The UK garden centre industry faces significant challenges with key players, Dobbies and Homebase, restructuring their operations.
- Dobbies plans to close 17 stores to address uneconomical rent costs, aiming for sustainable profitability.
- Homebase seeks new investment following divestiture of several stores, signalling a strategic shift.
- Both chains are impacted by the cost-of-living crisis and changing consumer behaviours.
- The overall gardening sector is struggling due to economic conditions and adverse weather.
In recent developments, the UK garden centre industry is undergoing considerable transformation. Two major players, Dobbies and Homebase, have announced significant restructuring plans to navigate ongoing financial difficulties. These strategies highlight broader challenges facing the entire market.
Dobbies has unveiled a plan to shutter 17 of its locations, including its Little Dobbies urban formats, as part of efforts to return to sustainable profitability. This move is necessitated by historically uneconomical rent expenses and aims to facilitate long-term stability and future investment. Additionally, the company is negotiating rent reductions at several other sites to alleviate costs. The chain reported a substantial pre-tax loss of £130.8m, attributing setbacks to adverse weather, macroeconomic pressures, and complications with refinancing debt, which impeded product availability and reduced sales by 8%.
Former executives and industry experts suggest internal strategic missteps also contributed to current difficulties. Acquiring multiple garden centres and investing in new store formats without expected returns have placed financial strains on the company. Nicholas Marshall, a former Dobbies executive, stressed the importance of aligning offerings with core customers, hinting at past expansions that diverted from traditional market demands.
Homebase is actively pursuing new investment options, having recently sold several properties to foster a new growth phase. The sale includes 10 stores, with spaces repurposed by other retailers, as part of its downsizing initiative. This comes amid an £85.2m loss following the cost-of-living crisis and cautious consumer spending, which notably impacted demand for DIY and big-ticket items.
Homebase’s history reflects a series of strategic shifts, including a sale to Hilco in 2018 and subsequent operational changes that initially improved profitability. However, recent years have witnessed a downturn exacerbated by operational costs and declining consumer confidence. The search for new investment is partly driven by an expiring asset-based loan, necessitating capital to sustain operations in a challenging retail environment.
The struggles of Dobbies and Homebase are mirrored across the broader gardening sector. Economic uncertainties, compounded by unfavourable weather, have hindered trading for many businesses. Reports indicate the gardening market’s dependency on housing transactions for growth, with encouraging signs emerging as housing activities begin to pick up. This may introduce opportunities for recovery across the sector.
The restructuring efforts by Dobbies and Homebase exemplify the challenges within the UK garden centre market, driven by economic pressures and internal strategic shifts.
