3rd Global DIY Summit in London
The two-day get-together of the great and the good in the industry provided an authoritative statement on the current state of repair in the global home improvement sector.
Some of the daunting challenges facing the trade were revealed at the very start of the show via an electronic questionnaire. One in three suppliers and one in five retailers believe that the growth of online home delivery could force 70 to 80 per cent of all physical store space to close by 2025.
A surprisingly high number of attendees also estimate that robots could replace 10 to 20 per cent of all shop staff by then.
Meanwhile, younger consumers are becoming less interested and capable in DIY, which favours the "Do-It-For-Me" segment. This is good news for professionals and their wholesale customers, but it means that fewer tills will ring at the DIY store.
Giroldi, a fervent advocate of multi-channel solutions, believes that even Big Box operators will be able to get their act together. "Five years ago we expected an online revolution, but now we know we're facing a long evolution. Bricks & mortar still have time!"
Kingfisher's new CEO, Véronique Laury, who delighted her male-dominated audience with feminine charm, was similarly optimistic. Asked if DIY was dead, the French manager gave a most emphatic "No!".
Laury reasons that the average annual salary on the company's UK home market is only around £27,000 (€38,000). So Joe and Joanna Average will not have the money for professionals to do all their home improvements.
John Gillam, CEO of Australia's largest household hardware chain Bunnings, agrees: "When you do it yourself, it costs less, not to mention the personal satisfaction you have."
Laury also points to an ageing median population in Europe – one of the highest globally. Retired people are more likely to own their own home and will therefore need to have things fixed. "There is always a market if you have a home."
Gillam concurs and points to the number of older people who will need to live independently at home in the future, especially when the Baby Boomers face the final curtain as from around 2020. "There just won't be the nursing homes for them, and their children will use DIY to modify family homes so that they can live better."
Other trends will impinge on the industry. The emerging internet of things and the connected house will change the lives of consumers and offer big business chances.
Tony Stockil, CEO of Javilin Group, contends that many aspects of life are coming back to the home which departed during the Industrial Revolution. We now entertain and increasingly work there.
Stockil cites research estimates that there will be around 26bn connecting devices on the planet by 2020. Only 7bn of these will be smartphones; the rest will be locks, fridges, security, digital surveillance, and health monitoring systems etc. "There will be ways of controlling our home that can't be imagined today."
So, if DIY retailers want to get a slice of the action, they obviously need to move into the house. The question is, of course, who will own the security, entertainment, and health hub of the new digital home? Put more bluntly: "If a customer's washing machine is connected and getting old, will the sale go to the retailer or the supplier?"
"But most retailers don't have the mandate to enter the home, only telecom and gas companies do." So they must rethink their customer relationships.
The emotional store
This imperative applies even more urgently to the physical store, where the days of the ugly Big Box plonked down, God knows where, on a greenfield site are well and truly numbered. Showing photos of uninspiring DIY store shelves with hundreds of paint cans, Stockil challenged his audience: "Just seeing a further can of paint won't add to your spend."
Here Véronique Laury pleads for a more emotional shopping experience which goes far beyond more emotive store designs. All customers, she argues, need to be engaged. As products are clearly not going to sell themselves, Magnus Agervald, President of The Byggmax Management Group, even suggests "taking the customer in the arm and walking with him or her down the aisle".
Gillam stresses the need for events in order to build the customer experience and to bring the store alive in the service of local communities. Faisal Haneef, Senior Business Consultant at SAP, calls customer experience the next battleground: "Millennials no longer buy a product on price alone."
Laury also feels the need for a solutions- rather than a product-oriented approach entailing the on- and offline visualization of whole DIY projects in the home and elsewhere. "If our industry wants to grow, it must base itself on needs rather than wants. Had you just asked customers what they wanted, we would still be in the days of the cart and horse."
Last but not least, John Gillam admits the importance of top brands in creating a destination store. "We know that, if we try to innovate ourselves, we will always be a follower, because the world's best suppliers are investing in innovation in a way we can't match. Brand involvement will get the customer in."
This is echoed by Véronique Laury at Kingfisher: "After selling a large part of our China business, we intend to focus on Europe for the next five years." Podcast. Click arrow to listen to an audio version of the text:
One growth driver will be the reduction of country-specific assortment policies and the international standardisation of products across nine different operating companies, including Germany (Screwfix). "I want to debunk the myth that you can't sell the same products across Europe."
The UK has, for instance, different window sizes to Continental Europe, but Laury is confident there is plenty of common ground in many of the categories Kingfisher works in.
We look forward to an update on this and many other exciting DIY projects at next year's venue in Stockholm...
Podcast. Click arrow to listen to an audio version of the text: