Help put the consumer in control, through products, services and solutions

Looking Back at FY20

The personal transport landscape is evolving quickly. Vehicles are becoming more complex – due in part to the transition to EVs – while mobility options are expanding thanks to the growth of electric vehicles, E-bikes and micromobility solutions. Fragmenting social structures are making domestic lives more complex, while working lives are becoming more flexible as employers evolve their policies and practices. In the short to medium-term, the COVID-19 pandemic will have a profound impact on commuting. Anticipated changes, such as the growth in working from home, the introduction of staggered shift patterns, and an increase in driving and cycling to the workplace, may endure into the long-term.

Introduction

Our mission is to support people through a lifetime of motoring and cycling. We are evolving our offer to guide customers as they embrace new technologies and navigate their way through a more complex transport landscape.

We are committed to giving customers the confidence they need to switch to greener forms of transport, safe in the knowledge that there is a reliable maintenance, repair and servicing infrastructure there to support them.

We are also equipping our colleagues with the expertise they need to advise people who are hesitant about the practicalities and costs associated with making more sustainable transport choices.

We are helping people stay safe on the road by i) expanding access to car and bicycle safety checks, ii) offering a truly national products and services network, iii) expanding access to maintenance, servicing and repair services by offering highly competitive prices, iv) investing in our mobile services – Halfords Mobile Expert and Tyres on the Drive – to make staying safe on the road more convenient than ever, and v) broadening our E-mobility offer both in terms of our product range and our servicing offer.

As the growth of electric mobility has accelerated, we have been working hard to keep pace to ensure that the majority of our customers have access to the EV products and services they need. We are the largest provider of E-bike servicing in the UK, and almost half our E-bike customers opt to buy a dedicated E-bike service plan purchase, which includes both unlimited puncture repair and specialist E-bike servicing twice a year. We also offer a dedicated E-scooter care plan, which provides puncture prevention treatment, unlimited brake adjustments and free inner tube fitting.

Our flexible finance offer makes E-bikes and E-scooters accessible to all. They allow customers to spread the cost, with one in five customers purchasing in this way.

Last year, the Government changed the Cycle-to-Work guidelines, allowing bikes over £1,000 to be accessed through the scheme. This has enabled more Cycle-to-Work customers to purchase E-bikes, as it allows them to not only spread the cost of their E-bikes but do so in a tax efficient way. In FY20 E-bikes made up 11% of all bikes sold through the Halfords Cycle-to-Work scheme, a nearly 4% increase year on year.

Supporting Customers Through Colleague Training

Better trained colleagues give better advice and help customers make better choices. That is why we strive to give all of our colleagues an equal opportunity to build a rewarding career as a 'super-specialist' within an inspiring and diverse team.

'Gears' – our development programme in which Retail colleagues progress through a structured series of e-learning, technical workshops, one-on-one coaching and shop floor experience modules – continues to go from strength to strength. It motivates colleagues to respond to the evolving needs of our customers, and encourages them to develop their skill-sets. Colleagues are rewarded for their achievements through career progression and increased pay awards.

Similarly, Tredz has a range of colleague training and development programmes that are aimed at helping colleagues at all levels to develop their skills, knowledge and management techniques.

In FY20 all new eligible starters in our shops were enrolled onto our Retail Level 2 Gears in-house Apprenticeship Programme. During the year, we reviewed the best way for apprenticeship training to be provided, and following this review, we have chosen to partner with Instep UK. This means that if a colleague wishes to complete an apprenticeship qualification, they are still able to do so.

Our 'Gears in Retail' qualification programme continues to be a crucial part of our colleagues' development, and allows them to achieve qualifications that are recognised throughout the industry.

All new colleagues complete Gear 1 within the first three months of their employment. Gear 2 then leads to an expert level of specialist knowledge in either Auto and Leisure or Cycling.

If nominated to do so, colleagues can then move to Gear 3 which elevates them to 'technician' status in either Auto or Cycling and allows them to undertake more complex fits and repairs.

During the year we continued to deliver additional 'Customer First' training to all of our store management, customer service and Support Centre colleagues.

We also continued to train colleagues on new products and services, for example E-bikes and E-scooters.

Halfords Autocentres continues to run a variety of training courses in conjunction with the Institute of Motor Industry ("IMI"). These include the IMI DVSA MOT tester accreditation, and the IMI Hybrid Electric Vehicle Level 2 and Level 3 accreditations. Autocentres also has one of the largest light vehicle maintenance apprenticeship schemes in the UK.

For colleagues who have been with Halfords for longer, we run our 'Aspire' series of leadership programmes to help them develop their management skills.

Aspire is a guided learning suite that gives colleagues the opportunity to further their careers and become leaders.

In addition, our 'Aspire to Assistant' and 'Aspire to Store Manager' programmes are mapped to Level 3 and Level 4 apprenticeship programmes, which means that our colleagues achieve a formal qualification as part of their programme.

This all means that the majority of store manager vacancies continue to be filled internally.

During FY20:

• 108 colleagues achieved the IMI's DVSA MOT tester accreditation
• 84 colleagues achieved IMI Level 3 accreditation.
• 215 colleagues achieved Level 3 Refrigerant Handling (air conditioning qualification).
• 134 colleagues gained the IMI's Hybrid Electric Vehicle Level 2 accreditation and 55 gained Level 3 accreditation.
• 152 new apprenticeships commenced and 56 colleagues completed management apprenticeships. Of these, 69% of the 'Aspire to Assistant' apprentices and 57% of the 'Aspire to Store Manager' apprentices achieved a distinction in their final assessment.

Product and Service Development

During FY20, we introduced a number of new products and services designed to help people make more sustainable transport choices and to expand access to services which keep people safe.

We have evolved our E-bike and E-scooter offer, providing consumers with a wider range of models and price points so that more people can make positive lifestyle changes.

In FY20, sales of E-bikes grew 45% and now represent 21% of all cycle sales. E-bikes typically have a range of 30-50 miles in commuter traffic conditions and provide the rider with varying degrees of assistance, depending on the mode selected.

During the COVID-19 lockdown, interest in cycling increased dramatically. Millions of people turned to cycling for exercise and to enjoy the outdoors. As people gradually return to the workplace – but try to avoid public transport – the expectation is that a growing proportion of commuter journeys will be completed by bicycle. However, mechanical bikes are not suitable for everyone or for every journey. E-bikes have a role to play, providing solutions for journeys that would otherwise be made by car or by public transport.

Halfords currently offers 31 E-bike models, ranging in price from £599 to £2,999. We have also introduced new E-bike specific products in FY20 such as E-bike cycle carriers, which are strengthened to support the additional weight of an electric bike for transportation by car. We will continue to evolve our E-bike offer, providing customers with a wider range of products and price points so that more people can access the category and make lifestyle changes which are better for them, our cities and the planet.

At the time of writing, privately owned E-scooters are not permitted on roads or pavements in the UK. In the wake of COVID-19, the E-scooter rental trials originally planned for 2021 have been brought forward to summer 2020 with a view to fast-tracking legislation. If the UK were to follow the lead of several European countries and permit the use of E-scooters on roads, we anticipate a significant increase in interest in the category.

We currently offer nine E-scooter models, ranging in price from £199 to £729. As with E-bikes, we will evolve our offer in order to expand access to the category and broaden the range of clean energy transport choices available to the public.

Last year we expanded our fleet of Halfords Mobile Expert and Tyres on the Drive and McConechy's vehicles to improve access to repair and maintenance services. The value of these mobile services has been demonstrated through the COVID-19 pandemic with high demand from customers who rely on their vehicles but who were reluctant or unable to visit us in person.

Safe and Sustainable Travel

During the COVID-19 lockdown, the number of journeys made by car dropped significantly, but the journeys that people did make were vital. They got doctors and nurses to work, volunteers to the pharmacy and parents to the supermarket.

When lockdown was announced on 23 March, Halfords was classed as an essential retailer by the Government and was permitted to remain open. The business devised and implemented a new operating model within 48 hours, allowing 600 stores and garages to continue to serve the public.

The operating model – known as Dark Store 1.0 – was designed to keep colleagues and customers safe whilst continuing to provide essential motoring and cycling services to the public. Customers were not permitted to enter stores. A queuing system was implemented which allowed colleagues to serve customers from the front of the store in a safe and socially distanced way. Throughout the lockdown period we continued to sell motoring essentials and provide fitting services. We also continued to sell, service and repair bikes.

Measures in Halfords Autocentres and McConechy's included limiting customers to one at a time in reception and asking them not to wait whilst the work was completed. Throughout lockdown Halfords Autocentres and McConechy's continued to provide servicing and repairs, not only for personal cars but also for emergency services vehicles. During FY20, we had contracts with 49 emergency services to provide servicing, repair and tyre services for ambulances, police cars and border control vehicles.

In late March we announced that our car health check, which normally costs £15, would be free for NHS and other emergency service workers as part of our Here for the Heroes programme, designed to keep essential workers on the road.

The 30-minute check covers lights, wipers, battery, windscreen, tyre depth and inflation, oil, screen wash, and coolant level. We also offered emergency workers a free Bronze bike service (worth £30). The service includes adjusting and aligning gears, lubricating the drivetrain and adjusting and aligning brakes. Emergency workers were also offered 10% off new tyres as part of the programme.

During the first ten weeks of lockdown (covering the end of FY20 and the beginning of FY21) 11,625 emergency workers took advantage of these offers, with a further 18,189 taking advantage of discounts using the Blue Light Card during the same period. We also donated E-scooters to the NHS Nightingale hospital in Birmingham to help construction workers complete the fit-out and donated numerous bikes to individual doctors and nurses whose bicycles had been stolen or vandalised.

Our research shows there are more than seven million neglected adult bikes languishing in sheds and garages. With bicycles set to play a crucial role in helping the nation return to the workplace we intend to enable as many people as possible to use bicycles for some or all of their commute.

During the COVID-19 pandemic (covering the end of FY20 and beginning of FY21), we promoted the free bike 'M' check via a campaign called Get Back On A Bike. The 32-point check assesses the condition of the frame, saddle, handlebar, wheels, tyres, brake system, and the drivetrain, including gears, levers, and chain, and we saw a fivefold increase in the number of checks performed in the first week after the campaign launched.

We are the leading retail participant in the Government's Cycle-to-Work scheme. The scheme allows workers to use salary sacrifice to make savings of up to 47% on the cost of cycling. In FY20 we released 54,765 vouchers to people to buy bikes and accessories as part of the scheme.

All of these initiatives serve to underline the role Halfords plays in keeping the nation moving. During FY20, we carried out:

• 312,026 car services
• 638,314 MOTs
• 2.97 million fitting services (such as for bulbs, blades and batteries)
• 11,000 bicycle services
• 125,000 bicycle repairs

Community Support

We intend to step up our efforts to campaign for safe and sustainable travel.

The Government has committed £2bn to increase cycling and walking capacity across the UK. At the time of writing, details of the programme have not been published, but we will participate fully and seek to make constructive contributions, whether that be through the introduction of new products, the development of new services or making policy proposals.

We are contributing to two consultations on the legalisation of E-scooters on roads, one called by the Department for Transport, the other by the Transport Select Committee.

We believe that E-scooters can play an important role in solving the commuting challenges the country faces as people gradually return to the workplace. We are also reaching out to the local authorities where E-scooter rental trials are taking place in June to explore ways in which we may be able to provide support.

We plan to ramp up our efforts to promote E-bikes which we believe provide an important additional option for commuters, especially those facing longer or more arduous journeys.

We believe employers should be doing more to take advantage of the Cycle-to-Work scheme and we intend to become a more vocal advocate for the scheme.