The largest kitchenware retailer in the United Kingdom has partnered with Australian electronics retailer The Good Guys, with plans to roll out 12 ‘shop-in-shops’ across the country by Christmas.
British retailer Lakeland, has negotiated a concession-style deal with The Good Guys, hoping to open 100 retailing locations in Australia over the next two years.
Lakeland will also look to establish its e-commerce offering and first stand-alone bricks-and-mortar stores on Australian shores by early 2017.
Tony Preedy, Lakeland’s director of marketing and international development, told Fairfax Australia is a good fit for the retailer “both commercially and culturally.”
“It’s taken us time to research the market and select a partner we felt was a good fit. We found The Good Guys, got to know them and decided they were the partner for us,” Preedy said.
“The Good Guys is the market leader in kitchen electricals, so it seems like a very good marriage – their strength in electricals could be married to Lakeland’s strength in non-electrical kitchenware and housewares.”
This news comes ahead of The Good Guys potential $1 billion initial public offering or trade sale, which is likely to take place by the end of the year. Chairman and company owner Andrew Muir is currently deciding whether to pursue the IPO or not, telling Fairfax in April he was appointing advisers to explore the option.
Muir is also reportedly entertaining a number of takeover bids from local and international retailers, namely JB Hi Fi, and Steinhoff International, which is rumoured to be purchasing Big W sites. Other interested parties include Indian multinational conglomerate Tata, but it is unsure if it will make an official bid.
JB Hi Fi’s proposed takeover is being assessed by the Australian Competition and Consumer Commission, and the Commission’s findings will be announced on August 11. A successful takeover by the electronics retailer could boost its sales to over $6 billion, and add another 100 stores to its footprint.
Preedy told Fairfax despite what happens with the IPO or trade sale potential, Lakeland will “adapt to that circumstance”.
“It’s possible a trade sale could take place and the owner will choose not to IPO, but, as far as we’re concerned, the deal has happened and there’s product on the water heading to Australia,” said Preedy.
Here’s three things to know about Lakeland.
1. Lakeland’s humble beginnings
Lakeland began in 1964 as an agricultural plastics business, where founder Alan Rayner sold polythene bags for farmers to pack poultry in. The bags were made in their garage and sent out via mail order.
One of the company’s early products was a ‘Lammac’, plastic coats that would protect newborn lambs from the weather.
In 1974 Rayner’s sons took over the business, transforming it into a kitchenware company and giving it the tagline: ‘the Creative Kitchenware Company.’ The company is called Lakeland due to its origins in the British Lake District.
2. The Good Guys expansion is not its first.
Recently, the retailer has begun an expansion into Indian markets with the same concession-style stores that will be seen in The Good Guys. These shop-in-shop stores are located in Westside department stores, which are owned by Indian conglomerate Tata.
Lakeland has 69 stores in the United Kingdom, and stocks over 4000 different products, with 150 new products coming in every month.
3. Quirky goods aplenty
Lakeland sells a number of kitchenware and homewares products, but the retailer prides itself on its selection of whacky containers and gadgets for the kitchen. These include a banana guard (will fit most bananas), the ‘Flexicado’ (a flexible avocado slicer), and the lettuce knife, which aims to stop lettuce from going brown after you cut it.
Preedy told Fairfax the company hopes to “bring to market products that just don’t exist in the (Australian) market,” and it could well be successful.
Lakeland’s wide variety of products reportedly appealed to viewers of reality cooking TV show The Great British Bake-off in 2014. The retailer saw a 5.5% rise in sales for that entire year.
David Gordon, retail expert and director at LZR Partners, told SmartCompany concession-style retail strategies have achieved success in Australia in recent times, and Lakeland won’t be an exception.
“It seems that international organisations coming to Australia have the choice of two different business models: come in by themselves or partner up with a local business,” says Gordon.
“Retailers like Aldi and H&M have been successful with their own stores, and both David Jones and Myers have had ‘shop-in-shops’ for years, the concept is not that new.”
Gordon says The Good Guys’ strategy makes sense, as the retailer is not strong in the kitchenware sector, being better known for its whitegoods.
“Partnering with Lakeland creates an area of capability and specialisation that they didn’t have previously,” he says.
“Lakeland’s standalone stores will be the first time The Good Guys will be opening up a secondary brand, so it will be interesting to see how that goes.”