Kingfisher Plc · LSE:KGF
Kingfisher — Investor Presentation (June 2000)
96 slides from Kingfisher's investor presentation, Jun 15, 2000
Slide 1: e-Kingfisher briefing
eC-KING SHER briefing 1s JUNE ZO00
Slide 2: Geoff Mulcahy, Chief Executive, Kingfisher
Geoff Mulcahy Chief Executive Kingfisher
Slide 3: Today's presentation
Today’s presentation ! Kingfisher e-strategy Geoff Mulcahy ! About e-Kingfisher Ian Cheshire ! Our strategy ! Our team ! Our mission ! About our activities e-Kingfisher team ! Sectors ! Infrastructure ! Alliances and new investments ! Priorities and summary Geoff Mulcahy ! Q&A
Slide 4: Kingfisher's strategic ambition
Kingfisher’s strategic ambition ‘To build a pan-European retail group dedicated to giving customers unbeatable service, choice and value’
Slide 5: Kingfisher's strategic ambition
Kingfisher’s strategic ambition ‘To build a pan-European retail group dedicated to giving customers unbeatable service, choice and value wherever and whenever they want’
Slide 6: Major opportunity for growth
Major opportunity for growth e-commerce spending, 2004 £77bn £11bn UK, Germany & France Kingfisher sectors Source: Kingfisher estimates, based on Henley Centre, May 2000 and Forrester, April 2000
Slide 7: We start with advantages
We start with advantages !Strong brands and customer propositions !Service delivery is key !Clicks and mortar interplay !Access new markets, segments We are already active, over £40m pure e-commerce, £200m total direct
Slide 8: Kingfisher's 3e strategy
Kingfisher’s 3e strategy Profitably expand Kingfisher’s total market share EXPLOIT EXTEND EXPLORE
Slide 9: Existing store assets
Existing store assets !Winning formats in destination or convenience !Kingfisher already doing this !B&Q Warehouse, Comet Destination, Big W, General Store !Provide e-commerce service in store !eg entertainment in-store CD recording !otherwise space will be redeployed
Slide 10: Why we will be successful
Why we will be successful !Grounded in real business !Clicks and mortar capability !Pan-European presence and scale !Significant, focused resource
Slide 11: Ian Cheshire, Chief Executive, e-Kingfisher
Ian Cheshire Chief Executive e-Kingfisher
Slide 12: Customers habits are changing
Customers habits are changing on ti l u o Customers ev buy extra ne categories l i on Customers he buy core T categories Customers go online
Slide 13: Customers are going online
Customers are going online % people online 1999 2003 Forecast US 41 78 UK 31 64 Germany 24 57 France 14 57 Source: IDC; US Census bureau
Slide 14: Customers across Europe are shopping online
Customers across Europe are shopping online: % onliners shopping 3.1m 2.9m 26 22 0.7m 11 10 9 8 Dec 97 Dec 99 Dec 97 Dec 99 Dec 97 Dec 99 UK Germany France Source: NOP
Slide 15: ... and online spend will follow
… and online spend will follow £bn 32.6 29.1 14.5 4.5 4.4 1.4 1.3 0.3 1.5 1999 2000 2004 1999 2000 2004 1999 2000 2004 UK Germany France Source: Kingfisher estimates based on Henley Centre May 2000, Forrester April 2000
Slide 16: Providing growth opportunities in Kingfisher categories
Providing growth opportunities in Kingfisher categories Total Sales (£bn) % sales on-line in UK 2004(e) 4.3 Entertainment 17.0 1.0 1.5 Electrical* 7.6 1.9 0.6 Toys 7.7 0.1 0.3 Childrenswear 4.4 0.3 0.1 Health & Beauty 4.6 1.1 0.1 DIY(RMI Market) 4.4 1.5 1999 *Electricals market includesPCs, photogra
Slide 17: About e-Kingfisher
About e-Kingfisher !Our strategy !Our team !Our mission
Slide 18: Kingfisher's 3e strategy
Kingfisher’s 3e strategy Profitably expand Kingfisher’s total market share EXPLOIT advantages EXTEND EXPLORE within and our current in our market across our propositions spaces sectors
Slide 19: Kingfisher's 3e strategy
Kingfisher’s 3e strategy EXPLOIT EXTEND EXPLORE advantages within and across our sectors ! strong brands ! low acquisition costs
Slide 20: Strong brands
Strong brands !Leverage current ad spend, recruitment !Capitalise on customer confidence ! 43% of internet users are uncomfortable buying from ‘pureplay’ e-tailers ! 1% of internet users said they preferred shopping at internet only companies ! 36% said they would prefer to shop at clicks & mortar w
Slide 21: Better customer acquisition costs
Better customer acquisition costs Pure Plays Multichannel 93% increase 82 $ 42 45% reduction 22 12 1998 1999 1998 1999 Source: Shop.org/The Boston Consulting Group
Slide 22: Kingfisher's 3e strategy
Kingfisher’s 3e strategy EXPLOIT EXTEND EXPLORE advantages within and across our sectors ! strong brands ! low acquisition costs ! Group scale ! sourcing, ranging ! fulfilment
Slide 23: Kingfisher's 3e strategy
Kingfisher’s 3e strategy EXPLOIT EXTEND EXPLORE our current propositions ! physical reach ! new segments ! new ranges ! new services ! personalisation
Slide 24: Kingfisher's 3e strategy
Kingfisher’s 3e strategy EXPLOIT EXTEND EXPLORE in our market spaces ! new businesses ! investments
Slide 25: e-Kingfisher team
e-Kingfisher team Ian Cheshire CEO DIY ELECTRICALS GENERAL VENTURES Stephen Robertson MERCHANDISE Stephen O’Brien
Slide 26: e-Kingfisher team
Paul Worthington e-Kingfisher team CTO Infrastructure Director Ian Cheshire Partnership CEO Director Business support George Bramhill / Tiku Patel DIY ELECTRICALS GENERAL VENTURES Stephen Robertson MERCHANDISE Stephen O’Brien B&Q - DIY.com & COMET.co.uk WOOLWORTHS.co.uk THINKNATURAL.com Trade.co.uk
Slide 27: Our mission
Our mission !Staying customer led !Aligning with the brands !Sharing across the e-cos !Driving acquisitions and partnerships !Managing for value
Slide 28: Staying customer led
Staying customer led ! Scan opportunities outside current format / organisation constraints ! Capture common consumer information ! Lead proposition development process
Slide 29: Aligning with the brands
Aligning with the brands ! Ensure maintenance of central brand proposition ! Develop and manage pricing principles ! Involvement of brands in strategy ! Aligned incentives
Slide 30: Sharing across e-cos
Sharing across e-cos !Back-end – customer led !Scarce resources, especially people ! Customer acquisition ! Infrastructure ! Technology
Slide 31: Driving acquisitions and partnerships
Driving acquisitions and partnerships ! Capture consolidation opportunities from funding squeeze ! Move rapidly to critical mass ! Provide single point of contact for key deals
Slide 32: Managing for value
Managing for value ! Metrics for value management ! Real business models, set of opportunities ! Path to profitability over 3-4 years
Slide 33: About our e-activities
About our e-activities !Sectors ! DIY ! Electricals ! General merchandise ! Ventures !Infrastructure
Slide 34: Stephen Robertson, DIY
Stephen Robertson DIY
Slide 35: DIY Status
DIY Status Market (RMI) !Large – £22bn UK, £22bn France !Less than 0.1% online
Slide 36: DIY Status
DIY Status Market (RMI) !Large – £22bn UK, £22bn France !Less than 0.1% online Advantages !No1 brands France & UK !No1 European sourcing scale !Powerful domain names
Slide 37: UK - DIY.COM
UK - DIY.COM ! The reference DIY site for the consumer bringing B&Q Warehouse to every home ! Content and community - enhanced functionality
Slide 38: UK - DIY.COM
UK - DIY.COM ! The reference DIY site for the consumer bringing B&Q Warehouse to every home ! Content and community - enhanced functionality ! Leverages the No 1 DIY brand to create a true multi-channel offer ! Robust fulfilment and customer care ! £250 - 300m sales opportunity by 2004/5
Slide 39: UK - DIY.COM
UK - DIY.COM ! The reference DIY site for the consumer bringing B&Q Warehouse to every home ! Content and community - enhanced functionality ! Leverages the No 1 DIY brand to create a true multi-channel offer ! Robust fulfilment and customer care ! £250 - 300m sales opportunity by 2004/5 ! Additiona
Slide 40: UK – Screwfix.com
UK – Screwfix.com !High performance trade-targeted offer
Slide 41: UK – Screwfix.com
UK – Screwfix.com sales £m 150 100 50 0 1998 1999 2000
Slide 42: Screwfix Direct
Slide 43: Evolution of Screwfix websales
Evolution of Screwfix websales 8 websales as a % of total sales 7 6 5 4 3 2 1 0 Sept Dec Mar May 1999 1999 2000 2000
Slide 44: UK – Screwfix.com
UK – Screwfix.com !High performance trade-targeted offer !Relaunch Q4 2000 !Excellent service provision !Sales opportunity at least £250m by 2004/5 !European expansion
Slide 45: France – Castorama.fr
France – Castorama.fr ! Leverage No 1 retail brand to create a true multi-channel offer ! Share fulfilment with Screwfix France ! Transactional launch early 2001 ! £150m sales opportunity by 2005
Slide 46: Germany – Heimwerker.de
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Slide 47: Home portal opportunity
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Slide 48: DIY 3e Strategy
DIY 3e Strategy EXPLOIT EXTEND EXPLORE ! Brand/advertising ! B&Q Warehouse ! Heimwerker.de ! Sourcing & Castorama ! Improveline.com ranges ! Home portal ! Fulfilment everywhere 24/7 ! Expand Screwfix into Europe
Slide 49: Stephen O'Brien, Electricals
Stephen O’Brien Electricals
Slide 50: Electricals status
Electricals status Market !Large, growing markets – £16bn UK, £15bn France !Less than 1.5% online Advantages !Top brands France & UK !Outstanding distribution & service network Activities !Current sites transactional !Team of 40 in place
Slide 51: Electricals 3e strategy
Electricals 3e strategy EXPLOIT EXTEND EXPLORE ! Brands ! Increasing ranges ! Home portal ! Pan-European on nationwide ! Investments sourcing basis ! Delivery & ! Additional service network platforms ! Collection and ! Expand returns geographically ! Own brand ! Germany ! Holland ! Belgium
Slide 52: Comet.co.uk
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Slide 53: Comet.co.uk objectives
Comet.co.uk objectives ! Give customers absolute confidence ! The destination store to every home ! Improving functionality and content
Slide 54: Comet.co.uk objectives
Comet.co.uk objectives ! Give customers absolute confidence ! The destination store to every home ! Improving functionality and content ! c. £200m sales opportunity by 2004/5
Slide 55: Darty.com
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Slide 56: Darty.com objectives
Darty.com objectives ! Extend geographic reach ! Leverage No1 brand proposition and existing service network, ‘contrat de confiance’ ! Site upgraded to improve search, handle volume ! c. £130m sales opportunity by 2004/5
Slide 57: Electricals summary
Electricals summary ! Operational sites and proven infrastructure ! Transactional this year ! European development 2000/01
Slide 58: Ian Cheshire, Chief Executive, e-Kingfisher
Ian Cheshire Chief Executive e-Kingfisher
Slide 59: General merchandise status
General merchandise Status Market !£39.9bn, UK !0.5% online Advantages !Well known, top brands !Broad physical presence Activities !Woolworths ! Multi-channel retailer !Superdrug ! Launch team in place !Investment in ThinkNatural
Slide 60: General merchandise 3e strategy
General merchandise 3e strategy EXPLOIT EXTEND EXPLORE ! Advertising ! Increased ranges ! Investment in ! Sourcing ! Appeal to new ThinkNatural ! Store returns segments ! Digital ! Increased share download of wallet ! Home Portal
Slide 61: Jill Arch, Woolworths
Jill Arch Woolworths
Slide 62: Woolworths.co.uk
Woolworths.co.uk ! More of Woolworths, more easily
Slide 63: Woolworths on Open...
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Slide 64: Woolworths on Open...
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Slide 65: Woolworths on Open...
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Slide 66: Woolworths.co.uk
Woolworths.co.uk ! More of Woolworths, more easily ! Leverages !brand
Slide 67: Woolworths.co.uk - Christmas 99
Woolworths.co.uk - Christmas 99
Slide 68: Woolworths.co.uk
Woolworths.co.uk ! More of Woolworths, more easily ! Leverages !brand !800 stores
Slide 69: Woolworths.co.uk
Woolworths.co.uk ! More of Woolworths, more easily ! Leverages !brand !800 stores !category shares
Slide 70: Woolworths.co.uk
Woolworths.co.uk ! More of Woolworths, more easily ! Leverages !brand !800 stores !category shares !sourcing
Slide 71: Woolworths.co.uk
Woolworths.co.uk ! More of Woolworths, more easily ! Leverages !brand !800 stores !category shares !sourcing ! Fulfilment and customer service focus
Slide 72: Woolworths.co.uk
Woolworths.co.uk ! More of Woolworths, more easily ! Leverages !brand !800 stores !category shares !sourcing ! Fulfilment and customer service focus ! Website relaunch Q3 2000
Slide 73: Woolworths.co.uk - preview
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Slide 74: Woolworths WAP test
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Slide 75: Woolworths.co.uk
Woolworths.co.uk ! More of Woolworths, more easily ! Leverages !brand !800 stores !category shares !sourcing ! Fulfilment and customer service focus ! Website relaunch: Q3 2000 ! £ 250-300m opportunity by 2004/5
Slide 76: Superdrug.com strategy
Superdrug.com strategy ! Content - rich health portal offering online pharmacy ! Leverages true clicks and mortar through prescribing, brand and sourcing ! Phased launch targeted at Aug – Dec 2000 ! £60m opportunity by 2004/5
Slide 77: Online pharmacy
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Slide 78: Ian Cheshire, Ventures
Ian Cheshire VENTURES
Slide 79: Alliances and ventures 3e strategy
Alliances and ventures 3e strategy EXPLOIT EXTEND EXPLORE ! Participation in ! LibertySurf World Wide ! ThinkNatural.com Retail Exchange ! Improveline.com
Slide 80: Our investment principles
Our investment principles Add value to tested business concepts in market spaces of interest by... !capitalising on !buying options value created for the future, through integrating other commercial link ideas Cash invested to date: £45m
Slide 81: Current investments
Current investments !Valuation £700m, 35% stake !French No 2, now across Europe
Slide 82: Current investments
Current investments ! £4.5m for 13%, natural products e-tail ! Tied into Superdrug, UK only
Slide 83: Current investments
Current investments ! £3m for 12%, UK only, builder referral service ! Commercial links to B&Q
Slide 84: The Worldwide Retail Exchange
The Worldwide Retail Exchange WWRE will comprise four “verticals” General Merchandise 17 founding Textiles & Home members 1999 Food Drug including sales $400bn+ Kingfisher The WWRE is by far the largest retail exchange today in scope and scale
Slide 85: Infrastructure 3e strategy
Infrastructure 3e strategy EXPLOIT EXTEND EXPLORE making it happen
Slide 86: Fulfilment is different to retail logistics
Fulfilment is different to retail logistics ! Main driver of customer loyalty but high cost of failure ! Already have assets and experience !Screwfix - same day dispatch operation !Electricals - delivery and installation service !Woolworths and Entertainment UK
Slide 87: Fulfilment is different to retail logistics
Fulfilment is different to retail logistics ! Main driver of customer loyalty but high cost of failure ! Already have assets and experience !Screwfix - same day dispatch operation !Electricals - delivery and installation service !Woolworths and Entertainment UK Focus on 100% availability 100% on-tim
Slide 88: Key fulfilment elements
Key fulfilment elements ! Central distribution centre Warehousing ! Prefer shared across business units e.g. Screwfix/Woolworths at Braunstone
Slide 89: Key fulfilment elements
Key fulfilment elements ! Central distribution centre Warehousing ! Prefer shared across business units e.g. Screwfix/Woolworths at Braunstone ! Existing network for big electricals Delivery ! Build on existing partnerships with national carriers for remainder
Slide 90: Key fulfilment elements
Key fulfilment elements ! Central distribution centre Warehousing ! Prefer shared across business units e.g. Screwfix/Woolworths at Braunstone ! Existing network for big electricals Delivery ! Build on existing partnerships with national carriers for remainder ! Add web-enabled seats to existing cal
Slide 91: Systems
Systems !Leading technology !Flexible open architecture !Skilled team !‘Build once - use many’ approach !Technology core competence versus location in physical world
Slide 92: Geoff Mulcahy, Chief Executive, Kingfisher
Geoff Mulcahy Chief Executive Kingfisher
Slide 93: e-Kingfisher Priorities
e-Kingfisher Priorities Profitably expand Kingfisher’s total market share EXPLOIT EXTEND EXPLORE
Slide 94: Impact
Impact ! Current year direct businesses’ sales forecast over £200m ! 2004/5 sales opportunity £1.5bn ! Value potential c.£2bn ! Net P&L impact this year £55m of which share of LibertySurf losses £20m
Slide 95: Summary
Summary ! e-commerce opportunity for Kingfisher ! Organising to deliver ! Harness our advantages to succeed
Slide 96: e-Kingfisher briefing
eC-KING SHER briefing 1s JUNE ZO00