With the news that Betta Living is now officially in administration, kbbreview talks to key figures in the industry for their thoughts and reactions.
The future of beleaguered retail chain Betta Living may still be hanging in the balance but suppliers and retailers have already begun to voice their opinions.
Sinks and taps manufacturer Blanco was a supplier to Betta Living for many years and managing director Simon Hart told kbbreview that he was saddened to hear the news.
Hart added: “As everyone is aware, the KBB market has been difficult since the Brexit vote. Dean House [owners of Betta Living] has been a loyal customer of Blanco for many years and it is therefore with some regret that we hear that the company has gone into administration. Our sympathies lie with all the staff and managers of the company, many of whom will find themselves unemployed in the run-up to Christmas.”
Paul Jenkinson, managing director of Faith Furniture Company, said that although he didn’t want to speculate on the news, he thought it was clear that things had been bad for a while.
He added: “Obviously, I’m shocked and saddened for the staff who find themselves unemployed as we near Christmas. There are, of course, rumours of what’s happened and what might happen to Betta Living, but given the damage events like this do to suppliers, staff and our industry, it feels inappropriate to speculate. Something was obviously wrong for some time. Was it the sales/operating model? On the surface, home selling might appear an easy way to make money, but obviously it isn’t.
“Wren is marching on. From a similar number of stores, they’re achieving over £200 million, suggesting selling in a showroom versus selling in the home is the customer’s preference? We certainly see this ourselves at Faith Furniture Company, where we are going from strength to strength along with our independent retailers, which seems to prove that bricks-and-mortar independent retailers with heritage, who take sensible deposits and staged payments, remain a safer bet. Value, quality and a personal service are clearly what consumers want.”
Dave Jarvis, managing director of retailer Albion Bathrooms Kitchens & Electricals, agreed, saying that no retailer is safe from this sort of failure and that it is difficult staying ahead of the game.
Jarvis said: “Every business of our kind, that is to say a retail business, needs to expand its profitable sales continuously to survive in this day and age. The reported discounts of up to 70% are not sustainable unless you are also selling some goods at full retail price – a difficult task with customers trawling the internet for cheaper prices. When the expansion process falters, or the company becomes entrenched in only gaining the massively discounted sales and not the profitable ones, due to the salespeople taking the easy way out (discounts), failure becomes inevitable.
“I think the failure of another multiple in the UK just goes to show that in reality it isn’t easy out there and that there is not one business that is safe from failure due to the margin squeeze we are all experiencing from those canny consumers. Keeping the turnover coming in is not enough, we need profit to make the advances needed to keep one step ahead of the competition.”
Nathan Helms, a director at brassware distributor Arte Form, agreed with Swift Electrical commercial director and kbbreview columnist Malcolm Scott, and said retailers are often in a race to the bottom with prices.
He said: “As with other stories of this sort, one always considers the human costs. No doubt there are many hard-working and creative people across a firm so large.
“However, I find myself agreeing wholeheartedly with Malcolm Scott. Retailers like this often find themselves in a race to the bottom when it comes to price point. I wonder these days how many consumers are persuaded with 50% off, 10% off this weekend, a further 5% off if you bring in a coupon, and a free set of pots if it happens to be sunny on the day you buy. Ultimately, it’s about the bottom-line price that they and the retailer agree on, rather than a huge discount.
“It just shows how quickly fortunes can change with huge profits one year and a loss the next, followed by administration. In the market we find ourselves in today, there is no hiding place. Consumers are so clued up these days and many have higher aspirations on their bathroom and kitchen purchases. At Arte Form, we have a clear strategy of dealing with the independent, often owner-occupied businesses. These quality retailers deserve the business, as they work incredibly hard on the sales and design processes. Maybe some of quality staff at Betta Living will find a home at one of these retailers.”
Panther Distribution managing director Craig Kavanagh advised that while its business is relatively distant from Betta Living, it had previously supported the company with some remedial delivery work.
Kavanagh said: “My concern would be that a company like that, who is working with the end user and working on long credit terms, is always at risk of over trading when markets upturn or downturn.
“I don’t know the business implicitly, but I think they were getting into a number of high-street stores around the country on the back of an agreement they have with a retailer. And I think they’ve taken on some fairly weighty leases that were quite problematic to the business. I think when you’ve got such a high level of fixed costs, the amount of business you’ve got to generate to cover those and keep the business in profit is very, very tough.
“Having spoken to some of the people at Betta over recent months, I think in terms of where the sales were sitting, the growth was there. I just think it collapsed [with] longer-term issues with regards to heavy leases and property in areas that perhaps they weren’t getting the footfall for.”
Caple, Egger and BSH, which all did business with Betta Living, declined to comment.