Covid-related disruption hit Kingfisher’s Q1 financials, with sales down 24.8%, but there was also good news with Q2 like-for-like sales up 21.8% (to 13 June).
While coronavirus continues to loom large, Kingfisher, owner of Screwfix, B&Q, Brico Dépôt, Castorama and Koçtaş, has laid out a new strategic plan, with some focus on ecommerce, coming a few months after Thierry Garnier joined as CEO.
With nearly all the group’s stores now open for in-store purchasing, Kingfisher saw a significant improving sales trend. Group like-for-like sales moved from -74% in the first week of April to more than +25% since the second week of May.
Like many other businesses, the group saw strong ecommerce growth during the pandemic and lockdown, seeing fourfold growth between mid-March and 13 June 2020.
Ecommerce is featured as part of Kingfisher’s new strategy. The group noted the home improvement industry has seen an acceleration of online shopping and consumption over the past five years.
In FY 19/20, e-commerce sales accounted for 8% of Group sales (FY 18/19: 6%), more than double the penetration level in FY 15/16. Click & collect is Kingfisher’s largest and fastest growing channel at a Group level, growing by 24% in FY 19/20 and accounting for 62% of e-commerce sales (47% excluding Screwfix). Screwfix's omnichannel capability has helped drive e-commerce sales penetration at this business to 33% in FY 19/20.
E-commerce sales penetration at Kingfisher’s other banners was 3% on average in FY 19/20, which the group admits does not measure up to their brand recognition and scale of their physical footprint.
In FY 19/20, Kingfisher had over 900 million web visits across its retail banners, with the highest conversion to transactions seen at Screwfix. However, overall conversion rate is seen as poor: “We have significant opportunities to increase conversion and e-commerce sales.”
Kingfisher also noted that this industry has more defences against online pure players than many other retail segments. Visualisation and inspiration, the need for advice, immediate access to product (especially for trade customers) and often complex and expensive delivery requirements mean that penetration varies by product category. As a result, there is a higher online propensity in categories such as tools, electricals, plumbing, heating and cooling, and garden/outdoors, but a lower propensity in categories such as kitchens, bathrooms, construction and paint.
Kingfisher therefore will put stores at the centre of its ecommerce proposition with stores providing support for the significant proportion of retail online orders picked in stores and fulfilled through click & collect, in-person returns and fast delivery. Kingfisher, with over 1,350 stores, is well positioned to address the clear e-commerce opportunity.
Thierry Garnier, Chief Executive Officer, said: "Throughout the COVID-19 crisis, our priorities have been clear - to provide support to the communities in which we operate, to look after our colleagues as a responsible employer, to serve our customers as a retailer of essential goods, and to protect our business for the long term.
"At Kingfisher, we are both proud of, and inspired by, the way in which our teams responded to the immense challenges of the last few months. When the various lockdowns began, we rapidly transformed our operations to meet a sharp increase in e-commerce, while adapting our retail space and processes to ensure a safe reopening of stores. In doing so, the social distancing and other health & safety protocols we established have contributed to setting the standard in non-food retailing. We have donated over £2.5 million of PPE to frontline health workers, in line with our commitment to responsible business practices. We have also taken significant actions on costs and cash management that give us a strong financial footing through the crisis and beyond.
"On joining the business in late September 2019 my priorities were to build the executive team, stabilise our operational performance and prepare a new plan. We have a strong new team in place. We ended FY 19/20 in better shape, after a disappointing first nine months, by returning the Group to positive like-for-like sales growth in Q4 as well as for the start of FY 20/21.
"While the coronavirus crisis has obviously shifted our immediate priorities, we have continued to plan for the longer term and implement our new strategic plan. It would be a mistake not to. Kingfisher is well positioned within a home improvement market that is resilient and has attractive long term growth prospects. We have strong market positions and distinctly positioned retail banners that address diverse customer needs. These are major strengths in a world that is so volatile and uncertain.
"Our clear intent is to become a more digital and service orientated company, using our strong store assets as a platform. We will continue to develop our own exclusive brands as a differentiator, cater for diverse local customer needs, and each retail banner will have its own positioning and plan. We will 'power' these banners as a Group. This is our new strategic direction, 'Powered by Kingfisher'.
"The coronavirus crisis has provided us with the most unexpected test of these plans, while really pushing our capabilities as a business. The results have reinforced our strategic direction, demonstrated how our operations and teams can be agile, and pushed us to be bolder. Together, we look to the future with confidence and are committed to returning Kingfisher to growth."