SuperGroup COO Susanne Given says the firm has been expanding its sourcing base to meet growth expectations

SuperGroup COO Susanne Given says the firm has been expanding its sourcing base to meet growth expectations

UK clothing retailer SuperGroup has had a somewhat buoyant year to date, with strong bottom line growth in its last three quarters, and ambitious plans to extend its international presence. To support this growth, the company has been busy re-aligning its supply chain. COO Susanne Given talks to Michelle Russell about the challenges international expansion brings and the group's position in the competitive youth apparel marketplace.

"Our manufacturing and supplier network is expanding and existing suppliers are planning for the growth we anticipate delivering over the coming five years," Given tells just-style.

Over the last 12 months, SuperGroup has been working to expand its sourcing base in a bid to better manage risk and meet growth expectations. With 79-plus suppliers now on its books, ultimately, the group believes this will support revenues, which in turn will support the firm's expansion plans, both domestically and internationally - be that owned retail channels or wholesale and franchise channels.

Supply chain re-alignment
To this effect, the company has recently completed the migration of three "ill-suited" warehouses into a new distribution centre in the Midlands, located within 30 minutes of key national and international distribution hubs.

It is also tendering its European-based wholesale warehouse operation, with a view to ensuring it has the required five-year capacity to support further growth in wholesale and franchise sales.

"We've gone through a cycle over the last couple of years where we've leveraged our volumes with our suppliers. At this stage, because we are at full capacity with those suppliers, there's only so much you can do to leverage that," Given says. 

"So we've said to the markets, we now believe we are at optimum and we know what that bench is and that's what we're going to do our best to hold.

"There are so many issues in terms of currency softening, and how that affects our manufacturers in terms of buying raw materials, so I think there is a lot going on at the minute below the negotiations, which we need to see the full effect of."

Supply challenges
With the significant growth plans SuperGroup has on its radar, the company will need it suppliers to double their capacity. This, Given says, is one of the challenges the firm is addressing.

"So far we've managed to stay with growth. But in terms of the next phase of growth we're going through, it's significant."

"However, we don't deal with volume manufacturers as such, it's just not our product, and taking a non-volume based brand and turning it into something, that's quite something to do because you're blurring the lines between different types of manufacturers."

As a result, Given says SuperGroup is in the process of appointing consultancy firm Elevate, an organisation which works with suppliers to help improve performance.

"They will do some work with our suppliers, both in terms of sustainability, and in ensuring they are compliant in the way we want them to be, but to also help them work out how to double their capacity.

"We don't want to drop what we have and move into something else. We'd like to work with our supplier base and really help them make that move."

Given says this might mean adding more suppliers to its core base. But not many more, she stresses. 

"That wouldn't be ideal but there is a jigsaw puzzle here that has to work. We're very keen to work with our suppliers and help them very integrally to increase their capacity while we still continue the sustainability work we've been doing for the last three years."

Aside from the need to increase capacity, Given suggests other supply challenges relate to flexibility and accurately forecasting the size and shape of the growth.

She adds: "Participation from different territories in terms of total volume and what type of business model, i.e. franchise versus wholesale versus owned operations, makes it an ever-changing picture.

"This requires great flexibility within the organisation as a whole, in particular in the context of the types of third party agreements you have in place, the capacity you have access to, and the infrastructure being put in place."

International ambitions
SuperGroup started out with an organic approach to growth. Over the years, Given says this has changed as the company restructured its international organisation, invested in resources and selected partners.

"Our ambition has changed and the way we go about international expansion has changed," she tells just-style. 

Last year the group revealed Europe would be its focus for growth in 2014/15. In the last 12 months it has bought out its Spanish and German distributors, and is now in negotiations for its other territories.

"We believe Europe has a huge platform for us to build on. We're seeing very strong operations supported by commercial and e-commerce, and underneath that it's a strong framework."

In July last year, CEO Julian Dunkerton told journalists: "The world is on our radar". And it certainly appears to be.

But while Europe is a large part of that ambition, Given says the retailer is also looking at its licensed partnership markets like Australia and the US, and how it can become "far more involved" with those markets.

"The challenge with licensed partners is that they don't always have the right tools and understandings. Those are some of the big pieces," she explains. 

Given also points to China, a country SuperGroup sources from. "We are looking at China to understand how and what kind of business model we would adopt there."

Yet, she adds: "While China is a fantastic opportunity, you can't race in and think it's a given. The Chinese market is evolving faster than any other economy in terms of retail. What was a great idea even five years ago is not a great idea today.

"Five years ago you'd open 3,000 stores there. Today you wouldn't do that. It's just a different market. This isn't 'quick get in there and grab loads of cash' type stuff. This is about a five-year plan and developing a grounded plan." 

But South East Asia, Given adds, SuperGroup is "looking at very seriously". 

One market the company is more reluctant to take a bite out of just yet, however, is South America. “We feel it's just a little bit early and with those markets softening quite a bit over the last 12 months … the size of the prize and the retail evolution is really very early on, so I just think that's going to rest for a while.”

Financial stability
SuperGroup's desire to expand, both at home and abroad, is only likely to be boosted by its financial performance in the year ahead. The company has been publishing some impressive figures, with third-quarter sales growing 22.1% to GBP141.1m (US$229.9m). 

Analysts have attributed the pick up in earnings momentum to the group's moves to strengthen management.

In June last year, the business appointed Hans Schmitt as its new managing director of international and wholesale, and more recently named Nicole Smith as head of merchandising.

A revamp of the firm's ranges has also helped drive wholesale sales, particularly in Europe, with womenswear now having gained real momentum.

Given is confident SuperGroup can deliver for the full year too. But what can we expect from the firm in the next 12-18 months?

"You'll see some of our biggest strategic plans take very clear shape."

For some of the big key international markets, she says SuperGroup's e-commerce and multi-channel proposition will "develop very significantly".

"You will also see our brand positioning and the overtness with which we communicate our brands step up another few levels. Our new marketing head comes from the BBC and is in the process of doing a big brand evuatlion piece and out of that will come a whole raft of new opportunities. Those things will be key."