My biggest regret is not getting Kathmandu, says Briscoe's head

Friday, 15 March 2019

'Listen, I am a very, very greedy fella and I love really, really happy customers because I figure, if I do that for you the chances of you coming back and shopping with me again is really high,' says Rod Duke, the head of Briscoe Group.

When Rod Duke bought Briscoes 30 years ago, New Zealanders loved the 'cheap and cheerful' approach to decorating their homes.

Times have changed.

The Briscoe Group, encompassing Briscoe's, Rebel Sport and Living and Giving just reported it's ninth record profit on the back of 'house proud' Kiwis on the hunt for internationally renowned brands.

'New Zealand has changed,' Duke said.

* Patchy summer fails to rain on Briscoes' parade

* Briscoe's Rod Duke: the man who would own Kathmandu**

'The desirability and affordability of very well known quality products has made cheap and cheerful not as attractive as it once was.'

While the housewares and sporting goods market in New Zealand has grown overall, the Briscoe Group market share had grown disproportionately, Duke said.

'I think for us it has been all to do with desirability, the desirability of merchandise and the promotions put on.'

This week Briscoe Group reported its ninth record profit.

The history of Briscoe's dates back to 1861 and was, for much of the next century, a wholesaler.

In 1988, Duke was sent by a Dutch firm to turn around the struggling New Zealand asset and get it ready for sale.

But by late 1989, Duke saw the company's potential and bought the company for himself and took it public in 2001.

His family trust and interests continue to be the main shareholders with a 78 per cent stake in the company.

Duke's original investment included 20 stores, with revenue of $20 million and was losing $2m a year.

Briscoe Group head, Rod Duke, says the key to is chains' success was stocking well known brands that were desirable to New Zealanders.

Briscoe now has 90 stores across its three chains and and over the last year made a $63m after tax.

The profit came on the heels of Stats NZ figures showing people spent much less on homewares and recreational goods in the last three months of last year.

Duke said key to the success of Briscoe has been the introduction of global lifestyle brands such as Royal Dalton, Jamie Oliver and Nike and to sell them cheaper than its competitors.

Until recently, these high-end brands had been too expensive for Kiwi shoppers, he said.

But by buying direct from the brand owners, Briscoe has been able to reduce prices to be more in tune with Kiwi wallets.

The budget conscious were able to 'trade-up' and buy well known brands at a cheaper price, he said.

At the same time, wealthier shoppers only had to be convinced to change shops to find on-trend goods, he said.

In the face of increased competition from the likes of Kmart and The Warehouse, and extensive availability for branded goods online, Briscoe fostered customer loyalty and found ways to maintain growth, Duke said.

The company's price guarantee included matching Briscoe's own sale prices for customers who had previously bought items before a sale. It was a effective way of promoting good word of mouth.

'Listen, I am a very, very greedy fella and I love really, really happy customers because I figure, if I do that for you the chances of you coming back and shopping with me again is really high,' Duke said.

Online sales were increasing, now making up $70m of the annual turnover.

Duke said the brand awareness helped customers feel comfortable buying online and the company planned to redevelop it's digital platform later this year.

However, a 'gyrating' New Zealand dollar as well as substantial movements in the price of essentials of food, power, heat, light and petrol would shut spending down quickly, he said.

Chris Wilkinson, managing director of First Retail Group, said Briscoe's owned the homewares retail category.

'They are the first to come to mind for customers, they get the first bite of the apple in terms of sales,' Wilkinson said.

'They also transcend demographics, they are not focussing on one group of people.'

Customer trust is important to growing the business.

Wilkinson said one advantage was Briscoe's had also created its own brands by teaming up with celebrity chefs.

The products were incomparable with anything else in the market.

'In terms of stores like The Warehouse and Kmart, they are moving away from established brands. So for consumers, there is some uncertainty around what they are buying,' Wilkinson said.

'Briscoe's, however, have brands people can validate. If you are buying a homebrand from other stores, well, you just don't know.'

While dipping in New Zealand, the homewares category was doing well overseas, Wilkinson said.

'There's a growing appetite for nesting, for baking and for decorating the home. It's all very much on trend.'

Now personally worth an estimated $750m, Duke is still eyeing expansion.

The rich lister was interested to expand the business or establish something new that wouldn't be in competition with his existing stores, he said.

He wanted a 'business that can be chunky and be a $100m business real quick', but he would not be drawn on where those opportunities were.

Over the last three decades Duke has eyed up some of New Zealand's most iconic companies for takeover.

He can't name names for legal reasons, he said, however in the past Duke had been linked to possible purchases of Whitcoulls, Noel Leeming and Bond & Bond.

But it was a New Zealand's outdoor goods store that broke his heart.

'A couple of years ago, we attempted to buy Kathmandu. We ended up with 20 per cent, I would have loved 100 per cent but I am not in the habit of just paying a ridiculous price because someone thought it was worth it. But that said, I regret not getting Kathmandu,' he said.