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Danes are enthusiastic DIYers. They have the necessary money in their pockets, and are happy to spend it as well. So the market is growing, but the pressure on prices is becoming more extreme
The Danish market for DIY and home improvement products, and for the professional building and construction industry amounts to between € 8 bn and € 9 bn. The figure for Scandinavia as a whole comes to around € 27 bn. Mintel estimates that the Danish DIY market totalled € 2.77 bn in 2004, which amounts to an increase of 3.4 per cent over the previous year. Growth of 5.4 per cent was recorded in 2003.
Because the economic situation in Denmark is extremely good, people are constantly altering or extending or renovating their homes. Which makes the market both attractive and highly competitive. Over the past three months 63 per cent of the Danish population have done some DIY, and three out of four have visited a DIY store during the last three months.
The major event of 2006 in the Danish DIY scene was without a doubt the sale of the DT Group to Wolseley, the British plumbers’ merchant group, for approximately € 2 mio at the beginning of the year. Wolseley has 4 200 branches in 14 countries and a workforce in excess of 70 000. In Denmark the DT Group operates two retail formats, Silvan and Stark. The latter has recently opened drive-in stores.
Share analysts like Mads Sejdelin of Denmark’s third-largest bank, Jyske Bank, expect that this sale will have a significant effect on the industry. As a global concern, Wolseley can take advantage of synergies which will put pressure on prices.
Bauhaus has become vigilant as a result of the sale. Last spring Mad Jørgensen, CEO of Bauhaus Denmark, was quoted in the Danish business daily, Børsen, as stating, “It goes without saying that we are keen to see how things will progress. The pressure will increase if DT Group is put on a sounder financial footing.” Bauhaus will open an outlet in Herning this spring, thereby sparking off a struggle with Silvan for this medium-sized town.
At the moment both the Ditas Group (Råd & Dåd, Byggekram and Proffen A/S) and the DT Group each generate around 40 per cent of the DIY turnover in Denmark. Bauhaus, Jem & Fix and Harald Nyborg account for the other 20 per cent. However, there will be a change here from January 2007: Råd & Dåd, Proffen and Byggekram are to be combined under a new name, and buying for the three retail formats will also be combined. It is not yet clear what effect that will have on purchasing prices.
Developments in the area of regulation are also interesting. The current law specifies that a DIY store in Denmark may have a maximum size of 5 000 m² today. However, parliament now has a majority in favour of relaxing the law and permitting the introduction of bigger outlets. A final decision will probably be reached some time this year.
The company Millard Brown has looked into customers’ emotional ties to a particular DIY store. They show that 23 per cent of Danes “love” Silvan, and Jem & Fix gets 15 per cent. There is great potential here when it comes to customer loyalty.
Over and above this, the same old tunes are still being played (e.g. price guarantees). The pricing parameter was once again a key topic in 2006. The success of Jem & Fix is evidence of this tendency. The retail format, which is part of the Harald Nyborg Group, does not offer any price guarantee like Bauhaus or Silvan, for instance, but the name Jem & Fix is still so firmly associated in people’s minds with “cheapness” that a price guarantee would be superfluous.
Women customers are increasingly being targeted, since they make the decisions when it comes to furnishings and fittings. As just one example, last year Silvan staged five DIY courses for women in each of its stores.
Again in 2006 loud arguments were heard at annual meetings on the subject of private labels versus manufacturers’ brands. The dealers want to camouflage successful manufacturers’ brands as private labels, and the producers are refusing to play.
Generally speaking, margins are coming under pressure, retailers’ and manufacturers’ margins alike. And it looks as though Danish DIY customers will have to wait in vain for more store personnel, and especially for better qualified personnel.
Download:
Because the economic situation in Denmark is extremely good, people are constantly altering or extending or renovating their homes. Which makes the market both attractive and highly competitive. Over the past three months 63 per cent of the Danish population have done some DIY, and three out of four have visited a DIY store during the last three months.
The major event of 2006 in the Danish DIY scene was without a doubt the sale of the DT Group to Wolseley, the British plumbers’ merchant group, for approximately € 2 mio at the beginning of the year. Wolseley has 4 200 branches in 14 countries and a workforce in excess of 70 000. In Denmark the DT Group operates two retail formats, Silvan and Stark. The latter has recently opened drive-in stores.
Share analysts like Mads Sejdelin of Denmark’s third-largest bank, Jyske Bank, expect that this sale will have a significant effect on the industry. As a global concern, Wolseley can take advantage of synergies which will put pressure on prices.
Bauhaus has become vigilant as a result of the sale. Last spring Mad Jørgensen, CEO of Bauhaus Denmark, was quoted in the Danish business daily, Børsen, as stating, “It goes without saying that we are keen to see how things will progress. The pressure will increase if DT Group is put on a sounder financial footing.” Bauhaus will open an outlet in Herning this spring, thereby sparking off a struggle with Silvan for this medium-sized town.
At the moment both the Ditas Group (Råd & Dåd, Byggekram and Proffen A/S) and the DT Group each generate around 40 per cent of the DIY turnover in Denmark. Bauhaus, Jem & Fix and Harald Nyborg account for the other 20 per cent. However, there will be a change here from January 2007: Råd & Dåd, Proffen and Byggekram are to be combined under a new name, and buying for the three retail formats will also be combined. It is not yet clear what effect that will have on purchasing prices.
Developments in the area of regulation are also interesting. The current law specifies that a DIY store in Denmark may have a maximum size of 5 000 m² today. However, parliament now has a majority in favour of relaxing the law and permitting the introduction of bigger outlets. A final decision will probably be reached some time this year.
The company Millard Brown has looked into customers’ emotional ties to a particular DIY store. They show that 23 per cent of Danes “love” Silvan, and Jem & Fix gets 15 per cent. There is great potential here when it comes to customer loyalty.
Over and above this, the same old tunes are still being played (e.g. price guarantees). The pricing parameter was once again a key topic in 2006. The success of Jem & Fix is evidence of this tendency. The retail format, which is part of the Harald Nyborg Group, does not offer any price guarantee like Bauhaus or Silvan, for instance, but the name Jem & Fix is still so firmly associated in people’s minds with “cheapness” that a price guarantee would be superfluous.
Women customers are increasingly being targeted, since they make the decisions when it comes to furnishings and fittings. As just one example, last year Silvan staged five DIY courses for women in each of its stores.
Again in 2006 loud arguments were heard at annual meetings on the subject of private labels versus manufacturers’ brands. The dealers want to camouflage successful manufacturers’ brands as private labels, and the producers are refusing to play.
Generally speaking, margins are coming under pressure, retailers’ and manufacturers’ margins alike. And it looks as though Danish DIY customers will have to wait in vain for more store personnel, and especially for better qualified personnel.
Download:
