HSS to close 134 depots in digital shift

HSS Hire has been prompted by the Covid-19 pandemic to accelerate its digital strategy, which will lead to the closure of 134 of its 240 depots and the redundancy of 300 staff.

The UK-based rental company saw its revenues drop by 22% to £126 million in the first half of 2020, compared to the same period in the previous year.

It also made a pre-tax loss of £12.9 million in the six months to the end of June.

At the peak of the pandemic, HSS Hire closed its entire depot network, furloughed 60% of its staff and moved to a delivery only operation through its network of customer distribution centres and its OneCall rehire business. The majority of the depots remain closed.

But the closures were said not to be having a significant impact on levels of trading. HSS Hire says customers have been placing orders through digital channels, over the phone and by e-mail, and these have then been fulfilled through deliveries or Click-and-Collect.

Approximately 30% of all new contracts are now raised through digital channels.

“This shift away from branches for both ordering and fulfilment is an acceleration of changes in customer behaviour that we have witnessed over several years,” the company said in a statement.

In the second quarter of 2020, revenues dropped to 63% of the levels seen in 2019 but have recovered in September to more than 90% of last year’s levels.

Two thirds of the furloughed staff have now returned to work as demand has picked up.

“The pandemic has demonstrated that there is a lower cost, more agile business model for rental,” the company said.

As a result, it intends to accelerate its digital strategy by making further investment in technology platforms, allowing HSS Hire to reduce its physical footprint. To this end, the company has proposed the closure of 134 of its 240 depots, which would result in the redundancy of about 300 staff.

To support this initiative, HSS Hire is partnering with regional builders merchants to maintain national coverage at lower cost. As well as giving access to more customers, this move also affords HSS Hire greater flexibility because fixed costs are replaced with variable costs.

Steve Ashmore, CEO of HSS Hire, said, “Whilst Covid-19 had a significant impact on our performance in the first six months, I am encouraged by the resilience of HSS during a very challenging period.

“Our recent investment in technology has proved critical, allowing us to support our customers during lockdown, our digital channels and Click-and-Collect service providing low-contact alternatives to branches.”

Referring to HSS Hire’s acceleration of it digital strategy and planned investment in its technological platforms, he added, “This will build on our already differentiated commercial proposition and create the most advanced, customer-centric offer in an increasingly competitive marketplace.”

Since the Covid-19 situation is likely to remain uncertain for some time, HSS Hire is still not providing market guidance.