MDJ2 Associates has analysed UK DIY in a report ‘big bets places – who will win?’ showing large investment by big DIY/garden centre retailers are set to transform the market.
The report is relevant to garden retailers as it talks about the changes at B&Q, Homebase/Bunnings and Wickes.
Director Neil Munz-Jones presented the report at the recent EDRA (European DIY Retail Association) Global DIY Summit in Stockholm.
The report says: "The next three to five years will see radical change that will impact on consumers, retailers and suppliers."
MDJ2 warns that using consensus forecasts of 2-2.5 per cent p.a. applied to GfK’s £16bn market size implies that the market will grow by £1.05bn in 2018.
"We estimate that the three traditional DIY retailers will add £0.7bn of sales, based on market growth plus stated store expansion/reduction plans as well as known, additional self-help initiatives."
However, retailer growth forecasts add up to in excess of £1.8bn and "unless the market grows ca 75% faster than forecast not everybody will achieve their growth aspirations".
On Bunnings, the report says: "The scale of change is significant as there are major differences between the customer propositions of Bunnings in Australia and Homebase. While Bunnings targets both trade and DIY customers, Homebase primary target has been a more premium, female customer."
This will go in favour of ‘Everything you want under one roof’, ‘Everyday Lowest Prices’, and ‘Best Service’, which is "significantly different to Homebase" and "more in common with B&Q (and even Wickes) than it does with Homebase. We believe that what is now the Homebase business will be unrecognisable in five years. The Bunnings management team have moved quickly with changes in pricing and new ranges already evident in stores."
MDJ2 says store numbers may grow from 265, retail basics will be a focus, trade buyers will be targeted, as will e-commerce buyers.
Homebase previous owners Home Retail was to shut a quarter of the 323 Homebase stores by 2019, reducing the total to around 243 stores. But the new Australian owner is hoping to keep 260 shops open, which will then all be converted to the Bunnings brand.
Contact email@example.com to obtain a copy of the report.
See more in HW next issue.