Halfords details next wave of tech investments

Bikes and car parts retailer Halfords will be implementing an in-store labour management system over the next year or so as it looks to reduce store workload and bring efficiencies by optimising staff scheduling.

The move is part of a raft of technology investments making up a wider business growth strategy led by new CEO Jill McDonald, who joined the organisation as Matt Davies' replacement in the spring, following his switch to become Tesco's UK managing director. Other projects in the pipeline for Halfords over the coming 12 months include replacing till hardware and software to speed up customer interactions and to facilitate new ways of boosting sales, including targeted offers.

Halfords also said it will be introducing customer relationship management capability as it looks to "maximise the lifetime customer opportunity".

All of these measures were announced on Thursday, alongside an interim results statement for the first-half-year period to 2 October 2015, which showed that like-for-like retail revenues were up by 1.4% but group pre-tax profit had declined by 6.3% year on year to £46.4 million.

A slowdown in the retailer's crucial bike sales category in the second quarter was said to have had a significant impact on profitability, but a positive long-term outlook for the cycling market and the roll-out of a new 'Moving up a Gear' strategy is fuelling the company with confidence that it can grow in the years ahead. The new strategy follows work started under Davies, labelled 'Getting into Gear', which was launched to repurpose Halfords for a modern retailing environment.

McDonald explained: "After three years of investing to stabilise the foundations, improve service levels and grow sales, Halfords is now a fundamentally strong business, operating in markets with good growth prospects.

"However the modernisation process is not yet complete. Under the new strategy we will continue to invest to move from fixing the basics to enabling sustainable growth."

She added: "There are a number of significant opportunities for further improvement, which include the leveraging of customer data and analytics, relentless innovation, a better shopping experience, enhanced customer service and services, and a fulfilment infrastructure for modern times."

'Moving up a Gear' comprises five key pillars, including building upon Halfords' services proposition and underlining what is unique about the business. Arguably of more interest to the tech industry, are the areas of development around improving customer experience with technology and new delivery options, as well as planned investment in customer data tools and infrastructure.

McDonald and her team have indicated they want to collect more data about their customers as they move towards the fabled "single customer view across the business" that so many players across the wider retail industry are striving to create. As a result, there will be a shift towards marketing campaigns that are customer-segment led, rather than product-category led, which will be supported by the distribution of e-receipts for in-store purchases later in November.

Halfords has said it will continue to monitor changing consumer behaviour when it comes to home delivery, and having already extended the cut-off for next-day fulfilment on online orders to 8pm, this will soon be increased to 9pm and backed up by new parcel tracking tools. 

Changes are being made in store and online, with many of the eCommerce amendments to increase efficiency and website layout completed last year. The Halfords team is working on a refresh of its 'Store of the Future' concept and a 'Store of the Future Light' design, with the latter set to be applied to stores where the economics of a full refresh are deemed not appropriate. Between 15 and 25 stores will be given a new look in the next financial year.

This week's statement also said that, whereas much of the IT investment over the past two years has been directed at improving the company's core architecture, there is now a concerted focus on enhancing colleague- and customer-facing applications.

Greg Bromley, consultant at research group at Conlumino, said that this week's half-year statement represented "a below par set of results for Halfords" but praised the retailer for its proactivity.

"Today's announcement of its latest 'Moving Up a Gear' programme indicates that Halfords has a sustainable strategy in place aiming to overcome its slowdown in performance," he noted.

"Major challenges for Halfords will be to manage the threat of competitors such as Sports Direct and the bike specialists, such as Wiggle, on the retail side, while ensuring seasonality of the weather has less of an effect on sales going forward. Halfords will also be hoping it records a strong Christmas performance, with this trading period often having an impact on performance in the following year."