Building a culture of agility and speed

Last year, as in the previous year, we saw declines in sales in major European DIY markets. Is the market simply shrinking back to pre-Covid levels, or is home improvement fundamentally in trouble?

Thierry Garnier: We saw the impact of several factors. There was the cost of living crisis and the perception of inflation for customers, which impacted consumer confidence. So we saw consumer confidence being relatively low, and as a consequence discretionary spending was more impacted than grocery for example. In parallel, the housing market was difficult because interest rates were high. So, past years were a combination of lower consumer confidence, impact on discretionary spending, and in parallel housing transactions being down, and therefore people not moving, not buying new apartments, etc. This meant all the project categories like kitchens, bathrooms or flooring were impacted.

Overall, the volumes of the DIY market are probably still below the pre-pandemic level. But in the medium term, we should be optimistic, and at Kingfisher this year, we’ve had a good start, which we announced at our Q1 results in May.

The DIY markets will continue to recover for several reasons. In the context of our work as part of EDRA/GHIN, one of these is that a lot of governments and therefore businesses are working hard on net zero. This means more investments to renovate homes in the coming 20 years. That’s about insulation, doors and windows, but also heat pumps or solar panels.

What we also see is that more people are now working from home after Covid. Even though there is a trend to call them back to offices, there is a larger proportion of people working from home than pre-Covid. And that as well should support more investments in the DIY market.

And finally, we have seen people restarting DIY during Covid and especially the younger generation being at home and learning by YouTube or Instagram videos how to do their DIY projects.

However, we have seen these government initiatives for energy-efficient renovation for years already without major impact …

Yes, but the trend towards energy-efficient renovation will stay and will be very important in the future, and it’s not a question of one or two years. It’s a long-term trend, and we will see positive consequences of this trend on the DIY market.

In recent years, “uncertainty” used to be the preferred word to describe the situation on the markets: inflation, declining sales, the war etc. were the key words. Now, there is a new one the new US administration has been added: tariffs. What impact will that have on the European home improvement industry?

Every year we believe that we have reached even more uncertainty and volatility than in the previous year. So, we have to get comfortable with uncertainty, and the best solution is to be very agile. What does this mean? Being agile means doing things fast, launching projects when you are only 80 per cent ready, testing things, but if it’s not working, stopping things. It’s a big test and learn – fail fast. What is the problem with being agile? The problem with going fast is that you obviously make more mistakes, and you launch projects when they are not fully ready. So, you have to get comfortable with managing some mistakes, and accepting that perfection can be dangerous as it slows you down. That’s, for me, the key cultural topic: fast speed, test and learn, and being comfortable with mistakes because that’s the only way to manage things faster.

But talking about US politics and tariffs, will that also have an impact on the Chinese production, predominantly when it comes to the question if these products which won’t be imported in the US will flood the European market?

It is not the role of the business community to hold political views. We have to focus on what we can control, and be agile to react to the environment.

Speaking for Kingfisher, we source 20-25% of our purchases from Asia, and most of our products in Europe are sourced from the same country in which those products are then sold. We have long-term partners, and we will continue to work with these partners in the coming years.

And will it impact the price level?

I can’t speak for the industry here; I can only speak for Kingfisher. In 2024 at Kingfisher we saw flat retail prices. At our full year results in March, we said that we believe we will have a small level of inflation of retail prices this year. Overall, I don’t see deflation.

The theme of this year’s Summit is “how we redefine DIY for the future”. As a summary, what does this mean to the Edra members and at Kingfisher?

One key question is to understand what is the store of the future. I believe it’s firstly a place for experience. It’s about how we give advice, how we focus our teams on customer experience. I’ll give you an example: If you want to buy a kitchen, then it’s a family event. Everyone comes several times, to create a proper design, choose colours and materials.

What we have also rediscovered in the past ten years is that the store is a central asset for online operations. Ten years ago, we were very much focused on large fulfilment centres, and now we have rediscovered that the store is a fantastic asset to prepare e-commerce orders close to customers and with no fixed costs. That’s a great way to compete with pure online players. That’s the second big shift when I think about the future.

The third topic is: The younger generations are not patient and are looking for speed. When we consider TikTok with its very short videos, when you look at deliveries and companies that deliver in a few minutes. That’s a long term trend. So we have to look for speed.

I’ll give you an example from Kingfisher: The B&Q click & collect delivery time is now as little as 15 minutes, at Screwfix it is as little as one minute, and now we offer “Screwfix Sprint” and deliver at home within 20 minutes. We have to work on speed. And we also have to work on having large choice. In this context, Kingfisher has launched successful large marketplaces across six banners (brands) in Europe.

In parallel, back offices have to be more efficient. Consider store checkouts: we have self-checkout. And if you go to China, there are no checkouts at all. You just scan products with your phone, pay with your phone, scan a QR code and leave. Technology will help us to get a more efficient back office, and to refocus our teams to customer experience and online operations.

And finally, the important thing is, again, agility. We need to focus our energy on the things we can control and do things.

Does your analysis apply to all geographic markets? Why, for example, does Screwfix not enter the Spanish market?

Overall, I believe managing projects in an agile way applies to any market. Regarding Screwfix, we operate in the UK and Ireland. We have started in France and are happy with its progress there. We have publicly said that we might consider entering new countries at the right time, but the focus for now is France.

Talking about the relationship between online and offline, does that mean that we see the end of the age of the big box retailing in the home improvement sector?

No, because it depends on the catchment area. There are catchment areas where large boxes are totally relevant. And again, it’s about using space efficiently for customer experience – for showrooms, kitchen or bathroom presentations, you need space – and it’s about using it efficiently for online preparation – we are creating dark stores for e-commerce picking, and therefore you need space. At B&Q for example, we have 53 online hubs for home delivery across the UK.

We also believe in smaller formats in urban areas. We need to develop smaller formats, like Screwfix City and B&Q Local in the UK. That is also a long term trend.

Not only in the UK, you mean?

Exactly. Also in France or in Poland, or the Ace hardware stores in the US. All over the world, there are a lot of smaller format stores across the industry as a whole.

And “small” means what sales area approximately?

It depends. In some catchment areas, it might be 2,000 m², but there are also stores with 500 m².

Where are these stores based? In inner-city urban areas?

Yes, downtown city.

Another current major topic is the Scope 3 discussion started by Edra/Ghin. I have the impression that this topic is strongly supported by you personally. Why so?

When you are in a position of responsibility, you have to seize the moment. Today, for the industry, net zero and Scope 3 is a key topic because it’s very complicated. There are a lot of Scope 3 issues that are not under our direct control. We need the government, we need a decarbonisation strategy for electricity, and we need accord with our suppliers. Scope 3 is critical for our future and the planet, and we can’t achieve it alone. This topic was at the top of the agenda for many retailers, so I felt as president of Edra/Ghin it was the right time to launch an initiative to create task-forces and to try to help people to work together. The entire DIY sector carbon emission volume is the equivalent of the size of Canada’s carbon emissions. So we have a specific responsibility as an industry.

But reducing this impact will generate new costs. Will the end-consumer be willing to pay more for climate saving products?

That’s a good question. At Kingfisher (and others), we are committed to reaching net zero by 2050. If you anticipate and organise it properly, it does not necessarily create higher costs. If you move from plastic to recycled plastic for example, that does not necessarily create more costs and you do the right thing. If you want to source from FSC forests and you anticipate, it doesn’t necessarily create more costs.

Even in times of higher inflation rates as nowadays?

Again, if you want to be climate neutral by 2050, it’s a question of doing things differently. I strongly believe as a mass market retailer you should always have good prices. It should not impact the customer’s decision, you have to find the right solution.

You are confident in your customers that they really want to have these products?

That’s not always the case, because today the customer usually is looking for value first and foremost. But again, that’s a long-term topic, and you have to stay consistent on this topic, just like the matter of energy-efficient renovation, because it will stay with us for the coming years.

What will be the next steps in this journey?

We have now a task-force of retailers and a task-force of suppliers which is very good. We have created the “Make It Zero” campaign, which means if you support the initiative you have access to support, education and training materials. These are the next steps for 2025 and 2026.

To sum it up, an optimistic outlook?

You have to be optimistic on the things you can control and put your energy on that. Otherwise you can all spend your time complaining about the things you can’t control, but that will not help you in your business. There are a lot of things we can act on. We are going in the right direction: let’s keep our agility and do things faster!

The questions were asked by Rainer Strnad