Adairs shifts focus to larger format stores

Bedding retailer Adairs has outlined its 2019 growth strategy, including a focus on more inspiring and larger stores and a best-in-class omnichannel retail offering.

The business is targeting like-for-like sales growth of between 5 and 8 per cent for FY19.

To achieve this, Adairs is looking to increase its ‘expansion categories’, which are complementary adjacent categories through which the retailer can leverage its core competencies while also differentiating its product offering.

The opportunity lies in the fragmented nature of the market, according to Adairs chief executive Matt Ronan, who presented Adairs’ 2019 growth strategy at wealth management firm Morgans’ Queensland conference on Friday.

He said the opportunity to grow share is high, and the upside is significant, since Adairs can focus on growing its share of spending with its existing customer base, rather than having to identify and convert new customers.

Ronan noted that the strategy to expand into adjacent categories goes hand-in-hand with its shift towards larger stores.

Nearly half of Adairs’ sales now come from homemaker centres, rather than shopping centres. Going forward, the company will selectively roll out larger shopping centre locations with a broader home furnishings offering to replicate the success of its homemaker stores.

The retailer expects to open seven to 10 stores per year over the next three years, with a bias to the larger formats. A further 15 stores have been identified as upsize opportunities over the next three to five years.

Ronan noted that online sales are key factor in Adairs’ offline growth and revealed a potential range of online-only products that could be ordered in-store for home delivery.

The retailer is also targeting website improvements to make it easier for customers researching products online, and plans to implement product recommendations to encourage further spend.

Ronan said Adairs is looking to support more omnichannel shopping behaviour, since these customers are more engaged and overall spend more in store and online at Adairs.

Looking forward to FY19, the bedding retailer is forecasting sales of $345-360 million and earnings before interest and tax of $47.5-51.5 million.

Like-for-like sales have grown 5.2 per cent across stores and online in the first weeks of 2019 trade.

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