Traditional DIY retailers losing share

We wrote in our 2016 UK report that growth forecasts were modest (+/- 2 per cent p.a.). 2017 and 2018 have come in below these forecasts. Political (with Brexit dominating the news) and economic uncertainty have made consumers cautious, despite low levels of unemployment and interest rates. GfK's consumer confidence index has an Overall Index of -14 and -39 index for the General Economic Situation over the next twelve months. Housing transactions, a major driver of spending on DIY, remained flat in 2018.
The lack of definitive progress on Brexit at the time of writing (mid-March with the supposed EU-exit on March 29th) is having an impact on business sentiment, with many businesses (retailers and suppliers alike) delaying investment decisions until there is greater clarity on the UK's future relationship with the EU.

Announcements from Kingfisher and Travis Perkins show the growth format. New branch openings since 2016 show no investment for both B&Q and Wickes, in contrast to the B2B/B2C hybrid formats Screwfix (100+ new in last 2 years) and Toolstation (80 new), with more openings in 2019. This investment is translating into sales with both brands taking an increased share of their group's UK sales. Travis Perkins 2018 results reported Wickes LFL sales growth at -4.4 per cent, in contrast to Toolstation's +11.4 per cent. Even though Screwfix LFLs have fallen to 'only' single digits (avg +4 per cent in last four quarters vs avg +10 per cent in previous four quarters), it consistently outperforms B&Q.
Both brands target selected customer segments ('white van' tradesman and 'serious DIYer'), allowing an overall range, price and service proposition that meets these customers' needs well. Convenience, using an 'omnichannel' approach, is at the heart of this: Screwfix offers click & collect 'in as little as a minute' from 600+ branches and free next-day delivery for orders over GBP 50; Toolstation offers click & collect 'from 10 minutes' from 300+ branches and free next-day delivery on orders over GBP 10. Both businesses have a low-cost operating model, stocking standard ranges across small and low-rent branches. The trade-counter model also enables significant operational efficiencies.
Currently, Screwfix sales per store (GBP 2.7m) are much higher than Toolstation (GBP 1.1m) with Toolstation aiming to close the gap through initiatives such as adding an extra 4 000 products, especially recognised trade brands, and…