The changing face of retailing

Swift Electrical’s commercial director, Malcolm Scott, looks at how KBB retailing has adapted to a world dominated by the internet and social media

With the rise of the web, social media, eBay, and Amazon, innovation is playing a huge part in reshaping our daily lives. How much has kitchen retailing actually changed and what does this mean for retailers?

The Office of National Statistics reported that during May 2017, internet sales were 15.9% of all UK retail sales, and that in the household goods sector, 9.9% of sales were online.

Within the kitchen goods sector, internet retailers have been much more successful with components, like appliances, with only a small number making any headway selling cabinets or full kitchens.

One might reasonably argue that the internet has simply replaced MFI, which at its peak was selling more than one-in-10 kitchens in the UK and conducting huge TV campaigns.

Ten years ago, consumers were standing in retailers’ showrooms, asking if they could match the MFI price for Bosch appliances. Today, they do the same thing, but with AO. Then, as now, margins for kitchen specialist are pushed down by other types of retailers, although most consumers haves no real intention of purchasing from these retailers.

Wren continues to grow and Howdens certainly takes a large share of ‘trade’ kitchens, but no single kitchen selling business in the UK enjoys anywhere near to the share of the retail kitchen market enjoyed by MFI before its collapse.

So for the kitchen specialist, the big changes over the past few years have not been directly linked to transactional selling on the internet, but in some key areas have been driven by indirect internet activity. This is especially true of sinks, taps and domestic appliances, where e-tailing has driven down margins.

But for those ‘savvy’ enough to use social media and to create a non-transactional website, this channel has created a really great platform to communicate with new and existing customers, where referrals have become hugely important and faster resolution of consumer complaints essential to avoid poor feedback. The internet has improved the already high service levels of kitchen studios.

However, for the kitchen studio owner, there is an elephant in the room – an issue that has improved margins for retailers, but restricted their ability to be fast and flexible. That is the considerable rise in demands from manufacturers for larger percentage shares of total showroom floorspace.

Bigger brands have linked discounts to the percentage of total display space, rather than to the number of actual displays. This has given better margins, but has squeezed consumer choice. The trend has also left retailers more reliant on specific, key suppliers and much more exposed when there are supply chain issues.

The rise of franchise retail groups has had a very similar effect, tying retailers to specific brands.

There is much to be said for specialising. In the correct geographical location, a very focused, offering can be hugely successful.

So there are very real changes to the face of kitchen retailing, many of which are driven by the rise of the internet, but a great many of which are driven by the strategic response of kitchen furniture and appliance brand manufacturers to it, rather than by the actions of consumers or retailers.

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