Britain Tops the European DIY Stakes

Latest research from Mintel finds Britain topping Europe in terms of DIY activity. In the last year some 62% of British consumers carried out DIY or decorating tasks compared with just 30% of the Spanish. On mainland Europe, France is the most active DIY country with 57% of French adults having taken part in DIY or decorating. Meanwhile, just 36% of Germans participate in DIY.

In terms of types of projects undertaken, the British and Irish show a greater tendency to carry out decorative tasks, which is reflected by the presence of 'softer' DIY stores. The French show an equal willingness to tackle property maintenance tasks such as repairing rotten wood and glazing and mending windows, while the Germans are more likely to undertake larger more expensive projects.

In contrast to both the UK and France, German women play a much smaller role in DIY participation. Just 25% of German women participate in DIY compared with over 50% of French and British consumers.

The German market is currently very much geared towards heavy end and major projects. While the Swiss market is at the opposite extreme, in a largely rental housing market. One of the main drivers for the DIY market has been the growing interest in home fashions. While the building side of DIY is still present, the DIY market has largely grown because of the way fashion has invaded home decor. This is why so many retailers are determined to make their outlets attractive to women. The German market has been slow to move towards the soft end, though there seem to be many retailers, particularly OBI, which expect to do so. 'As the generation which rebuilt the country in the 1950s and 1960s is handing over, the need for major building projects is less and the interest in fashion is greater, so there may well be a slight shift in focus' comments Richard Perks, Senior European Retail Analyst.

The DIY market in the 19 leading countries was worth euro168.1bn in 2001, an increase of 16.4% on 1997. Germany dominates the DIY sector, accounting for some 28% of the total market value, followed by Italy at 18%, the UK at 14% and France 9%. In terms of spend per capita, Norway and Germany top consumer DIY spend. Ireland, Portugal and Italy also come near the top, a surprising result since in each case the DIY market is relatively underdeveloped.

Within Europe, the most exciting opportunities exist in the less developed markets of East and the South. Both areas are underdeveloped and the leading players have low market shares. It is hardly surprising therefore that the leading Western players are actively expanding in them. Nevertheless, it is noticeable that in these countries the locals tend to open relatively small stores. 'Those incoming players hoping that large outlets will work well in their home markets must adapt their formats to local conditions' comments Richard Perks, Senior European Retail Analyst.

DIY is still a growth market and we expect to see demand move ahead strongly as European markets pick up again, Mintel forecasts that DIY specialists will increase sales by 24% over the next five years (to 2006).

It is surprising to come across a market, such as Germany, which is still so fragmented. The top five players have barely 55% of specialists' sales between them. The barrier to rationalisation is the individual problems or status of the companies themselves. OBI or Hornbach could lead such a process, although Hornbach has preferred to develop organically, Pratiker has major problems, but is an integral part of the Metro group. Praktiker established itself as a dominant force in the market by being highly price competitive but at some stage in the 1990s it chose to increase prices. With price levels out of line with the marketing stance, the company found its credibility in the eyes of its customers and their trust in the brand undermined. Unfortunately such trust is far more easily undermined that re-established and Praktiker continues to underperform. There are strong regionals such as Max Bahr and Globus, and co-operatives such as Hagebau, but one tends to see them as victims rather than predators. 'In five years time there will be fewer regionals and a smaller number of leading players altogether. Rationalisation will come, but ownership structure will tend to delay it' comments Richard Perks.

Despite the B&Q -Castorama saga, experience in other sectors does support the view that there is scope for cross-boarder growth. In food retailing, Ahold has shown how it is possible to maintain a local customer facing appearance, but integrate all services and maximise buying power. B&Q's sister company, Kingfisher Electricals has also been successful in translating some of the success of Darty to Comet in the UK. This skill of being able to respect local markets and yet translate best practice is something which historically has eluded British, and other, retailers, though with Tesco's success in Eastern Europe one can reasonably hope that lessons have been learnt. Even so, B&Q now has a major challenge with Castorama and its performance there is critical to the future of the group. But with Kingfisher about to divert its electricals business, the group will be able to focus just on DIY and will be much stronger for it.

The appearance of Home Depot has long been feared/expected. Mintel believes it makes little sense to expand into countries which are already highly competitive and difficult to develop in when there is still plenty of scope in the US and in adjacent countries, North and South. This is not to say US leaders such as Home Depot will not choose to come to Europe but with so many opportunities in their home market and in developing countries, Mintel fails to see why any of the US majors should choose to enter one of the most competitive markets in the world. If they do choose to do so, the experience of Wal-Mart in the UK and Germany makes it clear that they should buy a well established market leader.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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