Holland & Barrett: ‘In 5-10 years our global franchises could be bigger than UK core’

By Annie Harrison-Dunn contact

- Last updated on GMT

Ironically, it's easier for an EU company to set up shop in a non-EU country than in another member state, says Holland & Barrett
Ironically, it's easier for an EU company to set up shop in a non-EU country than in another member state, says Holland & Barrett

Related tags: European union, Holland & barrett

Holland & Barrett plans a massive expansion of its global franchise base, something it says it is in good shape to do given its roots in Europe, one of the world’s toughest regulatory environments. 

The UK health food and supplements retailer and manufacturer, owned by the European arm of multinational NBTY, has created 30 new jobs at its headquarters in Nuneaton, Warwickshire as well as another 40 across other areas and 200 in stores across the country. But this is just the beginning of its expansion plans. 

Kyle Rowe, Holland & Barrett's international development director, told us this came as part of its 26-point strategy called Project ASAP aimed at growth through its franchise base, additional stores, external partnerships and customer base online. 

Brand for rent​ 

Holland & Barrett currently has about 100 franchises of its UK brand in Malta, Gibraltar, Spain, Cyprus, Kuwait, the UAE as well as China and Singapore which are the most significant regions accounting for about 30 franchises each. Franchise stores have the Holland & Barrett name above the door and must stock 80% Holland & Barrett products. 

He said this franchise base had grown gradually and organically over a period of five years, with the company assessing applications that came to it through its website. 

For the first time it would now be actively targeting certain areas to increase its franchise base, an ambition that would be coupled with investment in new territory sales managers and additional staff in all of the regions. 

He could not share information on what proportion of Holland & Barrett’s profits currently came from its oversea franchises, but added that although not currently the largest, this proportion of the business was not insignificant either.

But if you roll the clock forward and measure that in five to ten years, we see it being equal to or even greater – in potential – than our UK operations.​” 

Inquiries for franchises as well as monitoring of site traffic were good “tell-tell signs​” of where the interest was and acted as market research, he said, allowing it to “dip a toe​” in markets of particular interest.   

India, Russia and Korea on the horizon​ 

Rowe said the firm was looking to India, Russia and Korea and closer to home, at Italy, France and Switzerland. 

The closer to home we come, the more versatile we’re being in our thinking. So ideally we’d own stores, if owning stores is more problematic we could do a joint venture or a franchise or in the worst case we’d go wholesale or an internet development only.​” 

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The company does not currently sell its own brand products on Amazon or online in China. He said this, as well as allowing the franchisees to have an online presence, was a clear area for development. 

Previously there had been a perception within the NBTY Group that it would be counter intuitive for its brands to compete in the same space, but following Holland & Barrett’s growth in the EU this thinking had been reconsidered. 

Found in translation​ 

Shipping the Holland & Barrett products to the franchises in various countries meant all products had to be registered with the relevant authorities and labels printed in English and the local language. However, in terms of making adjustments to different national food and supplement regulation, Rowe said this was not really a barrier to their plans since if the product complied with strict European food law – which he said was perhaps the most stringent in the world – they were very likely to be okay in other countries too. 

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Perversely, for all the frustrations [EU food and nutrition regulation] can cause everybody in the European market, it can actually be an underlining benefit in some areas.

"In fact, if anything the places it is harder to transpose its benefits are in other European countries, which like to take their own view on the same legislation. Trying to convince [other EU member states] that you’ve got evidence that these products are already being sold and the law has already been seen to so you don’t need to do it again can be more challenging sometimes than in a completely different country where we’ve not even been heard of.​”

In terms of translating price to fit local price references, he said they did not yet have sufficient scale in a market where the price of a loaf of bread, for example, was so different that the supplement prices would have to be adjusted but this may have to be considered in the future. 

This would not always mean a lower cheaper price point. Informal exports of the product to China meant the brand already had a good positioning and commanded a higher price point than in the UK. 

He said that the Holland & Barrett range – previously manufactured in the US but now made in Burton in the UK – had international kudos for quality and safety because of where it was made and who it was made by. 

A changing landscape

Chris Schmidt, consumer health analyst at Euromonitor International, said compared to pure-play supplement specialists​” across the pond like GNC or Vitamin Shoppe, Holland & Barrett had always opted for a more general health food shop branding.

That has helped them capture more of the health and wellness crowds who might still feel a bit intimidated to go into a supplement specialist. Interestingly, that broader appeal is the foundation for GNC’s recent changes in the US.​” 

Put in context, Schmidt said Holland & Barrett had been doing very well recently. As had its parent-company with strong growth in the European retail segment, which largely came down to UK-based Holland & Barret stores, its oversea franchises and GNC stores.

Holland & Barrett's success contrasted with GNC, which had reported flat-line retail revenue recently due to growing competition from the likes of Vitamin Shoppe and disappointed hopes for marketing pushes. 

In late 2014 the US arm of GNC said it would be going for a broader appeal with greater shelf space for plant-based proteins, health foods like nut butters and other more general health-and-wellness products. 

Related topics: Manufacturers

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14 comments

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Frunchise

Posted by S Chaudhry,

Hi Sir /Madam ,

I am interested to frunchise. Please guide me process and ways to proceed.

Regards
Shahid Chaudhry

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My alert

Posted by Azari Alexandre,

hi im in France in city of Pau post code 64000 holland barrett is not existing here . i would like to get some information about your franchise here in my town . thanks for your attention .
best regards .

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Dr

Posted by Dr Abdullazees,

Considering franchising your product in Sub-Sahar Africa especially in Nigeria where is very popular . What is the procedure of Franchise.
Many thanks ,
Dr. A Abdulazzez

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