This article was first published in July when The Range was first reported to be pursuing a deal with Homebase, which has now been completed.
While the business pages have been dominated by the fate of Carpetright, now in the hands of its biggest rival Tapi, discounter The Range has been quietly pursuing a deal of its own.
Over the weekend, Sky News reported that The Range had expressed interest in taking over British DIY stalwart Homebase – resulting in the retailer’s owner Hilco becoming open to putting the business up for sale.
According to the report, city sources say the discussions were not certain to lead to an agreement but analysts suggested that if it did, The Range wanted to take on Homebase’s 140 stores.
The Range has been on a steady expansion plan, growing its estate to 200 with the acquisition of Wilko, and taking on Homebase’s store estate would certainly supersize the group – but what would The Range want to do with Homebase? And does it have what it takes to continue its transformation plan?
There are several options as to what The Range could do if it acquires the Homebase brand and, in theory, we could end up seeing tri-branded Homebase, The Range and Wilko stores in future.
“I would expect that The Range would run Homebase as a brand, mostly based on what it’s done with Wilko,” she says.
“Homebase stores are large, so there’s potential that it could put all three stores in one and build their own superstore if it wanted to, but it’s unlikely based on how it’s progressed things so far.
“It’s more likely that Homebase would come under the CDS Superstores banner and The Range would take some of the Homebase product categories into its larger stores.
”The Range has likely learned a lot through its acquisition of Wilko already, and it seems almost bullish in what it wants to do now because it’s progressed this quite quickly and it clearly knows its strength within the home market.”
Big-ticket items
The Range has much of home improvement covered but one area it hasn’t fully fleshed out in its offer is fitting big-ticket items like kitchens and bathrooms. This is an area that would be tricky to grow, so buying an operator like Homebase would equip it with trained staff, a trusted supplier base and the tech necessary to provide the service.
”A buyout would bring the specialism that Homebase offers to The Range,” says Retail Navigator senior retail analyst Kate Doherty.
“It would get the expertise that comes with Homebase and its employees, as long as it also moves across, and the new THG Ingenuity-powered website that offers home planning tools. That would give it a step up to the level of a specialist and it can exploit the expertise and the quality that you get from that tried and tested service.”
Another element of the Homebase business that The Range will be interested in is the wealth of brands it has brought into its stable over the years.
Homebase bought Bathstore in 2019, selling its products in stores and operating 44 Bathstore shops across the UK.
It also has an in with powerhouse retailer Next, selling its wallpapers and home decor in its stores and running Garden by Homebase mini garden centres in a handful of Next locations.
“Buying Homebase gives The Range the opportunity to be more of a specialist and to push itself into that market – becoming almost like a one-stop shop for anything for the home,” says Doherty
”Particularly if it did embrace a superstore setup, then it is everything under one roof.”
A fixer-upper
As much as Homebase has much to offer The Range, the discounter would have plenty of fixing up to do if it wants to get the retailer back to peak performance.
The home and DIY sector hasn’t had an easy year. After a surge in home improvements during the pandemic, when consumers found they had less disposable income during the cost-of-living crisis, diving into new projects around the house was not the top priority for many.
This has created a challenge for Homebase and its fellow home improvement retailers like Wickes and B&Q, with the former struggling more than most due to its customer base swaying more towards consumer DIY, while its competitors’ customer bases have higher proportions of trade shoppers.
Value retailers like The Range have come out of the cost-of-living crisis well, as shoppers opted for more affordable home improvements like new curtains and cushions over paint and wallpaper.
“After seeing sales decline by 11% in its FY2022, we expect Homebase has continued to struggle due to its reliance on DIY and big-ticket furniture categories,” says GlobalData lead analyst Emily Salter.
“The contrasting performances of Homebase and The Range can be seen in their shares of the UK home market. Homebase’s share fell from 2.3% in 2019 to 1.9% in 2023, while The Range’s increased from 2.0% to 2.5% in the same period as it has continued to open stores and gain share as discounters maintain their hold over UK consumers.
“The DIY market fell by 0.3% in 2023 as consumers had already made any improvements to their homes during Covid-19 lockdowns and due to the weak housing market and low consumer confidence for purchasing big-ticket items. These trends continued into the first half of 2024, impacting DIY demand. This will also have hampered spend on kitchens and bathrooms, with weak demand across these categories being reported by Homebase’s competitors B&Q and Wickes. ”
Homebase to fanbase
Although a buyout would create challenges for The Range, Bloomfield thinks the value discounter has what it takes to make it work.
“Homebase would be a strong buy for The Range,” she says.
“The discounter has got a strong balance sheet and it says it has a significant level of net assets, so it’s in a good position to make this move if it can get it over the line.”
And deal or no deal, The Range is set to storm ahead regardless.
“The Range has a loyal following,” she adds.
“There’s a customer that loves shopping at The Range and that’s evident in its offer. It’s also really bolstering that offer, even opening in-store cafes. It’s switched on to what people want and the likelihood is, even without this deal, it will keep growing it just might not be at the same pace.”
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