Eight months on from Simplyhealth’s mobility retail collapse, the group has revealed it took a hit of over £5m during the closures, which it said were a result of a ‘changing retail landscape’.
Simplyhealth closed all 15 of its mobility stores, including seven Unlimited Company sites, just a year after it launched the retail concept which was designed as an experience-based format different to anything the market had seen before.
In its latest report published this week, the group showed that the closures cost it £5.2m, which included £1m in redundancy costs, £2m in property costs and £400,000 to reduce stock to NRV (net realisable value).
Reflecting on the exit of Simplyhealth’s mobility retail arm, chief financial officer Ben Kent said that the healthcare landscape is changing and that the business must try new things and adapt and learn.
“At the end of 2017 we made the difficult decision to close The Unlimited Company, because although we still saw a need to support customers to maintain their independence, the retail landscape had changed.
“Large mainstream retailers are now providing mobility products and daily living aids, and customers are purchasing these products in new ways, different from the model that we had developed.
“Making a decision like this is never easy, and we remain committed to supporting customers in this space, but good governance is about making decisions that ensure we are sustainable and able to meet the long-term needs of our customers.
Mr Kent added that Simplyhealth must be “purposeful but also controlled” in its risk-taking. He noted that every business must take risks to progress but it should be done with due care and proper governance.
The report said that The Unlimited Company was centred on well-designed stores offering an “appealing range of products, complemented by quality, dedicated online and in-the-field expertise”.
It stated: “We saw a shift in the requirements of customers and mobility products being provided by general retailers and online providers. This significantly changed the future sustainability of the proposition with led to the difficult decision to close.”
At the time, mobility dealers in the industry speculated as to the reasons for the operator’s closure, with some suggesting its model left it with an “almost impossible” task to achieve the turnover necessary to maintain its mobility retail operation.
Mainstream retailers such as Argos, Amazon and most recently the bathstore, have been making inroads into the mobility market.
But some industry members disagreed with Simplyhealth’s suggestion that customer needs had changed as mainstream retailers have taken on mobility products.
One dealer said that “all the major retailers have traded for many years without making major changes as the way they operate is proven”.
In spite of the cost of closing its mobility retail concept, Simplyhealth achieved a total income of £238m last year, although this is a reduction of £9m compared to 2016.