British retail giant Kingfisher plans to go about its DIY retail business in China with a new approach, according to an article in the Financial Times.
The company's CEO Ian Cheshire told the newspaper that big-box DIY "is not the model for China," which has proven difficult for DIY retailers to gain acceptance. The international retailer is trying a showroom format targeting the do-it-for-me customer.
Two years ago Kingfisher closed 22 of its DIY stores in China. It now operates 40 stores in China.
Atlanta-based Home Depot also recognizes Chinese resistance to western-style DIY habits, and it too has closed a handful of stores over the past two years, cutting its presence there to eight locations. In February, Home Depot announced an effort to focus its China business on select, high-growth markets, especially Tianjin and Xi'an.
Comments
Post a CommentIt took far too long for
It took far too long for Kingfisher and HD to recognize that this market is different and requires core re-thinking. While the goal of improving living conditions is similar to western economies, the fact is that China jumped over many of the steps that led to Big Box DIY in the west.
It was difficult to make this argument ten years ago when those in power to make decisions on investments never left their comfort zone, even when visiting China. They stayed in exclusive western style hotels, took tours of factories and ancient tourist attractions but never investigated Chinese life. Never set foot in a real Chinese home.
In Shanghai or Shenzhen for example, for every two income family able to afford a condo, there are three or four, legal or illegal workers happy to do anything for $1 per hour. Because condo owners make as much as $40.00 and hour combined and work 60 to 70 hours each per week, including side jobs, they do not see a value in sacrificing that $39 and hour differential for the "pleasure" of doing it themselves.
One of the answers is to have the China National Builder Council establish much needed building codes and train the skilled tradesmen to build according to those codes. In another ten years after codes are written into local law, the plumbers will make more than the cube riders, just like here in the US and those same cube riders will clamor for someone to show them how thye can Do It Themselves.
The argument for Showrooms over DIY big box was made to the HD execs from the inside in 2002 and again in 2008 to Kingfisher from the position of a supplier. Several years and millions of dollars invested later, these two extremely well capitalized and talent laden companies are finally believing the facts on the ground.
While it is tough for their stakeholders that they wasted the money,the real shame is they gave the Chinese investors who knew the market, ten years to overcome K.F. and H.D.'s only advantage; money earned in their own markets.
It will be amusing to see the next ten to twenty year cycle when the Chinese Showroom Home Improvement Retailers try to bring their model to the US and Europe. I am confident they will make the same kind of mistakes.
This is a case where the
This is a case where the comment is more interesting than the article that led to the comment. Thank you for posting this.