kbbreview Editor Andrew Davies on the collapse of Homeform and why the whole industry will suffer.
If brown is the new black and staying in is the new going out, then Homeform is the new MFI.
It’s understandable why the sounding of the death knell for the Homeform Group and its Moben, Sharps, Dolphin and Kitchens Direct brands is ringing some particularly familiar bells for anyone caught up in the MFI debacle of a few years ago.
The difference this time is that, while devastating for anyone affected, its overall market impact in terms of immediate financial issues will be much less quite simply because most people learnt their lesson.
Suppliers in particular, Mark Two being the most apparent example, will have spread the risk much more and aren’t anywhere near as reliant on individual buyers as they were on MFI. And secondly they would’ve had them on a much shorter credit leash than they were prepared to give MFI – no room for goodwill anymore.
Don’t get me wrong, a lot of people will lose their jobs because of this situation, many working directly for Homeform and many for their suppliers, but it won’t finish, or nearly finish, whole companies off like MFI did.
The real medium-term issue to tackle in the deflation of Homeform is the effect on the wider consumer confidence in losing yet another high profile kitchen, bedroom and bathroom retailer through financial mismanagement. If a company with brands the size of Moben, Sharps and Dolphin – with such a ubiquitous presence on every High Street – can go, then anyone can.
This unease, of course, isn’t helped by the frankly diabolical way that it has gone about it either. Firstly, staff were told to just go home a few days before payday with no indication whether they’ll see that month’s wages. Secondly, fitters and installers haven’t been paid for jobs completed, and many were, of course, halfway through projects inside customer’s homes.
I’ve already heard several stories of fitters finishing the jobs out of pride and goodwill, even though they know they’ll probably never get paid. Fair play to them.
Thirdly, and most importantly for consumer confidence, there are hundreds of people who have gone through the entire sales process, picked their products, discussed their designs, and then committed to the project by handing over a deposit – only to then be told that not only weren’t they getting the kitchen, bedroom or bathroom, but they weren’t getting their money back either.
And those deposits were being taken on the Wednesday before the administration was announced on Thursday.
If those customers paid that deposit on a credit card then they’ll probably get it back, but that’s hardly the point. This is a black time for the KBB industry, there are very few high profile companies leading consumer opinion in this area and one of them has just thrown a brick through whatever reputation it had managed to rebuild since the recession.
And independents will feel it most acutely, as every customer will now want to know how safe their deposit is and how likely they are to get the job finished once its started. Whether you’re a big fan of multiples or not, I present this crude and pompous paraphrase of a classic poem:
No retailer is an island
Entire of itself
Each retailers’ collapse diminishes me,
For I am involved in retailkind.
Therefore send not to know
For whom the bell tolls
It tolls for thee…
Andrew Davies is Editor of business magazine