Is Amazon becoming the UK’s top DIY retailer?

New data suggests that Amazon will overtake Kingfisher as the UK’s biggest DIY retailer by 2026.

Amazon’s gross merchandise value (GMV) in UK sales for 2021 was £4.4 billion, according to market research and digital insights company Edge by Ascential. Kingfisher’s GMV sales for the same period was £4.7 billion — the largest in the UK.

Already the top e-commerce DIY retailer in the UK by sales (followed by Kingfisher), Amazon’s sales is forecasted by Edge by Ascential to reach £8.5 billion in 2026, surpassing Kingfisher. The GMV sales for the parent company of B&Q and Screwfix is forecasted at £5.4 billion.

GMV is a standard used to measure the size of a third-party marketplace. It is calculated by multiplying the number of products sold by the price at which each product was sold over a given time period. The data includes online and offline operations, and only includes chain retailers, of which Edge by Ascential’s research covers almost 2,500 worldwide.

Xian Wang, VP, Edge Retail Insight, Edge by Ascential, comments: “Kingfisher’s digital sales have surged 170% over the past two years and the company has leaned in to accelerating its e-commerce and mobile-optimised business. In March, the retail chain launched an Amazon-style third-party marketplace to extend its product range with the convenient option to return many products at their local store. Kingfisher said Click + Collect options will be added to this service too.

“However, the firm’s digital transformation efforts are unlikely to be sufficient to stave off Amazon, which we expect will overtake the store-based DIY group by sales in 2026.”

The new data is released just as Kingfisher publishes its Q1 2022 trading update. The group’s total Q1 sales for UK and Ireland was £1.6 billion, which is down 15.8% compared to 2021. However, three-year like-for-like sales is up 16.7%. Kingfisher says the pre-pandemic growth is down to “significant market share gains over the past two years, and good retention of revenue from new and existing customers.”

Commenting on the trading update, Kingfisher CEO Thierry Garnier, said: “Kingfisher has delivered a good first quarter of trading, with LFL sales 16.2% ahead of our pre-pandemic performance. While facing very strong comparatives in the prior year, our continued strategic progress has enabled us to retain a significant proportion of the increased sales during the pandemic.

“We continue to effectively manage inflationary and supply chain pressures. As a result, our product availability is now very close to ‘normal’ levels across all our banners, and we continue to deliver value for our customers through our own exclusive brands and competitive prices.

“Looking forward, we are reiterating our profit guidance for FY 22/23. We are focused on delivering on our strategic objectives and growth initiatives, including the growth of our scalable e-commerce marketplace, the expansion of Screwfix in the UK and France, new store openings in Poland, further increasing our trade customer base.

“We remain committed to delivering attractive returns for our shareholders and are today announcing a further £300m share buyback programme. This reflects our strong cash generation and our confidence in the group’s outlook.”

Edge by Ascential says e-commerce boomed during the 2020 lockdown (up 37% worldwide) and the company expects the shift to online shopping will become permanent. Its data shows that e-commerce will be the biggest growth driver of all retail categories over the next five years — growing twice the value of all major store-based channels combined.

In the UK, Edge by Ascential analysts expect shoppers to spend almost £78 billion across categories via e-commerce platforms between 2021-2026, accounting for 68.3% of total retail growth over this five-year period.

“We are likely to see increased consumer interest in DIY this month, as people invest in their homes and gardens to enjoy the weather and celebrate the Jubilee weekend with family and friends,” said Wang. “Home improvement search terms for Q1 (January to March) this year are ranking even higher than Q1 last year, Edge by Ascential analysis of category-specific terms in Amazon Vendor Central shows.

“‘Peel and stick wallpaper’ searches are up more than 250% over this period, for example. The average ranking for cordless drills was up 95%. Meanwhile, April saw the best search ranking for ‘garden solar lights’ since Q4 2020. 

“DIY brands should take advantage of the seasonal spike to invest in their SEO and content strategies online and on Amazon. Being visible on the digital shelf is even more important than on the physical shelf, with almost 90% of shoppers starting their search online, e.g. researching a product via ratings and reviews, even if they end up buying in-store.”

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