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A depressed housing market, unseasonal weather and a shift in consumer spend mean the DIY market has shrunk. How can retailers fix the problems?
The Brits have long been considered a nation of DIY-lovers. In the mid-1990s TV shows such as Changing Rooms had as many as 10 million viewers glued to the box each week to discover the latest trends in wall stencilling and mosaic mirrors.
The obsession with beautifying homes lasted for years and led to the DIY market ballooning to £9.76bn by 2004, according to Verdict research.
However, last year that figure had shrunk to £7.54bn and the sector’s woes were reflected in B&Q owner Kingfisher’s first-quarter update last week.
Everything from the weather to the economy has been blamed, but is it really that consumers are falling out of love with DIY? And if so, what effect will this have on home improvement retailers?
Conlumino managing director Neil Saunders believes the DIY sector faces a “structural” challenge because consumer interest in it is waning. He says: “Consumers look unfavourably on DIY, either because they lack the skills to undertake various tasks or they simply lack the inclination to get involved.”
The ‘do-it-for-me’ (DFM) trend - where consumers hire tradesmen to carry out jobs for them - is gaining more traction.
In a note last week Cantor Fitzgerald analyst Kate Calvert highlighted that this presents a challenge for market leader Kingfisher, which suffered a first-quarter group like-for-like decline of 4.2%. That followed its first profit fall in five years for the 12 months to January 31.
Calvert says: “The structural issues that Kingfisher faces are real. In the UK, underlying DIY sales have been in decline over the last decade as there is a marked shift from DIY to DFM.”
SCOPE FOR RECOVERY?
However, Kingfisher group chief executive Ian Cheshire insists the DIY market does not face a structural challenge.
He instead links the decline in DIY spending to the depressed housing market; fewer people are moving house so fewer people need to install new bathrooms, hang new doors or wallpaper their bedrooms.
“I don’t think the data is there to make that [structural] claim,” Cheshire tells Retail Week. “DIY spend has been suppressed because first and second-time buyers haven’t got on the market.”
Investors seem to back Cheshire. Despite Kingfisher’s disappointing figures, the DIY giant’s share price climbed on the day of the update. “The market has decided the recovery is coming and we’re going to be in good shape,” maintains Cheshire.
Panmure Gordon analyst Philip Dorgan says: “Investors think that as the housing market recovers Kingfisher will be one of the beneficiaries. Large investors’ view is that DIY isn’t dead.”