As the failed furniture brand returns as an online operation under a new owner, retail expert Glynn Davis assesses its chances of survival...

In the 1980s MFI was briefly part of Asda and such was the poor reputation of the flat-pack furniture retailer for parts dropping off its goods that the joke at the time was that the supermarket chain was the only place you could buy a chicken where the legs would fall off.

Ultimately the legs and wheels came off the business and it collapsed into administration in November 2008. It has therefore come as something of a surprise to see it re-appear this month with claims by its current owners Walker Capital that the business still has some "affection" with consumers.

People have affection for a whole host of bygone brands. I have fond memories for butterscotch Angel Delight, white chocolate mice and Caramac bars but when I've tried them again recently the experience hasn't been quite what I remembered.

However, the big difference second-time around for MFI is that it has re-launched as an online-only brand. Walker Capital has certainly thought long and hard about the site as it bought the rights to the brand in 2009 and has apparently been working on the re-launch for the intervening two years.

This new operation is going for the store-less model, which must look massively appealing to a business/brand that put its earlier failure down to having to run too-costly and too large a store estate.

Management now reckons its slimmed down model can compete in the tough big-ticket market - specifically for furniture, beds and bathroom suites - as it will be able to operate on much thinner margins.

This might be so, but it will still have a tough time competing today - even if there does remain a genuine affection for the brand that reportedly had 30,000 outstanding customer orders when it collapsed.

For starters, it rejoins the market when the competition online is getting stronger by the day and new trading models continue to emerge. Among them is Worldstores that operates almost 80 niche stores such as HeadboardsWorld, TVStandsWorld and BarStoolWorld.

It drives customers to its sites through paid-search and it aims to have each of its stores in the top three places on the search engines when people are looking for specific terms. It is also launching an online one-stop-shop that will incorporate all the products from its various websites.  

Secondly, the new MFI site enters a market that has come to realise that the optimum model is multi-channel. The value of customers that shop across a retailer's various channels are massively more valuable and loyal than mono-channel shoppers.  

Multi-channel's growing value is reflected in the levels of usage of Click & Collect-type services. Recent research from e-commerce trade body IMRG shows that 10.4% of all online orders in the third-quarter of 2011 involved a collection of the goods in-store as opposed to being delivered to the home. This is up from 7.4% in Q2.

This is why the online operators such as Amazon, Ocado and Asos are considering opening stores that would have an in-store collection aspect as a crucial part of the model. MFI will lack this potentially important aspect.

Thirdly, industry powerhouse Ikea is putting its foot hard down on the accelerator and punishing the competition, and MFI will be among them. The global operator grew its market share in the UK and Ireland (for the year to end-August) after lowering prices by 5%.

Its share grab was helped by online sales growth (up 20%) and a new in-store picking service whereby staff pick customers' goods and then have them delivered to their homes.

While MFI online might not have any stores to worry about it will certainly have many other things to concern it as it works hard to keep its legs and wheels from falling off for a second.