JEAN-NOËL CAUSSIL | PUBLISHED 19 JUNE 2020
In an interview with LSA, Thierry Garnier, CEO of the Kingfisher group (Castorama, Brico Dépôt) outlines the key elements of his strategic plan, “Powered by Kingfisher”, which was presented this week alongside the group's annual results.
Thierry Garnier– Everything is based on the customer and its needs. We are, of course, fortunate to have different brands available, for the professional, discount and generalist segments. This gives us an opportunity, since what better way is there to target different consumers than via different brands? That’s why we want to put our brands and shops back at the heart of our strategy, to enable a more autonomous and agile approach.
T. G. – Yes, using a store-based organisational model. I’m a strong believer in click & collect. I also believe in rapid home delivery. The market standard, in China, involves home deliveries within 30 minutes. And even if you were to point out that China is a long way away, look at the United States: There, you see a battle going on between Walmart and Amazon around this very issue, with Walmart relying on its network of stores to make quick deliveries.
T. G. – There are some great locations for large stores, just as there are for mid-size units of 4,000 to 5,000 square metres, but we also need to develop more compact formats, first and foremost in urban areas. In the UK, we already have three stores that I’d categorise as “Express”. In France, our plans have been somewhat delayed by the crisis, but we are planning to run some trials while still relying on services, such as kitchen installations and providing advice.
T. G. – The basic idea is to have more confidence in our brands and in the people who make the decisions. For its part, the group must set itself the task of supporting all of this, by providing the tools needed to make this strategy a success. Our organisational structure was too complex and needed to be simplified. That is why we set up two task forces, one focusing on retail matters and the other on IT. They are still hard at work and we’re looking forward to hearing their conclusions so that we can implement a better system for coordinating things. Already, though, in general terms, we need to move towards lowering our costs and reducing our stock levels. On the first point, we believe we have some opportunities particularly with regard to our IT costs, our rent levels and our overheads. We can also go further in terms of procurement. [Editor’s note: the group’s total purchasing spend is around £7 billion.] We therefore want to set up work clusters with our 20 or 30 largest suppliers focused on developing longer-term partnerships, while sharing more of our common data to develop our business together. Finally, with regard to stock levels, we have a great deal of work to do, as we currently hold stock worth £2.6 billion, and that’s far too much.
T. G. – A lot of things are already in place. We’ve freshened up the management team to meet the needs of our planned new organisational structure. And we have the talent we need internally with, for example, a shared IT team, eight sourcing teams, our engineers, our designers, hundreds of people working on our own-brand products. These now account for 39% of the group’s sales and we want to develop them further. And importantly, just before the Covid-19 crisis, we were starting to see the impact of all the work we’d already done on our business results.
T. G. – Looking at the year overall, yes. But if you look in detail, in France, after the first nine months of 2019, we were down by 5%. In the last quarter [Editor’s note: to end of January 2020], on the other hand, sales were up by 3.3%. And in February, by 8.6%! Of course, there is the 29th of February this year, which flatters the figures, but even if we exclude it from the comparison, growth is still positive, at +2.2%. That result is slightly better than the market average. So, of course, there’s still a lot of work ahead of us, but those are real, tangible signs. And they’re encouraging. All the more so because they didn't happen by accident. I see at least two reasons. The first is that we’ve invested a lot of energy, with Alain Rabec’s teams, in turning things around in France.
We’ve therefore repatriated our supply chain. This used to be managed by the group but now it’s managed from France. To facilitate this, we’ve recruited nearly 30 very high-level managers to strengthen our supply chain in France. By doing this, we’re becoming more efficient. The second part involves deployment of the SAP system at Castorama, something we’ve accelerated and that’s now been completed. As a result, based on both our IT systems and our supply chain, we’ve been able to improve our in-store availability levels and reduce stock shortages. It’s a good, healthy, solid foundation. We still need to improve our product ranges, particularly in terms of a slightly more localised offering. We also need to do a little more to balance out the ranges since, in my view, we still have slightly too wide a range at Brico Dépôt and, in contrast, too limited a choice of products at Castorama. This rebalancing still needs to be completed, but things are progressing. They’re progressing rapidly and well.
Interview by Jean-Noël Caussil
The main points of the “Powered by Kingfisher” plan:
- Set up a more balanced and simpler group-brand organisational structure, with an “agile culture” and greater brand autonomy.
- Develop online sales
- Offer a “service-oriented, mobile-first” customer experience
- Achieve market differentiation by means of exclusive own-brand products
- Test new concepts and adapt the store network
- Optimise procurement, reducing costs and stock levels
- Become a “leader in social and societal responsibility for the sector”
Figures for the Kingfisher group:
- 12.5 billion euros
- Group revenues in 2019-2020 down by 0.8% (4.4 billion euros)
- Revenues achieved in France in 2019-2020 down by 3.2%
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