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International Marketing Review 16,4/5 406

Strategic consequences of retail acquisition: IKEA and Habitat
Department of Retailing and Marketing, The Manchester Metropolitan University, Manchester, UK
Keywords Retailing, Acquisitions, Globalization, Market segmentation Abstract Takes an historical perspective, considering the events leading to the sale of Habitat by the Storehouse group to the Swedish furniture retailer IKEA in October 1992. Focuses on the strategic issues involved in the acquisition of an international retailer by a retail organisation that is truly global in its operation. Describes the development of both retailers (with particular emphasis on their international development) and a description of the terms of the sale. Areas for further discussion and analysis arising from the case can include: the future development of Habitat within the global strategic framework laid down by IKEA; analysis of the motives of Storehouse in disposing of Habitat, including the future development of a smaller Storehouse; and issues relating to market segmentation and positioning, with specific reference to retail brands.

Gary Warnaby

International Marketing Review, Vol. 16 No. 4/5, 1999, pp. 406-416. # MCB University Press, 0265-1335

Habitat ± early development The first Habitat store was opened in Fulham by Terence Conran in 1964. By meeting a demand for more design-led products the company became one of the retailing successes of the 1960s. Indeed, Conran's belief that good design should be available for every customer was almost missionary in its zeal. Habitat was one of the first ``lifestyle'' retailing concepts and it certainly struck a chord with customers. Despite the fact that expansion of the Habitat concept was characterised by caution and extensive research regarding possible new sites, the 1970s saw several years of sustained sales and profit growth. In 1976 sales were £21 million, rising to £44 million in 1979 and £58 million in 1980 (Financial Times, 1981a). Habitat also expanded overseas in the 1970s, with the first store opening in France in 1973. European expansion continued into Belgium and by 1980 there were 14 stores in mainland Europe. While these stores did not become profitable until 1977, they had since become a healthy and growing contributor to company profits, in 1980 accounting for nearly a quarter of group trading profit (Financial Times, 1981b). Expansion into the USA, while appearing a sound strategic move, was more problematic. Terence Conran was well established in America through his interior design books, and when the first Habitat store (trading as Conran Stores Inc., or more commonly ``Conran's'') was opened in the USA in 1977 the group's advertising slogan tried to capitalise on this ± ``Conrans, the home furnishing store that wrote the books''. However, trading losses rose steadily to £543,000 in 1979-80 before easing slightly to £467,000 in 1980-81 (Financial Times, 1981b).

Of the overall Habitat group sales of £58 million in 1980, £33 million came from its 33 UK stores, £21 million from its 14 stores in France and Belgium, and the US operation produced sales of £4 million from six stores (Financial Times, 1981a). In addition, Habitat also operated a mail order operation selling furniture and other home products, and an international design consultancy business, Conran Associates. In September 1981 Habitat was floated on the UK stock market, using the somewhat unusual means of an offer to tender; a seldom used method that obliges the would-be investor to guess how much he will have to offer in order to receive an allocation of shares. The rationale behind the use of this method was to attempt to recoup most of any difference that may have existed between the company's and its advisors' assessment of the shares' worth and the markets' assessment. The main motive behind the flotation was to fund further incremental expansion of the Habitat concept. However, only three months later the company went back to the financial markets for further cash to fund a strategic acquisition which would diversify the company's operations. Habitat-Mothercare In December 1981 Habitat merged with the much larger Mothercare group to form Habitat-Mothercare. Mothercare was founded in the early 1960s by Selim Zilkha who grouped together a product range under the slogan, ``everything for the mother-to-be and her baby and children under five''. In 1972 Mothercare went public and embarked on a programme of rapid expansion ± the original 139 stores at the time of flotation had, by 1981, increased to 417. However by this time, Zilkha seemed to have lost interest in the company, and this, coupled with disappointing results from overseas expansion (particularly in America), led to his desire to relinquish leadership of the company to someone who could give it the entrepreneurial leadership he believed it needed. The merger between the two companies, with Conran at the head of the combined operation, was received with some scepticism by the city ± the motivating force behind the merger being regarded as the filling of the vacuum left by the withdrawal of Zilkha from the business he founded (Financial Times, 1981c). The intention was that both constituent elements of the merged company would operate as separate subsidiaries, each with its own distinctive competence ± at Mothercare, Zilkha's very good control systems and, at Habitat, Conran's design flair. Habitat's overseas expansion continued in 1983-84 into Iceland, in partnership with a local group, and also into Japan, which expanded quickly and by 1985-86 was trading from 11 sites in and around Tokyo. Growth by acquisition also occurred with the purchase, in April 1983, of Heals, a small privately owned furniture and furnishings retailer catering for an upper middle class market which had been making losses for some years. The Heals store in London was refurbished, with part of the site becoming the new corporate headquarters for the group.

IKEA and Habitat

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Habitat continued its solid performance in its core markets. In the UK sales increased from £37.2 million in 1981 to £52.5 million in 1983 and £73.3 m in 1984 with profits of £4.1 million, £6 million and £8 million respectively. The French and Belgian operations were consistently good performers with sales rising continuously from £22 million in 1981 to £41 million in 1984 (Clarke-Hill, 1991). However, profits peaked at £2.2 million in 1982, falling slightly to £2 million in 1983 and collapsing to £585,000. This was largely due to deteriorating economic conditions in mainland Europe, which affected the French market particularly ± the French furniture market suffered a 12 percent fall in volume in 1983/84 (Clarke-Hill, 1991). The response to these adverse conditions was a major programme of cost-cutting, including stock level reductions, the reductions of Head Office overheads and performance linked salaries. The US operation returned profits for the first time in 1983, making £177,000 on sales of £12 million. This trend continued in 1984, with profits of £732,000 on sales of £21.5 million, as the company consolidated its trading base (Clarke-Hill, 1991). Storehouse In November 1985 Storehouse was formed as the holding company for the newly merged Habitat-Mothercare and British Home Stores (BHS). The two companies had been in negotiation regarding a possible merger for most of 1985. However, talks had broken down in April and the announcement of the merger six months later surprised the City. The original aim of the merger was to combine ``flair with systems''. The flair was to come from Conran, with the reputation as the ``design guru'' of high street retailing, who would give a new image to BHS. BHS, though lacking flair, had a solid systems base. Profit margins were good ± a result of a first class distribution network and good buying systems. The financial skill that brought about these margins was to be applied to Habitat-Mothercare. It seemed a marriage made in heaven. The first manifestation of the new regime was the relaunch and repositioning of BHS in 1986. This was, in many ways, the culmination of activities started in 1983, aimed at persuading the younger upmarket (25-44 year old B/C) family shopper to add BHS to their store portfolio while retaining as many of the existing core of loyal BHS shoppers (35-55 year old C1/C2) as possible. Initial reaction to the change seemed promising but some of the sales increases hoped for by the company did not materialise, and many commentators preferred to reserve judgement on the repositioning until summer 1987 when the autumn ranges of merchandise (the first completely reviewed by the Conran design team) were to be introduced. In other areas the combination of style and systems seemed less successful ± Mothercare turnover in 1986-87 rose by only 6.4 per cent while trading profits fell by 9 per cent. In the first year under the Storehouse regime, Habitat turnover increased by 14 per cent on the previous year to £210.7 million, with profits up almost 10 per cent to £14.5m (Retail Business, 1987). The company seemed to be benefiting from a more discriminating buying policy and an out-of-town store expansion

scheme. The first two out-of-town stores were opened in 1987 in High Wycombe and Birmingham, and another three were opened later in the year. The intention was for five out-of-town stores (each approximately 40,000 sq. ft., carrying a wider range of goods than town centre stores) to be opened annually until a total of 30 was reached. International expansion continued with four more US Conran's stores planned, with the first West Coast store opening in Spring 1987. Habitat Europe had increased to 28 stores: 22 in France, three in The Netherlands and two in Belgium. However, the lacklustre performance of Storehouse (and its shares) led to criticism of Conran's management style. A collection of individual businesses had been produced, rather than a single cohesive entity, and the whole appeared to be less than the sum of the parts. Conran defended his hands-off management policy, but critics argued that the ceding of operational control to the individual companies within the group had led to the creation of fiefdoms and tension between operating company heads. Indeed, during 1987 there was much speculation as to the future of Storehouse. Shares in the company were definitely ``in play''. Rumours abounded as to the suitor, with Woolworths, Sears, Next and Burton all touted as potential bidders. An unsuccessful bid of £800 million was made by the Mountleigh property group. While Conran refuted press speculation regarding a possible demerger of Storehouse, he did admit to having meetings with other retailers to discuss sales of subsidiaries, although no proposals worth putting to the Storehouse Board materialised. At the end of 1987 Storehouse was still intact. However, when the results for the year 1987-88 were published in June 1988 they revealed over £20 million drop in profits to £111.9 million: a downturn of 8 per cent. The main culprit was Mothercare, whose full year trading profits fell by £13 million due largely to merchandising and distribution problems. Other elements of the group appeared to hold their own in what were difficult conditions for all retailers: Habitat's profits were little changed at £14.9 million (compared to £14.8 million the previous year). In June 1988 Michael Julien joined Storehouse as Group Managing Director, taking over the day-to-day running of the company from Conran, who remained Chairman. Julien's appointment was regarded by many as an acknowledgement of Conran's frustration with the detailed work of running the large public company that Storehouse had become. Shortly after his arrival Julien initiated a strategic review of the group, reorganising it into three retail divisions: BhS; speciality retail (Mothercare, Richards, Blazer, Anonymous, Jacadi); home furnishing (Habitat, Heals, Conran Shop). The overall aim of this was to concentrate on managing the ``core'' businesses. Other results of the review included a drastic tightening of stock levels and writedowns, a rationalisation of distribution systems and the development of compatible IT systems across the group. Arguably, with the benefit of hindsight, these actions should have been

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taken at the time of the merger. Conran's laissez-faire management style with regard to the Storehouse subsidiaries did not keep as ruthless a check on performance measures ± such as stock control ± as it should have done. Indeed, costs were rising significantly faster than sales volumes. When the 1988-89 results were published it was obvious that Storehouse was failing to get to grips with the problems. Pre-tax profits collapsed to £11.3 million after exceptional charges against £114.9 million the previous year. Not counting the exceptional charges (which were higher than expected) profits were still significantly lower at £60.7 million. One of the major contributors to the profit drop was Habitat and the home furnishing division, with profits down 63 per cent to £5.1 million, suffering a major profits collapse in the second half. The main factor in this was the rapid expansion of Habitat over the previous two years into out-of-town sites at the rate of six new stores per year, which had substantially added to costs. Additionally, poor stock control had left stores full of goods which no one wanted to buy and empty of lines that customers would pay for. An ``aggressive markdown programme'' of surplus stock boosted sales but invariably hit profits. Despite these actions, the performance of the home furnishings division was still giving cause for concern. In 1989-90 the division produced an operating loss of £6.8 million compared to a profit of £5.1 million the previous year. This was partly due to high interest rates and the collapse of the furniture market, but also due to deep seated problems at Habitat UK (which made a loss in excess of £10 million). Remedial action included the closure of 12 stores (including seven of the 12 out-of-town superstores) at a cost of £13 million, the introduction of new management systems including EPoS, and the strengthening of store management and training in the company. Overall, Storehouse's pre-tax profits for the year fell from £60.4 m to £32.6m, before exceptional costs resulting from restructuring. Taxable profits rose slightly to £12.8 million. In the words of the new Chairman Ian HayDavison, the company faced ``serious underperformance in all three of our trading divisions'' (Annual Report, 1989/90) (Terence Conran resigned as Chairman of Storehouse in May 1990, a decision apparently prompted by Storehouse's decision to sell its design business and the Conran Shop). In order to concentrate on what it defined as its core businesses ± BhS, Habitat, Mothercare and Richards ± Storehouse disposed of a number of companies including Heals, Jacadi, and Storecard (the group's credit card subsidiary). The following financial year saw no real improvement in fortunes. Despite an encouraging start, the final results for the year fell well short of expectations, and overall profit before tax and exceptional items was £21 million compared to £32.6 million the previous year, partly due to undermined consumer confidence caused by the deepening recession and the Gulf War. Despite this, the Chairman was able to report some good news in his Statement in the Annual Report and Accounts, ``we have made considerable progress during the year in reorganising our businesses and improving efficiency. In particular, we have held cost increases across the group to some 2 per cent, and

we end the year with no net debt on our balance sheet. These are major achievements''. Disposal of peripheral businesses continued apace (including Savacentre and FNAC) as the company concentrated on its core activities. Despite such efforts, losses at Habitat increased to £11.9 million. The strongest performance was from Habitat France, which increased sales and operating profits, although as in the UK, sales were affected by the Gulf War and fragile consumer confidence. Three new stores were opened including the first ``high density'' store at Avignon, which sold a limited range of furniture and concentrated on decorative accessories, housewares and lighting (Storehouse, 1991). Elsewhere Habitat trading space was being contracted. In the UK about one third of trading space was closed, leaving 40 stores which were inexpensively reformatted as speciality stores. Warehousing was concentrated on a single site and head office staff were reduced. All of this enabled the cost base to be reduced by approximately 20 per cent. With regard to the actual products sold, there was progressive introduction of new product ranges aimed at restoring Habitat to its position ``as a high value added design-based brand''. More of the buying and marketing was driven from the centre, which took full responsibility for UK and US merchandise requirements (Storehouse, 1991). 1992 saw a slight upturn in fortunes at Storehouse (Stonehouse, 1992). Despite a poor first half performance, profit before taxation rose to £15.8 million (from £6.2 million) largely due to a strong second half performance, particularly by BhS. Habitat's losses were reduced, recording a loss of £8.2 million in 1991/92 (compared to £11.9 million the previous year). Habitat France continued to be profitable, although operating profits were reduced somewhat. A second ``high density'' store was opened and a major refurbishment programme was put into operation. Loss reduction in Habitat UK continued, due mainly to cost and distribution savings. However, sales were down on the previous year due to the continuing slump in the UK housing market. Problems with the US operation continued. This appeared to be the weakest link in Habitat's chain. The Chief Executive's Review stated that in the USA, Conran's Habitat ``requires considerable investment to achieve the scale necessary to operate successfully in the USA. In the light of other demands on the groups resources, we do not believe such investment is justified. We are therefore reviewing our options in relation to that business'' (Annual Report and Accounts, 1992). IKEA ± historical background IKEA was founded as a commercial organisation by Ingvar Kamprad in 1943, selling fish, vegetable seeds and magazines. In 1947 a mail order catalogue was introduced and, in 1950, furniture and home furnishings were introduced to the mail order range. In 1953 Kamprad bought a small furniture factory and a small furniture and home furnishing showroom was later opened. On the basis of the showroom's success, it was replaced in 1958 by a store of 13,000 sq. m (Jefferys, 1992). Five years later the first IKEA store outside Sweden was opened in Norway.

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The IKEA format that is recognisable today originated in 1965 when Kamprad opened a store outside Stockholm. It revolutionised furniture manufacturing and selling. Most furniture was sold in flat-pack form so as to ``avoid transporting and selling air''. In order to accomplish this the furniture was specially designed by IKEA staff, and traditional furniture manufacturers were bypassed; the components of each item of furniture being produced by specialist factories. The intention of this strategy was to ensure that all the components of each piece of furniture could be put together by the customer at home. Some of the innovations to help the customer do this included table legs which fitted into place with snap locks and kitchen chairs that were assembled with one screw (Jefferys, 1992). The furniture was sold in IKEA stores by self service methods. Customers walked round the stores selecting items for themselves. There were few staff to aid customers in their selection of merchandise, although information points were numerous. When ordering and paying for the merchandise the customer was given a docket and collected the flat-pack, pre-packed merchandise at the delivery dock. There was no home delivery service although car roof racks could be bought and later self drive vans could be rented (Jefferys,1992) This formula proved to be a great success and the IKEA concept expanded world-wide, as detailed in Table I. The great majority of this expansion was organic, allowing the company to retain full control. However, a number of business format franchises existed, for example, in Iceland, Hong Kong, Kuwait, Saudi Arabia, Singapore and Spain. These stores were operated by outside companies where capital investment and management were the
Country Australia Austria Belgium Canada Czech republic and Slovakia Denmark France Germany Holland Hungary Italy Norway Poland Sweden Switzerland UK USA Date of initial market entry 1975 1977 1984 1976 1991 1969 1982 1974 1979 1990 1989 1963 1990 1958 1975 1987 1985 Number of stores 7 3 4 8 2 3 7 18 4 1 4 3 4 13 5 5 12 Average size (sq. m) 4,714 18,700 13,700 12,800 6,050 17,067 19,057 16,617 15,175 12,600 15,300 14,767 6,150 18,392 13,220 19,400 17,767

Table I. IKEA international expansion to 1993

Source: Adapted from Worrall and Littler (1995)

responsibility of local entrepreneurs, with IKEA providing merchandise and trading services such as marketing, administrative systems and support, education and training etc. (Worrall and Littler, 1995). This rapid international expansion changed the pattern of sales considerably. In 1975 the Scandinavian markets represented about 85 percent of total sales, but by 1990 this proportion had dropped to just over 26 percent, with sales in Germany (the largest single market outside Scandinavia) rising to more than 27 percent of the total. The rest of Europe contributed 34 percent of sales and the rest of the world just over 12 percent (Jefferys, 1992). In 1990/91 total group sales exceeded £2.5 billion, making IKEA the world's largest furniture retailer (EIU, 1993). Jefferys (1992) describes the structure of the IKEA operation as comprising four main interlocking functions: (1) Product range and development ± primarily carried out by IKEA of Sweden AB. New product development and product improvement is organised by separate product groups within IKEA, such as living room furniture, kitchen and bathroom furniture, carpets and textiles, lighting and glassware and ceramics. (2) Purchasing ± conducted by agents who are responsible for placing orders to the specifications laid down by IKEA of Sweden. The range of suppliers is very broad. In 1990 there were about 1,500 suppliers in 45 different countries. In terms of geographical distribution of suppliers, Scandinavian manufacturers account for 45 percent of products, the rest of western Europe accounted for 30 percent and the Far East and other areas accounted for 10 percent. (3) Distribution service ± undertaking the transport and distribution of the finished products to 12 regional distribution centres and stores throughout the world. (4) Retailing ± carried out by retailing companies, operating under the same format to ensure consistency. Each IKEA store in the group (as well as stores outside the group), is operated under franchise from Inter IKEA Systems BV, a company outside of the IKEA group, based in The Netherlands. The IKEA group as a whole belongs to Stichting Ingka Foundation, a charitable foundation established in The Netherlands by Kamprad, whose aim is to promote outstanding achievements relating to architecture and interior decoration. It can be argued that IKEA is truly a global retailer. There is minimal adaptation of the business format to accommodate local cultural and market characteristics in the various geographical areas in which the company operates. Indeed, the IKEA concept, encompassing a quintessentially Scandinavian style, which has been marketed across the globe, can be regarded as a significant source of competitive advantage.

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The sale of Habitat In 1992 the Storehouse Board initiated a major strategic review to examine ``the development opportunities available to the group's various businesses, their respective investment needs and what remained to be done to achieve significant and sustained profit growth''. The role of Storehouse in relation to the individual businesses was also considered, in terms of whether the group should act essentially as a financial holding company or whether it should involve itself more directly in key operational decisions. The implications for the structure of the group and for the range of businesses it should support were obvious. As a result there were rumours that further disposals of constituent elements of Storehouse could be under way, particularly with regard to Habitat and Richards. In September there was speculation that Habitat's French operation might be sold to the Au Printemps group but this came to nothing. However, in October it was announced that Habitat and Richards would be sold, to IKEA and Sears respectively ± Habitat for £78 million and Richards for £30 million. The rationale for the sale was articulated by the Storehouse Chairman, Ian Hay-Davison, as follows:
The review reinforced our opinion that both our two largest businesses, BhS and Mothercare, have major competitive opportunities, not only within the UK but in due course overseas. It was also clear that they are in many ways very similar businesses, where skills and experience can be readily transferred. Both are mass market retailers; both have a similar customer focus on young families and children; and both have similar supply and distribution chains which should lead to operational synergies and efficiency improvements. While the strategic review also identified development opportunities in our other businesses, particularly in Habitat France, these would have required considerable investment over a number of years, the return on which looked less attractive and involved more risk than investment in BhS and Mothercare. In addition, both Habitat and Richards are different in character, being essentially niche or specialist retailers as opposed to having mass market appeal. This reduced opportunities for synergy and increased the risk of management overstretch, especially since two of the three Habitat businesses were still loss making and Richards' profit record had been far from consistent over the years. In the light of this analysis, your Board had no doubt that the right course for the future was to seize the opportunities we had identified and to concentrate the Group's resources in the active support of BhS and Mothercare. We should, therefore, seek to sell our other businesses, starting with Habitat and Richards, provided appropriate prices could be realised (Stonehouse, 1992b).

Habitat Europe was sold to the Stichting Ingka Foundation (SIF) for £78 million (which included repayment of inter-company loans of £24 million) which was paid in cash and represented a surplus of £7 million over net book value. Storehouse retained its freehold and leasehold interests in certain properties occupied by Habitat UK which had a current book value of £14 million. In addition, Storehouse would bear part of the cost associated with the closure of certain Habitat UK stores in 1993/4 if SIF decided it wished to cease trading from them. Storehouse was also holding talks with other organisations with a view to the disposal of Conran's Habitat in the USA, which in the 1991/92 financial year had lost £7.7 million on sales of £29 million. It was intended that any sale would be

for a nominal price and would involve an extraordinary provision of some £25 million to cover the current book value of the company at £17 million, together with other costs of disposal. Had the talks failed the company would have been closed by the end of the financial year in March 1993. However, in December 1992 Conran's Habitat was sold to MTLG Acquisition Corporation for a nominal price. Just over a year later the company was forced to file for protection from its creditors under Chapter 11 of the USA bankruptcy code, being described by one of the original investors as ``a very sick company'' (Daily Telegraph, 1994). With the sale of Habitat and Richards the future strategic direction of Storehouse began to take shape, consisting of two major mass market retailing brands, BhS and Mothercare, each with a strong market focus and substantial growth potential, evidenced by both companies making encouraging progress in terms of sales, market share and profits (Storehouse, 1992). Commentators regarded the sale of the businesses as a good piece of negotiating by Storehouse. The following comment is indicative of the reaction: ``Hats off to Storehouse for some pretty impressive dealing. To get £78 million for a problem child like Habitat, which the Storehouse management does not have time to fix, must be satisfying'' (Financial Times, 1992a). Conversely, the wisdom of IKEA's decision to purchase Habitat was questioned by the same commentators. For example:
The possible acquisition has no commercial logic at all. If IKEA has a spare £50 million to invest, I would have thought they would have done better to continue expanding what is clearly an outstandingly successful format, rather than buying a loss-making high street chain which provides very weak competition (Richard Hyman, quoted in Financial Times, 1992a). F F F it is difficult to see what IKEA sees in Habitat. There are superficial similarities between the two chains, but they hide more than they reveal. IKEA's vast furniture barns contrast with Habitat's mix of high street and edge-of-town locations. The logistics of handling a panEuropean chain with half a dozen UK outlets are also very different to managing some 70 Habitat stores. While the worst may be over at Habitat, this could be a deal that IKEA lives to regret (Financial Times, 1992a).

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The rationale for IKEA's move appeared to be the desire for an ``upmarket high street presence'', according to Terence Conran at the time of the sale (quoted in Financial Times, 1992a). However, some clues as to the future of Habitat under IKEA ownership were given by Vittorio Radice, the newly appointed managing director of Habitat (who had been with the company for two years, first as merchandise manager and then as buying director):
The [Stichting Ingka] Foundation sees the future of Habitat very much as we do and is prepared to invest in the future. The Foundation sees Habitat and IKEA as two completely separate brands and we will be run quite separately from IKEA. Whereas IKEA goes in for 200,000 sq. ft self service style stores, eventually I want all our stores to revert to being smaller, fully serviced stores with high quality sales staff'' (quoted in Financial Times, 1992c).

Indeed, these sentiments seemed to be consistent with the direction in which Habitat had been moving over the last year, with some success. Radice seemed to think that the worst was over for the company. In his view:

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Habitat could today be the best home furnishings chain in the world if the original concept hadn't been murdered. When Terence Conran first opened stores they were in beautiful buildings ± a restored church in Tunbridge Wells, a 1920s cinema in the Kings Road, a grand hotel in Bristol, an old Spitfire factory in Manchester ± all these were wonderful, individual, special to their towns. Then they started opening in huge sheds in edge of town sites , next door to B&Q, MFI, Do-It-All. They even opened seven Habitat stores in BhS. All this diluted the image, took it down-market. I think that was a tremendous mistake. When I arrived I asked whom they saw as their competition. The Reject Shop, MFI, and John Lewis I was told. I knew at once I had to do something (Quoted in Financial Times, 1992).

Postscript In many ways Radice's vision of Habitat's market position after the takeover by IKEA has come to fruition (although Radice himself subsequently left Habitat for the department store Selfridges). Habitat operates completely independently of IKEA and has returned to its original trading proposition under Terence Conran of retailing innovative design-led products at affordable prices. Nearly 90 percent of the products sold in the stores are designed inhouse and a high proportion of these are Habitat own brand. The store network is concentrated in secondary or tertiary sites within urban areas, with an optimum store size of 15,000-18,000 sq. ft (MINTEL, 1997).
References Clarke-Hill, C.M. (1991), ``Habitat-Mothercare plc'', in Clarke-Hill, C.M. and Glaister, K. (Eds), Cases in Strategic Management, Pitman, London. Daily Telegraph (1994), ``Conran's Habitat seeks Chapter 11'', 11 January. Economist Intelligence Unit (EIU) (1993), ``Company Profile No. 5 ± IKEA'', Retail Business Quarterly Trade Review, No. 25, March. Financial Times (1981a), ``Habitat prepares to go public'', 25 August. Financial Times (1981b), ``Unusual problems face potential investors'', 28 September. Financial Times (1981c), ``Habitat's £117.6 million agreed offer for Mothercare'', 15 December. Financial Times (1992a), ``IKEA's logic furnishes a market riddle'', 20 October. Financial Times (1992b), ``The Lex column'', 20 October. Financial Times (1992c), ``Aiming to shake the shabby out of Habitat'', 27 October. Financial Times (1992d), ``The Lex column'', 27 October. Jefferys, J.B. (1992), ``The IKEA Group'', in Hast, A. (Ed.), International Directory of Company Histories, Vol. 5, St James Press, Detroit, MI and London.. MINTEL (1997), ``Furniture and household textiles retailing'', Retail Intelligence, March.. Retail Business (1987), ``Storehouse plc'', Retail Business Quarterly Trade Review, No. 3, September. Storehouse (1991), Annual Report and Accounts, 1991. Storehouse (1992a), Annual Report and Accounts, 1992. Storehouse (1992b), Document to Shareholders Concerning Sale of Habitat Europe and Richards, 4 November. Worrall, S. and Littler, D. (1995), ``IKEA'', Management Case Quarterly, Vol. 1 No. 4, pp 3-14.