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Halfords invests in digital as part of new plan to boost sales to £1bn a year

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Halfords is to invest around £100m over the next three years as it looks to improve its retail business and boost sales to £1bn a year.

Key measures in the automotive-to-cycling retailer’s new Getting into Gear 2016 plan, announced this week, include introducing a “service led digital proposition” as well as a supply chain fit for the 21st century. Other measures include improving customer service, upgrading the store estate, and “reasserting Halfords’ authoritative category propositions” in areas including cycling.

The programme was introduced as the company reported 1% growth in sales to £871.3m in the year to March 29 and pre-tax profits down by 24.5% to £71m a year. Retail sales fell by 0.9% to £745.5m, and were down 0.7% on a like-for-like basis in a “demanding trading environment” with unseasonal weather, while autocentres revenue grew by 13.5% to £125.8m. The autocentre strategy of opening 20 to 30 new centres a year will stay largely unchanged.

Online sales grew by 15.9% to account for 10.3% of retail sales, up from 8.9% in the previous year. During the year Halfords introduced a 24-hour reserve and collect service and introduced new site search capabilities.

Chief executive Matt Davies said the plan was “designed to significantly improve our retail customer experience and bring about sustainable and profitable sales-growth momentum.”

“This programme will focus on supporting our colleagues to deliver consistent friendly expertise backed by major improvements in store environments, plus building on the authority of our offer, infrastructure and digital capabilities,” he said.

“We expect these vital investments will inevitably reduce short-term retail profitability but will deliver long-term revenue and profit growth together with sustainable shareholder value.”

Halfords said that nearly 90% of its online transactions were already picked up in store – and its aim is to improve the customer service offered in those stores in order to compete against competition from general retailers such as the supermarkets, and from online specialists with no stores. The company said it did not anticipate a change in store numbers since 99% of its outlets generated a profit. Around £50m of its planned investment will be spent on stores.

Some £38m of Halfords’ capital investment over the next three years will then go on its IT and digital plans, including new IT infrastructure and creating a service-led digital proposition. The company said it would also focus on developing a supply chain that supports its digital ambitions as well as its in-store service.

Some 24% of its online sales are made over mobile devices, and the company is to invest in a new site that will be optimized for tablet and smartphone as well as aligned around its three strategic pillars. Planned features include live chat, dynamic content and improved customer account management.

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