We’ve been following for the past week or so rumours that Home Retail wanted to buy Habitat’s UK business, but hadn’t written them as we’d been steered away from writing it. It now appears to be true and the deal is imminent, but my perplexion about the deal is nothing to do with being annoyed about us not getting the story, more that it just makes no sense.
Habitat, which is currently owned by Hilco, was an iconic brand when Terence Conran set it up. I remember being taken to the one in the Kings Road by my parents when I was a kid and even at that age you could feel the buzz and excitement about that place.
That went long ago, way before the present owners took charge (although it’s important to note it retains its cachet in France, where the business is much stronger). It was ironically thanks to people like Ikea - its former owner - that the Habitat brand means nothing to people of my generation. It is perceived as overpriced and selling commodity products, and while Hilco has done a good job of getting the business back into shape and looked hard at the structure of the organisation, getting the next generation of 30-somethings to view it in the same way as my parents did will prove an impossible task.
Hats off to Hilco for getting it away, but a deal makes no sense for Home Retail (although the suggestion we’re hearing that Arcadia was in the frame is even weirder). The company was given some harsh treatment by the City following its dreadful first quarter update, primarily for its high exposure to the home market and total focus on the UK. So to buy the UK business of a brand which had its best days 30 years ago is weird. Presumably Home Retail sees synergies with Homebase and will put it into its sheds, but it’s not the answer to Home Retail’s problems that the City has been looking for.