Viewpoint – Biting the store bullet is only one of the property challenges

Retail Insider and K3 Retail bring you a monthly column taking a look at some of the most pertinent and interesting topics of the day in the big wide world of retail.

Biting the store bullet is only one of the property challenges

DIY is among the categories with the lowest level of sales derived from the online channel – albeit one that is growing – but this has not stopped the sector’s big players from realising there is a need to reduce their store numbers and square footage.

Having successfully developed a coherent digital concept that is now being rolled out across its extensive estate the team at Argos are now applying this expertise and learning to sister business Homebase.

John Walden, CEO of parent company Home Retail, has admitted the category is “over-spaced” and suggested part of the remedy is to sell off 80 of its 320-plus Homebase stores. These are its least profitable units – of which seven have already been closed in the first half of its current financial year and over 20 more are expected to be offloaded in the second half.

This follows the actions of B&Q that has for some years been closing units, downsizing by sub-letting space, and using other creative ways to reduce its exposure to physical store space in the UK.

Even though the company was well ahead of the game with implementing this major strategic objective the business has found it tough to exit some of the leases on its stores. It has had many units on the block for a lengthy period despite its best intentions.

The reality for B&Q, and undoubtedly this is also the case for Homebase and other retailers, is that where a number of years are left on a lease and the rent is being paid on-time by a respected operator then it is nice and easy for the landlord to make every effort to do absolutely nothing and retain the status quo.

So while it is sensible to see the DIY retailers recognise the major changes that need to be made, and are taking the necessary decisive action, it must be frustrating that other parts of the retail food chain are not necessarily on the same page.

Glynn Davis, editor, Retail Insider

K3 Retail deliver multi-channel solutions that enable retailers to create joined up shopping experiences for their customers whether they choose to buy on-line, direct, in-store or via mobile. It has over 20 years’ experience delivering award winning solutions, to more than 175 internationally recognised retail brands.