DIY retailer Homebase has shelved its expansion strategy to focus on store refits after outlining plans to shed 12% of its store base in the next five years as its multichannel sales grow.
Homebase is to plough investment into its existing estate instead and will roll out a new look format to stores, modelled on its trials in Aylesbury and Ruislip shops.
The retailer has leases coming up for renewal on 65 stores in the next five years and plans to close 40 of them, bringing its store estate down to 300, as revealed in Homebase’s parent Home Retail’s half year results last week.
It is a change in strategy for the retailer which, until recent months, was on the expansion trail. Just 12 months ago, in October 2011, Home Retail said that Homebase will “continue to examine the opportunity for new store openings”.
Homebase managing director Paul Loft said: “A while ago we had a model of 400 stores, but two things have happened since then. The economy changed and multichannel is moving rapidly.
“With store openings there is a level of uncertainty with the growth of multichannel. Whatever models people have now might not apply in 10 years.”
He added: “We haven’t got a plan to open more stores. We want to focus capital on the ones we’ve got. We aim to refit all stores with the new look.”
Loft said that the 65 expiries puts Homebase in a strong position. “Most are stores we want to get out of. A number are loss making,” he said.
Homebase’s multichannel sales accounted for 5% of total revenue in its first half, which Loft said was a “good” proportion for home improvement retailers. The proportion of rival B&Q’s revenue made up from multichannel sales is thought to be considerably less, for instance.
Loft said Homebase will introduce improvements to its online offer including launching next day delivery and extending the number of lines sold.
He added that the rise of online sales will change space allocations in store. Homebase is for instance trialling reducing the number of door handles in store so space can be reallocated to other products such as room sets.
“How the stores look may change over time,” he said.
The store refits include a Habitat concession after Home Retail bought the brand out of administration last year.
The DIY retailer’s like-for-likes slumped 6.2% in the first half after the wettest spring for 10 years hit sales of gardening products.
“We had an okay first half considering the dreadful weather,” said Loft. “We gained share.”