Farewell Focus

Another well known British brand, Focus DIY, has gone down the toilet. Unfortunately for them, it was one of toilets from their bargain £199 bathroom suite.

What went wrong?

According to The Telegraph;

Simon Allport, one of the administrators, said: "Focus will continue to trade as we look for a buyer for the group and its stores. It is very much business as usual." He said the company has struggled due to low consumer confidence and a very weak housing market.

A weak housing market?

Recession = dead housing market = people invest in their houses rather than moving = boom time for DIY stores

What went wrong for the executives of Focus?

They sat back and let their competitors run riot, basically.

Homebase shifted their brand positioning upwards, B&Q used their size to control costs and Wickes crept up from their bargain basement builder's yard image and started chipping away at Focus' core market like a Dad on Christmas morning with a new hammer drill.

Even Wickes' new slogan, "It's got our name on it" is a crystal clear and quite brilliant positioning statement. A few years ago, that would have been an embarrassment. Today, it's something they aspire to take pride in.

This has happened so often to so many corporations that you'd think CEOs would have learned their lesson by now. Yet, time after time, huge High Street names disappear because they sit still while their competitors push up from the bottom and squeeze down from the top.

Focus tried to broaden their product base, moving into pet products and other such junk, but taking on new product lines is costly, and if your bank balance is heading south, you need to reduce the product range, not increase it.

"Despite management's actions to tightly control costs and restructure the operations, unfortunately it has not been possible for the business to continue to trade outside of insolvency," Mr Allport said. The company, run by former Iceland boss Bill Grimsey, warned last night that it had defaulted on a loan and was preparing to appoint an administrator.

The people involved in these situations often blame outside trading conditions that are beyond their control, and make the situation more complicated than it actually is.

By the way, our prediction is that Wickes will be next, because they have moved their positioning and stock strategy upwards without protecting their traditional core market of building materials and consumables. Seriously, go into Wickes and try to buy a box of nails. Recently, I went to buy a U bolt and none of the staff knew what one was. However, they could design me a fitted kitchen instead.

The simple yet often hard to face truth is that, when times are hard, the absolute last thing you must do is drop quality and price, no matter how tempting that seems.

At Iceland, Bills' strategy was to drop price and quality, competing with the bottom end retailers such as Heron Foods. This is fine for food retailers, because once your Mum's been to Iceland and come back with 96 cocktail sausage rolls and a box of frozen mini kievs for £1, she can go again tomorrow and get some more because there really is no limit to the number of sausage rolls that a gang of growing kids can stuff down their throats.

But what about Dad? How many lawn mowers does one man need?

We've shopped in Focus many times. Why? Because they were cheaper. That's never, ever a stable foundation for such a top heavy business that has limited potential for repeat product sales.

With the benefit of hindsight, we can say that if the Focus board had asked us at the time, we would have advised them to:

Reduce the number of product lines and choose target areas that were traditionally profitable.

Continue their discount schemes for retired DIYers and home movers. The problem was that they happily gave away discount cards, but did nothing to tie in product lines with those target shoppers.

For example, what do retired discount card holders need? Screws sold in small packs or even individually, basically anything for 'odd jobs', home improvement, etc. and anything that you used to be able to buy that is now hard to find, for example, wooden wall plugs.

Home movers? You could say that their core ranges of paint, furniture, DIY materials etc. target homemovers, but think back to the last time you moved house. What did you need?

You see the problem? Retirees and home movers only shop there because of the discount and have no reason to stay loyal after the discount card has expired.

B&Q had a trade counter and pushed down on Focus, Screwfix continued their growth and pushed up. Focus got caught in the middle. Trade consumables is an attractive market with lots of stock turnover, but tradesmen have different needs to consumers, for example they want ex-VAT invoices, free T shirts and bacon sandwiches.

Pet products? Big mistake. Their like for like prices were lower than Pets At Home, but limited shelf space meant they just didn't stock much that a pet owner needs. And with their retail park locations, there was sure to be a Pets At Home next door anyway.

In short, Focus. The clue was in the name all along.