Home Features SIG’s Stuart Mitchell shows off model for growth

It’s not often that you get the chance to discuss the merits of the new rugby hooking laws with a chief executive of a top 250 FTSE company. But a former front row forward, Stuart Mitchell, is relishing the new laws and he’s also excited by a new challenge at SIG. Specfinish caught up with SIG’s group chief executive at the opening of its new 100,000 square feet Tyneside supercentre. Adrian JG Marsh reports.

“This will be the model for SIG moving forward,” says Stuart Mitchell as he looks out on SIG Distribution’s new £2 million Gateshead supercentre investment on Tyneside.

“We’ve built this with growth in mind. We’ve signed a no-break 10 year lease.  We think we can grow the market and do it more efficiently and improve services for our customers.”

Around 90 per cent of SIG deliveries go direct to site but those contractors visiting the new supercentre will see a bright open plan environment. The old silos of different businesses have gone and teams from across the five divisions of SIG distribution share the new premises.

Stuart Mitchell said: “In the 10 years to 2008 SIG bought 120 businesses, since then some tough decisions have been made. We’ve closed 200 branches but we still have 730.” And last year SIG completed a rebranding bringing its businesses under SIG as the master brand.

SIG’s learnt how to bring branches together and be sensitive to the local market and Mitchell says SIG’s currently doing a desk top study reviewing all its property to see how similar models could be introduced once the Tyneside branch has proved itself: something that Mitchell is confident it will do.

Stuart Mitchell joined SIG after a 25 year career in retailing, missing out to Justin King for top job at Sainsbury. When he left Sainsbury in 2005 he moved to an Asian retailer working in China and Hong Kong. He then returned to the UK with Wilkinson where, during his six years as CEO, he transformed the value retailer into a high street success story.

The retail industry has been one of construction’s largest and most important customers in recent years. So can construction learn from retail?

“For me construction can learn lots. From an SIG perspective we can learn. We can learn how to buy things better. We as a group buy less than one per cent of products together and we don’t utilise our supply chain as efficiently as we could. Everyone wants their delivery at six in the morning so we’re flat out then but, as the day goes on, our utilisation can deteriorate. We need to know how to back load and pick up materials from suppliers. We’ve been a loose federation in the past with businesses focused on their job, sharing resource was not part of their thinking. We just have to be a bit smarter in how we buy and transport.”

Mr Mitchell also says that SIG can look at its network. SIG’s growth through acquisition built a broad network of branches. It could benefit by asking if the branch footprint for each business, in each country or territory, is structured in the best way to serve its customers. The Tyneside supercentre is the first step in this direction.

“Finally there is e-commerce. The internet has dramatically changed business models really quickly. Last year, HMV, Blockbuster, Comet and others, went under. The common denominator was that their internet changed the business model and they didn’t change.

“E-commerce will happen in our industry, not sure if it will be tomorrow or in two or three years, but we don’t want to miss the boat. For us on a B2B platform we could be hugely more efficient and the
industry could make better use of technology.

“We’re already doing e-commerce in some of our businesses. We’ve a drainage business that’s 100 per cent e-commerce. We’ve got a Belgium business that has integrated bricks, mortar and clicks and that business now does 35 per cent of its sales on the internet.

“We know that contractors often prepare orders at the end of the day. If we’re ready to receive these orders we could then pick at night and they can go out the following day. “There’s no magic number that our e-commerce should reach, which we still have to trial, but we are building a platform which should be ready in Q1 2015.

In five years what will SIG look like? Stuart Mitchell responds positively: “Supercentres will be in place, they’ll be more e-commerce, we’ll be better at procurement, we’ll have a more efficient fleet and, if we’re doing all of that, it’ll be pretty good.”

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