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Overview of the Group’s strategy

Halfords is a strong business with 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.

Our Market Context

  • Leading market share in the cycling and car products and fitting market, with significant headroom to grow further in car servicing
  • Increasing demand from customers for ‘do it for me’ service – looking for convenient solutions to fit around busy schedules
  • Significant opportunities to improve cross-shop with only 2% of retail customers also using Autocentres
  • Market dynamics are changing – cars are becoming more complex and fewer people have the knowledge and capabilities to do work on their cars
  • Huge increase in popularity of e-bikes and e-scooters, combined with the shift towards electric vehicles presents a major opportunity for Halfords to meet the needs of these more complex products as a specialist service provider

customer, market and competitive chart

Strategic Acceleration

Firstly, we plan to significantly grow our Autocentre business. We know that our Autocentre garages are often not conveniently located. In many parts of the country, the time taken for a customer to drive to their nearest Halfords Autocentre is well over 30 minutes. Our insight shows that customers require a drive time of less than 20 minutes if they are to utilise Autocentre services. To reduce this drive time, we need more garages in more convenient locations for our customers. Via the acquisition of McConechy’s Tyre Service, we have already made good progress with this part of our plan, increasing the size of our site footprint by about 20%. Looking into the future we believe there is the potential for 550 Autocentres across the UK and Ireland, which will bring our drive time in line with customers’ Expectations.

Our Mobile Expert vans have proven that there is sufficient customer demand for mobile services delivered at a location convenient to them. Encouraged by the results of our trial, we plan to grow to 200 vans over the next 3–5 years, giving us national coverage and providing most UK consumers with access to Halfords Mobile Expert services. Our acquisition of Tyres on the Drive, a mobile tyre-fitting business, has significantly accelerated the roll-out of our Mobile Expert proposition giving us access to both a large number of vans and best-in-class software to drive growth of our mobile services business. In addition to this, we will increase investment in the provision of WeFit and WeCheck services in our Retail stores, for example the fitting of wiper blades and headlight bulbs. This will be enabled by a best-in-class customer contact strategy and the redeployment of labour in store to provide more WeFit trained colleagues to better service customer needs.

To Inspire and Support a Lifetime of motoring and cycling

Inspire our customers through a differentiated, super-specialist shopping experience

  • General-specialist to super-specialist
  • Lead and differentiate our markets with customer-led innovation
  • Redefine and further differentiate our own label ranges
  • New customer experience in stores and garages, linking online and offline journeys

Progress made

  • Fully integrated Group web platform, delivering best-in-class customer experience
  • Optimisation of cycling space in all Retail stores
  • Exit of Cycle Republic, focusing investment on Tredz to serve the

Priorities for the year

  • Materially upweight our Group web platform and digital customer experience, to create an even more differentiated and specialist proposition

Support our customers through an integrated, unique and more convenient services offer

  • Offer convenience through an integrated and expanded ‘on-demand’ service proposition across stores, garages and mobile
  • Enhance the digital customer journey from booking through to service delivery
  • Enhance our unique position in E-bike servicing in Retail stores and hybrid and electric vehicle servicing in our garages with the most fully trained technicians outside the dealer network
  • Increase awareness of Halfords services by leveraging the Halfords brand

Progress made

  • Acquisition of McConechy’s Tyre Service
  • Acquisition of Tyres on the Drive
  • Driving growth and profitability of Halfords Mobile Expert business with higher customer satisfaction scores
  • Building relevance, awareness and value through our new WeCheck services
  • On-demand WeFit trial in Autocentres

Priorities for the year

  • Expand our Motoring Services proposition
  • Swiftly completing the integration of McConechy’s and Tyres on the Drive, utilising our best-in-class technology across our Services offer
  • Significantly scale up the number of Mobile Expert vans, growing the size of our fleet to 120 by the end of the year

Enable a Lifetime of motoring and cycling

  • We will place equal focus on retaining customers as well as acquiring new ones. Customers will enjoy building relationships with Halfords for the long term as they are encouraged to explore and benefit from all that we do in both motoring and cycling over their lifetime.
  • How we will achieve this:
    • A more focused and targeted approach to loyalty at a Group level in order to optimise lifetime value of our customers
    • Accelerating the development of our Customer Relationship Management (“CRM”) programme, offering compelling reasons for our customers to return
    • Fully leveraging our Group Single Customer View and increasing the investment in customer data management

Progress made

  • Accelerated investment in our financial services offer giving us double-digit sales growth year-on-year and access

Priorities for the year

  • Double the number of customers shopping across the Group, fully utilising the new Group web platform and our single customer view and CRM systems.

Operational efficiencies

As well as focusing on our customer strategy to create a more unique and differentiated, super specialist business, we will be equally focused on ensuring we have an efficient, cost effective and cash generative business. We will be targeting cost savings and cash efficiencies from property, product, supply chain and in-garage processes, along with synergies from greater integration of our businesses across the Group.

These operational efficiencies will be re-invested into:

  • accelerated capital expenditure;
  • strategic investments in operating costs; and
  • investing in price as and when required to respond to competitive threats over the medium term.