HOME, GARDEN, AUTO
Retail sector overview and key trends
June 2013
1
A Service
NIKLAS REINECKE
Associate Analyst
Contents
1. Sector Overview
2. Key Trends
3. Outlook and Implications
4. Further Reading
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1. Sector Overview
1. Summary: Recovery faltering amid continued economic fragility
The Home Depot has retained its position as the global market leader in the
Home, Garden & Auto (HG&A) sector, although sales have been stagnant
since 2007 as a result of the weakness of the US housing market.
HG&A: Top 10 Retailers Banner Sales,
2007-2012 (USD bn)
90
2007
5.0
2012
4.5
70
4.0
60
Net Profit (USD mn)
Banner Sales (USD bn)
80
HG&A: Top 3 Retailers Net Profit,
2007-2012 (USD mn)
50
40
30
20
3.5
3.0
2.5
2.0
1.5
10
1.0
0
0.5
Home Depot
Lowe's
IKEA
0.0
2007
Source: Planet Retail
Source: Planet Retail
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2008
2009
2010
2011
2012
1. Sector Overview: Investments in IT and multi-channel key
The top HG&A retailers are to invest in IT and multi-channel retailing in
2013. Given the economic backdrop, particularly in parts of Europe, retailers
are becoming more experimental with their store concepts.
Home Depot to improve customer service, setting a 60% target
of payroll spend to be allocated to customer-facing store roles.
Investments in information technology and supply chain (such
as through the integration of online and instore data, pricing
and assortment planning processes).
Investments in multi-channel retailing, e.g. “Buy Online Pickup
In-Store” (BOPIS) capability in 2011, which was extended with
the Buy Online Return In Store (BORIS) and Buy Online Ship to
Store (BOSS) initiatives in 2012.
Lowe’s plans to reduce the number of future store opening
plans and consolidate the store network. Focus is on smaller
outlets in underpenetrated communities.
Expansion of online offering, with potential for e-commerce to
account for 5-10% of sales by the end of 2016.
Lowe's is aiming to invest in instore technology to improve
customer experience and drive its multi-channel approach. The
IT initiatives will include assortment optimisation on store level
as well as mobile POS with e-receipts.
IKEA
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The long-term target is 50% of SKUs being common to all retail
operations. By end of 2011/2012 only 8% of SKUs were
common to more than one business and sourced from a
common supplier.
IKEA is to accelerate its store opening plan to drive growth,
starting in fiscal 2014/2015. The retailer will increase the pace
of new openings to 20-25 per year, first and foremost in
existing markets.
Upgraded B&Q online offer, including 20,000 extra products for
home delivery, while B&Q’s UK store estate is to be right-sized.
Expansion in Asia, especially China, has high priority, as IKEA
sees this region as holding high future growth potential.
Open 68 new stores (including 50 Screwfix outlets in the UK)
with internationalisation to be re-evaluated.
IKEA is to make a renewed push into online shopping with more
products and cheaper distribution.