2022 looks set to be a good year for Kingfisher with the arrival in France of Screwfix, its star DIY brand dedicated to professionals. The opportunity to review the Group’s ambitions with Thierry Garnier, its Chief Executive Officer.
Thierry Garnier - This logistics platform dedicated to Screwfix will support the opening of the first stores in France, which will take place in clusters. Openings that will take place during the second half of 2022 and will serve our strong ambitions: this is not a test launch, but rather the rapid deployment of the brand in France. There, the professionals’ market is worth around £20 billion per year (23 to 24 billion euros) and Screwfix is moving forward with this target with a long-proven model in the United Kingdom and Ireland.
It is this British model that we will duplicate in France with ranges adapted to the French market.
T. G. - Professionals’ expectations are very clear: no loss of time, no disruption in the supply chain and, above all, some of the best prices on the market.
Screwfix is responding to all this with stores designed to be efficient, preferably set up in industrial areas, on spaces of around 300 to 500 m2: a limited assortment of 11,000 plumbing and electrical products and other small tools, product availability reaching 99% and strict organisation, made of a few square metres of sales area in front of a counter and, behind it, the dark store, organised for picking in record time.
The promises are equal to the challenges: click & collect in one minute and home delivery in less than an hour.
T. G. - No, because they both have their own positioning. Our experience in the UK between B&Q and Screwfix already shows that cannibalisation is weak. There is no reason why it should be otherwise for Brico Dépôt and Screwfix: first paint, structural work, kitchens, then small tools and very specific plumbing and electrical products. The distinction is very clear. Moreover, to establish Screwfix in France, we are working with the teams from Kingfisher France, who are all carrying this new brand, which will benefit everyone. We are building its fundamentals with a team led by Christian Mazauric, who knows the market and its workings to pull all the strings, in connection with teams from both Screwfix and the French brands.
T. G. - Our foundations have become solid again. This is reflected in our gains in market share over the past two years in France and the United Kingdom. This can also be seen in the commitment of the teams: the impetus is there and it is fuelling growth. We are comfortable with the agility necessary for success, with the delegation of powers and, ultimately, the right to make mistakes. We want to encourage team initiatives: yes, there will sometimes be mistakes, but above all, we are going much faster and seeing many innovations emerge. We have unleashed energy and talent. We had major logistical difficulties in France. Today, we no longer have any stock issues or shortages. Our renewed efficiency even allows us to undertake work to reduce our warehouse sizes: -19% in France, for example, over the last eighteen months. We have also upgraded our IT. And from a commercial point of view, if we already had good prices, we were lacking due to the absence of events or promotions. But I don't believe in "zero promotions". You should always try to bring the stores to life, create events, and promotions are part of the model. The work to repair our offer is, for its part, very well advanced.
We are involved in a business where choice is important, which is why we have already reintroduced many brands, particularly French ones, and premium products to the Castorama catalogue, for example.
T. G. - We have a very good price positioning and have, at the same time, improved our margins in 2021, becoming the third UK retailer to achieve a billion pounds of profit. The Group's development remains solid and we are confident about the future because Kingfisher is well prepared. Therefore, 45% of our turnover in 2021 was achieved via our own labels, a high level for the sector. Since these ranges are 15 to 30% cheaper than national brands, this contributes to our excellent price positioning and gives us room for manoeuvre to meet the challenges of purchasing power.
The positioning of our brands is also well balanced, with 20% of the Group's turnover generated via our Brico Dépôt discount format. In this brand, in Spain as in France, we are now committed, for example, to reimburse twice the difference if a customer finds it cheaper elsewhere.
T. G. - I think that, in our markets, the problems stem from a general disorganisation of supply and demand directly due to Covid. That is why I remain optimistic. Moreover, we have now returned, in our brands, to a standard level of product availability in stores, because we had anticipated things well. However, we remain attentive to the situation in China. But the ports of Shenzhen and Shanghai are operating normally for now, limiting disruption.
Asia accounts for 20% of our purchases: it is not neutral but it is not too dependent, even if it necessarily varies according to market categories. What we are doing, however, is working more flexibly and with a larger number of suppliers. We therefore work with around forty major international suppliers, to mention only our main partners, and the current trend is rather to seek to increase the number, to reduce and smooth out the risks.
T. G. - Working from home has taken hold and will remain, sustainably boosting our markets. Automatically, when you spend more time at home, your house becomes more important to you and you invest more in it.
The other important element, also linked to working from home, concerns moves away from major city centres to benefit from larger housing, with a garden or an outdoor area. Here again, the consequences are expected to be lasting, because the dynamism of the property market is expected to continue. The subjects related to energy renovation, with insulation or heating work, are also major projects that will be developed and on which we must be present. Finally, the other good news concerns do-it-yourself, a real social trend: we recruited many new DIYers during the Covid crisis, younger ones, all motivated by the pleasure of doing things themselves, which corresponds to Castorama's positioning, for example. This is yet another sign that we are ready to support current and future consumption changes.
T. G. - We are now able to accelerate our investments for growth and increase our capex to 3.5% of our sales, when many of our competitors are more between 1.8 and 2%. All with very clear objectives. For France, the challenge is to improve the level of profit. This is particularly true for Castorama and it starts with the level of sales per square metre. The good news is that Castorama enjoys a good technical image with consumers. To assert its generalist positioning, major work has been carried out to restructure and enhance the offering and is in the process of being completed. We are also committed to adapting our store network. This is true, on the one hand, for the optimisation of existing areas, with around forty sites over ten years, in particular at B&Q and Castorama France, i.e. 3 to 4% of their sales areas at most, without any social consequences for our teams. This is also true with the exploration of more compact formats: around thirty tests are currently being carried out in all our countries on these new models, such as with Casto in Lille and Paris. Here we are still learning, but we are starting to see some scenarios appearing for tomorrow.
Screwfix is, within Kingfisher, the little gem that keeps climbing. In the previous financial year, there were no fewer than 70 openings in the United Kingdom and Ireland and in four years, the brand's turnover has jumped by more than 53% from £1.5 bn in 2017-18 to £2.3 bn in 2021-2022 in both countries. Boasting 790 stores, with the 1,000 mark in sight, the Screwfix model is ripe for crossing the Channel.
A model that has more than adequately proven its worth: 11,000 plumbing and electrical products and other small tools, for professionals, on spaces of around 300 to 400 m2; a few square metres of sales area in front of a counter and, behind it, the dark store, organised for picking in record time, carried out by 20 to 25 employees.
The brand promise, verified by LSA during its visit to a London store, is quite impressive: a click & collect order ready in one minute flat and home deliveries organised in less than an hour.
This will attract professional customers in France.
INTERVIEW BY JEAN-NOËL CAUSSIL, IN LONDON