Вы находитесь на странице: 1из 31

P a g e | 1

APMG8119 Vipin Kumar 1414046

Company Business Model Analysis
Briscoe Group Ltd

Vipin Kumar
APMG 8119: Digital Enterprise
Post Graduate Diploma in Business Enterprise

Professor: Dr. Robert Davis

P a g e | 2

APMG8119 Vipin Kumar 1414046
Retail industry is a very important aspect of modern world and is happening both offline and
online. In order to fulfill our necessities and luxuries, the existence of a well-structured retail
industry is a must. Retail industry has faced innovative ideas in last century and has seen many
forms with each idea. Chaotic markets, single brand outlets, multi brand outlets, shopping
centers, huge malls, and interactive home shopping are forms that retail industry has seen in the
last century. In a highly competitive retail industry which operates on very small margins, there
is no scope of errors for retailers. Customer experience has become the key to successful retail
operations. It is interesting to understand the different business models retailers use and how
they have been shaped over the years.
This report studies the business model of Briscoe Group (BG), a prominent retail organization in
New Zealand. BG facilitates retail for homewares and sports related goods. Company operates in
both marketplace and marketspace, hence; possess the necessary tools to stay competitive.
Original company was founded more than 150 years ago in England. Fortunes smiled on BG
New Zealands operations after Rod Duke took over as managing director in 1988. BG holds a
strong position in the market today with 48Homeware and 32 Rebel Sports outlets. BG operates
under three nameplates in New Zealand market and they are Briscoes Homeware, Living &
Giving and Rebel Sports. BG has dedicated Ecommerce websites for all three nameplates.
The study looks into companys structure, value proposition and value creation to understand the
business model. BGs engagement in aggressive promotions and value capture strategies have
paid well and resulted in huge cash reserves for the firm. Report identifies implications to the
current value proposition of the company and they are:
Regional Dominance
Cross Selling and Alliances
Improvement in consumers web Experience.

P a g e | 3

APMG8119 Vipin Kumar 1414046
1 Cover Page 01
2 Execut i ve Summary 02
3 Tabl e of Cont ent s 03
4 Company Background 04
4. 1 I nt r oduct i on 04
4. 2 Pr oduct s and Ser vi ces 05
4. 2 I ndus t r y 06
4. 4 St akehol der s 07
5 Bus i nes s Model 11
5. 1 Code of Conduct 12
5. 2 Obj ect i ves 12
6 Revenue Anal ys i s Chart 13
6. 1 Oper at i onal Act i vi t i es 14
6. 2 Non- Oper at i onal Act i vi t i es 16
7 Cos t Anal ys i s Chart 17
8 Val ue Creat i on Anal ys i s 20
8. 1 I nt er nal & Ext er nal Per s pect i ve 20
8. 2 I mpl i cat i ons 22
9 Concl us i on 24
10 Ref erences 25
10 Appendi x 27

P a g e | 4

APMG8119 Vipin Kumar 1414046
4. Business Background
4.1 Company introduction:
Briscoe Group Limited (BG) features among the biggest retail companies on New Zealand. BG
has its headquarters based in Auckland; New Zealand. Its product range constitutes clothing,
equipment and accessories for household, outdoors and sports purposes.
BG is not only one of the major players in Homewares and sports equipment retail, but also is
one of the oldest businesses across world that is still functioning. What is known as Briscoe
Group today was established in Wolver Hampton, England in 1781. British Empire dominance
presented flourishing business opportunities and soon business expanded into British colonies
including New Zealand and Australia. William Briscoe and son opened the first warehouse and
an established a store in 1862. From 1973 to 1990 the New Zealand and Australian operations of
the company changed hands from Merbank Corporation, Hagemeyer and RA Duke Trust. Rod
Duke established trust under the name of RA duke is the majority shareholder with 78.47% stake
in the company (Annual report, 2013).
During the time from 1973 to 1988, BG faced multitude of troubles because of changing
management, business transformation and continuous losses. Rod Duke gained control of the
company as managing director of the company in 1988 and finally bought it in 1990 via his trust.
Company negotiated a franchise agreement with as Australian sports company, Rebel Sports for
New Zealand operations. Company opened Rebel stores across New Zealand and by 2001 had
established, 28 Homeware and 11 Rebel Sports stores. BG saw a phase of rapid expansion and
by 2006 had established 48 Homeware and 27 Rebel sports stores. In 2006 company acquired 9
stores from Living and Ginving. By 2008 company had established 57 Homeware and 32 Sports
goods stores. BG reduced the number of Homeware stores to 48 in 2013 and continues to operate
with 32 Sports goods stores (History, n,d,).
BG has its product range divided into three subsidiaries: Briscoes Homeware, Living & giving
and Rebel Sports. Group has its presence across New Zealand via 41 Briscoes Homeware stores,
32 sports good stores and 7 Living & Giving stores located in Hamilton, Northland, Auckland,
Waikato, central North Island, East coast, Wellington, Upper south Island, Christchurch and
Otago. BG has also consolidated its presence in terms in Marketspace and has fully functional
P a g e | 5

APMG8119 Vipin Kumar 1414046
Ecommerce websites for all three subsidiaries. The group continues to hold a strong position in
terms on constantly increasing sales revenue and clocked 452,702,000 in fiscal year 2012-13, an
increase of 3.35 % to previous financial year (Annual Report, 2013).
Table 1: Briscoe Group Sales Trending
Financial year 2012-13 2011-12 2010-11 2009-10 2008-09
Sales Revenue 452,702 438,037 419,294 416,686 388,467
GP Margin 40.00% 39.50% 39.80% 39.90% 38.60%
EBIT 40,970 36,666 32,755 30,118 15,113
NPAT 30,468 27,529 21,612 21,026 11,634
Cash Flow from Operating Activities 31,406 42,030 45,264 14,910 28,099
*in $000 Source: Annual Report (2013)
BG provides financial support to Cure Kids. Cure Kids is an agency that supports medical
researchers across the globe dedicated in finding the cures to diseases. Cure kids has invested
close to USD 32 million by 2012 and BG has raised more than 2 million for the charity
organization (Cure kids, n.d.)
4.2 Product and Services
BG facilitates retailing for a huge selection of products under three name plates: Briscoes
Homeware, Rebel Sports and Living & Giving.
Briscoes Home ware offers selection in various categories such as bed & bath, Electrical,
Kitchen, dining & entertainment, Cleaning & Laundry, Bags & Luggage, Decorating &
Accessories, Outdoor Living, Furniture & Storage. Store offers selection form various brands
such as Brabantia, Breville, Churchill, Classic Living, Cloud 9, Cloud 9 Optima, DeLonghi,
Design Plus, Essential Collection, Fieldcrest, Galaxy, Goldair, Habitat, Hampton & Mason,
Jamie Oliver, Kas, Kenwood, Maxwell & Williams, Philips, Playboy, Prestige, Remington,
Royal Doulton, Russell Hobbs, Scanpan, Sunbeam, Table fair, Tefal, Urban, and Zip. Company
has a dedicated Ecommerce website apart from 41 stores that serve to the needs of the customers
(Briscoes Homeware, n.d.). Living & Giving offers similar but less diverse selection in the
P a g e | 6

APMG8119 Vipin Kumar 1414046
Homeware range. BG has a different website for the name plate and product selection offered in
the nameplate (Living & giving, n.d.)
Sports Goods:
BG offers a variety of sports gear related to majority of sports and games under the nameplate of
Rebel Sports. Selection available is categorized under Clothing, Foot ware, Sports Gear, Exercise
& fitness, Camping & Fishing, Games & Accessories, Swimming and water sports. Various
brands that are associated with Rebel Sports are ADIDAS, ASICS, AVIA, CASIO, CCC,
sports, n.d.).
4.3 Industry:
The era of exponential growth in retail industry has gone and retailers constantly contemplate
operational efficiency to gain competitive advantage. Retail Industry is being driven via online
expansion, operational restructuring, promotional planning, cost control tactics, people
development and inventory management (Retail market, 2013). Businesses operate in a highly
competitive and challenging environment. Value proposition in highly competitive retail
environment is closely associated with product choice availability and customer experience.
Abundance of retail outlets and diminished profit margins in New Zealand clearly reflect that it
is a mature industry. The following chart shows that the profit margin for retail industry has
come down to 3 % from 6.3 % in 2003 (Retail market, 2013).

P a g e | 7

APMG8119 Vipin Kumar 1414046
Figure 1: NZ Retails Profit/Revenue Ratio trending

Source: Retail market (2013)

Retail industry has an intense competition in the market. The presence of stores in New Zealand
market is evenly poised with the population concentration and the following table outlines the
kind of competition BG faces in the retail environment across the country.
Table 2: Category Wise Store Competition
Store Type Number of Stores
Department Stores 284
Footwear Retailing 601
Other Personal Accessory Retailing 186
Furniture Retailing 737
Houseware Retailing 280
Electrical, Electronic & Gas 1,149
Other Electrical Equipment Retailing 218
Sports/Camping Equipment Retailing 1177
Toy & Game Retailing 223
Newspaper & Books Retailing 642
Total 5,497
Source: Retail market (2013)
2003 2003 2004 2004 2005 2006 2007 2008 2009 2010 2011
NZ Retail Industry: % Net Profit before tax/Revenue
P a g e | 8

APMG8119 Vipin Kumar 1414046
BGs area of focus for the year has been on effective implementation of resources in order to
generate maximum revenue. In order to understand its competitive position, it becomes
imperative for BG to look into the regional breakup of the competition that group faces. It is
necessary and very critical for BG to identify the opportunities and reap their benefits which
arise from strategic locations. Group can also look into creating regional dominance if possible.
Following table shows the regional concentration of various retail outlets as per different
categories BG deals in.
Table 3: Category Wise Regional Concentration of Retail Stores

Source: Retail market (2013)
The retail industry and the environment as a whole are evolving because of various reasons such
as advancement in technology, buying patterns, consumer focus, and Ecommerce (Retailer
association review). Incessantly increasing use of smart phones by the customers is a new
P a g e | 9

APMG8119 Vipin Kumar 1414046
version of web space retailers need to look into. Price comparison, user reviews and social media
connectivity is happening round the clock via these mobile devices. Retailers consider this as a
new area of opportunity to reach their target consumers and simultaneously understand that
failing to do so may impact future performances. Consumers behavior has changed too
especially in terms of price and value. Price offers linked to brands are getting more results than
just the price offers, which is a compelling fact for the brands and their need to accommodate the
consumers demand (Conseur, Fiorito & Gable, 2010).
Despite the economic conditions across globe, retail industry in New Zealand continues to grow.
Retail sales for the year 2012 has shown an increase of 3.7% as compared to the previous year
with a total revenue of $70,302 M. Majority of the classes in the industry have shown positive
movement except clothing, footware & accessories and Electrical and electronic goods in 2011-
12. Looking at a global perspective, the economy world over is recovering fast, however;
considerable uncertainty continues around the retail sector. Advancement in technology,
especially mobile arena, is affecting consumer behaviors and coming years may see such trends
accelerate (Retail market, 2013)

P a g e | 10

APMG8119 Vipin Kumar 1414046
4.4 Stakeholders
BG has its presence in New Zealand and hence majority of its stakeholders are local.
Figure 2: Briscoe Group Stakeholders

Listed below are the most prominent stakeholders in the company:
BG is a publically listed company however, majority of the shares are held by RA Duke
Trust. This accounts for 78.47% stake in the company. Other prominent shareholders are
Gerald Harvey, Harvey Norman properties and New Zealand Central securities
depository Ltd.
BG has more than 1700 employees across 80 stores in New Zealand. Group has 72
employees in various support functions such as management, information technology,
finance and administration, and other support functions
P a g e | 11

APMG8119 Vipin Kumar 1414046
Company is closely associated with more than 55 brands and numerous suppliers which
are both local and international.
Being one of the oldest companies in New Zealand, BG has a large and diverse consumer
base across the country.
Another key stakeholder for the company is Cure Kids, a nonprofit organization. BG has
been closely associated with the charity organization for more than a decade.
BG has multitude of people associated with the company in industries such as
manufacturing, retail, logistics, and advertisement.

5. Business Model
Zott et al. (2011) define business model as a framework that looks at a holistic perspective on
how a firm downs its business, with an emphasis on firms activities and importance of value
creation. BGs business model can be looked at as a first level distribution channel that uses both
marketspace and marketplace in order to conduct its operations.
The business model for an organization can be understood by four interlocking elements together
that create and deliver value. They are profit formula, value proposition, key processes and key
resources (Johnson, Christenson & Kagermann, 2008, as cited in Zott et al., 2011).
In order to understand the business model for an organization, there are multiple aspects which
need to be looked at. Lets Start with Rodney Duke, individual who shaped a loss making
business of 1980s to a profit center of 2000. He is the managing director of the company and
holds 80% stakes in the company. Rod took over as managing director of the company in 1988
with a goal to bring the company back into profitability and sell it off. He has worked in retail
industry all his life and has been associated with names such as Waltons Ltd, Homecraft/Eric
Anderson Stores, Grace Brothers and Norman Ross Ltd. Looking to expand business, Rod took a
franchise of Rebel sports in 1995 and the exclusive rights to operate from 2005 in New Zealand.
He reflects the acumen of a true entrepreneur and is shows interest in the business that is related
to groups core competencies. BG has not been under debt in 15 years and as a result of huge
cash reserves, Rod acquired 9 stores of Living and Giving in 2006. He understands the
P a g e | 12

APMG8119 Vipin Kumar 1414046
importance of online businesses and hence, has dedicated websites for all three business lines
(Director profiles, n.d.).
To understand what BG looks to deliver to the customers, the code of conduct BG mandates on
all employees and parties associated must be looked at.
5.1 Code of conduct
Company has defined a code of conduct which serves as values for the company and believes
that these are essential to groups recognition and success. The values apply to all employees and
businesses that are associated with the group. The Group requires all to preserve and enhance
groups reputation among all by:
Being truthful and fair
Abide by law
Demonstrate respect, integrity and openness.
(Code of conduct, n.d.)
5.2 Objectives
Group has been working on various objectives over the years to stay competitive and improve
continuously. The objectives of the group are
To improve value and quality of products
To promote relevant products at great prices
To improve inventory management process and stock turn
To control operational cost and improve customer service levels
BG is looking forward to enhance customer experience and increase companys profitability in
near future. The objective outlined by the group for 2013 are
To maximize Profit growth.
To continue develop and improve the quality of our people
To develop our online businesses.
P a g e | 13

APMG8119 Vipin Kumar 1414046
To expand the number of fulfillment locations that will result in lower freight costs and
quicker deliveries to customers.
(Annual report, 2013)

6. Revenue Analysis Chart
BG has been looking forward to improving customer service in the stores to generate more
revenue and enhanced customer experience. Another area of focus is to fine tune the profit
centers to ensure optimization of resources. Online business presents another opportunity for the
business to grow further and focus remains at making the online experience efficient, easy and
attractive. The efforts put in by the BG reflect well on sales revenue for financial year 2012-13.
Business earned $452,702,000 from operational activities. Company received a total of
$3,051,000 additional earnings from non-operational activities such as financial and lease related
activities (Annual report, 2013).
Figure 3: Revenue Breakup Briscoe Group 2012-13

Table 4: Revenue Analysis 2012-13
Nameplate Homeware Sport Goods
Revenue 307051000 145651000
No Of stores 48 32
Non Operational Homeware Sport Goods
P a g e | 14

APMG8119 Vipin Kumar 1414046
Area of stores 93014 51884
Revenue/Store $6,396,896 $4,551,594
Revenue/Sq M $3,301 $2,807
Source: Annual report (2013)

6.1 Operational Activities
Operational activities for BG are the core retail activities of the group. These include business
operations for Homeware and sporting goods name plates. Operational revenue for the group was
$452.7 million in 2012-13.
Homeware represents Living and Giving and Briscoes Homeware. Together they accounted for
67.3% of the total earnings of the group which was $307,051,000 in 2012-13. BG believes this is
the outcome of relevant and aggressive promotion strategies developed by the company which
has kept the brand in front of customers. New range of products accompanied by price based
promotions, kept the stores in limelight and special emphasis was given to range, quality and
value combination. BG realizes the potential of the web based retail and believes that Living &
Giving sections future would be web dominated in near future. Average revenue per store for
Homeware nameplate was $6,396,896. Revenue earned per square meter was $3,301 (Annual
report, 2013).
Sporting goods sales revenue for the year 2012-13 was $145,651,000. Rebel sports accounted
for increased sales in previous year due to Rugby World Cup. The sales performance continued
to sustain the previous year levels and contributed a share of 31.96% to total earning for the year.
BG believes that the performance is a result of aggressive marketing and promotion strategy as
the competition is more intense in fishing, camping and 5 other outdoor categories. Average
revenue per store for Rebel Sports nameplate was $4,551,594. Revenue earned per square meter
was $2,807 (Annual report, 2013).
P a g e | 15

APMG8119 Vipin Kumar 1414046
Risks: There are a number of risks that are associated with BGs retail operations revenue and
they are:
1) The volatility of marketplace in constantly increasing because of various reasons such as
dependence on other industries, technological innovations, currency fluctuations and
trade relations.
2) Growing complexity of the operations for group is another risk area. Various factors that
contribute to the risk are: huge number of suppliers and product range, recent advent into
market space, limited delivery capability for ordered goods.
3) Low growth of retail industry and presence of big competitions such as Warehouse,
presents another challenge for the companys revenue making capability.
4) Profit maximization in retail industry is dependent on operational efficiency and cost
control practices. Inability of retailers to control direct costs makes them vulnerable to
excessive cost control in support and operational activities such as employee numbers
and advertisement, which puts them at risk of sabotaging core operations.
5) BG is a retail firm and does not have any in-house production. Hence, operations are
dependent on suppliers and leave the firm vulnerable to supplier disruptions. Secondly,
majority of the brands on offer are off shore brands and are services through Chinese and
Australian suppliers. Political situation and trade relations also carry significant
importance in companys successful operations.
6) Another risk to online operations of BG is the dispatch capability of physical stores. All
online orders are dispatched from 2 Auckland stores.
7) The industry analysis of the report reflected that BG faces hyper competition in the
market. With abundance of stores and mega retail players, competition may result in
wrong price image in consumers and may prove fatal to businesses.
8) Real estate is on a boom in New Zealand and hence the prices are sky rocketing. Rental
and related expenses present a severe threat to companys profitability.
9) BG has a huge product range and there are similarities in the products at offer. BG faces a
trivial choice as reduction in offered products could decrease competitiveness and less
popular items hold space for longer durations impacting profitability.

P a g e | 16

APMG8119 Vipin Kumar 1414046
Opportunities: Opportunities available to the group in Homeware and Rebel Sports retail are:
1) Market space consolidation as the most apparent area that BG needs to look into. BG has
already announced its plans that Living & giving nameplate would be dominated by web
based business with minimum possible physical stores. Company is clear with the
objective however, a lot of work is required to accomplish the same. The web sites are
basic Ecommerce engines designed to facilitate transactions only. They fail to achieve
Hoffman and Novak (2009) flow perspective.
2) Cross Shopping is the key to current retail industry. More time customers spend in store
or on the website, better are the chances of that they will spend more and hence increase
3) BG needs to look into regional dominance for revenue growth. In the face of fierce
competition strategic store location would result in competitive advantage.
4) ICC world cup is approaching and shall be jointly held in New Zealand and Australia.
This presents a bright opportunity for Rebel Sports in near future.
5) Real estate boom in densely populated areas such as Auckland has is a result of scarce
availability of residential spaces. Governments has announced plan to ramp up
construction to meet the demand and presents a juicy opportunity to BG. If BG can
negotiate a contract to supply Homeware in new furnished accommodations, revenue for
the company will be at a whole new level.
6) Co-creation between customers, company and suppliers, is another value proposition that
BG needs to look into. A cohesive relationship will result in higher revenue and loyal
consumer base.
6.2 Non-Operational Activities
Another source of income, though negligible, is through nonoperational activates such as
hedging, lease, interest and financing. Net earnings from this component accounted for
$3,051,000 during the year 2012-13, which was 0.67% of total earnings (Annual report).
There is multitude of risks associated with this aspect of groups earning. These are set of
different activities that group undertakes as support to operational activities. All of them present
unique risks and opportunities for the members of those industries for example finance for
P a g e | 17

APMG8119 Vipin Kumar 1414046
hedging and real estate for lease. Although, these activities are unrelated to core operations of the
group, BG must keep an eye out as they can impact financial performance.

7. Cost Analysis Chart
In order to survive in a mature and heavily competitive industry, BG incurs a lot of costs in terms
of advertisement, brand promotion, and related business investments. BG has been conducting
business in a traditional retail environment. Group has taken into account the potential of Market
space platform since 2010 only. Although, BG is cash rich firm and has not seen debt in last 15
years, need to be mindful of the volatility in the market and need to invest in technology, creative
ideas and innovative ideation principles (Zott et al., 2011).
Figure 4: Cost breakup Briscoe Group 2012-13

Source: Annual Report (2013)
Total cost incurred in2012-13 by BG was $271,598,000. 48 Homeware stores accounted for
67.5% of the total cost incurred by BG. On the other hand, 32 Rebel sports stores accounted for
32.5% of the total cost. To understand further the cost involved in each operations type, we can
look into the following chart. Average cost per store in the Homeware nameplate is $3,820,104,
whereas the average cost per store in Rebel Sports stores is $2,757,281. Comparison can also be
made on the grounds of cost per square meter to get better comparative understanding. Cost per
Homeware Sport Goods
P a g e | 18

APMG8119 Vipin Kumar 1414046
square meter in Homeware stores was $1,971, whereas it was $1,701 in Rebel Sports. This is
clear that BG has been concentrating efforts towards the Homeware nameplate to increase
revenue and hence the cost in the efforts made is higher too (Annual report, 2013).
Table 5: Expenses Analysis Briscoe Group 2012-13
Nameplate Homeware Sport Goods
Cost Of sales 183365000 88233000
Expenses 154114000 77863000
No Of stores 48 32
Area of stores 93014 51884
Cost/Store $3,820,104 $2,757,281
Cost/Sq M $1,971 $1,701
Source: Annual report (2013)
The Following chart outlines the breakup of all costs and expenses incurred by the group in the
year 2012-13.
Figure 5: Expenses Analysis Briscoe Group 2012-13

Source: Annual report (2013)
Wages and Salaries Operating Lease and rental Expenses
Depriciation Withdrwan Inventory
Other Bad Debts
P a g e | 19

APMG8119 Vipin Kumar 1414046
It is clear the maximum cost driver for BG is employee wages, salaries and other short term
benefits. The total cost to company for this component of expenses was $50.56 million which
covered 58.89% of the total costs & expenses. This is in alignment with the traditional
marketplace retailing across markets. With 31.145 of total expenses, Operating, lease and
Rental expenses accounted for a total of $26.74 million during the same period. Depreciation
expenses cost was $5.5 million which was 6.44% of total income. It is very important for BG to
look into the next component of the cost which is Withdrawn Inventory. Total cost incurred by
the group under the component was $1.45 million and accounted for 1.69% of total expenses. It
is nearly impossible to estimate the actual cost of the component as the time this inventory was
on shelves is lost and could have resulted in better sales figures if the space has been occupied by
popular items. Bad debts for the group were at 0.04% of the total expenses and accounted for
only $37,000. This is an indication of companys robust monetary policy. Other expenses for the
group were $1.53 million and accounted for 1.79% of the total expenses. These expenses include
Directors fees, audit expenses, share option expenses, software amortization, and loss on sale of
property. BG paid a total of $12.2 million as Income Tax to the New Zealand government
(Annual report, 2013).
Risks: Various risks associated with current cost structure are:
1) Groups investment has been only towards the core businesses. The number of stores is
showing a decline. In such situation BG should be looking forward to invest considerably
in new ideas or concentrate on acquisition of already successful companies. That has not
been seen and Rod Duke in his interview reflected that BG may not go that route, rather
concentrate on core business. While the big competitors such as Warehouse are
improvising and actively looking for acquisitions, BG may be too late if not stagnated
and stationary business group.
2) As mentioned earlier BG plans to limit Living & Giving to marketspace, it would require
substantial efforts in accomplishing this task as it is in contrary to the rest of groups
efforts which are concentrated on bringing the customers to physical stores.
3) As mentioned earlier, BG has a primitive distribution system which is concentrated in
Auckland region only. As a result it is less efficient and attracts more cost.

P a g e | 20

APMG8119 Vipin Kumar 1414046
Opportunity: The opportunity areas for the group related to cost structure are:
1) BG has had to close down 10 stores as a result of underperformance since 2010 under
Homeware nameplate and now stand at 48 stores from 58 in 2010. The firm needs to look
into cost reduction by opening stores in near vicinity to each other. As a result firm can
look forward to introduce shared management, shared warehouses, and regional
dominance to lower costs. This will result in reduced vulnerability of underperforming
stores against closing down.
2) As mentioned above that BG lost 1.45 million to withdrawn inventory. There is clearly a
need for better inventory management. Although BG has invested in SAP for inventory
management tool however, more emphasis needs to be put into negating such losses.
3) BG lost $37,000 in bad debts. Though it accounts for very small loss percentage, firm can
look forward to decrees it further.

8. Value Creation Analysis
8.1 Internal & External Perspective
The success of a business model lies in the value proposition for internal and external customers.
Eriksson et al. (2011) divided the study of a business model into three components and they are:
design, value creation and value exchange. Basic component of the business model is design
element. This element includes the operational activities of the firm, the structure and
governance. Value creation is an important aspect of the BGs business model. Amit & Zott
(2001) identified four drivers of value creation and they are Novelty, Customer Lock in,
Complementarities and Efficiency. Value Exchange can be understood as the exchange of value
between suppliers, marketers and customers (Amit & Zott, 2001). BG gives a face to more than
55 suppliers in front of customers.
Morris et al. (2005) found that the novelty in superior value creation. BG experimented
successfully by opening the Rebel store and Homeware next to each other resulting in better
management for both stores and cost control. BG offers signup vouchers of a value $500 through
P a g e | 21

APMG8119 Vipin Kumar 1414046
draws to its customers. Group offers deals on Living & Giving such as 30% off storewide which
attracts the customers and creates value for brand.

Figure7: Profit/revenue Ratio comparison

Source: Annual report (2013), Retail market (2013)
The comparison of the profit after tax to revenue between industry average and BG gives a clear
picture on how the company has been creating value by decreasing the direct cost of operation
and increasing efficiency (Zott et al., 2011).
BGs investment in technology for effective inventory management and attention towards people
development will act as a source of competitive advantage and shape future development of the
organization (Park et al., 2012). BG has been investing in aggressive promotional strategies and
operational restructuring. That has brought stability in the sales revenue to both Homeware and
Rebel sports. BG paid $21,368,750 to its shareholders and also introduced group incentive
schemes for the employees on account of good sales performance. BG is also looking into up-
skilling people as they are the key to an excellent customer experience in stores (Amara &
Landry, 2012).
Value creation should be considered from an external customers perspective. Value can also be
created by non-economical means that contribute to societal wealth improvement and reduction
2008 2009 2010 2011 2012
Industry Average Briscoe Group
P a g e | 22

APMG8119 Vipin Kumar 1414046
in human suffering (Thompson & McMillan, 2010). BG supports NGO Cure Kids, an
organization that funds the researchers dedicated to finding cure for widespread diseases. Cure
Kids has funded breakthroughs related to childhood leukemia, cot death, hole in heart babies,
cystic fibroses, genetic birth abnormalities, and inherited heart disease. In essence, the group
brings value to the whole community by funding Cure Kids.
BG promises the lowest price guarantee for all products on Rebel Sports. With a total of 80
stores across New Zealand, this brings the factor of convenience into customers minds. BG
hosts 55 renowned brands and a huge product range to choose from. This helps customers in
onsite features and price comparison and associated brands serve as a symbol of product quality.
BG itself is a brand name in the market and helps product sale of the brands that are less known
in the market, a perfect example of value creation via value exchange (Zott & Amit, 2001).
Extensive product range, promised product quality, associated brands, professional staff from
BG, and customer service all act together to lead to an excellent consumer experience and hence
create value (Osterwalder & Pigneur, 2005).
8.2 Implications:
An understanding of the business model has reflected that BG is doing better than the industry
average in terms of efficiency. There are both risks and opportunity areas that were identified. In
order for BG to increase value, few opportunities can be looked into and they are:
1) Regional Dominance: Retail market is saturated and as a result abundance of retailers can
be seen all around. BG tried to expand and found that some of the stores had to be closed
down due to underperformance. The way forward shall be via consolidation of regional
presence and dominating the market. BG can look into decreasing cost by shared
management and warehouses in high density areas. Also, strong brand presence means
increased customer loyalty and lessened promotional expenses.
2) BG has a strong management team led by Rod Duke. The company is sitting at a huge
cash reserve and the core business is maturing fast. BG should be looking into acquiring
small firms in similar industry. There are numerous promising web based startups in the
market that company can look to acquire. Careful brand diversification will increase
value for shareholders.
P a g e | 23

APMG8119 Vipin Kumar 1414046
3) BGs ecommerce websites for all three nameplates are average to above average setups.
These websites need to be equipped with content and services that make consumers time
worthwhile. A number of value additions can be offered to complete the task. For
example, designing solutions can be made available to people to decorate and remodel
their houses on Homeware sites. On the other hand, Rebel Sports can look into providing
fitness tips and other sports related information. Consumers forums and product feedback
is another area that needs to be worked upon as co-creation would lead to value creation
for the business (Rayport and Sviokla, 1994). Advancement in technology is changing the
way consumers interact and shop. Investment in technologies such as tablet and smart
phone will be at the core of value creation in businesses (Prahalad and Ramaswamy,
2004). BG needs to look into integrating all the three web sites to provide a flawless
experience to customers.
4) Densely populated areas have encountered a housing boom. This present an area of
opportunity for Homeware section of the firm. Company can look to get contracts from
builders to provide furnishings in furnished homes. While BG can look to support
builders with huge selection and better price, BG in turn gets a consistent and defined
source of revenue.
5) It is a proven fact that more time people spend in the stores or on websites, better are the
revenue propositions for the business. Hence, cross selling becomes the key retail market
is looking for. Looking at the profiling of the retail customers where majority of
Homeware customers are women and majority in Rebel Sports are athletes, BG should
look into making alliances with other brands to share the consumer base and force people
to spend more time around the stores. Value creation by exchange can be achieved if
Rebel Sports nameplate can look to partner with the fitness institutions and Homeware
can look to share space with coffee shops or interior designing firms (Zott et al., 2011)

P a g e | 24

APMG8119 Vipin Kumar 1414046
9. Conclusion
Rod Duke has done an exceptional job in bringing a cash strapped company to high levels of
profitability. BG business model seems to be the traditional marketplace style retail. The unique
selling point of the group is a vast range of product availability for both Homeware and Rebel
Sports. BG concentrated on the expansion from 1996 to 2010 and reached to a total of 90 stores.
However, as a result of highly competitive retail environment and business restructuring,
underperforming stores were closed down. Group understands that the time for mindless
expansion is gone and success now lays in strategic locations and efficient operations. BG is
learning from its mistakes and understands that Ecommerce has huge potential especially for big
brand names. BG has invested in the web space for all three nameplates of the group. BG is now
a high cash reserve firm and holds a comfortable position in the market. BG has to look into
some of the shortcoming associated to current business model. Business has reached its mature
stage and requires entrepreneurial ideation to expand further. Competitors such as warehouse are
investing in acquisition of web based promising business. BG should look into different ways
highlighted to create and capture value via value exchange in order to stay competitive and
prosper further.

P a g e | 25

APMG8119 Vipin Kumar 1414046
10. References
Amit, R. and Zott, C. (2001), Value creation in E-business. Strat. Mgmt. J., 22: 493520.
doi: 10.1002/smj.187
Annual report for the period ending 27th january 2013. (n.d.). Retrieved from
Briscoes Homeware.(n.d.).Retrieved from http://www.briscoegroup.co.nz/
Code of conduct.(n.d.). Retrieved from http://www.briscoegroup.co.nz/content.asp?cont=code
Director profile.(n.d.).Retrieved from http://www.briscoegroup.co.nz/content.asp?cont=directors
History. (n.d.). Retrieved from http://www.briscoegroup.co.nz/content.asp?cont=history
Hoffman, D. L., & Novak, T. P. (1996). Marketing in hypermedia computer-mediated
environments: Conceptual foundations. [Article]. Journal of Marketing, 60(3), 50.
Liisa-Maija Sainio, Sami Saarenketo, Niina Nummela, Taina Eriksson, (2011). Value creation of
an internationalizing entrepreneurial firm: The business model perspective.
Journal of Small Business and Enterprise Development, 18 (3), 556 570
Living & giving.(n.d.).Retrieved from http://www.livingandgiving.co.nz/
Morris, M., Schindehutte, M., & Allen, J. 2005. The entrepreneurs business model: Toward a
unified perspective.Journal of Business Research, 58: 726-35.
Osterwalder, A., & Pigneur, Y. (2005). CLARIFYING BUSINESS MODELS: ORIGINS,
PRESENT, AND FUTURE OF THE CONCEPT. [Article]. Communications of
AIS, 2005(16), 1-25.
Prahalad, C. K., & Ramaswamy, V. (2004). CO-CREATION EXPERIENCES: THE NEXT
PRACTICE IN.VALUE CREATION. [Article]. Journal of Interactive Marketing
(John Wiley & Sons), 18(3), 5-14.
Rayport, J. F., & Sviokla, J. J. (1994). Managing in the Marketspace. [Article]. Harvard Business
Review, 72(6), 141-150.
Rebel sports..(n.d.). Retrieved from http://www.Rebelsport.co.nz/
Rjean Landry, Nabil Amara, (2012) Elucidation and enhancement of knowledge and technology
transfer business models. VINE, Vol. 42 (1),94 116
P a g e | 26

APMG8119 Vipin Kumar 1414046
Retail market in new zealand an analysis 2013. (2013, may). Retrieved from
http://www.retail.org.nz/downloads/2013 Retail Market in NZ.pdf
Sang-Chul Lee, Kwang-Hyuk Im, Sang-Chan Park, Liu Fan, (2012). An evaluation model of
business value for research and development of technology to improve the
competitiveness of companies. Asian Journal on Quality, 13(1), 22 - 36
Susan S. Fiorito, Myron Gable, Amanda Conseur, (2010). Technology: advancing retail buyer
performance in the twenty-first century. International Journal of Retail &
Distribution Management, 38(11/12), 879 893
Thompson, J. D., & MacMillan, I. C. 2010. Business models: Creating new markets and societal
wealth. Long Range Planning, 43: 291-307.
Zott, C., Amit, R., & Massa, L. (2011). The Business Model: Recent Developments and Future
Research. [Article]. Journal of Management, 37(4), 1019-1042. doi:

P a g e | 27

APMG8119 Vipin Kumar 1414046
10. Appendix
P a g e | 28

APMG8119 Vipin Kumar 1414046
P a g e | 29

APMG8119 Vipin Kumar 1414046
P a g e | 30

APMG8119 Vipin Kumar 1414046
P a g e | 31

APMG8119 Vipin Kumar 1414046