Nervous about the future

With regard to the UK at the present, the only trend seems to be that there is no trend. While Home Retail Group, which includes Homebase, reported a decline in sales for the 13 weeks to the end of May, Travis Perkins, which includes Wickes, has more recently reported a sales uplift of over 2 per cent for the first half of the year. On top of general concerns about the market and continuing lack of consumer confidence, new uncertainty has now been added to retailers’ worries, with the recent announcement that the standard rate of value added tax (VAT) is to increase to 20 per cent at the end of the year. This is a tax increase which will impact on the sales of the majority of products sold through DIY stores, making them that bit more expensive. Increasingly the major retailers are seeking to be generalists. So on the one hand B&Q are rolling out their TradePoint in-store sections, while on the other hand attempting to court passing trade, and especially the female customer, with a tempting housewares offer. B&Q intends that TradePoint will ultimately extend to 118 stores across the country. Effectively they are 350 m² trade sections within existing stores, where access is restricted to TradePoint members who have credentials as genuine trade customers. It is expected that TradePoint will leverage synergies with Kingfisher’s established Screwfix operation, which has a long record of serving the trade, while also benefiting from B&Q’s existing store infrastructure. This is not, however, Kingfisher’s first attempt to cash in on the building products market and comes just 18 months after the closure of its stand-alone Trade Depot chain, which grew to nine stores before it was revealed that the experiment was loss-making and the stores were shut down. At Wickes the main interest has been on its new showroom offer – kitchens and bathrooms. Buoyed by results at the turn of the year, which showed that this area of their offer had enjoyed a 23 per cent sales uplift during 2009, the company announced earlier this year that it would be introducing new Wickes Kitchens & Bathrooms stores of 450-900 m². The stores will be situated on a mixture of high street sites and retail parks. The first two have already opened in the south of England, with a third planned for London. To a large extent, the Wickes initiative is a response to the collapse of MFI in 2008, which has left a significant opportunity in the kitchen and bathroom market. The environment…