TITLE PAGE

Unit Code: FBL5020

Unit Name: Marketing Leadership

Name of Lecturer/Tutor: Dr Saleem Sadeque

Title of the Report : Assessment 2 – Best&Less Group

Student Name :Mona A PANDURANGAN - 10555573

Student ID :10555573

Due Date: Saturday, 14 May 022 @23:45 AWST

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 EXECUTIVE SUMMARY

Best&Less Group is well established since 1965 and trusted consumer brands with
strong product design, planning and sourcing capabilities in the clothing retailing
across Australia and New Zealand. Best&Less Group Holding, listed in ASX recently,
raises approximately $60 million through the allotment of 28.3 million shares at $2.16
per share. With a great financial strength, Best&Less spreads its physical
infrastructure network, coupled with its sizable investment into various e-commerce
and customer relationship systems to cater its customers to provide significant
volumes of products at a value price point, which can be difficult to achieve for most
start-up operators. Best&Less Group with 245 physical stores and online platform
known as a leader for babies and kids’ apparel with a high valued products at great
prices and their brands are well recognised by Australian families. Women/mums are
the primary loyal customers as other secondary customers are increasingly shopping
through online platform over the years. Best&Less Group has a strong engagements
with mums through its loyalty programs, virtual activities/celebrations, on trends
fashion and high quality products at significantly low prices. Their business strategy
was restructured based on customer preferences, new technologies and innovation,
economic condition, population demographics and pandemic threats to sustain their
position in fashion industry. Their revenue is expected to increase from $625.0
million to $657.7 million, a 5.2% growth due to improved product mix. The
penetration of omnichannel and online platform via advanced innovation and
technology investments exhibiting savvy shopping behaviours and a preference for
value attracted millennials over the years. This strategy has improved Best&Less
sustainability and revenues during the Covid-19 pandemic. Best&Less Group
strength in customer service, brands selection, online platform management and
engagements in social media contributes to a strong customer base and business
sustainability. Best&Less Group strategy growth has been developed based on the
current market demand and external factors with a great consistency and
commitment from the management team. On the other hand, key competitors like K-
Mart, Cotton On, Amazon, other international departmental and online stores
becoming more digital savvy with higher competitive advantage could be a threaten
to Best&Less to sustain in Australian market. To maintain the market position in the
industry, Best&Less Group has implemented several initiatives including improving
product and pricing mix, reducing total stock levels, technology advancement and
leveraging on expansion to sustain their brands recognition and market positioning.

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Page Break

TABLE OF CONTENTS

Company Overview ................................................................................................ 4

Situational Factor Analysis .................................................................................... .5
Customer ................................................................................................................ 5
Organisation.................................................................................................,……….6
Current Competencies ...................................................................................6
Current Deficiencies ................................................................................7
Market .........................................................................................................8
Sociocultural trends...........................................................................................
Economic Environment.....................................................................................
Technological Environment.......................................................................... 11
Key Competitors ....................................................................................... 12

Product...................................................................................................................11
SWOT Matrix........................................................................................................ 12
Conclusion ........................................................................................................... 12
References........................................................................................................... 13

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COMPANY OVERVIEW
The Best&Less Group founded by Berel Ginges in May 1965 at Parramatta and
grown across Australia and New Zealand, with a profitable 245 physical store and
online platform with 4000 employees. The business operates across two brands:
Best&Less in Australia and Postie in New Zealand, focus on retailing baby and kids’
apparel with an extensive range of good quality brands at a great value for families.
Their vision is to be the “Number One” choice for mothers buying baby and kids’
apparel at an affordable price.

Almost 86% of their brands are designed in-house, sourced directly from
manufacturers, distributed via supply chain, and sold exclusively in line with “twice
the quality at half the price”. The company provides its target customers with
everyday low prices, a high valued customer service and a convenient shopping
experience, supported by accessible stores and high levels of availability of daily
basics and on trend products.

Best&Less emphasising on social, environmental and community. Best&Less is a

trusted brand in Australia, including a top 10 position in a recent KPMG Customer
Experience Excellence Report in trustworthiness and a finalist in four categories at
the 2020 ORIA awards, including Best Multi-channel Retailer, Social Commerce
Initiative and Best Online Retail Marketing. Besides, Best & Less active in local
community, including long-standing relationship with Drought Angels, Good 360 and
The Smith Family.

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SITUATIONAL FACTOR ANALYSIS (COMP)

CUSTOMER (C)
As a great leader in baby and kids’ apparel, Best&Less are offering twice the quality
at half the price with an extensive range of stores physically, online platform and
omnichannel to be a customer-centric establishment. Based on Prospectus-BLG
(2021), 50% of customers like the store for babywear. In the midst of fierce
competition, customer experience, and client acquisition may assist urban merchants
improve their customers' trust, increase their customer base, and differentiate their
brand. (S.Gupta & D. Ramachandran, 2021).

The primary target customers are value conscious women/mothers between 18 – 55

with children under 17 across Australia and New Zealand. The highest target group
is kids, under 17 years as they have over 4000 items on this category, followed by
women and baby apparels (2000 over items each). As their core targets are families,
they have included home and lifestyle category too, became one stop shopping hub
for Australian households.

Categories of women and men clothing, footwear and accessories are forecasted to
grow to A$27.8 billion by 2024, and this will be a great opportunity to shift their focus
on different target customers. (Prospectus-BLG,2021). The business model with
“halo” concept proves their transformations on target customers from mums with
baby and toddlers into adult women and men.

According to Prospectus-BLG (2021), its loyalty program has 1.5 million members
while on the other hand its social media engagement has 188k Instagram and 291k
Facebook followers. Strong engagement with their existing primary customers
influences a long-term relationship. The company must continually monitor changes
their competitive environment that may alter the behaviour of the core customer.
(HBR, 2014). Prospectus-BLG (2021) mentioned that primary customers are moving
to other adjacent departments and showing interest on omnichannel “Click and
Collect” and online purchasing. Loyal mums find Best&Less as a favourable
shopping hub for the dads as well.

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ORGANIZATION (O)
CURRENT COMPETENCIES
Differentiated Customer Value Proposition
Best&Less brand has a long-standing trusted customer relationship with multiple
generations of mothers shopping for their babies and toddlers. More customer
touchpoints define their value offering, including more than 22.6M transactions,
38.3M online sessions, and 91.6M products sold in 2020, a significant opportunity to
convert these consumer contacts further into revenue. Best&Less business model
that centred on maintaining and growing its strength in its core products categories
which creates a “halo” with other categories. (Figure 1: The ‘Halo Effect’). An
extensive range of products with best price points, strategic location with large
networks of bricks and mortar stores and social media influence promising a high
valued proposition to customers.

Enhanced Customer Experience and Loyalty

Best&Less customers in the infant category are distinguished by high degrees of

loyalty, greater time limitations, value consciousness, and a higher sensitivity to
qualitative characteristics including quality standards and compliance regulated by
the ACCC and state-based Fair-Trading departments. (Best&Less Annual Report,
2021). Impactful boost of customer loyalty through loyalty programs, social media
engagement and online platform improve the growth of the company during this
pandemic. (Figure 2). Friends Club benefits such as birthday vouchers, exclusive
deals, monthly lucky draws, and latest promotions/events inspire customer loyalty.
Customers who change their minds about acquiring products or return faulty
products get 100 days for doing so.

Figure 1: The ‘Halo Effect’ Figure 2: Best&Less Historical Revenue,

2019 - 2021 (millions)

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Omnichannel and Online Sales Transformation
Classical brick-and-mortar stores offer the uniqueness of consumers’ being able to
touch products with immediate satisfaction; however, online channels can lure with
more information, price comparisons, and user-generated content such as ratings
and reviews. (Aubrey & Judge, 2012). Best&Less strategized its distributions into
next level, omnichannel platform which promises the best convenience and cost
effective for target customers, just “click and collect’. Individualised customer
experience could be notified through this platform.

Financial Strength

Finance decisions assist corporates to decide when, where, and how to acquire
capacity to fulfil the firm's investment needs. (Zhao Bei & W.P. Wijewardana, 2012).
Investing on large scale of physical stores nationwide, with high end of technologies
such as online catalogues and product specifications requires strong financial
support. Best&Less has been listed on the ASX:BST in July 2021 at a share price of
$2.16, giving it a market capitalisation of $271m which increase its financial
strength for future extensive growth. (Best&Less Annual Report, 2021)

Excellent Employees Benefits

The Company conducts a regular review of high-performing talent within the

organisation, with senior managers throughout the organization placing individual
development plans in place for team members. They provide on-going training and
implement focus on health and safety of the team members. According to
Prospectus -BLG (2021), they provide best employee benefits; short-term, long-term
and termination benefits, dividends and shares earnings. Extrinsic motivation
includes monetary rewards like salary hikes, bonuses and promotions whereas
intrinsic motivation involves non-monetary rewards like verbal recognition and
acknowledgement from their superiors. (Victor & Hoole, 2017).

Committed to Sustainability

Due to Covid-19, Australians' spending habits have changed. They spend less on
discretionary items (such as leisure, entertainment, cafés, and personal care) and
are more willing to purchase items that promote sustainability and the local
economy. (JP Morgan, 2019). The Environmental, Social and Governance (ESG)
committee active in sustainability. They implemented Sustainable Packaging
Guidelines and aiming for all packaging re-usable, recyclable and compostable by
2025 as an effort for sustainability. Ethical sourcing policies together with
entrepreneurial spirit driven in the team contributing to the success of this company
too. Through Good360, the corporation also funded 173 organisations, while
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collaborating with the non-profit Drought Angels to help rural communities.
(Best&Less Annual Report, 2021)

CURRENT DEFICIENCIES

Bad Reviews on social media

Poor customer reviews on social media and product review platforms are beyond the
company's control. According to productreview.com.au, the online store had a rating
of 1.7 out of 5.0, while physical stores received a rating of 2.4 out of 5.0. Negative
feedbacks from dissatisfied consumers harmed the future strategy's reputation.
Customer complaints on Best&Less products' quality, customer service, shipping,
limited supply, return policies, and brand dissatisfaction are significant flaws that
must be addressed by the company.

Pathetic Customer Service/aftersales service

Customers have reported about unhelpful employees, a limited variety of products,

items that were tough to locate, and a complicated store layout. Poor ratings for
return claims and after-sales care indicate that the company must walk the talk.
There is also variance in customer service between physical locations, which can be
attributed to non-standard floor assistance training and inadequate employee
engagement.

Poor online platform Management

Best&Less has limited stocks, in term of brands, sizes and colours creating poor
experiences for their customers and might moving towards other online competitor
like Amazon. As stated on their Annual Report 2021, a bigger investment allocated
on technological advancements to compete in current market demand proved the
online platform need critical betterment. Features, technical factors and management
of online business are the serious deficiency in the company.

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Weak customers engagement

Best&Less has a long-standing relationship with customers but it seems they lack in
community campaigns and events that could bring higher traffic in their social media
and online platform. Friends club need a better loyalty programs and engagement of
existing customers.

Limited brands and choices

Product branding that depends on their suppliers like China and Bangladesh lack of
new trends, need a critical change over. They also depend on brands that licensed
under third parties. There is unsatisfaction among consumers who claimed
Best&Less out of fashion, offering low prices due to old brands and lack of choices.

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MARKET (M)

Based on financial report ended 27 June 2021, Best&Less Group total sales was
$576.1 million, gross profit of $279.3 million, statutory net profit after tax (NPAT) of
$81.2 million and net cash of $35.7 million.

ANZSIC (2021) stated that pricing, spending power, consumer sentiment, new
trends, brand status, and weather conditions all influence demand for products in the
Australian clothing retail market while profit margins in the business have declined
over the last five years as a result of increased competition and COVID-19 trading
limitations.

SOCIOCULTURAL TRENDS
Women/mums in Australia with new-borns and children under 17 are the primary
target market. According to AIFS (2019), while total fertility rebounded in the early
decades of millennium following a gradual fall in the 1990s, there have been recent
decreasing patterns and in 2019, new moms aged 30 to 34 outnumbered other age
groups (51%). This cohort of mothers is digitally savvy, with an increased interest in
online quick shopping.

Because of the Covid-19 outbreak, shopping habits have shifted to the internet
realm, and many physical stores have shuttered. Customer who are not digital savvy
experienced difficulties and lack of confidence on their online purchasing. Australians
are more concern on social, environmental and standards of compliance since the
Covid-19 outbreak. Additionally, border restrictions affecting migration that
contributes to building Australia’s long term productive capacity in economic, social
and cultural development. (APH Committee,2020)

ECONOMIC ENVIRONMENT
Uncertain economic conditions driving consumers towards value offerings, driving a
larger division between the value and premium segments of the market. Economic
conditions such as incline on interest rates and inflation rates impact the market's
sustainability of business. Reserve Bank of Australia has raised cash rate by 25 bps
to 0.35% this May 2022, tough for families and small businesses, as increased
mortgage and debt repayments. Inflation significantly inclined over the years, from
3.7% to 5.1 % broadened firms’ pressure and the cost added to consumer prices.
(RBA, 2022)

The Australian Government’s support package for affected workers, businesses and
the broader community via JobKeeper and JobSeeker payment schemes during

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Covid-19 contributing to spending power. (Prospectus-BLG, 2021). The political
crisis between Australia and China may have an impact on the supply chain of local
shops, since Best&Less sources 73% of its items overseas, mostly from China,
Bangladesh, and India. Government restrictions and regulations that encourage
overseas departments to grow locally will cause discrepancy in local businesses.

TECHNOLOGICAL ENVIRONMENT
Social media platforms allowed Best&Less to directly communicate with customers
on new products and has improved womenswear offering. Trained customer service
staff substituted with E-catalogue and information pages to provide specifications on
the product.

In 2021, Best&Less online traffic is climbed by 23%, with conversion rates increasing
from 2.33 % to 2.74 %. (Prospectus-BLG, 2021). Many traditional businesses benefit
from the availability of technological advancements such as fast internet access and
innovative applications, which enable them to increase revenues through an online
platform. (e-book)

In their Prospectus Report 2021, implementing and maintaining an online platform

was complex and costly, and it required rapid technical improvements to compete
with other major competitors and satisfying customers beyond their expectations.

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 KEY COMPETITORS
Best&Less competitors are clothing retailers and departmental stores, primarily on
baby and kids’ apparels. Consumer-to-consumer websites such as eBay and
independent online businesses also pose a threat to their revenue. Because of the
tremendous rise of online retailers in recent years, the company must focus heavily
on new investment while expanding their physical stores to sustain their market
position.

RETAILER
BEST&LESS KMART COTTON ON ICONIC

Product

PRODUCT Baby, kids, Clothing, Toys, Kids, women and Clothing, shoes,
women and men household items, men apparels sportswear &
RANGE
apparels shoes, bags beauty
245 physical Large network with 667 physical stores, 100% online
DISTRIBUTION stores, online & online platform & platform
strong expansion
omnichannel omnichannel

Twice the quality All range prices,

Middle to low High end to
PRICING at half the price range groups medium range
branded & non
(low to medium) branded

Social media, Social media, Social media,

PROMOTION/ TV ads, social Google ads, Email
Google ads, Google ads, Email
MARKETING media, catalogue campaigns campaigns
Friends Club

MARKET Mums, baby, Extensive range of

women & men,
toddlers under 17, departmental women & men
SEGMENT women & men products demand
kids

Leader for babies Leader for babies Well known for Well known for
BRAND & kids apparels, & kids apparels, adult fashion branded
RECOGNITION value for price value for price apparels collection

PRODUCT (P)

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In Best&Less, there are over 20 000 high quality products with variety of styles,
sizes, brands, colours and materials available in both physical stores and online to
be purchased at value price point. Their core products are: -

 Baby apparels (0 – 36 months)

Fashion, seasonal, at home, pyjamas, gift and new-born are the common
collections
 Kids apparels (size 1 -16)
All types of boys and girls clothing, including swim wear, pyjamas, outfits and
collections
 Womenswear (size 8 – 26)
All types of women clothing including maternity, sleepwear and scarves
 Menswear (sixe xs – xxxl/ 30 – 42)
All types of men clothing including office wear, casual wear and swim wear
 Footwear (200 over styles) for all gender, with different sizes
 Fab Fleece (900 over styles) winter clothing for all categories
 NRL/AFL – Sports gear
AFL Supporter Gear, Football Socks, Motor Racing, NRL Supporter Gear,
State Of Origin Supporter Gear
 Underwear for all gender, with different sizes
 School Wear including uniforms, shoes, jackets, jumpers and accessories
 Home & Lifestyle
Beauty ,gifts, home accessories, towels and hankies
 Accessories (all categories)
Watch, bag, gloves, hats, beanies, sunglasses and many items

Best&Less operates all the above categories through hybrid method; physical stores,
online stores and omnichannel that includes ‘Click & Collect” services. Both stores
provide a diverse product selection that reflects personal style preferences, size, and
fit, and a functional solution that meets current demand. Besides own brands such
as Breakers, Broncos,Coco Melon, Miss Mango and etc, Best&Less also has a
licensed products such as Disney, Bonds, Tradie, NRL, AFL, and Bad Boys. New
arrivals with latest trends, clearance stocks at very low price while seasonal product
‘Fab Fleece’, a Winter clothing are available to serve the market demand.

SWOT MATRIX

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 STRENGTH WEAKNESS
 Differentiated customer value proposition  Bad customer reviews on Social Media
 Enhanced customer experience and loyalty platforms
 Omnichannel and Online market penetration  Pathetic customer service on delivering
 Great financial strength for future innovation standard aftersales services
and expansion  Poor online platform management that
 Excellent employees benefit to keep high needs improvements for market
engagement team penetration
 Community social responsibility through  Weak customers engagement – less
sustainability commitment and ethical focus on primary data
resourcing.  Limited brands and choices – dependable
 Wide geographical coverage across Australia on Asian countries
 Good reputation – brand recognition on baby  Lack of advertisement on media and
and kids’ fashion social media
 Quality products for best value costs  Poor maintenance of delivery and return
 100 days return policies improves claims – walk the talk
customers perception on the company
 Listed company on ASX-shares

OPPORTUNITIES THREATS
 E-commerce business expansion globally  Expansion of departmental stores with
 Technological advancements for upgrading competitive prices and selections
innovation and achieving growth strategy  Covid-19 outbreak impact on industry
 Covid-19 outbreak causes key competitors revenue overall – restrictions and limited
closing business giving additional market share spending power
in the industry  Revenue outsourced mainly for
 Market positioning alteration due to current sustainable after pandemic recovery
trends via social media and loyalty program  Consumer-to-consumer websites
 Room for improvement on future strategy based such as eBay and independent
on changed consumer behaviour during the online businesses
economic downturn  Political crisis between Australia and
 Financial strength good for physical stores China
expansion nationwide and internationally  Economic condition- higher interest rates
and inflation
 Lack benefits from immigrants due to
border restrictions

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CONCLUSION

Best&Less Group, a leading fashion retailer in Australia currently maintain its strong
position in the industry. Over the years, the company has investing into the e-
commerce channel and the loyalty programs, re-starting stalled sourcing, supply
chain and traffic conversion initiatives and adding resource to support the baby, kids
and women’s categories and leverages industry tailwinds, for long-standing gains in
market share and material EBITDA growth. Despite the fierce competition,
Best&Less Group successfully improves its financial strength and remain focused on
increasing the business sustainability as well maintain its market positioning.
Best&Less strength in customer loyalty and trusted brand for families supporting its
position. The company should focus on customer behaviour and value the customer
expectations to provide an outstanding commitment on customer services, giving
quality brands that value for money and understanding the need of their customers.
Best&Less need to continuously work on their growth strategy, investing on
innovations and serving the community to stay on the business as the competition
accelerated over the years.

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REFERENCES

Aubrey, C. and Judge, D. (2012). Re-imagine retail: Why store innovation is key to a brand's
growth in the ‘new normal’, digitally-connected and transparent world. Journal of Brand
Strategy, 1 (1), 31- 39.

Best&Less Group Annual Report (2021),

Best&Less Group Prospectus (2021)

Harvard Business School, HBR, (2014),

Choosing the right customer

https://hbr.org › 2014/03 › choosing-the-right-customer

Shaphali Gupta, Divya Ramachandran, (2021)Emerging Market Retail: Transitioning from a

Product-Centric to a Customer-Centric Approach Journal of Retailing,Volume 97,

Issue 4,Pages 597-620,ISSN 0022-4359, https://doi.org/10.1016/j.jretai.2021.01.008.

Zhao Bei, W.P. Wijewardana, (2012), Financial leverage, firm growth and financial strength

in the listed companies in Sri Lanka, Procedia - Social and Behavioral

Sciences,Volume 40,Pages 709-715, https://doi.org/10.1016/j.sbspro.2012.03.253.

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