The brilliant idea that saved The Reject Shop
Last year, The Reject Shop’s 2017 financial year report revealed a net profit crash of 27.8 per cent, leaving the discount retailer in serious strife.
According to the chain’s managing director Ross Sudano, it was all down to a simple mistake – failing to take advantage of the appeal of its branded products by placing them instore, rather than in prime display positions at the shop’s entrance.
Now, after implementing a new strategy to turn its performance around, The Reject Shop is experiencing a huge surge in popularity.
In its first-half profit report, the retailer revealed a profit of $17.7 million, up 1.1 per cent from the same period the previous year, with comparable sales up 0.4 per cent. As a result, its share price has soared by up to 13 per cent from the day before the profit report was released.
Ross Sudano told the ASX in a statement the jump in sales was thanks to a “raft of significant changes”, including its new merchandising strategy.
“These include realigning our product mix towards key everyday items and branded products, and reducing the frequency of promotional variety by focusing on high-impact events,” he said.
“Most importantly, our customers have come back to The Reject Shop as they have positively responded to the increased availability of key everyday items such as laundry powder, tissues, dishwashing tablets and bulk coat hangers, as well as branded products.”
Though the profit increase is relatively small, and despite forecasting a net loss of $200,000 to $1.2 million for the second half of the year, Sudano said the expected full-year profit of $16.5 million to $17.5 million would represent a “significant turnaround” on its $12.3 million profit in 2017.
“Sustainable sales growth will be driven by increased transactions over time,” he said. “The strategies we are implementing to achieve this include changes to the way we build ranges, and improvements to the categories that have lacked the right product balance. We are also simplifying in-store activity for both customers and store teams.”
Tell us in the comments below, have you noticed any changes at your local Reject Shop?