BLOG Consistent excellence – Arnold Clark


Final week, Arnold Clark filed their monetary outcomes for calendar 12 months 2021.  As a personal firm, there was no press launch or media occasion related to this – they had been simply filed with Corporations Home.

We all know that the final 12 months or so has been remarkably good for sellers because of the mixture of presidency assist through the pandemic restrictions and powerful pricing as a consequence of product shortages affecting each the brand new and used markets, however the outcomes for the group nonetheless stand out.

For many who are unfamiliar with Arnold Clark, they’re one of many largest teams in Europe – ranked third by turnover in our 2021 rankings to be revealed quickly – and the biggest purely UK group.

Having mentioned that, their roots are very firmly Scottish, and that continues to be the inspiration stone of the enterprise.  Arnold Clark based his first showroom in Glasgow in 1954, and though he did add dealerships and franchises, maybe extra vital to the form and success of the enterprise at present is that they established their very own finance arm in 1960, entered contract rent in 1966, launched their very own insurance coverage providers enterprise in 1993 and created their very own coaching firm in 2007.  In parallel, they’d expanded into the English market from their native Scotland with an asset-light strategy, and invested closely and broadly in digital channels.

They’ve persistently turned in earnings which might be larger than the UK common, sometimes within the 3% plus vary, although the 2021 results of over 5% revenue pre-tax was excellent.  Though this was helped by the market situations, it didn’t embrace any authorities assist for workers furlough, though there have been decreased property taxes through the interval.

When it’s regular for giant teams to solely carry out in step with nationwide common or barely above, it’s price attempting to grasp what it’s that Arnold Clark does that permits it to carry out extra in step with good small owner-operator sellers on a constant foundation.

My observations will not be based mostly on ‘inside info’ and doubtless miss some facets that senior administration would level to as additionally being influential.

Nevertheless, over time I’ve had the privilege of talking on numerous events to Eddie Hawthorne, the present CEO who joined the enterprise in 1989 and have become Managing Director in 1998, and have had different contacts with the enterprise, in addition to discussions concerning the group with producers and fellow sellers.

Clearly scale and a robust steadiness sheet helps.  This permits them to spend money on assets which might be past the attain of a small owner-operator, and when offers are round from the producers they will purchase large, with out the strain to liquidate that inventory instantly.

Nevertheless, what impresses me most concerning the enterprise is that once they resolve on a specific motion, they’re daring.  This may be thought of as foolhardy by some, nevertheless it actually leaves nobody in any doubt concerning the dedication to launch a brand new exercise or to keep away from being taken in a path that they don’t take into account is correct for his or her enterprise.

This influences their alternative of producer companions, with a willingness to maneuver on rapidly from these whose calls for they view as unreasonable, and their enthusiasm to broaden with these they imagine in.

We noticed it with their speedy growth of infrastructure and sourcing to develop their share of the tyre enterprise – an space usually uncared for by sellers.  We’ve got additionally seen it with their launch of two multibrand Innovation Centres, offering brand-neutral recommendation to potential BEV patrons in an unpressured setting.

Maybe extra importantly for the group’s success has been their multi-faceted growth within the digital world.  Once more, this has been a collection of daring strikes, with progressive enhancements to their web site, but additionally a ‘My Arnold Clark’ app providing a variety of features to potential and present clients.

One instance is you can scan the registration of any automotive that has caught your consideration as a attainable subsequent automotive, and the app will then establish the make and model and suggest a variety of matching fashions which might be out there in Group inventory.

They’ve additionally leveraged these new digital capabilities to drastically broaden their presence exterior of Scotland and a restricted a part of northern England, with out investing in a standard community of franchise shops.

As an alternative, a small variety of click on and accumulate shops permit clients to order on-line, then accumulate comparatively regionally with out the price of costly single automotive house deliveries.  All of that is supported and steered by an in-house workforce of builders and knowledge scientists.

The strategy on individuals has been no much less complete.  Their coaching organisation, GTG, launched fifteen years in the past, now has a number of centres and holds accreditations from numerous our bodies.

In that very same spirit of daring actions, they not solely practice employees for the Arnold Clark organisation, but additionally for exterior clients.  Reflecting the dimensions of the enterprise, but additionally the popularity of the broader social want, Arnold Clark is a significant supplier of apprenticeships, however goes additional by supporting candidates who want additional growth.

They’ve taken their very own spin on the product genius idea by appointing non-commissioned assist individuals into any such function, working with the gross sales executives, offering preliminary product explanations and demonstrations.  Workers pay plans and dealing rotas have been amended to enhance work-life steadiness and retention.

None of that is supposed to be an advertorial for Arnold Clark Group, however it’s too simple to say that their excessive and constant profitability is the consequence of the extraordinarily robust place they’ve of their foremost market areas.

That’s clearly an element, however I’ve not come throughout a gaggle which pursues such a broad vary of enchancment actions, typically with good outcomes, in such a relentless trend 12 months after 12 months.

They’ve additionally created a community of companies that complement one another and create extra alternatives to maximise revenue throughout the group.  These are the elements that impress me most concerning the enterprise – the earnings observe.

Steve Younger is managing director of ICDP


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