Opinion: Holland & Barrett price tag reflects global potential

Holland & Barrett’s price tag of £1.8bn raised some eyebrows, but the retailer has been one of the UK’s most consistently successful and is increasingly replicating its appeal overseas.

It boasts eight years of like-for-like growth and has sustained one of the highest profit margins in the industry.

At the heart of Holland & Barrett’s appeal is the wellness trend.

From unlikely sounding bestsellers such as organic snail gel cream and chewable hair vitamins through to superfoods and cereal bars, the retailer is in tune with contemporary health-consciousness.

That’s a global direction, meaning that the retailer is well placed to build its international operations which, at present, are comparatively small – more than half of Holland & Barrett’s shops are in the UK.

Global resonance has been central to the success of retailers such as Asos, whose twentysomething customer follows the same fashion trends and celebrities no matter where they live.

“Retailers have lots to do to restore their status in the court of public opinion”

Such universal appeal is likely to mark out the retail successes of the future, particularly perhaps as the UK continues to navigate the uncertainties of Brexit.

Peter Aldis, who has been part of Holland & Barrett’s success since 1990, will stay at the helm.

He will be able to draw on some expert insight and experience from L1’s advisors, such as former Home Retail boss John Walden, ex-Lidl chief Karl-Heinz Holland and data wizard Clive Humby, one of the founders of Dunnhumby, as well as Stephan DuCharme, chairman of Russian retail giant X5.

Together they bring a wide range of experience, from data and digital to a variety of geographical markets.

The Holland & Barrett deal is the biggest by value by a private investment house in years.

It shows that there is plenty of money available and that retailers, despite the challenges of changing shopping habits and an uncertain domestic trading environment, remain attractive buy-out targets.

But only the right retailers. As time goes by a convincing international growth story is increasingly likely to mark out the ones with plenty still to go for.

Pennycook’s pointed questions

Former Co-op boss Richard Pennycook, chairman of etailer The Hut and department store group Fenwick, provided retailers with plenty of food for thought this week.

Delivering the BRC annual lecture, he pointed out that trust in retailers is lower than in bankers – and that’s even as the repercussions of the financial crisis of almost a decade ago continue to play out.

Whether it’s associations with the gig economy or consumers’ confidence in price integrity, retailers have lots to do to restore their status in the court of public opinion.

Pennycook maintained that the two most important questions any organisation needs to have clear answers to are “what are we for?” and “how do we want to behave?”

Such considerations of course “count for nought if you cease providing what your customers want and doing it better than competitors”.

But the retailers who will thrive in the future will execute brilliantly and be able to answer Pennycook’s questions – and that will allow them to sustain success even further down the line, as they will attract the brightest and best young employees.

From the Rochdale Pioneers who founded the Co-op, to the enlightened management approach of Harry Selfridge, retailers with a sense of purpose as well as commercial nous have endured.

Today, some retailers need to do more work on their fundamental purpose.