EUROPEAN DIY RETAIL ASSOCIATION

DO-IT-YOURSELF

REPORTby

DO-IT-YOURSELF

REPORT

The retail experience hasn’t really changed much in 200 years.

But today, there are several important and rapidly evolving transformations taking place in the way retailers and their customers interact. Taken together, these new develop-ments are revolutionising the way we think about the shop-ping experience in Do-It-Yourself or home improvement.

Most noticeably, innovation and technology is permanent-ly altering how we shop every day.

Interactions between the customer and retailer are no lon-ger simply confined to face-to-face transactions but now take place across a range of physical and digital platforms and devices.

As customers become used to making purchases across different channels – face to face, on a mobile phone, on a tablet or PC, so they are also experiencing an empow-erment in what, how, when and where they choose to shop.

In this short report, EDRA looks at some of the changes taking place in the home improvement sector and what they mean for retailers and customers alike.

EDRA DIY REPORT 1

INTRODUCTION

EUROPEAN DIY RETAIL ASSOCIATION

General SecretaryJohn W. HerbertAn der Rechtschule 1-350667 CologneGermanyTel: +49 (0) 221 2705 9555email: herbert@edra-online.org

Director of European AffairsAlisdair GrayEDRARue de Boetendael 49Brussels 1180BelgiumTel: +32 473 251 532email: gray@edra-online.org

TEAMTEAM

Executive AssistantMarina MinklerAn der Rechtschule 1-350667 CologneGermanyTel: +49 (0) 221 2587 9588email: minkler@edra-online.org

Corporate Social ResponsibiltyRay BakerTel: +44 (0) 7774 110644.email: baker@edra-online.org

Newsletter and WebsiteCatherine Morganemail: morgan@edra-online.org

CUSTOMERS WANT MORE CONTROL; AND THEY AREGETTING IT Already, the DIY customer is often highly invol-ved in the purchasing decision. DIY demands a level of understanding of the product, how it is used and whether the customer has the skills to properly handle it.

As a result, the physical store has always played a particularly important role. When a consumer ur-gently needs a product, they are unlikely to want to make an online purchase when their need is immediate.

But change is taking place. In Germany, amongst the top three largest DIY retailers, one is an on-line retailer with no physical store presence. A growing number of customers are content to only purchase DIY products online, particularly amongst the male population.

But instead of running away from the competition, retailers are embracing it, by giving the customer more control, and convenience in their shopping experience. And they are doing this by deploying new technological innovations in other parts of the customer journey.

SETTING THE SCENE:

HOW IS RETAIL CHANGING?

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So get used to accessing the entire store inventory with an iPad, using it to browse the store and then make a purchase, and have the product shipped to your home, all while you’re in the store itself.

This will be an entirely new way of shop-ping, merging all of the benefits of the online store with the immediacy of the physical store environment.

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TECHNOLOGYIS CHANGINGEVERYTHING

TECHNOLOGYIS CHANGINGEVERYTHING

INFORMATION & KNOWLEDGE

Being empowered isn’t confined to simply purchasing goods, it also applies to greater demand for information about products. In 2015, retailers are serving a better-infor-med and educated customer base, with easy access to information, who tend to be more demanding and inquisitive about the products they buy.

This has implications for product label-ling and traceability, ensuring retailer due diligence systems are robust and sound, with intimate knowledge of the supply chain that can be provided to the customer quickly and clearly. Similarly, review web-sites, price check apps, and social media will also grow in popularity and trust.

PERSONALISATION

Customers want a greater degree of per-sonalisation; the creation of a more indivi-dual shopping experience tailored to the situation the customer finds themselves in – what is the weather like outside, the time of day, what did they purchase last time?

Using beacons within stores to identify mobile phone IDs and linking this with a customer’s online data profile creates the link between the physical and online store. The retailer will able to send spe-cific notifications to a customer’s phone directing them to an offer that matches their needs at a given time. In a sense this is like a return to retail’s roots, when a shopkeeper was on personal speaking terms with his or her customers, but on a massive scale.

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Me route, hiring in professionals or asking their parents to fix their homes.

In the UK, research suggests that any-thing from rewiring a plug to unblocking a sink can prove too much of a challenge for many under 35s. This is not a univer-sally shared trend in the whole of Europe though. In Finland, retailers see young peo-ple doing more in the home, conscious of the ongoing recession and more careful in how they spend their money.

DEMOGRAPHICS

Retail in 2015 will continue to be driven by the needs and preferences of two pro-minent generations: the baby boomers (in their 60s – 70s) and millennials (18 - 34 year olds).

Baby boomers will need an easier shopping experience; this could include changes to store layout, such as areas for people to sit down, larger in store signs and clearer pa-ckaging and labeling.

A GROWING SKILLS GAP

A broader, and perhaps even more pro-found change between these age groups is a generational DIY skills gap between the over and under 35s, between homeow-ners and renters. Younger consumers are now more likely to go down the Do It For

EDRA DIY REPORT

DIY IS FOREVERYONE

DIY IS FOREVERYONE

DESTINATION STORES

DIY retailers are adapting to a changing world with softer concepts, more space for home furnishings in place of construction products, electronic screens to illustrate products, more accessible garden sections and decorating zones.

SOCIAL MEDIA

Under 35s are the largest group of smart phone users, these customers want things quickly, as the "always connected" consu-mer expects fast answers to questions. SMS or web alerts, 24-7 telephone hot-lines, and using social media to provide ins-tant information.

RETAIL BECOMESENTERTAINMENT

It is a more fun environment, placing more emphasis on theatre and entertainment – ideas that the online store cannot replicate.

Technology won’t only be about transac-tions, but also about keeping customers in the store, and to do that locations will seek to create pleasurable, engaging and perso-nal experiences.

Their buying decisions are strongly influ-enced by social media and are receptive to marketing campaigns over these platforms as well. Beyond marketing, the next step will be to start shopping over social media.

RETAIL BECOMESENTERTAINMENT

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BIG DATA

Providing truly personalized experiences will only be possible if retailers continue to invest in Big Data – which is the backbone behind a personalized retail experience.

Gathering as much information about the behavior, history, and whereabouts of consumers as possible and using that in-formation to implement dynamic pricing, personalized recommendations, and shop-per-specific discounts.

SUSTAINABILITY

Rapid innovation in retail packaging will continue, with circular economy principles of reducing the amount of materials used, increasing product shelf-life, reducing the amount of energy needed, increasing the use of recycled materials becoming more mainstreamed.

Consumers are also more likely to choose products based on their personal values, and will expect ethical products to be simi-lar in price, while also expecting retailers not to stock products they cannot morally justify.

The decision to give one’s business to a re-tailer is based on prior information and on the relationship built up over time, and a strong sustainability story is an important aspect of retaining loyalty.

LOYALTY

As retailers compete more intensively for customers, so loyalty has risen up the sca-le of priorities. Retailers will aim to build loyalty by providing highly personalized services. Location-specific marketing, with store offers arriving on mobile phones while the customer is browsing, replacing loyalty cards with customized rewards and incen-tivising customers to share information.

Better trained staff will evolve more into positions of an advisor or problem solver, and in doing so build stronger relationships with customers. This is all part of moving away from the points-for-purchases model into a more personal approach to rewarding customers.

SUSTAINABILITYFOR THE EARTH& CUSTOMERS

SUSTAINABILITYFOR ThE EARTH& CUSTOMERS

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THE PROSPECTS FOR 2015 AND BEYOND

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So clearly there are many new and exciting things happe-ning in the world or DIY retailing.

The backdrop to this shopping revolution is however, an economy struggling to shake off the aftermath of the finan-cial crisis. Continued uncertainty in the Eurozone is hampe-ring a prolonged return in consumer confidence. The DIY market will not fully recover until stable growth returns.

The sector is highly cyclical, and trends in home improve-ment industry are closely linked with the performance of the housing market.

To increase sales in this market, retailers will need a flexi-ble supply chain allowing stores to hold the right products at the right time; a well known and trusted online offer and good reputation in customer service. We should also expect to see a growth in private label which holds stron-ger margin opportunities and for consumers to focus on durability and value.

Successful DIY retailers will be those who best under-stand customer buying patterns and use this knowledge to create a unique point of difference: an easier shopping experience and a wider offer that excites the customer, providing a logical reason to invest in the home.

ABOUT US

The European DIY Retail Association (EDRA) is an inter-national organisation representing home improvement retailers across the European Union. Our membership includes 126 retailers operating over 18,000 stores in 97 countries. Our members generate over 1.2 million jobs and total revenues of approximately €208bn.

EDRA National Association Members EDRA Retailer Members

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