Dobbies failing to cash in on grey pound
You don’t need Retail Insider to tell you that older shoppers are the grouping with the most disposable income in their pockets.
While young people and those in the middle – with families and mortgages stretching their finances – are strapped for cash, it is their parents and grand-parents that are living it up, with their high levels of disposable income.
For retailers focused on this more mature end of the market there is clearly an opportunity. This is undoubtedly one of the sweet spots in retailing and garden centres fall firmly in this camp, with a customer base drawn largely from those with lots of grey hair (or very little hair).
It is therefore all the more surprising that Dobbies Garden Centres are performing so poorly. According to its recent accounts filed at Companies House, the Tesco-owned chain has suffered a severe profits decline.
For 2013 its trading profits have fallen to £4.1 million compared with £7.5 million in 2012 and a peak of £9.7 million in 2010. In contrast to Tesco’s other problems Dobbies should be a bright spot.
When Tesco bought the business in 2008 it paid over the odds (at £155.6 million) when it got in into a clash over its ownership with entrepreneur Sir Tom Hunter (who then owned Garden Centre group – parent of the Wyevale garden centres) but this was an expression of its confidence in the company as it clearly foresaw the sweet spot the company was in.
But according to a City analyst it has failed to deliver on its hopes, and plans to grow the company from an initial 25 to 100 units by 2020 looks to have slowed. At a current 34 outlets it looks more likely to push towards a lesser 70 units.
It also had plans to build up the restaurant aspect of the sites but judging by the 2013 trading figures this does not look to have quite played out as anticipated.
In contrast, other operators like Country Food & Dining (as featured here on Retail Insider in May) seem to be cleaning up at their restaurants. Such has been its success that it is running a trial of a restaurant in a unit of Wyevale (now owned by Terra Firma) with a view to rolling them out across its estate of 160 outlets.
Although Dobbies is arguably a small issue for Tesco compared with the other problems that its management team is presently addressing, it really should be pulling its weight a little better and be making a much more positive contribution to the overall group’s profitability.