHOUSESupplier Feedback Project – 2012Strictly Private & Confidential
Overview • The Warehouse conducted a survey of our suppliers to get a better understanding of how you rated us across various performance attributes. • It was decided to use Coalface Consulting, an independent market research company, to carry out this research to ensure objectivity and confidentiality. • We plan to make this an annual survey to allow comparisons to be made year-on-year. • Warehouse Stationery have been doing this since 2008 and have made significant year on year improvements. Response Rate • Total Response rate of 73% (83 of 113) • By survey industry standards this is deemed to be a good response rate for a first survey – Thank you for your responses
Headlines • Good set of results: you mostly are happy with our interaction (once you get hold of us!) • Good Feedback from you regarding our direction - the future is bright! • Some good ACHIEVABLE opportunities for us to work on Key Opportunities for the TWL teams: • Speed of Response: respond to suppliers quickly even if its bad news for them • Visibility of Strategy: share our strategy more effectively with you; we have a strategy but we don’t share it
Summary of All Survey Questions Suppliers were asked to rate The Warehouse Store Support Office using a 5-point scale (Strongly disagree in RED to Strongly Agree in BLUE) Our objective is to move the BLUE further along the scale to the left next year Solutions: Sharing Strategies Speed to Market Communication
You were asked to list three things you think TWL should stop doing; Not involving key suppliers Little time to meet with suppliers Slow decision making Departments not communicating with each other Poor store compliance Making mistakes with data High staff turnover and use of inexperienced staff Parallel importing major brands Stop being so greedy on margin Discounting Your Comments included: Sorry but this is the way we work! We are addressing these in our Action Plans
Next Steps for the TWL team We asked our teams to: • Review the detailed feedback as a team • Agree an action plan for their team focusing on the big wins not individual comments • Not take the feedback personally, and to use it as an opportunity to improve and work with suppliers more effectively Each team has built an action plan; ask about it next time you talk to us
Supplier Survey – Team Action Plan Highlights • Quick response to Supplier Emails/Phone calls – Implement a two day turnaround rule to reply to any and all supplier emails and telephone calls even if to advise further time required • Communicate how long things will take (in order to manage expectations). • Calendar of Supplier meetings based on strategic importance of Supplier – some Supplier meetings to be in store • Share Promo and Range strategies with key Suppliers so they can review and tailor submissions as appropriate • Stop slow / no decision making; quick, direct answers. • Stop taking so long to discuss & implement ideas through TWL
Supplier Engagement – New News for 2013 • Supplier Promise • Supplier Brainwaves • Supplier Communication Plans
Supplier Promise What you can expect from us What we expect from you Operate Ethically Employment is freely chosen Working conditions are safe and hygienic Child labour shall not be used Living wages are paid No discrimination is practiced No harsh or inhuman treatment is allowed To abide by our terms of trade; Be knowledgeable about the regulatory body that you are operating within Operate fairly and responsibly and with transparency Escalate disputes appropriately To support TWL in delivering our strategy Through appropriate price, product and promotion submissions Supply products that match our customer promise on quality standards • We operate ethically • We will treat you fairly and with respect • We will support you to meet high labour standards • We buy and sell our products responsibly • We abide by our terms of Trade • We will work with you in good faith to resolve any escalated disputes • We will abide by our Ways of Working • We will use language and behaviour that supports our guiding principles • We seek to continuously improve our ways of working with suppliers by acting on Supplier Brainwaves • We commit to responding to suppliers in a timely fashion • Our answers will correspond to the successful delivery of our strategy
We want to hear your ideas!From the end of May we will have secured our brainwaves website so only existing suppliers can access it and submit ideas to us Supplier Brainwaves Email supplier.brainwaves@thewarehouse.co.nz • You can currently access the supplier brainwaves site via the supplier section on the TWL website BUT from the end of May to get access first you’ll need to register as a supplier. • This password will also give you access to the Supplier notices section of the website which we will use to communicate any information to you. • All brainwaves will be reviewed by Tania Benyon and allocated to the appropriate team member for a response We will email registration instructions by the end of May
