Page last updated at 20:18 GMT, Wednesday, 26 November 2008

Why did it go flat-packed at MFI?

MFI furniture store in Kingston Upon Thames

It transformed the nation's interiors and brought cheap furniture to millions of homes.

At its peak, six out of ten British children were said to have been conceived in its bedrooms, one in three Sunday lunches prepared in its kitchens.

But decades after its peak, MFI has slumped into administration following a long, slow reversal of fortunes.

Once the UK's largest furniture chain, the firm now faces the indignity of collapse.

It is a far cry from the 1980s, when families flocked to spruce up their newly-purchased council homes and the brand became synonymous with brash Thatcherite optimism.

Aggressive campaign

The business began humbly enough in 1964 as a mail order-only operation.

Set up by Noel Lister and Donald Searle, it was christened Mulland Furniture Industries, after Searle's wife's maiden name.

After it opened its first store in Balham, south London, in 1967, it enjoyed a prolonged boom. The mail order operation was closed in 1974 and the company concentrated on selling affordable flat-pack furnishings to the masses. Eventually, the chain would be worth 1bn.

MFI store in 1990
In happier days, the firm was worth as much as 1bn

The downturn began in 1987 with a 715m management buyout. Two weeks later came Black Monday.

But an even more ominous cloud had appeared on the horizon: Ikea. In the same year, the Swedish giant opened its first store in the UK, beginning an aggressive campaign against its British rival.

MFI began to find itself squeezed. B&Q began selling furniture and then fitted kitchens. Supermarkets like Tesco and Asda could undercut the chain at the bottom end of the market, while Habitat and John Lewis offered quality at the top.

The decline continued. Supply chain problems dogged the firm. Errors with orders damaged the brand.

Nostalgia and bitterness

The acquisition of Sofa Workshop in 2002 was seen as a blunder. Sales dropped from 854m in 2003 to 742m in 2005. The following year, it was acquired by Merchant Equity Partners (MEP) for 1.

Another management buyout in September 2008 - which resulted in the closure of more than a third of its stores - was trumpeted as a deal to secure the firm's future.

This talk did not last long. By the time administrators were called in, the GMB union - urging a solution for MFI's 1,200 employees - complained that the firm had been "badly managed for some years".

A backdrop of economic turmoil and looming recession may have proved the final straw.

But workers at the chain's remaining 111 stores can be forgiven for looking back to their employer's glory days with a mixture of nostalgia and bitterness.

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