The recession hits, the housing market crashes, and what do people do? If reports are to be believed, we all stay home to redecorate and fix up the place. In reality, however, the picture is not so clear cut. B&Q's latest results show that its like-for-like sales slumped 6.7% in the 11 weeks to 16 July.
Ian Cheshire, group chief executive of B&Q parent Kingfisher, has said: 'These are testing times for retailers, particularly in the UK.' He's not kidding. B&Q's rival Focus DIY fell into administration in May, and this is not to mention all the other retail chains that have gone to the wall this year.
Yet, as Cheshire also pointed out, such times of crisis can create 'an opportunity for strong businesses such as ours to strengthen their position'.
The OFT has given B&Q the go-ahead to buy 30 Focus stores. Part of the fallout from Focus' failure was its stock clearance, which lured bargain-hunters. With those deals snapped up for summer, B&Q will be hoping normal trading can be resumed. That, too, is an issue, though, with sales of seasonal outdoor products hit by poor weather, down 20% for the quarter.
B&Q believes it will emerge from the current 'testing times' in excellent shape, well-placed to enter a new stage of development. But do the latest numbers show that it might need more than just a patch-up-job?
We asked Giles Hedger, group chief strategy officer at Leo Burnett, which works with Homebase, and Nick Gray, managing director of Live & Breathe, which has Argos as a client.
GILES HEDGER - GROUP CHIEF STRATEGY OFFICER, LEO BURNETT
The recently reported drop in sales looks largely circumstantial, coming as it does after a stimulated first quarter, and diluted as it has been by the clearance sale of the ill-fated Focus. Beyond the tales of inclemency and insolvency, however, something interesting is afoot.
For a while now, the retail margin of B&Q in the UK has been a focus for its owner, Kingfisher. Impressive improvement has been achieved in some difficult years, but, while B&Q has become more efficient, it needs to keep its eye on the main chance - the leadership of a market and ownership of an idea.
The stated focus is making DIY easier, but ease alone may not be enough to unlock latent demand, and teaching consumers one at a time is a slow way to build Rome.
Improving your home is difficult, but it can be beautiful and worth the effort. The question is not 'What are you mending this weekend?', but 'What could you build if you put your mind to it?'
REMEDY
- The fact that 'difficulty' is a claimed barrier to home improvement doesn't mean that 'ease' is a winning strategy for stimulating demand.
- The banana skins of the overweening amateur just serve to remind us why we put it off. Instead, tune in to the psychology of a cash-strapped mortgagee with wet-room aspirations.
- The website says B&Q exists 'to help people create homes to be proud of'. Help is only one of the verbs in that sentence, and only part of the idea in the brand.
- Identify a clear, comfortable doorway into the brand for the non-trade segments you seek to attract. The proficiency continuum is a myth and the tribes need separate handling.
NICK GRAY - MANAGING DIRECTOR, LIVE & BREATHE
I don't think there should be a knee-jerk reaction to the latest figures. The more commentators jump on results like this, the more self-fulfilling the prophecy of the declining high street will become.
B&Q should be left to maintain its resolve - allowed to regroup and stand strong, and make the most of the opportunities it has now, rather than pandering to sensationalised headlines.
The numbers weren't great, but they were over a relatively short period. The closure of Focus caused some volatility in the market, but now it has gone, B&Q should be in a stronger position.
The recent economic turmoil may have affected spending, too, but, on the whole, people are continuing to improve their houses rather than move or buy property. So the portents for a better position in the long term are good.
B&Q has a great offer, which isn't often well-communicated. It provides loads of services such as reserve and collect, next-day delivery and help on improving your DIY skills - in-store demos, classes and more. These are all fantastic, but could be better communicated.
REMEDY
- B&Q needs to embark on an aggressive programme of local marketing around the stores acquired from Focus to migrate the previous loyal customer base to the new brand.
- Make more of the added services - DIY classes in stores are a fantastic idea, but still not widely known about - and there's much more that B&Q is already doing that it can promote.
- Maintain resolve. B&Q is doing a good job and should continue with its strategy of not only providing great prices, but also 'making it easier' for us all to do DIY - and not be swayed off course.