Leo McKee, the chief executive of rent-to-own electricals and homewares retailer BrightHouse, likens his store managers to counsellors.
He says that, with many of BrightHouse’s 140,000 customers visiting their local store each week to make payments, they regard the stores as community hubs, with store managers dishing out “good advice”. It is this close relationship that leads McKee to claim few retailers know their customers the way BrightHouse does.
“We know our customers in a way that is unrivalled elsewhere on the high street,” says McKee. “Because we are very close to our customers we become aware of any change in circumstances very quickly. We can give them a payment holiday if they need it.”
An average BrightHouse customer, he says, is female, aged 25 to 45, with children and has a household income of less than£18,000. There is a good chance she is wholly or partly dependent on benefits and she may be a lone parent. She probably lives within three miles of a store and has no access to a car.
Individuals are not credit checked and can return items if they no longer want them, which according to McKee is one of the most compelling aspects of BrightHouse’s proposition. Customers pay for the goods at a borrowing rate of 29.9 per cent APR. The average shopper pays£23 a week and has an average of three and a half items out on loan through BrightHouse.
As its target audience is lower-income households, is there a worry that as the downturn bites these shoppers will stop spending on discretionary items? McKee doesn’t think so.
“Our target population is to some extent less affected by the turmoil in the economic cycle,” he says. “A large proportion of our customers don’t have mortgages, so whether inflation goes up 1 per cent or down 1 per cent does not make a great deal of difference to them.”
While he admits it would be “foolish” to assume BrightHouse is immune to the economic gloom, he believes there are opportunities to increase the customer base as cash-strapped consumers trade down. “There’s a huge market out here,” he says. “We believe there may be as many as 10 million consumers in our target population.”
In the short term, McKee is aiming for half a million customers within five years and he believes there is scope for more than 600 stores to service them through. It operates 177 at present and plans to open at least 30 next year. The growth plans are on the back of impressive figures – it revealed a 13.6 per cent jump in like-for-like sales for the six months to September 31.
McKee says BrightHouse’s success is not just down to the availability of credit, but also product quality. For example, he recruited a professional furniture buyer – a first for the company – which he says led sales in the category to increase “at a rate of knots”.
Some products are sourced from China, but most are sourced from Europe and many of the furniture lines are British. It sells brands such as Philips, Sony and Whirlpool, with some own-brand products too. Furniture accounts for about 20 per cent of sales, audio and visual for 30 per cent, domestic appliances for 20 per cent and 30 per cent for technology, which includes laptops and mobile phones.
BrightHouse is not without its critics. Some have accused the retailer of taking advantage of people who struggle to get credit through normal channels by charging inflated prices. But McKee argues that BrightHouse’s business model allows people who would not ordinarily be able to afford such goods the chance to purchase them.
In fact, McKee claims that far from being an unscrupulous company, it is actually an industry-leading, socially responsible business. For instance, the retailer is trialling Learndirect information points in nine of its stores, in order to “provide customers with information to further develop their life skills”, McKee says. “We’re a community store and our staff want to put something back in.”
Whatever people might think of BrightHouse, there is no denying it has a well-executed business proposition that can thrive in this economic climate. As McKee says, a lot of people’s aspirations are to do with “holidays abroad or a flash car. But our customers’ bragging rights are associated with a TV, a sofa and a cooker”. And BrightHouse is poised to meet that demand.
Due credit:
Age: 62
Lives: Beaconsfield
Family: three grown-up children, two grandchildren
Likes: France, theatre, restaurants, gym
Career history:
2005: joined BrightHouse as chief executive
2001: various directorships, including Ponden Mill and Courts, principally as turnaround manager
1986: Kingfisher Group, where board roles included managing director of Woolworths from 1999 to 2000
1984: management services director, Rumbelows, Thorn EMI
1978: North Europe production executive, Levi Strauss
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