Kingfisher eyes smaller, urban store(70071)

Kingfisher eyes smaller, urban store

From: Reuters

Kingfisher, Europe s No.1 home improvements retailer, plans to expand into city centres with smaller stores as it looks to innovate in anticipation of persistent tough trading conditions.

Chief Executive Ian Cheshire told the Reuters Consumer and Retail Summit on Monday that Kingfisher, already experimenting with smaller, town-centre stores in France and Russia, hoped to bring the concept to its UK chain B&Q within 18 months.

There s 60 catchments where there isn t a B&Q within 20 minute drive time where you have got more than 40,000 people, he said, adding these were mostly in densely populated areas such as London or in market towns.

Cheshire said the stores would be about 35,000-40,000 square feet in size, big enough to carry a broad range of products, but smaller than B&Q s current mini format.

They would also have a greater focus on homewares and would step up the challenge to rivals like Homebase, which is strong around London, and Focus DIY, which is in market towns.

The initiative is part of a broader focus on innovation as Kingfisher looks to grab the imagination of shoppers.

What is quite clear, is there is consumer spending available for things that are different. The iPad is the super extreme example of that, but I think that s playing into a broader theme, Cheshire said, adding Kingfisher was harnessing the creativity of its French arm for the group as a whole.

New products from France will include click-fit tiles and a space-saving eco toilet with a built-in wash basin at the top which uses the sink water for flushing.

COPING IN TOUGH MARKETS

Cheshire was optimistic the global economy was over the worst and that steps to rein in government borrowing -- which may include a rise in VAT sales tax in a UK emergency budget on Tuesday -- would not throw countries back into recession.

But he saw little prospect of much growth in do-it-yourself either. I wouldn t be at all be surprised to see slightly minus markets for the next two years, he said of Britain.

France, where Kingfisher trades at Castorama and Brico Depot, was slightly better, while Poland -- a key growth market for Kingfisher which was hit hard in the first quarter by bad weather and national mourning over the death of the president -- looked okay on an underlying basis, he added.

Kingfisher, which runs over 830 stores in eight countries, is half way into a three-year recovery plan focussed on boosting profit margins by, for example, buying more products centrally, and directly, from cheaper manufacturing regions like Asia.

Cheshire was relaxed about the decision by China to allow its currency to appreciate, which will make imports for foreign retailers like Kingfisher more expensive.

Any appreciation would likely be gradual, and would still leave most Chinese goods significantly cheaper than those made in Europe, he said, while adding firms were likely to look at other cheap manufacturing centres like Vietnam and Indonesia.

Cheshire said Kingfigher s turnaround plan for its loss-making Chinese business was slightly ahead of target, although recent steps by the government there to cool the housing market could lead to a difficult month or two.

He denied reports Kingfisher might exit China in the near future, saying it would take about 18 months to find the right range of products, after which it could then determine whether there was a long-term profitable growth opportunity.

At the moment I would say it s more an opportunity than anything else, he said.

Cheshire said Kingfisher would steadily develop its business in Spain, which has defied a deep recession.

I don t think there s any reason why it's not at least a 50 store country, he said.

Kingfisher eyes smaller, urban store

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