House Pride

Question 1

What are CSFs that HP must pay attention to in order to become a preferred supplier?

Answer 1

Excellent customer service (long-term relationships + loyalty)
Fast delivery times
Excellent credit control
Product availability
Specialist knowledge

Question 2

What are some key risks to HP?

Answer 2

• Growing online threat (competitive risk)
• High CMPI (puts pressure on margins and expected to continue in 20-21)
• Poor cash management/control results in loans needing to be taken out

Question 3

What is the current sales mix of customer types?

Answer 3

RH 80%

BCT 20% (of which over 50% belong to NWFT)

Question 4

What is NWFT?

Answer 4

North-West Federated Tradespeople

Over 50% of HP’s BCT customers belong to it.

Group of tradespeople in the region involved in renovations + refurbishments. Provide members with support + info. Encourages its members to lower carbon emissions & install energy-efficient heating systems.
Members are listed on a register of “Trusted Local Traders”.

Question 5

What happened to the Bury store?

Answer 5

Fire took place in 2013.
Since then, did not recover & closed in Dec 2016.
Inventory, PPE, staff were redeployed to other branches/HO where possible.
Other PPE disposed of for zero proceeds.
Inventory sold at 50% of normal sale price.

Net closure costs = 100k.

Question 6

What does HP hold every month?

Answer 6

Free workshops demonstrating new products.

Now done over video conference.

Question 7

How is HP currently considering green practices/sustainability initiatives?

Answer 7

• Replacing all vehicles gradually with electric models
• Company uses energy-efficient processes such as energy-saving lighting in stores
• They consult with external specialists on impact of opening a new branch on local community
• Sustainability due diligence on suppliers

Route planning & maximising load sizes will reduce carbon emissions (also HP regularly checks old vehicles for emissions levels)
Should place an increased focus on energy-efficient heating systems/products (important for NWFT customers)

Question 8

Who are HP’s 4 main customers?

Answer 8

Elevant (RH) - affordable housebuilder (contributes over 1m annually) - one of several suppliers

Wrights (RH) - builder + manager for serviced offices - 0.8m in last 8m of 2020 - sole supplier for building products

Orko (RH) - builder of care homes - roughly 400k per care home. Keep an eye on them as there is a rise in care homes/retirement villages. Steady increase in average age of UK population.

Members of NWFT - make up over 50% of BCT

Question 9

Which business pose a competitive threat to HP?

Answer 9

Cementonline.com - set up in 2019, offers online only to tradespeople. Able to offer very competitive prices due to lower overheads.

Greg & Sons - similar to HP. Have been focusing more on online sales through new website (new sales function added around 10% to annual revenue). Even converted worst-performing branch to a warehouse, although this was expensive + disruptive.