GlobalData: Lakeland Must Adapt In Order To Compete

Following the news of Lakeland being close to agreeing a Hilco-financed management buyout; Oliver Maddison, Retail Analyst at GlobalData, a leading data and analytics company, offers his view:

“Lakeland’s inability to adapt has meant that it has struggled to compete for some time; it took a global pandemic for it to start taking online seriously, meaning its website offers less functionality than its rivals, which combined with its low store count of just 58, has made it inconvenient to shop at. This left it vulnerable to competition from the likes of Dunelm, which has over 200 stores and online penetration of 41%; rival kitchen specialist ProCook, which grew its Q4 online sales by 23.4%; and the grocers, which offer readily available ranges of low-cost cookware.

“Its lack of agility meant that it was unable to adapt its offering to changing circumstances. Lakeland made hay out of its ‘Smart Save’ campaign, promoting energy-saving electrical items like air fryers and heated airers when energy prices were high, but failed to shift the campaign’s focus to other more relevant areas, such as its cooking and baking range, when energy prices normalised but inflation remained elevated.”

Maddison concludes: “As a proportion of its revenues, Lakeland’s operating costs (52.0%) are much higher than rivals like Dunelm (38.6%), even though gross margins are similar (50.8% vs 52.8% respectively), exposing Lakeland’s operational inefficiencies. Tellingly, the only years between 2018 and 2023 that Lakeland made a profit were during 2020 and 2021, when its operating costs were effectively subsidised through policies such as the furlough scheme. Especially with increases to NICs and the minimum wage, cost control will be at the top of the agenda for Lakeland’s new ownership.”

Source : GlobalData

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