DIY-chains of Netherlands - Jos de Vries The Retail Company study trip

From 26 to 29 October 2009 Russian retailers were on a business seminar to DIY-chains of the Netherlands.
Business tour was organized by design-bureau Jos de Vries The Retail Company. During the trip we talked with leading DIY representatives and visited the shops. Here we would like to share our observations with you.

About the Dutch DIY market
Market of DIY shops in the Netherlands is considered to be one of the most competitive in Europe. Annual turnover of the country's DIY market is about 10 billion Euros. There more than 450 only chain supermarkets and hypermarkets. And this is on the area slightly larger than the Moscow region and with the population of 17 million people. The situation makes the chains constantly monitor the actions of competitors and to change accordingly. However the retailers who communicated with us say that lately the chains are looking more at each other and not on the market. And difference between brands and formats, as well as between the prices becomes smaller. During the trip we saw these approaches at work.
There are a few general trends: the Dutch DIY chains have a clear organizational structure and logistics. Small, in comparison with Russia range, up to 20,000 items. On the shelves are just the better selling positions. Minimal storage space - to store goods is too expensive, orders are done automatically and delivered with 98% accuracy.

Key players in the market:
Intergamma (Gamma chain and Karwei) 35%
Maxeda (Praxis chain and Formido) 28%
DGN (Multimate chain, Doehand, Hubo) 10%
Hornbach 5%
Other shops - 22%

No doubt that the chains will continue to change. The crisis clearly affects the situation. Experts estimated reduction in turnover by 10%. Some market players adjust the range trying to please the customer - Bicycles and TV`s were not previously included in the assortment. From meetings with managers, we realized that today it is still the price buyers are looking at. And then the best one wins!

We visited several stores of Karwei chain. The shop (see the photos) submitted by an area of 4400 sq. meters (including storage), 40 employees, average bill is 40 euro and about 2,200 customers a week.
Several years ago, the chain has made its main assortment decorative rather than constructive. Today, about 50% of the assortment is designed for decoration and home furnishing. The chain is counting on female shoppers and varies from the standard (gray shelves, quiet shades in design) to design - the black heads of racks for promotional items, bright big names of departments, a clear visualization of goods and merchandising.

The chain has 138 DIY stores, some of them have a garden center (the objects were bought from a German Marktkauf). We visited several sites including the best in the country in terms of turnover store area of 12,000 sq. + 4.000 meters square. meters garden center. In the year store serves 500,000 customers, average bill is 35 euro. Praxis differs from the other players because it has no own DC, all products come from suppliers, 4 stock employees receive 30 trucks. The store employs 150 staff, a 100 of them have full-time contract. In the sales area chain earns 1,600 euro a square meters in the garden center - 800 euro.

Gamma chain making emphasis on the sale of building materials, has opened 158 stores in the Netherlands and Belgium. We visited several sites, including the standard shop Gamma, near the city of Utrecht - the fourth largest city in the Netherlands. In the suburbs of Utrecht before the crisis very extensive building was carried out, which is now according to the prognosis for the next three years will be reduced. Shop area is 5600 square meters. It receives 425 customers a day, average bill is 47 euro. Turn of the shop assortment 2 weeks, the margin is 32%.

All the participants of a business tour liked this shop with a small sells area as well as its owner. Chain Hubo operates 200 stores and the work is built on the principle of co-operative union. The central organization makes purchases for the chain and receives the bonus on volume. The chain has dozens of shops, but also private entrepreneurs. They buy the main range from the parent organization and pay 4000 euro per year as a contribution. THE shop we visited has two floors, 800 square meters and is located in a small village, with 15,000 inhabitance. On the first floor of the entire range of Hubo - hardware, spare parts for tools, paint, corners, etc. It is believed that if the master requires a pair of screws Hubo is ideal store for him. Competitors do not sell screws individually. On the second floor the owner arranged its range and services - kitchens, furniture, built-in wardrobes and promotion services for installation, painting, etc. In addition to trading activities, the owner of the shop provides services for painting, maintenance and repair of buildings, cutting wood, and has established links with various specialists to repair.

German chain Hornbach - DIY-the only foreign player in the Netherlands. Now in the country 9 hypermarkets are working. Thanks to the advertising, the buyers got the impression that this is the cheapest DIY shop. In practice this is not always the case. Nevertheless, during our visit there were a lot of buyers.
Hornbach is closest to Russia's DIY shops concept - a wide range 30-40.000 articles, with a high-rise storage racks of commodity stocks. There are several unique features. Trade Hall is divided into 3 parts: immediately after the entrance to the center - a decorative range of products, the right side of the shop - range of construction (and, if a customer buys a large batch or special large door it will be delivered on the special truck to his car to the parking). Left to the building an open garden center is adjusted.

According to our observations, today more than ever the client is focused on price when choosing store. Dutch DIY market is highly saturated with stores. Just in a radius of 5-6 km a buyer finds a competing store, if it is something he disliked in the first. So things are going better for chains that offer an interesting variety and good price.

Irina Bolotova
Jos de Vries The Retail Company


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David said...

Strange that you comment the Dutch sector is very competitive. I find prices much higher than the UK where I come from, limited ability to compare prices and buy on the internet and then the exact same products at the exact same prices at each of the main brands.

Likewise I don't see any branches closing with the economic slow down, and little differentiation in the products or services offered. For example in the UK some were more retail oriented, with staff who knew nothing about the products, and some were more small business and bigger project oriented, with staff who were more competent on advising. Prices were also different and most sold a lot on-line / had prices taht could be looked up.

My conclusion was then that this market in the Netherlands was a bit of a cartel, uncompetitive with very tired retail formats. My guess was that this was due to restrictive planning permission and the locals blocking out foreign competitors looking to open up in Holland.

Would love to hear more about how you came to the conclusions that this market was very competitive. From your report it would seem that some of my assumptions are wrong.

Look forward to your reply. Thanks!

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