Castorama France. April 2008

Transcription

1 Castorama France April 2008

2 The History of Castorama Number of stores stores 7 Italia Briker Brico Dépot 32 stores transferred to BD Poland Castorama actual Castorama + stores transferred to BD 2

3 A winning concept until the end of the 90 s, which no longer fits the market in 2002 Brand image Historic Strengths Strong brand awareness : legitimacy (as a pioneer, a leader), seriousness Still leader in overall Brand Capital Consequences Masculine & technical identity In a market undergoing feminisation and tending towards decorative & showroom Communication Range / Products /Prices Remember Chez Casto, y a tout ce qui faut ( At Casto s, there s everything you need ) Leader in Hardware Leader in Gardening Competitive in Building Wide range of products Quality Has not followed the evolution of the clientele, which has moved on from just home repairs to home improvement projects Weaker Decorative Weaker Showroom Lack of clarity in the structure of the ranges Bad price positioning Stores/ Merchandising Fast development International development Heterogeneous store portfolio Lack of investment and maintenance 3

4 In this context, in 2003, it was decided to change our way of running the business Use the strength of the Castorama brand and its know-how Take into account the market evolution and customer trends : Development of a more feminine market (decoration, showroom) Development of discount retailers (reinforce price issues since 2002) Transform the business model and reposition Castorama : Price Offer Organisation Economic model In order to not simply regain lost ground but move forward and become again a brand of reference on the home improvement market 4

5 beginning a major and ambitious transformation programme 6 strategic main lines : Revenues Evolution of Products and Services Offer Productivity CPR Price Efficiency Store Investment Programme Supply Chain 3 phases : Structuring the organisation, the teams Re-acquisition of the basics through strong actions Adjustment, optimisation and continuity 1 aim : Launch ambitious medium/long term projects while upholding business performance versus

6 needing a high level of investment Supply Chain Store Investment Range Price CPR Efficiency Redefine principles and organisation design INVESTMENT Return to basics / High Investment RETURN Improvement / Return on Investment 6

7 while upholding business performance Price 1 st on the DIY Traditional players > 100mil investment New concept 40% redeployed stores outperforming sales growth Property : 1,2billon Supply Chain x2 of m² (eg. Chatres m²) Direct from 58,2% to 50,1% New cross-dock warehouses IT roll out Product Offer 40% families of product renewed < 50% turnover 100% stores = A range /FTE / per worked hours Organisation 3% 97% +36% 86% 14% Retail Operating Profit ROP constantly superior to that of 2002 (average growth: double-digit) 7

8 The first results of the strategy are obvious 12% 10,7% 10% 8% 6% Castorama CS 6,0% 4% 2% 0% -2% -4% -6% Market Castorama CS Market Fev.-May June-Oct. Oct.- Jan. 7,8% 4,4% 4,6% 5,8% 2,5% 0,6% > > > Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Fev-08 8

9 Price A necessary investment, a rapid image improvement Redefine principles and organisation design Strong price focus: Entry price product Aggressive promotions Check on competitors CPR development Return to basics / High Investment Range restructuring: Definition of ranges Price scales Launch of catalogues Improvement / Return on Investment Margin optimisation: Own brand development Local price promotions New pricing tool Third traditional DIY player on prices A convincing price position to be maintained 9

10 Price A necessary position to maintain Negative Impact BASIC DRIVER Price Price SECONDARY BONUS Positive Impact 10

11 But price is simply not enough to make the difference in the market It is the performance of the economic model that will make the difference between retailers : Free up resources in order to invest in price positioning Develop key business to generate margin 11

12 which confirms the relevance of the strategic range programme Redefine principles Return to basics / Improvement / and organisation design High Investment Return on Investment Define strategies and align organisation: Redefinition of Product strategies (GPS) Clarification of head office and store responsibilities Build the offer and begin roll out: New product hierarchy Marketing principles ABC range Blueprints and planogrammes 1st range reviews Range roll out and optimisation: ABC range in stores Performance analysis Optimised range review 12

13 Offer A driver to accelerate performance Negative Impact BASIC DRIVER Product Product SECONDARY BONUS Positive Impact 13

14 Two main axes to develop offer 1. Offer modernity Feminisation Styles and stories Frequency of range renewals Sustainable development solutions New technologies 2. Easy access to offer Price Self-service Sales supports Own brand 14

15 Offer Improving the legibility of the offer through Own Brand Price Price OB Selection OB Core 1 st Price Old : April 2005 Quality New : April 2006 Quality Own brand sales are increasing Profitability is better with own brand products Coverage of all levels of price scales 15

16 Offer Clarification of Own Brand territories Categories 1st Price OB Core OB Selection Brands Decoration Wall, floor, windows Lighting, panelling Interior showroom Bathroom, kitchen, storage Internal carpentry Comfort Products Heating, airconditioning Water & air treatment Automation, security Exterior showroom Garden furniture, swimming pool, barbecue, lighting, external fit out Tools Hand tools, garden tools Supplier Brands Power tools Handheld drills, motorised garden tools 16

17 Offer Development of brand legitimacy : the example of paint Range restructuring Brand creation and repositioning Redefinition of Merchandising Average selling price Footfall Average transaction value Sales Feb-May 06 June-Sept

18 Offer Successful repositioning : the example of wooden flooring 2004 : Aggressive price positioning Laminate Avg Price of goods sold : -24% 2005 : Range restructuring Parquet Avg Price of goods sold : +11% 2006 : Range restructuring Parquet / Laminate Avg Price of goods sold : +4,3% Sales : Quantity : Margin : Sales : Quantity : Margin : Sales : Quantity : Margin : Create footfall and legitimacy Develop the business Trigger leadership 18

19 Offer Acceleration of the frequency of changes : the example of curtains 2005 : Aggressive price positioning and range structuring Curtains Avg Price of goods sold : -9% 2006/07 : Increase frequency of range reviews 2 collections a year Range optimisation Through homogenous merchandising Continue development of Direct Sourcing Sales : Quantity : Margin : Sales Quantity Margin Create footfall and develop business on key categories Reinforce legitimacy of the whole department 19

20 Offer Styles and stories 20

21 Offer Styles and stories 21

22 Histoire Contemporaine 22

23 Histoire Technicolor 23

24 Histoire Charme 24

25 Histoire Authentique 25

26 Sustainable development From behaviour to business Negative Impact BASIC DRIVER 89% of French people feel concerned Sustain. Devlpt 7,5Bil spent by customers on energy saving products New European legislation Sustain. Devlpt Base : customers who buy DIY products (100% ) = 970 Total: important Quality of the product 97% Health risk 94% Price 93% Environment preservation 84% SECONDARY Sustain. Devlpt BOOSTER Energy savings 83% Positive Impact Promotion 80% Origin 39% Source : Audirep jan 07, IFOP may 06 26

27 Offer Sustainable development : From behaviour to business Develop partnership Develop products Co-label : 1700 products 27

28 Offer Sustainable development : From behaviour to business R&D and advice Communication : New catalogue 28

29 Offer Sustainable development : better communication Visuel maison Eco + aide au choix 29

30 Offer Sustainable development : better communication 30

31 Store revitalisation programme : 4 new stores, 16 relocations and 13 revitalisations since % roll out 3% 13% 24% 33% 40% Average age if no action Average age of Casto portfolio

32 Economic model Cost reduction to sustain the transformation Evolution of the / FTE / worked hours % of stores Practical training +36% per worked hours 2nd target agreed in % 97% 16% 84% 48% 52% 68% 32% 84% 16% 88% 12% E-learning % staff available for customers 48,5% 53,0% 53,7% 55,2% 56,9% 58,2% Staff costs 2007 < 2002 in mil +9,7pts of staff available for customers 32

33 qui permet le développement de la productivité 2002 % magasins % /ETP / heures travaillées > 120 < % % 48% 68% 32% 84% 16% 88% 12% 97% 84% 52% FP 341,0M 346,0M 345,9M 333,4M 347,4M 375,9M % Marge Nette 41,2% 40,2% 39,6% 38,3% 38.7% 38.7% -2.5 pts vs 2002 Evolution ETP vs 2002 % Face aux clients 48,5% 53,0% 53,7% 55,2% 56,9% 58,2% +9.7 pts vs

34 Change Curve Phase 1 : 2003 Hénin Serenity Phase 2 : 2006 Englos Blindness Lucidity Concern Phase 3 : 2008 La Défense 34

35 Castorama France April 2008