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Innovation and digital development central to Kingfisher's plans

The home improvement market's lack of big consumer brands means there is an opportunity for Kingfisher to develop its own suite of innovative products to inspire its customers, according to David Alexander, retail consultant at industry analyst group Conlumino.

Kingfisher reported a year-on-year rise in top and bottom-line figures for the 12 months to 1 February 2014, with adjusted group pre-tax profits up 4.1% to £744 million and group sales up 3.5% to £11.13 billion. However, with what Alexander described as "flagging enthusiasm for home improvement products", as people become increasingly inclined to pay tradesmen to conduct work rather than do it themselves, he argued that the group should use innovation to drive its consumer businesses further in 2014.

"In October last year, Kingfisher held a huge event in Lille to showcase its impressive product range, which has been bolstered by a 50% increase in its innovation budget over the last three years," explained the analyst.

"The long-term trend may be skewing towards using tradesmen, but with consumer finances likely to remain under pressure for some time to come, there is surely some scope for Kingfisher to convince a segment of consumers of the advantages of DIY as a cheaper alternative to employing a professional."

Refreshing product lines has been part of a wider self-help strategy at Kingfisher called 'Creating the Leader', which aims to put multichannel development at the heart of the business to encourage growth and expand market share and profitability.

Kingfisher is evolving the digital offering of its consumer brands by using many of the learnings from its trade-focused business, Screwfix, which continued on a strong growth trajectory in 2013.

These developments included an upgrade of B&Q's online offering diy.com, which added 20,000 products for home delivery over the course of the year, and the launch of upgraded websites in Turkey, China, Brico Dépôt France and Spain. Click & collect has been trialled in Castorama France & Turkey, too.

It is clear that the Screwfix infrastructure is being used as a model for the wider multichannel evolution going on at the group, and like-for-like sales at this division jumped up 7.3% last year to £665 million (total sales increased by 17.6%). The preliminary results statement reported that Screwfix benefited from a strong promotional programme, extended opening hours, the continued rollout of new outlets and introduction of a mobile click, pay & collect offer.

"Screwfix has been able to latch on, albeit very successfully, to the prevailing market shift away from DIY and towards DFY (Done for you) as the trade market significantly outperforms against a weak consumer backdrop," Alexander commented.

"With enthusiasm for DIY having waned rapidly since the boom years of the 90s, it has been no mean feat for B&Q just to keep its head above water and any return to growth, however slight, is to be welcomed."