Super Retail Group defies the retail gloom – there are three keys to its success

The gloom in the retail industry has put a dampener on Christmas trading, but Super Retail Group has managed to speed ahead of the pack, yesterday confirming a sales increase of 35% for the first half of the year to $758.6 million.

The result comes despite official figures yesterday showing retail trade remained flat in November, and also come alongside downgrades for traditionally well-performing companies, including JB Hi-Fi.

Super Retail Group, which operates the Ray’s Outdoors, Rebel Sports, Amart All Sports, Supercheap Auto, Goldcross Cycles and FCO chains, said yesterday its like-for-like sales in the Auto and Cycle division were up 3.5%, while in its leisure division, like-for-like sales were up 9.9% from the previous corresponding period.

Sales at Rebel, which was only under Super Retail Group’s control for nine weeks, jumped almost 8%.

The result is an impressive one. But how is it Super Retail Group and its chief executive, Peter Birtles, are able to produce such an impressive result considering the circumstances?

About experiences, not stuff

The Super Retail Group sells products like any other retailer, but its goods are connected to experiences – camping, fishing, playing sport, enjoying leisure time. Leveraging everything on leisure experiences has been a deliberate expansion strategy by CEO Peter Birtles.

When the business was only the Super Cheap Auto, it was similar to a Repco or an Autobarn – a fairly narrow automotive aftermarket niche. But in an environment where experiences are being valued more than goods, it was a smart move.

Smart discounting

Despite many retailers’ promises they would refrain from discounting during the 2011 Christmas season, the past few months have been littered with cheap goods. But Birtles maintains his company has tried to stay away from moving his prices downwards, and has even criticised other businesses for going down that path.

“Some retail businesses have pulled the discount lever too quickly and have now conditioned their customers to being accustomed to those discounts,” he told the Australian Financial Review yesterday.

“That’s not something we’ve had to do.”

That’s not to say Super Retail Group hasn’t discounted and it did say yesterday that its gross margins will be particularly lower in its sporting goods business. But this discounting had a purpose – eliminating old stock that it got when it bought Rebel Sports a few months ago.

New products

Part of any good retailer’s strategy is ensuring enough new products are hitting the shelves to keep customers interested – and that’s exactly what Birtles and his team are doing.

“We still feel people are out there looking to enjoy themselves in their spare time, and that’s what is holding sales up,” he said yesterday. “We’ve been very focused on continuing to bring in new products and giving people a reason to shop.”

Customers don’t want to see the same old products that appear week after week. Give them something new, and it gives them a reason to come back.