Kingfisher hopes to soar to 50 local DIY stores despite challenging market

Newsroom 19/03/2014 | 08:02

After taking over the local Bricostore DIY network in June 2013, British company Kingfisher last week opened the first two stores rebranded as Brico Depot. Over the next two years it wants to convert the remaining 13 outlets and open new branches.

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Simona Bazavan

Home improvement and DIY retailer Kingfisher wants to grow to 50 stores in Romania over the coming years, despite the fact that the market has been contracting for some time and is showing no solid signs of growth. However, the retailer remains optimist.

“The market indicates that there is the potential to reach 50 stores. How will we get there? There are various options and we have no restrictions – acquisitions, takeovers, anything is possible. It is too early to speak about the expansion pace, but, anyway, we want to move fast,” Patrick Papot, deputy CEO of Brico Depot Romania, told journalists last week.

The first two Brico Depot stores were opened last week – the former Bricostore Pantelimon and Orhideea outlets – and the rebranding of the remaining 13 will take place over the next two years, he added. However, company representatives refused to comment on revenue targets for this year or the timetable and investment budget for the expansion.

What will differentiate Brico Depot from its competitors will be its pricing policy, they said. “This is not about adding a new name to the local DIY scene but about launching a new and different concept,” said Papot. Focusing on promotional offers and sales as a means to ensure customer loyalty is a strategy now used by all local DIY retailers, he went on. However, this has only served to “confuse customers”, he suggested. Instead, Brico Depot will employ an “everyday low prices model” which it says will enable it to grow on the local market.

Brico Depot stores will feature a different product portfolio than Bricostore outlets, focusing more on construction materials and renovations, downsizing the home décor department and removing the garden section.

A Brico Depot unit will also require fewer employees than Bricostore outlets – on average 62 per store – and as a result the company has reduced the total headcount from 1,400 when it took over Bricostore last year to about 1,200 at present. No further layoffs will follow, said Isabelle Pleska, the operations director of Brico Depot Romania and former GM of Bricostore Romania.

British home improvement retailer Kingfisher took over the 15 Bricostore branches operated by French company Group Bresson locally in June 2013 for the total sum of EUR 75 million, according to Mediafax. In 2012, the Bricostore network reported a EUR 131 million turnover in Romania.

The company is Europe’s leading home improvement retail group and the third largest in the world, according to its own data, with a network of around 1,050 stores in nine countries in Europe and Asia. Its main retail brands are B&Q, Castorama, Brico Depot and Screwfix. In addition to Romania, Kingfisher is present with the Brico Depot brand only in France and Spain.

A challenging market

The local home improvement and DIY retail market has been on the wane for several years now, prompting various market shifts. Most recently, the 27 Praktiker stores in Romania were acquired by Turkish businessman Omer Susli. Most of the branches had been opened during the 2005-2008 real estate boom. In 2008, the company reported sales of EUR 306 million but the figure slumped to EUR 142 million in 2012 with the company amassing a EUR 48 million loss at the same time. German player Praktiker AG had been reporting financial difficulties on its domestic market as well and last year the company entered insolvency.

Others international players present on the local market include Hornbach, OBI, Baumax and Mr Bricolage, but the leader of the local DIY market is now local player Dedeman.

Owned by Romanian businessmen Dragos and Adrian Paval, Dedeman had a network of 36 stores countrywide at the end of 2013, ranging between 6,000 and 18,000 sqm in size. Unlike its competitors, Dedeman has maintained a steady expansion pace over recent years, opening six stores in 2013 following on from four the previous year. The company’s 2012 turnover stood at EUR 540 million.

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