Retail leader geared up for next move

Sonny Bill Williams is the latest sportsman to be the face of Rebel Sport, whereas there's only one Briscoes lady, and that's Tammy Wells (pictured). Photo / Supplied

For someone who planned to be out of New Zealand 20 years ago, Rod Duke's stay has been prolonged - and profitable.

The candid, tough-talking Briscoe Group managing director has built a retail empire that helped write the book on sustainable discounting in this country and earned a personal fortune estimated at more than $200 million.

Duke was hired to turn around the struggling Briscoes chain in 1988 and ended up owning it.

"I was a nobody who had fallen into New Zealand for the first time in my life in September 1988. I'd never even come here for a holiday."

In his unpretentious office in Auckland's Morningside, the 60-year-old Duke recalls the scenario.

"Everyone knows I'm here for three years, I'm selling the place and I'm out of here - I'm taking a kit bag full of money back to Sydney.

"It didn't happen that way but that's what everybody knew because I told them - there was no point in telling them any different."

Briscoes had a long heritage but was struggling to transform itself from a wholesaler into a retailer selling everything from toys to engine oil and most things in between.

But after a year he had turned a $2 million loss into a profit. He then bought the business himself for "not that much", which sprung lore that has surrounded him since - if it's not going for a song, Duke isn't interested.

Duke started his retail career in an Adelaide shoe shop when he was 16. He says the past two years have been the toughest he's known in the trade.

Amid the battered wider retail sector, listed retailers have generally performed well during the past year and Briscoe Group has been no exception. In the six months to August net profit at Briscoe rose 42.31 per cent to $9.28 million. This came on top of a full-year profit to March when the group delivered an 80 per cent jump in the bottom line to $21 million.

Two or three years ago, no matter what he did, the company was struggling for traction.

"We were pressing every button known to man but we just couldn't make any headway."

There was something that needed fixing in the back office so Duke spent millions of dollars on a stock management system that allows the company to identify every last item it wants on sale and the profit margin.

A profit-share scheme was introduced with a flatter structure and fewer managers, who are encouraged to save on power, cleaning bills and stock losses.

"We put a sword through a lot of those levels and returned a lot of the power back to the stores."

It was basic stuff for the times, very much like Duke's business ethos - and given he owns 76 per cent of it - Briscoe's as well.

"I don't duck and dive and pretend to do things. There's a whole bunch of retailers out there today trying to be something that they're not. They're the ones that aren't going to be successful."

His office is located next to a Briscoes outlet store which is a bit like the owner himself: What you see is what you get.

Unlike the rest of the chain with large-format stores, space is limited at Morningside in a building he owns. The store is cluttered but he's not about to renovate.

"If I could knock it over and rebuild in a month I'd do it."

However, it would more likely take a year to rebuild - costing $10 million to $15 million in turnover in that time and $1 million in profit.

His wealth is estimated by National Business Review's Rich List at $205 million, up from $155 million the year before, and he's known as a private person.

In spite of Rebel Sport's previous sponsorship of rugby's Super competition (which ended this year), Duke avoids the limelight and those who know him say his old school, unvarnished public image accurately reflects his personality. He prefers to deal directly with the media.

But his pragmatic, conservative approach has frustrated some analysts who say he should have been more acquisitive and aggressive given his cash position, which in latest figures showed Briscoe Group had $46 million in the bank. Duke says he's always assessing growth opportunities.

"There are always opportunities out there not far away from [the sector] where we are. Some are interesting and some are not. Some are on the verge of bankruptcy and some owners have a much different idea of value," he says.

"We've got plenty of money in the bank, our powder's dry, we're ready to go."

His last major acquisition was Living & Giving, bought from Pacific Retail Group in 2006. This led to the establishment of Urban Loft, a more upscale homeware store in downtown Auckland.

It was a mis-step as the country was about to sink into recession.

"While I love the [Urban Loft] concept I've got to say my timing was not perfect but at the end of the day its washing its face and we'll have another look at that when we pull out of the recession. It's the same with Living and Giving - it's in a category where it's our most highly discretionary offering and arguably it's highly discretionary in the market overall."

Briscoe watcher and market commentator Arthur Lim says history is favouring Duke's cautious approach.

"In comparison to other retailers out there Rod Duke and Briscoes have tended to be conservative. When the market was running hot there was a perception that Rod was far too conservative and didn't really capitalise on the opportunities that are presented," he says.

"The other side of the coin is when the market tumbled Rod and Briscoes were then perceived to have very wisely kept to their knitting with a very strong financial profile and consequently not only able to survive but look at the acquisition opportunities out there."

On that scale the company comes across very favourably with the market. But given his dominant ownership stake, Lim says there is a perception that Briscoe is Rod Duke and Rod Duke is Briscoe.

"Investors like to see a shareholding structure that is more in tune with a public company but by virtue of having someone with 76 per cent - rightly or wrongly - the company reflects too much the thinking of one person."

He's never been keen to sell down, quite the opposite.

"I could be best described as an opportunistic bottom-feeder - if no one wants to buy my shares and I think they're undervalued then I'll stand in the market and I'll buy them.

Forsyth Barr analyst Guy Hallwright says investors are cautious in spite of the company's performance through the downturn.

While there had been some disappointments in the early days, the company now tended to underpromise and overdeliver.

Its share price has recovered from 60c in March last year to a high of $1.38 in the past 12 months. It closed yesterday at $1.31.

Tim Morris of retail specialists Coriolis Research says Duke is a rare breed of retailer who has not only made a career of retailing but had been extremely successful.

"Retailing is not brain surgery - it's often a stepping stone kind of job. Few people make a career out of it. He's a natural retailer where there's probably some personality traits running together," he says.

Duke says with Briscoes he picked the position in the market that he could most easily defend.

"There are too many people who are brighter than me who are selling poor quality and are cheap. At the other end it's too hard. I'm in the big box big volume."

Since 1988 the company established where it wanted to be and who it wanted to compete with.

His main rivals were Farmers and to a lesser extent K Mart.

He has always avoided malls where he says he'd be paying five times the rent. So to get customers to bulk retail stores with parking outside the door he must bombard them with advertising based around sales.

"You can't go into a bulk retail store and just wait for people to come. You can't because you'll die. You can't go into a shopping mall and spend the amount of money we do on advertising because you'll run out," he says. "From my perspective you've got to do one or the other."

Duke used to spend half the year away from home on buying trips but time overseas now is just as likely to be to top golf destinations with his wife, Patricia.

"I'm lucky because I've got a wife who also likes to play it. If she didn't play golf I'd be dog meat."

ROD DUKE

* Age 60.
* Married with a teenage son.
* First job was in an Adelaide shoe shop.
* From 1980 to 1988 worked for Australian retailers, including Norman Ross.
* In 1988 took charge of Briscoes to prepare the company for sale.
* Bought the company two years later, expanded Briscoes and added the Rebel Sport chain in 1996.

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Briscoes lady proves consistency works

Sonny Bill Williams is the latest sportsman to be the face of Rebel Sport, whereas there's only one Briscoes lady, and that's Tammy Wells.

It's one of the most enduring advertising collaborations and it's now into its third decade - the Briscoes lady with her relentlessly chirpy message about what's on sale at the homeware chain.

Tammy Wells has been the face of Briscoes since 1989. "She is us," says Briscoe Group managing director Rod Duke.

Briscoes targeted primarily women, 30 to 50 years old.

Tim Morris, of Coriolis Research, said the unwavering, consistent message worked for Briscoes.

"You see too many firms hire some new marketing grad and completely change the message. Get a good message, stay on plan and stick with it and that's how you get some cut through in the modern world where there is so much noise." Rebel Sport takes a different tack and is something of a sports form guide. Its latest face is new All Black Sonny Bill Williams. Former All Black Christian Cullen was a fixture for a few seasons and more recently boxer David Tua, and French rugby hard man Sebastien "The Caveman" Chabal.

"It's a different kettle of fish, it's very young, there's no particular skew to male or female," Duke says of Rebel Sport. "Christian Cullen was fabulous at the beginning but Christian retired. Unfortunately or fortunately you've got to keep changing and we've lucked on to a couple of good plots there."

Brand consultant Brian Richards said Rebel had it right linking itself to achievement on the sports field and being a team player. He believes Briscoes and other retailers remain in the trap of concentrating "on items rather that outcomes".

"What we're looking for is brands to be our friends. We want something to associate with them well beyond the item."

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Growth tips

Rod Duke has overseen the growth of Briscoes from a struggling dozen stores in 1988 to 57 homeware stores and 32 sporting goods outlets.

For anyone wanting to expand he offers the following tips:

* Find a defendable position - either high quality or low quality, high volume or low volume.
* Bring to the business or promote reliable, hard working people already working in the company.
* Put in effective systems for advertising, relationships with suppliers and stock management.