CAC 11 : RIO 02 JANZIRO
Item 'El : Introduction to Retail Session
1. The fLrsc slide shows the contributions to the Group's 1968 Turnover
and Trading Profits from the Racailing activities.
It also shows the forecasts for the growth rates over the next five
years included in the respective plans.
As in the case of the Tobacco figures, there are some differences from
the figures given by David Allvey in that the Plan figures for BATUS
are based an US rather than UK accounting while the starting point for
RATIG is based an figures adjusted co oliainate special item in that
year.
As a result, the growth rates shown for profits for both BATUS and
BATIG are rather lower than those shown on Tuesday. However, in each
case, they still represent a significant improvement in margins over
the period.
Z. Key features of the table are:-
(a) The impor-tance of the concribution from Argos, Saks and Marshall
Field's, which together acco=c*d for almost 80% of the total
profits from retailing in 1988.
(b) The large number of Loss makers including Ivey's, Breuners,
Peoples and rho two discontinued businesses The Jewellers Guild
and Thimbles (included under che Corporate beading in BATUS).
Also, the low margins for Horton.
(c) It should also be noted that the figures for IMASCO represent
the Group's 40Z share only. which mans that in absolute term
Hard*es is #lithely larger than Argos. In add the sales
figures for Shoppers Drug refer only to the Imasco revenues
rather than to the system-wide sales for this franchise
operation.
3. Looking to the prospects for the next five years:-
(a) The growth rates in Argon, although impressive, are lower than
the actual rates achieved over the past five years. The min
dangers to these figures say lie in the degree of market
penetration that has been achieved and in increased competition
In mom of the key product areas In which Argos has been most
successful.
(b) The forecasts for Saks and Marshall Field's show growth rates
for sales which are not dissimilar from the rates experienced In
the five years 1983 to 1988. Where there is a major difference,
however, is in the races of profits Srowth 'At are forecast.
Here, the rates shown need to be compared with virtually no
growth in Saks in the period since 1983, While profits growth
was only 22 faster than sales in Marshall Field's rather than
the 6% difference shown in the plan.
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(c) The forecasts for Horton represent a combination of two separate
projections for the 39 store Caleria chain and for the residual
13 stores included under Ror-cen-Extra. The growth rates for
each chain are similar with more emphasis on improved margins
than on rapid growth. However, there is an aim to lay the
foundacions for more rapid growth in the Caloric chain in the
future and there is also an aim to dispose of the Horton-Extra
chain at an appropriate time. Another key issue for Rattan
which is noc evtdeac from the Table is that this is still a low
return business and on current plans the returns on act assets
in the Caleria stores is forecast to reach only 12.4Z by 1993,
raising some question as to the viability of this concept.
(d) In Iaasco, the plans show a rationallsed Peoples Drug chain
returning to profits with continuing rapid expansion in Shoppers
Drug, Hardees and UCS.
4. The key issues for discussion suggested by the Chairman are summarised
an the next slide, with the issues for the individual businesses
leading through to the more general questions as to whether the Group
has the capability to add value to its retailing businesses and,
following on from this. whether there are realistic growth options for
B.A.T Industries in Utailing.
5. One way in which the Centre ran add value is by assisting the
operations in formulating viable plans for their activities. by
ensuring that each business moats the following criteria and that
It:-
(a) is based on a clearly defined concept which has been researched
and tested to ensure chat L: is attractive to the target
customer group;
(b) has strong systems support;
(c) pays sufficient attention to staff training and communication to
maintain efficiency and achieve an effective delivery of the
concept to the customer;
(d) has a defined competitive advantsSe over other retailers
competing for the same customers;
(a) has achievable plans to meet the B.A.T Industries' criteria.
specified in the Guidelines.
6. The Contra can also add value by encouraging the exchange of
information and experience between the Group's retailing businesses.
This was the thinking behind Project Exchange, set up after the last
Chairman's Advisory Conference and designed to assist in the upgrading
of performance in Information Technology, Consumer Research and
Training.
(The Chairman to suggest to delegates that they should concentrate on the r%)
two overall questions - can we add value to retailing and are there load CD
opportunities for us in this sector. meeting the Group's criteria for
returns and for growth. To start the discussion on adding value, Tom Long
.will sl- the progress that h" been made an Project Exchange.)
Url
its /WA 29th April 1989
BAT Industries document for Province of British Columbia 22 April 1999