Having endured sale after sale, capped off by a global pandemic, Bensons for Beds may finally be turning a corner. Paul Farley speaks to CEO Mark Jackson about what went wrong – and, perhaps more importantly, what’s going right …
On June 30th 2020, Bensons briefly dipped into administration before being bought back by its former owner Alteri Investors, in a pre-pack deal designed to shed the business’ existing debts and salvage the majority of its stores, staff and manufacturing capabilities.
The deal – which also saw Alteri divest itself of the troubled furniture chain, Harveys – was the culmination of nearly four years of political and financial manoeuvring, sparked by “accounting irregularities” in Bensons’ South African parent company, Steinhoff International Holdings, coming to light in late 2017.
These irregularities – which would later be confirmed as systemic fraud at a management level, dating back years – prompted the group to secure independent financing for its UK interests, before selling them to Alteri in November 2019.
Seven months (and a pandemic) later, and Bensons would be given a new lease of life when Alteri sold these businesses and repurchased the bed brand, injecting £25m and pledging a thorough overhaul.
If all that sounds complex, just imagine being tasked to maintain, evolve and, twice, sell that operation throughout this upheaval, while reassuring suppliers that the business still had a future. Covid-19 is the biggest curveball the industry has faced to date, but Bensons was already facing its third strike.
“Once fraud was exposed within the Steinhoff business, Bensons operated under the same conditions, as a distressed retailer,” recalls retail veteran Mark, in his first open discussion with the trade following the pre-pack. “We endured 2-3 years of significant underinvestment in product innovation and range evolution, and our digital operation was not performing.”
Mark pauses as he thinks back to the implosion at Steinhoff. “I still remember Christmas 2017,” he says, the memory clearly being one he’d rather forget. “The last four years have been hard.”
An understatement, perhaps. Yet through those years, the bed business performed adequately – even if its furniture counterpart did not.
“Before the pandemic, Bensons was already a healthy business,” says Mark, “but it was inextricably linked to Harveys.”
Right-sizing the 140 stores it shared with Harveys (often relocating nearby, or partitioning the back of the stores’ ground floors while keeping the front of house and mezzanine operational) is just part of a three-year strategy to stabilise and grow Bensons as a standalone business. From manufacturing to distribution, every aspect is under scrutiny, says Mark.
“We’ve got very clear transitional plans and we’ve landed a number of those initiatives already, but there’s lots more work to do in some areas,” he explains.
Alongside 20-year Bensons veteran Alan Williams as the MD of retail, Mark’s leadership team now comprises CFO John Sidebotham, and chief commercial and digital officer Nick Collard. The business will soon appoint a new COO, following the departure of Joe Wykes.
Bensons’ circa-180-strong store estate will evolve, but is unlikely to change dramatically in terms of numbers, Mark reveals: “We’re definitely overspaced in a chunk of our stores, but the rate of change will depend on the economics of each individual deal with our landlords. We’re looking at an ideal store size of 6000-8000 sqft.
“There’s room for expansion, but it’ll be opportunistic. There are gaps in our estate – we’re looking at 7-8 at the moment – this is definitely a market where your online channel performs better where stores are present.”
Thanks to historic underinvestment and changing consumer buying habits, there’s real growth potential in the digital arena, says Mark.
“There’s great opportunities to take a bigger market share of digital,” he explains. “Previously, ecommerce was run independently of the store estate, on a poor platform, and, consequently, it underperformed.
“We’re not truly omnichannel yet. At the moment, our customers’ in-store journey is guided, but online it isn’t – we want to make the journey consistent.”
That disconnect was laid bare when Bensons’ supply chain faltered as a result of the pandemic. At its worst point, the business was receiving some 10,000 customer calls each week, often checking delivery schedules or complaining of delays.
“The last 15-18 months have shown that this is a sector, UK wide, that’s based on very strong sole supplier relationships,” says Mark. “But as soon as there’s a breakdown – be it springs, foam, or something else – it quickly becomes clear that relying on three or more suppliers for one order is not so clever. All those supply chain models which worked perfectly adequately in a ‘normal’ world, were found to be wanting.
“For example, we import our high-end bed frames from Malaysia. When they shut the ports this summer – with no end in sight – we had 19 containers there, ready to ship. And all we could tell our customers waiting for their orders was not to worry. When you’re receiving such a high volume of calls, these excuses just don’t cut it with 2-3% of your customers – and that’s a huge number of dissatisfied shoppers. Some of it gets quite personal.”
Mark says the experience has forced Bensons to greatly improve its communications process – “using the right tone of voice, admitting we’ve got it wrong” – but he still aspires to the best-in-class automated models employed by the likes of AO.com, which enable customers to change their delivery date and order, and customise many other facets of their service.
There’s also scope for technology to improve the business’ manufacturing arm. Still operating through its Huntingdon factory, Bensons continues to invest in staff and machinery, and Mark says the possibilities for growth and diversification are significant.
Bensons is still trying to find the right balance of own-manufactured product and branded goods, but Mark feels that co-operation – with the right partners – is the way forward.
“Although we’ve had significant opportunity to switch from third-party brands, there are some – Silentnight, iGel and Tempur, in particular – which really resonate with our customers, and we’ll continue to develop promotions together, as they’re real footfall drivers,” he says.
“Our supply partnerships and raw material relationships are robust, too. Strategic partnerships are the way forward – gone are the days when retailers would drive suppliers down and screw them out of every last pound. We’re in it together now, and stronger for it.”
This sense of camaraderie runs right through the business, which, despite the spectre of job losses and bad debt, has negotiated the transition out of lockdown with aplomb. For the three months since stores reopened in April, Bensons saw “very strong” sales, with double-digit LFL growth compared to an undisrupted 2019. “Trading is robust,” says Mark. “Arguably, it is for everyone in this sector – but we are doing particularly well.”
Admittedly, the future is not without its challenges. “For me personally, one of the hardest parts of this whole experience was trying to keep people who were stuck at home furloughed ready to come back fired up and keen to get going,” says Mark. “But while I don’t really see a possibility of another lockdown, it’s clear that staffing is going to be a real problem for everybody.
“Poundland is currently offering lorry drivers a £2000 retention bonus – I think competition for labour’s going to get fierce. And we can mainly thank Brexit for that.”
Yet the release of all that pent-up shopper demand – which has put customer services, manufacturing and delivery under such pressure – is also a huge opportunity. Bensons has launched a huge recruitment drive to help staff its factory and new warehouse, as well as running out a major TV advertising campaign. It has revamped its website, started to reshape its store estate, and invested in product innovation – including a vegan-friendly mattress collection, and a pocket-sprung mattress with “cleaner, greener” memory foam.
“We’ve got a clear direction of travel, plus very supportive stakeholders,” Mark concludes. “And I’m pretty confident in the long-term outlook. We’re in the business of specialised, assisted product sales – which means it’s a sector that’s not exposed to being taken over by Amazon. If anyone can compete with them, we can.”
Given what the brand’s endured to get this far, how hard could it be?
This interview was published in Bed Buyer, a Furniture News supplement celebrating the National Bed Federation (NBF), its members and annual Bed Show.
