Kingfisher has shifted strategy to prioritise in-store picking and new store types as it seeks to accelerate the integration of on- and offline.

  • Kingfisher CEO Thierry Garnier says “we can go very far with store-picking, click and collect and home delivery”
  • B&Q can now offer next-day delivery to 98% of the UK population from stores
  • Garnier believes smaller-format stores “are key for demographic reasons to help with online”

DIY giant Kingfisher has found itself in a strong position despite the impact of the coronavirus pandemic as more consumers turned to home enhancement projects and gardening to pass the time during and after lockdown.

While the retailer, which operates B&Q and Screwfix in the UK, was classed as essential and began reopening its stores to the public in April, its ecommerce sales soared in the six months to July 31 when they were up 164% year on year.

As part of its digital-first strategy, Kingfisher is supporting its online operations with in-store initiatives such as picking and packing, click-and-collect and final-mile delivery through partner DPD.

The retailer is also trying out a variety of smaller formats including compact shop-in-shops in four Asda stores.

Keeping up with demand

Thierry Garnier Hi Res

Thierry Garnier: ‘Smaller formats are key for demographic reasons to help with online’

Ecommerce sales now amount for 19% of the group total at Kingfisher.

To keep up with the online demand, the home improvement colossus has leveraged its store estate, switching to in-store fulfilment for the majority of products while its distribution centres serviced the rest.

Kingfisher boss Thierry Garnier believes that making home delivery and click-and-collect services as efficient as possible is the way forward.

“We were starting to do experiments before the crisis, so when it started we accelerated our plans around store picking. 

“I believe we can go very far with store picking, click and collect and home delivery from the store.”

Using in-store fulfilment, B&Q can now offer next-day delivery to 98% of the UK population and was processing 50% of home delivery orders in stores by the end of July.

The store-to-home orders are picked in one of the retailer’s 56 “digital hub” stores by a dedicated team with their own manager. The team picks orders for both home delivery and click-and-collect orders for those stores.

For stores that only offer click and collect, the orders are picked by existing store staff. That is by far the most popular option, which Kingfisher has supercharged during the pandemic. 

Throughout the six-month period, click-and-collect sales grew by 243% – its fastest-growing channel.

Click and collect now accounts for 79% of group ecommerce sales. B&Q commits to offering the service within an hour and Screwfix in as little as one minute.

Store picking, Kingfisher says, makes sense because there is only a marginal extra cost to move stock from the shelves to the designated collection storage area.

For home delivery, on the other hand, B&Q has the added costs of fulfilment – a cost that will likely rise as it aims to offer same-day delivery options over the coming months.

In the 56 digital hubs, which are fulfilling orders that would previously have been sent from a distribution centre, the retailer has added more stock.

In the rest of the stores, which only fulfil click-and-collect orders alongside the ordinary store operations, stock levels are adjusted on a case-by-case basis according to consumer demand, in the same way that would happen if items were taken directly from the shelves by customers. 

In these cases, the majority of customers would have bought the item from that store anyway – click and collect is just an alternative way of shopping, according to Kingfisher. 

While stock levels may not be as big an issue, Eagle Eye head of industry insights Miya Knights also talks about the cost, time and hassle of having workers pick from the store, giving the example of Waitrose, which previously ran a picking service from its stores at night, causing problems for the colleagues who came into the store the next morning.

With an extra team in the digital hub stores, organisation will be key to keep both operations running alongside one another.

Knights suggests a combination of in-store picking, distribution centres, dark stores and smaller formats could be the answer in order to ensure all customers are served without taking too big a hit on profitability.

New store models

Garnier is adamant that a combination of stores and online will set Kingfisher up for success but envisages smaller store formats leading the way in future.

While retail parks, where the majority of Kingfisher’s B&Q big-box stores are located, have emerged as the coronavirus winners as social distancing is more easily maintained, Garnier believes convenience will be king.

“Retail parks have recently shown better results and we can understand why,” he says.

“If you look at grocery retailers however, the smaller formats have had better results during the crisis. So, if you think in the longer term, I still believe smaller formats are key for demographic reasons to help with online.”

The group has been piloting various smaller store formats, including what Garnier has dubbed “B&Q Express”.

merton2

B&Q’s small-concept store in Merton

The first iteration opened in Merton, south London, in January – a 13,000 sq ft compact store that stocks 6,000 SKUs, with an additional 40,000 available for next-day home delivery or click-and-collect. 

The store, which is only a 10th of the size of standard B&Q stores, also features a small showroom for kitchen, bathroom, tiling and flooring ranges, a paint mixing service, and an indoor and outdoor plant selection.

The retailer has also revealed plans to open shop-in-shops in four Asda branches later this year.

Garnier hopes that a test-and-learn approach will enable the creation of the right smaller urban format for the future, and has given Kingfisher’s chains, which include Castorama in France, the freedom to conduct their own experiments.

Like the Merton store, the new formats will carry limited ranges, showcase design options, and act as a hub for additional products available for home delivery or click and collect.

Knights agrees that smaller formats are a good idea but the retailer will need to be careful that the lack of space in-store to keep products to sell immediately does not add friction to the customer journey. 

“They will need more centrally located, smaller stores in urban areas and their most popular areas to service those people and not impact on shelf availability in their other stores,” she says.

“It will be interesting to see how a home improvement retailer does a smaller-format store when they can’t keep large products without adding extra friction to the customer experience because they can only fulfil requests at a point in time in the future, whether it’s next-day or same-day delivery or click and collect.

“That leaves me with some question marks as the smaller format can’t possibly cover the range. 

“What they’ll probably do is bring more of the planning, for example, kitchens, into the store. They’ll be able to experiment with technology and immersive experiences, perhaps even allowing customers to use a virtual-reality headset to design their next project.”

“That retailers have been able to ramp up their ecommerce capacity, open up their deliveries and scale their click and collect is a testament to the fact that they’ve actually been sitting on this capacity all along”

Miya Knights, Eagle Eye

She also suggests the smaller stores could act as hubs for kerbside pick-ups of larger items, whether for delivery by smaller vehicles in an urban location or collected by customers. 

While there’s little doubt that these new store strategies are a step in the right direction for Kingfisher, Knights thinks it is ironic that it took a global pandemic for such options to be put in place by some retailers.

“That these retailers have been able to ramp up their ecommerce capacity, open up their deliveries and scale their click and collect is a testament to the fact that they’ve actually been sitting on this capacity all along – almost throttling it deliberately as they know it’s not as profitable,” she says.

Knights is sceptical whether the DIY sector will continue to boom in the coming months because of economic uncertainty and the potential for more pandemic disruption, meaning Kingfisher could ultimately be basing its positive outlook off unrealistic numbers.

Garnier, however, is excited about the prospect of testing new concepts and driving faster and more efficient delivery and collection services as Kingfisher adjusts to the new operations, and is betting on a “better than average” market for the DIY sector in the coming months.