There’s a brightness on the horizon for rent-to-own retailer of household white goods Brighthouse. The private equity owned organisation has told the Financial Times it understands it will receive a consumer credit licence from the Financial Conduct Authority and as the new CIO Ed Hutt (pictured left) tells me, this is driving opportunities for a CIO keen to embrace new methods.
Hutt, previously with gym company Fitness First, is with Hertfordshire based Brighthouse on an interim basis, but says the transformation will take over two years. “That was the case with Fitness First and the plan,” he says of the role he had for two years and three months up to September 2016.
Hutt is enthused by the opportunity at Brighthouse and the market disruption it faces from pure online players like AO.com and major organisations like ShopDirect, which he cites in our interview.
Brighthouse can trace its roots to being the retail arm of Thorn EMI a major household technology provider in the past and Radio Rentals, which was a stalwart of the high street for most of us in our 40s. As the Radio Rentals name implied, it rented new radios, televisions and in our household’s case VHS video players. This then evolved into the opportunity to buy goods on what is called hire-purchase and often better known by the phrase coined in the US of rent-to-own. The model suffered and declined for more affluent customers during the rapid growth of credit cards and loans on low interest rates that was a core aspect of financial services through the 90s and early years of this century, but many industry observers and of course those in the sector believe it is primed for a return to favour. As the demographic known as Generation Rent find credit hard to reach, organisations like Brighthouse may be set to have a renaissance enabling consumers to gain access to low energy using refrigerators and high definition television in the same way as the more affluent who take such item for granted. Gaining access to high end goods on a rental-to-own agreement has become the cultural norm in automotive with a large proportion of the driving public having a new or nearly new vehicle on a rolling financial services contract that sees them change vehicle on a regular cycle. That same model could once again leave the kerbside and head into the kitchen and living room.
“Saving means consumers do not immediately have the benefit of the utility of a washing machine. It is a business model that is the best part of 100 years old,” Hutt says of the situation many find themselves in, either unable to save or if they can, interest rates are too low to make a difference. He sees the increasing Generation Rent that cannot own their own homes will see renting the devices they want in the home as part of their way of living alongside their entertainment subscriptions and rejecting car ownership over using Uber.
“As the demographic of the country is moving it allows an older model to add some new channels and become highly relevant again,” Hutt says.
“Brighthouse has reached a point where it is a financial services business with retail,” Hutt says, adding that the opportunity for Brighthouse is technological. “The weapon of choice for consumers, no matter their financial position, is the smartphone and that is how we will communicate, how we will scale and how we will become a multi-channel provider of services.
“Many of our customers may not have a laptop or PC, but they will have a smartphone and that will be the basis of their retail experience, including in-store.” Brighthouse has 280 physical stores around the country. “The store managers are very retail savvy and they know what they need to do to attract people and to maintain customers through the traditional retail routes.” Hutt says one of the opportunities Brighthouse has is a unique and strong community connection surrounding the stores and the CIO is keen to develop this as part of its digital vision.
“The sense of community is quite interesting and most retailers don’t have that, it is an interesting USP for how we use social media and digital. The challenge is if it makes customers less frequent visitors to a store, but ensuring we maintain the community,” Hutt says.
Hutt is keen to explore the next wave of disruptive technologies as he leads the organisation into a channel shift and away from the store being the hub for all customer interaction.
“Our customers are time poor and they will want to carry out transactions away from the store, but also, how do we bring a different digital experience to the store,” he says of the necessity of change.
Hutt inherits a team of 90 staff and contracted vendors. “The retail and IT estates all work well and that is a great place to be, there are no screaming needs, so now it how do we move into the digital arena,” he says with a new web offering already under development as we speak. Hutt is already meeting the Brighthouse suppliers and discussing the journey the organisation plans to take and he says he’s pleased with the response with many providing good feedback and some valued advice.
“They can become very valuable in an ecosystem of advice, experience and help our IT team become more powerful than it already is.
“I have set a target for myself that we will be changing the operating style within five months, so by the end of May people will be thinking differently and in July to September the market will see a big change as the digital platform comes out and is then scaled up,” Hutt says. That role out requires an Agile approach as Brighthouse plan to deliver it in slices and the CIO believes it will have an impact on the marketplace.
Looking further ahead Hutt sees technology playing a key role in service and repairs of customers technology. “That becomes really interesting for customer’s loyalty and their journey.”