DIY – cool in the UK again?

There was a time not so long ago when DIY was definitely cool. The television schedules were crammed with programmes featuring DIY tasks, and many of the presenters of these programmes were among the top celebrities of the day. Then came the housing crash and plummeting property values, which took a lot of the shine off the market and had a major effect on discretionary spending among DIY consumers. The DIY retailers felt the effect of this throughout late 2008 and the first half of 2009. Now, however, a succession of retailers are reporting unexpected sales and profits increases, prompting some to say that “improve not move” in the still-depressed housing market is bringing back some of the former gloss to the DIY sector. First Homebase reported sales up 2.9 per cent in the 13 weeks to the end of August 2009. Then B&Q owner, Kingfisher, reported profits up more than a third in the six months to the beginning of August. The company attributed this in part to a “renewed consumer interest” in the home and DIY. B&Q also moved into some new areas, notably kitchens, during the same period, benefiting from the market withdrawal of a competitor company which had majored in this area. It also pushed through a programme of cost-saving changes, including the closure of one of its four distribution centres. However, the interesting point is the apparent change in consumer attitudes, with the public mood swinging back towards an interest in DIY as a pastime, not just a way to add value to a property before selling it on. “DIY is cool again,” asserted Kingfisher chief executive Ian Cheshire. “There was a consumer shift heading our way.” He added that consumers were opting to travel less and were instead focusing on home-based activities such as growing their own vegetables, a theme which he said had prompted a surge in sales of gardening equipment. This in turn was helped by good weather during the first half of the year, leading to barbecue sales up by 69 per cent and charcoal by 40 per cent. Seed kits were up 225 per cent, vegetable plants 68 per cent and herbs 15 per cent. Recently Travis Perkins, owner of Wickes, has reported that showroom sales (kitchens and bathrooms) were up 20.8 per cent in the first nine months of the year, driven by a heavyweight TV advertising campaign, although total turnover was up a more modest 0.7 per cent on the previous year. The performance of the group as a whole was better than had been expected during the past three months. The company commented that: “Consumer confidence had stabilised somewhat”. Focus has also recently claimed to be trading ahead of its own expectations in the current year. While posting a loss of £ 95 mio for the year to February 2009, the company says that special arrangements with its creditors and bankers, which were negotiated during the summer, have left it well-placed to capitalize as the economy picks up. The positive trend continued through to the end of October, when Home Retail Group announced that the trading performance at Homebase had “exceeded expectations” for the six months to the end of August.
So does all this mean that boom times are here again for DIY retailers? Probably not. But what it does indicate is that for those retailers who adapt, innovate and cut costs, there are opportunities to be had in the market, because consumers are ready to spend money on DIY, rather than foreign holidays, new cars or other large discretionary spending projects. Retail sectors such as DIY and electricals took the biggest hit in the early phase of the downturn, so it’s perhaps not a surprise that DIY, at any rate, seems to be making the best comeback.