Can't stand the heat
Changing consumer attitudes and a tough competitive environment has led to gaps emerging in the replacement kitchen market, providing opportunities for new and existing players. The UK fitted kitchen market returned to 2007 volumes in 2015, after a sharp decline and slow recovery. However, the premium segment saw only one year of decline in 2008 followed by accelerating growth year on year. The premium market resilience is offering a stable base for the stronger players to innovate.
Faster product development incorporating the latest luxury small appliances delivered through slicker integrated multi-channel experiences will be a key differentiator. As the premium market remains fragmented with local independents, the brands that can develop stronger commercial relationships with interior designers and promote their brand as trend leaders will be able to target further share growth.
However, in the mass market, two forces have combined to make retailing flat-packed and mid-tier DIY kitchens more challenging; namely the loss of DIY skills and the acceptance and usage of online referral services. The well-established move away from DIY towards ‘Do It For Me’ since the mid-2000s driven off the back of generations of home owners without DIY skills has created demand for skilled tradesman who can be accessed via online referrals such as TrustATrader.com or MyBuilder.com.
These tradesmen are becoming increasingly influential on the consumer decision-making process allowing Howdens’ offer of pre-built kitchens from stock to become the go-to supplier for the trade.
At the same time B&Q, the market leader, has scrapped its in-house installation capability. It now provides a network of ‘approved’ local tradesmen, allowing them to focus on the product offer. And Bunnings (the owners of Homebase), on launching their first two re-furbished stores have indicated their intentions by offering a significantly reduced DIY-only range. Conversely, Bathstore on taking over two Betta Living stores have entered the full-service fitted kitchen market under its Haus fascia.
The DIY chains retreating from full-service fitted kitchens marks the loss of a major point of differentiation against the online pure-players operating on a supply-only basis. Pure-players have rapidly grown, exemplified by online retailer diy-kitchens.com whose parent has reported average annual revenue growth of 60% since 2013.
With reducing resistance to purchasing kitchens online, will one of the online players fill the full service gap and meet the needs of the Do It For Me customer that wants only one point of contact?