Our three priorities
At the beginning of the 2016/17 financial year we have established three priorities
against which we will allocate resources across the organisation:
- Generate the best profitable and sustainable growth in Ferguson our major US subsidiary
Ferguson has a clear strategy which we are executing rapidly and effectively. We will focus on accelerating revenue growth on a sustainable basis while continuing to generate attractive returns for shareholders. We will continue to target above market revenue growth supplemented by organic expansion and bolt-on M&A where we can generate valuable synergies.
- Execute the UK turnaround and repositioning plan
In September 2016, we announced a new operational strategy focusing on the most attractive plumbing and heating categories. Going forward we will simplify our customer propositions; including one for smaller installers and one for medium and large specialist customers. At the same time we will lower the cost base and optimise the supply chain and branch network.
- Review the Nordics operational strategy to restore the business to profitable growth
We have initiated a review of operational strategy in the Nordics to ensure that our strategy to drive the best service, grow market share and improve financial performance across the region is successful. We expect to conclude the review in the Spring of 2017.
We want to accelerate execution of our strategy throughout the organisation to deliver faster profitable growth in every business.
In all of our businesses our objective is to grow revenue ahead of the market while generating profitable growth through a relentless focus on providing the very best service in our industry, improving gross margins and maintaining an efficient cost base.
Our businesses and markets are not homogeneous and therefore require customised strategies to provide our customers with the best possible experience.
To achieve excellent execution we have identified a number of important strategic themes which are the primary drivers for how we will win in our local markets, outperform our competitors and drive strong financial results. While these strategic themes are common, the businesses prioritise them appropriately depending on the local market and competitive environment. For example, e-commerce growth is a priority in the UK and Canada where penetration is less than 10 per cent, whereas in Central Europe it is already over 35 per cent. So overall we want to see rapid execution of the most relevant initiatives in each business to drive the fastest improvements.
Key strategic themes
Well trained, highly engaged associates deliver better customer service. A relentless focus in this area drives customer loyalty.
Our aim is to provide the best customer service in the industry, consistently across branches and regions.
We will continue to drive a strong sales culture. Where our associates are proud and confident about our services, and have the best tools, knowledge and data to support them, we will achieve the strongest results. They engage with existing and new customers to make sure we are front of mind when it comes to bids for work.
Operating model improvement
We need to ensure that our operating model is agile and flexible so it can adapt to changing customer needs. We also need to ensure our support functions provide the right service to the front end of the business and do so efficiently with the ability to flex their cost base when required.
Increasingly our customers want to deal with us online and we must ensure we have the leading e-commerce platform in each market in our industry. This provides our customers with an invaluable channel and some competitors find this hard to replicate, giving us a significant competitive advantage.
Private label penetration
We will systematically build upon and extend our portfolio of private label brands which in 2015/16 represented 6.4 per cent of Group revenue. We have an opportunity to offer a wider range of private label products to our customers, some of which attract a higher gross margin.
We will work constantly to understand our customers' needs more accurately and structure our pricing to be fair, consistent and transparent.