Castorama France June 2008 - Kingfisher plc · Brand image • Strong brand awareness : legitimacy...
56
Castorama France June 2008
Transcript of Castorama France June 2008 - Kingfisher plc · Brand image • Strong brand awareness : legitimacy...
Castorama France
June 2008
2
The History of Castorama …
0102030405060708090
100110120130
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Castorama actual
7
15 Briker
1992
1969 1971
197720 stores
Castorama + storestransferred to BD
32 stores transferred to BD
Number of stores
Brico DépotPoland
Italia
3
A winning concept until the end of the 90’s,which no longer fits the market in 2002
Historic Strengths
Brand image• Strong brand awareness : legitimacy (as a
pioneer, a leader), seriousness• Still leader in overall “Brand Capital”
Communication • Remember ‘Chez Casto, y a tout ce qui faut’
(‘At Casto’s, there’s everything you need’)
Range / Products /Prices
• Leader in Hardware• Leader in Gardening• Competitive in Building• Wide range of products• Quality
Stores / Merchandising
• Fast development• International development
Consequences
• Masculine & technical identity• In a market undergoing ‘feminisation’ and
tending towards decorative & showroom
• Has not followed the evolution of the clientele, which has moved on from just ‘home repairs’ to ‘home improvement projects’
• Weaker Decorative• Weaker Showroom
• Lack of clarity in the structure of the ranges• Bad price positioning
• Heterogeneous store portfolio• Lack of investment and maintenance
4
In this context, in 2003, it was decided to change our way of running the business …
Use the strength of the Castorama brand and its know-how
Take into account the market evolution and customer trends :Development of a more feminine market (decoration, showroom)Development of discount retailers (reinforce price issues since 2002)
Transform the business model and reposition Castorama :PriceOfferOrganisationEconomic model
In order to not simply regain lost ground but move forward and become again a brand of reference on the home improvement market
5
… beginning a major and ambitious transformation programme…
6 strategic main lines :
3 phases :
1 aim :
Revenues
Price
Store Investment Programme
Evolution of Products and Services Offer
Productivity
Efficiency
Supply Chain
CPR
Structuring the organisation, the teamsRe-acquisition of the basics through strong actionsAdjustment, optimisation and continuity
Launch ambitious medium/long term projects while upholding business performance versus 2002
6
… needing a high level of investment …
Efficiency
Supply Chain
Price
Range
Store Investment
CPR
Redefine principlesand organisation design
Return to basics / High Investment
Improvement /Return
on Investment
INVESTMENT
RETURN
2003 2004 2005 2006 2007
7
… while upholding business performance
Price
1st on the DIY Traditional players
>€100mil investment Product Offer
40% families of product renewed
< 50% turnover100% stores = ‘A range’
Retail Operating Profit
New concept
40% redeployed storesoutperforming sales growth
Property : € 1,2billon
ROP constantly superior to that of 2002
(average growth: double-digit)Organisation
88%
12%3%
97%
2002 2007
+36%
€/F
TE/€
per w
orke
d ho
urs
Supply Chain
x2 of m² (eg. Chatres 60 000m²)Direct from 58,2% to 50,1%New cross-dock warehouses
IT roll out
8
The first results of the strategy are obvious
6,0%
10,7%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Market
Castorama
June-Oct.
4,4%2,5%
Oct.- Jan.
4,6%0,6%
Fev.-May
7,8%5,8%
> > >
Castorama CSMarket
Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Fev-08
9
Price A necessary investment, a rapid image improvement
Strong price focus:Entry price productAggressive promotionsCheck on competitors
CPR development
Range restructuring:Definition of rangesPrice scalesLaunch of catalogues
Margin optimisation:Own brand developmentLocal price promotionsNew pricing tool
2003 2004 2005 2006 2007Redefine principles
and organisation designReturn to basics / High Investment
Improvement /Return on Investment
Third traditional DIY player on pricesA convincing price position to be maintained
10
Price A necessary position to maintain
BASIC DRIVER
BONUSSECONDARY
Price
Price
Positive Impact
NegativeImpact
11
But price is simply not enough to make the difference in the market…
It is the performance of the economic model that will make the difference between retailers :
Free up resources in order to invest in price positioning Develop key business to generate margin
12
… which confirms the relevance of the strategic range programme
Define strategies and align organisation:
Redefinition of Product strategies (GPS)Clarification of head office and store responsibilities
Build the offer and begin roll out:
New product hierarchyMarketing principlesABC rangeBlueprints and planogrammes1st range reviews
Range roll out and optimisation:
ABC range in stores Performance analysisOptimised range review
2003 2004 2005 2006 2007Redefine principles
and organisation designReturn to basics / High Investment
Improvement /Return on Investment
13
Offer A driver to accelerate performance
BASIC DRIVER
BONUSSECONDARY
Product Product
Positive Impact
NegativeImpact
14
Two main axes to develop offer
1. Offer modernityFeminisationStyles and storiesFrequency of range renewalsSustainable development solutionsNew technologies
2. Easy access to offerPriceSelf-serviceSales supportsOwn brand
15
OfferImproving the legibility of the offer through Own Brand
OB Core
OB SelectionPrice Price
QualityNew : April 2006QualityOld : April 2005
1st Price
Own brand sales are increasing
Profitability is better with own brand products
Coverage of all levels of price scales
16
OfferClarification of Own Brand territories
Categories 1st Price OB Core OB Selection Brands
DecorationWall, floor, windowsLighting, panelling
Interior showroomBathroom, kitchen, storageInternal carpentry
Comfort ProductsHeating, airconditioningWater & air treatmentAutomation, security
Exterior showroomGarden furniture, swimming pool, barbecue, lighting, external fit out
ToolsHand tools, garden tools
Power toolsHandheld drills, motorised gardentools
Supp
lier B
rand
s
17
OfferDevelopment of brand legitimacy : the example of paint
Range restructuringBrand creation and repositioningRedefinition of Merchandising
Feb-May 06 June-Sept. 06 20 07
SalesAverage transaction valueFootfallAverage selling price
18
OfferSuccessful repositioning : the example of wooden flooring
2004 : Aggressive price positioning
Avg Price of goods sold :
-24%
Laminate
Quantity :Sales :
Margin :
2005 : Range restructuring
Parquet
Avg Price of goods sold :
+11%
Quantity :Sales :
Margin :
2006 : Range restructuring
Parquet / Laminate
Avg Price of goods sold :
+4,3%
Quantity :Sales :
Margin :
Create footfall and legitimacy Develop the business Trigger leadership
19
OfferAcceleration of the frequency of changes : the example of curtains
2005 : Aggressive price positioning and range structuring
2006/07 : Increase frequency of range reviews
2 collections a year
Range optimisation
Through homogenous merchandising
Continue development of Direct Sourcing
Curtains
Avg Price of goods sold : -9%
Quantity :Sales :
Margin : 2003 2004 2005 2006
Sales
Margin
Quantity
Create footfall and develop business on key categories
Reinforce legitimacy of the whole department
20
OfferStyles and stories
21
OfferStyles and stories
22
Histoire Contemporaine
23
Histoire Technicolor
24
Histoire Charme
25
Histoire Authentique
26
Sustainable developmentFrom behaviour to business
BASIC DRIVER
BOOSTERSECONDARYSustain.Devlpt
Sustain.Devlpt
89% of French people feel concerned€7,5Bil spent by customers on energy saving productsNew European legislation
Environment preservation
Energy savings
Origin
Health risk
Base : customers who buy
DIY products (100% ) = 970
Quality of the product
Price
Promotion
97%
94%
93%
84%
83%
80%
39%
Total: important
Source : Audirep jan 07, IFOP may 06
Sustain.Devlpt
Positive Impact
NegativeImpact
27
OfferSustainable development : From behaviour to business
Develop partnership
Develop products
Co-label : 1700 products
28
OfferSustainable development : From behaviour to business
R&D and advice
Communication
+2008 : New catalogue
29
OfferSustainable development : better communication
Visuel maison Eco + aide au choix
30
OfferSustainable development : better communication
31
Store revitalisation programme :4 new stores, 16 relocations and 13 revitalisations since 2003
2003 2004 2005 2006 2007
% roll out 3% 13% 24% 33%
19.0
12.9
40%
Average age if no action 16.0 17.0 18.0 20.0
Average age of Casto portfolio 15.4 14.7 13.3 12.4
32
Economic modelCost reduction to sustain the transformation
Evolution of the € / FTE / worked hours
€pe
r w
orke
d ho
urs
2nd
targ
et a
gree
d in
200
5
Practical training …
84%
16%
48%
16%
52%84%
3%
97%
68%
32%
+36%
% of stores20042002 2005 2006
48,5% 53,0% 53,7% 55,2% 56,9%
% staff available for customers
2003
88%
12%
2007
58,2%
E-learning …
Staff costs 2007 < 2002 in €mil+9,7pts of staff available for customers
33
Change CurveSerenity
LucidityBlindness
Concern
Phase 1 : 2003Hénin
Phase 2 : 2006 Englos
Phase 3 : 2008La Défense
34
La Défense : Stakes and first lessons
35
4 million inhabitants150 000 business centre staff 55% of medium & superior socio-professional groups
36
9500 m² on two levels in the ‘4 Temps’ Shopping Centre
200 staff
153000 till receipts in 2 months
37
The stakes of the store at La Défense
1. A question of image for Castorama and the GroupClientsSuppliersPress
2. A commercial stakeInvent a new store organization to correspond to customers projectsBoost sales through a cross-disciplinary offerGive a unique buying experienceSimplify access to the product ranges
The store at La Défense is a new step of the evolution of
38
Image of Castorama and the GroupSuppliers’ Conference
384 people
For 84% of them, this conference met their expectations
A conference, which gave a new image of Castorama on The evolution of the store concept Its vision of the marketIts role
39
Image of Castorama and the Group Press Conference
115 journalists of whichAll the Home specialistsLes EchosLe FigaroLe ParisienLibération…
40
Image of Castorama and the Group Effect in the Press
60 so far
Many effects: TV, written press, radio
41
The stakes of the store at La Défense
1. A question of image for Castorama and the GroupClientsSuppliersPressAnalysts & Investors
2. A commercial stakeInvent a new store organization to correspond to customers projectsBoost sales through a cross-disciplinary offerGive a unique buying experienceSimplify access to the product ranges
42
Invent a new store organization to correspond to customers projects
From a store organised by department …
… to a store organised by project
43
Organization of our offer according to the customers’ projectsI find the light!
National rankingTurnover (tax inc.)
LA DEFENSE 1X 3Avg in France
1st product family of the store : 5 % of total Turnover
44
Organization of our offer according to the customers’ projectsI set up my workshop
National rankingTurnover (tax inc.)
X 2,2LA DEFENSE 2
Avg in France
45
Organization of our offer according to the customers’ projectsI maintain my house
National rankingTurnover (tax inc.)
X 3LA DEFENSE 1
Avg in France
46
Boost sales through a cross-disciplinary offerDeco Story corner
Turnover (tax inc) : 5,5 % of the Decor Turnover
2,2 % of the store turnover
47
Boost sales through a cross-disciplinary offerBathroom accessories
National rankingTurnover (tax inc.)
X 2,8LA DEFENSE 1
Avg in France
48
Boost sales through a cross-disciplinary offerOrganise products per style : Frames
National rankingTurnover (tax inc.)
X 4,9LA DEFENSE 1
Avg in France
49
Boost sales through a cross-disciplinary offerOrganise products per style: Textiles
National rankingTurnover (tax inc.)
X 4,2LA DEFENSE 1
Avg in France
50
Give a unique buying experience A store which puts products in their global project
51
Give a unique buying experience A pleasant store
Dynamic visual communication
Olfactive Merchandising
Musical background
Coaching
52
Give a unique buying experienceA store which supports the customer
53
Simplify access to the product rangesSustainable development
«The Eco House», a sustainable development
message, through product offers in every
department of the store
54
Simplify access to the product rangesElectric Bulbs
National rankingTurnover (tax inc.)
X 2,6LA DEFENSE 2
Avg in France
55
Simplify access to the product rangesMultichannel – Web Site - Desks
Castorama France
June 2008
