Wesfarmers Limited · ASX:WES
Wesfarmers — Investor Presentation (April 2021)
41 slides from Wesfarmers's investor presentation, Apr 20, 2021
Slide 1: Kmart briefing presentation and store tour (ASX announcement)
20 April 2021 The Manager Market Announcements Office Australian Securities Exchange Dear Manager, KMART BRIEFING PRESENTATION AND STORE TOUR Following is a presentation that will be given at a Kmart briefing and store tour on Tuesday 20 April 2021 at 8.30am AWST / 10.30am AEST. This briefing will b
Slide 2: Kmart briefing and store tour
Kmart briefing and store tour 20 April 2021
Slide 3: Overview of Kmart Group
Overview of Kmart Group Three iconic Australian retail brands with differentiated customer propositions Focus of this presentation Leading product development company and Offers high-quality and stylish Online marketplace offering branded trusted brand offering everyday products at products at affor
Slide 4: Kmart Leadership Team
Kmart Leadership Team Ian Bailey Aleksandra Spaseska John Gualtieri Arjun Puri Managing Director Chief Financial Officer Retail Director Director Kmart Group Kmart Group Kmart Australia and New Zealand KAS Group Asia Tristram Gray Brad Blyth Tracie Walker Chief People and Capability Officer Chief In
Slide 5: Key highlights
Key highlights Competitive advantages A strong brand with a sustainable lowest-price position, underpinned by a 1 underpinned by lowest-cost operating model, market-leading scale and unique product market-leading scale development capabilities A large and growing Number 1 or number 2 market position
Slide 6: Our vision
Our vision — EVERYDAY Livy KANG Nile ZS A GREAT moons PLACE TO | SHOP Bi PAT EVEN om 4 | LOWER al eet PRICES THAT IS SIMPLE NN RE FAMILIES jj come first for the LOWESTPRICES y/ for everyday items
Slide 7: Competitive advantages underpinned by market-leading scale
Competitive advantages underpinned by market-leading scale
Slide 8: Kmart's scale advantage
Market-leading scale Kmart’s scale advantage $6.1B total sales Approaching 1.0B ~190M >250M units sold transactions website sessions Statistics relate to the last 12 months as at 30 June 2020. 7
Slide 9: Scale and cost advantage
Scale and cost advantage Lower Kmart’s scale and sourcing cost capabilities underpin our low-cost business model, which allows us to deliver lowest prices to our customers, Stronger sourcing and Lower product prices driving even greater development demand and scale, allowing us to further advance ou
Slide 10: Lower prices drive scale and reduce costs: case study
Lower prices drive scale and reduce costs: case study 1 Scale and sourcing …driving significant …that further lowers the capabilities deliver price volume growth… cost of production leadership… Bubble wands sold Cost per bubble wand +166% 3.1m -33% 1.2m 2016 2020 2016 2020 50c bubble wand, 3.1 milli
Slide 11: Lower prices drive scale and reduce costs: case study
Lower prices drive scale and reduce costs: case study 2 Scale and sourcing …driving significant …that further lowers the capabilities deliver price volume growth… cost of production leadership… Towels sold Cost per towel +460% 1.8m -17% 0.3m 2016 2020 2016 2020 $5.75 towel, down 1.8 million units so
Slide 12: Best-in-class sourcing and product development capabilities
Best-in-class sourcing and product development capabilities Kmart has the largest direct-sourcing business by volume and value relative to any other Southern Hemisphere retailer. Australia's single largest importer of containerised freight Sourcing offices: 1 Melbourne, Australia 2 Auckland, New Zea
Slide 13: Direct-sourcing capabilities
Direct-sourcing capabilities Sourcing and product development overview video – Available from: https://www.wesfarmers.com.au/kmart-briefing-APR21 12
Slide 14: A large and growing addressable market
A large and growing addressable market
Slide 15: Kmart operates in a large addressable market
Kmart operates in a large addressable market Kmart’s addressable market ($86b) Apparel Kids GM & Active Home & Living Australian market ~$35b Australian market ~$25b Australian market ~$26b CY20: CY20: c.6% c.6% CY20: c.11% Kmart operates in a broad and highly-fragmented addressable market that prov
Slide 16: Strong engagement across all Australian household groups
Strong engagement across all Australian household groups Kmart has strong engagement across all …with growth potential as customers household income groups… expand their participation across the range Kmart participation1 by household income Average annual Kmart spend by customer2 (index: average in
Slide 17: Unique operating model enables growth
Unique operating model enables growth Kmart’s core competitive advantages differentiate it from department stores and category specialists. Scale Product development Sourcing model • Aim for #1 or #2 in each category • Specialist design capability delivers • Lowest-cost sourcing due to better produc
Slide 18: Flexible store layouts support deeper engagement
Flexible store layouts support deeper engagement Categories compete for space in a store format designed to accommodate changing customer preferences and Kmart’s product development capabilities. Southland store: Plan C format 17
Slide 19: Growing online offer complements stores
Growing online offer complements stores Increasing online engagement …supports Kmart’s growth and and scale… product development Online sales, $m • ~95% of Kmart’s in-store products available online 400 • Launch of Kmart Online Exclusives in February 2021 300 • Leverage product development capabilit
Slide 20: A valuable store network at the centre of the business
A valuable store network at the centre of the business
Slide 21: Our stores are at the centre of everything we do
Our stores are at the centre of everything we do 92% “A Great Place to Shop” of Australian retail shoppers visited a simple and consistent layout that makes shopping easy for Kmart in the last 12 months1 customers and operations easy for the team. Stores are at 83% the centre of of Australia’s popul
Slide 22: Store network growth
Store network growth: last 10 years Kmart network 10 years ago Kmart network post conversions (June 2011) (December 2021 estimate)1 2 3 1 36 51 17 33 3 21 16 5 13 51 73 15 44 65 16 12 19 5 5 3 6 187 stores 271 Kmart stores 57 K Hubs 1 Includes conversions agreed with landlords only. 21
Slide 23: Conversions will support the growth of Kmart
Conversions will support the growth of Kmart Accelerating Kmart’s store network …under a business case that will enhance strategy to support growth… the overall value of Kmart Group Store numbers (large format) 271 Significant increase in sales density Conversion stores 32 (SFA = 239 153,000m2) Unlo
Slide 24: Conversions are an accelerator of value
Conversions are an accelerator of value A unique opportunity to rapidly enhance the productivity of Kmart Group’s selling space by converting Target stores to Kmart stores. Sales density, R12 Dec-20 To date, the conversion program has +85% delivered: • Sales density in line with the broader Kmart fl
Slide 25: Leveraging the store network to support online growth
Leveraging the store network to support online growth Kmart’s store network has underpinned innovations to the online offer and will continue to support a seamless omnichannel experience for customers. Kmart’s store network has been a key enabler of online growth… • ~100% of online orders fulfilled
Slide 26: Technology-enabled growth
Technology-enabled growth
Slide 27: Technology and data will be key enablers of future growth
Technology and data will be key enablers of future growth Investment in technology is expected to drive significant value for Kmart by: • Delivering further improvements in customer experience • Strengthening Kmart’s lowest-cost position Kmart has prioritised four areas where accelerated investment
Slide 28: Improving the online offer
Improving the online offer Several initiatives are underway to …which will significantly improve the streamline Kmart’s omnichannel offering… customer experience Ability to scale for periods of New online platform peak demand Category expansion through Seamless shopping experience on an online-only
Slide 29: Increasing flexibility and efficiency of the supply chain
Increasing flexibility and efficiency of the supply chain Digitally-enabled supply chain project Flexible supply chain Faster product development Demand sensing Real-time Tailored product Better understanding decision-making to lifecycle management of customers and respond to changes in system to im
Slide 30: Creating a digitally-enabled store of the future
Creating a digitally-enabled store of the future Kmart is investing in a multi-year program to transform the in-store customer experience and deliver operational efficiencies and even greater value for customers. As part of the first phase of its multi-year program, Kmart is utilising in-store RFID
Slide 31: TORY RFID technology
TORY RFID technology TORY RFID video – Available from: https://www.wesfarmers.com.au/kmart-briefing-APR21 30
Slide 32: Personalising the customer offer
Personalising the customer offer Customer interactions Kmart Customer Marketing Customer SMS website profile Transactions platforms service browsing (Kmail) Customer data (profile, preference, interaction) Customer 360 data platform Insights Customer management Data analytics products Customer Make
Slide 33: A sustainable development leader in Australian retail
A sustainable development leader in Australian retail
Slide 34: Kmart is a sustainable development leader in Australian retail
Kmart is a sustainable development leader in Australian retail “Better Together” video – Available from: https://www.wesfarmers.com.au/kmart-briefing-APR21 33
Slide 35: Our unique scale positions us to drive change
Our unique scale positions us to drive change The scope of our operations Our relationships with global Our price leadership and the gives us unprecedented scale to sustainability partners, suppliers volume of product we sell mean make a real difference across and peer retailers positions us to we n
Slide 36: Summary
Summary
Slide 37: The fundamentals of Kmart are unlike other multi-category stores
The fundamentals of Kmart are unlike other multi-category stores A strong brand with a sustainable lowest-price position, underpinned by a lowest-cost operating model, market-leading scale and unique product development capabilities Number 1 or number 2 market position in every major category, with
Slide 38: Questions?
Questions?
Slide 39: Appendix
Appendix
Slide 40: Current Kmart store network and planned store conversions
Current Kmart store network and planned store conversions Kmart operates a network of 313 stores across Australia and New Zealand as at 20 April 2021. Kmart network1 3 1 51 1 27 4 17 1 3 3 15 1 3 2 58 5 239 Kmart stores 10 13 22 Kmart conversions 55 4 52 K Hub conversions 19 6 15 15 To be converted2
Slide 41: Store conversion program timeline
Store conversion program timeline The majority of the store conversions are expected to take place in FY 2021. Store conversions1 1H 2021 2H 2021 FY 2021 1H 2022 Total Kmart 12 19 31 1 32 K Hub 7 47 54 3 57 Total 19 66 85 4 89 40 1 Includes conversions agreed with landlords only.