Endeavour Group targets omnichannel experiences

Endeavour Group delivered strong retail sales in the last six months of 2022, bolstered by its investments in digital, omnichannel experiences, technology platforms and data analytics capabilities.

Endeavour Group CEO Steve Donohue

CEO Steve Donohue told a half-year briefing that total sales were $6.5 billion, up 2.6 percent on the previous corresponding period.

He added the group generated "robust” operating cash inflow of $643 million, allowing it to expand operations “as well as our continued investments in digital platforms and technology”.

“We continue to invest in improving customer experience via digital platforms, launching product image search for our two major retail apps, and launching Dan's Daily, our new digital drinks and lifestyle content platform," Donohue said.

“We also progressed our work on consolidating and simplifying our core technology infrastructure, launching a new groupwide spend management system in the half and continuing with the program to replace and consolidate our people systems.”

Donohue said the results also saw consumers “re-embracing in-store purchasing", accompanied by "a corresponding fall in online sales”.

However, he added, “online penetration remains 2.2 percentage points above pre-Covid levels”.

“Perhaps, more importantly than that, our ecommerce business remains profitable and investments in digital development underpin our customer's omnichannel experiences," he said.

“This is highlighted by the fact that 34 percent of retail store purchases are now digitally influenced, beyond the pre- and post-Covid changes in customer behaviour.”

Over the half, Endeavour Group also continued its store and hotel renewal program and opened “21 new stores and acquire five new hotels and a half with a further three hotels acquired in January.”

Dan Murphy’s digital My Dan’s membership program grew to over 4.9 million active members, up nine percent compared to last year and achieved a record ‘scan rate’ - use of a membership card in-store - of 77 percent.

Its ALH Hotels brand also launched an in-house trial of a new app and loyalty program “which we'll continue to build on in the coming half”, Donohue said.

He said 43 percent of food sales were enabled by order- and pay-at-table technology.

On gambling in its venues, the group is continuing to roll out a data-driven alert system “designed to identify potential at-risk patterns of gameplay so that our team members can have a supportive conversation with the player”.

Donohue said Endeavour Group had also received approval in NSW "to proceed with a digital wallet trial to enable cashless gaming”.

“The hardware for the trial is actually being installed today at the Crows Nest Hotel” on Sydney's lower north shore, he said.

Capital spend and Woolworths technology program

Over the half, the group’s capital expenditure reached $205 million, excluding Victorian gaming entitlements, with chief financial officer Shane Gannon stating the group's digital arm endeavourX “continues to deploy digital capabilities to create differentiated experiences and value for our customers”.

He added capital expenditure will be in the vicinity of $300 million to $460 million in FY23, “excluding property redevelopment and tech transition costs.”

Part of its capital expenditure saw 9.5 percent put towards digital, data and ecommerce and another two percent spent for “technology transition” as it shifts away from previous owner Woolworths.

Gannon said while the technology transition is “only two percent” of its total capital expenditure, “in the half we incurred $10 million in operating expenditure and capital expenditure of $4 million in relation to this program.”

“The technology transition is a multi-year program," he said.

"We are at the beginning stages of this, as such, we are continuing to assess our future technology needs.

“We are working with Woolworths on a plan to transition to standalone technology platforms”.

He said it is anticipated the group’s total operating expenditure will reach “$20 million to $30 million this year on this program and capital expenditure of $20 million to $25 million.”

Endeavour Group also announced Kate Beattie will take over as chief financial officer from Gannon, who will officially step down in June.