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

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

  • ID: 1295218
  • July 2010
  • Region: Europe
  • 99 Pages
  • Datamonitor
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Across the continent housing markets have been in decline over the last couple of years and credit has become very hard to obtain. Partly as a result, DIY expenditure across the EU has tumbled 4.5% in 2009. The result is a DIY and home improvement sector which is back at 2004 levels of expenditure. However, many trends on the horizon provide great opportunities for retailers and sector recovery.

Scope of this research:

- Key DIY retail statistics for the EU27 covering 2004-2009 including sector expenditure, specialist sales, stores and retail space data.

- Insight into the five core EU markets including the leading players within them, major developments and the outlook for the sector.

- Assessment of strategic issues and recommended responses, such as channel diversification, private label development and capitalising on the green trend.

- Dedicated chapters on Kingfisher, Groupe Adeo, OBI, Praktiker and Bauhaus, detailing key operational metrics and strategic developments.

Research and analysis highlights:

In the majority of EU countries, expenditure on DIY products fell back in 2009. While Austria, Poland and Belgium were the most resilient, the markets in CEE and the southern European countries saw the sharpest declines, with READ MORE >

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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
Table of Contents
Table of figures
Table of tables

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
Sales densities are also continuing to fall
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
Recent key developments - major players are growing sales through store openings
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
Kingfisher France saw a reversal of fortunes for its two fascias
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
B&Q is pledging a carbon emissions cut in 2010
B&Q still needs to give its One Planet Home range greater focus
Groupe Adeo has developed its Kbane banner
Rautakesko, Hornbach and Bauhaus all offer guidance on saving energy in the home
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

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
In-store services have been improved in Leroy Merlin's stores in Italy
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

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

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
Gardening centres and drive-in arenas are being extended to more Bauhaus stores in Germany
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

Ask the analyst
Verdict Research Consulting

List of Tables:

Table 1: Expenditure on DIY (€m), by country, 2004-2009e
Table 2: EU DIY expenditure growth rates (%), by country, 2004-2009e
Table 3: EU27 DIY expenditure ranking matrix, 2009
Table 4: EU27 specialist DIY retailers sales (€m), 2004-2009e
Table 5: EU27 DIY specialists sales growth rates (%), by country, 2004-2009e
Table 6: EU27 DIY specialists sales ranking matrix, 2009
Table 7: Estimated DIY specialists selling space (000 sq m), by country, 2004-2009e
Table 8: DIY specialists space growth (%), by country, 2004-2009e
Table 9: Estimated EU27 DIY specialists store numbers, by country, 2004-2009e
Table 10: Changes in estimated EU27 DIY specialist store numbers (%), by country, 2004-2009e
Table 11: French DIY expenditure and specialist sales, 2004-2009
Table 12: French DIY specialists, 2004-2009
Table 13: French DIY market shares, 2009e
Table 14: German DIY expenditure and specialist sales, 2004-2009
Table 15: German DIY specialists, 2004-2009
Table 16: German DIY market shares, 2009e
Table 17: Italian DIY expenditure and specialist sales, 2004-2009e
Table 18: Italian DIY specialists, 2004-2009e
Table 19: Italian DIY market shares, 2009e
Table 20: Spanish DIY expenditure and specialist sales, 2004-2009
Table 21: Spanish DIY specialists, 2004-2009
Table 22: Spanish DIY market shares, 2009e
Table 23: UK DIY expenditure and specialist sales, 2005-2009
Table 24: UK DIY specialists, 2005-2009
Table 25: UK DIY market shares, 2009
Table 26: Kingfisher company overview
Table 27: Kingfisher turnover, 2004-2010
Table 28: Kingfisher store portfolio, 2008-2010
Table 29: Kingfisher selling space development, 2008-2010
Table 30: Groupe Adeo company overview
Table 31: Groupe Adeo turnover, 2004-2009
Table 32: Groupe Adeo store portfolio, 2007-2009
Table 33: Groupe Adeo store portfolio, 2007-2009
Table 34: OBI company overview
Table 35: OBI trading record, 2004-2008
Table 36: OBI turnover (€m), by country, May to December 2008
Table 37: OBI store portfolio, 2007-2008 and 2008-2010
Table 38: Praktiker company overview
Table 39: Praktiker trading record, 2004-2009
Table 40: Praktiker sales, by country, 2008-2009
Table 41: Praktiker store portfolio, 2007-2009
Table 42: Bauhaus company overview, 2009
Table 43: Bauhaus estimated trading record, 2004-2009
Table 44: Bauhaus store portfolio, 2007-2010

List of Figures :

Figure 1: DIY specialists sales densities in the EU (€/sq m), 2009e
Figure 2: Leroy Merlin on the high street, Paris, 2010
Figure 3: Y-o-Y house price changes (%), 2008-2009
Figure 4: Kingfisher's Castorama app
Figure 5: Poster for Leroy Merlin's eco-store in Gandía, 2008
Figure 6: Leroy Merlin's blogging site logo
Figure 7: Exterior of an OBI store in Germany
Figure 8: Interior of an OBI store in Germany
Figure 9: OBI's five branded labels each correspond to different product groups
Figure 10: Some of Bauhaus' private label brands
Figure 11: Bauhaus' drive-in area
Figure 12: Bauhaus' single store in Reykjavík, Iceland, standing empty

Note: Product cover images may vary from those shown
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Note: Product cover images may vary from those shown