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European DIY giant names new CEO

BY HBSDEALER Staff

Kingfisher has announced the appointment of Ian Cheshire as group CEO of the company’s B&Q, Castorama, Screwfix and other international DIY retail banners.

The European home improvement giant has been in a three-month search for a successor to Gerry Murphy, who announced he would leave the CEO post in November. Murphy served with the retailer for five years.

“[Cheshire] has extensive experience of international home improvement retailing and knowledge of the Kingfisher businesses, both in the U.K. and internationally,” said Peter Jackson, chairman of the board for Kingfisher. “This makes him uniquely placed to lead the business and drive through the changes necessary to improve return.”

B&Q has seen a decline in sales in recent years and has participated in a major revamping of its stores in the United Kingdom and China. B&Q also has seen increased competition in China from Home Depot, which opened its first locations in that country last year. In the last year, the retailer has expanded into new territory, including Russia and parts of Eastern Europe under the Castorama banner.

Kingfisher has seen similar challenges to U.S. retailers in recent years, including a slower housing market, and has responded by expanding internationally. In its third quarter, while sales rose just 0.8 percent in Britain, sales from French operations rose 5.6 percent. Sales from the rest of Europe increased 18.6 percent, and sales from Asian operations rose 8.6 percent.

Kingfisher operates more than 760 stores in 10 countries, under banners including B&Q, Castorama, Brico Depot and Screwfix.

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Lowe’s treks north of the border

BY Bill Addison

Many of the customers who came to Lowe’s grand opening in Brampton, Ontario, didn’t have any specific purchases in mind; they just came to check it out.

Brampton residents Matt and Lori Simpson were among the crowd to visit the Brampton store, one of three Ontario locations that officially opened Dec.10. The couple disagreed in a way that shows the promise and challenge facing Lowe’s in Canada.

Lori described the new Lowe’s store as a welcome addition to the Canadian home improvement landscape. “It’s really well lit,” she said. “The aisles are so wide, and everything’s so easy to find.”

Matt said he didn’t like it: “It’s not Canadian.” His Canada-first attitude applies to more than just Lowe’s. He doesn’t shop at the Brampton Home Depot either.

The couple’s disagreement reflects conflicting attitudes that Lowe’s hopes to leverage, as well as overcome, as it expands throughout an already mature Canadian market.

Lowe’s Canada president Don Stallings is working full steam to build a chain that’s not only customer-friendly, but Canadian-friendly. Three additional stores are slated to open Feb. 1, and a seventh is planned to open shortly after that. Beyond those seven, the company has more than 15 additional Canadian sites on the drawing board or in various stages of development.

Stallings said Lowe’s has intentionally taken its time between planning and opening—more than two years. “What we’ve done has been very methodical,” said Stallings. “We’ve taken literally years to be able to select products and recognize what’s really needed in the marketplace.”

“It’s a Canadian business basically,” he told Home Channel News. “I’ve had many people ask me ‘Is n’t this basically just the United States operation dropped up North?’ And that’s not the case. It’s a Canadian business that’s being staffed by Canadians, being managed at the local level at the stores by all Canadians.”

Stallings said that the company doesn’t want to be seen as a U.S. big box setting up the same stores with the same models as their U.S. locations. To combat that perception, the company took more than two years researching the Canadian market, hiring Canadian merchants and buying Canadian products. He added that the company wanted to offer the Canadian consumer a unique shopping experience, with wide aisles, helpful associates and well-lit stores.

The question is, will the company’s entrance into the market reflect its patience and hard work, or will it encounter more Matt Simpsons along the way?

Home Channel News recently toured the Brampton location, where similarities and differences were on full display.

One similarity was across the street—a Home Depot. Home Depot operates about 165 stores in Canada, and three of them are stone throws from the three Lowe’s that opened Dec.10. Direct competition with the orange box appears to be very similar to the U.S landscape.

Lowe’s has been firing shots in this battle for market share through a television ad campaign leading up to its opening. The key themes to the TV spots are service and price.

Inside the stores, a new feature is a “help button” in almost every aisle designed to bring an associate within 60 seconds. The store also boasts a three-in-line policy for checkouts. “if our lines have more than three customers, we’ll open up another so you don’t have to wait,” according to the Canadian commercial.

Matt Basso, store manager for Brampton, told HCN that Lowe’s upholds the three-in-line policy by making sure all associates are trained on registers. Basso said that the customer service aspect of the store will be one of the big draws for Canadian consumers.

“Essentially customers decide with their wallets,” he said. “We believe that if we give our customers what they want, they’ll keep coming back.”

Not only was the store full of associates (three to an aisle at times and of ten outnumbering the customers in the aisle),no one was above Lowe’s customer service pledge, not even Stallings, who could be seen assisting customers throughout the store.

One of the big differences in Lowe’s Canadian locations is in the products. According to Stallings, more than 35 percent of the products in Lowe’s Canada’s stores are Canadian specific manufacturers, while another 25 percent are common brands to both the U.S. and Canadian markets.

“If I were a Canadian and had lived there my entire life and a new business opened up with a lot of brands that I didn’t recognize, I’m probably not going to be as impressed as somebody who opens up with a lot of brands that I would recognize as being good quality brand names,” said Stallings.

Among the purely Canadian products featured at the new Lowe’s locations are Miele appliances, IKO, Sika and Can for lumber products, Good fellow, Beaulieu Canada and Loxcreen flooring products as well as McKenzie live goods.

That’s a concept that hasn’t been lost on Canadian consumers either. Bill Young, of Brampton, said he liked the new store. “They buy Canadian products, they’re right there on the shelves,” he said.

That approach to marketing is employed most visibly by Boucherville, Quebec-based RONA. The network of some 670 stores across Canada points to a high rate of Canadian manufacturers and wholesalers. Coincidentally, it was RONA that emerged last summer as a possible acquisition candidate for Lowe’s. Fueling the speculation, denied by both companies, were the ideas that mature markets are ill-suited for organic growth, and the U.S. housing troubles boosted the importance of Canada to Lowe’s.

That mature market includes powerhouses like Home Depot, RONA, Canadian Tire and Home Hardware, with roughly 2,000 stores combined.

In the end, the customers will make the final determination.

Trevor Young, shopping the store on opening day, said that he thinks the new store is a fine addition to the town. “They have better prices,” he said. “It’ll create some competition for the Canadian stores, and I think that’s for the better.”

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B&Q sees “limited opportunities” in Taiwan, sells stake

BY HBSDEALER Staff

Through its parent, Kingfisher, Britain’s B&Q chain of home improvement stores will sell its interest in B&Q Taiwan for US$106.5 million.

The buyer, Test Rite International, has been Kingfisher’s joint venture partner in the Taiwanese market. Kingfisher will use proceeds from the sale, expected to close by Dec. 31, to reduce debt.

According to information provided by Kingfisher, Taiwan was the company’s first entry into Asia in 1996 with a “highly adapted” B&Q format. Supported by its joint venture partner, B&Q quickly expanded across Taiwan and today operates 21 stores and employs around 1,800 people in the country.

“Our Taiwanese joint venture has been a success, providing good investment returns for shareholders while also acting as a useful springboard for entering the large and fast-growing mainland Chinese market,” said Peter Jackson, Kingfisher’s chairman of the board. “However, after 11 years of expansion, B&Q Taiwan now offers only limited opportunities for future market share growth for Kingfisher.”

Kingfisher owns several other home improvement retail brands across Europe and in China, including Castorama, Brico Depot and Screwfix.

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