Poland and Russia
Kingfisher is market leader in Poland and is building a new business in Russia. Consumers in these countries have been enjoying increasing disposable income and demand for home improvement. Retail spending in total and the proportion spent on home improvements are both lower than the EU average in these countries but are growing faster as consumers become wealthier and look to improve their homes. Poland has a large, mostly home-owning population with good DIY skills. Russia is the largest European country and developing fast. The home improvement market is being driven by new construction and much needed renovation.
In both markets, consumers have traditionally been served by fragmented small-scale, local outlets and open markets.
Kingfisher also operates a joint venture in Turkey, a fast-developing market with strong future growth prospects.
Kingfisher operates a small but fast-developing business in Spain, the fifth largest retail market in Europe. Home ownership is high but the proportion of retail expenditure spent on home improvement is significantly lower than the European average. As a result, the home improvement markets are currently less well developed and served by a fragmented group of national and regional retailers.
Kingfisher acquired Bricostore's 15 home improvement stores in Romania from Group Bresson, a French retail company, in April 2013. It is Kingfisher's first new market entry in seven years.
Bricostore Romania recorded sales of €131 million in 2012 and EBITDA of €5 million. It is one of the largest home improvement retailers in Romania, with well-located stores. Four of the branches are in Bucharest, with most located near other major international retailers. The Romanian stores will be converted into the Brico Dépôt format in due course, providing scope to grow the business to around 50 stores in the longer-term.
Romania is an attractive, growing market for home improvement, with the organized part of the DIY market having trebled in size since 2005 to around €1 billion in 2011. There is a strong DIY culture among homeowners.
China has a fast-growing urban middle class and is fast becoming one of the most important retail markets in the world. In recent years many millions of Chinese migrated to its major cities and new homes have been built at an unprecedented rate, typically sold as empty concrete shells. The new owners are responsible for completing the internal fit-out and decoration themselves. This has fuelled the rapid growth of the home improvement market, particularly design, decorating and installation services. Kingfisher is launching a standalone B&Q Design Centre trial store in China to meet this demand.