“There are very few other businesses that have assembled a portfolio of such high quality iconic brands in one place, but we just haven’t told the story of those brands,” Matthews told Inside Retail. “At the moment, that feels like the missing ingredient.”
APG & Co also owns Saba, a 50-year-old workwear brand, and Willow, a women’s fashion brand it acquired from Australian designer Kit Willow in 2011, contentiously closed in 2016 and recently relaunched via a capsule collection in David Jones.
Matthews believes a bigger focus on brand storytelling — through marketing as well as the store format — will lead to growth in Australia and New Zealand, where APG & Co currently operates more than 200 bricks-and-mortar stores and concessions in David Jones. It also lays the groundwork to enter new markets.
“I’m a big believer in the idea that if you own iconic Australian brands, you almost have a duty to try and take them to the rest of the world,” Matthews said.
“We tend to play small in Australia. We assume that the world doesn’t want us because we are quite enamoured by the world’s brands, but our brands sell an Australian lifestyle which is massively coveted by the rest of the world, so there’s a big tailwind there for us in other markets. We just need to work out the right way to do it.”
Southern hemisphere markets like South Africa and New Zealand, where APG & Co already has a presence, are the most obvious places for international expansion due to the alignment of the seasons, but ultimately, the biggest opportunities are in the US, UK and China.
According to Matthews, Sportscraft and Jag have the greatest potential for global growth.
Focus on brands
Over the last five years, APG & Co has focused on finding efficiencies across its portfolio, and many parts of the business are run centrally across the brands. For instance, store teams all receive the same service and sales training, despite the fact that the customer base is different for each brand.
But while this approach has put APG & Co in a good position financially (it was estimated to be worth around $500 million in 2017, according to The Australian), it has also prevented the business from differentiating its individual brands as much as it could. And in today’s retail environment, that is what leads to success.
“I think brands will become more important as the online shift accelerates because that is what people engage with and search for in the digital world — more than commoditised products,” Matthews said.
Due to his previous role as CEO of Brand Collective, where he oversaw brands including Hush Puppies, Clarks and Superdry, Matthews understands how to maintain operational efficiency, while also investing in brand storytelling.
That investment in brand storytelling will play out in two arenas at APG & Co going forward: online and in stores.
“The store is still the place, more often than not, where customers get to know a brand properly. And given that we have these brand stories we want to tell, it’s still really important,” Matthews said.
Investing in digital
Like many retailers, APG & Co downsized its store network this year, so the current bricks-and-mortar business is relatively sustainable. But Matthews, who has spoken out about unfair rental agreements in the past, said he would not hesitate to review the network if landlords aren’t willing to adapt their rent to the current market.
On the other hand, if the right opportunity presents itself, Matthews would actually like to open more stores.
“Even though traffic is declining, we don’t necessarily see that as a signal that demand is declining. It’s just that people are shopping in a different way. They’re much more deliberate because they’ve done more research online,” he said. “So if anything, we’d like to open stores, but we won’t be in a hurry. We’ll do it cautiously.”
At the moment, the higher priority is updating the look and feel of the stores APG & Co already has. While they’re clean and modern, they lack the storytelling component of other iconic Australian brands like RM Williams, Matthews said.
There’s similar room for improvement when it comes to the brands’ online presence. E-commerce currently makes up a “strong percentage” of total sales, according to Matthews, but it’s mostly driven by the brands’ existing customers.
“We do an excellent job of converting the customer we already have to our online channels. The opportunity for us is to go and attract a new customer to our online channels,” Matthews said.
This will require increasing the amount of money APG & Co spends on digital customer acquisition and building up its digital marketing skills and capabilities to be more in line with that of a pureplay online retailer.
“It’s a different culture and mindset that requires different marketing and brand content and a different level of investment in digital marketing,” Matthews said.
By sharing content more effectively online, Matthews hopes to broaden the appeal of APG & Co’s brands, and in turn, drive growth.
“The big opportunity for us is in Sportscraft,” he said. “Because we haven’t been investing in the brand, our customer base has grown old with us, while our product range has actually evolved to be quite universally appealing. We’re already hearing from our retail teams that when we get the younger customer in, they’re finding plenty of things that they want to buy. But because we haven’t really told the brand story and made a significant investment in it, we’re just not getting enough of those customers through the door.”
Besides the long and unique heritage of brands like Sportscraft and Jag, product quality is another strong point of difference that is being under-communicated, according to Matthews. APG & Co has a dedicated quality team that rigorously tests fabrics in third-party labs before they’re used by any of its brands.
“We frustrate the hell out of our fabric suppliers because fabrics that pass with other prominent international brands don’t pass our testing standards,” Matthews said. “We’re constantly pushing the boundaries of fabric standards in terms of things like pilling tests and wash and shrink tests.”
While existing customers might know that clothes from Sportscraft tend to last longer than the competition, or that jeans from Jag are incredibly high quality for the price, those who haven’t shopped with the brands before might not know that.
Last year, APG & Co relaunched the Jag brand with an explicit focus on its choice of fabrics and quality construction in preparation for a move into direct-to-customer sales. Matthews said he’s been surprised by the momentum behind the brand, and sees it as an indication of what’s possible across the business.
“There’s a lot of low-hanging fruit,” Matthews said. “So you don’t necessarily need to do anything dramatic in terms of structure or the operating model, you just need to have a philosophy about the brand storytelling being clearly expressed in everything we do, from marketing to product to store fixtures and fittings.”