Leading tile specialist Topps Group had set itself the goal of taking £1 in every £5 spent in the UK on tiles and related products by 2025. It achieved this ahead of schedule in 2023 when its share of the £1.2bn market hit 22%.
The business was renamed from Topps Tiles to Topps Group towards the end of 2023 to reflect its broader base and strategic journey to continue to grow its share of the UK tile market.
Topps Group operates in the following three business areas:
- Omnichannel - Topps Tiles
- Commercial - Parkside
- Online pureplay - Pro Tiler Tools and Tile Warehouse
Prior to the recent unveiling of the ’Mission 365 ’ strategy (see below), all three channels were underpinned by the same three priorities as part of a ‘One Topps’ strategy:
- Leading product (benefitting from scale to develop and produce differentiated products that are innovative, high quality and often exclusive to the group)
- Leading people (focus includes recruitment & retention, employee experience and capability)
- Environmental leadership (key pillars of carbon reduction and circularity)
Mission 365 growth strategy
In May 2024, as it set a new goal to grow group sales to £365m “in the medium term”, Topps Group revealed its new growth strategy dubbed ‘Mission 365 – grow sales, build profit’. It said: “The objectives of Mission 365 are based on conservative assumptions and assume only a modest recovery in tile market volumes, with cumulative market and pricing growth over the medium term of c. 4-8%.”
As part of the strategy, the group redefined its addressable market to ‘hard floor and wall surface coverings and related products’, in line with the broadening of its product offer and in a move that increases the scope of its market by 75% from c. £1.2bn to c. £2.1bn.
The five key areas of focus under the new strategy are:
1) Modernise the trader digital experience in Topps Tiles - focusing on improving its digital engagement with traders. This will include the relaunch of the trade website and the introduction of a modern trade app, while the trade loyalty scheme will also be modernised and embedded in the app. A new Customer Engagement Platform will also launch.
2) Expand into new product categories - as mentioned above, the retailer has expanded the definition of its addressable market, allowing it to expand its product offer. Where it has already sourced relevant product ranges the group has yet to “activate full marketing campaigns to support them”.
3) Business-to-business sales focus - including efforts to increase its business-to-business sales, which it will do via its three “highly complementary offers for business-to-business customers”, which are Topps Tiles, Parkside and Pro Tiler Tools.
4) Continue to support Pro Tiler - by providing the support and resources to grow the business further. This will include expansion into a larger warehouse and investment in other brands within the Pro Tiler portfolio. Opportunities to cross sell across Pro Tiler, Topps Tiles and Parkside will also be pursued.
5) Develop Tile Warehouse to maturity - continuing to build on the growth strategy for Tile Warehouse.
The group said: “Mission 365 is very clearly focused on building profit, as well as growing sales.” Investments to support the strategy will include a new ERP system, warehouse management system and new store systems. Investment will also be made into the supply chain infrastructure and marketing spend will be increased.
Omnichannel – Topps Tiles
The core Topps Tiles business accounted for 88% of group sales in the year to end-September 2023 (FY2023).
Its main strategy has been geared towards “out-specialising the specialists”, providing customers with a combination of inspirational service, unrivalled range and convenience through a seamless omnichannel offering.
While the customer base comprises a mix of professional trade customers and homeowners, Topps Tiles has been growing its sales to trade customers. Trade customers accounted for 60% of sales in FY2023 and are important for providing repeat business and providing links to homeowners.
Growing customer numbers is a key function of its digital operations as the vast majority of journeys start with online research. In addition to a series of technical improvements to its website, Topps Tiles has recently launched a new app for trade customers, introduced a series of visualisation tools, and extended its social media presence, including a launch on TikTok. It also launched a Topps Tiles range on Very.co.uk, which management said targeted a similar customer base, as a first move into marketplaces in 2022.
Stores remain central to its omnichannel offer, particularly for trade customers, with “almost every customer” visiting a store at some point in their customer journey.
A long-running store optimisation programme was completed across the Topps Tiles business in FY2022 through which the network has been reduced to just over 300 stores. As of end 2023, this comprised 41 superstores (a net addition of eight in the year) and 14 clearance outlets in addition to just under 250 core stores.
Commercial - Parkside
The group has established a toehold in the commercial market through the acquisition of two small UK specialists – Parkside Ceramics in 2017 and Strata Tiles in 2019 which has now been integrated into the Parkside business. The commercial business returned to profitability in the final quarter of FY2023 following the restructuring of the business, but accounted for just under 4% of group sales.
The ambition for Parkside is to utilise the scale and expertise of the wider group to create a business delivering at least £20m of profitable sales in the commercial tile market.
Online pureplay: Pro Tiler Tools and Tile Warehouse
In the wake of the pandemic, management identified “a significant opportunity to add complementary trading businesses which operate solely online, serving different customer groups with different needs, but always focused on our specialism of tiles and associated products”.
In 2022, Topps created a new online-only channel through the acquisition of a 60% stake in the small Pro Tiler Tools business in March and the launch of the Tile Warehouse pureplay business, targeted at value-conscious homeowners, a couple of months later.
The remaining 40% of the shares in Pro Tiler will be acquired in March 2024. Pro Tiler currently comprises five small specialist businesses, including Warm Floor Store (underfloor heating) and Flooring Materials (floor coverings), both of which were acquired in FY2023, as well as the eponymous brand.
Topps CEO Rob Parker said the launch of Tile Warehouse formed the basis “for a new, high growth, online-only sales channel, leveraging our core strengths in product, service and scale”.
Tile Warehouse focuses on quality tiles at very competitive price points and is complementary to Topps Tiles as it targets a different customer group, whilst leveraging the group’s scale, supplier relationships, digital expertise and financial resources.
The brand has been developed at a low cost, but investment in growth has kicked off from 2023 with the group starting to invest in pay per click to drive traffic “in a more meaningful way”.
Acquisition of CTD Tiles
Topps Tiles completed the acquisition of the CTD Tiles brand and “certain assets” out of administration in August 2024. The acquisition included the CTD Tiles brands, 30 stores, selected stock and all intellectual property for £9m.
Topps stated that the move provided it with “opportunity to make a meaningful entry into the housebuilder segment”.
Parker said: “The CTD brand and assets are an excellent fit with our existing business and the acquisition creates a new and complementary specialist tile business within the Topps Group.
“CTD operates a different model to our existing Topps Tiles retail stores, with separate trade and retail offers within each unit and a number of market-specific sub-brands, which are differentiated from our existing offer.”
Financials
Despite an increasingly challenging trading background, Topps Group sales rose 6.3% to £262.7m in the year to end-September 2023 (FY2022), bolstered by the first full-year contribution from its online-only businesses, although profits came under pressure from cost inflation. For more see Financials
