Malcolm Scott of Swift Electrical Wholesalers looks at how online appliance sales are being dominated by a few big-name retailers. In the kitchen market, he sees Wren rapidly catching up with the sheds and predicts that franchise operations may make greater inroads into the UK. Independent studios, however, are holding strong
The trend of the past decade towards more transactions online has certainly continued, but the rate of change has slowed substantially. The profile of main retailers on the internet is stabilising and there is clear evidence of a shift towards more dominance by a few big-name retailers.
A very clear consumer ‘preference divide’ has also developed, with freestanding domestic appliances being very ‘internet-friendly’, while built-in appliances and sinks and taps are perceived as much more ‘store-friendly’ products, as they need to be viewed and require guidance from the retailer on selection of the correct option.
A third category has also emerged, with many consumers treating larger items, such as side-by-side refrigeration and range cooking, as home-delivered products that must be viewed before purchase, but that can then be purchased from anyone who has a full home-delivery service.
The challenge for outlets displaying big-box products is a difficult one. Retailers faced with showroom costs are increasingly finding that although they are well placed to hold on to the consumer and make a sale, they have no control over the margin they make and so must be ever more careful about what they actually display.
Looking specifically at the replacement domestic appliance market, the Euronics group, with 1,100 UK members, continues to support a smattering of retailers like Gillman’s, Marks Electrical and Stellisons, which jointly have internet sales of over £30 million under the Euronics umbrella, which had UK sales of £148m last year. There are some big independents like Hughes Electrical with 40 high street stores and sales of over £110m, which have substantial internet sites and several hundred Sirius Group members many with internet sites.
So the replacement sector remains fragmented compared with other European countries, but is gradually consolidating, with Currys emerging as the clear dominant force.
The position remains quite stable for the private specialist kitchen studio, with none of the major multiple retail groups making any progress in their efforts to move in on traditional kitchen studios
On the DIY shed front, even after lots of store closures, B&Q still has 389 stores and sales of £3.8 billion with Wickes having 238 stores and sales of £1.38bn.
Looking at kitchen manufacturers with their own multiple outlets, Howdens continues to hold ‘white-van-man’ business and grow with 650 stores and sales of £1.1bn with Magnet holding on to the number two slot with 200 stores yielding sales of £420m from a more mixed trade and retail business. Wren has 55 stores and sales of £200m and is rapidly catching up with its bigger rivals with a much clearer focus on retail sales. The considerable growth of Wren has been largely at the expense of B&Q and other multiples, while the growth at Howdens has largely been at the expense of the builders merchants.
The position remains quite stable for the private specialist kitchen studio, with none of the major multiple retail groups making any progress in their efforts to move in on traditional kitchen studios.
Some specialist multiple kitchen retailers, such as Neville Johnson Group’s Tom Howley, with nine showrooms, are growing. These specialist businesses are very focused and are not new to the kitchen sector.
Franchise groups, like In-toto and Schmidt, which could perhaps in the future make the kind of inroads into the kitchen market that they have made in other European markets, haven’t yet succeeded in making any significant inroads into the UK.
The other great game-changer – the internet – has not generated any major demand for the online purchase of full kitchens, but there are several quite successful sites selling to small traders and the ‘white-van-man’ trade, although there is very little appetite from the UK consumer for a DIY online kitchen proposition.
The prediction that consumers would shift away from buying a full kitchen from studio retailers, preferring to buy a kitchen without appliances and add their own has taken hold in the DIY sector, with sheds and builders merchants finding it more common to sell furniture without appliances.
However, while the internet has suppressed margins, it remains the case that most consumers wanting to buy a new kitchen from a specialist expect the studio to supply all parts of the kitchens.
The simple proposition remains true in 2016, where a retailer can provide a high-quality kitchen service with good design ideas, and has a quality showroom, the more affluent consumer will shop at this outlet.