Diversification ensures growth

DIY and gardening is the UK’s fastest growing retail segment, and the leading operators have the opportunity to increase their market volume by more than a third over the next five years, according to the DIY & Gardening Retailers 2004 report compiled by Verdict.
To date DIY retailers in the UK have succeeded in adding £ 2.6 bn (€ 3.7 bn) to the sector’s market value through diversification of their product offer. Here Verdict sees the potential for further growth of £ 5.5 bn (€ 7.8 bn) over the next five years, through the addition of new product categories such as home appliances, fireplaces and outdoor leisure, or through extending existing ranges (patio heaters, air conditioners, dehumidifiers, fitted bedrooms and garden vacuums).
DIY & gardening sector overview 2004(.pdf download)
Shoppers should be encouraged to trade up to higher quality products and tackle larger-scale projects, with the aim of increasing the average shopping basket. The two giant US home improvement retailers, Home Depot and Lowe’s, have already demonstrated the potential in appliances by capturing a substantial share of the white goods market.
Among the developing areas in the UK are fires and fireplaces, which can command a price in excess of
£ 500 (€ 713) – whereas an average spend per visit is less than £ 30 (€ 43). The expansion of existing product categories, e.g. furniture, is also aimed at increasing the average spend. More fitted kitchen and bathroom ranges are being included in the product offer, as well as more design-influenced and better quality ranges. However, Verdict comments that the quality of advisory services and the store environment must also match up if DIY retailers want to play in a higher league.
Trading up as a tactic has managed to fend off deflation in the DIY sector. This has focused on garden furnishings, with customers being encouraged to switch from plastic to wooden tables and chairs, and from a basic charcoal barbecue to a higher priced gas powered model. Rising interest in garden use is playing a role here, but so are improved ranging structures and selling skills, as well as better communication of additional product benefits, which is also relevant for other product categories.
Market share of major UK retailers in the DIYand gardening sector(.pdf download)
DIY retailers are developing sophisticated financial services to increase sales. Instead of simply selling goods, they are aiming to become project partners and to capture a greater share…