DIY and Home Improvement Retail in Europe: Market Size, Retailer Strategies and Competitor Performance

NEW YORK, Oct. 31, 2011 /PRNewswire/ -- Reportlinker.com announces that a new market research report is available in its catalogue:

DIY and Home Improvement Retail in Europe: Market Size, Retailer Strategies and Competitor Performance

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Introduction

Across the continent housing markets have been in decline over the last couple of years and credit has become very hard to obtain. Partly as a result, DIY expenditure across the EU has tumbled 4.5% in 2009. The result is a DIY and home improvement sector which is back at 2004 levels of expenditure. However, many trends on the horizon provide great opportunities for retailers and sector recovery.

Scope

*Key DIY retail statistics for the EU27 covering 2004-2009 including sector expenditure, specialist sales, stores and retail space data.

*Insight into the five core EU markets including the leading players within them, major developments and the outlook for the sector.

*Assessment of strategic issues and recommended responses, such as channel diversification, private label development and capitalising on the green trend.

*Dedicated chapters on Kingfisher, Groupe Adeo, OBI, Praktiker and Bauhaus, detailing key operational metrics and strategic developments.

Highlights

In the majority of EU countries, expenditure on DIY products fell back in 2009. While Austria, Poland and Belgium were the most resilient, the markets in CEE and the southern European countries saw the sharpest declines, with Spain and the Baltics suffering from falls in expenditure in excess of 14%.

Climate change has taken on a hugely significant role in all governmental policies. DIY retailers are in a perfect position to capitalise on the growing trend for going green with many implementing new sustainable initiatives. For example, Groupe Adeo has launched its Kbane banner dedicated to green products and services for the home.

With a value in excess of Euro 37 billion, Germany remains by far the largest market by DIY expenditure and benefitted from a comparatively resilient 2009 with a nominal 1.2% fall. It is host to three of the largest DIY retailers in Europe, OBI, Praktiker and Bauhaus, which all continue to expand aggressively across the CEE region.

Reasons to Purchase

*Make informed investment decisions by understanding the size of EU DIY and home improvement sector and the activities of competitors within it.

*Achieve revenue growth by identifying the most successful home improvement product areas and consumer trends driving sales growth.

*Develop innovative strategies to enhance your retail proposition in areas such as in-store services, sustainable product development and e-retail.

Summary 1

Executive Summary 2

Europe's economy is emerging from the aftermath of a brutal recession 2

Naturally, the DIY market was in no position to escape this malaise 2

Hard DIY is suffering, while the homing trend and gardening are offering some respite 2

Despite the significant headwinds, DIY retailers continued to expand their store estates 2

2010 should be a better year for the sector and the whole industry 3

What to do now - private label provides an opportunity to improve margins 3

A flexible supply chain would help retailers sell the right products at the right time 3

Online is growing right through the recession; the next step is applications 3

Environmental targets and trends are presenting numerous growth opportunities 4

Table of Contents 5

Table of figures 6

Table of tables 7

DIY Market Structure 8

The European DIY market is in its second year of decline 8

Specialist sales are following the downward trend 12

Specialists' selling space is showing a much slower pace of contraction 15

Sales densities are also continuing to fall 17

Store numbers are continuing to show long-term decline 19

The DIY Market in France 21

The French market is down by 3.0% for the first time in 15 years 21

Recent key developments - major players are growing sales through store openings 24

In March 2010 Bricorama reported growth, mainly driven by new space 24

Q4 sales at Kingfisher were down 24

In February 2010, Mr Bricolage reported stagnating sales 24

In October 2009, Mr Bricolage acquired Le Club-les Briconauts in France 24

Shares of DIY retailers in France - Leroy Merlin is the dominant DIY retailer 25

Leroy Merlin France now has an annual turnover of more than €4.5bn 25

Kingfisher France saw a reversal of fortunes for its two fascias 25

Outlook for DIY retailing in France - poor consumer spend will restrict organic growth 26

The French DIY market's fortunes will be sharply influenced by the macroeconomic picture in the country 26

Unemployment is too high, the housing market is weak, and overall consumer confidence is down 26

There is no easy alternative into growth, as opening new DIY sheds remains difficult 26

The outlook for trade specialists remains grim in the short term 27

More consolidation is on the cards, especially from smaller operators 27

The DIY Market in Germany 28

The German market has enjoyed a good year despite the crisis 28

A greater focus on smaller ticket items would work well 29

Gardening is growing strongly 29

Consumers are saving energy through renovation 29

Recent key developments - performance was mixed among the key players 29

In March 2010, Praktiker announced its results for 2009, showing a decline of 6.2% to €3.7bn 29

Also in March, Hornbach announced that it continued to grow through the recession 30

Shares of DIY retailers in Germany - the main players continue to invest in expansion 30

OBI remains the market leader in Germany 30

The challenge from Praktiker is faltering-for now 31

Bauhaus' store proposition is ideally suited to tradesmen 31

Outlook for DIY retailing in Germany - although 2010 will be weak, the future is promising 31

Macroeconomic recovery is on shaky ground, but the DIY outlook appears to be relatively benign 31

Short timing has kept unemployment on an even keel 31

The savings rate is high, the residential market is down, and confidence recovery is on shaky ground 32

The DIY market got off to a slow start to 2010 32

Sales densities are under pressure 32

Environment stimulus is promising for future growth 32

The DIY Market in Italy 33

The crisis has caused a standstill in the Italian market 33

Recent key developments - Groupe Adeo is making gains in the market 34

In April 2010, Leroy Merlin reported double digit growth 34

In May 2009, the second Bricoman store opened in Italy 34

Shares of DIY retailers in Italy - Groupe Adeo dominates the market 35

Outlook for DIY retailing in Italy - expenditure is being hampered by entry of discounters 35

Italy's economy is on shaky ground 35

Disposable income is falling, unemployment is getting worse, and savings are down 35

House prices are coming under pressure 36

A rise in discounting is posing a threat to DIY specialists 36

Developing an upmarket positioning will help DIY retailers to boost sales 36

Offering a good service will also contribute to increasing sales per store 36

The DIY Market in Spain 37

The DIY market is collapsing as the recession is taking hold 37

Recent key developments - value DIY players are expanding in the market 38

In March 2010, El Corte Inglés announced its intentions to accelerate the roll out of Bricor 38

In March 2009, Leroy Merlin reported a sales decline for 2008, a portent of things to come for Spanish DIY 38

Brico Depot is seeing signs of improvement 38

DIY groups are laying out their expansion plans 39

Leroy Merlin is seeing long-term potential in Spain, and is planning further expansion 39

Shares of DIY retailers in Spain - new entrants are gaining share 39

Outlook for DIY retailing in Spain - the economic climate remains gloomy 40

Spain is still in recession, but inflation is slowly rising 40

A rise in VAT is imminent and unemployment remains exceptionally high 40

The property market has tanked 40

Relying on a booming housing market is a thing of the past for DIY retailers 40

The DIY Market in the UK 42

The UK market is suffering a brutal decline 42

UK DIY is being saved by gardening 43

DIY retailers are benefiting from the difficulties faced by furniture specialists 43

Competition is intensifying 43

This is being heightened as grocers and general merchandisers gain market share 43

Recent key developments - the main players have reported positive results 44

In March 2010, Kingfisher reported positive results, but warned of tough times ahead 44

In 2009, Home Retail Group announced that Argos and Homebase increased total sales 44

In August 2009, Focus secured the backing of creditors for its proposed company voluntary arrangement 45

Shares of DIY retailers in the UK - B&Q commands over a quarter of the market 46

Outlook for DIY retailing in the UK - value and green issues will take greater precedence 47

DIY demand is unlikely to rebound in the short term 47

The Big Four are responding to a changed consumer mindset 47

DIY will remain price competitive and value driven, but will gain some impetus from the eco theme 47

Strategic Issues 49

The downturn has resulted in a changed retail landscape for the DIY sector 49

Housing market growth across the EU has slowed to a crawl and in some cases started to retrench 49

Most DIY specialists are reacting well to the changed consumer 49

Energy efficiency will have a major impact on the future development of the European DIY market 49

The online channel has clearly outperformed for retailing all the way through the recession 49

The housing market is going south, the first synchronised fall in the EU 50

The solution is to focus on smaller projects... 51

...and on gardens, as barbecue sales growth continues across most EU markets 52

Energy efficiency and carbon footprint reduction are other growth drivers 52

Depending on incentives, solar panels could achieve mass take-off in UK 52

Consumers are demanding green products and services 52

Europe's largest DIY players have already begun to incorporate the green agenda into their offers 53

B&Q is pledging a carbon emissions cut in 2010 53

B&Q still needs to give its One Planet Home range greater focus 53

Groupe Adeo has developed its Kbane banner 53

Rautakesko, Hornbach and Bauhaus all offer guidance on saving energy in the home 53

Online, from click and collect to apps, has been outperforming 54

B&Q has developed an online proposition... 54

...and has also rolled out a reserve and collect service 54

Homebase has also rolled out reserve and collect... 54

...and is developing online marketing campaigns 54

Praktiker aims to become a multichannel retailer 54

Apps present the next step in the internet evolution 55

Kingfisher 56

Retailer summary - Kingfisher is the world's third largest DIY retailer 56

Europe's biggest DIY retailer has a strong presence in UK and France 56

Recent key events - Kingfisher is focusing on strengthening its existing store networks 57

Kingfisher has exited Italy 57

Showrooms have become a key feature for B&Q 57

B&Q is targeting trade customers through new TradePoint store-in-stores 58

Kingfisher has launched an Eco Shop 58

Staff can gain a green qualification from B&Q 58

Eco brands are being increasingly promoted in-store 58

Castorama has developed an iPhone app 59

The inner-city store format on the Continent is now being launched in the UK 59

Financials - strong growth is continuing, despite the crisis 60

Stores - growth in emerging markets is picking up 62

Outlook - multichannel and improved customer service will help to maintain sales growth 65

Kingfisher is focusing on becoming more of a specialist in the DIY field 65

Multichannel is becoming a greater focus for Kingfisher 65

Groupe Adeo 66

Retailer summary - Leroy Merlin is the core fascia of Europe's second largest DIY retailer 66

Groupe Adeo operates eight DIY and homeware store brands 66

The retailer offers a range of services in its stores 67

Recent key events - the Leroy Merlin concept continues to be diversified 67

New Leroy Merlin eco store formats have been launched in France and Spain 67

Leroy Merlin stores are being downsized 68

In-store services have been improved in Leroy Merlin's stores in Italy 68

Leroy Merlin has launched its own blog 69

Groupe Adeo has acquired Kingfisher's store estate in Italy 69

Financials - the group is maintaining double-digit sales growth 70

Stores - continued expansion has taken place across all markets 71

Outlook - Groupe Adeo will continue to diversify away from its core DIY categories 72

Homewares and decorative products will become an increasingly prominent category 72

Continued format and product diversification is key to Group Adeo's growth 72

OBI (Tengelmann) 73

Retailer summary - OBI is Germany's leading DIY retailer 73

OBI is expanding rapidly in the CEE 73

OBI stores take the form of large out-of-town warehouses 74

OBI is a hard DIY retailer focusing on renovation and home maintenance products 74

Services on offer at OBI include floor fitting and tool rental services 76

Recent key events - OBI is driving spend by enhancing in-store products and services 77

180 ATMs have been installed in OBI stores in Germany 77

OBI is no longer expanding into Greece 77

OBI's gardening assortment is being expanded across Germany 77

Financials - OBI's stores in CEE outperformed its domestic network 78

Stores - Romania and Ukraine are the newest markets for OBI 80

Outlook - OBI will benefit from targeting growth markets, but mustn't forget its core market 81

OBI is continuing to target growth markets 81

OBI's hard DIY focus in Germany is resulting in weak sales growth 81

Praktiker 82

Retailer summary - Praktiker holds an 8.5% share of the DIY market in Germany 82

Praktiker positions itself in both the value and high-end price segment 82

Praktiker operates from two store formats 82

Private label will account for 30.0% of sales in 2010 83

Praktiker is gearing itself toward an EDLP proposition 83

Max Bahr's higher prices are justified by a variety of specialist DIY services 83

Praktiker hopes to become a multichannel retailer 84

Recent key events - online and private label are being further developed abroad 84

Praktiker entered Albania in 2009 84

Private label ranges are being expanded outside of Germany 84

Loyalty cards are being enhanced at both Praktiker and Max Bahr 84

Praktiker is trialling online in Hungary 84

Max Bahr is extending its partnership with Küche&Co 85

Financials - the Max Bahr store format is outperforming Praktiker 85

Stores - store expansion is continuing despite the poor financial performance 87

Outlook - Praktiker will continue to enhance its existing store network 87

Store consolidation has become the name of the game 87

Bauhaus 88

Retailer summary - Bauhaus is Germany's third largest DIY retailer 88

Bauhaus is mainly present in Germany, but is growing strongly in Scandinavia 88

Bauhaus operates from a large store format 89

In-store products are very much geared toward the hard DIYer 89

Gardening centres and drive-in arenas are being extended to more Bauhaus stores in Germany 90

Recent key events - Bauhaus is continuing its store and network expansion 91

Bauhaus entered Estonia in April 2010 91

A new large format store has opened in Kalk, Germany 91

Financials - sales have been squeezed by strong price competition in Germany 91

Stores - 60% of Bauhaus' store network is situated in Germany 92

Outlook - Scandinavia will make increasingly larger contributions to total revenues 93

Scandinavia will become a core region for the retailer 93

Appendix 95

Definitions 95

Abbreviations 95

Methodology 95

Ask the analyst 96

Verdict Research Consulting 96

Disclaimer 96

List of Tables

Table 1: Expenditure on DIY (€m), by country, 2004-2009e 8

Table 2: EU DIY expenditure growth rates (%), by country, 2004-2009e 9

Table 3: EU27 DIY expenditure ranking matrix, 2009 10

Table 4: EU27 specialist DIY retailers sales (€m), 2004-2009e 12

Table 5: EU27 DIY specialists sales growth rates (%), by country, 2004-2009e 13

Table 6: EU27 DIY specialists sales ranking matrix, 2009 14

Table 7: Estimated DIY specialists selling space (000 sq m), by country, 2004-2009e 15

Table 8: DIY specialists space growth (%), by country, 2004-2009e 16

Table 9: Estimated EU27 DIY specialists store numbers, by country, 2004-2009e 19

Table 10: Changes in estimated EU27 DIY specialist store numbers (%), by country, 2004-2009e 20

Table 11: French DIY expenditure and specialist sales, 2004-2009 21

Table 12: French DIY specialists, 2004-2009 21

Table 13: French DIY market shares, 2009e 25

Table 14: German DIY expenditure and specialist sales, 2004-2009 28

Table 15: German DIY specialists, 2004-2009 28

Table 16: German DIY market shares, 2009e 30

Table 17: Italian DIY expenditure and specialist sales, 2004-2009e 33

Table 18: Italian DIY specialists, 2004-2009e 33

Table 19: Italian DIY market shares, 2009e 35

Table 20: Spanish DIY expenditure and specialist sales, 2004-2009 37

Table 21: Spanish DIY specialists, 2004-2009 37

Table 22: Spanish DIY market shares, 2009e 39

Table 23: UK DIY expenditure and specialist sales, 2005-2009 42

Table 24: UK DIY specialists, 2005-2009 42

Table 25: UK DIY market shares, 2009 46

Table 26: Kingfisher company overview 56

Table 27: Kingfisher turnover, 2004-2010 60

Table 28: Kingfisher store portfolio, 2008-2010 62

Table 29: Kingfisher selling space development, 2008-2010 64

Table 30: Groupe Adeo company overview 66

Table 31: Groupe Adeo turnover, 2004-2009 70

Table 32: Groupe Adeo store portfolio, 2007-2009 71

Table 33: Groupe Adeo store portfolio, 2007-2009 71

Table 34: OBI company overview 73

Table 35: OBI trading record, 2004-2008 78

Table 36: OBI turnover (€m), by country, May to December 2008 79

Table 37: OBI store portfolio, 2007-2008 and 2008-2010 80

Table 38: Praktiker company overview 82

Table 39: Praktiker trading record, 2004-2009 85

Table 40: Praktiker sales, by country, 2008-2009 86

Table 41: Praktiker store portfolio, 2007-2009 87

Table 42: Bauhaus company overview, 2009 88

Table 43: Bauhaus estimated trading record, 2004-2009 91

Table 44: Bauhaus store portfolio, 2007-2010 92

List of Figures

Figure 1: DIY specialists sales densities in the EU (€/sq m), 2009e 17

Figure 2: Leroy Merlin on the high street, Paris, 2010 23

Figure 3: Y-o-Y house price changes (%), 2008-2009 51

Figure 4: Kingfisher's Castorama app 59

Figure 5: Poster for Leroy Merlin's eco-store in Gandía, 2008 68

Figure 6: Leroy Merlin's blogging site logo 69

Figure 7: Exterior of an OBI store in Germany 74

Figure 8: Interior of an OBI store in Germany 75

Figure 9: OBI's five branded labels each correspond to different product groups 76

Figure 10: Some of Bauhaus' private label brands 89

Figure 11: Bauhaus' drive-in area 90

Figure 12: Bauhaus' single store in Reykjavík, Iceland, standing empty 93

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