CEO about the past year
Elisabeth Peregi, President and CEO of KappAhl, about the past fiscal year 2018/2019.
CHALLENGES BUT ALSO OPPORTUNITIES
KappAhl’s financial year 2018/2019 was characterised by tough competition in all markets and by declining footfall in our stores. We are now carrying out intensive development to adapt to the transformation of the industry in both the short and long term. The work builds further on our strengths – our own design and our own sales channels.
Since I started at KappAhl in April we in the management team have developed a strategy based on five goal images for where KappAhl needs to be in 2022 to be successful. We will carry out many activities to achieve the goals and they will mean major changes in our internal organisation. Because while the fashion industry is developing and becoming more sustainable, another major change in how consumers shop for clothes is taking place with the growth of eCommerce. For us specifically this means a decline in store footfall and sharper competition. Our customer groups now have access to a greater selection than ever and another offer is never more than a click away. This means that we must work harder on the customer value proposition and ensure we are relevant and accessible to our customer groups. In increasingly tough competition this has even greater significance. At the same time we must ensure that it is simple and desirable to shop with us. Both components are necessary for success.
PERFORMANCE ENHANCEMENT PROGRAMME
To meet the short-term challenges and to create resources for the changes we need to make in the longer term, during the year we initiated a programme to boost profit by SEK 150 million. The programme focuses largely on adapting our store rents and store areas to today’s visitor levels, together with continued review of other overheads and organisation.
GREAT FOCUS ON SUSTAINABILITY
Sustainability is important to us. During the year we have continued to develop our ambitious sustainability work in the context of our sustainability strategy Responsible Fashion. We have achieved some targets; such as collecting 250 tonnes of textiles in our stores and from the autumn manufacturing all our denim from more sustainable material, using processes that require considerably less water, energy and chemicals. We have also added new targets for climate, packaging and suppliers and together with other Swedish fashion companies in the Swedish Textile Initiative for Climate Action (STICA) we have undertaken to reduce our climate impact in line with the Paris Agreement and the 1.5 degree goal. Our ambition is to create a brand and a business model that is sustainable and does not harm humans or the environment. This is a sucient incentive in itself, but we also see that it benefits our business, not least since the fashion industry’s use of resources is more and more central in the unease felt by may people concerning their consumption. Our customers can trust that we are doing the job for them and feel confident that we take full responsibility for our operations and our products. That way it becomes more secure to shop at KappAhl.
BUILD ON OUR STRENGTHS
One of KappAhl’s great strengths is that we design and create our own products. This is a great asset for our market position, not least in purely financial terms. In our new strategy, described in our five goal images (pages 6–9), we make changes intended to give us the greatest benefit from our company’s great design skills. Since we know from customer surveys that we succeed best if we design for a more defined customer group, we will allow several independent brands to emerge within KappAhl. With more defined customer groups it is also easier to transform insights about our customers into measures that make us more relevant. And with shorter lead times from idea to garments hanging in stores we further improve our success potential. Another great strength is that we own our channels and thus the customer meeting. This means that everything is in our own hands when we want to make it simpler and more desirable for our customers to shop with us. In our new strategy we will work to optimise the customer meeting in all our channels and to let our customers’ behaviour and wishes dictate how and where we meet them. A good example of how we have already started to optimise is the KappAhl Kids store that we opened in Stockholm in February. With greater flexibility in our store portfolio, when we find the right store location, we can easily choose which concept is most relevant just there.
” Our ability to understand our customers is the key to our success.” Elisabeth Peregi, President and Chief Executive Officer
The targets we have set up extend to 2022, but the principles behind them are timeless and will continue to be the key to success even further into the future. It is a matter of showing genuine interest in our customers so that we can create an offer that is relevant, of being accessible and of being effective in our internal processes. Now in the autumn KappAhl will be a wholly owned company within Mellby Gård and I am looking forward to developing KappAhl further in that constellation. We are facing challenges but also great opportunities. If we focus on the right things we will get the job done and succeed in our ambition to be our customers’ first choice.
Elisabeth Peregi, President and Chief Executive Officer
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