THE ERT INTERVIEW: Mark Davison
‘WE NEED TO FIX OUR BUSINESS IN THE UK’
Mark Davison took over as MD of Glen Dimplex Home Appliances (GDHA) late last year – he was previously head of sales and marketing at Aga Rangemaster. Since his appointment, the British-based manufacturer announced that in a bid to secure its future, 300 jobs at its Prescot site in Merseyside – a third of its workforce – were at risk. He tells Sean Hannam why the business has to change to meet tough market conditions and where he sees opportunities for growth
Q: You joined GDHA at the end of 2017. It seems like a challenging time for the business…
Mark Davison: It is a very challenging time. I’ve joined a company that is changing its business strategy, its culture and its organisation and making some changes to its people, but, at the same time, we’re trying to compete in a very challenging market.
Q: So you’re finding the market tough?
MD: Yes – it is tough and it’s subdued. When you look at the categories that we play in, volume is flat at best – if not down. In some areas we’re seeing a bit of value growth – it’s [product] mix and pricing.
Q: Why is the market in the state it’s in? Is it down to a lack of consumer confidence and uncertainty over Brexit?
MD: It’s a combination of well-known factors, including the ones you’ve mentioned, and inflation versus wage growth. The housing market has started to cool a bit – people are reining in their belts and making things last longer.
That affects us – we’re in quite a few categories and there aren’t many that are seeing growth.
Q: The mid-market in which you operate is very competitive, isn’t it? And there’s been a lot of consolidation in the appliances sector…
MD: You’re exactly right – you’ve hit two nails on the head. You’ve got the consolidation among global manufacturers – there are some massive companies out there with multiple production sites, economies of scale and low product costs.
If you look at the market and divide it by price points, you’ve got relatively few players at the bottom and the top-end and then you have a myriad of brands and manufacturers slugging it out in the middle. It makes it tough. There’s also a consolidation of retailers in the UK and a growth in online.
I think we’ve been quite open in terms of our business performance – it’s not good enough at the moment and we can’t hide from that, hence the reason we’re changing our strategy.
Q: Let’s talk about that. In late April of this year, GDHA announced that 300 of its staff – a third of its workforce -– might face redundancy as a result of a ‘significant change’ to the business. The company said it was planning to ‘realign’ its operations to secure its future and confirmed it would pull out of loss-making segments of the market, outsource the manufacture of certain products and invest in appliances that were more economically viable to produce at Prescot. Where do you see the future opportunities for GDHA?
MD: Two main areas. My focus is on range cooking and we also need to drive our international business. We have proposed that we will continue to make range cookers in Prescot because it’s economically viable, as well as gas built-in ovens – they’re more of a UK phenomenon and we dominate the market – and leisure products, which are slot-in cookers for static homes. Everything else that we currently make – or buy – will either be exited, or externally sourced.
We’ve got some great plans [for range cookers] and we’ve brought on board more capabilities and resources.
We’ve done a lot of work looking at our current situation and our financial performance – we’re developing a new three-year strategy to try and get us back on track.
We have good brands that are fit for purpose and my background is range cooking – being blunt, I want to take market leadership from Rangemaster.
Q: Have you set a timescale for being number one in the market?
MD: Realistically, we’re talking 18 months to two years. I’m confident that’s a reasonable target.
We brought in a new Belling range in 2016, which has been doing well, and now we’ve overhauled all of the Stoves products for the second half of this year. Stoves is a brand we’re going to focus on more and more – it’s more than an able competitor to Rangemaster, but we need to invest more in the brand with consumers.
Our new products are market-leading, both from a quality and features point of view, and we’re more than doubling the size of the Stoves range cooking SKUs – there’s more choice for retailers and consumers. We’re going to be the first brand to have a connected app on range cookers, so you can set and control the timer.
The new Stoves products will move us on to a par with – if not ahead of – Rangemaster. We’ve been achieving good growth without the Stoves launch. Over the past 12 months, we’re growing market share – we’re up about 2.5 per cent – but the Stoves launch, in conjunction with other things, is going to accelerate us to market leadership.
We have further plans that span 2019 to 2021 and we’ve got a lot of stuff coming up on range cookers.
Q: What are your plans for developing your international business?
MD: We’re very UK-focused – the UK will still remain the highest percentage of our business – but, relatively, we have a low percentage of sales outside of the UK. If you look at the mix of our business, we’re underdeveloped – even in Europe. We could be doing a lot more. We’re going to focus more on growing sales outside of the UK.
Q: Will Brexit make that more challenging?
MD: From a marketing and product point of view, I don’t think it matters – it just comes down to us all trying to figure out what’s going to be agreed, when it’s going to be agreed and what impact it will have on import and export. We get hit both ways – we’re importing raw materials to make products in the UK, but we’re also trying to grow our export business.
I’m not so concerned about it at the moment – especially given where we are. We’ve got to sort out our business in the UK and, over time, we’ve got to grow our international business.
With the pound being weak at the moment, it’s probably better for us to grow our export sales. British design and British manufacturing still has some resonance and helps you win business in certain parts of the world. Europe is our immediate priority, but I want to have a look at the Asian regions – we have an opportunity there. We’d like to have a more serious look at those markets, but, fundamentally, we need to fix our business in the UK.
Q: What needs fixing?
MD: It’s our business strategy and the way we operate as a company. What we’re doing is difficult – we’re trying to implement a new business strategy that involves change at Prescot. I think there’s a big challenge in terms of the culture of the company and how we operate. We need to move on, we need to be more modern and we need to operate more efficiently.
Our business has good customer relationships, but we’re quite antiquated in terms of our systems and processes – we need to get slicker. Our culture needs a big kick, our product ranges need to be improved and so does our working environment.
Q: What’s your strategy with regard to independent retailers?
MD: We need to have a stronger presence within the independent sector and kitchen specialists – we’ve been too reliant on some of the big electrical multiple retailers and there aren’t too many of those.
We’ve restructured our team for the independent sector – we’re going to focus a lot more time, energy and resources on the independent channel. We’re in the process of relaunching our Elite Centres – our primary partners for range cooking – and we’re getting a good reception.
Independents have always been a pillar of the GDHA business – within our three-year strategy, they need to become an even more important channel. Our business is very concentrated with a few retailers – we need to broaden it.
Q: So what’s your vision for GDHA?
MD: Our vision for the business is that we want to be recognised as a leading supplier of British-designed domestic appliances that delight our consumers and our customers.