The question is how far the span of Halfords’ group can be profitably pushed without sprawling.
Since this piece was written - for tomorrow’s edition of Retail Week magazine - Halfords has announced the £73.2m acquisition of Nationwide Autocentres, a 224-outlet business offering services such as MOTs and repairs. Halfords said Nationwide “will complement our retail business closely” and the City liked the deal. The purchase of Nationwide seems to support the argument made in the column.
First it was HobbyCraft, then it was Blacks. Who will emerge next as being on motor accessories and leisure group Halfords’ potential acquisition list?
If it’s anything like the first two, it will no doubt be another surprise.
Of that pair, Blacks makes more sense than HobbyCraft. Over the past few years, Halfords has carved out a space for itself in the outdoor and camping market and a rationale for a Blacks deal can be made.
What is clear is that Halfords generates plenty of cash that it wants to put to good use. The question is how far the span of the group can be profitably pushed without sprawling.
If Halfords gets deals right, it has the opportunity to put together a raft of businesses with synergies and complementary qualities. If it fails, it risks becoming a conglomerate of the sort ultimately destined for break-up.
The association of Halfords with names such as HobbyCraft calls to mind ill-fated enterprises such as Ward White - now gone the way of all flesh - although constituent businesses, including Halfords itself, retain strong positions.
The supermarkets are the best example of skilful entry into new categories but, while the food boys have made general merchandise their own, few general retailers have managed to offer such an breadth of product. Kingfisher, while hugely successful at the top of its game, ultimately refocused around core strengths.
These days the supermarkets are increasingly focusing on services - Tesco’s banking offensive is the latest example. Halfords too has ramped up its services and offers, for example, mirror fitting and dent repair. In its January update, Halfords drew attention to the progress made in such services, and higher-margin accessories.
Halfords chief executive David Wild is a former Tesco and Walmart man and no doubt can see opportunities to adopt similar approaches to those giants.
Perhaps services, rather than conventional retail businesses, might present opportunities for Halfords too.
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