Interview with Simon Beaty, Snooze Sleepwell

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1 Interview with Simon Beaty, Snooze Sleepwell As one of Australia s longest-running and innovative franchised businesses, Snooze s experience in the bedding industry is second to none. Managing Director, Simon Beaty talks us through the history of Snooze as well as his own journey in franchising. He also talks about the successes to date which has made Snooze one of Australia s most desirable franchises and also the challenges they have had to overcome. And why the key to being a successful franchisee and franchisor is having the right attitude. Tell us about how/when Snooze was established and the motivation behind franchising the business, and also about your own Snooze franchise journey? Snooze was established in 1974 with one store in Melbourne, under the trading name, Capt n Snooze. It was one of Australia s first bedroom specialist stores, offering new standards of service, expertise and range. As demand grew, the business saw a great opportunity in franchising. Within two years (1976), five more stores were added and Snooze had successfully franchised stores in Victoria and New South Wales. In 1992 the company expanded into Queensland, merging with the franchised bedding group, Bedpost, establishing the company as one of the largest specialised franchised bedding chains in the world. In 2002, Snooze became a wholly owned subsidiary of Freedom Group Limited, a lifestyle retail organisation operating in Australia and New Zealand with brands including Freedom, Bay Leather Republic and Poco saw many changes the company undertook a rebrand leaving behind the Capt n component of the name, the cartoon-like cap and the red and black logo. In 2008, I joined the business as the Managing Director and was tasked with driving the reinvigoration of the brand. Today, Snooze has 74 stores located in Victoria, Queensland, New South Wales, ACT, Tasmania, South Australia and Western Australia, which allows us incredible buying power to ensure customers enjoy the very best products at great value.

2 Describe your own franchise journey? I began my retail career in 1979, where I spent nearly eight years at Fleececraft Industries, rising to the position of General Manager. I then joined Solomons Carpets in 1987 firstly as Victorian Administration Manager, and was later appointed to National Logistics Manager. My franchise journey began in 1987 with Solomons Carpets, then the largest national carpet retailer. I then joined Clark Rubber as General Manager and later as Director of Operations, re-launching the business as a franchise model. My expertise in retail sales helped establish the detailed systems enabling the brand to grow from one to 82 stores with a retail turnover in excess of $100 million. During this time I was a franchisee, personally owning two Clark Rubber stores. After a 12-year stint at Clark Rubber I served as General Manager of franchised food chain Healthy Habits, before joining Snooze in 2008 as Managing Director. My role at Snooze is to continue to drive and grow our franchisee network and increase market share, with a clear focus on increasing sales and profitability for our Franchise Partners. What have been Snooze s biggest achievements/successes to date? The most satisfying achievement is being part of a dedicated team of professionals that has successfully increased the top line sales and the gross margin dollar performance of our Franchise Partners year on year. The Snooze Brand has been recognised twice in the top 10 of Australia s most desired franchises, most recently coming in at number eight in Top Franchise Awards (Nov 2013). Votes were cast by over 1,000 Australian franchise owners, and reflected a range of categories including support, expansion, lifestyle, opportunities and renewals. We have achieved many strategic milestones too. Two trends that we are more frequently seeing are the number of internal staff who make the transition into franchisees and secondly the number of current franchisees who embrace multiple store ownerships. When I started with Snooze, there were 17 company-owned stores which have now nearly all been snapped up by Franchise Partners. This shows a real strength in our business model, support and brand and something we are very proud of. As well as the awards and franchisee achievements, we are a brand that has been at the forefront of technological developments in retail too. The first Australian bedding chain to launch a mobile and tablet compatible website after spotting a huge growth in website use by mobile users; the first to develop a unique bedmatch service which helps take the guesswork out of buying a mattress and the first to launch a bespoke online bed building tool for its customers - bedbuilder. In addition to these successes, we were recently awarded Website of the Year at the 2013 Victorian Web Awards a testament to the innovative online platform we provide to our customers. What challenges have you had to overcome? Franchising is very much a people business and requires a level of trust between the Franchisor and their Franchise Partners. At the time I joined Snooze, those levels of trust were at an all-time low. Without a high level of trust in the franchise relationship, there can be no foundation for growth, as any strategic initiative is unlikely to be adopted.

3 I initially undertook a "Franchise Satisfaction" survey with the help of Greg Nathan and his Franchise Relationships group. This highlighted a range or areas where the Franchisor needed to reestablish credibility and clarity of direction, which were then work shopped with our Franchise Partners. This was very much the initial focus for me and although this resulted in both structural and personnel changes in the business ultimately trust levels were gradually rebuilt through a demonstrable focus on Franchise Partner profitability, though clear strategic direction delivered transparently. What we said we would do, we delivered. What differentiates Snooze from the competition? Snooze offers a superior retail experience. As well as the people behind the brand, our extensive and exclusive range of products and technologies including bedmatch and bedbuilder enable our Franchise Partners to deliver a level of service that is above and beyond our competitor. Our product managers do not simply select products from catalogues; they work hand-in-hand with suppliers from all over the world to identify products that are innovative, unique, and of a higher quality to other products on the market. What marketing/promotional tools do you use to grow your franchise? National marketing campaigns and strategies are planned, organised and executed by an experienced professional in-house marketing team that provides support, guidance and expertise at a national, state and local level to our Franchise Partners. In your opinion, what makes a successful Snooze franchisee? Attitude is everything. If you have the right attitude you will succeed. An attitude focused on success through providing customers with an awesome retail experience that helps them make decisions in an infrequent and often confusing purchase. We have an extremely focused business strategy with an emphasis on customer experience that we work extremely closely with our Franchise Partners to deliver. How do you support your franchisees? We pride ourselves on providing each of our franchise partners with initial and ongoing training and support across all business areas to ensure their business is successful and continues to grow. It s also imperative to us that our franchise partners are up-to-speed with the latest industry standards and trends, and feel best equipped to meet the needs of their local market. In addition to ongoing training, we also host regular meetings, forums and conferences for our Franchise Partners to network with colleagues and learn more about the business, ensuring they re aware of company news, able to speak directly with the senior management team, and be the first to view new products and technologies from our suppliers. What changes have you seen in your industry over recent years? And how have you adapted to them? The retail sector has witnessed massive changes in the last five years, predominantly through technology. It has drastically changed purchasing behaviour and the way retailers interact with consumers. The digital world has also empowered consumers enormously, and means that a

4 consumer can now, if they choose to, research a product or service in such detail that in some instances, they could know as much as the salesperson serving them. It is now more important than ever that bricks and mortar retailers deliver a unique retail experience to justify shopping offline. Retailers who can t create this will struggle in the long term. For us, our website is clearly intended to serve as a support for the physical shop, not a competitor. Realistically, fewer people want to buy a bed online. We are dealing with products which predominately are very comfort orientated. A mattress is all about comfort, furniture is all about the aesthetics and how it fits into your home and enhances your lifestyle. Both of those things ultimately require you, more often than not, to actually see, feel and touch the product. I feel that we operate in a market which has less to fear from online retailing than some others. That said, some of our customers will choose online over in- store and we want to be able to accommodate the most seamless experience moving forward. What does the future hold for Snooze? What expansion plans have you got nationally and internationally? Snooze is constantly looking to explore new territories, providing it is right for our customers. With an aggressive growth strategy firmly in place, we aim to extend our current offerings into new markets in regional New South Wales, metro Sydney, Northern Territory, Western Australia and metro Brisbane in Our aim is to reach 90+ stores and we re always looking for ambitious and passionate people to join the business exciting future. What advice would you give to someone considering franchising their business? Attitude is everything. Focus on your customer and ensure you provide an awesome retail experience. In providing an awesome retail experience, everything matters and everyone in your business has to deliver on the brand promise. You need to love dealing with people, both customers and staff. Be passionate and maintain the excitement of successfully helping your customers find the right product or solution. Finally, invest in a business model that is tried and tested. Snooze has an aggressive growth strategy firmly in place and with proven results amidst some of the toughest retail conditions in history. You need to be confident you're investing in a business model that is both profitable and rewarding. If you had to do it all again, what would you do differently? Nothing! That is not to say I haven't made mistakes. There is no doubt I have, but it is all too easy, with hindsight, to say what could have been done differently.

5 Those mistakes became challenges to be overcome and experiences that we learn from...that's how we all grow and develop.

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