US News: European Innovation

Whilst in Germany for Practical World, Bob Vereen took a look at innovative German chain, Knauber and European heavyweight, Kingfisher…

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Caption: Three colors are used to distinguish departments in this Knauber store – blue for tools and other male-oriented items, orange for decorating and female items, and light green for gardening. The colors are used throughout the store on canopies over gondolas, signage, etc

In retailing today, competition is so fierce that every retailer is seeking an edge –something that will set one store apart from others.

Good display and merchandising ideas are one way to distinguish oneself, and few stores offer more (or as many) excellent presentations as the Knauber chain in Germany.

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Caption: One of several color-coordinated displays in the decorating section, stimulating sales of wallpaper, paint, shower curtains, decorating items, etc

Knauber, a small, privately owned chain, long has been recognized for its ability to compete against far larger chains dominating the German landscape. It sets itself apart by its presentations. Its recently opened Pulheim store, which replaces a smaller, older store, provides dozens of examples of clever merchandising presentations designed to encourage impulse and add-on sales.

Knauber’s merchandising flair exemplifies a need expressed recently by several industry leaders that home centers must become more female-friendly in the future because women are playing an increasingly important role in decision-making for families, and certainly for those single females heading up households. Knauber does that, and by its imaginative product presentations, becomes a “destination for ideas,” another point made by an industry leader at a seminar during the 2006 International Hardware Fair/Practical World in Cologne. Here are a few ways in which Knauber merchandising excels:

How To Be ‘King’

A summary of a presentation by Gerry Murphy, Kingfisher CEO, at the 2006 International Hardware Fair in Cologne…

Kingfisher is Europe’s leading home improvement retail group and the world’s third largest home center chain. It operates 650 stores in 11 countries, with leading market positions in the UK, France, Poland, Italy, China and Taiwan. Kingfisher also has a 21% interest in, and strategic alliance with Hornbach, Germany’s leading DIY warehouse retailer, with 123 stores across Europe. Kingfisher operates chains under four names, the two best-known being B & Q and Castorama. The other two are Brico Depot and Screwfix Direct, which serves the professional, industrial market. Brico Depot is the warehouse segment of the chain, although some B & Q stores are also warehouse-oriented. Castorama’s focus is being “the home solution.”

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Caption: Castorama is one of the biggest home improvement stores in Europe

When Kingfisher is evaluating international expansion strategies, it considers such factors as the size of the market and its growth potential, the soundness of the local economy, and whether there is an adequate source of qualified people to staff the stores and good sources of local products to supplement what is imported. The company looks for markets where the proper economic scale of operations can be achieved quickly.

Murphy said their international strategy calls for “adapted marketing,” which, as its name implies, means being flexible, market to market. They also seek a rapid transition to local management. He said the key to successful international operation is to work together with locals “where it matters” and independently where it doesn’t.

DIY simply isn’t a major factor in China, where its B & Q division achieved 48% growth last year and enjoyed double-digit growth for the last six years. There, he said, the emerging middle class wants others to do it for them. Italy, where Castorama is strong, is a European country whose citizens are not into DIY, also preferring DIFM – Do It For Me. DIFM in China meant that B & Q outfitted 15,000 new apartments in 2005.

Looking to the future, Murphy said he sees the following as key retail trends for successful operation:

 

  • The “feminization” of stores
  • Time pressures on consumers, resulting in more DIFM
  • A growing consumer demand for value for money
  • A growing consumer desire to use styles and colors to create ‘a look’ (and retailers need to do the same thing to avoid looking like all their competitors)
  • More services, including installations, to attract the DIFM customerKingfisher chains are coping with some of these trends by lowering their racking and creating more open layouts. They are allocating more space for homewares (items appealing to females), providing more inspirational and educational displays and even “dressed” room setups. Summarizing, Murphy said, to be successful internationally, one simply has to “adapt, adapt and adapt.”By Bob Vereen
    Australian Hardware Journal’s US correspondent