Following a tough H1, the new chief executive for Bensons and Harveys faces the unenviable task of navigating a pair of fascias, which are losing both share and resonance, through a more competitive furniture market. Improving quality and design should be the focus of its strategy to encourage shoppers to consider them again.
Stuart Machin, who will become the new chief executive for Harveys and Bensons in August 2017, gained experience of taking over retailers in challenging conditions when he was the managing director at Target. Prior to him joining in 2013, the Australian department store had recorded three consecutive years of sales and EBIT declines but a turnaround strategy that focused on investing in price, rationalising ranges and developing online helped it return to sales growth in 2016. His work in online will appeal to Steinhoff, as it works towards having 10% of sales go through this channel but the main problem which Machin must solve is how to provide shoppers with a reason to visit either Bensons or Harveys.
While Bensons and Harveys have been refreshing its stores, others have done this too and improved product quality, introduced new ranges, extended their customer bases and communicated these changes to prospective shoppers. With the competition in living room and bedroom intensifying, Harveys and Bensons’ offer is now not as developed as its rivals. To recover, it should introduce exclusive products from the premium offer of recently acquired businesses such as Mattress Firm and Cofel into Bensons’ branches, develop and communicate higher product quality at both fascias and add more design elements to its upholstery and living room offer.
Despite the tough conditions, there have been winners within furniture in 2017
For the six months to the end of March 2017, Harveys and Bensons combined sales fell by 6%. This decline has been attributed to the net closure of seven Bensons’ stores since June 2016 and the harsh market conditions within furniture, as weak consumer confidence is discouraging customers from making big ticket purchases. With inflation set to outpace wage growth, further suppressing spending power, the prospects for furniture in 2017 will remain difficult.
While these tougher conditions have impacted other prominent retailers, with DFS recently announcing a profit warning and B&Q seeing non-seasonal like-for-likes (which includes showroom) fall by 3.9%. However, there are success stories with Dreams reporting that it was trading 5% above the beds market and Wren, IKEA and John Lewis all making headway within furniture, indicating that retailers which have invested in their offer are still attracting customers.
Bensons struggled in a more competitive market
The main culprit behind Steinhoff’s weak performance was Bensons, which was the only top five retailer to lose bedroom furniture market share in Q1 2017 according to GlobalData findings. Its market share lead over Dreams has eroded from 1.2 percentage points in Q1 2016 to just 0.2. Bensons has not benefitted as much as others have from Dreams’ “Replace Every Eight” advertising campaign and, given the comparative buoyancy within bedroom furniture, as customers prioritise replacing products in this category, this performance is concerning.
The competition within this sector has intensified with Dreams investing in staff training and product quality, John Lewis using Simba mattresses to drive footfall where it can showcase a full offer including new innovative storage solutions and IKEA’s low prices but high quality (reflected by its £180 Hovag mattress receiving a Which? Best Buy award) offering excellent value. Along with the raft of new online mattress providers disrupting the market, Bensons has struggled to stand out.
Harveys’ offer is losing resonance
The main problem at Harveys, which has opened a net of nine stores since June 2016, is that fewer people consider it when purchasing living room furniture. When asked where they considering for living room furniture in Q1 2017, Harveys ranked 13th, way behind key competitors such as John Lewis, Next, and DFS and down four places on Q2 2016.
With DFS and ScS extending its customer base towards affluent shoppers, by launching capsule collections and concessions within House of Fraser respectively, IKEA serving the more constrained and John Lewis, Multiyork and Sofa.com catering to ABs, it is unclear who Harveys is targeting. Its recent advertising campaign is unlikely to rectify this, showcasing little of its offer and focusing primarily on price, with little to distinguish it from ScS or DFS.