DIY Retailing - UK - May 2013
“Retailers such as B&Q and Homebase are established authorities in DIY – and they need to capitalise on this to deliver online advice, knowhow and service that pureplays such as Amazon cannot.”
– John Mercer, European Retail Analyst
Some questions answered in this report include:
- Are there growth categories?
- Why the downsizing?
- Are small stores challenging the big boys?
- How can retailers capture non-core customers?
- What is the role of online?
DIY has been one of the worst-hit retail sectors by the squeeze on incomes and the weak housing market. And poor weather in spring and summer 2012 compounded the sector’s underperformance.
Consequently, from a sector sales peak in 2008, DIY retailers had lost £1.2 billion - or 10.7% of 2008 turnover - in annual sales by 2012. We do not forecast a major recovery for the DIY specialists: much will depend on the timing and strength of economic recovery including a pick-up in housing transactions.
Moreover, the unseasonal early-2013 weather will have dented start-of-season sales for the sector. In the medium term, we think DIY retailers will be forced to cater to demand which will be less focused on big-ticket goods or traditional DIY. Categories such as gardening, homewares or lighter homeimprovement categories are likely to prove more resilient in the near future.
And an ageing population with demand for Do It For Me could boost trade sales – but much of this demand will be channelled to trade specialists.
As ever, the report includes extensive consumer research. This year we asked shoppers about their past activity and future intentions in undertaking DIY; where they had bought in-store and online; satisfaction levels on a number of measures when shopping for DIY including a breakdown of satisfaction for major retailers; their attitudes to DIY and decoration; and their usage of online for browsing and shopping for DIY goods.
Core DIY – paint, wallpaper, screws, tools etc. – is now a small part of the proposition of the DIY sector. The closest any of the majors comes to such a narrow definition is Wickes. But the other two majors, B&Q and Homebase, have expanded their offer enormously. They are broad-range home-improvement stores with substantial gardening ranges.
So the problem that has to be asked is when does a DIY store cease to be a DIY store?
The normal answer would be to say that if core DIY is less than a certain percentage of sales, then the company should be classified elsewhere. But for DIY we take a slightly different line. The guiding principal should be the store’s authority in core DIY, irrespective of what proportion of group sales it takes. Consequently, the substantial product diversification at Homebase, for instance, does not invalidate its status as a DIY retailer. We exclude builders’ merchants such as Travis Perkins and Jewson.
New format, new content
This year’s DIY Retailing – UK, May 2013 report follows our new structure, the main elements of which are:
A new Financials and Outlets section, bringing together in one section five years of operational indicators – such as revenues, store numbers, sales per outlet, and operating margins – for the leading DIY specialists. This provides greater depth and breadth of data coverage than in our previous report format and allows readers greater ease of comparison of key metrics.
A new Non-Specialist Retailers section, providing market share estimates and company profiles of major non-specialist retailers of DIY goods, such as Argos, Amazon, Tesco and Wilkinsons. The non-specialists retailers are also included along with the specialists in our Market Shares section. More concise company overviews, retaining the essential insight and evaluation from our analysts alongside company background information and a summary of operators’ retail offerings. To allow easier comparison of data between retailers, measurable such as company market shares, space allocation data and demographic profiles of their shoppers, can be found in other sections of this report such as the Market Shares, Space Allocation and The Consumer sections.
New, proprietary data on sales area by product type for the leading retailers in the Space Allocation section. An updated Online section, providing online sector sales estimates, online market share estimates for B&Q and Homebase, and consumer findings on usage of the online channel for DIY browsing and shopping.
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* This is a sample representation of the report layout and does not reflect the research included in this report.
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