Supplier Conference
May 2013
This presentation contains information that is confidential to The Warehouse Group Limited. If you are not the intended recipient you must not peruse, use,
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disseminate, distribute or copy this report. Please notify Kerry Nickels, on phone +64-9-489 7000 to arrange for document retrieval.
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Welcome – Mike Pook
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2
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
X Simplified the slides
X Bigger room / better AV
X 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
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3
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
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Mark Powell – Group CEO
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5
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
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TWG Retail Brands
The Warehouse
Warehouse Stationery
Noel Leeming
Sales FY12: NZ$1.5b
Team: 7,000
Stores: 92
+ 55,000 SKUs online
Sales FY12: NZ$210m
Team: 1,000
Stores: 60
+ 8,000 SKUs online
Sales FY12: NZ$542m
Team: 1,500
Stores: 75
+ 4,500 SKUs online
Foot Count: 1 million customers
per wk
Foot Count: 200,000 customers
per wk
Foot Count: 279,000 customers
per wk
Positioning:- “House of Bargains”
- “Home of Essentials”
Positioning:- “Work, Study, Create,
Connect”
Positioning:- “The Authority in specialty
electronics and home
appliances”
Markets: NZ
Markets: NZ
Markets: NZ
Financial
Services
Multi
Channel
Services
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
Tech Solutions, Telecommunications, Connectivity
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Clearly Defined Competitive Advantage
Sourcing
Expertise
Understanding
New Zealand
(Market, Channels, Customers)
Customer Led,
Stores Focused,
People Centred
- Way of Working
- Culture
- People
Both Leveraging Group
synergies and remaining buy
/ sell trading dominated
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Way of Working Framework – Giving Competitive Advantage
Customer Led,
Front-line Focused,
People Centred
Strategic
Planning &
Deployment
Framework
Leadership
Framework
Business
Principles
Team
Model
Retail
Principles
Brand
Strategy
Thinking
Smarter
Support
Principles
Brand Specifics
Brand Positioning & Personality
Company Working Smarter
Merchandise
Working Smarter
Buying Smarter
Stores
Working Smarter
Selling Smarter
People
Policy, Process & Systems
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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
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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
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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
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Store & Customer Experience:
Execution & Rejuvenation
Simon Turner
EGM Store Operations
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It starts with the CUSTOMER
This is what we want our customers to say……
I can get what I
want, when I want,
where I want
The Prices
are great
Service is quick I don’t wait too
long
The
Quality is
right
I am loyal to the
Warehouse and tell
others how great it is
I can get help,
information and
advice I need when
I want it
I enjoy the
shopping
environment
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Store Experience : Execution and Rejuvenation
Strategy 2013
Store experience:
Execution and rejuvenation
Evolution
Strategy 2014
Store experience:
Increased emphasis on
productivity and customer service
Our primary goal is to improve our in-store customer experience

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
Stores are improving, but now we have to do more (for customers), with less resources!
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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
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‘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
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ANDCONFIDENTIAL
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18
2
Brand and Price & Promo
Framework
Tania Benyon
EGM - Merchandise
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Same Store Sales Trend Continues to Improve
Quarterly Same Store Sales (Reported)
10.0%
MAT Same Store Sales (Normalised)
MAT Same Store Sales (Reported)
The trend of improving Same Store Sales
continues with now 8 consecutive quarters for
the first time since 2004
8.0%
6.0%
4.0%
2.0%
0.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
F03
F04
F05
F06
F07
F08
F09
F10
F11
F12
F13
-2.0%
-4.0%
Christchurch
Extra, Cellars and Pharmacy
GFC
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
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Brand & Price/Promo Framework
Strategy 2011 - 2013
---------------------------------------------------Establish and drive clear brand
positioning, personality and
approach to Price & Promotion
Evolution
Strategy 2014 & Beyond
---------------------------------------------------Embed brand positioning and Price &
Promotion framework. Focus on Points
of difference

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
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
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Competitive Positioning
We have a unique competitive positioning – and are famous for House of
Bargains. We still need to embed Home of Essentials.
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Category Strategies and
Margin Dollar Growth
General Merchandise and Apparel
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Category Strategies and Margin Dollar Growth
Strategy 2013
------------------------------------------Category Strategies and
Margin Dollar Growth
Evolution
Strategy 2014
----------------------------------------------Category Strategies and Margin
Dollar Growth through continuous
improvement
 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





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
A Unique Category Mix and Offer in the Market.
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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.
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Shape Change Strategies
Cross Category Defensible Themes
Leverage multiple categories for an advantage in the marketplace
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

Zones
Leverage our ability to bring together consumables and general
merchandise
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

All the family’s essential clothing and everyday footwear
needs, of a fit-for-purpose quality at a price that excites
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
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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
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

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
Suppliers have a key role in delivering quality products that match our
specifications and meet our Customers expectations
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Multi Channel and
Direct Customer Engagement
Multi Channel Strategy
Andrew Buxton
CEO – Multi Channel
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Multi Channel
Strategy 2013
-----------------------------------------------Multi Channel and Direct Customer
Programs
Evolution
Strategy 2014
---------------------------------------------Multi Channel Expansion




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

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
Bringing Essentials and Bargains through all channels to NZ
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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
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Direct Customer Engagement
Strategy 2013
-----------------------------------------------Multi Channel and Direct Customer
Programs
Evolution
Strategy 2014
---------------------------------------------Customer Loyalty, Contact,
Engagement





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

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)






Getting closer to our customers so they love us!
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Category Strategies and Margin Dollar Growth
Support Initiatives
Jon Adams
EGM Merchandise Support & Logistics
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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
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Category Strategy–Support Initiatives
Strategy 2013
-------------------------------------------------------Building and prioritising our plan,
focusing on improved ways of working
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
Strategy 2014
-------------------------------------------------------Delivery of key priorities of our plan ensuring
they are embedded and sustainable
Year 1 of our 3 to 5 year journey is complete and we are broadly on track.
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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.
Supplier
Inbound
Transport
Distribution
Centre
Supplier Challenge
Delivery
Frequency
& Channel
EDI
Lead
Time
Outbound
Transport
Stores
Get the Basics Right
Stock
Service
Levels
Levels
On Time
MOQ’s
Delivery
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Pack Size
Shelf
Life
Event
Planning
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
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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 times driving 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
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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!
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Suppliers and TWL: Working Together
Tania Benyon
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THE WAREHOUSE
Supplier Feedback Project – 2012
Strictly Private & Confidential
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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
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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
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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
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You were asked to list three things you think TWL
should stop doing;
Your Comments included:







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
We are addressing these in our
Action Plans
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Sorry but this is the way we
work!
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
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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
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Supplier Engagement – New News for 2013

Supplier Promise

Supplier Brainwaves

Supplier Communication Plans
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Supplier Promise
What you can expect from us

We operate ethically




What we expect from you







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
Operate Ethically

To abide by our terms of trade;


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



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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
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
49
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
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Other Supplier Communications

Strategic Supplier Sessions being planned:Strategic touch points to foster closer working relationships, expedite feedback channels, improve
access to TWL leadership group, work on issues and opportunities jointly.


Supplier ‘check-ins’ – “The Breakfast Club”
Strategic Supplier Focus Groups – targeted feedback sessions with small selected groups
– Topics such as eg. Ethical Sourcing, vendor refills

Supplier “Ways of Working”
Improving our way of working together, utilising group skills and expertise to drive continuous
improvement

“Thinking Smarter” for Suppliers – pilot in June
But wait – there’s more!!

The Supplier Website is being reviewed and revamped – watch this space!

Next Supplier Survey - November 2013

Supplier Charity Dinner – November 2013

Charity Golf Day – March 2014

Next conference – May 2014
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Sir Stephen Tindall
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52
Q&A
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Q&A with the Red Shed Leadership Team

Mark Powell – CEO

Simon Turner – EGM Store Operations

Tania Benyon – EGM Merchandise

Jon Adams – EGM Merchandise Support and Logistics

Andrew Buxton – CEO Multi Channel

Mike Pook - MC
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Q&A with the Red Shed Leadership Team
Questions answered on the day
 Why do our teams have to attend so many internal meetings? – it stops them doing stuff


Any plans for gathering customer data similar to club card like Tesco in the UK?


The primary reason is because this supports our House of Bargains positioning and allows us to bring NZers the low prices enjoyed by
consumers in other countries. Another strong reason is that some brands have historically refused to supply The Warehouse and so
PIs have enabled us to offer branded items to our customers at great prices.
Do we plan to centralise more products from direct store deliveries to delivery via DC?


We have had some debate about this internally but no decision has been made. We recognise that we are a different business to
Tesco (and other international brands) so we are careful that we assess ideas against our own criteria in order to translate for TWL, not
transfer.
Why do we do parallel imports?


Our internal meetings are where we do our work – we don’t have any other forums to make decisions about trading the business or
driving improvement. This is part of our way of working. We do recognise that suppliers would like more time with category
managers/buyers which is why we would like to create calendars with you that set agreed frequencies for meetings relevant to your
business with us.
The answer is we should supply in the most customer centric way. Usually this is via DC as it allows us to ensure product is delivered
‘store friendly’ (faster to shelf) and we can make sure it is delivered on time for promotional activity. FIS vs. FID delivery will also be
assessed on a cost basis.
Plans for delivery to customers for website?

We are working through different delivery options and these will also evolve over time. Currently we pick from fulfilment centres for
ranged items and drop ship from suppliers for other items.
PRIVATE AND CONFIDENTIAL
Q&A with the Red Shed Leadership Team
Questions not read on the day
 Better, simpler, cheaper. The ticketing process should be owned by TWL. At the moment it
is a 4-step process that involves suppliers - extra time; extra communication; extra
complexity. Suppliers should concentrate on servicing.
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Over a number of years with changes of buyers we have noticed/experience quite large
reduction sin key promotions & volumes, e.g. BTS – 5-6 years ago we would expect 20-30K
units sales for BTS. With the course of time and changes in buyers, BTS 2013 volumes were
4-5k. Q: Is this information we should be alerting you to? And to who? From a supplier point
of view, TWL is giving up market share without a fight or though ignorance?
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Sorry, we are not clear on the process you are referencing here. We really want to answer your question so please submit a brainwave
with a bit more detail, or send me an email (tania.benyon@thewarehouse.co.nz) and we will provide an answer.
Any concerns you have with volumes changing should be initially raised to the category manager/buyer, and then to the merchandise
manager if you do not think they have been addressed. There are many reasons for volume changes such as the market changing in
size or trends. In the example above our BTS share has actually been growing so potentially the business may have shifted to another
supplier. Your category manager would be able to confirm this for you and advise the reasons.
Do you see any product lines/opportunities to be brought back to NZ, leading to job creation,
investing in NZ

We do not have any view currently on production that can be bought back to NZ. We remain supportive of NZ made items that fit with
our category strategy.
PRIVATE AND CONFIDENTIAL
Q&A with the Red Shed Leadership Team

Will BizRewards expand to Noel Leeming and Torpedo 7 products and ranges?
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Why did you buy Torpedo 7? Do you intend to use it as an online bridgehead into Australia?

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Torpedo 7 is a pure play online specialist with a different brand personality and range position strategy to TWL. Torpedo 7 has a wider,
more branded, adventure sports range focus. TWL will continue to build category strategies and range plans based on our category
strategy box thinking including very basic, basic, better and best brands delivering a range of price points across multiple segments.
Will OEM brands be sacrificed (which TWL) built its business on in the quest for brands?
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Torpedo 7 has the largest deals business in NZ with 1-Day.co.nz and has a great brand and existing sporting adventure business
backed up by a great team with the opportunity for much more expansion from this base. Torpedo 7 has a significant portion of its
business in Australia which we can learn from with other online retail brands we may launch there.
With the acquisition of Torpedo 7, how do you see range differentiation?

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BizRewards is a great scheme for businesses. Nothing has been decided yet but we are reviewing whether to extend BizRewards to
Noel Leeming as it seems like a good fit. We don’t plan to expand BizRewards to Torpedo7 due to it’s sporting/adventure range not
being relevant (largely) for businesses.
No, within our brand matrix there is room for both house brands and national brands. Both are important to deliver our house of
bargains and home of essentials positioning. We are working towards having strong house brands in almost every segment.
Re: focus on training product knowledge. How do we support you? Online training; store
after hours, during hours; training events?

The PK training we need will vary by category. To date our approach has been ad hoc, supplier by supplier – particularly as we have
rolled out brands. We will form a view on our preferred approach over the coming months and it is likely to include elements of all the
options you have listed.
PRIVATE AND CONFIDENTIAL
Q&A with the Red Shed Leadership Team

What categories are you looking to strengthen local supply base


What is the strategy to use local supplier vs.. Shanghai buying office? %. Particularly in apparel.


This is not really a question but it sounds like you are frustrated. My suggestion is to contact either the merchandise manager or myself with
your specific concern so we can understand the issue. It will be important to also understand where your category is located in the category
strategy box as this could help explain some of our actions.
Business strategy is great. Is there a plan to communicate the category strategy to suppliers.


As suppliers you need to be honest with your category manager/buyer so we can make informed decisions. We are not obsessed with Kmart
as we ‘follow our customer’, however we recognise they have engineered product to particular key price points – this is why it is important for
us to establish the very basic segment in our brand matrix. We will have an (market) opening price point within our offer and it will be marketed
authentically. I.e. fit for purpose and worth what I paid.
Buyers still focus on themselves and are not leveraging efficiencies or productivity advantage with the
suppliers


Our strategy is to use agents/local suppliers where they offer a clear advantage over SRO such as technical expertise in a particular segment.
There is no set %.
How do we as suppliers handle the quality price issue when there seems to be an obsession with Kmart
whose margin expectations are much less than TWL?


We are reviewing our sourcing to ensure that we are clear on the best way to source for each product i.e. buying or selling agent, direct , or
local supplier. We have no view on which categories should be sourced locally, rather we want to source appropriately to ensure ethical, lowest
COGS, quality and delivery standards are met.
Our category strategies are detailed plans that support the overall business strategy – every category manager has a strategy and they will be
able to talk you through the key points. I suggest you ask for the category strategy box placement and retail principles, the brand matrix, and
the value cocktail to get a good overview.
CRC return centres, are those being reviewed at all for performance (not good to date)

We have one CRC (Centralised Returns Centre) which is a key part of our supply chain. This is operated by an experienced 3PL (TIC) who
operate returns operations for major retailers across Australasia, but it is also managed closely by our Logistics team, including on site support.
It has been open since September and we are pleased with progress to date, although as in all areas, there is always more to do. One
challenge that has come through is returns stock from suppliers yet to sign up creates capacity issues – so it is critical that all suppliers sign up,
as this forms part of the way we do business at TWL.
PRIVATE AND CONFIDENTIAL
Closing Words
Mark Powell – Group CEO
PRIVATE AND CONFIDENTIAL
59
Conclusion: The Warehouse (Red Sheds)


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No economic headwind or tailwind is expected
Long term declines in sales have been reversed and market share
stabilised
Key customer concerns are Price, Store Environment, Service, Products
& Quality
Customer perceptions are very slow to change, but improvement is
detectable
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 and does…
PRIVATE AND CONFIDENTIAL
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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
PRIVATE AND CONFIDENTIAL
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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
PRIVATE AND CONFIDENTIAL
Thank You for Coming
Have a Safe Journey Home
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63