Strathfield Group Limited

What makes Super Cheap different? There is a noticeable lack of large competitors in its markets. Rebel Sport has a 25 per cent market share. The outdoors and auto parts markets are fairly fragmented, with some businesses focusing on niche product areas, such as Barbeques-Galore, or local mom and pop sports / outdoor stores. Several of its potential competitors, like Kathmandu Holdings Limited (ASX:KMD) are struggling. Others, such as Strathfield Group (ASX:SRA) are on life support and Colorado Group has already collapsed. The company’s fortunes are indirectly linked to the mining boom with the Queensland BCF store in Mackay reporting $10m in sales compared to the average store sales of $5m. According to CEO Peter Birtles, regional Queensland stores are the stronger trading stores. Its products are targeted at hobby and leisure activities, and from the results announced, people seem like they are still willing to spend money on those products. The bulky nature of its goods (kayaks, outdoor settings and tents for example), don’t really lend itself to competitors setting up websites selling these types of products. The business has high barriers to entry, which gives Super Retail a competitive advantage. It typically doesn’t operate stores in large shopping centres, so doesn’t have to pay exorbitant rents to the likes of Westfield Group (ASX:WDC) and CFS Retail Property Trust (ASX: CFX). It offers members clubs with Rays Outdoors VIP Club, BCF Club (750K+ members), Rebel Group Loyalty program (700k+ members). The company will start offering a loyalty program for the Super Cheap Auto business in 2012.