Wickes will be the only retailer of the Big Three in DIY – Wickes, Homebase and B&Q – to gain market share in 2017, as its comparatively advanced online offer enables Wickes to reduce physical space sooner than competitors and helps it capitalise on this channel’s growth. While Homebase and B&Q have been forced into mass closures, Wickes’s proactive approach will help it grow in 2017.
Wickes benefits from online channel growth and rightsizing store estate
Wickes’s early adoption of online means its more sophisticated offer compared to rivals resonates with online shoppers. Wickes achieved online sales of over £100m in 2016, equating to approximately 8.6% of sales, above that of both B&Q, which stood at 3% by July 2016, and Bunnings. With online revenue in DIY & gardening set to grow by 43% between 2017 and 2022, Wickes’s investment in this channel, which includes launching a new website and click & collect in 2014 and offering one-hour delivery slots for online orders in October 2016, leave the retailer well-placed to capitalise.
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Wickes’s focus on driving online has also enabled it to be proactive in rightsizing its store estate, when it announced in September 2011 that it was to reduce space by 1.4m sq ft through subletting to other retailers or returning space to landlords. This led to its average store size falling from 26,147sq ft in 2011 to 24,917sq ft in 2016. Reducing space early has enabled Wickes to continue to expand, while B&Q has closed 60 branches since February 2015 and Homebase exited 61 units between February 2014 and 2016.
Wickes sees the benefits of store refurbishment
Wickes has preserved sales by not being forced into store closures. The Travis Perkins Consumer division, which comprises Wickes predominantly (but also includes Toolstation and Tile Giant) grew like-for-like by 2.9% for the three months to March 2017, marking the 14th consecutive quarter of like-for-like growth for the division. This is an impressive feat considering it was going up against a comparative of 7.3%, which included the pivotal Easter weekend.
The retailer has been able to focus on refurbishment, with 62 units being refurbished by the end of 2016. A key focus of this new format is improving the kitchen and bathroom displays, which supported growth to March 2017 in this area. This was a strong performance given the weak consumer confidence ahead of the activation of Article 50 and the lack of momentum in the housing market. Wickes’s refurbishment programme will continue into 2017 and contrasts sharply with Bunnings, where only two stores have been converted.
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Bunnings remains an emerging threat
The emergence of Bunnings is something that Wickes must monitor, as both retailers go after a similar, knowledgeable DIY customer with an emphasis on price. Over the three months to March 2017, Bunnings also recorded a like-for-like increase with customer transactions up 2.2%. However, sales of £245m in the first three months of 2017 are significantly down on 2016 and it will take time to convert its portfolio into Bunnings. Wickes’s predominantly own-brand ranges will insulate it from Bunnings’s Price Promise (which beats competitor prices of branded items). Furthermore, Wickes’s more sophisticated online offer, in contrast with Bunnings lack of interest in this channel, will hold off the new entrant.
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