The limited availability of prime town centre sites, and a desire not to compromise its brand exclusivity, mean the diversification will be highly selective - in keeping with Heal's refined tastes.
A new pounds 1.8m store in Chel- sea's King's Road on the site of the old Reject Shop is due to start trading early in December. It will be first addition to the Heal's fold since Colin Pilgrim, the managing director, led a management buyout from the Storehouse group in 1990. The King's Road shop will add to existing outlets in London's Tottenham Court Road and in Guildford. Expansion for the first time outside the South-east is also being actively considered. Heal's is understood to be close to taking out a lease on a 23,000 sq ft property in the centre of Manchester. Up to 10 other sites in Glasgow and smaller towns such as Oxford and Bath are also on the shopping list.
"We're very keen to expand," said Mr Pilgrim, "but we need big space, reasonably close to the town or city centre, and there isn't much of it available."
Founded in 1810, Heal's has operated from its flagship store in Tottenham Court Road since 1840 and was first quoted on the stock market in 1905.
The tone for the company's distinctive style was set by Ambrose Heal, who worked as craftsman, designer and - for 60 years between 1893 and 1953 - as chairman.
Based on the ethos "have nothing in your home except what you know to be useful or believe to be beautiful", his achievement was to make good design available at relatively affordable prices. The impact of his work on Victorian homes has been likened to that of Sir Terence Conran's Habitat in the 1960s. And it was Sir Terence's Habitat and Mothercare group, the forerunner to Storehouse, which bought the family business in 1983.
Heal's is best known for its handmade beds, which cost anywhere from pounds 2,500 to more than pounds 7,000. Customers used to include the Royal Family until Heal's had its warrant withdrawn four years ago when ownership of the company passed from Storehouse to the present management.
Mr Pilgrim revealed that Buckingham Palace could no longer afford to buy beds from Heal's because of deep cuts in the Civil List. "The Palace said the beds were too expensive. It was a bitter blow."
The lack of Royal patronage, however, has not hindered Mr Pilgrim's progress since the buyout.
After taking over the loss-making business and riding out the recession, Heal's managers and their venture capital partners NatWest have seen sales grow by 20 per cent in each of the past two years. Turnover reached almost pounds 20m in the year ended in September, when operating profits hit pounds 1.2m and net cash stood at pounds 4m.
This reversal of Heal's fortunes has prompted the plan for a stock market listing in 1997.
Mr Pilgrim attributes the dramatic turnaround to several factors. One is the greater freedom Heal's has been given since leaving the Storehouse stable. "A chain store has to be safe, predictable. There is no room for indulgence, so our stores become very bland. But we have now thrown off that dead corporate hand."
The product mix has been changed and expanded to include far more non- furniture items such as fabrics, carpets, rugs, lighting, china and mirrors. "We hardly sell anything today we sold four years ago," he said.
This radical overhaul has attracted a far younger clientele as Heal's casts off the rather dowdy image it acquired during the Storehouse era.
"Our typical customer is female, single, co-habiting, pre-kids, urban-dwelling and a high-earning professional in her early thirties," said Mr Pilgrim. "We may have a 200- year history, but we are contemporary."Reuse content