“Car parts retailer Repco” is the way many stories about this troubled company begin. But it is a false description.

Repco has always been a pretender in the retail sector. It was really a trade supplier that saw some opportunity for profit in higher margin retail sales. However, any retailer in which staff use terms like “wood duck ” to describe retail customers is likely to struggle.

Following a trading halt and speculation about a cash injection or a merger with rival Super Cheap Auto, yesterday the Repco board announced it would recommend a $336m takeover offer from CCMP Capital Asia, a private equity firm. This will prompt stories in the next few days about the vagaries of private equity buyouts; this being Repco’s second in recent years.

Until the mid-90s, Repco stores were ill-lit dusty affairs selling stock from behind a counter to men in overalls. Visual merchandising was limited to empty and faded oil filter or brake pad boxes. Their customers were largely from the motor trade. Male retail walk-ins were treated with disdain (wood ducks) unless they could quickly speak the language of those behind the jump. And, girly, love, darl; I’m not even going to consider how females were treated.

Repco attempted a more serious retail presence, opening new super stores with ranging and merchandising more focused on the retail customer. While they were a vast improvement, with better lighting, housekeeping, ranging and visual merchandising, the company still seemed to lack a retail mind set. In June 2003, Repco announced a new era and the planned opening of 40 new stores.

Later that year, the company refloated at $2.65, but has subsequently stumbled; trading well below $1 for a time.

An unfortunate consequence was that Repco’s failed attempt at becoming a retailer alienated many of the key trade customers (mechanics). So Repco, having appointed retailer Graeme Yeomans as CEO in July, conducted a review that resulted in planned scaling back of its retail operations and a refocus on the trade customers.

The automotive aftermarket has been changing. Some cars have either become cheap and disposable (Kia, Daewoo, Hyundai). Others are more complex, so that only the dealers can repair and service them. As the DIY auto sector underwent a shift, Repco seemed unable to find a role in the evolving market. By comparison, Super Cheap Auto, in spite of some recent difficulties, appears to have done better by extending the range and redefining their offer, moving into the leisure business. At SCA, cars are also about lifestyle and fun; not just greasy hands holding spanners — and SCA staff understood retail customers.

Private equity will give Repco another opportunity to find a successful model – otherwise it’s the wreckers.

Peter Fray

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