China International Hardware Show kicks off
This year’s China International Hardware Show kicked off Wednesday in Shanghai, with more exhibitors and greater interest in Chinese DIY consumers and professional builders than ever before.
Exhibitor attendance has risen to well over 2,000 participants this year, with new hardware manufacturers making up the bulk of new attendees, alongside lawn and garden product manufacturers and kitchen and bath companies.
Michael Dreyer, vp-Asia Pacific for Cologne, Germany-based show organizer Koelnmesse, explained that the show has traditionally been strong in the area of power tools and hand tools, but the categories of building hardware, locks and garden tools grew so significantly that they now have their own separate areas. Next year, he said he expects the show to include a separate space for manufacturers of fasteners.
Dreyer also gave some insight into the Chinese DIY market, which is coming into increasing focus as more Chinese citizens own homes and quality of life grows. He said there are some factors holding back the DIY market in China, specifically the cost of labor.
“The fact is that the cost of labor is so low, it’s still very economical to hire someone to do a project,” he said.
Zhang Dongli, president of the China National Hardware Association, agreed with this assessment. Speaking through a translator, he told HCN that DIY has entered the lexicon of the average Chinese consumer in the past decade, but it has not yet become a strong trend in the market.
“It’s early for this to be popular with Chinese people. But the future of DIY will increase as China develops more,” he said. Another factor, he added, was the hectic pace of life in much of China — long work hours and a perception that doing home improvement projects is more work, rather than a hobby, has kept the consumer DIY market from taking off.
The real areas of growth, however, are in building materials, according to Dongli. He estimated that sales of building materials have soared 35 percent in the past five years, while sales of bath and kitchen hardware have risen 20 percent countrywide.
Since the market for home improvement projects in many parts of China is largely “do-it-for-me,” pros make up a large portion of home improvement product consumers. And with a great deal of construction going on in large Chinese cities — particularly Shanghai — building materials and fixtures are doubly poised to sell well in the future, Dongli said.
The China International Hardware Show will run through Sept. 19 at the Shanghai New International Expo Center.
Kingfisher will sell Italian DIY stores
Kingfisher, parent of European DIY chains Castorama and B&Q, will sell its Castorama Italy stores for 560 million euros (US$823.4 million).
Groupe Adeo, a Lille, France-based DIY chain, will take over the 31 Castorama stores in Italy pending regulatory approval from the European Union.
The first Castorama store was opened in Italy in 1988. Last year, the division reported $53 million in earnings on sales of $573 million.
Kingfisher said it plans to use proceeds from the sale to reduce the company’s net debt.
“This sale is consistent with our aim of delivering a step-change in shareholder value and is a good deal at this point in the economic cycle,” said Ian Cheshire, Kingfisher’s group CEO. “We believe we can achieve higher incremental returns on capital elsewhere in Europe and strengthen our balance sheet by reducing our net debt.”
Adeo Group operates stores in France, Italy, Spain, Brazil, Portugal, Poland, Russia, Greece and China.
B&Q, Castorama see sales growth
Kingfisher, parent of European DIY giants B&Q and Castorama, had sales growth in the second quarter despite similar commodity and housing pressures in the European market as in the United States.
Total sales at B&Q rose 3.7 percent due to better weather and fewer markdowns, the company said. B&Q also reported greater sales of “higher margin decorative ranges” and significantly less clearance activity.
The company’s U.K.-based pro businesses, Screwfix and Trade Depot, reported sales growth of 18.7 percent, primarily due to 13 new store openings.
The company’s France-based Castorama chain saw same-store sales growth of 3.5 percent, while total sales grew 4.3 percent, with decorative ranges and outdoor product performing well. Sales at the Brico Depot chain rose 2.2 percent overall, although sales were negatively affected by lower housing starts in that country. House-brand sales rose at both chains, the company noted.
Sales in other countries were mixed: Castorama in Poland saw sales growth of 18.8 percent in what the retailer characterized as a “buoyant market.” Castorama in Italy saw total sales rise 5.1 percent in what it said was a weak consumer environment. B&Q in China saw a big sales dip, down 24.5 percent, “reflecting market weakness driven by housing regulation changes and the significant reduction in unprofitable deep discounting and special promotions.”
The company outlined several initiatives for the coming year, including expansion in France and Eastern Europe. In all, Kingfisher operates around 850 stores in nine countries in Europe and Asia.