29 September 2008

Making five from two plus two

Business failures and government bail outs have dominated the mainstream media in recent days and so it was only natural that some bright spark would try to link two events together.

And thus, when it was announced the Bradford & Bingley Building Society were in trouble and that MFI had been ‘saved’ with an MBO, it was said that problems in the buy-to-let market had given B&B problems on the mortgage side and because buy-to-let owners were not buying kitchens from MFI, this had given them problems as well.

Garbage!

B&B may have been over-exposed within the buy-to-let sector, but long term the market will come back. Money invested here is as safe as, well, houses actually. Okay, it’s not the ‘wake up 20% richer than the night before’ market it once was, but property always comes good for those prepared to wait.

Unfortunately for B&B property became just another short-term commodity rather than a home and B&B got caught with its portfolios down.

Trying to bring MFI’s problems into this arena is frankly laughable! Few people who know this troubled giant thought there were ever legions of landlords beating a path do the doors of MFI to buy its cheap as chips kitchens to do up a home to rent out.

If a landlord went anywhere near MFI, it was more likely to visit Howdens to buy a kitchen from them. Howdens parted company from MFI when owners Galiform flogged MFI for one pound to Merchant Equity Partners in October 2006. There’s a lot more about MFI’s problems in Marion John’s blog on the kbb News website.

Howdens, it would seem, has weathered the property market storm for the present at least. MFI, meanwhile has gone from bad to even worse. Its main problem is one of image, and it’s hardly a new problem. Quite simply, they cannot attract enough consumers back to buy from them a second time.

The company DNA is that of a cut price retailer. Its staff are geared up to sell on price, and the organisation seems incapable of offering the level of service buyers of more upmarket products expect as a matter of course.

Will MFI prosper under its new management? I have to say with IKEA offering a much better design-led alternative to MFI this seems unlikely. Much will depend on how patient - and how ruthless - the management team at MFI are prepared to be.

But I’d put money on property bouncing back ahead of MFI being a rip-roaring success again.

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