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Refurbished MFI set to launch online on Wednesday

Almost three years to the day since it collapsed into administration, furniture retailer MFI is to relaunch under new ownership as an online business.

Walker Capital, the private company which owns online bathroom retailer Victoria Plumb, paid MFI’s administrators £250,000 to acquire the rights to the brand in August 2009, and has been working on relaunching its website for two years.

Famed for selling cheap flat-pack furniture, MFI’s online resurrection comes at a sticky time for retailers of home wares, who are suffering as consumers cut back on discretionary spending. This year, Focus DIY, Habitat and HomeForm have gone into administration, and listed chains Carpetright and Topps Tiles have been forced to issue profit warnings as sales slide.

MFI’s collapse in 2008 was blamed on the slow housing market, which hit sales of fully fitted kitchens and bedrooms, and the relaunched website will not be selling these. However, it also faces stiff competition from DIY retailers and supermarkets, who have expanded their furniture ranges, plus online only businesses such as Worldstores.

“Furniture retailers saddled with high property costs sadly find it very difficult to operate,” said Adrian Storr, a former MFI director who is commercial director of the relaunched business. Adding that MFI’s new online only model would enable it to sell furniture “at a lower margin than our rivals,” he said it would specialise in furniture, beds and bathroom suites, which were the top sellers on MFI’s former website.

Noting the pressures on consumers’ disposable incomes, Mr Storr said that low prices would be “first and foremost,” with research suggesting consumers would be prepared to wait several weeks for delivery to obtain a lower price. This means MFI could operate on very low stock levels, fulfilling orders direct from manufacturers, or manufacturing to order, to keep costs down.

Retail analysts believe the business model is theoretically sound, but question how much consumer affection remains for the MFI brand, which had around 30,000 outstanding customer orders at the time of its collapse.

Mr Storr hopes that the store’s disparaging nickname – Made for Idiots – will not be revived. The initials actually stand for Mullard Furniture Industries, the company’s name when it was founded as a mail order business in 1964. With the new website set to go live on Wednesday, Mr Storr adds: “We want to make sure we are on people’s shopping lists when the January sales come around.”

Source : Claer Barrett – Financial Times

29 November 2011
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