Strategy from Down Under almost sent Homebase under

Wednesday 12th September 2018

There are few home comforts for Homebase right now. The DIY chain confirmed on August 31 that it will close a further 42 stores later this year, resulting in 1,500 job losses.

The home improvement and garden retailer has already shut 16 stores this year, following its acquisition by restructuring company Hilco Capital, and a proposed Company Voluntary Arrangement (CVA) has now been approved by creditors.

It is easy to speak with the benefit of hindsight, but it does seem that the business model pursued by Homebase’s previous owners, the Australian business Wesfarmers, was fundamentally unsuited to the UK.

Flagship product ranges such as designer kitchens, and high-end Habitat and Laura Ashley concessions were dropped altogether, shaving millions of pounds of sales in one go. Wesfarmers’ strategy was to try to compete head on with key competitor B&Q and others such as Wilko, The Range and the supermarkets, rather than to build on Homebase’s strengths and differentiate.

Put simply, it didn’t work. Homebase has lost its reputation as an aspirational home and garden brand, and it hasn’t given customers enough reasons to spend there instead of the others.

Homebase will be hoping, as chief executive Damian McGloughlin puts it, that this CVA will give it a “platform to turn the business around and return to profitability.” Homebase certainly needs to get back to basics of offering core customers the products and services they actually want.

Read the full article by Gordons head of retail, Andy Brian, on Garden Centre Retail.