The retail world is nothing if not varied. Selling toys requires an entirely different approach to selling perfume, for instance. While department and variety stores must be jacks of all trades, mastering them is best done by outlets dedicated to one demographic or another.
The trick is not to thinly spread such ambitions. When Massimo Arioli arrived at Italy’s PRG Retail Group in 2016, the company was only a year old, but spanned a range of specialties.
“It was, let me say, an ensemble,” he tells The CEO Magazine. “Different banners, different head offices, different processes, different systems, different customer views. The opportunity I had was to truly integrate these elements.”
Today, PRG’s focus is a single demographic: families with young children.
“We want to play a role in helping young families grow and educate their children,” he says. “Not so much traditional schooling and teaching methods, but letting them play with reality so they can experiment and get a feel of the world around them.”
“We want to play a role in helping young families grow and educate their children.”
As Chief Operating Officer, Arioli got to work pruning PRG’s branches down to three specialized categories.
“The most important is toys, which make up 60 percent of our turnover,” he says. “Then we have childcare, so strollers and modular systems, and the third is fashion, which is basically apparel for babies and expectant mothers.”
Handling these three departments are PRG Retail Group’s brands: Prenatal, King Jouet, Toys Center, Bimbo Store, Maxi Toys, Toys R Us and its junior outlet, Babies R Us, as well as industry legend FAO Schwarz. Under Arioli’s leadership, first as COO and since 2022 as Managing Director, PRG Retail Group has aligned these interests to become a ‘kids and family hub’ for Europe.
“We always play in the same product categories, but we’ve grown revenues from south of €800 million [US$844 million] per year to more than €1.2 billion [US$1.26 billion] annually,” he says. “We’ve tripled EBITDA and reduced our net debt to less than half.”
Also in the works is a platform that encompasses PRG Retail Group’s retail banners with a single enterprise resource planning (ERP) system. “We had more than five in the beginning,” Arioli says.
These recent consolidation efforts have been done with the customer in mind. “Even though we’re working toward having one head office, we still maintain local head offices in the nine countries in which we operate because we believe that customers in different countries have different perspectives and choices,” he says.
“We want to be very close and personal to our customers in this respect.”
PRG Retail Group was also without an online presence at its inception, but that’s no longer the case. “Digital now accounts for nearly 10 percent of our revenues. It’s not a lot, but it’s an infinite increment from the zero it was,” he says.
Arioli’s plan has worked wonders for PRG Retail Group’s market share and standing. In the nine countries where the Group has a presence, the company is either a market leader or second.
“It’s either us or Amazon,” Arioli says. “We don’t even perceive Amazon as a competitor, either. It’s a worthy rival we can learn from.”
And learning is among PRG’s top priorities, he adds. “Trying to reach the benchmarks set by Amazon is a continuous challenge in order for us to improve and satisfy our customers.”
The customer journey undertaken by PRG Retail Group’s demographic – new parents – isn’t an ordinary one. Arioli understands this, and as a result has created a learning program called Parental Skills at Work.
“Many of the skills you hone as a parent – patience, stress management, creative capability – are also relevant in the workplace,” he explains. “We’ve put this program in place to help companies, staff and parents understand that having a baby isn’t a career stopper, but actually a gift for the company.”
For PRG Retail Group itself, however, growth remains at the top of the agenda.
“We want to be very close and personal to our customers.”
“Retail is a business that works better when growing,” he says. “So our plans are to expand in the European markets, especially where we’re already present, and work on efficiencies and synergies under the PRG umbrella as well as creating customer journeys that span pregnancy to primary school.”
PRG Retail Group’s recent acquisition of the much-loved Toys R Us brand in Spain and Portugal from the toy store’s parent company WHP Global is part of that process.
“Our plan there is to combine Toys R Us with Prenatal to give parents a more consistent value proposition. In doing so we’ll create a one-stop shop that’s stronger than either of its predecessors and makes better use of the space we have,” he says.
“The more we can grow revenue per square meter through improvement, the more profitable and sustainable we’ll be in the long run.”
Connecting the Parts
Behind the scenes, Arioli and his team have deployed a new ERP system to better connect PRG Retail Group’s network of stores and outlets.
“Now we can have essentially a real-time inventory everywhere,” he says. “We can see the products, where they are, what’s happening with them and the best way to ship them to the customer.”
The full exploitation of this powerful new system is, he admits, a big challenge. “It’s also an area where we expect the most results,” he explains.
“The biggest difference between PRG and Amazon and other purely online retailers is an expert human touch.”
Then there’s the matter of enhancing PRG Retail Group’s purchasing functions across Europe. “As you may imagine, suppliers try to divide markets with different contractual conditions for different countries,” he says.
“Amazon has just one condition, and we want to have the same single condition at the European level. It’ll be tough to change the culture of our suppliers, but we have the human touch that sets us apart.”
PRG Retail Group’s large retail floor space means it has a fleet of salespeople Arioli regards as the company’s biggest asset.
“These people have seen more babies born than any hospital. They have the experience to provide great advice every time,” he says. “The biggest difference between PRG and Amazon and other purely online retailers is an expert human touch.”
Arioli says that the Group’s promise to its customers – to be there every step of the way on what is one of life’s great journeys – is ultimately where his loyalties lie.
“It’s a long-term goal, not a short-term result,” he says. “We have to be loyal to that promise. If we are, our customers will be loyal to us. That’s why we ask customers, staff, suppliers and shareholders alike to grow with us.”