Arca Blanca with McCarthy and Stone

Rapidly responding to a retirement housing crisis

Using start-up thinking in a 40-year old sector

Retirement housing is the most undersupplied market in the UK. One fifth of our population over 65 (2.7million people) are considering moving into retirement homes, but only 733,000 purpose-built properties have ever been built. This has traditionally meant a strong demand for McCarthy & Stone’s retirement homes.

By 2018, a property market slowdown meant that retirees were struggling to sell their homes and fund a move into retirement communities. As the UK’s largest retirement housebuilder, no one was bearing the brunt of this crisis more than McCarthy & Stone. In the first half of 2018, profits plummeted by 50%, the share price hit an all-time low and the CEO resigned.

Enter the new CEO, with a new strategy – and a call to Arca Blanca to execute it. McCarthy & Stone should offer varied tenure types. Previously, retirees could only purchase a McCarthy & Stone property, which usually meant selling their existing home. The new strategy was to offer customers more options; rental, part-buy-part-rent and rent-to-buy which would increase access to retirement living. It was a major change from the existing business model.

Faced with limited resources and pressure from investors, Arca Blanca boldly decided to apply a start-up mentality to a 40-year-old property company. Our joint team of just three rapidly developed the new propositions in an incubator, before rolling them out nationwide.

The new propositions have been a resounding success – accounting for a substantial proportion of customer activity and having a 10x in-year ROI.

“The multi-tenure project has been a real success. The joint-team combined our own in-house capability with experienced change practitioners from Arca Blanca – ensuring that the project was anchored in McCarthy & Stone, but benefited from new insights and an innovative approach. The incubator turned a complex problem into manageable chunks, teaching us the value of working in a more agile way to deliver faster results. From a standing start, we now have a new nationwide business unit up and running – expanding our offering and offering more choice to customers.” – John Tonkiss (CEO)

“McCarthy and Stone have always sold their apartments for the last 40 years. We started renting as a trial through a quick start-up incubator approach and it immediately got traction as we learned what customers liked about it and adapted. It has grown rapidly. Arca Blanca have played a critical role in setting up and driving the rental incubator in the first instance. Their approach and people hugely accelerated the time it would have taken us to get this working, to get momentum, and to roll it out. Rental is now established and will potentially transform our business.” – Mike Lloyd (COO)

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