Hotel Chocolat’s opening new stores with a focus on destination retail outlets
Hotel Chocolat will increasingly focus on destination retail parks as it looks to add 50 more stores over the next three years, according to its CEO and co-founder Angus Thirlwell.
Thirlwell revealed plans to add to the chocolatier’s network of 125 UK stores alongside the publication of the company’s half year and Christmas results last week.
It will target “vibrant high streets” with strong footfall and shopping centres as locations to build stores, but “destination” locations will be a particular focus of the new strategy, Thirlwell told The Grocer.
“[We want locations] where people are prepared to drive to find us, and in many cases park and then spend an hour or so having a nice experience in one of our ‘Velvetiser’ cafés, and then browse the range we’ve got,” Thirlwell said, adding that a visit to a Hotel Chocolat store “can become a kind of leisure-focused activity”.
In December, Thirlwell said the business would target stores two to three times larger than its typical store after seeing the success of its new branches in Norwich and Nottingham. Both have sit-in cafés and more selling space.
He told The Grocer the exact rollout of the stores will depend on when the right sites become available, but that the business had already built the infrastructure to support the new store rollout.
In April 2022, the company secured a 10-year lease to open a new 429,000 sq ft factory, shop and café in Northampton. Over the past year it has also worked to increase the capacity at its main factory in Huntingdon, Cambridgeshire.
“We’ve grown overall by 65% since 2019, and that growth has needed a bit of catching up in terms of infrastructure. When we did it, we also allowed that it would support the demand for business as well,” Thirlwell said.
The retailer has struggled to grow abroad
The luxury chocolate maker enjoyed strong UK and Ireland sales over the first six months of the financial year. Like-for-like sales grew 7% to £74m in the 26 weeks to 25 December 2022, and were up 10% year on year in the nine weeks to Christmas day.
Demand for its Velvetiser drinking chocolate machine proved popular, with more than 250,000 selling during the first half of the year. Sales of vegan chocolate grew by 132% year on year, driven by a growth in customers choosing to buy them as gifts, and the fact Hotel Chocolat offered more vegan lines, Thirlwell said.
While the business excelled on the home front, group sales fell 9% to £130m during the half-year period, largely as a result of the struggles of its ventures overseas.
In July 2022, Hotel Chocolat shuttered all US retail stores and placed its Japanese business into civil rehabilitation protection. Hotel Chocolat retains a 20% share in the latter, which will continue to trade as part of a strategic partnership signed with the Tokyo-based Eat Creator Corporation in January.
Thirlwell said while the products and marketing had landed well, the problems had been within the “back end of the business” with supply and forecasting, particularly long-distance shipping shortening the shelf-life of products.
While he didn’t rule out any further international expansion, he said the immediate focus in the medium term was to keep focus on the adaptations it is making to the Japanese and US operations.
“Nobody gets international right the first time,” Thirlwell said. “The important thing is to apply the learning and learn fast. I intend to prove that Hotel Chocolat is the type of organisation that does that.”