Halfords is an iconic British brand with a strong heritage, having over 100 years' presence on the UK High Street in both the Auto and Cycling categories. However, we needed to do more, so in FY14 we began our journey to reassert our Retail proposition authority by ensuring our offer is more relevant for our customers.
Supporting Drivers Of Every Car
We will continue to bring new products and innovations to our customers over the coming years.
Our Auto offer comprises Car Maintenance and Car Enhancement. It's the largest part of our Retail business, representing around 47% of Group revenues and the changing nature of the Auto market means we are well placed to exploit material opportunities.
The number of cars on British roads continues to grow and overall mileage is starting to increase for the first time since 2008. The age of the car parc continues to increase and newer cars on the road have added complexity, both of which lend themselves to our unique Car Maintenance proposition.
In FY15 our Car Maintenance category will continue to be driven by initiatives across our product ranges and service offering, including car parts. bulbs, blades and batteries ("3Bs") represent a significant growth opportunity for us, with the parts and labour market estimated to be worth around £1bn. Halfords currently has a relatively low market share. In FY14 we sold 5.3m bulbs and fitted 37% of them and we will continue to enhance the breadth of our car parts range by bringing innovative and specialist products to market. As the technology in wiper blades develops we will be extending our range to include flat blades and widening our range of rear-wiper blades as retail aftermarket demand increases. More and more new cars are being fitted with batteries that feature start-stop technology and with the knowledge and capability to fit these types of batteries we will be a cost-effective service to our customers.
In the Car Enhancement category we are well prepared for any forthcoming digital radio switchover. During the year we launched an exclusive range of Pure in-car digital radios. This is a strong partnership with the leading brand in in-home digital radio and has already delivered an award-winning product. We will continue to bring new products and innovations to our customers over the coming years.
Inspiring cyclists of every age
Cycling has always been at the core of the Halfords offer, from the opening of the first shop in Charlotte Street, Birmingham in 1892 through the opening of the out-of-town retail stores in the 1990s to today's interest in Cycling as a healthy and fun activity.
We cater for all cyclists, from young children to families to commuters to premium cyclists. Our range of products includes a large number of SKUs from the UK's biggest bike brand Apollo, our fastest-growing bike brand Carrera to our premium brand Boardman and our newest brand Pendleton.
We recently relaunched much of the Apollo range with 21 bikes redesigned to appeal to the very broad spectrum of customers, who range in age from 12 to 72. This new range is all about making Cycling accessible to everyone, and making our bikes specific to their leisure needs. We undertook a lot of customer research to ensure we got this right and we're really pleased with the results we hope our customers will be too.
A new range of Carrera, our second-largest bike brand by volume will be launched in June 2014. We're delighted with the performance of the brand, in part driven by a very successful spot-buy programme.
We will also be taking advantage of our market position to attract more junior riders to Cycling and will be launching specifically designed junior bikes for every need across Apollo, Carrera and for the first time, Boardman. Now our aspiring, junior customers will be able to choose from hybrid, road and premium bikes.
Halfords also implemented a major acceleration of its presence in the Cycling Parts, Accessories and Clothing market ("PACs") during FY14. This represents an exciting opportunity for growth and during 2014 our stores will feature a larger range of PACs products with more space allocated to clothing, merchandised by gender and product type. We're moving closer and closer to something for everyone in clothing and we have introduced a great value range starting at £10 for a jersey under the Tenn brand.
Complementing this we have released space in some stores for our Cycle Repair offer and delivered Cycle Repair training as part of our 3-Gears programme as we seek to re-establish Halfords as a comprehensive Cycling destination.
Equipping families for their leisure time
As we leverage the heritage of Halfords into Equipping Families for their Leisure Time we have focused not only on products but also on customer convenience. We have refocused our camping offers on two specific markets, introduced new promotions on camping accessories, and will be trialling pop-up Click & Collect collection points. We are also focused on making life easier for our customers - where additional items and fitting are required to fulfil our customers' needs, we will be introducing bundled 'complete' prices that our customers can trust e.g roof boxes.
"they're brilliant — even the customers are commenting."
We will look to take advantage of a new area for the business - the rapidly growing wearable fitness and well-being technology, driven by the success of technology within the Cycling category. The expansion of the fitness and well-being market, along with a stream of innovations in wearable technology, will see Halfords also offering fitness solutions. A wide range of products and brands will be available, from Cycling GPS, running watches, health-tracker wristbands and action cams, such as the Go Pro brand. We will also offer an extended range online to include additional accessories.
The 'h' factor
All of our product-ranging activities are designed to leverage the heritage of over 100 years' presence on the British retail scene. Our repositioning has only just begun as we recreate our 'H'-factor! — the confidence and trust with which customers can turn to Halfords as the natural destination for their Auto, Cycling and Leisure needs.
Halfords have been selling Apollo bikes since 1930, and with over 80 years of heritage, it is now the number one bike brand in the UK for bikes sold – over 170,000 bikes per year and the second most recognised bike brand in the UK, with 43% recognition amongst mainstream cyclists.
As a result, the brand is really important to Halfords, and is our second most profitable bike brand. Halfords have approximately 80% consideration from the mainstream customer, and they form the heartland of our current customer base.
The current Apollo adult range is 3½ years old, and in real need of a refresh to match the expectations of the Halfords customer.
When beginning the redesign of the complete range back in summer 2012, we had the following key objectives:
- Update the visual appearance and specification of the bikes
- Improve the positioning of the Apollo brand as the solution to mainstream cyclists needs
- Focus on improving female specific designs
- Target incremental markets, such as teen and older Mountain Bike customers
- Increase profitability of mainstream bikes
Customer focus groups had informed us that bike design was as important to them as specification when choosing a mainstream bike, so we invested in making the bikes look as contemporary as possible whilst maintaining good value specification to meet the needs of mainstream cyclists. Consequently design moved away from "literal" graphics towards cleaner designs.
Key learnings from customer focus groups both pre- and post-bike design was that the new range offers something for everyone, with very strong value for money. Most noticeably, the progress in female bike designs was highlighted as a success and a positive move.
As part of the sourcing strategy for the new range, we widened the factory base that produces Apollo bikes. This involved developing existing factories so that they could produce higher-spec bikes, as well as building relationships with new suppliers and thus increasing our supplier base.
The new bike range spans 21 models in total, grown from 17 models in the previous range. we seek to maximise on incremental market opportunities, and to invest in hybrid as a fit-for-purpose option for the leisure cyclist.
Nine of these models were launched in September 2013 to provide a new offer and marketing message for the key Christmas trading period. These models were backed with a large stockholding to ensure a strong Christmas availability. The brand sold 24% more volume in Q3 FY14 vs. Q3 FY13.
The remaining models were launched between October 2013 and January 2014 to give a new range message in store for spring. This has been supported by new point-of-sale in store to highlight the newness of the bikes and the great deal for customers.