Homebase price discounting 'would damage supply model'

Homebase will have to change its business model if it is going to discount seasonal plants, according to Newey Group managing director Alex Newey, who supplies rival B&Q with bedding via Roundstone. Homebase, recently bought by Bunnings, is currently supplied with non-bedding plants by Newey Group companies New Forest Plants and New Place Nurseries.

Newey said whether or not the new Homebase plans to compete with discounters is a big question because it will mean a different system of supply from growers. "I'd like to think they are selling a value product at the right price in the market they are currently in and not as a discounter," he added.

Other growers have suggested that the newly rebranded Homebase stores, when they become Bunnings, could use the discount model of supplying a guaranteed amount for a short season regardless of the weather. "That is a different model," Newey pointed out. "They have to have stock even if it is snowing."

He said his group "remains acquisitive and will do so for the future" but is not ready to announce any new buys yet before making structural changes in the company. He suggested that it is a "romantic notion that we should stay in Europe" ahead of the EU referendum. Newey Group works with European breeder Dummen Orange so Newey said he would rather "maintain the status quo" when the vote happens, but his personal view differs from his business perspective.

This season's other big political issue, the National Living Wage, has "significantly increased production costs" leading to increased interest in mechanisation to keep costs under control, said Newey. "We're interested in anything labour-saving," he added. "Robotics are at the forefront of our investigations."

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