Pål Wibe started as CEO on April 1st. He now has clear plans for how he will work to make XXL the number one in Europe. At the same time, he believes more sports shops will have to give up.
ALNABRU, OSLO (Nettavisen Økonomi): When Nettavisen meets him at the headquarters in Oslo, it has been 11 weeks since he left his boss job in Europris until he sat in the chair of the big sports chain XXL. With 37 stores in Norway, and stores in Sweden, Finland and Austria, it is enough to hang your fingers.
– My job is to get good people running in the same direction. We need to focus on getting a little better at everything we do, and that everyone should work on the same set. I also have to help motivate the employees and be a good sparring partner for my loved ones, he says to Nettavisen.
Wibe was able to report revenue growth of over seven per cent in the first quarter – to NOK 2.16 billion, but pre-tax profit was negative by NOK 262 million. It is the worst first quarter of all time, and worse than the analysts envisioned. Now it is important to turn around the profitability of the company.
– Is the goal to be number one in the sports industry?
– It’s always fun to be number one. The goal is to be the best in Europe in what we do – in the sports industry. It’s a pretty hairy goal, because there are a lot of good people out there, he says.
– My experience is that people find it a bit funny that they have something specific to work towards. Why shouldn’t we set ambition levels high? he continues.
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Must be more profitable
If they are ready to take XXL to new heights, Wibe is aware that it is important to make changes that customers notice and be satisfied with.
– I’m not the boss of XXL – it’s the customers. If we are to be the specialist with the best prices, we must streamline and work smarter. In addition, we must bring about changes that customers get with them. We must work with both what happens behind the facade and what meets the customers, he explains.
He believes it is important for the chain to always be able to offer the cheapest sports equipment in the industry.
“Not only is it a clear position for XXL, but the lowest prices are also important to get even more active in sports,” says Wibe.
– How profitable is that?
– There has been some of the challenge in the industry. If you have the lowest price, you must also have the lowest cost. Then you have to buy big and get to an extremely efficient value chain where you save costs at every level. At the same time, you must be early in the process of automation, digitization and the use of new technology, he explains.
– We have to cut costs and invest money in things that can make everything more efficient. We have to get the solutions so smart that we save more than we invest, ”says Wibe.
And at this point, a lot is happening in XXL at the moment. Now a number of stores will have pickup towers / boxes in the stores, which allows customers who order goods in the online store with delivery in department stores, can enter a code and retrieve the package themselves from parcel boxes. Then they save time for employees.
– We have also decided that we will have RFID labeling for most of the items in our stores, which we are testing at Alnabru in Oslo now. This means that we always know the exact stock, he explains, adding:
– This way, for example, customers do not get annoyed because they go inside the store and think we have an item in stock when we do not have it.
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Must become specialists
It’s not enough to just be the best on the price of XXL and Wibe. The new CEO says they will go “all in” to take on the role of sports equipment specialists in the various departments they have.
– Several say that it is not possible to be both good and cheap. But we buy large quantities of goods across Europe so we get low prices, and at the same time every department in our department stores is as big as a big regular sports shop. That’s why we get to be both specialist and cheapest at the same time, explains the XXL boss.
– How do you manage to compete with the specialty stores, such as Löplabbet?
– We have to fill the gaps in the assortment, something we start with already in the fall / winter, so there is something for both exercise and keen runners, for example. We need to have the full width of the range, but also the services you need to get a shoe that fits your foot, for example, he replies.
However, there is talk of considerable sums to be invested in the department stores, without Wibe saying anything more concrete.
– We must first get the basic operation up again and get a clear direction, so we act more coordinated on campaigns, marketing and assortment. We have a lot going on there. When it is in place, we must take action that the customers notice, he says.
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Seamless trading can provide additional sales
However, it does not help with a good assortment, because the way you shop also has a lot to say. Both XXL and Wibe’s former employer, Europris, have previously been criticized for not investing enough in e-commerce. The new XXL boss will now invest even more online.
– Yes, definitely. But it’s not either or. It is the customers who decide whether we should open more stores, bet more online or both. We must further develop what customers want, he says.
A seamless solution is what they see that customers want.
– It can also make us sell more. We see that many people buy something online, pick up the package at the store, and at the same time buy more on their way out of the store, he says.
This is also one of the reasons why they now invest heavily in e-commerce. Among other things, they invest in the pick-up package boxes in the department stores, as mentioned earlier, improve the user interface and make returns easier.
– We are digitizing returns in all countries now. The cost of handling returns is too high, and now it will be much easier so that customers do not have to fill out the form and call us, and so on. At the same time, they can monitor the status of the return at all times, he says.
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Reducing the return share is also something they have to work on – including the environment.
– The dream is to find solutions so that you find the right size right away, so that you do not have to return anything you bought in our online store. But then we have to look a little further ahead. After all, new technological developments are happening, such as allowing you to scan your foot to find which shoe fits your feet, he says.
– Wouldn’t that lead to smaller customers in the department stores then?
– It’s a bit both and. We have to give the customers what they want. But the customer journey usually starts on the mobile anyway, and at the same time many people want the item right away to order it online and pick up in store, he says.
– Customers want both. Those who have it will win in the future, I think.
IMPORTANT TO INVEST: Pål Wibe, CEO of XXL, believes it is important to invest in both physical stores and e-commerce.
Photo: Nina Lorvik (Mediehuset Nettavisen)
Corona crisis positive for the sports industry
The corona crisis has led to very good results for XXL, so that in the second quarter they have seen sales growth of 25-30 per cent. There are also several sports shops that have improved after the coronary pandemic broke out in Norway and the fitness centers closed.
– People have started exercising more, and they bring the kids on Sunday walks in the fields. I think the corona virus may be causing the sports industry to attract more new customers, says Wibe.
This time has made more people take advantage of the many opportunities for the area to move around, which in turn gives health benefits. Those who have never run before have started running, and more have started cycling to work or more out in the woods. It also creates a need for more equipment.
– After all, you wear your sneakers and need new ones, and if you have got the taste for outdoor life you may need more equipment for both yourself and the family, he explains.
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Think more stores need to give up
Although XXL had to lay off some employees in mid-March, they were quickly back in work as sales accelerated. Wibe was more concerned at the start of the corona crisis than he is for a possible second wave.
But regardless of this crisis, he sees that there is too much capacity in the market.
– There are too many sports shops. Those with marginal profitability are closing down, and we are prepared for that to happen in the future as well, he says.
– Are you going to close any stores?
– Yes, we look through it. But we will eventually return to that. First, we need to get the whole organization in the same direction and do all the steps we can to maximize the profitability of each store before we can see if all the stores are profitable enough to continue, Wibe says.
This winter we saw that Gresvig went bankrupt and several G-sport shops had to be closed. It also creates less competition in the market, but the XXL boss thinks it’s more important to focus on himself than to look too much into the competition with other chains.
Feel free to say your opinion in the poll before reading on, the article continues below.
Involves employees
If they gain momentum on the top line of the company and do a better job towards the customers, they may eventually hire more people.
Now they have been working on reducing inventory, which is important for creating profitability. And with a new boss in the sports group, the employees also become more involved.
– I send newsletters by mail to all employees in all countries at regular intervals. I think it’s been a while since XXL, but I think it’s an important channel for informing everything about the company. At the same time, it creates the opportunity for dialogue so that we can get new ideas, says Wibe.
– One should not underestimate that people know what is happening and believe in what they are doing, he points out.
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At the same time, it is no disadvantage that he, as a manager, shows to the investors of the company that he has faith in XXL.
– I have bought shares for NOK 20 million over the stock exchange. I know that many investors are keen to show that I have faith in the company and appreciate my investment. But I did it primarily because I have a lot of faith in XXL, he says.
With many changes in the company in the future, he also hopes that it will actually go very well. But first we go through a long summer holiday, and then the boss hopes for changing weather.
– It’s our dream weather. If it is sunny and warm you will want to go out in the water and enjoy yourself, and then you will buy swimwear for example. It gets colder, you want to be in the mountains, and then you may need wool and rainwear, he explains, adding:
– In 2018 everyone learned that tropical heat for two to three months is not good for the sports industry. Then people can do little more than lie on the beach.
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