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Kingfisher to renovate Chinese DIY business

Kingfisher, the home improvement retailer which owns the B&Q and Castorama chains, is poised to reshape its Chinese business in its latest bid to crack one of the world’s most difficult DIY markets.

Ian Cheshire, chief executive, said the group planned to test a smaller version of its current “big box” format, and was considering a “design centre” format, by which customers could plan the interior for a whole apartment – then pay a workman to install it.

“Big box DIY retail is not the model for China, so we’re going to try something else,” said Mr Cheshire. “If you can afford to buy the products, as a matter of class, you won’t get involved in their installation.”

B&Q has already tested a showroom format inside one of its Shanghai stores, which features four complete life-size apartments, squarely aimed at what Mr Cheshire terms the “Do it For Me rather than Do it Yourself” market. If successful, this approach could be copied throughout Kingfisher’s 40 existing Chinese stores.

“The Chinese don’t tend to do the small projects,” Mr Cheshire said on the mooted change of strategy. “You don’t paint up the bathroom over the weekend. They either do brand-new apartments fitted out from a concrete shell or, when they do refurbish their apartment, it’s once every 10 years.

“You rip everything out, move out for three months, and you completely rebuild it down to the wiring and the plumbing.”

Since entering the Chinese market in 1999, Kingfisher was forced to close 22 stores two years ago after the venture reported losses of £52m ($83m) in a single year. It has already trimmed the size of its remaining 40 stores by sub-letting space to other retailers, including Carrefour and Best Buy.

A design centre format would not need to carry as much stock, because consumers typically order products six months in advance, potentially enabling more space to be sub-let.

B&Q is not the only DIY chain to encounter difficulties in the Chinese market. Home Depot, the US home-improvement group, has closed 5 of its Chinese superstores during the past two years.

Source : Claer Barrett – Financial Times

06 November 2011
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