Kingfisher Plc · LSE:KGF
Kingfisher — Investor Day (November 2003)
57 slides from Kingfisher's investor day presentation, November 2003
Slide 1: Investor Event November 2003
Investor Event November 2003 37
Slide 2: B&Q Presentation
B&Q Presentation Bill Whiting Chief Executive Rob Cissell Managing Director, Commercial Duncan Tatton-Brown Finance Director 38
Slide 3: Agenda
Agenda • Introduction Bill Whiting Chief Executive • Customer Offer Rob Cissell Managing Director, Commercial • Space & Infrastructure Duncan Tatton-Brown Finance Director 39
Slide 4: B&Q is bigger
B&Q is bigger 2002 SALES * (£bn inc. VAT) 3.97 3.45 B&Q Focus/Wickes & Homebase … yet with only 14.4% of RMI market in 2003 H1 *Source: GfK – 12 month to Jan 03 (includes VAT, excludes offshore stores) 40
Slide 5: And better
And better “PRICE” “RANGE” “INSPIRATION” 100 100 100 90 90 90 80 80 80 70 70 70 60 60 60 50 50 50 40 40 40 30 30 30 20 20 20 10 10 10 0 0 0 1999 2000 2001 2002 2003 HY 1999 2000 2001 2002 2003 HY 1999 2000 2001 2002 2003 HY B&Q HOMEBASE FOCUS WICKES Source: Milward Brown Tracking Survey 41
Slide 6: B&Q is the store of choice
B&Q is the store of choice Visit most often 59% 16% 11% 9% Visited last month 81% 52% 41% 32% Visited last 6 months 93% 70% 61% 59% Source: Millward Brown (6th August) 42
Slide 7: B&Q has....
B&Q has…. • more AB and female customers than Homebase • more skilled workers than Wickes • twice the building material sales of an average builders merchant • a bigger home delivery business than Next Directory 43
Slide 8: Agenda
Agenda • Introduction Bill Whiting Chief Executive • Customer Offer Rob Cissell Managing Director, Commercial • Space & Infrastructure Duncan Tatton-Brown Finance Director 44
Slide 9: Consumers are definitely changing
Consumers are definitely changing • Cash rich / time poor • Changing family types • Needs to Wants • Price still key 45
Slide 10: Our competitors are changing
Our competitors are changing • Homebase going softer • Focus Group investing in Wickes • Specialists growing stronger • Retail boundaries blurring 46
Slide 11: B&Q described as "owning" the harder end of the market
B&Q described as "owning" the harder end of the market Hard Soft Interior New garden path Services Design 6 5 4 3 2 1 B&Q heartland Projects that involve design Projects involving choices and add bulk materials, the finishing skill and touches to a knowledge home 47
Slide 12: B&Q is seen as down to earth and honest
B&Q is seen as down to earth and honest Hard Soft Interior New garden path Services Design 6 5 4 3 2 1 Functional Helping people make their homes better Recognised leader Authority Known for quality, design and style Basic Standardised Innovation Low prices As good for women as men Trade-y Honesty D
Slide 13: ... a solid foundation for growth
… a solid foundation for growth Hard Soft Interior New garden path Services Design 6 5 4 3 2 1 Functional Helping people make their homes better Recognised leader Authority Known for quality, design and style Basic Standardised Innovation Low prices As good for women as men Trade-y Honesty Down-to-E
Slide 14: B&Q proposition evolution
B&Q proposition evolution Retain core values • Low prices Becomes • Honest & trustworthy Affordable and • Innovative Accessible DIY Helping people make their homes better 50
Slide 15: B&Q = Better homes
B&Q = Better homes • Greater choice • More services • Low prices 51
Slide 16: 5 Customer Offer Levers
5 Customer Offer Levers 1. Stretch Core Markets 2. Enter New Markets 3. Create Mass Markets 4. Component Sourcing 5. CPR 52
Slide 17: Stretching Core Markets e.g. Shower Enclosures
Stretching Core Markets e.g. Shower Enclosures Shower Enclosure Market (% Volumes by Price Point) 10% 20% 51% Over £1,000 £200 - £999 70% 29% Under £200 20% B&Q Total Market Source: GFK 53
Slide 18: Stretching Core Markets e.g. Shower Enclosures
Stretching Core Markets e.g. Shower Enclosures GOOD BETTER BEST PREMIUM 2003 £129 £299 £499 2004 £129 £349 £799 £999 £1199 £2399 STOCKED SPECIAL ORDER 54
Slide 19: Improved product and proposition will drive ATV and project sales
Improved product and proposition will drive ATV and project sales Today’s volume product 2004 volume product Total Project Cost Total Project Cost £942 £1,441 Average Sale +53% Average Profit +94% 55
Slide 20: 5 Customer Offer Levers
5 Customer Offer Levers 1. Stretch Core Markets 2. Enter New Markets 3. Create Mass Markets 4. Component Sourcing 5. CPR 56
Slide 21: Entering New Markets e.g. Bedroom Furniture
Entering New Markets e.g. Bedroom Furniture GOOD BETTER BEST PREMIUM 2002 £69 2004 £69 £99 £149 £295 STOCKED SPECIAL ORDER 57
Slide 22: Bedroom Furniture Trial
Bedroom Furniture Trial 58
Slide 23: Bedroom Furniture Trial
Bedroom Furniture Trial 59
Slide 24: 5 Customer Offer Levers
5 Customer Offer Levers 1. Stretch Core Markets 2. Enter New Markets 3. Create Mass Markets 4. Component Sourcing 5. CPR 60
Slide 25: Create Mass Markets - examples
Create Mass Markets - examples STEAM CABINET AIR CONDITIOING 61
Slide 26: 5 Customer Offer Levers
5 Customer Offer Levers 1. Stretch Core Markets 2. Enter New Markets 3. Create Mass Markets 4. Component Sourcing 5. CPR 62
Slide 27: Component Sourcing Project Widget
Component Sourcing Project Widget • B&Q initiative which can be rolled out to other group companies • Taking control of supply chain, branding and quality • Minimum 20% cost saving 63
Slide 28: 5 Customer Offer Levers
5 Customer Offer Levers 1. Stretch Core Markets 2. Enter New Markets 3. Create Mass Markets 4. Component Sourcing 5. CPR 64
Slide 29: How do we deliver all of this?
How do we deliver all of this? • Growth of Services – Special Order – Financial Services – Installation Services 65
Slide 30: Rapid growth of Special Order
Rapid growth of Special Order Customer benefits from: • Dramatic increase in choice • Access to quality products • Convenience 66
Slide 31: Continued expansion of other services
Continued expansion of other services Multi Channel Financial Services 67
Slide 32: Sustainable improvement of installation services
Sustainable improvement of installation services • Customers want installation – lack time – do not trust tradesmen – lower DIY skills – risk with higher value items • Installation difficult to perfect 68
Slide 33: Customer Offer Summary
Customer Offer Summary • Clear commercial strategy – Offering greater choice – Offering more services – Maintaining low prices 69
Slide 34: Affordable Style Ads
AFFORDABLE STYLE ADS 70
Slide 35: Agenda
Agenda • Introduction Bill Whiting Chief Executive • Customer Offer Rob Cissell Managing Director, Commercial • Space & Infrastructure Duncan Tatton-Brown Finance Director 71
Slide 36: B&Q Strategy
B&Q Strategy • World class supply base • LFL growth • Reach - channels - stores • Infrastructure and capability • Efficiency 72
Slide 37: Alignment of our formats
Alignment of our formats TODAY HARD PROPOSITION SOFT HIGH PRICE SUPERCENTRE WAREHOUSE LOW 73
Slide 38: Alignment of our formats
Alignment of our formats TODAY THE FUTURE HARD PROPOSITION SOFT HARD PROPOSITION SOFT HIGH PRICE SUPERCENTRE WAREHOUSE WAREHOUSE LOW 74
Slide 39: Alignment of our formats
Alignment of our formats TODAY THE FUTURE HARD PROPOSITION SOFT HARD PROPOSITION SOFT HIGH PRICE SUPERCENTRE MINI WAREHOUSE WAREHOUSE LOW WAREHOUSE 75
Slide 40: Mini-Warehouse Proposition
Mini-Warehouse Proposition FROM TO 76
Slide 41: Mini-Warehouse Proposition
Mini-Warehouse Proposition FROM TO 77
Slide 42: Mini-Warehouse Proposition
Mini-Warehouse Proposition FROM TO 78
Slide 43: Mini Warehouse Video? Customers Talking
MINI WAREHOUSE VIDEO? CUSTOMERS TALKING 79
Slide 44: Mini Warehouse revamp programme
Mini Warehouse revamp programme • Capital investment - up to £1m / store revamp • Double digit sales uplift • 19 by end 2003/4 • 25 to 35 commencing 2004/5 80
Slide 45: Warehouse is our flagship
Warehouse is our flagship Store Visited Most Often 49 Supercentre 20 17 9 Catchments 70 Warehouse Catchments 12 9 4 Source: Millward Brown 81
Slide 46: Space optimisation in current Warehouses
Space optimisation in current Warehouses Service Desk 3 4 RETURNS 82
Slide 47: East Central Scotland - Current B&Q Stores
East Central Scotland - Current B&Q Stores Edinburgh Livingston Key Warehouse Mini Warehouse Supercentre 0 3 6 miles 83
Slide 48: East Central Scotland - Potential
East Central Scotland - Potential Edinburgh Livingston Key Warehouse Mini Warehouse Supercentre 0 3 6 New Store miles 84
Slide 49: New selling space growth...
New selling space growth… Current Store New Stores Potential Stores Warehouse 100 175 +75 Mini 8 50 +42 Warehouse Total Increase +117 85
Slide 50: Pipeline remains strong despite tougher planning environment
Pipeline remains strong despite tougher planning environment Net Space Growth 000’s Square Metres Last 5 years Next 3 years 177 = Average store 153 157 openings p.a. Warehouse 9 Mini Warehouse 6 1 9 9 8 -2 0 0 2 2 002 2 0 0 3 -2 0 0 5 Average Average Average (exc. 2001/02) 86
Slide 51: Infrastructure investments will support new opportunities
Infrastructure investments will support new opportunities • Existing delivery business £500m • National scale enables efficiency • Ability to define service level 87
Slide 52: Building our capability & efficiency
Building our capability & efficiency CUSTOMER IN TASK OUT = More Time for Customers (shop floor hours) 120 111 100 Current Next Year Future (Indexed) 88
Slide 53: Building our capability & efficiency
Building our capability & efficiency • Cost reduction • Systems Total Shrinkage • Shrinkage 2002 2003 • Working capital management 89
Slide 54: B&Q Strategy
B&Q Strategy Operating Asset Margin Turn • World class supply base 9 • LFL growth 9 • Reach - channels 9 - stores • Infrastructure and capability 9 • Efficiency 9 9 90
Slide 55: B&Q Strategy
B&Q Strategy Operating Asset Margin Turn • World class supply base 9 • LFL growth 9 = Sustainable Growth • Reach - channels 9 - stores • Infrastructure and capability 9 • Efficiency 9 9 = Improved ROIC 91
Slide 56: B&Q Presentation
B&Q Presentation Bill Whiting Chief Executive Rob Cissell Managing Director, Commercial Duncan Tatton-Brown Finance Director 92
Slide 57: B&Q Presentation
B&Q Presentation Bill Whiting Chief Executive Rob Cissell Managing Director, Commercial Duncan Tatton-Brown Finance Director 93