The British DIY giant is back on form. Now ready to punch its weight again, it’s brimming with plans and ideas. The recurring theme? To optimise what can be optimised at Group level but above all, to give free rein to the initiatives of individual brands and local markets.
What’s at stake?
Having overhauled its organisation to strike a better balance between the Group and its brands, Kingfisher is now well equipped to get back in the ring and win new market share.
Undertaking new ventures and road-testing ideas has become the hallmark of the Group’s approach: Saisons bears witness to this, as does Screwfix.fr and a number of other examples, particularly in the United Kingdom.
And it’s all driven by the need to adapt to the new ways in which people are “consuming” DIY products, which are visibly setting major trends everywhere.
The pandemic has buoyed up demand in the DIY and home improvement markets. Like other players, Kingfisher has reaped the benefits of this, in the shape of a 7.2% increase in revenues. And this is likely to be just the beginning of these tectonic shifts. Remote working is set to expand, and even if it’s only for one more day per week, that still represents 20% of working time, so is considerable and opens up some significant opportunities. It means people will need to adapt their environment to be able to work in comfort. And as they spend more time at home, people will also start to realise that perhaps their sound or heat insulation is not that great. And lastly, they’ll find they want to repaint or refurbish everything...
New customers are coming into the market too, with new desires and a new temperament: they’re less hung up about the idea of DIY, and less inhibited about getting stuck into projects on their own, even major ones. They learn from online tutorials and they have the courage to give things a go, for better or worse. There’s also an increasing desire to “go green”, to leave the big cities and to find a garden or, at least, a terrace. And lastly, our housing stock is ageing, so needs more frequent repair or improvement.
The combination of all this triggers a nice virtuous circle. All these changes, whether small or large, micro- or macro-economic, structural or circumstantial, are shifting the boundaries. And when that happens, it’s best to keep above the waterline. So that’s what Kingfisher is striving to do. In 2020, the Group got itself back on track for growth in France. And after years of enviously watching what the competition was doing, it’s now asserting itself as a “trailblazer” again. To put it simply, Kingfisher is back in the game. And Thierry Garnier, who has been the company’s Managing Director for two years, has given this exclusive interview to LSA.
Thierry Garnier – The first thing is that, regardless of circumstances, it’s best to be modest: you’d have to be very clever indeed to know exactly what tomorrow will bring. Nevertheless, our strategy is starting to bear fruit and our growth in market share in France and the UK is the first evidence of that. And in the face of emerging consumer trends, I think we’ve managed to find a very effective organisational structure. What I’m referring to is our commitment to putting in place a more balanced and agile Group/brand operating model that – within an optimised common framework spanning bought-in goods, own brands (44% of the Group’s revenues come from its own brands, ed.) and supply chain – gives more latitude to each of our brands to find their own way of expressing themselves. This more balanced model had a big impact straight away, by restoring the teams’ dynamism and freedom of initiative and, I would even say, their pride. And this rediscovery of pride, brand by brand, has spawned a new pride at Group level too. This is borne out by the fact that 9,500 of our employees, that’s over 12% of our global workforce, took up our offer of one free share for every share purchased, under our employee stock ownership programme. This new mindset frees up energy and gives us back our appetite to undertake new ventures, put forward ideas and take initiatives. The Group is more agile, more engaged in the culture of risk – controlled risk, of course – and the culture of test and learn. This is what gave rise to Saisons, for example, which derived from a regional initiative, with a single, one-room store: the teams proposed the idea and we let them run with it. The aim, on a daily basis at Group level, is to work at high pace and with maximum agility to do the 70% that really matters to establish a strategy, and then take care of the remaining 30% later. We test, we move fast and if it doesn’t work, we correct our course or we stop. This flexibility holds the key, and since it always takes a bit of luck to get things right, this organisation was fully operational just before the outbreak of the pandemic, in March 2020. So we were well equipped to get through this period.
You said earlier, with reference to the pandemic and the growth of e-commerce, that it had given you two years’ worth of development gains. Kingfisher’s online sales account for 18% of the company’s revenues, up 10 percentage points in one year.
T. G.- I was talking about this test and learn strategy. It applies to online sales too. The Group has a brand, namely Screwfix, with a pretty extraordinary model, both on the commercial front and in terms of its profitability. While there’s already a dense network of branches across the Channel, with over 700 stores, we’re still opening about 50 a year. And now we’re opening Screwfix on French soil with Screwfix.fr. Our aim is to start online, in order to learn more about the market, establish the brand and give it time to settle in people’s minds. We’re starting off with just under 10,000 articles, but that is obviously bound to increase. We need to take time to find the right balance and build the right ranges. The logical thing to do next, if things go well, would be to start opening Screwfix stores in France, but we haven’t set any timetable for that. The strength of a Group like Kingfisher is that we have brands with complementary profiles, each with their own character, own offering and own assortment.
T. G.- The trend is towards more compact stores combined with e-commerce. It’s a strong trend, worldwide, and we must learn to live with it. We’re stepping up our tests on smaller formats and other sales models. So in France, we’ve opened Casto Solférino, in Lille, on the basis of a convenience-store model that we’d never used in France before (380m², ed.), and we have other plans in the pipeline. In the UK, we have a click & collect model with Screwfix, which is a very interesting idea. Also in the UK, we now have four B&Q convenience stores with an area of 230m², four store-in-stores located in Asda supermarkets, with an area of 400m², and two B&Q stores of about 1000m² in small shopping centres. We no longer live in a world where you can do everything all on your own. Joining forces with complementary partners helps you move faster and deal with uncertainty more effectively. With Speedy Hire, a UK-based tool hire specialist, we now have 16 franchises in B&Q stores. To meet demand for services and minor works more effectively, we also acquired the French start-up NeedHelp last November, and we’re now deploying its service marketplace model outside France: tests are under way in 21 B&Q stores and we’ll soon be extending the principle to Poland. Another of our strengths is that we’re a global group, with the ability to spread good practice more quickly than before. For convenience-store formats, we’ve set up some centres of excellence, with two or three experts responsible for coordinating ideas between different countries. For now, I’m not saying we’ve found the ideal solution, but we’ve already made a lot of progress. Every test gives us a chance to improve: how to determine the right assortment, how to optimise the amount of floorspace, etc.. One of the most complicated things in our line of work, for example, is the question of how to display kitchens and bathrooms: should we move everything online? Do we put just a few on display? If so, which ones? Should we opt to display just the materials, with colour swatches and so on? In other fields, what should we do with wood cutting services? Or colour mixing machines for painting? The purpose of our tests is to answer all these questions.
T. G. - Yes, but within the Group, this is only an issue for Castorama France and B&Q, and we’re only talking about a handful of stores. It’s the same principle as for the convenience-store format: how to cut floorspace is something you learn, and you need to approach it with humility, so as to strike the right balance and look at the consequences on sales and profit margins. Basically, there are three possible options. The first is to shut down this floorspace and give it back to its owners – that’s the least appealing option as far as I’m concerned. The second is to put it in the hands of a partner, whether it’s another brand, a food retailer or a business associated with our line of work, which could generate footfall. And the third is to keep it and turn it into dark stores for e-commerce. This is an interesting option: in the UK, 56 of our B&Q stores are already used as “digital hubs,” and enable us to supply 98% of UK territory in record time. Now, and increasingly in my view, everything has to be seen as part of a global ecosystem, with a much more environmentally responsible vision. That’s why we have also taken on some major challenges in terms of corporate social responsibility. We established the Castorama Foundation in March and have made some big climate commitments, in line with the Paris agreement. We’re among the 2% of global distributors whose targets for cutting greenhouse gas emissions are compatible with limiting the temperature increase to 1.5°C by 2025.
Letting the teams get on with it: the case of Saisons
A store called Saisons, with 150m² of floorspace, opened in Saint-André-lez-Lille in April. This was a local initiative, developed by the local Castorama store teams, aimed at making use of vacated space. The Group immediately agreed to let them go ahead with it. After all, what risk was there? None, without question. As its name suggests, Saisons intends to keep step with the seasons and adapt its offering accordingly. For the time being, the store is focusing on plants and gardening
Using the strength of the Group: the case of Screwfix.fr
Kingfisher, an international Group, has a portfolio of four very strong, clearly differentiated brands: Castorama, Brico Dépôt, B&Q and Screwfix. The last of these, a little gem that’s expanding relentlessly on the other side of the Channel, may have a role to play in the French market. The Group has decided that it has, so has launched it in France, initially as an online sales channel. It’s a way to road-test things, without putting anything at risble
Acting fast: the case of Casto Lormont
As purchasing patterns change, stores need to follow suit. The rise in online sales has given retail outlets a new role: offering “basic” items is no longer enough to justify their existence. So proximity and the ability to put things on display in showrooms, offer advice and provide support become key strengths. That means re-allocating floorspace when necessary. This applies to a few stores that are now too big. The Castorama store in Lormont decided to set up an outlet area to occupy this vacated floorspace. Other stores will take different approaches. The idea of hosting a partner brand, for example, is under examination.
Forging partnerships: the case of B&Q at Asda
B&Q has just over 300 stores in the UK and Ireland. Four of these are located in Asda supermarkets and have around 400m² of floorspace each. It’s a way of adapting to new consumer trends, by partnering with brands operating in other markets, so that both parties boost their attractiveness and their footfall – or at least that’s the idea.