Small is beautiful

B&Q is remaining “tight-lipped” about the detail of its new smaller store format proposed for UK town centres in the next 18 months. The new store format is said to be based on a fascia trialled by parent company Kingfisher in France and Russia under its Castorama and Brico Depot brands. B&Q management have also probably been watching the progress of Home Depot’s smaller store format. The new UK store sizes will be around 3 250 – 3 700 m², which makes them smaller than B&Q’s current small stores. The company intends that the more compact size will open up market towns and smaller catchment areas with a population of around 40 000. This will enable it to increase the pressure on those of its competitors who are already operating in such areas. In fact, retailers such as Focus have long said that their stores in market town locations are amongst their most profitable. Indeed both Focus and Wickes are now trialling their own smaller store formats. No doubt B&Q managers will also have been looking at the performance of retailers such as Wilkinson, a 337-store chain with a strong DIY product mix. The company reported a 7.4 per cent sales increase in 2009, accompanied by a doubling of operating profits. Since its stores are largely town centre based, these results will have demonstrated the continuing resilience of high street retailing in the current economic climate. Of course Wilkinson would have been one of several retailers to benefit from the closure of Woolworths at the end of 2008. Wilkinsons and other multiple high street retailers, such as Robert Dyas, as well as many independents, will be considering their response to the latest pronouncements from B&Q. Not only are the new stores set to be physically located at the end of the high street, but their product mix will also pose a threat to other retailers. Speaking at the recent Reuters Consumer & Retail Summit, Kingfisher’s chief executive Ian Cheshire said that the proposed new stores would have a greater focus on housewares products. This again would put them in direct competition with many specialised high street retailers, as well as Focus and Homebase who currently have larger ranges in this area. Clearly B&Q is looking for new markets to aim at, since in the same speech, Mr Cheshire stated that he thought it likely that growth in the UK DIY market as a whole would remain negative for at least the coming two years. Mr Cheshire cited the example of the Apple iPad to…