Five Insights from Kingfisher’s Innovation Day 2019

1. A Future CEO Has Flexibility to Change Course—But Must Continue to Leverage Kingfisher’s Scale

Since 2015, Kingfisher has been leveraging its scale to: create a unified offering with common ranges across its various European banners; improve its digital proposition; and cut costs in areas such as IT and procurement. With CEO Véronique Laury set to depart, Chairman Andy Cosslett defended the common-ranges strategy: Customer needs across markets are more common than they are different, he said. Cosslett also noted that, while a future CEO would have “freedom to maneuver,” the key will remain to use Kingfisher’s scale to best effect—and the Board is “in no doubt” that operating at scale in the manner of Kingfisher’s recent strategy is in the best interests of customers and shareholders.

2. The Future of Retail Will be Polarized

Laury pointed to a future in which two types of businesses will dominate retail:

• In DIY and beyond, marketplaces offering a huge number of stock-keeping units (SKUs), such as Amazon, ManoMano and ASOS.
• Design-led retailers offering fewer SKUs, such as IKEA, Decathlon, Zara—and Kingfisher.

Kingfisher will establish its position in the latter segment by making home improvement more accessible, with lower prices (a result of leveraging its scale), product innovations and simplifying DIY for shoppers.

3. GoodHome Will “Solve the Nightmare” of DIY

Under the “international customer proposition” and product banner GoodHome, Kingfisher will position itself as simplifying home improvement for shoppers. The GoodHome proposition encompasses product, price, service, experience, convenience and brand.

Laury noted that four out of five DIYers abandon at least one home-improvement project a year and said that, often, there are too many barriers. These can include traditional home-improvement store formats, which customers find “horrible” to shop. Kingfisher will “fix this nightmare,” Laury said, with a seamless experience approached through a project lens rather than by product category, and with store formats set up to simplify home improvement.

4. Kingfisher’s “Sales Ecosystem” will Focus on Four Channels

Laury said Kingfisher will focus on three store formats, on top of digital channels:

• Convenience—including new Express formats that focus on serving DIYers but that also cater to trade professionals, and that offer customers the kind of advice and assistance found in larger stores. The first new-format store opened recently in London under the GoodHome by B&Q banner, offering 6,000 products in stock and 25,000 for next-day collection.
• “The Place”—a new format to make large stores destinations for DIY. Stores will be redesigned around types of projects rather than product categories; we discuss this in more detail below.
• Screwfix—which will continue to serve predominantly trade customers with small, multichannel stores focused on click and collect.

The GoodHome proposition will span Kingfisher’s consumer-focused channels: Convenience, The Place and digital.

5. Large Stores Will Focus on Projects, Not Products

Kingfisher plans to overhaul large stores to switch the focus from products to projects. The company has identified 11 customer projects, which include 400 shopper missions; these 11 projects include maintaining the home, modernizing a kitchen, modernizing a bathroom, refreshing the home interior, and modernizing, creating and maintaining the garden.

Over the medium term, large stores will be reformatted around 11 “pavilions” that serve the identified projects. These pavilions will focus on inspiration, project help and product display; under this model, stores will not carry stock on the shop floor (which we think may risk confusing and inconveniencing some shoppers). The first category to trial the pavilion format is kitchens, where all of B&Q’s almost-300 stores will see a new format for the category introduced by the end of the current fiscal year, in January 2020.

Not specified was the timescale that is envisaged for Kingfisher to roll out the pavilions format, should the company decide to implement it across all 11 project areas in its several European retail chains.