Overview of the Group’s strategy
Halfords is already a good business with many existing strengths, including its highly-engaged colleagues, a sizeable and growing services business, leading positions in attractive markets, and a prudent capital structure and strong balance sheet.
These strengths also provide a solid foundation on which to build, but are not sufficient in isolation to provide a long-term, sustainable and profitable business nor counter some of the significant headwinds we face going forwards. The retail environment is ever-changing, with increasing competitive threats and more demanding customer expectations. After a detailed strategic review process we are clear that standing still is not a long term option.
We have chosen to accelerate investment in the business to become a much more differentiated, super specialist with an integrated, unique and more convenient services offer, and to focus on retaining customers for a lifetime. By doing so we will develop a business with long-term, sustainable growth prospects.
Customer, Market and Competitive Context
Halfords operates in the motoring and cycling markets, and has leading market shares in some areas whilst also having significant headroom to grow further. Both markets have good long-term growth prospects, but are increasingly characterised by generalists becoming more sophisticated and encroaching on the space previously occupied by specialists.
There is an increasing demand from customers who want someone to “do it for me”, with customers seeking convenient solutions to fit around increasingly busy schedules. For example, we know that large proportions of 25-34 year olds are interested in the prospect of a mobile fitting service. There are also significant opportunities to improve cross-shop (currently only 2% of our Retail customers also shop at Autocentres) and customer retention (for example, 1 in 3 of our known customer haven’t shopped with us for two years).
The dynamics of the markets that we play in are changing – cars are becoming more complex and fewer people have the knowledge and capabilities to do work on their cars, especially with the shift towards electric vehicles. We are also seeing a massive increase in the popularity of e-Bikes, a trend already benefitting the bicycle markets in European countries.
There are opportunities for scaled, specialist service providers to lead in these changing markets.