This week's retail news 'you may have missed'......
At mdj2, we’re passionate about retail and always looking to share our news, views, and insights. With so much information out there, we wanted to share just a small selection of retail news headlines from last week that we found interesting…?
?Homebase in administration: What went wrong and what next?
Homebase plunged into administration today,?appointing Teneo,?which immediately sold the DIY retailer’s brand, IP and up to?70 UK stores to The Range and Wilko owner CDS Superstores.
But where did it go wrong for Homebase, and what will happen next? Retail Gazette explores.
Homebase’s fall from grace
Homebase’s demise was kickstarted by what GlobalData senior data analyst Matt Walton terms, the “disastrous ownership” by?Australian conglomerate Wesfarmers.
The group bought Homebase in 2016 for ￡340m to bring their Bunnings hardware store to the UK. It made a swift exit just two years later as?it sold the business for ￡1?to restructuring firm Hilco, having sunk around ￡1bn into the venture.
“The real root cause of the issues at Homebase lies on the back of its acquisition by Wesfarmers. I think that caused such a big ripple effect on the business that it’s taken a lot of time for it to get itself back on track,” he says.
Bunnings’ botched DIY job on Homebase involved switching its soft furnishings – which was its clear differentiator from market leader B&Q – for the Aussie retailer’s no-nonsense DIY sheds filled with power tools galore.
When Hilco bought the chain it took swift?action, closing a third of Homebase’s stores via a CVA as well as two warehouses, and reverting back to its previous home furnishing focus.
The early signs were positive as?the retailer returned to profit faster than expected?under CEO Damian McGloughlin, a former B&Q exec.
For the year ending 29 December 2019, it delivered ￡3.2m EBITDA, compared with a ￡114.5m loss the prior year.
However, Walton says it was “unable to capitalise on the lockdown-induced boom in DIY and gardening in 2020 to 2022,” and failed to return to its previous market position.
“From being the second largest DIY and gardening retailer in 2015, Homebase’s market share had more than halved by 2021 as Hilco struggled to recover from Wesfarmers’ complete overhaul of its offer,” he says.
GlobalData now places Homebase as seventh in the DIY and gardening market, with its share forecast to sit at just 3.6%.
Walton says that Homebase should have benefitted from cash-strapped shoppers doing smaller refreshes of their homes but says that “poor communication of its offer” has meant it has not capitalised on this more buoyant part of the market.
It lost ground as?competition within decorative DIY intensified from both Wickes and B&Q, says Walton. He points out that?B&Q’s marketplace launch?in 2022 enabled it to offer a wider range of homewares and furniture, stealing shoppers from Homebase.
Thought Provoking Consulting partner Richard Hyman says Homebase lost its relevancy.?“Whatever market you’re trading in, when it’s a competitive market with lots of players and lots of choice, you have to develop a point of view.
“You have to try and develop that relevance, and I’m not sure Homebase really has. Not for a long enough period to really gain traction with customers,” he says.
Hilco sought to offload Homebase several times in recent years, but despite reportedly attracting interest from the likes of?former Pizza Express owner Hugh Osmond,?and?more recently The Range,?it failed to sell.
Meanwhile, losses started to mount. In its last reported year to January 2023,?it swung to a ￡84m loss?from a profit of ￡30m the year prior. Sales also plummeted from ￡788m to ￡701m over the period.
A challenging market
Homebase has of course not been helped by the challenging market conditions. McGloughlin called it “an incredibly challenging three years for the home and garden improvement market”.?
“A decline in consumer confidence and spending following the pandemic has been exacerbated by the impact of persistent high inflation, global supply chain issues and unseasonable weather,” he said.
In its last reported financial year,?the DIY retailer?said its costs had increased “significantly” including by over ￡40m in freight, and ￡10m in energy bills.
Signs emerged that trouble was on the horizon when Homebase?offloaded 10 stores to Sainsbury’s in August?at the same time it initiated talks with potential investors.
McGloughin said it had?“taken many and wide-ranging actions to improve trading performance including restructuring the business and seeking fresh investment”. “These efforts have not been successful,” he said today.
What’s next for Homebase?
Following The Range and Wilko owner CDS Superstores’ pre-pack deal it has vowed to continue trading the Homebase business online.
However, the up to 70 stores it has acquired will re-open as The Range stores, although they will hold a “much broader choice across garden, showroom and DIY categories – retaining the best of the Homebase expertise and heritage”, according to CDS group CEO Alex Simpkin, who promised to “continue to invest in the Homebase brand, with many initiatives in the pipeline”.
CDS has experience in reviving brands. Following?its acquisition of Wilko’s IP just over a year ago,?it has not only traded the brand online but?launched six Wilko stores with its seventh set to open in Uxbridge in west London week.
Simpkin added: “We’re now in a position to roll out a significant number of Wilko format stores, along with our existing The Range store opening programme, with intentions to more than double the store estate size over the next four to five years. Acquiring the Homebase brand enables CDS to access new customers and reach new communities.”
However, Walton says reviving Homebase will be more complex than Wilko.
“I think the challenge for it is twofold. I’m not sure the Homebase brand has the same amount of resonance as the Wilko brand. It’s not seen as what it was before, and it’s just lost a lot of ground.
“I also think whereas The Range to Wilko isn’t an enormous step in terms of offer, the more specialised offer at Homebase is a bit more of a leap.”
Elsewhere, administrators are still hopeful to sell some of the 49 Homebase stores not bought by CDS. Currently 2,000 jobs hang in the balance, although administrators have said there will not be any immediate redundancies and employees’ wage and benefits will be paid while they remain in work.
It is understood that?there have been?many expressions of interest?in the remaining stores, with big box retailers like B&M, the discounters, and DIY rivals thought to be running the rule over some outlets.
Homebase may soon disappear from retail parks, but hopefully some new operators will take their stores and salvage as many jobs as possible.
?Lidl’s ￡21bn Investment Boosts British Food Economy.
Lidl is set to surpass its investment target, reaching ￡21bn in the British food industry by 2024, a substantial 40% increase over its initial goal.
Lidl is on track to reach an impressive ￡21bn investment in the British food industry by the end of 2024, significantly exceeding its original target of ￡15bn. This marks a commitment to enhancing home-grown food production, aligning with its strategic goals to support domestic suppliers. The supermarket chain has already invested ￡5bn this year, underscoring its intent to bolster the British economy.
A key component of Lidl’s strategy involves sourcing two-thirds of its permanent product range from British suppliers. This decision reinforces the importance of local partnerships in achieving sustainable growth. Chief Commercial Officer Richard Bourns highlighted the strong relationships cultivated with these suppliers over the years, which are pivotal in ensuring a stable supply of quality products.
Notably, Lidl’s commitment to British agriculture is evident in its sourcing strategy for essential fresh products. By ensuring 100% of its fresh milk, butter, cream, eggs, pork, chicken, and beef are British-sourced, Lidl supports local farmers and promotes agricultural sustainability.
In addition to its financial investments, Lidl is enhancing its support for suppliers through initiatives like the Grassroots programme. This initiative is designed to strengthen the relationships with British farmers, aiming to foster growth and innovation within the industry. The upcoming Grassroots Farming Conference further signifies Lidl’s dedication to these partnerships.
Lidl’s strategic investments and partnerships underscore its commitment to supporting British agriculture and the local economy.
?Garmin steps onto the high street with first UK store.
Garmin?has opened its first UK-based retail store located in Southampton’s Westquay Shopping Centre.
The new retail store, which opened to the public on Wednesday, November 6, demonstrates Garmin’s commitment to its growing base of active-lifestyle customers in the UK.
Opening a physical store in an area that sees more than 17 million visitors a year brings the Garmin brand even closer to its customers.
Located on the Upper Shopping Level, the store measures nearly 1,500 square feet and is the only UK retail location to showcase the company’s range of consumer electronics from smartwatches, cycling computers and golf devices as well as its products for cars and the marine industry.
In this new store, shoppers can discuss their product needs with Garmin experts and get hands-on experience with the devices.
“We are thrilled to bring Garmin’s extensive product range to one location on the high street in the UK for the first time,” says Jon Oliver, managing director Garmin UK and Ireland.
“We’re passionate about our products and excited for more customers to experience them first-hand, whether that’s through speaking to our expert staff or attending the events we will hold for the local community.
“It feels fitting that the next step in our growth in the UK is the opening of this store in Southampton’s Westquay, down the road from our European headquarters.” Garmin has continued to invest in the Southampton area having set up its European Headquarters in Romsey more than 30 years ago.
Garmin’s annual cycling event in the UK, The Garmin Ride Out with Action Medical Research, is one of the most popular and sought after cycling events in the area.
Now based in Totton, Garmin is the main sponsor of local non-league football team AFC Totton, the New Forest Marathon and many other events in the area including Southampton Boat Show and Cowes Week Regatta.
“We are thrilled to be partnering with Garmin on its maiden UK store, providing a space for it to bring its full collection of devices into one compelling brand experience for customers,” adds Toby Tait, director of asset management at Hammerson.
“We were quick to understand Garmin’s critical requirement for the right space in the right location to showcase the brand.
“Garmin boosts an already thriving Southampton destination, with Westquay now fully established as a destination for brands, events and experiences to serve the city and wider region.”
?Toolstation Club Hits 250,000 Members.
Toolstation, part of Travis Perkins plc and one of the UK’s fastest growing and largest suppliers of tools and building supplies, has announced that its free Toolstation Club has signed up 250,000 members since launching nine months ago, at the end of January. The 250,000th customer was given a free ￡100 gift voucher to spend at Toolstation. The Toolstation Club, which is free and open to everyone, gives every one of its members exclusive discounts and prizes, as well as 5% off all orders, all completely free of charge for Toolstation customers. Over the last 10 months Club members have benefitted from hundreds of prizes including breakfasts, holiday vouchers, TVs and more. To join is free and easy, customers just need to sign-up online or through the Toolstation App.?The 5% offer is available to all customers during their first month of Toolstation Club membership. After this, the 5% discount will apply to a spend of ￡75 or more each month.?
Chris Other, Customer Director for Toolstation said:?“Our ambition has always been to offer the best value and convenience to our customers, and with the Toolstation Club reaching this milestone so quickly, thousands of the nation’s tradespeople are benefitting from some of the best possible offers from Toolstation and deals from our partners.” The 250,000 members have access to a dedicated hub, where they get access to a range of rewards and competitions, such as spin to win and prize draws.
?Britain’s WH Smith targets 500 stores in North America by 2028.
WH Smith PLC is doubling down on its airport travel shop business in North America.?
The London-based retailer, which opened 40 stores in North America this year, said it recently won some “significant new airport business,” including wins for stores at Dallas, Denver and Washington Dulles airports, and is also the preferred bidder for a further 15 stores across two major U.S. airports.?
WH Smith plans to open about 60 shops in North America during the next two years. By 2028, the company expects be operating around 500 stores, up from its current total of 341. (The total includes 256 stores in airports, 83 in resorts and two in rail stations.)
“North America, the world’s largest travel market and with increasing passenger numbers, is our most exciting growth opportunity where we see excellent prospects to further grow our airport business,” WH Smith said in a financial release. “This division will continue to become an increasingly significant part of the Group and is now our second largest division in profit terms, after Travel UK. “
WH Smith is a leading global retailer in news, books and convenience for the world’s travel customer. It has more than 1,700 stores across 30 countries worldwide.
In April, Toys”R”Us parent WHP Global signed a long-term license agreement with?WH Smith?as the exclusive shop-in-shop partner for Toys"R"Us in the?United Kingdom.?
?Asda and Amazon launch ‘hassle-free’ parcel collect and return service.
Asda and Amazon have launched a new parcel pick-up and label-free, box-free return service at over 700 of the supermarket’s stores.
Eligible Amazon?orders?will now be able to be collected at most of the supermarket’s stores across the UK, with more locations set to be added across the coming months.
The tie-up is designed to make shopping at?the grocery giant?more convenient for customers, who will be able to do their weekly shopping alongside collecting and returning their parcels in one trip.
The scheme also slashes the need for additional shipping boxes, with shoppers able to turn the item in the original manufacturer’s packaging.
The grocer’s vice president of logistics Chris Hall said: “This collaboration with Amazon just in time for Christmas marks another landmark moment, not just for our larger stores, but our ever-expanding Asda Express convenience estate.
“By bringing essential services like Amazon parcel pickup and return drop-offs closer to where our customers live and work, we’re able to provide greater convenience to more of the communities we serve across the UK.”
Amazon UK country manager John Boumphrey added: “We work hard to offer customers low prices on a wide selection of products, with fast, convenient delivery options and easy returns.”
“This collaboration with Asda makes it even easier for customers to pick up ordered items when they’re shopping or make hassle-free returns at more than 700 locations around the country.”
The partnership comes as the supermarket chain’s?hold on the grocery sector continues to dip further.
Its market share dropped one percentage point from 13.5% to 12.5% as sales fell 5.5% in the 12 weeks to 3 November.
?B&Q introduces new electric delivery trucks to drive 2040 Net Zero goals.
B&Q is ramping up its efforts to hit its Scope 1 and 2 net zero target by 2040 with the introduction of new electric delivery trucks.
The heavy-goods electric vans will be integrated into B&Q’s home delivery fleet, with plans to add smaller electric vans for more local deliveries in the new year. The electric HGVs will cover the nationwide Home Delivery Network, as well as supporting B&Q’s Showroom network, where larger deliveries range include kitchens and bedrooms.
According to the DIY retailer, the vehicles will play a significant role to improve energy efficiency and using alternative energy sources, with the trucks expected to make 12-14 deliveries per day. This introduction into the fleet form’s part of B&Q’s commitment to the Zero Emission Vehicle mandate – a legal requirement that 10% of new van sales in 2024 must be zero-emissions, rising to 70% in 2030 and 100% by 2035.
Amélie Gallichan-Todd, B&Q supply & logistics director, commented: “We’re working hard to improve our fulfilment services to give our customers more choice of when and how their B&Q purchases are delivered. Our aim is to give customers more choice of speed and location whilst, at the same time, fulfilling our commitment to reduce our impact on the environment, and the introduction of these electric trucks into our fleet is another step towards our transition to alternative fuels.”
B&Q plans to add more electric vehicles to its fleet in 2025, which already includes the second largest Liquified Natural Gas fleet in the country.
The retailer is also trialling alternative ways of delivering products to home, such as its trial in Milton Keynes with DPD UK to deliver customers’ orders to home using autonomous robots, and its partnership with Deliveroo which aims to deliver customers’ purchases within 25 minutes.
?Just for Pets teams up with Just Eat for on demand delivery.
Just for Pets has teamed up with?Just Eat to enable customers to order products for on demand delivery in 30 minutes or less.
The partnership will launch in 18?of the?petcare retailer’s?stores and one DOG store in Cirencester this week, before rolling out to?Just for Pets?sister brand?Pets & Friends?in the coming months.
Shoppers will be able to select from thousands of products including dry, wet and frozen raw food for dogs and cats, as well as treats, grooming products and toys.
Paul Lewis, managing director of Just for Pets, said: “We’re so pleased to be Just Eat’s first specialist pet partner, as we look to offer our customers even more convenience.
“Whether you’ve run out of kibble, struggle to get to the store or need support transporting heavier items, our collaboration with Just Eat offers a new, quick and accessible way to shop and care for your pet.”
The news follows Just Eat’s recent partnership announcements with Waitrose,?Boots,?Card Factory,?Lovehoney?and?Hello Fresh.
Claire Pointon, managing director at?Just Eat, said: “The UK is a nation of ardent animal lovers and so we’re thrilled to team up with Just for Pets, enabling our millions of customers to treat and delight their pets.
“Demand for rapid delivery continues to grow as customers see the benefit, and Just Eat is proud to be leading the charge in empowering everyday convenience.”
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