In this exclusive extract from Ragtrader's recent print edition, Josh McDonnell reports on Accent Group’s 2018 data driven retail strategy. Subscribe to the title for more of this in-depth industry information.
Anew name, new CFO and a hub dedicated to eCommerce. That’s what 2018 looks like for Accent Group Limited.
Last year, the company completed the acquisition and integration of the Hype DC business. As such, it consolidated and rebranded itself from RCG Corporation to the Accent Group moniker.
Co-CEO Daniel Agostinelli says while RCG had been a great vehicle for the company, customer data pointed to the Accent name as more recognisable.
“The majority of the business today comes out what is in effect Accent retail. We felt that given that Accent is a name that’s also very well established in the footwear space, with brand principles, that we should name the company Accent Group.”
The move will also see the appointment of a new CFO in February 2018, or even earlier.
Matt Durban will take over from Michael Hirschowitz, relocating to be closer to the major businesses.
“The organisation is much bigger in Melbourne given that the hype of Platypus businesses are all housed in the Melbourne office,” Agostinelli says.
“We will keep some Sydney operations going and we actually feel that it strengthens our position, to have some key management in both markets.”
At the core of the company’s strategy for 2018 is eCommerce, more specifically a new digital hub located in Melbourne. The hub will employ up to 25 people, acting as a digital retail ‘trading floor’.
Agostinelli says Accent Group needs a continuous flow of data and information to capitalise on eCommerce spending.
“ At any one time, you’ll know what Platypus has sold, where it’s sold it, what size the shoe was, what’s trending and that goes for all of our sites. Essentially all of our sites will be online in the new year.
“About 15% of Australian footwear is online and we are not anywhere near that number yet, so we see major growth here for our business.
“The numbers we’re talking about are fairly strong and the reason we built the digital hub is to ensure that we can actually capture those sales correctly and efficiently rather than just trying to capture them.
“The general plan for us to have a much greater share than we have today of the online space for branded footwear.”
The hub also has a dedicated marketing team of three people who use the data to better understand and develop the best marketing tolls to drive sales.
Consistent day-to-day reviews on the data collected from the hub will influence where money is spent, the type of Google SEO investment and the types and frequencies of EDMs.
Agostinelli says the hub has already yielded results that will influence company strategy in 2018, identifying the growing demand for click-and-collect among its brands.
“In terms of what it’s identified, it’s certainly identified that it’s a much bigger market than we expected and it’s also allowed us to turn on things such as click-and-collect, click-and-despatch and that effectively allows us to open up our whole inventory catalogue to the whole market.
“If you run out of a shoe in one store, well, store 80 may have it and they will send it to you from that location same day. So, it’s amazing how fast technology is moving and what can be done these days to what couldn’t be done five years ago.”
In 2018, Accent Group will also look to complete the conversion of its entire ‘The Athlete’s Foot’ store network to the new performance store format.
This year, this conversion process, coupled with other factors, saw EBITDA for the brand fall by 8%.
Agostinelli says the company hopes to have the fitout of the entire 40 store network completed by June 30.
“The conversion is not complete. By June 30th, we should be at about 40 stores. You can imagine that we can’t refit stores unless we’ve got brand new leases, so that’s where we’re at now.
“The current stores, from our point of view, certainly look fresher and more with today’s environment and that’s allowed us to be very strong in areas that we tend to own in this space.
“From that point of view, we’ve got a good, new robust team and make things happen, but it’s fair to say it’s been a tough market.”
The company will also decentralise the brand’s online store in February/March. What this means for franchisee partners is that they will now be able to get the entirety of a sale made online.
For the Platypus brand, know as ‘the jewel in the crown’, retail expansion remains on the horizon in the new year.
Agostinelli says the he wants to see the current footprint grow from 90 to 110-120 stores this year across Australia and New Zealand.
He believes the expansion will be supported strong eCommerce growth, with sales in 2017 growing by four times compared to years prior.
“Platypus is simply going to grow into more stores. You know, every time you think you’re almost getting shorter, you end up doing a couple of things.
“We’re still finding a lot of areas that Platypus can operate, that we certainly haven’t explored to date, and our thinking is that in ‘18/’19, we will continue to do that.”
Conversely, Agostinelli says the newly adopted Hype DC brand will slow the growth in store numbers and shift focus to overall store size.
“We may move from any 100 square metre squares today – if we were going to renew, we’d need to be 250 square metres.
“We’re through with playing the game of who’s got the most stores, it’s who’s got the most profitable and relevant stores.
That’s where we think Hype will play in the future and they
will certainly be much more elevated than they are today.
“Having said that, the last quarter has seen a great turnaround on all things Hype. We’ve put a brand-new computer system in, being Apparel 21, which now fits with the rest of the Accent Group businesses, and that’s made things much more efficient for us.
“You can imagine putting a new system in the 60 stores is no easy feat, but we’ve done that. We’ve strengthened payroll, we’ve strengthened all our systems which will allow us to take the next step for that business.”
As part of that change, the company will also look to shift its pricing for the Hype DC brand.
Agostinelli believes the business can tap into the growing market of consumers looking to buy higher-end sneakers.
“That’s sort of where we see Hype fitting, a much broader elevated seller of higher-end sneakers and better quality sneakers with higher price point so, in effect, the more ‘sneaker freaker’ type guy.
“Well, Hype DC can get $180-$200 very easily compared to Platypus which really operates in that $140-$150 area.”
The final piece of the 2018 puzzle? Amazon. Agostinelli says that while the company knows it will have an impact, it has put the wheels in motion to combat the retail giant.
“Anyone who’s not afraid of Amazon would be a fool. From our point of view, they will take some sort of a bite from our industry, so we’re certainly not taking them lightly.
“Equally, we feel, particularly with our digital hub and our store presences and the brands we carry, that we’ve got enough ammunition to hold our own.
“They will do what they will do and, to us, it’s just going to be simply another competitor in the market.
“They have to win that battle and, so far, it doesn’t look like anyone’s supplying them. So, from our point of view, it’s just another competitor. That’s how we’re viewing it.”