The Warehouse Group – Progress on Strategy

22 March 2022

NZX Limited


The Warehouse Group Limited

Investor Briefing – Progress on Strategy

The Warehouse Group Limited will hold an investor briefing to institutional investors and analysts
today at 2pm following the release of the FY22 Interim Results.

A copy of the presentation is attached.


Jonathan Oram
Chief Financial Officer


ENDS

Contact details regarding this announcement:

Investors and Analysts: Jonathan Oram, Chief Financial Officer
To be contacted via Kim Russell
+64 9 488 3285 or +64 21 452 860, kim.russell@thewarehouse.co.nz
Media: Nick Grayston, Group Chief Executive Officer
To be contacted via Jordan Schuler
+64 21 143 6930, media.enquiries@thewarehouse.co.nz

The Warehouse Group Limited

26 The Warehouse Way
Northcote, Auckland 0627
PO Box 33470 Takapuna
Auckland, New Zealand 0740

phone +64 9 489 7000
fax +64 9 489 7444
web www.thewarehousegroup.co.nz

---

Speaker: NICK G
22 March 2022

Jonathan Waecker
Chief Customer
and Sales Officer
Tania Benyon
Chief Product Officer
Jonathan Oram
Chief Financial Officer
Sarah Kearney
Chief Digital Officer
Edwin Gear
Chief Information Officer
Presenters
2

We are improving ourcustomer experiences
and outcomes
Our Purpose
Helping Kiwis live better every day
Our Vision
To build New Zealand’s most sustainable, convenient and customer-first company
Our Strategic Customer Experiences
1st Party Unified Data = Meaningful Experiences for our Customers
Helping customers to find
what they’re looking for, at
prices that are great, every
time
Helping customers to enjoy
fast, easy, and reliable ways to
get what they need
Helping customers to have
access to affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy
and high-quality customer
service every time
12345
3

There are a variety of headwinds impacting the disposable
income of New Zealanders
1, 2, 3
•The rising cost of living and increased inflation is hitting New Zealanders and
their families hard and is impacting our overall trading environment.
•Key customer headwinds include:
•food inflation (up +6.8% in Feb vs LY)
•general inflation hitting a 30-year high
•rising petrol costs
•low unemployment
•and rising interest rates.
•New Zealanders remain focused on safely managing COVID-19 at home,
impacting retail trips and causing temporary worker shortages.
•Consumer confidence has decreased.
1
1.Source: NZ Trading Economics
2.RBNZ –Inflation by category
3.RBNZ –Mortgage rates
A challenging time for Kiwis

Value leadership in The Warehouse continues to be recognised
by customers
•The Warehouse "good value for money" perception increased +4 pts to 83%
in H1 FY22 (vs H1 FY21)
1
•The Warehouse continues to leadon value vs our competitor set
1
•Saving Kiwis over $6 at breakfast compared to everyday prices at key
grocery compete
2
•Meaningful customer perception increases around quality improvements
•Gains across ”products that last” (+3 pts to 52%), “products that look
great” (+4 pts to 69%), and “products that work well” (+4 pts to 68%)
1
•“Convenient store locations” increasing as a driver of value perception
•Price and promotional activity driven by strategic investments into data
science and analytics
The Group’s market share grew +0.1 points vs LY to represent
6.1% of total retail sales
3
•Group market share grew despite New Zealand H1 total retail spend declining
5.0% vs H1 LY
3
•The Group’s online growth rate, +67.8% was over 2 X that of the key compete
growth rate (core retail, +31.9% vs LY), and 3 X the growth rate of the total
retail market (+22.4%)
3, 4
1.Source: Qualtrics and TWG Insights. Total retail = all categories, including grocery, liquor, restaurants, and petrol
2.Source: TWG Insights. Based on average full-price basket of eggs, bread, milk, coffee, butter, oats and Weet-Bix on 18 Mar 2022 costing $29.03 at The Warehouse and $35.61 at Countdown.
3.Source: Datamine. Core retail = all categories excl. restaurants, fuel, liquor stores, entertainment, supermarkets, and travel
4.Online Sales includes The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7, sales through 1-day.co.nz, revenue from TheMarket.com; but excludes TheMarket.comgross transaction value(GTV).
5
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345

“I bought this shirt for my brother who works out constantly. He loves the quality as
it’s light, leaving his upper body and torso to breathe. He likes the colour too.”
★★★★★
The Warehouse customer review
•OurSKU price segmentation
allowedthe Group to protect margin
withouteroding value perception
•21% of baskets contained
anitemwhere we have invested in
theretail price perception
•In H1 baskets with price perceptors
delivered on average49% more value
and 58% more units than non-price
perceptorbaskets
•We sold over 10 million price
perceptorsin H1 with an average 32%
GP and over 15 million key volume
lines in H1 with an average 44% GP
•Range curation continues with a 12%
reduction compared to H1 LY
•Quality perception in The Warehouse
improved +7pts vs the prior period
•TeReo descriptions are being rolled out
across our private label ranges, including
our new Market Kitchen product
•More than 2 million units of Back-to-
School stationery sold with TeReo
•Master Data Management (MDM) has
enabled capture ofricherproduct data.
Customersshopping online can now
easily identify our productswith a
sustainablefeature.
Our range is delivering more
value with better quality and more
sustainable features
6
Our detailed price perception
programme delivered customer value
and $183m in H1 sales
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345

•Customer satisfaction
scoreshavesignificantly improved
acrossproductsthat last, work well and
lookgreat
•Able to manage inflationary cost pressures
while maintaining value leadership with
customers
•GP% was strong at 40% for The Warehouse
recognising good price management
•Purchase cost per unit declined 1.6% as our
mix of grocery grew while total purchase value
declined 13.9% as we managed unit volume
vs FY21 H1
•Shipping costs increased 111% vs FY21 H1,
including more spot rate being used to
manage delivery timelines
•Volume was steady with 35 million cartons
handled through our DC and 9,500 20-foot
equivalent containers devanned
•Ongoing shipping disruption resulted in very
low on time performance from shipping
lineswith less than 20% of all sailings
completed on time and reduced space
available
•TWG managed shipping challenges by:
•Implementing a new priority process to
get our most in demand products to our
customers
•Purchasing additional space at ‘spot
rate’ when our contracted rates were
fully allocated
•We continue to benefit from having sourcing
teams on the ground in Asia to manage
production and keep our stock flowing
7
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345
Despite strong cost price inflation we
continue to lead on value for customers
Our supply chain performed well under
the COVID-19 and seasonal pressures,
although there is significant cost
inflation to manage

We have designed a pragmatic and staged approach to fixing the
fundamentals in supply chain
•Six programmes of work are transforming our logistics and fulfillment capability, including:
1.DC and FC network re-design,
2.Increased automation in handling and fulfilment,
3.Transport optimisation to improve route planning and replenishment logic,
4.Store process reset to reduce inventory on hand,
5.Resetting our labour model to align closer with our supply chain model,
6.Investments in Warehouse Management System (WMS), Inventory and Master Data
Management (MDM) will reduce error rates, rework, lead times and resupply costs.
Weare making good progress building our integrated supply
chaintodeliver market leading convenience at a winning cost to serve
•Four programmes of work are delivering better availability for customers, including:
1.End to end planning informed by customerdata (demand),
2.Dedicated Agile tribe, demand forecasting that segments and prioritisesSKUs,
3.Supplier collaboration to create store friendly packagingand optimised pack sizes,
4.New store ranging and replenishment logic.
8
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345

Total online sales growth of +67.8%vs LY shows an
abilityto better capture shifts in customer demand than
our competes
1
•Online sales growth rate is over double that of Core Retail
compete (+31.9% vs LY)
2
•Online gross margin continues to improve, with Noel Leeming
online GM now within 280 bps of total brand GM
1
•Dynamic performance marketing investments continue to drive
omnichannel customer traffic and high-ROI
•Click & Collect sales grew 79.1%, now accounting for 50.1% of
online sales. Units grew 94.9%, selling an average of 49.7 units
per minute
•Orders grew 80.4%, with record number of parcels (over 3 million)
delivered through fulfilment centre
•Investments in Warehouse Management System enabled us to
react quickly to changing customer behaviours
•Our investment into Group Order Management System will unlock
better carrier determination, as well as faster and more
convenient delivery options
+93.6%
+54.2%
+79.0%
+46.6%
0
20
40
60
80
100
120
140
TWLWSLNLT7TWLWSLNLT7
Total Online Sales ($ million)
C&CDelivery
Online Sales by brand –by Click & Collect and Delivery
FY21 H1FY22 H1
9
“It was so easy! I had the goods in my hand 30
seconds after walking into the store.”
★★★★★
Noel Leeming Click & Collect customer review
1.Source: TWG Finance
2.Source: Datamine
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345

Focusing on store pick up as the easiest, fastest, and
lowest-cost “last mile” experience
•Making it quick and easy for customers to pick up Click& Collect orders
•Rolled out SocialQto all stores during lockdown to enable pre-
booked collection time slots
•Completed drive up Click & Collect test and new format trial in
TWL Manukau, significantly reducing customer pick up times to
under 60 seconds
•Extended MarketPointpick up locations to all Noel Leeming
stores
•Extended endless aisles sales to all WSL stores
•Group Order Management Solution will unlock integrated and
frictionless Click & Collect experiences, such as real-time two-way
communication ahead of collection
•Advanced analytics delivered by Group Order Management System will
enable us to monitor real-time cost to serve, and flexibility to optimise
for cost and customer
10
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345

Mobile app experiences are driving strong customer
engagement and shopping metrics
•Apps for The Warehouse, Noel Leeming and TheMarket.com continue
to be loved by customers
•The Warehouse mobile app spent 46 days as the #1 most
downloaded shopping app during the half
1
•TheMarket.com mobile app also achieved #1 during the half
1
•Noel Leeming mobile app achieved #2
1
•All three apps are rated 4.7+ with over 67k reviews on iOS App Store
3
•The Warehouse app revenue grew 145%, and now accounts for 35%
of total online sales
2
•TheMarket.com app GTV grew over 10 X, accounting for 23% of sales
•Mobile apps drive higher frequency than our websites, and are used
more often by our high value customers
11
“Great app! Use it in store to check barcodes for prices. Use it before going out to
see which stores have stock. Use it to purchase items online, check review, free click
and collect. Very happy.”
★★★★★
The Warehouse mobile app customer review
1.Source: data.aiIntelligence
2.Source: Google Analytics & TWG Insights
3.Source: Apple
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345

1.Source Google Analytics & TWG Insights
Migrated Noel Leeming site to our mobile-first Group
eCommerce platform in October 2021
•Noel Leeming is our second brand to migrate, joining The
Warehouse which moved in March 2021
•Common backend already creating efficiencies
•New mobile-first platform provides tight interactions with our
customer ecosystem across our product, marketing, fulfilment
and customer service systems
•Customers are loving the new experience, with key customer
metrics showing major improvements post-launch:
•conversion has grown 41%
1
•exit rate has decreased 14%
1
•checkout funnel drop-off rate improved by 48%
1
12
“Easy to find products that are in stock at my local store, making click and collect a
breeze”
10 out of 10
Noel Leeming online customer Net Promoter Score review
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345

Sales of products with a sustainable attribute
accounted for over $111million in the period
1
•We've been carbon neutral since 2019 and were the third major
global retailer and first large company in New Zealand to
achieve this status
•Sustainable & Affordable campaign drove some of our biggest
brandpreference and brand love increases with customers
2
•Products with an environmental attribute delivered an average
9.3% higher GP in H1, largely in the Home and Apparel
segments
•More than 30% of our apparel on order has a sustainable
attribute led by Better Cotton Initiative and Oeko-Tex
certifications
•We are making good progress on our goal to have 50% of our
products with sustainable packaging by 2025. Over7m units
sold with plastic packaging reduced or completely removed in
FY22 H1
•‘I was a Bottle Range’ introduced in Warehouse Stationery for
which 780,000 pcs of 750ml bottles were reused/recycled
•Introduction of circular programmes and ranges such as
ourCyclocotton range
1.Source: TWG Finance
2.Source: TWG Brand Tracker
“Love this!! Great quality and looks really stylish! Would recommend.”
★★★★★
Customer review
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345
13

Post consumer waste recycling options are being rolled out
throughout New Zealand
•Diverted 75.8% of operational waste from landfill in FY22 H1
•During FY22 H1, we collected 25.17 tonnes of soft plastics across 30
participating The Warehouse stores (+36% vs LY)
•15 million individual units of soft plastic (96 tonnes) have been
collected and diverted from landfill since the relaunch of the Soft
Plastics Recycling Scheme in August 2019.
•Piloting Terracyclerecycling solutions in partnership with Nestlé,
Colgate, Zuru, and Schwartzkopf
•22 Noel Leeming and Warehouse Stationery stores now offer E-waste
recycling programme for customers
•During FY22 H1 we collected 24.6 tonnes of E-waste for recycling
•57.9 tonnes of E-waste have been collected for recycling since the
launch of the programme up to January 2021
•E-waste recycling will be further expanded by May 2022, with
enhanced in-store and online customer experience
•This is in addition to 67 Noel Leeming stores where we help Kiwis
recycle old mobile phones via a partnership with RE:MOBILE
14
"Creating a circular economy is fundamental to a sustainable environment
and reducing climate impact.”
-The Warehouse customer
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345

We launched MarketClubgroup loyalty programme
•Live across The Warehouse and TheMarket.com from October 2021
•Programme will form the basis of our Group-wide loyalty programme
•Opportunity to enable 4.2+ million unique customer records across
the Group, moving from transactional relationships to managing
lifetime value (LTV)
1
•Club members are showing higher spend and frequency vs non-
members –and members love it, showing higher NPS vs non-members
2
•Free and subscription propositions provide the foundations required to
deliver enhanced convenience, value, and services for customers
We are continuing our strategic focus on 1st party data and
logged-in shopping experiences
•Logged in customers enjoy a more relevant experience and convert higher
•Revenue from retail media grew 55%, as we continue to build our Retail
Media Platform and new partnerships
2
1.Source: Salesforce Service Cloud
2.Source: TWG Insights
15
"Good variety of products. I like the new market club offers /coupons -I look
forward to seeing what is on offer every week ”
★★★★★
Customer review
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345

Our focus on building capability in our Customer Care
tools has given us the ability to effectively adapt to shifts
in customer demand
•Interaction volumes for our digital communication channels have
grown 115%, so it’s important that we continue to build and optimise
our digital care experiences
•Key areas of focus include:
•Building AI powered care experiences so customers can
access instant responses with ease
•Optimising our digital tools to improve processes and
leverage rich data to provide proactive and personalised
customer experiences
•The Group Order Management Solution will unlock reliable
information on order fulfillment status so we provide full end-to-end
transparency to customers
•We are building an easy returns process where customers
can self-serve via a frictionless experience
•Our Group Order Management System will be a key unlock
16
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345

1.Source: Qualtrics and TWG Insights
2.Source: TruRating
3.Source: Workday Peakon and TWG Insights.
We are investing to modernise and align our store footprint with
changing customer behaviours and expectations
•Customers continue to notice in-store and online improvements
•Weighted average in-store net promoter score (NPS) increased by +3.7 points
1, 2
•Commenced $25M investment in 8 store refits for The Warehouse
•Investing in flexible, modern, and fit-for-the-future retail environments that
enable us to adapt to changing customer needs
•Further unlocks our store footprint as a competitive advantage
•SWAS programme continues to enhance customer convenience with longer
opening hours, more ranges, and easier one-stop shopping
Our stronger, more resilient and flexible operating model for team is
creating better experiences for customers
•Looking after our team members so they can look after our customers
•Team engagement scores much higher TY vs LY, with store-based employee net
promoter score (eNPS) +27 points on LY
3
•Engaged team culture supported by increased flexibility, as well as continued
investment into efficiency and productivity opportunities
17
“Very easy to find what we were looking for.
Also very friendly staff.”
10 out of 10
Customer Net Promoter Score review
Our Strategic Customer Experiences
Helping customers to find what
they’re looking for, at prices that are
great, every time
Helping customers to enjoy fast,
easy, and reliable ways to get what
they need
Helping customers to have access to
affordable solutions
that help them live sustainably
Helping customers
to feel recognised
and rewarded
Helping customers get easy and
high-quality customer service every
time
12345

Thank You

TermDefinitionTermDefinition
C&CClick & CollectMDMMaster Data Management
CODBCost of Doing BusinessNIDCNorth Island Distribution Centre
COGSCost of Goods SoldNIFCNorth Island Fulfilment Centre
DCDistribution CentreNLNoel Leeming
DIFOTDelivered In-Full On-TimeOMSOrder Management Solution
E2EEnd-to-EndOMUOperating Model Update
EDLPEvery Day Low PricePOSPoint-of-Sale
ELSExecutive Leadership SquadSIDCSouth Island Distribution Centre
eNPSEmployee Net Promotor ScoreSSOStore Support Office
ERPFIEnterprise Resource Planning -Finance and InventorySSSSame Store Sales
FCFulfilment CentreSWASStore-Within-a-Store
GBOGroup Business OperationsT7Torpedo7
GEPGroup eCommerce PlatformTWLThe Warehouse
GTVGross Transaction ValueWALTWeighted Average Lease Tenure
GOMSGroup Order Management System WMSWarehouse Management System
LTVCustomer Lifetime ValueWSWarehouse Stationery
GLOSSARY
Glossary
19

This presentation may contain forward looking statements and projections.
There can be no certainty of the outcome and projections involve known and
unknown risks, uncertainties, assumptions and other important factors that
could cause the actual outcomes to be materially different from the events or
results expressed or implied by such statements and projections.
While all reasonable care has been taken in the preparation of this
presentation, The Warehouse Group Limited does not make any
representation, assurance or guarantees as to the accuracy or completeness
of any information in this presentation. The forward-looking statements and
projections in this report reflect views held at the date of this presentation.
Except as required by applicable law or any applicable Listing Rules, the
Relevant Persons disclaim any obligation or undertaking to update any
information in this presentation.
A number of non-GAAP financial measures are used in this presentation. You
should not consider any of these in isolation from, or as a substitute for, the
information provided in the interim financial statements, which are available at
www.thewarehousegroup.co.nz.
This presentation does not constitute investment advice, or an inducement,
recommendation or offer to buy or sell any securities in The Warehouse
Group Limited.
Disclaimer