Holland & Barrett CEO Peter Aldis talks here with NPN’s Jim Manson about the retailer’s new flagship More store at Marble Arch and how it plans to become a £1 billion business by 2020
In late January Holland & Barrett opened its fourth More store, at the Marble Arch end of London’s Oxford Street. With around 6,000sqft of selling space set over two floors it’s the retailer’s biggest store.
Just a few doors down from Selfridges, the new store occupies some of the expensive retail space in central London. There is a glitzy opening event in full flow when I arrive to meet with Holland & Barrett International’s CEO, Peter Aldis.
On the up
“It’s always been my ambition to grow the retail space,” Aldis tells me, “whether that’s by adding locations or relocating to bigger, more prominent spaces.” He says the More concept (Chester, the first, opened in April 2015) “is getting close to where we’d like it to be – so we’re becoming less of an innovations laboratory as we develop them.”
In recent years Holland & Barrett has been attaching increasing importance to the trend for experiential retail. Aldis says the More format is allowing it to experiment with a number of new shopping concepts. Several of these have proved successful in Chester, he says, including a vegan nail bar, on-the-go protein shake station, and fruit and nut pick n mix station. Marble Arch adds more features, including a very un-Holland & Barrett-like olive bar.
“This store is a very different proposition because of where we are and the footfall we’ve got. So we’re looking to work with potential partners (existing More stores include a V-Bites café and Zenerjii juice bar) about how we use the space downstairs.
Given the very different look and feel of the More stores, is the Aldis confident he is carrying the traditional H&B customer with him? “Yes, without a shadow of doubt. We break out the business into four main areas – and much of it will be instantly recognizable to those traditional customers. VHMS is our core category and historically has been positioned at the front of our stores (at Marble Arch it’s right at the back), There’s food, which has always been crucial, but now includes more speciality foods, free-from and vegan. And we’re now the UK’s biggest retailer of sports nutrition. Yes, there’s lots of completion online in this category but we’ve got a strong edge in store because of the advisors we have on the shop floor, staff who really know what they’re talking about.
“Then there’s beauty. Go back five or six years and we didn’t have a beauty section. We saw a very big opportunity. The total beauty market is worth billions. And although we have a very nice beauty business now it’s still just a fraction of that total market. If you look at ethical beauty and carve that out from the total beauty sector, we have something between 10-25% of that ethical segment.
It’s the growing list of banned ingredients that earns Holland & Barrett its ethical positioning, says Aldis. “We’re the only national retailer that is paraben-free and SLS-free. We banned micro-plastics a full two years before the Government announced plans to legislate on them. We banned plastic bags well before they became a national issue. We’re always thinking about how we can be ahead of the curve.”
Holland & Barett’s growing beauty offer is bringing a new type of customer through the door. “Beauty is attracting a younger, female customer. We know that from our 10 million strong loyalty programme. And it’s the younger beauty consumer who has the greatest propensity to cross-shop our store.”
While Holland & Barrett “looks at The Body Shop, Lush and Boots” it is determined to offer something distinctive, with broad appeal. Aldis Comments: “We really work hard to make sure we’re not only catering for a white, middle-aged, middle-class customer. The country’s becoming more diverse, so you have to have different beauty ranges for people from different ethnic backgrounds and different beliefs. This is crucially important in London – understanding what people want – as long as it sits within our health and wellbeing framework, our strict buying ethos and what we want to achieve.”
Holland & Barrett is set to continue its aggressive expansion programme into 2017. “We’re going to open around 60 stores this year, the majority in the UK and Ireland, but with some in Benelux. There’s the relationship we have with Tesco, where we are operating store-within-a-store format, and that’s ongoing. We’re also continuing to do about 50 refits a year.”
Aldis doesn’t see obvious value in Holland & Barrett targeting specific consumer groups. “It’s all consumers. When you’re looking for store locations you go where the footfall is. You don’t need to be selective about the demographic in a town, in my opinion.” It’s a view that reflects the changing profile of H&B’s customers. “Certain assumptions were made in in the past, before I was running the business. There was an idea that a Holland & Barrett customer was an ABC1 demographic, probably female, a housewife and had available disposable income. I don’t think that’s the case at all. It’s anyone who cares about their health and wellbeing journey.
“Certain assumptions were made in in the past, before I was running the business. There was an idea that a Holland & Barrett customer was an ABC1 demographic, probably female, a housewife and had available disposable income. I don’t think that’s the case at all. It’s anyone who cares about their health and wellbeing journey”
“It’s often in places with really lower demographics, from an affluence perspective, where we’re very successful. I think certain ethnic groups, culturally, and by upbringing, have very positive attitude towards proactively managing their health. And you don’t always see that in lower demographics in rest of the UK.”
Last year’s deal with Tesco – announced just months after the supermarket giant closed its NutriCentre operation – will be watched closely by retail analysts. Aldis explains that Holland & Barrett’s “ambition is to create opportunity for footfall with consumers that doesn’t involve cannibalizing existing sales”. So far, the plan has been working. “From the experience to date it’s dedicated Tesco consumers who are going out of town shopping – we can tell that from our loyalty database. We’re fishing in a fresh pond in the main – which is great for us.
“It’s great for Tesco too, which is why Matt Davies the CEO of Tesco UK is committed to this. Holland & Barrett is a strong brand that stands for quality, a strong ethos, and products that as an industry we passionately believe in. I think it’s quite clever to make your big Tesco stores more interesting and take shoppers on a more engaging journey. The deals they are doing with us and Arcadia (Topshop, Dorothy Perkins, Burtons and others) is creating something like a mini shopping centre in a big, big Tesco.
Another, perhaps more surprising, development in 2016 was the news that Holland & Barrett would be partnering with the convenience store operator Spar. The partnership has since seen the introduction of branded H&B bays in selected Spar stores in Northern Island.
Comments Aldis: “We started with three Spar stores, then extended it to ten. We’re taking it very slowly and regularly reviewing the figures to see what impact it’s having on local stores. We’re also talking to Spar in the Republic of Ireland as well because we consider there might be a similar opportunity too.”
Billion pound business
Aldis believes that the UK’s growing self-care trend will help Holland & Barrett with its stated ambition to become a £1 billion retailer by 2020. “People more generally are taking care to look after themselves. And if you look at the key stats – on cutting back on caffeine, drinking less, eat more healthily, exercising more; well, I think all these things are going in the right direction for this industry. The more you embrace all of that, the more success as a business you will have.”
Aldis is clearly delighted with the new Marble Arch store. “I’m so proud of this this store. Getting the Holland & Barrett business to where it is has not been without its challenges. But we’ve just completed our 31st consecutive quarter of like-for-like growth. That’s a statistic and measure that I think we really can be proud about.”
Picture: Holland & Barrett International CEO, Peter Aldis, pictured at the retailer’s new flagship store at Marble Arch