With the pandemic prompting an acceleration in store and online innovation, Kingfisher chief executive Thierry Garnier talks us through the group’s new retail formats, its test-and-learn approach and how that has shaped a new way of thinking throughout the business.
The only thing that gives it away are the facemasks everyone is wearing. Well, perhaps not the only thing. The Wandsworth branch Garnier is visiting is a new format, representative of new thinking at Kingfisher and new ways of doing business.
Garnier is speaking in B&Q’s smaller-format store in Wandsworth, which carries a convenience range drawing in tradespeople and consumers for essential items, along with room design consultation on a mezzanine floor.
It is one of a range of smaller formats being tested, including areas in Asda stores. The pilot epitomises a test-and-learn approach - a phrase that peppers Garnier’s conversation. The adoption of that mindset was central to his ambitions at Kingfisher before the Covid outbreak, and accelerated by the pandemic.
When Garnier started the top job at Kingfisher in September 2019, he no doubt expected a few challenges.
He was joining a retailer new to him, moving to a new country, and charged with revamping the B&Q and Castorama owner - and it was not a lick of paint but a more radical job that was needed to restore the fortunes of the home enhancement giant where profits had slumped under predecessor Veronique Laury’s aborted One Kingfisher strategy.
Then, after little more than six months in post, Coraonvirus brought disruption on a scale nobody in retail had ever experienced.
As lockdown was imposed in March last year, Garnier gathered his top team over video. They decided to close the stores for a time, even though they could have remained open because of the retailer’s classification as ‘essential’.
But shutting shops did not mean the business would stop trading. Overnight, B&Q became an online-only retailer, offering click-and-collect from the door of the stores.
As they burned the midnight oil following Prime Minister Boris Johnson’s imposition of the first lockdown, Garnier challenged the team to make 1,000 SKUs available for click-and-collect by 9am the next morning.
Working into the wee small hours, that target was not quite met - it was done by 10am, by which time 6,000 SKUs were available. A couple of days later the total had reached 8,000.
Garnier was delighted by the team’s efforts: “They had to decide overnight which SKUs, to inform the team that they would have to do stock-picking, to adjust our IT system - and they did that overnight. It was pretty impressive.”
That success, and the speed at which it was done, fundamentally changed the business. Garnier says: “They were in a spirit of test and learn and they never stopped. We have now to cool down the B&Q team because they have ideas all the time - a total change of mindset.”
While he would not have chosen the circumstances, that agility and willingness to try new approaches was exactly what Garnier had always hoped to nurture at Kingfisher when he joined the DIY group.
His experience running French retail powerhouse Carrefour’s business in China had brought home the importance of speed of innovation, the need to test, learn and adapt, and the inexorable rise of online business.
When Covid struck, he already had a clear idea of what should be Kingfisher’s direction, later elaborated in the Powered By Kingfisher strategy in June 2020.
He had also built his team, including key appointments such as CFO Bernard Bot and chief customer and digital officer Jean-Jacques Van Oosten.
That meant that the business was better placed than it might otherwise have been when it had to respond to the impact of coronavirus.
He says: “Even though the full strategy was not in place, the direction was there, the new team was there, the mindset was there. We had already as a team established some kind of trust together and the way we wanted to work together.”
For instance, Kingfisher was already piloting click-and-collect and last-mile delivery options in February 2020, and was able to press the accelerator as trade pivoted online.
The response to the pandemic spotlighted retail characteristics that were already growing in importance across the industry, such as the need to act fast, to experiment and apply the lessons of success or failure.
They are characteristics that were abundantly evident in China, where a constant thirst for the new and ambition fuelled by technological opportunity made a big impression on Garnier.
He says: “I believe we need to become comfortable with uncertainty - we have to. China obliged me to totally change my mindset. I am a French engineer. I like to think, prepare. You cannot do that in China, you cannot do that in the world we’re living in.”
He says the hope should be that you get things right about 70% of the time, and then correct: “That’s very different from the typical European mindset. B&Q was a super-long term, organised, super-perfect company. All the conversations I had with the team the first months I arrived were ‘well, do mistakes but go faster’.”
Trial inevitably brings error, but rather than attributing blame the point is to learn and improve. As part of his strategy, Kingfisher’s operating companies, including French giant Castorama as well as B&Q, now have the freedom to take many decisions themselves, and to try out new ideas.
So from marketing to fulfilment, they can take charge of their own destiny - a novel experience to which the test and learn philosophy is being applied.
Garnier cites a B&Q three-for-two offer on paint, a first in DIY. What was learned was that the promotion was “too crazy, too crazy”. Garnier chuckles: “The sales were good, but a bit expensive.”
However he emphasises: “This is where we are challenging the manager, because you have to say ‘that’s great, you did it, you can learn a little bit, continue to try’. I think we’ve created trust together around test and learn.
“I am really happy to see that such an organised, professional old lady [Kingfisher] is able to be so agile today.”
Inevitably, after the pandemic turbo-charged online retail and technological payment options such as smartphones, much energy is being devoted to online and digital operations.
But will that consumer behavioural shift be permanent? Garnier says: “A large part will stay in my view. It’s never zero to 100. Probably about 75% to 80% of the behaviour will stay.”
The growth of etail is emblematic of wider change, particularly the importance of mobile.
Garnier, used to his Chinese experience, rarely carries a wallet - to his occasional embarrassment when the bill arrives in a restaurant that does not take payment by phone. In China, he says, you may not need even to carry a phone as facial recognition is increasingly adopted.
Those uncomfortable moments in restaurants or elsewhere are ever more rare, and he says payments “cannot go back” to pre-pandemic trends.
Across the board, mobile commerce is defining new norms. He maintains: “We are still investing too much on the web.” instead, he says, the emphasis should be on enhancing mobile options such as apps.
But he nevertheless sees a central role for stores for a long time to come, arguing they remain a powerful advantage even in a digitally-driven world.
Again, it is a view informed by his experience in China and the attention devoted to stores by Alibaba, in particular its tech-infused Hema grocery chain - in Garnier’s opinion “probably the most innovative concept in the world”.
He observes: “They [Alibaba] saw that the combination of their operation with stores really made sense. The conclusion is that the store allows you to deliver at speed, at relatively marginal cost.”
Small stores such as Wandsworth with its convenience focus and design consultation services can play an important role. But if small is increasingly proving to be beautiful, what does that mean for Kingfisher’s big boxes?
Garnier says: “I don’t believe in massive store closures. I believe that some stores are too large, I believe we should have more of the small formats like this one, because from this store you can do click and collect, you can organise your [interior] design.” Where there is excess space Garnier sees potential for dark stores or sub-letting.
Big or small, click-and-collect is a foundation of Kingfisher’s multichannel appeal. Last year it was up 226% and accounted for 78% of group ecommerce sales, which themselves rose 158% to and were 18% of total revenues.
Click-and-collect can be done as fast as one-minute from order at trade business Screwfix and an hour at B&Q. Faster delivery is also on the agenda. Screwfix is testing 30-minute home delivery in Bristol with a start-up called Gophr.
For tradespeople that makes sense, says Garnier - if they are on a job and realise they are missing something, they want it quickly. But the retail group is also gauging interest in the appeal of this service to consumers - although B&Q’s click-and-collect and locker-collection proposition probably caters well for most.
Also on Garnier’s ecommerce radar are marketplaces. Kingfisher acquired services marketplace NeedHelp in November 2020 and the strong growth of marketplaces generally makes them of interest.
“I have high expectations of NeedHelp,” says Garnier. The retailer was already using NeedHelp in France before buying it, and its wider potential was obvious. Garnier says the potential for roll-out meant it made sense to invest in NeedHelp and benefit directly from its growth.
It is possible Kingfisher may want a product marketplace too. Garnier says: “We are exploring what is a marketplace for us. No decision has been made. We are a great brand, and when you want to be a marketplace you need brand traffic. We are looking at the plus and the minus of the marketplace concept.”
As he presses on with his strategy, Garnier is determined that the trading companies and group structure complement each other as powerfully as possible - the central thrust of Powered By Kingfisher.
He says: “We should have a clear strategic direction. If we say last-mile delivery and speed to last-mile delivery is a priority it’s true everywhere, but the way we do it in Poland or B&Q is their decision. If they want to do that with DPD or with Gophr or a taxi company I don’t care, but you have to deliver speed.”
Devolution of relevant decision-making to the operating companies has been initiated during Garnier’s tenure - with individual operating companies having autonomy over which promotions, ranges and loyalty programmes are right for their customers.
Where the Kingfisher group comes in is to ensure that expertise is shared, and to deliver benefits of scale such as through common buying, technology investment and the development of own-brand, which currently accounts for 44% of Kingfisher’s sales.
The home category was in great demand during the pandemic lockdowns as people, confined to their houses, freshened their living and working spaces up.
Garnier is confident that the market will continue to perform strongly even as more normal conditions resume.
Working from home, however many days a week it ends up being, will remain a feature of everyday working life for large numbers of people and they will therefore continue to invest in their houses and gardens.
The pandemic has also sparked interest in DIY among new consumers. Garnier says: “The combination of a lot of [customer] recruitment, new skills and people saying they enjoyed it is good for us in the medium term.” He admits he “would not dream to keep all of them” but is certain a substantial number of recent converts will be Kingfisher shoppers for the long-term.
Third, the housing market is buoyant and likely to remain so as people reappraise and reorganise their lives and where they want to live following the shock of covid. A good housing market typically lifts DIY spend as people do up new homes.
There are also opportunities to move into new countries. Screwfix launched in France earlier this year, while in the Middle East franchise partner Al-Futtaim will open B&Q stores.
Finally, increased government and consumer determination to act on sustainability and climate change opens the door to new products and services designed to minimise environmental impact.
Kingfisher, which has long been a pioneer in sustainability, is well-placed to drive and benefit from greater interest in going green. “If you don’t have proper insulation or a proper heating system or electricity management then you will not reach net zero, and we are working on that,” says Garnier.
Kingfisher has grown in torrid conditions and should be able to in more tranquil times. And in the end, Garnier’s overriding objective is growth - topline and market share.
The consumer may change and retail may change, but the fundamental measure of retail success remains the same - and Garnier’s mission is to ensure Kingfisher gets there faster than ever before.