Hard to believe 20 years ago Tesco was just another supermarket. Its core and actually only business was as a grocer and it was behind J Sainsbury’s as the UK’s leading provider.
Fast forward to the present where we are all too familiar that Tesco provides a one stop shop where you can buy anything ranging from a can of baked beans to obtaining a Bank Loan. Indeed Tesco is now the second largest global retailer by profit with stores in such unexpected places as Malaysia and Japan.
How did Tesco do this in such a short space of time? The answer is surprisingly simple; ‘branding’. Tesco soon realised in the 90s that its own brand enabled it to expand into new areas not traditionally associated with supermarkets. Unlike a start up they were already a trusted name and so automatically a consumer would be more inclined to buy a TV from Tesco than a new electrical shop that had opened on the High Street. The consumer had trust that if that TV became defective they would have a means of recourse that they wouldn’t from a shop that they had no prior experience of.
So how does this all relate to Housing Associations? It’s all about perception. Like Tesco in the 90s Housing Associations have a limited core business and are under extreme financial pressure. Housing Associations have suffered more than most during the Government cuts, with grant allocations being reduced to a fraction of previous years. Like Tesco, Housing Associations need to pause and objectively ask themselves two questions:
1. ‘What do we do best?’ and
2. ‘What are we trusted for?’
I am not advocating that Housing Associations start selling televisions but one obvious area of expansion would be to expand internal home repairs units to the wider public. Similar innovative thinking has already been reached by the board at Spectrum Housing Group linking up with Argos and B & Q.
Sceptical? It all comes back to branding. Now think how many of us are constantly asking friends and colleagues if they have any recommendations for plumbers, electricians or gas engineers etc and even then we are constantly paranoid that we are getting ripped off whilst at the same time being unwilling to pay known brands such as British Gas whom knowing our predicament charge us a premium for this comfort.
This is not alien territory for Housing Associations, they do it day in and day out for Tenants. Housing Associations offer a geniune alternative in the home repairs market, able to provide the consumer with the reliance of their brand coupled with competitive prices.
Now consider how much additional revenue Housing Associations could generate from annual gas check services, let alone more ambitious Housing Associations providing boiler care plans on direct debit.
More importantly any profits generated from these alternative business structures can be ploughed back into the provision of Social Housing. As this revenue will also not be restricted by grant funding it more importantly provides a geniune alternative to Affordable Rent ensuring that Social Rented properties can still be built.
Unlike Tesco however Housing Associations do have additional regulatory constraints to consider. To avoid these it is likely they may need to set up a Subsidiary Company to specifically provide these services, and revise their Group Structure. There are many well known precedents in this respect.
However even bearing this in mind, it is time to realise that the situation we find ourselves in is a real opportunity for innovation. We are not a Housing Association, we are a brand and expansion and opportunities are limitless.
The SH Lawyer 