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Press release:
‘Mind your own shop’

25 September 2009


There seems to be a general consensus now that while 2009 may have been slightly better than many retailers expected, 2010 might be a little more challenging.

With higher taxes on the horizon, both here and in mainland Europe, together with consumer concerns over rising unemployment and higher interest rates, it seems logical to be cautious.

There are certainly positive signs out there, such as a stabilisation in house prices and an increase in housing transactions, but they are not enough to give the “green shoot” cheerleaders the upper hand.

In short, I tend to subscribe to the “Nike swoosh” view of the recovery shape, or the flattened trajectory of the Concorde take off (I know that dates me).

So, with little or no help from the market, retailers could find top line growth hard to come by. The attention, then, will move to self-help. This means lots of gritty work to cut costs and working capital, while keeping a gimlet eye on stock. That way, more of those hard-won sales, will drop gracefully down to the bottom line.

We’ve been doing a lot of work on all those things at Kingfisher. B&Q, for example, has been focusing on reducing ‘top stocks’ – a long-ingrained practice of piling stock high above the main shelving.

Gradually removing it, while also maintaining high availability stock rates for customers, has facilitated greater sell-through of stock and also made the stores appear lighter and brighter.

Increasing direct sourcing is another opportunity to protect margins, something we are doing through our overseas sourcing offices in the Far East and Eastern Europe.

Combined buying programmes are another option if you have more than one format in your business. For example, B&Q has been working with our Castorama business in France to jointly source a quarter of its leisure products for next year, with half of the orders coming from common suppliers.

Getting more for less is also a useful mantra in these more straitened times. When B&Q started revamping its largest stores four years ago they were costing £2.5m each. Within a couple of years we had this down to under £1m. Now we are rolling out a “revamp lite”, where we give a makeover to just the kitchens, bathrooms and bedroom areas of the unrevamped stores. The cost is less than £40,000.

Of course, it’s vital that retailers do not lose sight of innovation in products, stores and service, just because times are tough. We’ve been running enhanced staff training programmes in the UK and France to improve customer service, while recent product launches include everything from ergonomic gel-handled paint brushes to pig arks, available online at B&Q from next month.

The Government could do more to help. Extending the VAT cut to the end of January would boost opinion poll ratings as well as retailers’ morale, as would a pledge to keep business rates at sensible levels. In the meantime, the onus is on management teams to mind their own shop.


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