Kingfisher’s struggles shows the pitfalls of nailing international retail
International success is one of retail’s holy grails but despite notable wins, Kingfisher’s results today show it is one of the most elusive of prizes.
As one senior retailer with extensive overseas experience told me, things are always going wrong in at least one important market. He questions whether it is actually possible to be successful on a truly global basis.
There is plenty of evidence to support that view. It’s not just Kingfisher that has beat a retreat from markets once seen as great opportunities like Russia and China. Tesco has too. And Walmart, which hopes to offload Asda to Sainsbury’s, is another case in point.
Global ambition is frequently spurred by the idea that there is today an ‘international consumer’ who wants the same whether they live in Swansea or Shanghai. The success of Asos, which describes itself as “a global fashion destination for 20-somethings”, is typically cited as proving that point.
While such a generation may be nascent, the particularities of place and people still matter hugely, as the travails of B&Q’s owner show. The mixed success so far of the ‘One Kingfisher’ strategy, including greater product in common across its markets, illustrates that starkly.
Kingfisher can certainly claim some advances from the strategy and it can point, as it did in its results statement, to the fact that “sales of our unified and unique ranges continue to outperform non-unified ranges”.
However, its overall performance was poor and the architect of the strategy, chief executive Véronique Laury, is to depart when a successor is found.
As Whitman Howard analyst Tony Shiret noted: “The news that Laury will be leaving the group… effectively means the company is calling time on her ambitious One Kingfisher transformation plan.”
Whether you put Kingfisher’s difficulties down to unaddressed differences in consumer tastes in various countries, generally tough conditions or the disruptive influence of the gilets jaunes protests in the important French market, the point is that international success is extremely difficult to achieve.
Gone are the days when giants could simply replicate abroad the model that brought success at home. More than product, what perhaps does unite consumers around the world is shared aspiration and behaviour.
Everybody wants a better life. Increasingly everybody is conducting more of their lives through smartphones. That’s evident from China to Africa, where pan-African etailer Jumia has grown to the extent that it is planning a Wall Street IPO that could value it at $1bn.
And while Walmart is scaling back its interest in the UK, it is upping the ante in India, where its $16bn acquisition of Flipkart shows that it is how shoppers buy as much as what they purchase that is seen as most likely to bring future success.
That same combination of aspiration, combined with the desire for convenience, speed and value is what has driven the rise of one of the big contemporary international retail success stories – Amazon.
But the ability to key into unifying behavioural patterns isn’t restricted to the new online giants. Ikea, which itself has had its ups and downs, has perhaps been more forward-looking than its rival Kingfisher.
The Swedish furniture titan is boldly nailing its colours to the mast of urbanisation, which is occurring across the world, and developing new formats in response. Similarly, Ikea initiatives such as renting furniture are driven in reflection of changes in how people live rather than just product.
Whether Ikea’s bets pay off remains to be seen, but it looks as if its ideas could tap into transforming times more than some of the shifts Kingfisher has made.
Ironically, Kingfisher owns one business that does reflect the common desire for speed and convenience – Screwfix, which can offer click and collect in just one minute.
It’s a business that has been built through intimate customer knowledge that is then executed upon with flair. That’s a foundation stone of retail success anywhere in the world.
Click here to read the original article from Retail Week.
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