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UK Home Improvement Sector. B&Q, Argos and Homebase Sales.

argosThe 2008 economic crisis that has affected most of the worlds markets also had its impact on the Do­it­yourself (DIY) multiples market in the U.K. over the last six years. The overall economic and construction declined in the U.K. DIY market made the situation pretty unstable even for the market leaders.

Currently, the DIY multiples market in the U.K. is considered a relatively compact one, taking into account the fact that it is being controlled by three major companies – B&Q Plc owned by Kingfisher Plc, Homebase Ltd, which is a subsidiary of Home Retail Group, and Wickes, which is a daughter company of Travis Perkins Plc.

The Do­it­yourself market in the U.K. as estimated to 6.8 billion pounds last year due to the impact of the overall economic downturn in the country. The market was considered comparatively static since the beginning of the worlds economic crisis in 2008 after a reported a 4% fall in the same year.

The demand for main home improvements, especially renovation or replacement of bathrooms and kitchens as well as customer spending and confidence were the main DIY market drivers over the period between 2008 and 2014 in the country. In addition, more simple DIY projects were preferred over the period, and customers became more focused on the use of the multiples by tradesmen.

After the 4% market value fall in 2008, the DIY multiples market in the U.K. was estimated to a little over 7 billion pounds in 2009, marking only a 1% increase in comparison to its market value in 2008. The performance of the entire business segment was considered to be undermined by declining house prices, low customer confidence as well as a relatively low level of house moves. Still, the market for DIY products and Home Improvement services has become more and more competitive, due to the fact that low consumer interest led to fiercer rivalry between the key market players.

All this, combined with the unstable weather conditions and the fact that the housing market was depressed led to narrowing the DIY market in the country, which citizens are known for their love towards DIY home improvement projects, which they prefer to carry out by themselves.

The industry blamed literally everything – from unseasonal weather conditions to more general economy impacts, but what was more disturbing was the fact that there were some doubts that British customers have been slowly but irreversibly falling out of love with the DIY industry.

This unfavourable conditions made the companies operating at the DIY Multiples market in the U.K. to try cutting their operating costs. Moreover, they also took measures that were focused on debt reduction, including cutting their capital expenditure and increasing the efficiency in terms of store layout.

Last year Mr. Neil Saunders, who is the managing director of Conlumino even commented on the situation for the RetailWeek, saying: “Consumers look unfavourably on DIY, either because they lack the skills to undertake various tasks or they simply lack the inclination to get involved.”

To make the outlook even worse, one of the leading companies in the U.K.s Do­it­yourself multiples market – Home Retail Group, which is the parent company of Argos and Homebase – reported fifth consecutive profit decline in 2013 due to the transformation through which the industry went through. The company reported that its profit before tax fell by 23% and reached 99 million pounds in the twelve months ended March 2nd 2013. Home Retail Group also explained that its revenues were broadly flat at 5.48 billion pounds.

Kingfisher Plc, which holds control of another main participant on the U.K.s DIY market – B&Q, also reported a profit decline in 2013, saying its performance was hit by both lower customer demand and unseasonal weather conditions in the country. Currently, the company is the largest

DIY retailer on the territory of Europe, but revealed that weak consumer confidence affected its results not only in the U.K., but also in other main markets.

The consumer confidence was reported to have started to slowly increase towards the end of 2013. The overall activity of the market was also encouraged by improving weather. In addition, the countrys economy indicators became more stable, which was a reason to believe that the situation is getting better for the DIY multiples market.

In 2014, however, the U.K.s economy remained vulnerable to negative impacts but most analysts share a belief of persistent recovery, especially when it comes to the housebuilding and maintenance industry. The customer confidence and spending also marked an increase. The market was benefited by the improvement in “big ticket products” such as kitchen and bathroom installations. The overall performance of the market was also improved in the garden products sector.

Last year the Chief Executive Officer of Kingfisher group Mr. Ian Cheshire projected that the housing transactions market, and respectively, the DIY multiples market may not be too far off from improvement. As reported by the RetailWeek, Mr. Cheshire commented: “The housing market is an important swing factor ­ if you get a feeling there are more skips in the street and more signs to sell and people get a little bit more confident about the value of their home then they are much more likely to say ‘OK, the pressure is off’. It might be the swing factor this year.” Lately, the U.K. DIY multiples market has been undergoing through some significant changes, especially over the last six years since the 2008 economic crisis. Its performance over the current year has been greatly determined by the trend of store rationalisation as a product of fierce rivalry or financial restructuring of the participants on the market.

In addition, the overall performance of the industry has varied between different home products and services over the period. Still, the garden and leisure remains the biggest sector within the Do­it- yourself multiples market in the U.K. Lightning and electrical, houseware and hardware, building materials and decorating also remain important to the entire business segment.

Some research and analysis of the market trends show that in the short term customers may still prefer carrying out DIY project by themselves, but in medium and long term their confidence is likely to improve. This, on the other hand, is expected to lead to a larger number of home improvements and restructuring.

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