The main interest in retailing at the moment is – how big was Black Friday and how good will Christmas be? It is too early to answer either question, so instead we’ll have a look at a sector which is less fortunate than all the others – at the moment.

We’ve had a number of news items about DIY in the last month – B&Q selling stores, Travis putting Wickes up for sale, Clas Ohlson pulling out of the UK and the Homebase store closure programme has now reached 59 and there still others under review.

Specialists struggling

None of the majors are performing well. Wickes has seen sales and profits fall in 2018, after a good run up to 2017. So Travis Perkins is now saying that it wants to go back to focussing on its trade customers - an admission that it should not have strayed away from them in the first place. But it plans to keep its Toolstation business which has been developed in imitation of Screwfix.

Kingfisher has reported falling sales in Q3. It is in the middle of its ambitious One Kingfisher programme which brings together ranges and systems across similar stores across Europe. It is hardly surprising that so ambitious a programme should have proved more difficult than expected and it is still too early to say whether it will work or not. But Kingfisher has announced the sale and leaseback of 6 stores to help fund the programme and has also decided to exit Russia, Spain and Portugal.

Homebase recently announced 59 store closures by January 2019. Homebase is in a desperate fight for survival. It needs cash and time to try to repair the damage done by Bunnings and it is still far from clear that it can succeed. One recent development has been a tie-up with Tapi which is the first confirmation of bringing back concessions into the business.

But not all are doing badly

Perhaps one of the problems for the DIY superstores is that they try to serve opposite extremes of the market. The two classes of business that are doing well serve the extremes of the sector.

On the one had we have Screwfix and Toolstation. The main focus of these two is trade customers, though they are more than happy to serve consumers as well. They operate from small, tertiary sites with a catalogue based, Argos-style operation. They specialise in DIY products.

Non-food discounters

At the other extreme are the so-called, non-food discounters, retailers such as B&M and Home Bargains. These two are unashamedly consumer orientated and they combine DIY and gardening with a wide range of home related goods (and, increasingly, food as well). They are not specialists and they can flex their space seasonally to reflect the patterns of consumer demand.

Naturally B&M and Home Bargains cannot carry the wide, specialist range of a superstore. But that is not necessarily a problem. One of the trends we have seen in recent years has been a move back into inner cities and into flats, frequently rented. Such people are much more constrained in the DIY they can undertake, so their DIY needs will also be much more limited. The philosophy of these non-food discounters is akin to that of Aldi and Lidl – have a limited range focussed on the fastest moving lines. That is much better attuned to today’s demands than a DIY superstore. It is also worth noting that both have been acquiring the closed stores of Homebase and B&Q, so alongside the smaller city centre stores, they also have much more significant home and garden ranges in out of town stores, catering to both types of customers in a way that specialists have been unable to do.

But what about the high street?

These non-food discounters trade both out-of-town and on the high street and so are well placed to capture trade from those unwilling or unable to travel out-of-town, but this doesn’t really seem to be a high street vs out-of-town issue. In the past we have argued that it was a great opportunity for high street retailers, but that has not been realised. Robert Dyas, for example, seems to be stuck on 95 stores, though the business is modestly profitable. Clas Ohlson, a Swedish chain that looked as if it should have great potential has finally decided to pull out of the UK (and Germany) altogether.

And the economy is not helping

There are signs that consumer demand has slowed during the second half of 2018. It is not clear how much and nor is it clear whether this was just demand delayed before the Black Friday promotions. The housing market is looking particularly dull as consumers are nervous about the outcome of the deal over Brexit.

Where next?

Current economic trends just seem to be making matters worse for the DIY specialists, but playing straight into the hands of the non-specialists who are picking up market share anyway.

We need to see the DIY superstores fight back, but none are in a position to do so at the moment so the present winners in DIY who represent the opposite extremes of the sector, look likely to continue to gain market share.

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