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Kingfisher puts the store at the centre of its ecommerce strategy to meet rising online demand and expand same-day delivery

A customer in a branch of Screwfix. Image courtesy of Screwfix

B&Q and Screwfix owner Kingfisher says putting the store at the centre of its ecommerce strategy has been “critical” for it to meet rising levels of online demand over the last year and a half. Some 90% of group online orders were picked from store in the first half of its financial year – with 57 B&Q stores being used as digital hubs for home deliveries to almost all UK postcodes.

The retail group is focusing on same-day delivery for competitive advantage. A Screwfix ‘Sprint’ service launched last month, offering delivery to site in less than a hour. The service will be offered in more than 30 UK cities by November, with a further rollout in 2022. “This development reinforces Screwfix’s focus on speed and convenience for customers, supplementing its already industry-leading one-minute C&C proposition” says Kingfisher Group in first-half results today. “Learnings from the ’Sprint’ tests are being shared with other retail banners that are also testing same-day delivery, including B&Q.”

The update came as Kingfisher Group reports sales of £7.1bn in the six months to July 31 2021. That’s 19.9% up on the same time last year. Online sales grew by 21% in the year – and were 216% ahead of the same time last year. Pre-tax profits of £677m were 70.6% up on the £398m it reported at the same time last year, with retail profits up by 45.1%. 

In the UK and Ireland, Kingfisher reported first-half sales growth of 28.1% on a like-for-like basis that strips out the effects of store openings and closures. The fastest growth was in the first quarter (+65%), when the comparative period a year earlier fell before the Covid-19 pandemic hit, while the second quarter (+3.8%) was in comparison to a strong period for DIY sales a year earlier. Third-quarter sales (-1.9%) to date are lower in comparison with a very strong summer 2020. 

At B&Q, first half sales were 28.8% LFL ahead of last time, with strong first quarter growth (+81.9%) against a pre-pandemic period followed by a 1.2% decline. In the third quarter so far, sales are 4.2% behind last year. 

Screwfix sales were 26.8% LFL ahead of last time, with strong growth both in the first (+39%) and second (+15.9%) quarters. In the third quarter so far, sales are 2.5% up on last time. 

The role of the store in ecommerce

Online now accounts for 19% of sales across the group, after a year of focusing on issues including last-mile delivery and the store as a fulfilment hub. Click and collect sales are 10% ahead of last year – and 277% ahead of two years ago. The group has also added mobile and service-led technology from the Screwfix mobile app, to self-checkout terminals, and 3D kitchen and bathroom design. B&Q introduced virtual kitchen and bathroom sales in early 2021, after the showroom parts of its stores had to close during Covid-19 restrictions, and since then has carried out tens of thousands of virtual showroom planning sessions. The retailer says it is still looking at options to expand product choice, including potentially launching an ecommerce marketplace. 

Stores are at the centre of the Kingfisher strategy of meeting customer demands for convenience and speed, both through fast click and collect and through home delivery. The shape of this demand has emerged during the Covid-19 pandemic, says Kingfisher, adding to another aspect to shops’ previous importance for inspiration, visualisation and expert advice. In total Kingfisher has about 1,420 shops across the group.

Now the retail group expects to have more stores, but that many will be smaller and more local. ‘Big box’ stores will be rightsized, while new openings will include both more compact (less than 2,000 sq ft) and medium sized (2-8,000 sq ft) shops. So far B&Q is trialling five compact stores, including three in ghih streets and two in branches of Asda. The group also now plans to have more than 1,000 Screwfix stores in the UK and Ireland – up from 900 previously. Screwfix has now launched as a pureplay in France, with shops in the market expected to open in 2022. 

“We believe that the demand for speed and convenience is driving both the shift towards online in our industry, as well as the need for smaller and more localised stores. In response, over the next few years, we have plans to increase our overall store count, while at the same time reducing the average size of our stores,: says Kingfisher in today’s results.

Kingfisher Group chief executive Thierry Garnier says: “We have had a very strong first half of the year, with growth across all our categories and channels, particularly ecommerce. This is a testament to the rapid progress being made against our strategic priorities which continue to drive customer engagement and an improved competitive position in our key markets.”

He says that the group has now navigated the worst of the pandemic and legacy and dealt with some pre-existing issues – and is looking ahead to the future.

“With the business in a strong position, we are now ready to accelerate our investments to capitalise on the attractive growth opportunities available to us,” says Garnier. “We are accelerating Screwfix’s expansion in the UK & Ireland, and will open our first Screwfix stores in France in 2022. We are accelerating our digital investments with new initiatives enabling faster fulfilment and broader choice. We are also moving faster with our expansion plans for Castorama Poland.”

Mobile growth

More than half (54%) of Kingfisher Group online sales are now via mobile, with first half m-commerce sales up by 32% on the same time last year – and 369% on two years ago. During the first half Screwfix upgraded its mobile app, offering features including geolocation for faster in-store pick up and relevant offers. 

Brico Dépôt Iberia has rolled out mobile Scan & Go technology that is now being trialled by B&Q with a view to including it in the B&Q app. 

Operations and logistics

The retailer expects there to be strain on international logistics infrastructure into 2022, following the Covid-19 pandemic and port congestion in Asia. The cost and availability of shipping containers are a “constant challenge”, but Kingfisher says its product availability has improved during the first half of the year, while it has also been able to manage the challenges of shipping containers and HGV drivers. “Inflationary pressure” is expected to continue through the second half, although the cost of some raw materials appear to have peaked. 

B&Q and Screwfix are both Leading retailers in RXUK Top500 research.

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