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DIY Retailing - UK - May 2014
Introduction
 
A bounce back, but one dependent on the housing market
This report looks at the retailing of DIY and associated home-improvement products in the UK.

The sector experienced tough trading conditions in a downturn that started well before the onset of recession, as interest in home makeovers dwindled. The recession-driven fall in discretionary spending and the plunge in residential property transactions compounded this. Between 2008 and 2012, the DIY specialists sector lost 11%, or £1.3 billion, in annual sales.

But 2013 saw the start of strong growth in the number of housing transactions and an associated boom in house prices (in some regions), and this prompted an upturn in demand for DIY. Given the macroeconomic context, we expect this resurgence in DIY sales to continue through 2014 and likely into 2015.

Consumer questions
This year, we asked consumers:

●	Which retailers they had bought DIY products from in the past 12 months, and whether this was online or in-store;
●	What types of DIY/home improvement products they had bought in the past 12 months;
●	What types of DIY/home improvement they plan to do in the year ahead, and whether they will do this themselves or pay a someone to do for them;
●	Whether they prefer buying DIY products from a specialist or non-specialist retailer, and why;
●	Other attitudes towards, and participation in, DIY.

More data, better content
As with our 2013 report, we include improved report sections with more data, including:

●	Our Sector Size and Forecast section this year includes segment sizes and forecasts for the Big-Box/’Shed’ segment (comprising the major large-store DIY retailers) and all other DIY/hardware specialists, as well as for the DIY specialists sector in total.
●	The Leading Specialists: Financials and Outlets section brings together in one section five years of operational indicators – such as revenues, store numbers, sales per outlet, and operating margins – for the leading DIY specialists.
●	The Leading Non-Specialist Retailers section provides market share estimates and company profiles of major non-specialist retailers of DIY goods, such as Argos, Amazon and Wilkinsons. The non-specialists retailers are also included along with the specialists in our Market Shares section.
●	Proprietary data on retailers’ distribution of sales area by product type in the Space Allocation section.
●	An updated Online section, providing Mintel estimates for online sales by DIY specialists and online sales of DIY products, as well as online market shares consumer research on usage of the online channel for DIY shopping.

Defining DIY
Core DIY – paint, wallpaper, screws, tools etc. – is now a small part of the proposition of the DIY sector. The closest any of the majors comes to such a narrow definition is Wickes. But the other two majors, B&Q and Homebase, have expanded their offer enormously. They are broad-range home-improvement stores with substantial gardening ranges.

So the problem that has to be asked is when does a DIY store cease to be a DIY store?

The normal answer would be to say that if core DIY is less than a certain percentage of sales, then the company should be classified elsewhere. But for DIY we take a slightly different line. The guiding principal should be the store’s authority in core DIY, irrespective of what proportion of group sales it takes. Consequently, the substantial product diversification at Homebase, for instance, does not invalidate its status as a DIY retailer. We exclude builders’ merchants such as Travis Perkins and Jewson.

Definitions
For consumer spending, the major relevant categories to DIY retailing are outlined below.

COICOP code | Category | Definition/notes
04.3.1 | Materials for maintenance and repair of the home | Products and materials for minor maintenance and repair, such as paints and varnishes, renderings, wallpapers, fabric wall coverings, window panes, plaster, cement, putty, wallpaper pastes, etc.; includes small plumbing items (pipes, taps, joints, etc.), surfacing materials (floorboards, ceramic tiles, etc.) and brushes and scrapers for paint, varnish and wallpaper.
| | Excludes materials and fixtures used for major maintenance and repair (intermediate consumption) or for extension and conversion of the dwelling (capital formation).
5.5 | Tools and equipment for home and garden | Motorised and hand tools – see breakdown below.
| Includes: |
05.5.1 | Major tools and equipment | Motorised tools and equipment such as electric drills, saws, sanders and hedge cutters, garden tractors, lawnmowers, cultivators, chainsaws and water pumps; includes repair and rental.
05.5.2 | Small tools and equipment | Hand tools such as saws, hammers, screwdrivers, spanners, pliers; garden tools such as wheelbarrows, watering cans, hoses, spades, shovels, rakes; ladders and steps; door fittings (hinges, handles and locks), fittings for radiators and fireplaces, other metal articles for the house (curtain rails, hooks, etc.) or for the garden (chains, grids, etc.); small electric accessories such as power sockets, switches, wiring flex, electric bulbs, fluorescent lighting tubes, torches, flashlights, hand lamps, electric batteries for general use, bells and alarms; includes repair.
09.3.3 | Gardens, plants and flowers | Greenstock and gardening products only. Note this category excludes garden tools and garden furniture.
| | Natural or artificial flowers and foliage, plants, shrubs, bulbs, tubers, seeds, fertilizers, composts, garden peat, turf for lawns, pots and pot holders. Includes: natural and artificial Christmas trees; delivery charges for flowers and plants.
| | Excludes: gardening gloves (03.1.3 – Clothing); gardening services (04.4.4) or (05.6.2); gardening equipment (05.5.1); gardening tools (05.5.2); insecticides and pesticides for household use (05.6.1).
05.1.1 | Furniture and furnishings | Includes garden furniture.
| | Excludes fitted kitchens, bathrooms etc where these are installed by professional tradesmen: in such cases, the ONS considers the product purchase to be part of the service cost and does not include this within the consumer spending data.
05.1.2 | Carpets and other floor coverings | All floorcoverings.
5.2 | Household textiles | Furnishing fabrics, curtain material, curtains, double curtains, awnings, door curtains and fabric blinds; bedding such as futons, pillows, bolsters and hammocks; bedlinen; table linen and bathroom linen; other household textiles such as laundry bags.
5.4 | Glassware, tableware and household utensils | Glassware, crystal ware, ceramic ware and china ware of the kind used for table, kitchen, bathroom, toilet, office and indoor decoration; cutlery and silverware; non-electric kitchen utensils of all materials such as saucepans, pressure cookers, frying pans, coffee mills; non-electric household articles of all materials such as containers for bread, coffee, spices, etc., waste bins, waste-paper baskets. Includes repair.
5.3 | Household appliances | Major household appliances and small electric household appliances.
05.6.1 | Non-durable household goods | Cleaning and maintenance products such as soaps, washing powders, washing liquids, scouring powders, detergents, disinfectant bleaches, softeners, conditioners, window-cleaning products, waxes, polishes, dyes, unblocking agents, disinfectants; articles for cleaning such as brooms, scrubbing brushes, dustpans and dust brushes, dusters, tea towels, floorcloths, household sponges; other non-durable household articles such as matches, candles, lamp wicks, methylated spirits, clothes-pegs, clothes hangers, pins, safety pins.
09.3.4 | Pet products | Pets, pet foods, veterinary and grooming products for pets, collars, leashes, kennels, birdcages, fish tanks, cat litter, etc.

Specialists sector
For our retail sector sales and forecast we use the following category under the SIC 2007 categorisation.

SIC code | Definition
47520 | Retail sale of hardware, paints and glass in specialised stores

As noted above, this year we also include a forecast for the Big-Box/’Sheds’ retail segment, which comprises B&Q UK, Homebase UK and Wickes, plus Focus DIY until its closure in mid-2011.

Financial definitions
Financial definitions used are:

●	Sales: Turnover as reported by the company, excluding VAT.
●	Operating profits: pre-tax profits plus interest, less non-trading income such as the sale of fixed assets and any exceptional items, including provisions.
●	Pre-tax profits: the net trading profit after deducting all operating costs including depreciation and finance charges, but before deduction of tax, dividends and other appropriations.
●	Operating margin: operating profits as a percentage of sales.

Crown copyright material is reproduced with the permission of the Controller of HMSO and the Queen’s Printer for Scotland.

VAT
●	In general, all company sales data are quoted excluding VAT.
●	Consumer spending data and sector sales data (including forecasts) are quoted including VAT unless specifically stated otherwise.
●	VAT-exclusive consumer spending data is used to calculate market shares.
●	The UK reduced the standard rate of VAT from 17.5% to 15% on 1 December 2008, before increasing it to 17.5% on 1 January 2010 and 20% on 4 January 2011.

Exchange rates
Where a retailer reports in euros, the following exchange rates have been used for conversion to pounds sterling. Where a retailer has a non-calendar year-end, the closest calendar year rate has been used.

| 2008 | 2009 | 2010 | 2011 | 2012 | 2013
€ to £ | 0.7964 | 0.8917 | 0.859 | 0.8678 | 0.8111 | 0.8489

Sales per store, sales per sq m
●	Sales per sq m is the sales generated during the year divided by the average area traded from during that year.
●	Sales per store is calculated using the average number of trading outlets during the year.

Abbreviations
B2B | Business-to-Business
B2C | Business-to-Consumer
C2C | Consumer-to-Consumer
CAGR | Compound Annual Growth Rate
COICOP | Classification of Individual Consumption According to Purpose
CPI | Consumer Prices Index
DIY | Do It Yourself
e | Mintel Estimate
f | Forecast
FMCG | Fast-Moving Consumer Goods
GDP | Gross Domestic Product
jv | Joint Venture
MBO | Management Buy Out
NA | Not Available or Not Applicable
NPD | New Product Development
OFT | Office of Fair Trading
ONS | Office for National Statistics
p | Projection
PDI | Personal Disposable Income
POS | Point of Sale
RPI | Retail Prices Index
SKU | Stock-Keeping Unit
USP | Unique Selling Point
VAT | Value Added Tax

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