The announcement of Kingfisher’s new chief executive came as a surprise to many. Retail Week looks at new boss Thierry Garnier and his task ahead.
Thierry Garnier, a veteran of French retail giant Carrefour, will succeed Véronique Laury at B&Q and Castorama owner Kingfisher – the exact date is still to be arranged – and hopes rest on him to get the business into shape.
Since Laury’s departure was revealed in March, the speculation had been that the DIY conglomerate would look outside the home improvement sector for its next boss.
Garnier is that. He has 22 years under his belt at grocery giant Carrefour, including seven years as chief executive of its China business, but he faces a challenge at Kingfisher.
The retailer has been following the ‘One Kingfisher’ strategy, constructed by Laury, built upon three pillars – the creation of unified product ranges, enhanced digital capabilities and generating operational efficiencies – that combined would add £500m a year to profits.
But three years into a five-year plan a combination of “internal factors and external challenges” drove Kingfisher’s pre-tax profits down 52.8% to £322m last year. Kingfisher scrapped its £500m profit uplift target. Internal focus on objectives such as the unified ranges meant the business took its eye off the ball as far as customers were concerned, and tough economic conditions in France were among the issues Kingfisher had to confront.
What will Garnier bring to Kingfisher?
Kingfisher chair Andy Cosslett says Garnier has the requisite capabilities and describes him as “a highly talented international retailer and proven business leader with a strong track record over many years at Carrefour”.
Cosslett maintains: “In what was a rigorous recruitment process, Thierry stood out for the board from a strong list of candidates due to his recognised operational know-how at a multinational retail business, his delivery of long-term value creation and his experience in driving leading-edge digital innovation, most recently in China.”
“Thierry embodies that combination of strategic and hands-on that is essential in a retail CEO”
Fran Minogue, Clarity Search
Headhunter Clarity Search founder Fran Minogue says “he has a fabulous background”, which means it does not matter that Garnier is not an expert in DIY retail.
“Thierry embodies that combination of strategic and hands-on that is essential in a retail CEO… he bridges the two very well,” she says.
“He’s a good leader, good manager… He’s an international big-box retailer by background but has shown he is very adaptable in terms of managing mature as well as emerging markets and becoming digital-first.”
However, one City analyst is less convinced. “He hasn’t been showing very much out in Asia by the looks of things,” he said, after the news earlier this week that Carrefour has sold its Chinese business after struggling to make it a success.
Despite some City concerns about the One Kingfisher strategy, it seems that the retailer intends to stick to it.
A Kingfisher spokesman says Garnier’s focus will be less about a strategic review and more on the execution of the plan and how it is tailored to deliver the best results.
For the rest of this year, the One Kingfisher plan’s priorities include unifying the remaining 50% of its ranges, launching “next-generation ecommerce ability” as part of a vision to become “world class” online and driving further operational efficiencies by implementing shared services.
Online is one area where Garnier brings direct experience from Carrefour China. There, he launched the online business in 2014 and increased digital sales penetration from 0.6% in 2016 to 6.5% this year. Garnier also launched an app that was downloaded 60 million times in the first six months.
“Extremely poor French execution has been the main issue at Kingfisher. We presume Garnier will move rapidly to assess what went wrong”
James Grzinic, Jefferies & Company
“He will certainly be able to drive things on digital and format, and leverage online and offline and the experiential side,” Minogue says.
Whitman Howard analyst Tony Shiret agrees but hopes there will be swift results. Shiret says: “He will have to do something about digitisation in France. [Castorama] gets probably less than 2% of its sales online.
“The way to do that is to buy something rather than try to develop something over 10 years and getting a bunch of pushback from the people at Castorama. He might have to do something different.”
Jefferies & Company equity analyst James Grzinic says Garnier is well equipped for the task ahead and will move quickly to start turning things around.
Castorama is a headache. The business suffered a 7.1% slump in like for likes last year as a result of lower footfall, price repositioning and logistics and stock inefficiencies that were a symptom of the transformation plan.
At least nine underperforming Castorama branches will be shut as part of Kingfisher’s plans to kick-start its French business.
“Extremely poor French execution has been the main issue at Kingfisher. We presume Garnier will move rapidly to assess what went wrong – physical supply chain, systems, people - and take corrective action,” says Grzinic.
But Shiret is concerned Garnier may not have the freedom to spread his wings.
“As long as he plays ball with the centralised buying and IT, he can do anything else according to Kingfisher,” he says. “I just wonder how much flexibility he has to operate.”
“The elements of the plan that have caused the problems are the ones he hasn’t got much flexibility on,” Shiret cautions.
However, he believes on one hand “the market doesn’t want another period of disruption, but on the other, it does not believe the Laury-type strategy is going to work”.
“The board clearly thinks that the core of her strategy should work and is prepared to run with it. So, the risk is we’re in for five to 10 years more of faffing around and just not getting it right,” Shiret says.
However, Minogue reiterates that Garnier’s Asian experience could give him an edge, particularly when it comes to digital.
“By being in Asia he has got close to what is the cutting edge. He introduced Alipay into their stores, mobile payment, WeChat, so he’s been at the forefront of new modern retailing,” she says.
His French background, observers say, is likely to be helpful in getting to grips with Castorama’s problems.
Garnier’s road ahead as chief executive may bring some bumps, but Kingfisher’s board is confident that he will bring that much-needed retail je ne sais quoi.