Simon Roberts, the CEO of Sainsbury’s group, which also owns Argos and Habitat, states that he was pushing for expansion on his food business as the food sector kept expanding.
Sainsbury’s announced that they are investing £130m to buy ten stores from Homebase and convert them into supermarket giants.
The deal represents a turning point in two major British retail brands as concerns are for the DIY chain’s future.
Damian McGloughlin, the managing director of Homebase, wrote to suppliers on Thursday, stating that the company was trading behind where they planned to be and would begin an active sales process to seek new investment every week.
The first of its new shops would open next summer, said Sainsbury’s, the second largest supermarket chain behind Tesco in the UK. A total of one thousand people would be hired by the entire group, which includes stores in England, Scotland, and Northern Ireland. Homebase workers at risk of losing jobs will be guaranteed an interview.
The retailer plans to open up as many large stores next year as it did over the previous five years under its planned expansion.
Simon Roberts, the CEO of Sainsbury’s group, which also owns Argos and Habitat, states that he was pushing for expansion on his food business as the food sector kept expanding.
Roberts said that since they offer the best combination of quality and value in the market. They are getting customers from their key competitors and continuously driving consistent growth in the volume market share. They want to continue building this trend. To capitalize on that, they are expanding into their grocery footprint.
The growth occurred five years after accessible retailers like Aldi and Lidl increased their UK development, putting pressure on traditional chains, which led to Sainsbury’s closing its fifteen major supermarkets and several Argos stores.
Due to a decline in sales due to an increase in online shopping, Tesco, Asda, Morrisons, and Waitrose were forced to make layoffs.
By matching the price with Aldi on essential product lines while offering loyalty card discounts and alluring treats, Sainsbury’s and Tesco have won back the market share.
The broad range of well-placed products benefitted the customers who had the strain on their finances eased, and they continued to save more money by pampering at home rather than dining out and trading up for more expensive delicacies.
Hilco, the current owner of Homebase, tried to sell previously four years ago and is again back on the market this spring. It is in its last negotiation to extend the £95m loan facility with Wells Fargo. The negotiation is due to end in December.
When Sainsbury’s founded the DIY chain in 1979, it had a turbulent history and was made a sale by the supermarket in 2006. It will shrink to over 130 outlets after the sale of 10 stores, which is almost half of the 250 it had when it was purchased by Hilco for £1 from the Australian retail group Wesfarmers in 2018.
Wesfarmer owned the group for only two years, which some consider the worst retail takeover.
As reported by the trade journal Gardenforum, the sale of 10 stores due to the long-term plan of transforming Homebase and returning to prosociality, McGlouphlin told the suppliers.
Homebase’s parent company, HHGl, faced an £85 million loss at the year-end of January 2023 after having a profit of nearly £56 million the year prior, an 11% decline in sales to £701 million.
During the Covid pandemic lockdown, the DIY industry boomed by not having a decline in sales since the household decided to pull back on spending on vital renovations due to high costs such as energy and food bills as well as increased mortgage and loan payments due to high interest rate.