Kingfisher, which owns B&Q and Screwfix, is to create one unified European distribution and logistics network as part of its strategy to become a single unified company.
In a presentation to city investors, the group said its five year transformation plan would deliver £500 million sustainable annual profit uplift by the end of year five over and above “business as usual”. Central to the plan is the creation of a new Offer & Supply Chain Organisation (OSC).
“Following an in depth review of Kingfisher’s business last year alongside in depth studies of our customers’ home improvement needs, the leadership team announced the ‘ONE’ Kingfisher plan. This plan will leverage the scale of the business by becoming a single, unified company where those customer needs always come first,” said chief executive officer Véronique Laury.
Kingfisher operates near 1,200 stores across ten European countries. Its brands include Castorama and Brico Dépôt on the continent as well as B&Q and Screwfix in the UK.
The group expects the move to a “Unified and unique” offer to account for £350m of the projected £500m profit uplift. Optimising operation efficiency is expected to generate £100 million in sustainable annual profit uplift by the end of year five. The remaining £50m will come from digital developments.
In total it is budgeting some £800m in cash costs to make the transformation. Some £270m of this is accounted for and P&L exceptionals for setting supply the new offer and supply chain organisation together with unifying common processes.
Part of the plan is to leverage its £7bn buying power to provide a unified product offer – the same products everywhere presented in the same way. Today, the group said, its offer was largely steered by suppliers and was similar to other retailers.
Exclusive brands only represent about 20 per cent of total group sales, and not one of them is shared among operating companies.
In the future, there will be one international buying team with unified global functions; supplier agreements will be managed by one team; there will be one European distribution and logistics network; and one set of merchandising principles.
In the financial year 2016-17, Kingfisher’s plan call for the creation of the new Offer & Supply Chain Organisation; completion of closure of some 15 per cent of surplus space at B&Q; and completion of a unified IT platform roll out in B&Q as well as starting the roll-out at Castorama in France.