Headlam Group Plc · LSE:HEAD
Headlam — Investor Day (July 2021)
80 slides from Headlam's investor day presentation, Jul 1, 2021
Slide 1: Operational Improvement Programme and Network Consolidation
v 0.4 OPERATIONAL IMPROVEMENT PROGRAMME AND NETWORK CONSOLIDATION Capital Markets Day 1 July 2021
Slide 2: Staying Covid-19 Secure
STAYING COVID-19 SECURE Please follow these guidelines 1
Slide 3: Capital Markets Day - Agenda
CAPITAL MARKETS DAY - AGENDA 01 Headlam and Operational Improvement Programme 02 Network Consolidation 03 Sales Force Effectiveness 04 Customer Opportunity – Multiple Retailers 05 Trade Counters Lunch 06 Tourprojects Multiple of Ipswich nowDistribution Centre being delivered… 07 Ecommerce and Digita
Slide 4: Introduction
INTRODUCTION Adrian Harris - Managing Director (UK) Experience Expertise • Joined Headlam April 2019 • Change and Transformation • 30 years supply chain experience • Operational Leadership • 10 years in military as a Supply Chain Officer • Ecommerce • MBA Strathclyde Business School • Supply Chain •
Slide 5: Headlam – The UK Opportunity
HEADLAM – THE UK OPPORTUNITY Key competitive advantages: • Market leader (+6x nearest peer) 29 17 • Scale and national coverage • Broadest product range 63 54 • Financial strength • Next-day nationwide delivery, and collection service • Great people, with huge loyalty and industry experts 24,830 363
Slide 6: Customer Insight Identified 7 Customer Types
CUSTOMER INSIGHT IDENTIFIED 7 CUSTOMER TYPES… Traditional Progressive Tradespeople & Large Major Multiple Retailers Retailers Fitters who supply Contractors Housebuilders Retailers Online …Not actively pursuing a large proportion of the £3bn UK market 5
Slide 7: Operational Improvement Programme Overview
OPERATIONAL IMPROVEMENT PROGRAMME OVERVIEW COMPREHENSIVE PROGRAMME OF SUBSTANTIAL CHANGE ACROSS THE BUSINESS Benefits analysis to identify at least Considerable programme planning to 01 £8m cost savings 03 ensure successful delivery Expertise brought in, or identified within the Employee engagement
Slide 8: Operational Improvement Programme Outcomes
OPERATIONAL IMPROVEMENT PROGRAMME OUTCOMES Supports the sustainable, long-term success of the business Creates significant revenue opportunities across a broader cross-section of customers Already seen significant improvements flow through: • Cost savings • Modernisation • Operational efficiencies a
Slide 9: Network Consolidation
NETWORK CONSOLIDATION Enabler of significant network consolidation - 6 sites with 8 businesses Consolidation completed in H1 2021 Trade counters and sales reps retained in areas to ensure customer continuity £[ ]m proceeds from sale of two freehold sites 8
Slide 10: Ipswich Distribution Centre
IPSWICH DISTRIBUTION CENTRE Operational July 2020 Key features after a COVID-19 related delay to commissioning 190,000 Eaves height of 10.6 million cubic of plant and equipment square feet almost 56 feet feet of capacity and substantial new warehousing Completed on budget at a total cost of £26m (in
Slide 11: Network Consolidation
NETWORK CONSOLIDATION Enabler of significant network consolidation - 6 businesses consolidated Consolidation completed in H1 2021 Site of network consolidation Existing sites closed Existing sites being reconfigured Trade counters and sales reps 1.Ipswich retained in areas to ensure 8 2.Hadleigh 3.B
Slide 12: Network Consolidation - Benefits
NETWORK CONSOLIDATION - BENEFITS Financial +£1m net benefit (cost saving) per annum from 2022 Non-Financial Improved service to customers throughout the South East of England through: • Unified business approach • Increased warehousing and order processing capacity • Greater depth and breadth of pro
Slide 13: Operational Improvement Programme Summary & Ongoing
OPERATIONAL IMPROVEMENT PROGRAMME SUMMARY & ONGOING Effective Significant Further opportunities under implementation revenue and development in areas such as: of all projects market share Product development underway opportunities Stock Supplier engagement 12
Slide 14: Sales Force Effectiveness
SALES FORCE EFFECTIVENESS Capital Markets Day 1 July 2021
Slide 15: Introduction
INTRODUCTION Iain Lennard – Sales Development Director (UK) Experience Expertise • Joined Headlam June 2020 • Large sales team leadership • 25 years sales leadership experience • Strategy creation, proposition development and transformation • 7 years distribution experience • Restructure and cost re
Slide 16: Sales Teams in June 2020
SALES TEAMS IN JUNE 2020 Segment Number of • Sales resource biased towards sales heads ‘independent customers’ Traditional Retailers 212 • Relationship/price key selling propositions (incl. 13 product brands) Progressive Retailer 38 • Reps required to make 8 calls a day Contractor 85 and visit all c
Slide 17: There Is Opportunity for Headlam in All Sectors
THERE IS OPPORTUNITY FOR HEADLAM IN ALL SECTORS Traditional Progressive Tradespeople & Large Major Multiple Retailers Retailers Fitters who supply Contractors Housebuilders Retailers Online 16
Slide 18: Significant Opportunity in Multiple Retailers
SIGNIFICANT OPPORTUNITY IN MULTIPLE RETAILERS HEADLAM HAVE 10% SHARE AND A UNIQUE PROPOSITION Traditional Progressive Tradespeople & Large Major Multiple Retailers Retailers Fitters who supply Contractors Housebuilders Retailers Online 17
Slide 19: Multiple Retailers
MULTIPLE RETAILERS Farren Murphy Commercial Director, National Carpets Capital Markets Day 1 July 2021
Slide 20: Introduction
INTRODUCTION Farren Murphy Commercial Director, National Carpets • National Carpets - Headlam company which supports large Multiple retailers • Retails sales/operations/buying roles through to Director of Category • 17 months in role – customer prior to becoming employee Exciting opportunity • Use m
Slide 21: Group Multiple Accounts
GROUP MULTIPLE ACCOUNTS c £1 billion total UK market opportunity (including sales direct from manufacturers) (Source: LEK Consulting, 2020) Currently only c 10% of Headlam’s revenue Currently 21 multiple retailer accounts Low penetration in accounts and market segment Have identified 33 immediate ta
Slide 22: Previous Approach
PREVIOUS APPROACH Previously - No set strategic approach to managing Multiple Retailers… • Identical sales approach as traditional customer base • Internal competition • No group approach, and no internal communications • Limited product presentation • Sales representatives trading with directors –
Slide 23: The Opportunity
THE OPPORTUNITY Significant opportunity Actively target 01 Multiples with tailored propositions Group approach and 02 better service Capture more 03 distribution share Target customers who buy 04 direct from manufacturers with a new proposition 22
Slide 24: Group Multiple Accounts
GROUP MULTIPLE ACCOUNTS Following extensive research and customer insight work, now fully understand the sector’s needs… What Headlam Can Offer • Insight – Broadest Product Range/Trends • Competitive Purchase Rates • Supply Chain Management • Storage Solutions – heavy, bulky hard to handle items • P
Slide 25: New Approach
NEW APPROACH Recruited a dedicated team Centrally managing all Key Accounts Approach as Headlam, not individual sites / businesses Tailored propositions Group network to provide service excellence Actively seeking and pursuing new opportunities with all current customers, with a focus on • Improving
Slide 26: Approach Is Already Resulting in Success
APPROACH IS ALREADY RESULTING IN SUCCESS Recently approached Not aware of Headlam, despite being Europe’s largest distributor Key Account team visited key decision-makers, and took time to understand One of the UK’s • Improving relationships leading home • Improving operating margin improvement • Im
Slide 27: Group Multiple Accounts
GROUP MULTIPLE ACCOUNTS THE OPPORTUNITY IS HUGE… c £1 billion Flooring Builders Homeware Garden Online DIY Supermarkets Retailers Merchants Retailers Centres Retailers 26
Slide 28: Protect and Grow Where Headlam Has High Share
HEADLAM NEED TO PROTECT AND GROW IN THE SECTORS WHERE THEY HAVE HIGH SHARE Traditional Progressive Tradespeople & Large Major Multiple Retailers Retailers Fitters who supply Contractors Housebuilders Retailers Online 27
Slide 29: What Headlam Is Changing in Established Sectors
WHAT HEADLAM ARE CURRENTLY CHANGING IN THE MORE ESTABLISHED SECTORS Create greater consistency of Tighten the range and service propositions pricing and pricing banding across the businesses Create clear market positions for Improve B2B websites the Product brands Launch customer app 28
Slide 30: Sales Team Flexibility to Spend Time With Customers
HEADLAM HAVE GIVEN THE SALES TEAM FLEXIBILITY TO SPEND APPROPRIATE TIME WITH THEIR CUSTOMERS Recently completed Allows for more effective sales reorganisation of our generation, as well as reduced costs sales team • Sales reps given increased flexibility in how they service customers and utilise the
Slide 31: Further Opportunities for the Sales Teams
THERE ARE FURTHER OPPORTUNITIES FOR THE SALES TEAMS Continue to improve the Realign sales resource customer propositions into opportunity all segments segments Reduce duplicate calls on Create sales development the same customer culture 30
Slide 32: Trade Counters
TRADE COUNTERS Capital Markets Day 1 July 2021
Slide 33: Introduction
INTRODUCTION Ian Crick – Trade Counter Programme • Joined Headlam December 2019 • 40 years experience - food retail • Tesco Express - new format, first 600 stores, 5 years • Tesco China - Tesco operating model deployment & Space range & display Expertise • Retail operations • Business transformation
Slide 34: The Trade Counter Opportunity
THE TRADE COUNTER OPPORTUNITY Growing market as Gap in the market for a flooring becomes a fashion truly national flooring item for consumers trade counter offer Opportunity to increase Meeting local customers’ market share through local needs for pre-ordered market penetration and collections and s
Slide 35: Our Aspiration
OUR ASPIRATION • Grow a £200m trade counter business (currently c £80m) • Establish a national network of 90 new and improved trade counters (currently 54) • Engage a broader range of trade customers • Improve ranges, margin mix and commercial terms 34
Slide 36: Our Aspiration
OUR ASPIRATION • Grow a £200m trade counter business (currently c £80m) Achieving £1.6m+ incremental sales upon New maturity (by year 5) • Establish a national network Locations of 90 new and improved trade counters (currently 54) Growing sales through an improved offer in Extensions existing locati
Slide 37: Our Aspiration
OUR ASPIRATION • Grow a £200m trade counter business (currently c £80m) National coverage across all major towns and cities • Establish a national network of 90 new and improved Target locations: trade counters (currently 54) • Large towns & cities • Conurbations • London • Engage a broader range of
Slide 38: Our Aspiration
OUR ASPIRATION • Grow a £200m trade counter business (currently c £80m) Traditional base: • Contractors • Fitters Who Supply • Flooring Retailers • Establish a national network of 90 new and improved trade counters (currently 54) Target customers: • Trades People • Local Builders • Engage a broader
Slide 39: Our Aspiration
OUR ASPIRATION • Grow a £200m trade counter business (currently c £80m) Tools, accessories and workwear • Establish a national network of 90 new and improved trade counters (currently 54) Consolidated ranges • Engage a broader range of trade customers • Improve ranges, margin mix Own brand and comme
Slide 40: Discovery Stage
DISCOVERY STAGE Decentralised business model has resulted in huge variability across our existing trade counter estate Different approaches to format, size, range, location, resourcing & performance A culture and mindset focused on flooring professionals has constrained market size for trade counter
Slide 41: Discovery Stage
DISCOVERY STAGE • Meeting the needs of a Delivering broader range of trade Quick service customers convenience… One-stop shop • New trade counter blueprint principles Fitter ranges • Trade counter business model Expert advice Re-rolling area 40
Slide 42: Discovery Stage
DISCOVERY STAGE • Meeting the needs of a broader range of trade customers Old format: • Small counters • New trade counter • Supplier focus blueprint principles • Samples not products • Trade counter business model New blueprint: • Larger footprint • Meeting customer needs first • Stocked ranges as
Slide 43: Discovery Stage
DISCOVERY STAGE Dedicated trade counter • Meeting the needs of a broader range of trade 01 Manager, accountable for £ growing business locally customers People investment for 02 service and growth • New trade counter blueprint principles Self-serve for quicker 03 service & more products for impulse
Slide 44: Discovery Stage
DISCOVERY STAGE • Meeting the needs of a Typical new site: broader range of trade customers £300k Capital investment • New trade counter blueprint principles £1.6m+ Sales at year 5 • Trade counter business model new sites 2 years Profit enhancing 43
Slide 45: Roadmap
ROADMAP 2021 2022 2023 2024 New sites 2 New sites 34 Review & evaluate Refits & 10 Refits & relocations 44 relocations £2m c £18m capital investment capital investment* Site performance evaluation and financial appraisal Range and operations consolidation Establish recruitment and training plans *£1
Slide 46: Summary
SUMMARY Initial focus to establish a national flooring trade counter network • 90 new and improved trade counters • £200m trade counter business • National click & collect • Reduced cost to serve Enabler for growing share of national contractors market Future opportunity to extend trade counter foot
Slide 47: Ecommerce and Digital
ECOMMERCE AND DIGITAL Capital Markets Day 1 July 2021
Slide 48: Introduction Rob Marsh
INTRODUCTION ROB MARSH Operations Project Manager • 25+ years experience in Supply Chain and Logistics • Senior Change Management roles in major retailers • Joined the Headlam team in 2019 • Specialist skillset • Major Programme Delivery • Digital and eCommerce 47
Slide 49: Digital Strategy
DIGITAL STRATEGY Our digital agenda has four key elements 01 02 Building digital and social media Headlam’s ability to support their awareness of Headlam’s own online customers in fulfilling their product brands own orders in a seamless manner 03 04 Headlam’s digital interaction Internal digitalisat
Slide 50: Digital Drives Growth
DIGITAL DRIVES GROWTH Competitive advantage through a curated suite of digital products Overview Online activity rising due to consumer demand and technological trends Floorcoverings industry lags behind Improve offer for ‘underweight’ higher growth segments larger retailers, emerging online focused
Slide 51: 1. Headlam Product Brands
1. HEADLAM PRODUCT BRANDS We are underweight in this area. There is a significant opportunity to increase awareness and penetration of our own brands 01 02 Building digital and social media Headlam’s ability to support their awareness of Headlam’s own online customers in fulfilling their product bra
Slide 52: 1. Headlam Product Brands
1. HEADLAM PRODUCT BRANDS We will engage consumers through improved awareness and stimulating content, so that our Headlam brands gain greater market penetration Summary End-consumer facing (non transactional) • Sampling and local retailer referrals Social media is increasingly important • Current s
Slide 53: 2. Online and Multiple Customers
2. ONLINE AND MULTIPLE CUSTOMERS We are accelerating in this area and have a strong proposition to go further with our existing online and multiple customers, who require deeper integration 01 02 Building digital and social media Headlam’s ability to support their awareness of Headlam’s own online c
Slide 54: 2. Online and Multiple Customers
2. ONLINE AND MULTIPLE CUSTOMERS Development of a powerful suite of applications to better support larger retailers, who typically require more systems integration Summary 01 Product Q4 2021 Information Centralised repository and Currently data set-ups are on an Management management of all business
Slide 55: 2. Online and Multiple Customers
2. ONLINE AND MULTIPLE CUSTOMERS Development of a powerful suite of applications to better support larger retailers, who typically require more systems integration Summary 01 Product Q4 2021 Information Centralised repository and Currently data set-ups are on an Management management of all business
Slide 56: 2. Online and Multiple Customers
2. ONLINE AND MULTIPLE CUSTOMERS Development of a powerful suite of applications to better support larger retailers, who typically require more systems integration Summary 01 Product Q4 2021 Information Centralised repository and Currently data set-ups are on an Management management of all business
Slide 57: 3. Distribution Core Customers
3. DISTRIBUTION CORE CUSTOMERS Our traditional core segments have significant stretch potential, through expansion and improvement of our digital assets 01 02 Building digital and social media Headlam’s ability to support their awareness of Headlam’s own online customers in fulfilling their product
Slide 58: 3. Distribution Core Customers
3. DISTRIBUTION CORE CUSTOMERS Targeting an average B2B web sales participation of >30% in 2022 Overview EDI 8.5% B2B web sales are increasing as a percentage of total sales WEB 16.2% • 11% in 2019, increasing to 16% YTD 2021 (some sites > 35%) Websites were refreshed and relaunched in Q4 2020 • Bat
Slide 59: Introducing the myheadlam App
3. DISTRIBUTION CORE CUSTOMERS Introducing the myheadlam App 58
Slide 60: First to Market With a Fully Transactional App
3. DISTRIBUTION CORE CUSTOMERS First to market with a feature rich, fully transactional App Summary Based on customer feedback and designed with inputs from focus groups • ‘Designed by our customers for our customers’ Personalised settings / powerful search engine / real-time availability and pricin
Slide 61: 4. Internal Digital Enablers
4. INTERNAL DIGITAL ENABLERS We can improve communication and engagement with our colleagues, and do things ‘better, simpler and cheaper’ by automating manual tasks 01 02 Building digital and social media Headlam’s ability to support their awareness of Headlam’s own online customers in fulfilling th
Slide 62: Summary
SUMMARY Competitive advantage through a curated suite of digital products Industry-leading capability Step change in our revenue Relentless focus on customer Building internal skillsets generating digital capability experience and feedback and colleague engagement by Q1 2022 61
Slide 63: Transport Integration
TRANSPORT INTEGRATION Capital Markets Day 1 July 2021
Slide 64: Transport Integration - Summary
TRANSPORT INTEGRATION - SUMMARY Overview • Objective – consolidate all daily customer deliveries into one vehicle, supplied from nearest hub • Maintain next day delivery offer • Region by region rollout Rationale / Problem Statement Inefficient transport operations: • Duplicated delivery routes by d
Slide 65: New Transport Operating Model
NEW TRANSPORT OPERATING MODEL PRE Operating Model Daily delivery patterns Overnight stock moves • Overlapping • ‘Trunking’ network • Long distances • Inter company moves 64
Slide 66: New Transport Operating Model
NEW TRANSPORT OPERATING MODEL PRE Operating Model NEW Operating Model Daily delivery patterns Overnight stock moves Daily delivery patterns Overnight stock moves • Overlapping • ‘Trunking’ network • Clear boundaries • Increased moves • Long distances • Inter-company moves • Reduced travel • Initiati
Slide 67: Northern Region Implementation
NORTHERN REGION IMPLEMENTATION Background – Accelerated Delivery • Multi-site implementation following successful Proof of Concept in Wales • 7 businesses, c 6k customers, c 25% of network deliveries • Significant step-change - people, processes, systems, physical infrastructure • Huge data modellin
Slide 68: Northern Region Implementation
NORTHERN REGION IMPLEMENTATION Background – Accelerated Delivery • Multi-site implementation following successful Proof of Concept in Wales • 7 businesses, c 6k customers, c 25% of network deliveries • Significant step-change - people, processes, systems, physical infrastructure • Huge data modellin
Slide 69: Rollout
ROLLOUT Completion • South East Region implemented June 2021 • 2 Transport modelling / planning experts now onboard • Completion in Q1 2022 with Central Region 68
Slide 70: Continuous Improvement
CONTINUOUS IMPROVEMENT Evolve and enhance the solution Stock and process a core range of products (Local Stocking project) at each site, to reduce overnight trunking movements ‘Sweep Up’ Phase - complete remaining partially integrated / optimised sites Review fleet mix – a range of vehicles to allow
Slide 71: Summary
SUMMARY The new transport model is a positive step change for Headlam and our customers Consistent customer experience Reduced costs Improved environmental credentials Increased employee engagement Roadmap of future improvements
Slide 72: ESG Strategy
ESG STRATEGY Capital Markets Day 1 July 2021
Slide 73: Headlam's Approach
HEADLAM’S APPROACH Building an ESG Strategy to reduce risk Headlam’s material issues, and current level and capture opportunity of operational control: Published first Materiality Assessment 01 Headlam - Working with our people in March 2021 Internal Emissions • Identifying Headlam’s key areas of ES
Slide 74: Headlam's Approach
HEADLAM’S APPROACH FY2021 actions to include: Governance and engagement FY2021 actions will mitigate ESG • ESG as a standalone project within the Operational Improvement Plan impacts under • Development of an ESG senior working group Headlam’s • Engagement with Employee Forum, and wider employee bas
Slide 75: Headlam and the Industry
HEADLAM AND THE INDUSTRY What are the ESG challenges that require • Multiple materials collaborative solutions? involved in production Suppliers: of floorcoverings c 180 The flooring industry’s key ESG issues are widely • Discrepancy in ESG acknowledged: the impacts associated with accounts maturiti
Slide 76: Headlam and the Industry Continued
HEADLAM AND THE INDUSTRY CONTINUED Expect an increasing shift to sustainable practices, initially driven by regulation…. EPR Scheme: End-of-life Regulation: Technology: Extended Producer Responsibility (EPR) Regulatory Position Statement (RPS) on Progress of technical solutions in the next 3-5 years
Slide 77: Headlam and the Value Chain: Scope 3 Case Study
HEADLAM AND THE VALUE CHAIN: SCOPE 3 CASE STUDY Key tool for assessing ESG risk within the value chain Outputs will inform collaborative Objectives actions to reduce risk in the • Scoping exercise to identify high impact areas value chain in the value chain • Assessment of data availability within t
Slide 78: Capital Markets Day - Conclusion
CAPITAL MARKETS DAY - CONCLUSION
Slide 79: Capital Markets Day - Conclusion
CAPITAL MARKETS DAY - CONCLUSION COMPREHENSIVE PROGRAMME OF SUBSTANTIAL CHANGE ACROSS THE BUSINESS Significant revenue growth opportunities Substantial cost savings Modernisation and removal of complexities Improvements to customer service Multiple projects now being delivered… Transport Network Tra
Slide 80: Q&A Session
Q&A SESSION = e724) eau 0000 | res