DIY and Home Improvement Retail in Europe: Market Size, Retailer Strategies and Competitor Performance

  • SUMMARY
  • EXECUTIVE SUMMARY
    • Europe’s economy is emerging from the aftermath of a brutal recession
    • Naturally, the DIY market was in no position to escape this malaise
    • Hard DIY is suffering, while the homing trend and gardening are offering some respite
    • Despite the significant headwinds, DIY retailers continued to expand their store estates
    • 2010 should be a better year for the sector and the whole industry
    • What to do now – private label provides an opportunity to improve margins
    • A flexible supply chain would help retailers sell the right products at the right time
    • Online is growing right through the recession; the next step is applications
    • Environmental targets and trends are presenting numerous growth opportunities
  • DIY MARKET STRUCTURE
    • The European DIY market is in its second year of decline
    • Specialist sales are following the downward trend
    • Specialists' selling space is showing a much slower pace of contraction
    • Store numbers are continuing to show long-term decline
  • THE DIY MARKET IN FRANCE
    • The French market is down by 3.0% for the first time in 15 years
      • In March 2010 Bricorama reported growth, mainly driven by new space
      • Q4 sales at Kingfisher were down
      • In February 2010, Mr Bricolage reported stagnating sales
      • In October 2009, Mr Bricolage acquired Le Club-les Briconauts in France
    • Shares of DIY retailers in France – Leroy Merlin is the dominant DIY retailer
      • Leroy Merlin France now has an annual turnover of more than €4.5bn
    • Outlook for DIY retailing in France – poor consumer spend will restrict organic growth
      • The French DIY market’s fortunes will be sharply influenced by the macroeconomic picture in the country
      • Unemployment is too high, the housing market is weak, and overall consumer confidence is down
      • There is no easy alternative into growth, as opening new DIY sheds remains difficult
      • The outlook for trade specialists remains grim in the short term
      • More consolidation is on the cards, especially from smaller operators
  • THE DIY MARKET IN GERMANY
    • The German market has enjoyed a good year despite the crisis
      • A greater focus on smaller ticket items would work well
      • Gardening is growing strongly
      • Consumers are saving energy through renovation
    • Recent key developments – performance was mixed among the key players
      • In March 2010, Praktiker announced its results for 2009, showing a decline of 6.2% to €3.7bn
      • Also in March, Hornbach announced that it continued to grow through the recession
    • Shares of DIY retailers in Germany – the main players continue to invest in expansion
      • OBI remains the market leader in Germany
      • The challenge from Praktiker is faltering—for now
      • Bauhaus’ store proposition is ideally suited to tradesmen
    • Outlook for DIY retailing in Germany – although 2010 will be weak, the future is promising
      • Macroeconomic recovery is on shaky ground, but the DIY outlook appears to be relatively benign
      • Short timing has kept unemployment on an even keel
      • The savings rate is high, the residential market is down, and confidence recovery is on shaky ground
      • The DIY market got off to a slow start to 2010
      • Sales densities are under pressure
      • Environment stimulus is promising for future growth
  • THE DIY MARKET IN ITALY
    • The crisis has caused a standstill in the Italian market
    • Recent key developments – Groupe Adeo is making gains in the market
      • In April 2010, Leroy Merlin reported double digit growth
      • In May 2009, the second Bricoman store opened in Italy
    • Shares of DIY retailers in Italy – Groupe Adeo dominates the market
    • Outlook for DIY retailing in Italy – expenditure is being hampered by entry of discounters
      • Italy’s economy is on shaky ground
      • Disposable income is falling, unemployment is getting worse, and savings are down
      • House prices are coming under pressure
      • A rise in discounting is posing a threat to DIY specialists
      • Developing an upmarket positioning will help DIY retailers to boost sales
      • Offering a good service will also contribute to increasing sales per store
  • THE DIY MARKET IN SPAIN
    • The DIY market is collapsing as the recession is taking hold
    • Recent key developments – value DIY players are expanding in the market
      • In March 2010, El Corte Inglés announced its intentions to accelerate the roll out of Bricor
      • In March 2009, Leroy Merlin reported a sales decline for 2008, a portent of things to come for Spanish DIY
      • Brico Depot is seeing signs of improvement
      • DIY groups are laying out their expansion plans
      • Leroy Merlin is seeing long-term potential in Spain, and is planning further expansion
    • Shares of DIY retailers in Spain – new entrants are gaining share
    • Outlook for DIY retailing in Spain – the economic climate remains gloomy
      • Spain is still in recession, but inflation is slowly rising
      • A rise in VAT is imminent and unemployment remains exceptionally high
      • The property market has tanked
      • Relying on a booming housing market is a thing of the past for DIY retailers
  • THE DIY MARKET IN THE UK
    • The UK market is suffering a brutal decline
      • UK DIY is being saved by gardening
      • DIY retailers are benefiting from the difficulties faced by furniture specialists
      • Competition is intensifying
      • This is being heightened as grocers and general merchandisers gain market share
    • Recent key developments – the main players have reported positive results
      • In March 2010, Kingfisher reported positive results, but warned of tough times ahead
      • In 2009, Home Retail Group announced that Argos and Homebase increased total sales
      • In August 2009, Focus secured the backing of creditors for its proposed company voluntary arrangement
    • Shares of DIY retailers in the UK – B&Q commands over a quarter of the market
    • Outlook for DIY retailing in the UK – value and green issues will take greater precedence
      • DIY demand is unlikely to rebound in the short term
      • The Big Four are responding to a changed consumer mindset
      • DIY will remain price competitive and value driven, but will gain some impetus from the eco theme
  • STRATEGIC ISSUES
    • The downturn has resulted in a changed retail landscape for the DIY sector
      • Housing market growth across the EU has slowed to a crawl and in some cases started to retrench
      • Most DIY specialists are reacting well to the changed consumer
      • Energy efficiency will have a major impact on the future development of the European DIY market
      • The online channel has clearly outperformed for retailing all the way through the recession
    • The housing market is going south, the first synchronised fall in the EU
    • The solution is to focus on smaller projects…
    • …and on gardens, as barbecue sales growth continues across most EU markets
    • Energy efficiency and carbon footprint reduction are other growth drivers
      • Depending on incentives, solar panels could achieve mass take-off in UK
      • Consumers are demanding green products and services
      • Europe’s largest DIY players have already begun to incorporate the green agenda into their offers
    • Online, from click and collect to apps, has been outperforming
      • B&Q has developed an online proposition…
      • …and has also rolled out a reserve and collect service
      • Homebase has also rolled out reserve and collect…
      • …and is developing online marketing campaigns
      • Praktiker aims to become a multichannel retailer
    • Apps present the next step in the internet evolution
  • KINGFISHER
    • Retailer summary – Kingfisher is the world’s third largest DIY retailer
      • Europe’s biggest DIY retailer has a strong presence in UK and France
    • Recent key events – Kingfisher is focusing on strengthening its existing store networks
      • Kingfisher has exited Italy
      • Showrooms have become a key feature for B&Q
      • B&Q is targeting trade customers through new TradePoint store-in-stores
      • Kingfisher has launched an Eco Shop
      • Staff can gain a green qualification from B&Q
      • Eco brands are being increasingly promoted in-store
      • Castorama has developed an iPhone app
      • The inner-city store format on the Continent is now being launched in the UK
    • Financials – strong growth is continuing, despite the crisis
    • Stores – growth in emerging markets is picking up
    • Outlook – multichannel and improved customer service will help to maintain sales growth
      • Kingfisher is focusing on becoming more of a specialist in the DIY field
      • Multichannel is becoming a greater focus for Kingfisher
  • GROUPE ADEO
    • Retailer summary – Leroy Merlin is the core fascia of Europe’s second largest DIY retailer
      • Groupe Adeo operates eight DIY and homeware store brands
      • The retailer offers a range of services in its stores
    • Recent key events – the Leroy Merlin concept continues to be diversified
      • New Leroy Merlin eco store formats have been launched in France and Spain
      • Leroy Merlin stores are being downsized
      • Leroy Merlin has launched its own blog
      • Groupe Adeo has acquired Kingfisher’s store estate in Italy
    • Financials – the group is maintaining double-digit sales growth
    • Stores – continued expansion has taken place across all markets
    • Outlook – Groupe Adeo will continue to diversify away from its core DIY categories
      • Homewares and decorative products will become an increasingly prominent category
      • Continued format and product diversification is key to Group Adeo’s growth
  • OBI (TENGELMANN)
    • Retailer summary – OBI is Germany’s leading DIY retailer
      • OBI is expanding rapidly in the CEE
      • OBI stores take the form of large out-of-town warehouses
      • OBI is a hard DIY retailer focusing on renovation and home maintenance products
      • Services on offer at OBI include floor fitting and tool rental services
    • Recent key events – OBI is driving spend by enhancing in-store products and services
      • 180 ATMs have been installed in OBI stores in Germany
      • OBI is no longer expanding into Greece
      • OBI’s gardening assortment is being expanded across Germany
    • Financials – OBI’s stores in CEE outperformed its domestic network
    • Stores – Romania and Ukraine are the newest markets for OBI
    • Outlook – OBI will benefit from targeting growth markets, but mustn’t forget its core market
      • OBI is continuing to target growth markets
      • OBI’s hard DIY focus in Germany is resulting in weak sales growth
  • PRAKTIKER
    • Retailer summary – Praktiker holds an 8.5% share of the DIY market in Germany
      • Praktiker positions itself in both the value and high-end price segment
      • Praktiker operates from two store formats
      • Private label will account for 30.0% of sales in 2010
      • Praktiker is gearing itself toward an EDLP proposition
      • Max Bahr’s higher prices are justified by a variety of specialist DIY services
      • Praktiker hopes to become a multichannel retailer
    • Recent key events – online and private label are being further developed abroad
      • Praktiker entered Albania in 2009
      • Private label ranges are being expanded outside of Germany
      • Loyalty cards are being enhanced at both Praktiker and Max Bahr
      • Praktiker is trialling online in Hungary
      • Max Bahr is extending its partnership with Küche&Co
    • Financials – the Max Bahr store format is outperforming Praktiker
    • Stores – store expansion is continuing despite the poor financial performance
    • Outlook – Praktiker will continue to enhance its existing store network
      • Store consolidation has become the name of the game
  • BAUHAUS
    • Retailer summary – Bauhaus is Germany’s third largest DIY retailer
      • Bauhaus is mainly present in Germany, but is growing strongly in Scandinavia
      • Bauhaus operates from a large store format
      • In-store products are very much geared toward the hard DIYer
    • Recent key events – Bauhaus is continuing its store and network expansion
      • Bauhaus entered Estonia in April 2010
      • A new large format store has opened in Kalk, Germany
    • Financials – sales have been squeezed by strong price competition in Germany
    • Stores – 60% of Bauhaus' store network is situated in Germany
    • Outlook – Scandinavia will make increasingly larger contributions to total revenues
      • Scandinavia will become a core region for the retailer
  • APPENDIX
    • Definitions
    • Abbreviations
    • Methodology
    • Ask the analyst
    • Verdict Research Consulting
    • Disclaimer
  • TABLES
    • Table: Expenditure on DIY (€m), by country, 2004–2009e
    • Table: EU DIY expenditure growth rates (%), by country, 2004–2009e
    • Table: EU27 DIY expenditure ranking matrix, 2009
    • Table: EU27 specialist DIY retailers sales (€m), 2004–2009e
    • Table: EU27 DIY specialists sales growth rates (%), by country, 2004–2009e
    • Table: EU27 DIY specialists sales ranking matrix, 2009
    • Table: Estimated DIY specialists selling space (000 sq m), by country, 2004–2009e
    • Table: DIY specialists space growth (%), by country, 2004–2009e
    • Table: Estimated EU27 DIY specialists store numbers, by country, 2004–2009e
    • Table: Changes in estimated EU27 DIY specialist store numbers (%), by country, 2004–2009e
    • Table: French DIY expenditure and specialist sales, 2004–2009
    • Table: French DIY specialists, 2004–2009
    • Table: French DIY market shares, 2009e
    • Table: German DIY expenditure and specialist sales, 2004–2009
    • Table: German DIY specialists, 2004–2009
    • Table: German DIY market shares, 2009e
    • Table: Italian DIY expenditure and specialist sales, 2004–2009e
    • Table: Italian DIY specialists, 2004–2009e
    • Table: Italian DIY market shares, 2009e
    • Table: Spanish DIY expenditure and specialist sales, 2004–2009
    • Table: Spanish DIY specialists, 2004–2009
    • Table: Spanish DIY market shares, 2009e
    • Table: UK DIY expenditure and specialist sales, 2005–2009
    • Table: UK DIY specialists, 2005–2009
    • Table: UK DIY market shares, 2009
    • Table: Kingfisher company overview
    • Table: Kingfisher turnover, 2004–2010
    • Table: Kingfisher store portfolio, 2008–2010
    • Table: Kingfisher selling space development, 2008–2010
    • Table: Groupe Adeo company overview
    • Table: Groupe Adeo turnover, 2004–2009
    • Table: Groupe Adeo store portfolio, 2007–2009
    • Table: Groupe Adeo store portfolio, 2007–2009
    • Table: OBI company overview
    • Table: OBI trading record, 2004–2008
    • Table: OBI turnover (€m), by country, May to December 2008
    • Table: OBI store portfolio, 2007–2008 and 2008–2010
    • Table: Praktiker company overview
    • Table: Praktiker trading record, 2004–2009
    • Table: Praktiker sales, by country, 2008–2009
    • Table: Praktiker store portfolio, 2007–2009
    • Table: Bauhaus company overview, 2009
    • Table: Bauhaus estimated trading record, 2004–2009
    • Table: Bauhaus store portfolio, 2007–2010
  • FIGURES
    • Figure: DIY specialists sales densities in the EU (€/sq m), 2009e
    • Figure: Leroy Merlin on the high street, Paris, 2010
    • Figure: Y-o-Y house price changes (%), 2008–2009
    • Figure: Kingfisher’s Castorama app
    • Figure: Poster for Leroy Merlin’s eco-store in Gandía, 2008
    • Figure: Leroy Merlin’s blogging site logo
    • Figure: Exterior of an OBI store in Germany
    • Figure: Interior of an OBI store in Germany
    • Figure: OBI’s five branded labels each correspond to different product groups
    • Figure: Some of Bauhaus’ private label brands
    • Figure: Bauhaus’ drive-in area
    • Figure: Bauhaus’ single store in Reykjavík, Iceland, standing empty

Report

Published by
Datamonitor
Published on
29 Jul 2010
Product code
DMVT0563
Pages
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