With low confidence and poor weather raining on shoppers’ grand home improvement plans, how is Kingfisher planning to patch things up over the next 12 months or so?
Home improvement giant Kingfisher has got a few cracks in its plaster.
Results reported today reveal total sales at the group dropped 1.8% on a constant currency basis to £12.9bn, while sales on a like-for-like basis dropped 3.1% in the year to January 31, 2024.
Broadly, the retailer’s UK and Ireland operations have seen growth and improvements in market share, but any green shoots were overshadowed by losses in France and Poland, which it said were impacted by a more “challenging consumer backdrop.”
With confidence low and poor weather raining on shoppers’ grand home improvement plans, how is Kingfisher planning to patch things up over the next year?
1. Data and retail media
It’s clear that leveraging retail media, AI and customer data is high on the agenda at Kingfisher right now, and it says the initiatives implemented recently are already bringing in extra cash and driving efficiencies.
The group has deployed AI and data-driven tools to optimise its promotions, streamline elements of its supply chain and it is now using AI-powered product recommendation engines in the UK, France and Romania in a bid to boost sales.
FY24 will also see the group bolster its retail media network, which allows it to sell ad space on its digital channels to third-party brands, and it has signed group partnerships with CitrusAd for technology and Unlimitail for sales support.
“Our data, AI and retail media initiatives are already driving incremental revenue, profit and cash,” says Kingfisher CEO and executive director, Thierry Garnier.
“Our retail media offering is rapidly building momentum and is now live in France and at B&Q. Over time, we see the potential for retail media revenues to reach up to 3% of the group’s total economic assets.”
2. Marketplace and ecommerce
Allowing third-party sellers to set up shop on its ecommerce sites has proven to be a key revenue stream.
B&Q’s 4.4% sales rise and market share gains were said to be assisted by marketplace sales, and the share of its group sales from ecommerce hit 17.4% this year, more than double where they were a few years ago, with much of that down to marketplace growth.
The platform is also bringing in new shoppers – 80% of the marketplace shoppers on B&Q’s website have never ordered there before.
B&Q has just launched a marketplace in France and there are plans to bring it to Poland later this year. It’s also bulking up the number of products – it already offers a staggering 1.2 million products – but the group is aiming to hit two million by year end.
Ultimately, Kingfisher wants the channel account for one third of its ecommerce revenue, with half of total sales going through the group’s sites expected to come via its marketplaces.
3. Simplifying France
Sales in France fell 5.9% on a like-for-like basis over the period, so the group is entering the next phase of its plan to simplify operations in the country and improve profitability.
Kingfisher’s biggest operations in France include its home improvement brand Castorama and discounter Brico Dépôt, and it has between 100-120 locations under each banner in the country, including some compact stores.
Garnier did not confirm or deny any potential sale of Castorama in France (having sold the Russian Castorama business in 2020) but said the primary focus was on improving the performance of stores.
“Castorama is the second largest [DIY] vendor in France. It is a very famous brand with great brand awareness,” he says. “We just feel that the performance of some of the stores is not good enough.
“We are very confident in the future of Castorama, but with that we need an additional plan on top of what we’ve been doing since 2019. It’s not a revolution, it’s a continuity of the plan we started four years ago, and it’s a brand we believe will have a great future in France.”
The group has announced plans for restructuring and modernising the store network, which is likely to result in a fair bit of store churn, but it was unable to confirm if the changes would lead to job losses, or a reduction in its staff count overall.
4. Compact stores
Physical stores, particularly smaller formats, will see a boost this year.
Screwfix is the brand with the most buzz. Alongside its ecommerce launch in six European countries, there have been 51 new store openings in the UK&I and 22 in France with “encouraging results”.
There are likely to be 15 more openings in France this year, as the retailer “refines the recipe for local success”. Overall, the group is eyeing a total of 1,000 Screwfix stores in UK and Ireland and 600 in France.
We can also expect to see growth in the number of compact formats that are currently being trialled across Europe.
The 27 compact stores currently operated by the group, made up of Casto and Brico Dépôt in France, Castorama Smart in Poland, and B&Q Local in the UK and Ireland, are all said to be “delivering encouraging learnings and results”. Testing of locations outside of major cities is set to begin in FY24/25.
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