Company Profile
Cycle Counting
How Halfords Gears Up for Twin Peaks
By John Wilson, Executive Editor
When you hear the phrase “twin peaks,” you assume it refers either to David Lynch’s 1990s horror drama or to some great outdoor adventure involving conquering mountains. The first assumption would only be a reference point to fans of niche art-house drama as the headline-grabbing TV show was controversially cancelled when interest “peaked” before falling off a cliff. The second definition, however, is near to the point when you think about the great outdoors and lycra-clad weekend warriors preparing to meet the challenge of ascending and descending hills on mountain bikes with more carbon-fibre engineering and shock-absorber technology than the first moon landing.
Today’s cycle enthusiasts no longer just want a bike; they want an experience of working in tandem with the machine in mortal combat with the elements and Mother Nature. They may choose to no longer go into a store to select their wheels; they may want to build it themselves and order the parts online to extenuate the bespoke experience of rider and machine working in perfectly engineered harmony.
These conflicting demands are not alien to car- and cycle-accessory retailer Halfords, which has a well-rehearsed process of dealing with all comers during the all-weather twin-peaked challenges faced by the business every year as it prepares for its two big seasonal shifts. This fact is highlighted in its multi-million-pound sponsorship of the UK weather on commercial TV: “Ready for winter, ready for summer, ready for anything” announces the advert beamed into millions of homes ahead of the evening weather forecast. We have not long come out of summer holiday and so-called “staycations” season where the trend is towards holidaying at home in the UK. Here, the focus has been all about camping, cycling, and festivals, where Halfords’ emphasis has been around helping the family complete the journey whether with roof boxes and bike racks, and their fitting, or satnavs and smart technology to simply “get there.”
Christmas
As we are now facing the long, hard winter, the peak focus shifts towards bulbs, batteries, and once again, bikes. Nothing, for example, announces peak trading louder than the prospect of a brand-new bike at Christmas. Halfords should know this as it sells in excess of one million bikes every year and, in terms of recycling cycles, donates thousands of traded-in bikes left to gather dust in sheds and garages to Africa as part of its corporate social responsibility (CSR) programme.
Halfords has become the go-to brand for generation after generation of parents who have, like their parents before them, watched the excited faces on Christmas morning as the children catch their first glimpse of the oddly shaped or badly wrapped bicycle under, or more likely next to, the tree. Hurriedly dressed children are out the door with the dawn and into the saddles of their new bikes, their excitement meeting the cold air of Christmas morning head on, along with millions of other eager youngsters showing off their new wheels.
Halfords, the UK’s leading retailer of cycling and automotive products, has 460 stores and 300 autocentres, which means, according to the company website, that 90 per cent of the UK population is never more than twenty minutes away from a Halfords-owned frontage, not to mention a click away from its website. Halfords has been going through the gears of peak for many years, so what seems like an up-hill struggle has become the automatic reflex of a well-oiled machine ready for the challenges that the two seasons always throw their way.
Historical Journey
In this respect, the business is not just reflective of the changing seasons but also a barometer of our ever-changing world. The Midlands-based business was founded as a wholesale ironmongery company by Frederick William Rushbrooke in 1892. The Halfords name, according to Grace’s Guide to British Industrial History, came from Halford Street in Leicester, which Rushbrooke opened in 1906 to sell the first of the millions of bicycles and accessories that have passed through its cash registers, tills, and electronic point-of-sale (EPOS) systems over the last century. By 1910, the business had grown rapidly and during that year opened more than 100 stores to capture the growth in the cycling craze. The business, today based in Redditch, Worcestershire, was at the crucible of change with the commercial development of cycling, which largely came out of the nearby city of Coventry with the Singer company, which began life making sewing machines but moved into bicycles and later motor cars in the early twentieth century.
As a piece of engineering, the bicycle became the vehicle for both personal and social mobility as people were able to travel farther for work and leisure. Furthermore, the bicycle played a major role in the emancipation of women as the stifling Edwardian dresses of the early twentieth century were replaced with lighter, more versatile garments, including trousers, that allowed freer movement, a commercial irony not lost on the Singer company that still makes sewing machines to this day.
Concerns over climate change, with increasing CO2 emissions and NOx fumes driving cities to introduce clean air zones, are pushing bike sales not only for recreational purposes but also as a practical alternative to the car as a means of getting to and from work. Local authorities are also striving to create safer cycle routes in campaigns to reduce obesity and promote healthier living.
This changing world helped catapult the fledgling Halfords into the business it is today. Now, with 12,000 employees, the Financial Times 350 business, which had a turnover of £1.135 billion in 2018, has been on its own long and personal journey. Rushbrooke’s vision saw a continued growth in bikes and car parts through the twentieth century. In 1965, the business was acquired by the oil company Burmah, which owned Halfords until 1984 when it was bought by the Ward Group. In 1973, the company looked overseas and purchased a small motor accessory company that was managed by Mark Rushbrooke, the grandson of Halfords’ original founder, who later returned to the UK to help spearhead the business’s “year of revival” in 1975. In 1989, ownership moved once again, this time to Boots who were custodians of the brand for thirteen years before it was acquired by venture capitalists CVC in 2002. Two years later, Halfords was floated on the London Stock Exchange, a move that enabled it to expand its offering and turn from acquired business to that of acquirer. In 2010, Halfords bought the autocentres business, and four years later, it purchased Boardman Bikes, the company formed by former Olympic and world champion cyclist Chris Boardman, for an undisclosed sum.
These moves allowed Halfords to develop its full portfolio in cars and bicycle accessories. In addition, the Boardman acquisition, which covered the complete price range of bikes—from a few hundred pounds up to £10,000 for one of Boardman’s Elite series—was followed two years later with the purchase of Swansea-based Internet start-up Tredz and Wheelies for £18.4 million, a move that pushed it into the online arena and drove Halford’s shares up by 3 per cent overnight.
In 2016, work on a new marketing strategy began when Halfords embarked on its most extensive piece of customer insight work to date. It interviewed thousands of people, both online and offline, to get an understanding of what they thought of the brand and its place on the high street. The aim was to find a way to reposition Halfords so that it meant something to consumers. Then marketing director, Karen Bellairs, admitted to Marketing Week that Halfords had previously only really spent its marketing budget on price and promotion, meaning most customers had little understanding of what the brand offered.
“Customers all know Halfords; it has been on the high street for 100 years, and there are shops within twenty minutes of every UK household. But they didn’t know exactly what we offered,” she told Marketing Week. “This all started from a real ambition to make the brand mean something and have an emotional connection with customers. We want to help them understand why Halfords plays a role in their lives. We want a relationship with them.”
The research revealed insights into what is important to customers in relation to journeys. It found that customers are busy, and when they visit Halfords, they are looking to make taking a journey easier.
Profit Protection and Peak
Like a bicycle, with lots of complex moving parts, the business had to optimise and leverage its rapid growth while at the same time managing a wide range of risks in-store, online, and within its car parts and repair business. This presented Matt Laycock, group head of profit protection, with some unique challenges that he had not seen in his previous international retail roles. The business year moves rapidly from festival to festive and from the tiniest car bulb to batteries, large and bulky roof boxes, and bicycle carriers.
Matt and his team play a major hand in managing the reconciliation of stock during Halfords’ twin peaks, which are defined by the change in the seasonal clock. When the clocks go forward, the focus is on sun, cycling, and even third-party partnerships with organisations such as the National Trust. Then, in October, when the hour is adjusted backwards, the emphasis shifts to winter offers from tyres to screen wash as demonstrated in Halfords’ “ready for anything” weather sponsorship.
Like most businesses, it’s about flexing of the supply chain—making it more agile and less fragile. As well as bikes for Christmas, it’s all about bulbs, blades, and batteries to protect cars through the long, dark winters, a dramatic shift that is reflected in-store, online, and most importantly, in the stock file in the retail units that are fed from the distribution centres as part of this well-oiled machine.
“We have two peaks for bikes: summer, when we are focused on the festival season and getting everybody ready for staycation, and Christmas,” said Matt, who joined Halfords in 2014 from the Kingfisher Group, which owns B&Q. Working in tandem with retail operations, HR (known as the People Team in Halfords) and health and safety, Matt’s role is strategic and goes well beyond collaring shoplifters. Profit protection is more to do with managing a lot of moving parts as a vital component of a process that prevents leakage and loss in the first instance and is helping to drive the profitability of the business.
“It’s all about managing the uplift in stock. Fraudsters have no issues collaborating with each other, so we work together to make sure everyone is clear on what is happening, especially moving towards Black Friday and Cyber Monday,” Matt said.
Profit protection is in charge of auditing the stock throughout the Halfords supply chain while the compliance team ensures that the right bikes are in the right place. It is all about the reconciliation of peak stock with peak sales, which Matt points out are two different things. There is intense pressure on the Halfords team during this period, which requires tremendous agility to respond to customer requirements around Black Friday with Amazon Prime Week offers.
“Before Black Friday, it is all about meetings with retail operations,” said Matt. “But during peak itself, it is more about profit protection not being in the stores and supporting from a distance. When we get to Christmas peak trading, most of our work is done. We have worked on the plan for so long that I only go into stores when I’m making a goodwill trip to deliver mince pies to keep morale up.”
The plan to which he refers is one that sees parents buying into Christmas peak earlier in the year to encourage return business and loyalty.
“We are trying to encourage parents to buy not only the bikes but also the helmets and the cycle-care plans. We then package it all up as a big bag offer, a Santa’s Sack if you like. Bike building is carried out by our store colleagues too, so there is little to do for parents on Christmas Day. We can even store the bike up until the big day to avoid it being discovered by prying eyes at home.
“During this time, there is a tremendous uplift in supply chain activity and pressure on store space. Bikes are bulky items to store, so we can have issues with health and safety in terms of how many can we safely store at a time. We have to carry out a survey of space capacity around the estate and then make sure we carefully manage capacity.”
To help forward planning, Halfords has introduced a deposit scheme for payments throughout the year, enabling children’s bikes to be purchased bit-by-bit in the run-up to Christmas, not only helping the business manage stock control and storage, but also helping households manage Christmas budgets.
Online
From a traditional bike and car accessory business, Halfords has re-engineered itself for the twenty-first century through its growing online offering. Online also presents an evolving challenge for the Halfords profit protection team. After the summer peak season, Matt and his team move more into distribution centre auditing, which takes place in October.
Part of this move is to do with a strategic gear shift to build and deliver bikes directly from the distribution centres (DCs) to customers, a move introduced last year to capitalise on Black Friday and Cyber Monday.
“You can order online, and that order can now be fulfilled centrally from the DC to reduce pressure on the stores,” said Matt. “We introduced this for the first time last year, and it went so well we will be building upon it this year. To achieve this, it is all about ensuring the optimum stock levels in the DC. We are looking at not just loss prevention, but also profitable selling, and online is a major part of that journey and evolution. At Halfords we are always working on our service offering, and to achieve this we have to keep our ears to the ground and our eyes on the road ahead.”
Seasonal Colleagues
The time change brings about a shift in stock levels and the need for additional seasonal colleagues in stores to cope with demand. Again, all departments work together to ensure a smooth integration so that the temps can hit the ground running with a minimum of disruption. In these ever-changing seasons, Matt has worked closely with the People Team and health and safety around the issues of colleague safety.
According to a number of different indices, from the British Retail Consortium (BRC), the Association of Convenience Stores (ACS), and shop workers union USDAW, violence and intimidation against store staff is worryingly on the increase. Last year, according to the BRC figures, incidents of violence more than doubled to six per 1,000 staff. With the perennial issue of reduced Police numbers and the downgrading of retail crime as a priority, store managers are having to deal with increasing levels of verbal and physical abuse, a factor that is heightened at peak times with the increase in footfall and the tendency towards shorter tempers.
This imperfect storm could also be working towards a reckoning with the Health and Safety Executive (HSE) focusing more on the issue in terms of the retailers’ potential breach of the duty of care obligation it has to each frontline employee. HSE leaflets that highlight what constitutes a breach in the obligation, which includes not only violence but also spitting and aggression, were produced in April this year. The implication of this approach could be that retailers are potentially vulnerable to prosecution under the Health and Safety at Work Act 1974 just for exposing staff to difficult customers.
Halfords is not immune to challenging customers during its twin peaks, including behaviour around female staff fitting car parts, with some male customers insisting that they only want men to carry out bulb changing or roof box fitting.
The company, a Sunday Times Best Companies to Work For, takes its staff commitments very seriously, and that includes mental well-being. Halfords has invested in conflict resolution and violence reduction training and has recently worked with Oakwood Training to upskill the support teams with violence avoidance training skills.
“We receive the training and then roll it out across the business through a ‘train-the-trainer’ programme to ensure we look after our colleagues’ welfare,” said Matt. “Like our cross-departmental working, we are taking a joined-up approach across the functions because we are a partnership.”
Matt’s approach is likened to a well-oiled machine. Halfords’ collective business is better than the sum of its parts because the individual cogs and working components move together in a rhythm that continues what has already been an eventful corporate journey. Peak may rise and fall like the pistons in an engine or pedals on a bicycle, but it is this very motion that continues to push the organisation forward so that, whatever the weather, Halfords is “ready for everything.”
