May 21, 2025 • 27 mins
How do you steer a retail giant through US-China trade conflicts and low consumer spending?
Garth Bray cracks open Rod Duke's playbook for weathering an economic downturn—and capitalising on an international trade standoff. The Briscoe Group CEO reveals how his buyers have used ongoing tariff tensions to find negotiating opportunities with Chinese suppliers.
In this episode, we find out: why is Briscoe Group investing $100M in a new distribution center while sales are flat? Why would this big box retailer plan to open 15 smaller 'metro' stores? Are Briscoes or Rebel concerned about incoming retail giants like IKEA, and budget e-commerce sellers like Temu and Shein? Plus, Rod shares some surprising numbers about online vs. in-store sales.
For more or to watch on YouTube—check out http://linktr.ee/sharedlunch
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Gotta Koto. Welcome to Shared Lunch. I'm Garth Gray here
in Morningside in Auckland at the headquarters of the Brisco
Group that's Brisco's and Rebel Sport Homewares and Sportswear, a
retail powerhouse. And at the head Rod Duke, a man
who's been running retail for thirty five years. What are
the challenges he sees ahead? Are we going to make
(00:26):
a recovery from this cost of living crisis? And what
opportunities has he been able to ring from the trade
war between the US and China. How does he see
the future coming? Will lie ahead inside to find out.
Here's some important info you should always keep in mind.
Speaker 2 (00:39):
Investing involves the risk you might lose the money you
start with. We recommend talking to a licensed financial advisor.
We also recommend reading product disclosure documents before deciding to invest.
Everything you're about to see and here is current at the.
Speaker 3 (00:53):
Time of recording.
Speaker 1 (00:54):
First, thanks for inviting us here today. I mean, I
know you are all about the deal, knowing what the
customer wants, and so in that view, we've asked some
of our customers, some of our listeners, some of the
people that tune into the podcast regularly what they would
like to ask you, And I've got a couple of
those questions right here. What's the key indicator of how
(01:15):
the economy is related to retail? Like, as there are
a product somewhere on the shelves where when that goes nuts,
you go things are doing well.
Speaker 3 (01:25):
No, there's probably not a product, but there's probably a
number of product categories, not one particular. And look, our
summary of whether or not the economy's buoyant or poor
is the propensity of people to shop. If they tighten up,
don't want to shop, there's nothing they want to buy.
You know you're in trouble.
Speaker 1 (01:46):
So how have you been able to deal with competition
while also staying true to your core values.
Speaker 3 (01:52):
Look, I think you're going to go all the way
back to nineteen eighty eight when we sat down and
we were a quasi seller of toys hardware merchants. I
sat down then with the key people in the business
and said, look, the position that we find ourselves in
right now is unsustainable. There's terrific hardware merchants out there
selling hardware. The toy business that we're in, which is
(02:15):
a thirty day business and so we had a look
at the landscape and figured out which piece of that
retail landscape we could occupy, dominate and defend. And the
piece that we found that was vacant was really good
quality product, really good price. And so we thought, okay,
let's go out there and get all the famous brand
(02:37):
names in the categories that we want to operate in,
and that's what we'll sell. Because look, at the end
of the day, the rich and middle income folks always buy,
you know, real good quality product. So that was the
core of where we thought we ought to sit. We
(02:57):
believe we could defend that position, and here eight years on,
we've managed to do it. And we've done it. We're
now with two brands with two different categories of merchandise
and two different brands of stores.
Speaker 1 (03:08):
Home, whar and sports where Yeah yeah, yeah. So is
there a secret to success in the business in this economy?
Speaker 3 (03:16):
I think if you're predictable, I think if you're trustworthy,
and I think if you're very, very community located so
people don't have to go to great lengths to shop
with you, that's probably a pretty good start. I would
have thought.
Speaker 1 (03:29):
I tuned into your AGM. I heard a great quote.
I just want to share with everybody. Retail is like
crossing a tightrope, juggling flaming tortures while riding a Uni cycle.
That was your chief financial officer, wasn't it?
Speaker 3 (03:42):
And bang on it was? Yeah?
Speaker 1 (03:43):
Did he get that from you?
Speaker 3 (03:45):
No? No, No, regrettably it is good it.
Speaker 1 (03:48):
I was sort of struck by that. I mean, he's
talking about I think, if I understand it right, the
dilemma of trying to sell as much as you can
but also make as much as you can from it.
And when I sort of looked, you've had to pull
your gross profit back how much you're making of this
by about I think it was about turn the basis
points about two percent down to about forty percent, just
(04:09):
in order to keep the sales flat last year. Tell
me about that typewrote walk. How do you make those
sorts of decisions?
Speaker 3 (04:17):
It all starts with being able to buy the right
merchandise and buy it at the right price. If you
do that, then you've got to build of leeway to
compensate for some of these poor times that come around
from time to time, and sometimes these poor times last
weeks and sometimes months, sometimes the season. They very rarely
last for the period they've lasted this time, and so
(04:41):
you know when people are resisting spending money and shopping,
you know there's always a proportion that will. So it's
really important that you're able in some way to get
a bigger chunk. It's been like a day fishing. If
the fish and are feeding, sometimes you got to change
your bait, and sometimes you got to change your possession.
Sometimes you're going to change things up to get a
(05:04):
good chunk of those that are shopping. And so that's
the skill I think that's embedded here.
Speaker 1 (05:09):
The world's are washed with all of this news about
tariffs and so on. I read that pretty much hot
off the back of the Liberation Day and all that
kind of thing. You had your entire buying team up
in China for a couple of weeks.
Speaker 3 (05:22):
What did they see? What did they tell you? They
saw some panic stricken factories because as you imagine, a
good chunk of what's made in China goes to the
United States, and so the American suppliers were simply saying,
do not ship. I'm not paying one hundred and forty
five percent tariff when it lands on the dock, so
(05:44):
don't ship it because I won't be paying for it.
And so you've got factories in China sitting on mountains
of stock, not knowing when they're going to ship the
next consignment. And at the same time, we're saying, I'm
here with a bag full of cash, and I want
to take it now, but I want a better price, right, so.
Speaker 1 (06:06):
There were a few bargains to be had when you
went shopping, your team went shopping. We'll see that turning up.
Speaker 3 (06:11):
Yeah. Sure.
Speaker 1 (06:13):
Does that then mean you pass that on or are
you using that as a hedge against uncertainty or you're
just looking at whatever the conditions are at the time
when the stuff arrives.
Speaker 3 (06:21):
A bit of all that. We have a particular style
or grade of product that we buy, and there's other
folks in the market who buy a lower grade, and
other folks that buy a very very very low grade.
So we don't always always buy exactly the same merchandise,
and so it largely depends for us anyway, It largely
(06:41):
depends on the on the strength of the competitor set
that determines, you know, what, what you're able to, what
you're able to sell at.
Speaker 1 (06:50):
It sounds like we need to talk about competition, but
I wanted to stay in China for a little bit
longer because I mean, were they waiting where they're ready
to do deals straight away to get it done, or
were they going hang on, We'll just wait and see
how this train Chinese.
Speaker 3 (07:02):
Chinese want the order right now. They want to ship
right now. We'll take the orders, take the LC okay,
and then ship when we request. But they want firm
commitments now, and if you're able to get firm commitments,
they'll deal.
Speaker 1 (07:15):
So if we've just seen in the last little while,
they've struck a deal for a pause. Now after sort
of six weeks of kind of chaos and uncertainty, a
different kind of uncertainty, now there's a ninety day pause
and China and the US have agreed to sort of
suspend the worst of some of those tariffs. Does that
mean they just snap back to supplying the US and
you miss out on the next round of deals or
(07:37):
what happens.
Speaker 3 (07:38):
Well, look, at the end of the day, they've reduced it,
and Trump to reduce it from one hundred and forty
out of thirty percent, thirty percent still kills it. So
thirty percent is still a bad deal. One hundred and
forty five percent. They close the gates. Not the gates,
it's count your business. So thirty percent is still bad.
Now there'll be some merchandise in some categories. You know
(08:01):
that the American suppliers will go. Look for the sake,
the toys might be one. Toys have got to be
shipped pretty soon to get there for Christmas. You can
have all the toys in the world at at whatever
price you like, but they land in January February, they
don't sell because that business is a thirty day business.
So toys might be one where the supplies go thirty percent. Look,
(08:25):
just give it, ship it, I'll worry about I'll worry
about the pricing later.
Speaker 1 (08:29):
So this thing has given a sort of a longer
term opportunity for a business like the Brisco Group to
get in there and achieve those lower costs of input,
the lower costs of the product that you're bringing in.
Speaker 3 (08:40):
Yeah, remember the priuce reductions we've got in the order
of one hundred basis points better than perhaps prior periods
fifteen percent. So it's not huge price reductions, but they're
significant enough to compensate for you know, PEPs current fluctuations.
Speaker 1 (09:01):
I was just going to get to that. Obviously, the
dollar has been pretty pretty strong, the US dollar, don't
kis pretty weak against it. That must have been really
hurting your buying ability if you're settling in dollars.
Speaker 3 (09:10):
How exclusive buying currency is yours dollars and I think
eighteen months ago it was about seventy three cents. Last
week it was fifty nine sixty, and now it's fifty
eight fifty, so it's still well below the seventy three cents.
So some would argue if you get ten or fifteen
percent or twenty percent discount off last year's product, last
(09:32):
year's similar product, so you're getting a twenty percent discount,
you know, fifteen percent of that has gone and gone
in currency, so there's not a lot of change left over.
Speaker 1 (09:43):
The economy takes with one hand and gives with the
other kind of things, so you've just got to try
and see it over the middle, right, how's their own
government you think rolling with these punches in terms of
how it's responding. Do you see any anything in the
air that helps it all or is there anything that
can do it?
Speaker 3 (09:57):
The government that's in paw Are now has I think
got a different set of issues. This tariff thing is interesting.
But I was reading the Financial Review this morning. A
lot of the Australians now are trying to just pretend
Trump's not there. I don't really want to talk to
(10:19):
you right now. I'm happy with the ten percent. Leave
me alone. I'll keep dealing business with China because they
they're exports of China something like two hundred and twenty
billion into the United States and thirty seven so they
really don't want to get into their conversation. They'd rather
just hide it in a corner than just leave it
at ten percent. We're probably in a similar position, I imagine.
(10:43):
I don't imagine that our exports in the United States
come anywhere near our imports from China, and so in
terms of balance of trade, We're probably pretty happy to
sit in the corner and cop the ten percent and
stay out of Trump's sight lines, I imagine. But don't
(11:05):
look at the goverment itself. It's got a whole bunch
of other issues they've got to contend with. They've got
pretty poor book they walked into. You know, it looks
like we've got to pay nine billion dollars a year
just to pay the interest bill on some of the
some of the borrowings the previous government did.
Speaker 1 (11:20):
But it's a company that was a group that isn't
largely encumbered by debt. I mean, you're pretty well cashed,
aren't you any lending all credit facilities of the projects, right,
so you've managed to stay out of that.
Speaker 3 (11:31):
Yeah, you're right, But we've always been a bit like that.
Speaker 1 (11:33):
I think it was one hundred and forty million or
something in the bank.
Speaker 3 (11:36):
Yeah, yeah, but traditionally we don't borrow borrow money. I'd
much rather save a bit and then pay cash for something,
or like this, this new warehouse facility.
Speaker 1 (11:46):
You're looking at spending what one hundred million or something
over the next couple of three years, forty million just
this year to build a warehouse, Yeah, with distribution center.
Speaker 3 (11:55):
Yeah, you're right, it's going to do both. We made
the decision we buy it. We want to own it.
If I want to rent it, then someone else will
be paying that. But I'll be paying two or three
or four million dollars a year in rent. I've got
pretty much the cash there, so we thought we're buy it.
It's a strategic asset that's going to be very very
(12:16):
valuable to us for decades to come. It's going to
produce a lot of incremental profit for the group after
this investment, and so we thought it was important that
we owned it and ran it ourselves. And because we've
been thrifty in the past, our borrowings to pay for
it are going to be negligible.
Speaker 1 (12:37):
So you're also, I understand looking at going smaller little box.
It's not big ones, right, those are the mini or
the metro concept that's been talked about at your AGM. Yeah,
fifteen new stores, but smaller ones? Where are they going
to be? Why do that? And I suppose if I
can bombard you with questions, Yeah, what were you thinking
before you made that decision? What made you think?
Speaker 3 (12:56):
Yep, we'll go with this. We sit down periodically and
do a three year review of We sit there and go, okay, look,
what do we have to do the next year or two? Okay,
that makes perfect sense, and then three to four years
out a bit of blue sky stuff, what might be
interesting to evaluate, to experiment with, just to toy around
(13:22):
with and see whether or not of works because it
smells like a good idea. That's where this smaller unit
came from and so yes, we've got the strategic stuff
like the DC blah blah blah all the way out.
And now we look at Briscoes and Rebel Metros or Minis,
(13:42):
their little stores in little catchments and so whilst it
is you know, schedule all being well to be established
in f I twenty eight, you know, we're starting to
do a lot of the work now. What we what
we've got right now is about around about one hundred
(14:04):
stores in both brands, total brands, in every catchment that's
got twenty thousand or less permanent residents. I think our
smallest is about Taupo and they've got about twenty twenty
twenty three permanent residents. But there's a lot of other
(14:24):
spots around New Zealand where we think it would be
uneconomic to put a full line Briscoes and Rebel in there.
You know, about three thousand square meters one hundred car parks.
You know, that's that's chunky. But at the same time
(14:45):
there's there's catchments like Hamilton and Toweronga for example, in
Twong and most of our competitors's got three or four stores.
I've got one, okay, And there's development going over the
bridge at Papamha and it's going to the other side
at Bethlehem Way. So we want to experiment and see
(15:07):
whether or not it would be worthwhile either planning a
larger store later or slap in a couple of minis
right now. So that that's Taroga Hamilton for example, almost
all the shopping is done on the north side. People
don't all the people don't live on the north side.
People live on the southwest and east. So would it
(15:30):
be interesting to have a look at the store in
those catchments. Yeah, we think it'd be pretty interesting to
have a look at that. Hamilton's not a small catchment.
Speaker 1 (15:39):
So this sounds a bit more of your occupy, dominate
and defend your building a few outposts around your fortress.
Speaker 3 (15:45):
Well yeah, building a wall, perhaps not a wall, but
we're putting little forts in different spots. Live in Gore.
What now, They're probably not quite big enough for a
full life in store for us, But would it support
a smaller version of our two brands. Probably, So we're
(16:07):
going to have a look at it.
Speaker 1 (16:08):
So who are you competing with at that level? Because
I would have thought stacks of people are shopping in
those places online. They just get it comes off the courier.
That's the ship that two ships through, right.
Speaker 3 (16:18):
But how much do you miss? How much do you miss?
We record we're doing pretty well online and it's less
than twenty percent of my total volume, less than twenty
percent nineteen point seven, up from eighteen point seven last year.
And I'm near the top of the tree. I'm going
real well. So there's eighty percent not shopping there. And
I'd suggest to you that perhaps twenty percent of the
(16:41):
twenty percent are shopping because they're nowhere near it, so
they have to. So the proportions in the overall are
relatively small. Okay, that wouldn't stop someone buying if they
didn't live and live in they lived outside of it,
buying it and using it as a click and collect place.
Speaker 1 (17:02):
Who are you looking at when you're competing with because
I guess if you if you're looking at where people
shop now, it's all over the place. People might jump
on and jump on TIMU or something and get something
extremely cheap and run through and that kind of thing.
Are you worried about them? Are you worried about Ikea
who are tuning up in this country later on this year?
Speaker 3 (17:17):
Or sports Direct I think they. I think the Teamurs
and the Shines and those folks operate at a different
end of the market that I operate in. They do
meet other competitors in this country, but they don't meet me.
(17:37):
But I'm more focused on the the Costcos and the
IKEA's and other people. You mentioned sports Direct, because.
Speaker 1 (17:50):
They're looking at moving into this part of the world,
aren't they. How Normally when a competitor turns up new entrant,
they throw a lot of money around to try and
draw custom. That's got to be something you have to
chew on and show people.
Speaker 3 (18:02):
Sure, but we've got people in their stores already. I
know how they operate, I know what they sell, i
know the propositions. I've got a lot of stores, and
I've got a lot of stores right next door the
stores where they think they're going to put foot jobs.
It's fine, I've got to lift my game. People. People
will go to these places and experiment with them. I
(18:25):
want people to go there and experiment a service level
or quality of service that is lower than mine, to
have a look at a range of product it's not
even nearest significant as mine. To go into an environment
that's not as comfortable as my environments. So does that
mean I have to lift my game in some centers
and in some brands. Yeah, it's okay, I'll do it.
Speaker 1 (18:50):
Sounds like you're relishing the challenge.
Speaker 3 (18:53):
You can't avoid it, mate, It's going to happen when
you're when you're on a really really really good plot,
you're doing it well and you're exit cueuting wonderfully. There's
always someone sitting outside the bar bier a fence thinking, oh,
I wouldn't want a bit of that. I wouldn't that.
I might have a crack at that. So is he?
Is he that clever?
Speaker 1 (19:12):
Hmm?
Speaker 3 (19:13):
I have a crack. Wasn't that long ago that that
Rebel Sport Australia brought over one of their concepts called
DFS no not DFS Boating Fishing cam bcf okay, set
up eight stores, lasted eighteen months, cost him forty five million,
(19:36):
and then went back home.
Speaker 1 (19:39):
You saw that as as seeing them off from the gate.
Speaker 3 (19:41):
Digit it's fine, that's okay. Look, I'm looking at doing
the same in Australia. I want to set up a
brand or buy a brand over there and compete over there.
I want to do that.
Speaker 1 (19:57):
You've still got a lot of energy. And I guess
that comes back to the question that one of our
listeners and viewers had asked there, what keeps you going?
No sign of your stopping? I mean, is it the
love for the business generally? Is it the need to occupy, dominate,
and defend.
Speaker 3 (20:15):
Maybe some of that, maybe all of that, maybe none
of that. I don't know. I've been in the retail
business since I was sixteen. I just happened to love
the concept of buying something, selling something, buying plenty, selling plenty,
having plenty of stores, having plenty of customers. I just
happen to like the idea. I think with this business
(20:36):
over here, it is a lot of fun. You know,
it's a lot of fun building, you know, something from
pretty much nothing into an organization that's really really, really
well respected and successful. And it's hard to give away
(20:58):
something or move away from something. For me anyway, if
you gave birth to it, you know, it's hard. And look,
I can I have to tell you I'm in a really, really,
really fortunate position at the moment. I've got about three
or four really really key people who have been here
for a very long time, who are very, very, very
(21:19):
clever and I'll tell you now, I don't get down
there amongst the weeds as much as I used to, well,
because it's not my job anymore. My job is. My
job is to is the mentor, is to guide, to assist,
to encourage, to do. I step into the weeds from
time to time, absolutely, yeah, But I try to be
(21:41):
a different sort of manager these days than I was
because I'm not going to be here for a very,
very lot longer, you know. But I'm very healthy, but
I'm not going to be here a lot longer. You know,
I'm past the halfway mark. I'll concede you that, okay,
And so this is my legacy. I don't want this
(22:05):
business to fail just because I go. You know, that'd
be a slight on me. That'd be well, didn't you
didn't do your job particularly well. You didn't train these
people particularly well. You didn't encourage them enough, you didn't
set the platform for success for them. That's not what
I want to do. So look, the short answer is
I'm still having some fun. I can still play golf
(22:27):
when I want to. My body can't take the games
of golf that it used to, so so my expectation
for games out on the course a lot as high
as they used to be.
Speaker 1 (22:40):
But in here you're still very competitive.
Speaker 3 (22:42):
Look well, you know, look I'm still full on I
don't I like to win every battle. I like to
buy at the best price. I like to sell at
the best price. I like the best quality people around.
When we sit down and we look at strategically, where
we want to be, when we want to be there,
what we want to achieve it, you've got to succeed
at that. You know. There's plenty of graveyards, corporate graveyards
(23:08):
where you know, the business was good, but management just
couldn't execute on change strategies. They couldn't execute. I think
we can and we've demonstrated that. Look, in a couple
of years, we would have invested one hundred, one hundred
and twenty million dollars in a DC. It will produce
substantial sales and margin gains. It'll it'll deliver a better
(23:32):
quality service to our customers. You know, if I can
do that, and I can execute on that, and we
think we can, then that'll be another giant hurdle you
know that we've conquered, and then the runway from there,
you know, is made. You know, significantly easier.
Speaker 1 (23:51):
You're off that typewrote with the juggling torches and the
unicycle you're onto. I think it was your CFO said,
a well paved road.
Speaker 3 (23:58):
Well, we think so beyond that. But look, they will
be there'll be other potholes and there'll be other type
ropes that you've got to get on. You know, this business,
this business, you know, is always there's always change.
Speaker 1 (24:14):
You know, it's never what doesn't change constant, what doesn't change?
As you own seventy seven percent of it, Yeah, with
such a majority, what is the point of being listed?
Speaker 3 (24:25):
Well, the point in the beginning was that I could
expand this business very very quickly, and I Rebel Sport
may not have come along if we hadn't add access
to you know, to funds. You know, if you, if you,
if you, if you're listening, you're successful at it. It's
a pretty good road. You know, very shortly, within weeks,
(24:47):
we may very well be invited to go into the
inns the next top fifty top fifty companies. You know
now that that brings another different set of rewards where
you know, institutions who follow have to get on board.
Speaker 1 (25:09):
That it's a big moment for a year. If that
comes to pass.
Speaker 3 (25:11):
Well, you think back to where we were. You know,
well they've been shops doing twenty minute and losing two
million in a year. Didn't know where we wanted to be.
We're selling just rats and mice. And now it's a
very very very very different group now quite different.
Speaker 1 (25:25):
So the idea that governments just sort of reduced some
of the requirements for capital listings, made it a little
bit easier, a little bit cheaper.
Speaker 3 (25:32):
Good work here, can I think so? I think so
that Look, that's that's the government's job. The government's job
is not to not to hand out stuff everywhere and
then people get hold of it and they spend it.
They either pay it back or don't pay it back.
Government's job is to make life and business and living easier,
(25:54):
you know than it was yesterday.
Speaker 1 (25:57):
So they can go shopping.
Speaker 3 (26:00):
Shopping, well, build a road, build a bridge, you know,
get some infrastructure, just get people in work.
Speaker 1 (26:11):
So you're not expecting a lot from budget day. You're
just hoping that they try and stay out of the
way a little bit.
Speaker 3 (26:16):
Well, I think I think all of us can expect
and should expect, you know, some real thought about what
the next year or two might look like or even
beyond that and fix some of the issues. Well, we
have to tighten our belts. Look, it's like a household,
you know. If mum and dad just go crazy and
just spend spend, someone's got to pay it back. But
(26:40):
how long has that taken, how painful it will be.
We'll find out pretty soon, won't we.
Speaker 1 (26:45):
And you're so here looking for it.
Speaker 3 (26:47):
I'll be looking for it. Yes.
Speaker 1 (26:48):
Thank you, Roger, thanks for having us here at Briscoe's headquarters,
and thank you for watching and for listening, whether it's
on YouTube or iHeart or Spotify or Apple wherever you
get your podcasts, even straight off the year. He's app
Couma two. That's us for this week.
Speaker 3 (27:09):
M hmm.
Gotta Koto. Welcome to Shared Lunch. I'm Garth Gray here
in Morningside in Auckland at the headquarters of the Brisco
Group that's Brisco's and Rebel Sport Homewares and Sportswear, a
retail powerhouse. And at the head Rod Duke, a man
who's been running retail for thirty five years. What are
the challenges he sees ahead? Are we going to make
(00:26):
a recovery from this cost of living crisis? And what
opportunities has he been able to ring from the trade
war between the US and China. How does he see
the future coming? Will lie ahead inside to find out.
Here's some important info you should always keep in mind.
Speaker 2 (00:39):
Investing involves the risk you might lose the money you
start with. We recommend talking to a licensed financial advisor.
We also recommend reading product disclosure documents before deciding to invest.
Everything you're about to see and here is current at the.
Speaker 3 (00:53):
Time of recording.
Speaker 1 (00:54):
First, thanks for inviting us here today. I mean, I
know you are all about the deal, knowing what the
customer wants, and so in that view, we've asked some
of our customers, some of our listeners, some of the
people that tune into the podcast regularly what they would
like to ask you, And I've got a couple of
those questions right here. What's the key indicator of how
(01:15):
the economy is related to retail? Like, as there are
a product somewhere on the shelves where when that goes nuts,
you go things are doing well.
Speaker 3 (01:25):
No, there's probably not a product, but there's probably a
number of product categories, not one particular. And look, our
summary of whether or not the economy's buoyant or poor
is the propensity of people to shop. If they tighten up,
don't want to shop, there's nothing they want to buy.
You know you're in trouble.
Speaker 1 (01:46):
So how have you been able to deal with competition
while also staying true to your core values.
Speaker 3 (01:52):
Look, I think you're going to go all the way
back to nineteen eighty eight when we sat down and
we were a quasi seller of toys hardware merchants. I
sat down then with the key people in the business
and said, look, the position that we find ourselves in
right now is unsustainable. There's terrific hardware merchants out there
selling hardware. The toy business that we're in, which is
(02:15):
a thirty day business and so we had a look
at the landscape and figured out which piece of that
retail landscape we could occupy, dominate and defend. And the
piece that we found that was vacant was really good
quality product, really good price. And so we thought, okay,
let's go out there and get all the famous brand
(02:37):
names in the categories that we want to operate in,
and that's what we'll sell. Because look, at the end
of the day, the rich and middle income folks always buy,
you know, real good quality product. So that was the
core of where we thought we ought to sit. We
(02:57):
believe we could defend that position, and here eight years on,
we've managed to do it. And we've done it. We're
now with two brands with two different categories of merchandise
and two different brands of stores.
Speaker 1 (03:08):
Home, whar and sports where Yeah yeah, yeah. So is
there a secret to success in the business in this economy?
Speaker 3 (03:16):
I think if you're predictable, I think if you're trustworthy,
and I think if you're very, very community located so
people don't have to go to great lengths to shop
with you, that's probably a pretty good start. I would
have thought.
Speaker 1 (03:29):
I tuned into your AGM. I heard a great quote.
I just want to share with everybody. Retail is like
crossing a tightrope, juggling flaming tortures while riding a Uni cycle.
That was your chief financial officer, wasn't it?
Speaker 3 (03:42):
And bang on it was? Yeah?
Speaker 1 (03:43):
Did he get that from you?
Speaker 3 (03:45):
No? No, No, regrettably it is good it.
Speaker 1 (03:48):
I was sort of struck by that. I mean, he's
talking about I think, if I understand it right, the
dilemma of trying to sell as much as you can
but also make as much as you can from it.
And when I sort of looked, you've had to pull
your gross profit back how much you're making of this
by about I think it was about turn the basis
points about two percent down to about forty percent, just
(04:09):
in order to keep the sales flat last year. Tell
me about that typewrote walk. How do you make those
sorts of decisions?
Speaker 3 (04:17):
It all starts with being able to buy the right
merchandise and buy it at the right price. If you
do that, then you've got to build of leeway to
compensate for some of these poor times that come around
from time to time, and sometimes these poor times last
weeks and sometimes months, sometimes the season. They very rarely
last for the period they've lasted this time, and so
(04:41):
you know when people are resisting spending money and shopping,
you know there's always a proportion that will. So it's
really important that you're able in some way to get
a bigger chunk. It's been like a day fishing. If
the fish and are feeding, sometimes you got to change
your bait, and sometimes you got to change your possession.
Sometimes you're going to change things up to get a
(05:04):
good chunk of those that are shopping. And so that's
the skill I think that's embedded here.
Speaker 1 (05:09):
The world's are washed with all of this news about
tariffs and so on. I read that pretty much hot
off the back of the Liberation Day and all that
kind of thing. You had your entire buying team up
in China for a couple of weeks.
Speaker 3 (05:22):
What did they see? What did they tell you? They
saw some panic stricken factories because as you imagine, a
good chunk of what's made in China goes to the
United States, and so the American suppliers were simply saying,
do not ship. I'm not paying one hundred and forty
five percent tariff when it lands on the dock, so
(05:44):
don't ship it because I won't be paying for it.
And so you've got factories in China sitting on mountains
of stock, not knowing when they're going to ship the
next consignment. And at the same time, we're saying, I'm
here with a bag full of cash, and I want
to take it now, but I want a better price, right, so.
Speaker 1 (06:06):
There were a few bargains to be had when you
went shopping, your team went shopping. We'll see that turning up.
Speaker 3 (06:11):
Yeah. Sure.
Speaker 1 (06:13):
Does that then mean you pass that on or are
you using that as a hedge against uncertainty or you're
just looking at whatever the conditions are at the time
when the stuff arrives.
Speaker 3 (06:21):
A bit of all that. We have a particular style
or grade of product that we buy, and there's other
folks in the market who buy a lower grade, and
other folks that buy a very very very low grade.
So we don't always always buy exactly the same merchandise,
and so it largely depends for us anyway, It largely
(06:41):
depends on the on the strength of the competitor set
that determines, you know, what, what you're able to, what
you're able to sell at.
Speaker 1 (06:50):
It sounds like we need to talk about competition, but
I wanted to stay in China for a little bit
longer because I mean, were they waiting where they're ready
to do deals straight away to get it done, or
were they going hang on, We'll just wait and see
how this train Chinese.
Speaker 3 (07:02):
Chinese want the order right now. They want to ship
right now. We'll take the orders, take the LC okay,
and then ship when we request. But they want firm
commitments now, and if you're able to get firm commitments,
they'll deal.
Speaker 1 (07:15):
So if we've just seen in the last little while,
they've struck a deal for a pause. Now after sort
of six weeks of kind of chaos and uncertainty, a
different kind of uncertainty, now there's a ninety day pause
and China and the US have agreed to sort of
suspend the worst of some of those tariffs. Does that
mean they just snap back to supplying the US and
you miss out on the next round of deals or
(07:37):
what happens.
Speaker 3 (07:38):
Well, look, at the end of the day, they've reduced it,
and Trump to reduce it from one hundred and forty
out of thirty percent, thirty percent still kills it. So
thirty percent is still a bad deal. One hundred and
forty five percent. They close the gates. Not the gates,
it's count your business. So thirty percent is still bad.
Now there'll be some merchandise in some categories. You know
(08:01):
that the American suppliers will go. Look for the sake,
the toys might be one. Toys have got to be
shipped pretty soon to get there for Christmas. You can
have all the toys in the world at at whatever
price you like, but they land in January February, they
don't sell because that business is a thirty day business.
So toys might be one where the supplies go thirty percent. Look,
(08:25):
just give it, ship it, I'll worry about I'll worry
about the pricing later.
Speaker 1 (08:29):
So this thing has given a sort of a longer
term opportunity for a business like the Brisco Group to
get in there and achieve those lower costs of input,
the lower costs of the product that you're bringing in.
Speaker 3 (08:40):
Yeah, remember the priuce reductions we've got in the order
of one hundred basis points better than perhaps prior periods
fifteen percent. So it's not huge price reductions, but they're
significant enough to compensate for you know, PEPs current fluctuations.
Speaker 1 (09:01):
I was just going to get to that. Obviously, the
dollar has been pretty pretty strong, the US dollar, don't
kis pretty weak against it. That must have been really
hurting your buying ability if you're settling in dollars.
Speaker 3 (09:10):
How exclusive buying currency is yours dollars and I think
eighteen months ago it was about seventy three cents. Last
week it was fifty nine sixty, and now it's fifty
eight fifty, so it's still well below the seventy three cents.
So some would argue if you get ten or fifteen
percent or twenty percent discount off last year's product, last
(09:32):
year's similar product, so you're getting a twenty percent discount,
you know, fifteen percent of that has gone and gone
in currency, so there's not a lot of change left over.
Speaker 1 (09:43):
The economy takes with one hand and gives with the
other kind of things, so you've just got to try
and see it over the middle, right, how's their own
government you think rolling with these punches in terms of
how it's responding. Do you see any anything in the
air that helps it all or is there anything that
can do it?
Speaker 3 (09:57):
The government that's in paw Are now has I think
got a different set of issues. This tariff thing is interesting.
But I was reading the Financial Review this morning. A
lot of the Australians now are trying to just pretend
Trump's not there. I don't really want to talk to
(10:19):
you right now. I'm happy with the ten percent. Leave
me alone. I'll keep dealing business with China because they
they're exports of China something like two hundred and twenty
billion into the United States and thirty seven so they
really don't want to get into their conversation. They'd rather
just hide it in a corner than just leave it
at ten percent. We're probably in a similar position, I imagine.
(10:43):
I don't imagine that our exports in the United States
come anywhere near our imports from China, and so in
terms of balance of trade, We're probably pretty happy to
sit in the corner and cop the ten percent and
stay out of Trump's sight lines, I imagine. But don't
(11:05):
look at the goverment itself. It's got a whole bunch
of other issues they've got to contend with. They've got
pretty poor book they walked into. You know, it looks
like we've got to pay nine billion dollars a year
just to pay the interest bill on some of the
some of the borrowings the previous government did.
Speaker 1 (11:20):
But it's a company that was a group that isn't
largely encumbered by debt. I mean, you're pretty well cashed,
aren't you any lending all credit facilities of the projects, right,
so you've managed to stay out of that.
Speaker 3 (11:31):
Yeah, you're right, But we've always been a bit like that.
Speaker 1 (11:33):
I think it was one hundred and forty million or
something in the bank.
Speaker 3 (11:36):
Yeah, yeah, but traditionally we don't borrow borrow money. I'd
much rather save a bit and then pay cash for something,
or like this, this new warehouse facility.
Speaker 1 (11:46):
You're looking at spending what one hundred million or something
over the next couple of three years, forty million just
this year to build a warehouse, Yeah, with distribution center.
Speaker 3 (11:55):
Yeah, you're right, it's going to do both. We made
the decision we buy it. We want to own it.
If I want to rent it, then someone else will
be paying that. But I'll be paying two or three
or four million dollars a year in rent. I've got
pretty much the cash there, so we thought we're buy it.
It's a strategic asset that's going to be very very
(12:16):
valuable to us for decades to come. It's going to
produce a lot of incremental profit for the group after
this investment, and so we thought it was important that
we owned it and ran it ourselves. And because we've
been thrifty in the past, our borrowings to pay for
it are going to be negligible.
Speaker 1 (12:37):
So you're also, I understand looking at going smaller little box.
It's not big ones, right, those are the mini or
the metro concept that's been talked about at your AGM. Yeah,
fifteen new stores, but smaller ones? Where are they going
to be? Why do that? And I suppose if I
can bombard you with questions, Yeah, what were you thinking
before you made that decision? What made you think?
Speaker 3 (12:56):
Yep, we'll go with this. We sit down periodically and
do a three year review of We sit there and go, okay, look,
what do we have to do the next year or two? Okay,
that makes perfect sense, and then three to four years
out a bit of blue sky stuff, what might be
interesting to evaluate, to experiment with, just to toy around
(13:22):
with and see whether or not of works because it
smells like a good idea. That's where this smaller unit
came from and so yes, we've got the strategic stuff
like the DC blah blah blah all the way out.
And now we look at Briscoes and Rebel Metros or Minis,
(13:42):
their little stores in little catchments and so whilst it
is you know, schedule all being well to be established
in f I twenty eight, you know, we're starting to
do a lot of the work now. What we what
we've got right now is about around about one hundred
(14:04):
stores in both brands, total brands, in every catchment that's
got twenty thousand or less permanent residents. I think our
smallest is about Taupo and they've got about twenty twenty
twenty three permanent residents. But there's a lot of other
(14:24):
spots around New Zealand where we think it would be
uneconomic to put a full line Briscoes and Rebel in there.
You know, about three thousand square meters one hundred car parks.
You know, that's that's chunky. But at the same time
(14:45):
there's there's catchments like Hamilton and Toweronga for example, in
Twong and most of our competitors's got three or four stores.
I've got one, okay, And there's development going over the
bridge at Papamha and it's going to the other side
at Bethlehem Way. So we want to experiment and see
(15:07):
whether or not it would be worthwhile either planning a
larger store later or slap in a couple of minis
right now. So that that's Taroga Hamilton for example, almost
all the shopping is done on the north side. People
don't all the people don't live on the north side.
People live on the southwest and east. So would it
(15:30):
be interesting to have a look at the store in
those catchments. Yeah, we think it'd be pretty interesting to
have a look at that. Hamilton's not a small catchment.
Speaker 1 (15:39):
So this sounds a bit more of your occupy, dominate
and defend your building a few outposts around your fortress.
Speaker 3 (15:45):
Well yeah, building a wall, perhaps not a wall, but
we're putting little forts in different spots. Live in Gore.
What now, They're probably not quite big enough for a
full life in store for us, But would it support
a smaller version of our two brands. Probably, So we're
(16:07):
going to have a look at it.
Speaker 1 (16:08):
So who are you competing with at that level? Because
I would have thought stacks of people are shopping in
those places online. They just get it comes off the courier.
That's the ship that two ships through, right.
Speaker 3 (16:18):
But how much do you miss? How much do you miss?
We record we're doing pretty well online and it's less
than twenty percent of my total volume, less than twenty
percent nineteen point seven, up from eighteen point seven last year.
And I'm near the top of the tree. I'm going
real well. So there's eighty percent not shopping there. And
I'd suggest to you that perhaps twenty percent of the
(16:41):
twenty percent are shopping because they're nowhere near it, so
they have to. So the proportions in the overall are
relatively small. Okay, that wouldn't stop someone buying if they
didn't live and live in they lived outside of it,
buying it and using it as a click and collect place.
Speaker 1 (17:02):
Who are you looking at when you're competing with because
I guess if you if you're looking at where people
shop now, it's all over the place. People might jump
on and jump on TIMU or something and get something
extremely cheap and run through and that kind of thing.
Are you worried about them? Are you worried about Ikea
who are tuning up in this country later on this year?
Speaker 3 (17:17):
Or sports Direct I think they. I think the Teamurs
and the Shines and those folks operate at a different
end of the market that I operate in. They do
meet other competitors in this country, but they don't meet me.
(17:37):
But I'm more focused on the the Costcos and the
IKEA's and other people. You mentioned sports Direct, because.
Speaker 1 (17:50):
They're looking at moving into this part of the world,
aren't they. How Normally when a competitor turns up new entrant,
they throw a lot of money around to try and
draw custom. That's got to be something you have to
chew on and show people.
Speaker 3 (18:02):
Sure, but we've got people in their stores already. I
know how they operate, I know what they sell, i
know the propositions. I've got a lot of stores, and
I've got a lot of stores right next door the
stores where they think they're going to put foot jobs.
It's fine, I've got to lift my game. People. People
will go to these places and experiment with them. I
(18:25):
want people to go there and experiment a service level
or quality of service that is lower than mine, to
have a look at a range of product it's not
even nearest significant as mine. To go into an environment
that's not as comfortable as my environments. So does that
mean I have to lift my game in some centers
and in some brands. Yeah, it's okay, I'll do it.
Speaker 1 (18:50):
Sounds like you're relishing the challenge.
Speaker 3 (18:53):
You can't avoid it, mate, It's going to happen when
you're when you're on a really really really good plot,
you're doing it well and you're exit cueuting wonderfully. There's
always someone sitting outside the bar bier a fence thinking, oh,
I wouldn't want a bit of that. I wouldn't that.
I might have a crack at that. So is he?
Is he that clever?
Speaker 1 (19:12):
Hmm?
Speaker 3 (19:13):
I have a crack. Wasn't that long ago that that
Rebel Sport Australia brought over one of their concepts called
DFS no not DFS Boating Fishing cam bcf okay, set
up eight stores, lasted eighteen months, cost him forty five million,
(19:36):
and then went back home.
Speaker 1 (19:39):
You saw that as as seeing them off from the gate.
Speaker 3 (19:41):
Digit it's fine, that's okay. Look, I'm looking at doing
the same in Australia. I want to set up a
brand or buy a brand over there and compete over there.
I want to do that.
Speaker 1 (19:57):
You've still got a lot of energy. And I guess
that comes back to the question that one of our
listeners and viewers had asked there, what keeps you going?
No sign of your stopping? I mean, is it the
love for the business generally? Is it the need to occupy, dominate,
and defend.
Speaker 3 (20:15):
Maybe some of that, maybe all of that, maybe none
of that. I don't know. I've been in the retail
business since I was sixteen. I just happened to love
the concept of buying something, selling something, buying plenty, selling plenty,
having plenty of stores, having plenty of customers. I just
happen to like the idea. I think with this business
(20:36):
over here, it is a lot of fun. You know,
it's a lot of fun building, you know, something from
pretty much nothing into an organization that's really really, really
well respected and successful. And it's hard to give away
(20:58):
something or move away from something. For me anyway, if
you gave birth to it, you know, it's hard. And look,
I can I have to tell you I'm in a really, really,
really fortunate position at the moment. I've got about three
or four really really key people who have been here
for a very long time, who are very, very, very
(21:19):
clever and I'll tell you now, I don't get down
there amongst the weeds as much as I used to, well,
because it's not my job anymore. My job is. My
job is to is the mentor, is to guide, to assist,
to encourage, to do. I step into the weeds from
time to time, absolutely, yeah, But I try to be
(21:41):
a different sort of manager these days than I was
because I'm not going to be here for a very,
very lot longer, you know. But I'm very healthy, but
I'm not going to be here a lot longer. You know,
I'm past the halfway mark. I'll concede you that, okay,
And so this is my legacy. I don't want this
(22:05):
business to fail just because I go. You know, that'd
be a slight on me. That'd be well, didn't you
didn't do your job particularly well. You didn't train these
people particularly well. You didn't encourage them enough, you didn't
set the platform for success for them. That's not what
I want to do. So look, the short answer is
I'm still having some fun. I can still play golf
(22:27):
when I want to. My body can't take the games
of golf that it used to, so so my expectation
for games out on the course a lot as high
as they used to be.
Speaker 1 (22:40):
But in here you're still very competitive.
Speaker 3 (22:42):
Look well, you know, look I'm still full on I
don't I like to win every battle. I like to
buy at the best price. I like to sell at
the best price. I like the best quality people around.
When we sit down and we look at strategically, where
we want to be, when we want to be there,
what we want to achieve it, you've got to succeed
at that. You know. There's plenty of graveyards, corporate graveyards
(23:08):
where you know, the business was good, but management just
couldn't execute on change strategies. They couldn't execute. I think
we can and we've demonstrated that. Look, in a couple
of years, we would have invested one hundred, one hundred
and twenty million dollars in a DC. It will produce
substantial sales and margin gains. It'll it'll deliver a better
(23:32):
quality service to our customers. You know, if I can
do that, and I can execute on that, and we
think we can, then that'll be another giant hurdle you
know that we've conquered, and then the runway from there,
you know, is made. You know, significantly easier.
Speaker 1 (23:51):
You're off that typewrote with the juggling torches and the
unicycle you're onto. I think it was your CFO said,
a well paved road.
Speaker 3 (23:58):
Well, we think so beyond that. But look, they will
be there'll be other potholes and there'll be other type
ropes that you've got to get on. You know, this business,
this business, you know, is always there's always change.
Speaker 1 (24:14):
You know, it's never what doesn't change constant, what doesn't change?
As you own seventy seven percent of it, Yeah, with
such a majority, what is the point of being listed?
Speaker 3 (24:25):
Well, the point in the beginning was that I could
expand this business very very quickly, and I Rebel Sport
may not have come along if we hadn't add access
to you know, to funds. You know, if you, if you,
if you, if you're listening, you're successful at it. It's
a pretty good road. You know, very shortly, within weeks,
(24:47):
we may very well be invited to go into the
inns the next top fifty top fifty companies. You know
now that that brings another different set of rewards where
you know, institutions who follow have to get on board.
Speaker 1 (25:09):
That it's a big moment for a year. If that
comes to pass.
Speaker 3 (25:11):
Well, you think back to where we were. You know,
well they've been shops doing twenty minute and losing two
million in a year. Didn't know where we wanted to be.
We're selling just rats and mice. And now it's a
very very very very different group now quite different.
Speaker 1 (25:25):
So the idea that governments just sort of reduced some
of the requirements for capital listings, made it a little
bit easier, a little bit cheaper.
Speaker 3 (25:32):
Good work here, can I think so? I think so
that Look, that's that's the government's job. The government's job
is not to not to hand out stuff everywhere and
then people get hold of it and they spend it.
They either pay it back or don't pay it back.
Government's job is to make life and business and living easier,
(25:54):
you know than it was yesterday.
Speaker 1 (25:57):
So they can go shopping.
Speaker 3 (26:00):
Shopping, well, build a road, build a bridge, you know,
get some infrastructure, just get people in work.
Speaker 1 (26:11):
So you're not expecting a lot from budget day. You're
just hoping that they try and stay out of the
way a little bit.
Speaker 3 (26:16):
Well, I think I think all of us can expect
and should expect, you know, some real thought about what
the next year or two might look like or even
beyond that and fix some of the issues. Well, we
have to tighten our belts. Look, it's like a household,
you know. If mum and dad just go crazy and
just spend spend, someone's got to pay it back. But
(26:40):
how long has that taken, how painful it will be.
We'll find out pretty soon, won't we.
Speaker 1 (26:45):
And you're so here looking for it.
Speaker 3 (26:47):
I'll be looking for it. Yes.
Speaker 1 (26:48):
Thank you, Roger, thanks for having us here at Briscoe's headquarters,
and thank you for watching and for listening, whether it's
on YouTube or iHeart or Spotify or Apple wherever you
get your podcasts, even straight off the year. He's app
Couma two. That's us for this week.
Speaker 3 (27:09):
M hmm.
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