TJ Hughes

TJ Hughes is a discount department store trading from 39 stores nationwide.

TJ Hughes first started trading in 1912. A management buy-out of the company took place in November 2003 with backing from PPM Ventures (the venture capital arm of the Prudential) and Bank of Scotland.

The Challenge

Under the new Senior Management Team, TJ Hughes had ambitious expansion plans relative to the Department Store sector, with plans to open 6 stores in 2005 and further expand over coming years.

TJ Hughes required a clear, costed, property strategy to satisfy the requirements of the current and potential business investors.

Specifically TJ Hughes needed:

	An understanding of how many TJ Hughes stores are viable in Great Britain
	Prioritized requirements list - based on ranked EBITDA and turnover
	Potential turnover, EBITDA and cannibalisation for any configuration of new store in any location identified

The solution

Working closely with the Senior Management Team, CACI built a bespoke turnover model to identify the key drivers of a successful TJ Hughes store. The model build combined the Retail Footprint catchment model with CACI and TJ Hughes data, and their combined retail and modelling experience.

The model was embedded into SpatialModeller software with customised reports that linked turnover predictions to the TJ Hughes profit model. CACI then ran a series of scenarios to identify the optimum locations and store configurations to maximise GB coverage and EBITDA. The resulting Road Map provides the strategic guidance on priority locations and an understanding of potential national market capacity.

The SpatialModeller is also held in-house, enabling the TJ Hughes Property Director to refine turnover and EBITDA predictions when specific properties become available. The easy to use system provides financial predictions as well as supporting information about benchmark stores, expenditure levels and cannibalisation.

The results and benefits

The results have already been used to assist TJ Hughes in evaluating the new openings that have taken place this year in Dundee and Sutton. The model has also been used as an input to bids for purchasing a range of new stores, to both select sites and set bid levels.

The Road Map is now the blueprint for the TJ Hughes property strategy, providing senior management and agents a clear target list for maximizing returns on the expansion of the portfolio.

Richard Foggin, Property Director, TJ Hughes comments

“I was particularly impressed by how CACI managed to convert complex models into a practical solution to help our ambitious store expansion strategy”.

Retail 'road maps'