Rugby Fitted Kitchens boss Trevor Scott on why he thinks the likes of Ikea on the high street is a threat for independents
It would appear, at first glance, that the UK consumer’s passion for DIY is dead. Homebase, following the Wesfarmers debacle, is floundering while its new owners, having acquired it for the princely sum of £1, try to establish a reason for its continued existence.
It had previously severed its links with both Nobia group kitchen suppliers and German manufacturer Nobilia.
Travis Perkins reported a 5.8% decline in operating profit for the first half of 2018, putting the blame squarely on Wickes’s shoulders, whose sales were down 7.7% over the same period, dragging overall profitability down.
A group statement made it clear that a “significant cost reduction programme” at Wickes would shortly be commencing, despite only a month or so earlier announcing a recruitment drive for sales consultants and installers. This was conspicuous by its absence from this, their latest financial statement…
B&Q group sales have also been down over the same period and they decided earlier this year to dump in-house installation services and announced their own recruitment drive for more design consultants to further enhance the quality of the in-store experience for consumers.
Magnet, another Nobia-owned brand, has, however, bucked this trend, doubling its sales during the second quarter of 2018, citing their pre-Christmas winter sale and general price lowering as the root cause of this success in the face of others failures.
So let’s drill down and look a little closer at these diverse yet, in many ways, so similar mass market retailers and see if we can play spot the difference….
'With the kind of money at stake here, the multiples aren’t going to simply wither and die. They’re going to fight back. And with their money, they’ll make waves'
On the one hand, and apparently failing, we have large out-of-town DIY stores, whose high-ticket kitchen and bathroom departments sit somewhat uncomfortably alongside pots of paint. Always looking a bit scruffy and unloved, with staff who don’t know from one minute to the next if they can concentrate on designing and selling kitchens or if they’re going to be pulled off to stack shelves.
Magnet, however, is a studio-based operation, albeit loosely.When you visit Magnet as a consumer, it is clear you are visiting a kitchen showroom and the staff respond accordingly, as you can only be there for one reason.
Don’t get me wrong, Magnet and its modus operandi is far from perfect, but I think it’s fair to say it’s getting it more right than wrong compared with its natural competitors of late.
In the case of Magnet, this has always been how they operate. Back in the late Eighties and early Nineties, they even embarked on a doomed programme of opening high-street kitchen showrooms, no doubt intended to bring them closer to their consumers. It didn’t work, as back then it had so many other problems.
But millennials are not rushing out and buying houses in their early twenties, forcing them to buy cheap DIY products to improve their new homes.
They are searching out, no doubt via the internet, specialist KBB retailers who can offer them the kind of one-stop-shop experience they need.
This is, of course, good for us independents, because it’s what we excel at but beware the sleeping giants.
With the kind of money at stake here, the multiples aren’t going to simply wither and die. No, they’re going to fight back. And with their money, they’ll make waves.
Ikea has just announced the opening of the first of its new mini high-street KBB stores in central London to “localise and personalise the complex process of purchasing high-ticket items, such a kitchen or a bathroom”. No doubt they’ll be rolling these out to high street near you soon. They won’t be the only ones.
Wickes already has a dedicated KBB showroom in Warwick opposite our own showroom. Indeed, it’s why we chose that location.
As far as I know, it’s currently the only one, but for how much longer?
As independents, it’s therefore more important we get our marketing right to attract new clients to walk through our doors and that once through them we give them the in-store experience they expect and demand.