Sean Milmo05.12.06
Manufacturers and retailers of DIY paints in Europe are now under even greater pressure to rethink their strategies in light of growing evidence of a shift in attitudes to home decorating among consumers.
DIY sales are dwindling in some key European markets, partly as a result of economic conditions but also because increasing numbers of people are bringing in outsiders to do their decorating for them. The future is looking particularly bright for the professional decorator in Western Europe.
Consequently, paint producers and retailers, particularly the big DIY chains, are in some cases having to reorganize their marketing activities and restructure their distribution channels.
"The biggest area of change at the moment in the decorative paint market is distribution, both among the paint manufacturers and the retailers," said Louis McCulloch, a partner in James Consulting, Dorking, England.
"On average, across Western Europe, approximately 60% of decorating is performed by professionals with the remainder being DIY," he explained. "The professionals are now increasing their share. It is a gradual rather than dramatic change. But it does mean that both the paint producers and the retailers are wanting to do more to have a presence in the professional sector."
Some of the large paint manufacturers have been stepping up the expansion of their networks of localized decorative paint outlets for professionals. Late last year Akzo Nobel continued a series of acquisitions of distributors in Germany and neighboring countries when it acquired the German wholesalers Wilhelm Lange Wabern and Farbe-Lange, both specialist suppliers to professionals.
Sigma Kalon integrated last year its three distributors of decorative paints to the French trade sector into a single network with the name of Le Comptoir Seigneurie Gauthier. It has 180 outlets, the largest in France, selling the top-range brand of Seigneurie, the value-for-money Peintures Gauthier and the protective coating range Freitag.
Paint producers have also been attempting to set up closer links between householders and professional decorators. Akzo Nobel has been pursuing a strategy in some markets of BIY-Buy it Yourself. Consumers are encouraged to purchase paints to be applied in their homes by professionals.
Sigma Kalon has introduced a scheme in the Netherlands, where DIY sales in the five years to 2004 fell by 21% by volume and 15% by value, under which professionals come to people's homes to advise them on interior decoration.
"The professional does not necessarily do the painting but helps the householder devise a color scheme and then choose the right paints for the job," explained a Sigma Kalon official. "The scheme makes up for the lack of adequate advice available to consumers in many DIY stores and encourages them to do more decorating than they might otherwise have done."
In the retail sector, the large DIY stores are continuing to increase revenue by taking sales away from the smaller independents, particularly in southern Europe where retailing is more fragmented than in the northern part of the region. However, DIY stores are also seeking growth in sales to professionals, usually through the creation of specialist outlets and also by setting up hybrid stores to serve both the professional and the serious DIY enthusiasts.
In the UK B&Q, the country's largest DIY chain with a 24% share of the market, has been offering in a pilot trial decorating services at some of its stores to try to persuade more people to undertake major projects in their homes.
A recent survey of home improvement in the UK by the mortgage bank Halifax found that schemes like fitted kitchens and bedrooms and new bathrooms have been slipping in popularity.
"When people are thinking of buying a kitchen or bathroom we are offering to arrange to have the decorating done for them," explained a spokesman for Kingfisher, B&Q's owner.
B&Q is also starting to establish in the UK a network of stores for professionals. "DIY is our core business but we have to recognize there is faster growth in the professionals sector at a time when there is an increasing number of consumers who are cash rich and time poor," the spokesman added.
In France, where Kingfisher's DIY Castorama chain is also a market leader, the company has been boosting sales by enlarging its network of Brico Depot outlets which provide large volumes but a limited range of essential products for both professionals and the serious DIY devotee.
"Brico Depot is a low-cost operation with simple stores which concentrate on being in stock, in volume and with the best possible prices," said Gerry Murphy, Kingfisher's group chief executive.
The forging of closer ties between the DIY and professional segments has offered opportunities for specialist suppliers in the construction market to move into the consumer sector. In the UK Travis Perkins, a leading distributor of construction materials, recently acquired the Wickes DIY retail chain.
"The attraction of the DIY market for building material suppliers is that despite its slower growth it provides cash up front," said McCulloch. "In the market for professionals many of the products have to be provided on credit."
In both the UK and France, DIY sales in recent years have been relatively buoyant. But now the bubble appears to be bursting. The UK repair, maintenance and improvement market for homes has fallen to its lowest level for 10 years, according to the country's Office for National Statistics. Figures from the Banque de France show DIY sales in the country slowing to an annual rate of 0.8%, the lowest for over 12 years.
Despite sluggish DIY sales and a large aging population in Germany, the increase in business by the German professional operators has been less noticeable than in some other countries in Western Europe. Instead the slow growth has given the owners of DIY megastores, like Hornbach, an opportunity to increase their share of total sales at the expense of independent shops.
While the decorative market has been faltering in Western Europe, it has been booming in Eastern Europe. Decorative paint sales in Poland increased approximately 80% in volume in the first half of the current decade, while in Russia the rise has been even faster.
Due to the influence of the communist era on the ways houses are maintained, the long-term trend is the opposite to that in Western Europe.
In Russia, for example, there has traditionally been little scope for DIY because homes were owned by the state which was responsible for the maintenance, according to Murphy of Kingfisher, which is planning to open 10-15 DIY stores in the country.
As a result, Russian householders tend to hire professionals to do decorative and other work. But Murphy expects that Russian DIY sales will grow as consumers gain sufficient confidence to do home improvement jobs themselves.
DIY sales are dwindling in some key European markets, partly as a result of economic conditions but also because increasing numbers of people are bringing in outsiders to do their decorating for them. The future is looking particularly bright for the professional decorator in Western Europe.
Consequently, paint producers and retailers, particularly the big DIY chains, are in some cases having to reorganize their marketing activities and restructure their distribution channels.
"The biggest area of change at the moment in the decorative paint market is distribution, both among the paint manufacturers and the retailers," said Louis McCulloch, a partner in James Consulting, Dorking, England.
"On average, across Western Europe, approximately 60% of decorating is performed by professionals with the remainder being DIY," he explained. "The professionals are now increasing their share. It is a gradual rather than dramatic change. But it does mean that both the paint producers and the retailers are wanting to do more to have a presence in the professional sector."
Some of the large paint manufacturers have been stepping up the expansion of their networks of localized decorative paint outlets for professionals. Late last year Akzo Nobel continued a series of acquisitions of distributors in Germany and neighboring countries when it acquired the German wholesalers Wilhelm Lange Wabern and Farbe-Lange, both specialist suppliers to professionals.
Sigma Kalon integrated last year its three distributors of decorative paints to the French trade sector into a single network with the name of Le Comptoir Seigneurie Gauthier. It has 180 outlets, the largest in France, selling the top-range brand of Seigneurie, the value-for-money Peintures Gauthier and the protective coating range Freitag.
Paint producers have also been attempting to set up closer links between householders and professional decorators. Akzo Nobel has been pursuing a strategy in some markets of BIY-Buy it Yourself. Consumers are encouraged to purchase paints to be applied in their homes by professionals.
Sigma Kalon has introduced a scheme in the Netherlands, where DIY sales in the five years to 2004 fell by 21% by volume and 15% by value, under which professionals come to people's homes to advise them on interior decoration.
"The professional does not necessarily do the painting but helps the householder devise a color scheme and then choose the right paints for the job," explained a Sigma Kalon official. "The scheme makes up for the lack of adequate advice available to consumers in many DIY stores and encourages them to do more decorating than they might otherwise have done."
In the retail sector, the large DIY stores are continuing to increase revenue by taking sales away from the smaller independents, particularly in southern Europe where retailing is more fragmented than in the northern part of the region. However, DIY stores are also seeking growth in sales to professionals, usually through the creation of specialist outlets and also by setting up hybrid stores to serve both the professional and the serious DIY enthusiasts.
In the UK B&Q, the country's largest DIY chain with a 24% share of the market, has been offering in a pilot trial decorating services at some of its stores to try to persuade more people to undertake major projects in their homes.
A recent survey of home improvement in the UK by the mortgage bank Halifax found that schemes like fitted kitchens and bedrooms and new bathrooms have been slipping in popularity.
"When people are thinking of buying a kitchen or bathroom we are offering to arrange to have the decorating done for them," explained a spokesman for Kingfisher, B&Q's owner.
B&Q is also starting to establish in the UK a network of stores for professionals. "DIY is our core business but we have to recognize there is faster growth in the professionals sector at a time when there is an increasing number of consumers who are cash rich and time poor," the spokesman added.
In France, where Kingfisher's DIY Castorama chain is also a market leader, the company has been boosting sales by enlarging its network of Brico Depot outlets which provide large volumes but a limited range of essential products for both professionals and the serious DIY devotee.
"Brico Depot is a low-cost operation with simple stores which concentrate on being in stock, in volume and with the best possible prices," said Gerry Murphy, Kingfisher's group chief executive.
The forging of closer ties between the DIY and professional segments has offered opportunities for specialist suppliers in the construction market to move into the consumer sector. In the UK Travis Perkins, a leading distributor of construction materials, recently acquired the Wickes DIY retail chain.
"The attraction of the DIY market for building material suppliers is that despite its slower growth it provides cash up front," said McCulloch. "In the market for professionals many of the products have to be provided on credit."
In both the UK and France, DIY sales in recent years have been relatively buoyant. But now the bubble appears to be bursting. The UK repair, maintenance and improvement market for homes has fallen to its lowest level for 10 years, according to the country's Office for National Statistics. Figures from the Banque de France show DIY sales in the country slowing to an annual rate of 0.8%, the lowest for over 12 years.
Despite sluggish DIY sales and a large aging population in Germany, the increase in business by the German professional operators has been less noticeable than in some other countries in Western Europe. Instead the slow growth has given the owners of DIY megastores, like Hornbach, an opportunity to increase their share of total sales at the expense of independent shops.
While the decorative market has been faltering in Western Europe, it has been booming in Eastern Europe. Decorative paint sales in Poland increased approximately 80% in volume in the first half of the current decade, while in Russia the rise has been even faster.
Due to the influence of the communist era on the ways houses are maintained, the long-term trend is the opposite to that in Western Europe.
In Russia, for example, there has traditionally been little scope for DIY because homes were owned by the state which was responsible for the maintenance, according to Murphy of Kingfisher, which is planning to open 10-15 DIY stores in the country.
As a result, Russian householders tend to hire professionals to do decorative and other work. But Murphy expects that Russian DIY sales will grow as consumers gain sufficient confidence to do home improvement jobs themselves.
