Analysis: Why Kingfisher boss Thierry Garnier believes lockdown trends will last

Kingfisher, which owns B&Q and Screwfix in the UK and Castorama and Brico Dépôt in France, has emerged as one of the lockdown winners of the past year as consumers turned their hand to home improvement.

The retailer recorded adjusted pre-tax profits up 44.4% to £786m in the year to January 31, when sales jumped 7.2% to £12.3bn.

In the UK alone, B&Q’s like-for-like sales surged 10.7% and at Screwfix, the rise was 6.6%.

Kingfisher benefited from the enforced time at home but once lockdown restrictions have been lifted and other sectors such as travel and leisure open up, will its success last?

Kingfisher chief executive Thierry Garnier is adamant the home enhancement trends of the last year are here to stay and the retailer has the strategy to ensure medium- and long-term success.

The home as a hub

After the imposition of lockdowns because of the coronavirus pandemic, the home became the centre of consumers’ activities – where they exercised, relaxed, worked and homeschooled as well as lived.

The government’s roadmap out of lockdown envisages that the UK will open up by the end of June but Garnier is confident that the habits formed out of necessity will be retained out of choice.

“I have no doubt that we will see more working from home in the future than 18 months ago,” he says.

“I would not qualify whether it’s half a day, one day – it could be different by country – but when I talk to other companies, we are clearly seeing a trend towards more working from home.”

That is expected to have a positive impact on Kingfisher because as people continue to spend more time at home, there will be more wear and tear, as well as simply wishing to reorganise and redecorate their homes to become the hub they need in a post-lockdown world.

Kingfisher is basing its predictions on a survey it conducted earlier this year to gauge DIYers’ plans. It found that almost 100% of those surveyed planned to take on a DIY job in 2021.

According to the survey, 80% of consumers were seeking to redesign and improve their gardens, while 70% planned to do some kind of interior decorating.

Fifty-eight per cent said they intended to do as much or more DIY in 2021 than they did last year, providing confidence that the upward trend may continue in the near future.

Asked whether he expected a decline in sales immediately following the end of lockdown as other sectors open up, Garnier does not shy away from the possibility that consumer priorities may go elsewhere, but he is more concerned about growth patterns over the medium term.

“We may see ups and downs in the coming months with lockdown and the end of lockdown but it’s very important for us to look in the medium term and these things are supportive of our growth,” he says.

Kingfisher will focus on like-for-like growth on a two-year, rather than shorter, basis.

GlobalData analyst Amy Higginbotham agrees that Kingfisher may face some headwinds in the short term, but shares Garnier’s longer-term confidence.

“The remainder of [this year] will be more challenging for Kingfisher as strong growth achieved during Covid-19 annualises out and as consumers shift spend away from the home back to leisure and travel as restrictions ease,” she says.

She says Kingfisher’s ongoing investment in online including trialling same-day delivery at B&Q, new ranges and new store formats such as smaller, more easily accessible shops mean the business is “well-placed to outperform the market”.

A new DIY generation

Another aspect Garnier highlighted was an influx of new, young DIYers who he hopes will continue their new hobby post-pandemic.

Kingfisher customer surveys – one last September and one in February – found young people have taken more of an interest in DIY over the past year.

The research found that 20% of those aged 18 to 34 did DIY for the first time in 2020, while 55% did more DIY than before.

Kingfisher noted that this customer base had been keen to learn new skills in lockdown, using tips and tricks from instructive YouTube videos in particular.

While this is still an emerging trend, Garnier is confident that the young generation of DIYers will be keen to keep up their skills post-lockdown and the more projects they take on, the greater their interest will be.

Speed is key

As part of its digital strategy and to cater to the needs of customers in lockdown, Kingfisher turned 56 of its B&Q branches into “hubs”.

They incorporate dark stores to service click-and-collect and home delivery purchases, with coverage across the majority of the country.

In the past year, B&Q’s click-and-collect proposition has soared: 92% of online orders were picked up in-store.

Garnier sees a strong future for click and collect but says having the store hubs at the centre of its strategy is the way forward because speed will be the most vital component to have an advantage over its pureplay competitors.

“I spent eight years in China and there you can see the growth of 30-minute home delivery for more or less everything,” he explains.

“It’s coming to the US and now in the UK, you have Deliveroo drivers everywhere in large cities delivering food. We are preparing ourselves for the next step for this. 

“Using stores as picking centres is not just a tactical solution for Covid – it’s a long-term strategic direction. We want to use our strengths because when you have a store network you can play on speed and deliver to home or click and collect very fast.”

To build on this, Kingfisher has been trialling same-day delivery from its B&Q stores, which it hopes to be able to roll out in the near future while continuing to offer the click-and-collect services that were popular in lockdown. The group is also testing click-and-collect lockers in B&Q stores to drive speed of service.

While consumers may rush out to enjoy newfound freedom when lockdown ends, it is evident that home will be where the heart is more than ever before – and with a focus on new store concepts and speedier service, Garnier is confident Kingfisher can build on the success of the past year.