Comment:Topps annual results saw sales growth of 0.1%.
Despite modest sales headlines, Topps Tiles has posted a more optimistic story which shows that its longer-term strategy gain profitable market share, ready to capitalise on growth once the housing market and consumer confidence picks up is still on track. By Liz Faulkner.
Over the reported period, initiatives to provide an inspirational shopping experience, improve multichannel convenience and to deliver an unrivalled product range, helped bolster Topps Tiles’ market share, while adjusted pre-tax profit rose to £13m from £12.8m. Moreover, Topps Tiles announced that for the first eight weeks of its new financial year, LFL sales grew by 7.4%. While, as management stated, it is ‘too early’ to confirm this as a ‘sustained trend’, such growth does suggest Topps Tiles is indeed well positioned to exploit upticks in demand.
In order to create a more inspiring environment, Topps Tiles is upgrading its store estate. The new concept store at Milton Keynes is serving as a flagship from which to roll out initiatives like the ‘Inspiration Centre’, where decoration ideas can be brought to life via mood boards, and the ‘Tile Visualiser’, a virtual home mock-up tool. Such measures are designed to increase conversion rates and promote larger basket sizes and up trading, while also adding to customer satisfaction – a result validated by rising NPSs (Net Promoter Scores).
Topps Tiles does recognise the trade is a core part of its audience base (45% of total sales) and even utilises trade connections to facilitate fitter services – a smart move given the growing trend of choosing Do-if-for-you services over DIY. However, Topps Tiles must be careful not to alienate its traditional, harder, customer base with soft store set-ups. Continuing to deliver quality, service and well-stocked ranges will help combat such concerns.
Topps Tiles also faces tough competition, not only from incumbents like B&Q and Tile Giant, but new entrants too. Tile Mountain has impressive clout behind it, having been founded by tile-industry leaders Mo Iqbal, Jeremy Harris and Nick Ounstead, and is looking to capture the gap in an underdeveloped online market with low prices, high quality and convenience (Tile Mountain offers free tile sample within 24 hours). Against such a threat, Topps Tiles’ instore interaction, SKUs and helpful service increasingly needs to set a compelling point of differentiation to protect its hard-earned market share. Topps Tiles should be mindful of this when employing cost cutting initiatives.
Despite meek headlines, Topps Tiles’ performance over the past year holds promise for future growth. However, it must be responsive to increasing competition and varying demands of its diverse customer base.
Liz Faulkner is retail consultant at Conlumino
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