Land of Leather no longer in the land of opportunity!

Implications: Land of leather's woes herald more than a downturn in the housing market and consumer big ticket jitters. The age of the "disposable" value driven leather sofa has come to an end. Customers were already growing tired of the edge of town shed format occupied by Land of Leather and fellow struggler SCS Frozen credit and significant cost price increases have put paid to Land of Leather's  value USP and the future of furniture retail is going to leave them in the margins if they survive. A new world order of furniture retail is forming with flair and style taking over from pure value in the customer's mindset. This will become more apparent as we come out of this down turn.

Analysis: Land of leather was for a golden 7 year period the fastest growing retailer in this incredibly competitive sector in the UK.
Cheap credit available to the equity confident consumer and very cheap far east supply lines available to the retailer made for a feverish growth spurt for this "what you see is what you get" retailer.

However a number of parallel developments have conspired to quickly demote L of L from high flyer to low lyer.

First the dramatic slowdown in the housing market has had a two pronged effect on the value end of the furniture market. Firstly the huge drop in housing transactions at the low end of the market (1st/2nd time buyers) has significantly reduced the ranks of the value led consumer that has made L of L such a success in the past. Second the collapse in house value equity along with the switch off of easy credit as governed by the interbank LIBOR rate has severely blunted L of L's competitive edge.

Land of leather along with their equally perilous counterparts (SCS) have failed to notice an increasingly savvy consumer who is looking for the future trends in home furnishing and are moving to either of the two poles of stylish value as presented by IKEA or moving further upmarket to DFS, Furniture Village or John lewis. Don't be surprised by the inclusion of DFS in this list. Graham Kirkham has seen the way the wind blows and has carefully re-positioned DFS further up the better and best scale. Either way the customer has eschewed the "Buy the 3 seater sofa and get the 2 str free and 4 yrs interest free merchants" in favour of contemporay styling and longevity.

The dramatic fall from favour of Out of Town Retail Parks has also had a negative effect on L of L. They trade mainly in 1st and 2nd generation parks that are scruffy, tired looking and downmarket. Open consent mixed usage parks have taken over albeit at highr rent levels as driven by the fashion apparel entrants. L of L's  strategy to contain rent levels and maximise returns through Mezzanine extensions has backfired over time as customers prefer to shop in new space. They've even lost the advantage afforded by mezzanines as they are now rentalised by landlords.

Other trends such as a move away from the Leather phenominum back to surface interest fabric sofa's has also damaged L of L's position along with ever more sophisticated web based ranges offered by more foreward looking competitors.

Land of Leather enjoyed their time in the sun and banked an awful lot of profit in the process. There's was never a sustainable long term business plan and they will probably disappear to make way for a new player unless the current team have the bravery and foresight to completely overhaul the brand.

It's not too sensible to bet on anything at the moment but if I were to flutter on this one. I'd be betting on a farewell to land of Leather sometime soon!