Strathfield lays out extensive rehabilitation plan

Embattled retailer plans to open 60 franchise stores and kiosks in shopping centres as part of rehabilitation efforts

Embattled retailer, Strathfield Group, has revealed an ambitious new business strategy following its rise out of voluntary administration earlier this year.

As part of the strategy, the retailer plans to establish new businesses and shift more of its company-operated stores to franchises.

Within the next 12 months, it will launch Strathfield Office Solutions to provide home and small office equipment to consumers; Strathfield Rental that will deal with renting office equipment; Strathfield Home Security; and Strathfied Finance, which will predominantly focus on providing finance options for customers wanting to purchase goods.

An additional integral part of its strategy is to launch mobile phone oriented kiosks in major shopping centres. Chairman, Vaz Hovanessian, said some may be company operated, but the goal is to have them operating under the franchise model as well. He claimed telecommunications will play a big part of the company’s retail strategy and indicated mobile connections would make up 35 per cent of the business. The group’s main telco supplier is Optus.

Since September Strathfield's 96 stores have been whittled down to 62, with 55 of them franchise operated. Hovanessian said he wants to see the rest of the stores franchise operated.

“Historically our franchise stores have been a lot more profitable, compared to company-owned stores, given that they’re run by people that perhaps have a greater incentive,” he said. “Their expenditures have been lower, profit margins and turnover has been higher. It made sense for the board to consider changing the mix of franchise and company operated stores to more a franchise operation.”

The retailer also plans to open up to 60 new franchise stores in the next 18 months, including mega-like flagship stores across Sydney, Perth, Melbourne and Queensland. It also has store refurbishing plans on the cards, with franchisees partly assisted by the group.

A franchise committee has also been established, where franchisees can share their experiences, improve services and product activity.

Earlier this month, the group secured a Deed of Company Arrangement and has established a creditor’s trust.

To finance the group’s new initiatives, Hovanessian said it had secured a substantial amount of funding and support from its major shareholder.

“We have no debt in the company and we have removed up to $1.5 million worth of expenditure from head office per month, which allows us to direct some of the savings into advertising and new products,” he said. “The savings is what will help us and the initial focus for us getting back to basics, refurbishing stores, introducing new products and improving our margins. We’re also focused on in-store staff training to provide better product knowledge and service to clients.

“If we’re going to restructure back to our old glory days, we need to have funding and support and we’re ensured that will be there if and when required.”

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