Super Retail Group is expanding yet again: Four lessons from the company’s dream run

It must be fun being Peter Birtles.

Sure, the Super Retail Chief CEO got a strike yesterday from the 25.9% of shareholders unhappy with the company’s remuneration report.

But when it comes to profits, his company – which has a market capitalisation larger than that of David Jones or JB Hi-Fi – has had a dream run. Its profits from sales at stores like Supercheap Auto, Amart All Sports, Ray’s Outdoors and Rebel Sport were up 23% for the 2012-13 financial year.

And, Birtles revealed at the company’s AGM yesterday, the company is set to expand, opening 25 new stores in the year ahead.

Its share price closed at $13.49 yesterday, up 55% from a year ago. And this is despite IBISWorld figures showing the consumer goods retail sector has actually shrunk since 0.9% since 2008.

Last month, The Australian crowned Birtles its CEO of the Year, and that’s just the latest in a long line of gongs his company’s steadily rising performance has earned him.

In a retail sector that’s had more than its fair share of collapses this year, what’s he doing right?

1. Talk isn’t cheap: remember your employees are listening

Speaking to LeadingCompany last year, Birtles had a word of advice for other retail leaders.

“Leaders who have publicly talked about how retail is so difficult and challenging, and how this is the worst time for the last three years, need to remember that it is not just the media and public who listen; it is your employees,” he said.

“If you send a message out saying life is hard, it is very difficult for your staff to come to work saying, ‘I can really make a difference’.”

Leaders need to focus their team on how to work through difficult times, and not throw their hands up in the air privately or during their AGMs about how difficult things are, he said.

2. Steady at the top

The average tenure for listed company chiefs is growing ever shorter. But Birtles has been in the top job since 2008. And before that, he was CFO.

Most of the people who report to him have also been promoted internally. When, shortly after taking over, he realised the quality of the company’s leadership wasn’t where it needed to be, he brought on a few leaders from the outside.

But the bulk of his 11 executives came from within the group.

This means he, and most of his direct reports, have a huge amount of memory and institutional knowledge about the business. They’ve focused on improving things like same-store sales growth over a number of years. The benefits of this focus have been paying off.

3. Not everything pays off right away

In 2011, the company bought Rebel Sports from its previous private equity owners.

At the time, shareholders weren’t happy. It was a big deal – worth $610 million – and it wasn’t clear if there was much value to be had from the business.

Speaking to The Australian last month, Birtles said the company’s share price took a dive to $5.34 at the time. “But now, our shares are above $12 and all the shareholders who supported the deal are very happy,” he said.

While the Rebel takeover is still a work in progress, it’s been a handy contributor to Super Retail Group’s bottom line, and has helped further diversify the company.

4. Focus on solutions not products

One of the hallmarks of Super Retail Group in recent years has been its focused attention on customer service. In interviews, Birtles often cites the success of Apple’s stores as proof that a service – heavy business model can and should work for retailers.

A few years back, Supercheap Auto has begun offering free fitting for things like windscreen wipers, car roof racks and car seats. It’s also looking at a service that will allow customers to check whether their car needs a service.

“We are adapting from being a product-centric business to a solution-centric business,” Birtles told The Australian. “It has got to be about helping the customer get the end result, not purely about selling them a product.”

This is helped by finding enthusiasts to work in his businesses.

“Because of the types of products we sell, we are able to employ a lot of people who naturally have an interest in those products. If you go into [our] auto businesses, our people there love cars.”


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