Innovation and Inspiration at The Global DIY Summit 2019

The Global DIY Summit made its way to the Dublin Convention Centre this year, with two full days of presentations and panel discussions on key topics affecting the industry. In the first of three articles Aoife Kinsella summarises the key insights from the congress.

The DIY Summit saw over 1000 delegates, including retailers and suppliers in the Home Improvement industry, from over 55 countries welcomed to Dublin for two days of innovation and inspiration on how the home improvement industry can (and needs to) adapt to survive in today’s world of digital disruption. With today’s digitally native consumers wanting fast, efficient solutions, it’s now more important than ever that retailers and suppliers adapt and innovate to survive against growing competition online and offline.

Topics covered over the two days included: innovation, political and economic forecasts, digitalisation, preparing your team to embrace digital transformation, Asia as a new
innovation leader worldwide, DIY logistics and a global overview of home improvement retailing around the world. In this issue we will cover the revelations from the Political
and Economic Forecasts and Innovation sessions.

Day One of the Summit began with John Herbert, General Secretary of EDRA and Ralf Rahmede, General Manager of FEDIYMA warmly welcoming delegates to the Summit and
introducing this year’s theme: “DIY Evolution: Designing the Future Together”. “Our mission is to improve the quality of Home Improvement globally”, said John Herbert as part of
his introduction.

Store Visits

Before the Summit commenced a day was set aside for store visits to some of Dublin’s top retailers and merchants. These stores were:

• TJ O’Mahony, Ballymount
• TileStyle, Ballymount
• B&Q, Liffey Valley
• Woodies, Blanchardstown
• Homebase, Santry
• Grange Builders Providers, Baldoyle

Global Economic and Political Overview

The first speaker of the DIY Summit was Dr Alexander Borsch, Chief Economist and Head of Research at Deloitte, Germany, who provided an overview of the latest global economic and political trends.

The latest statistics reveal that the Eurozone created 10 million new jobs over the last five years, and that labour markets are thriving which is supporting consumption, improving
consumer confidence and disposable income. However, the current situation reveals a two-tiered economy in Europe, with trends in manufacturing and services diverging.

“We should be careful not to talk ourselves into another recession”, warned Dr Borsch, while reminding delegates that a hard Brexit continues to be a highly likely outcome. He recommended that “you have to hope for the best but prepare for the worst. Brexit is a big risk and should be part of risk surveys and planning by European companies”.

Protectionism

Dr Borsch also noted that protectionism has played a huge part in impacting international trade, which was once a key driver in world economic growth (Fig 1). “World trade is one of the key components of world growth, but the upward trend in protectionist tariffs means GDP has lost one of its engines.” The question raised during Dr Borsch’s presentation was “Will protectionism spill over to services and data flows?”.

Productivity

Productivity growth, unfortunately, remains weak in most countries, and growth distribution worldwide is uneven, which Dr Borsch attributes to the emergence of the “superstar economy”; firms in the top 5% of digital intensity. This indicates that digitalisation has a significant impact on the productivity of any business, which shows how important it is that retailers harness it (Fig 2).

Innovation – The Shopping Revolution

The next topic of the Summit was all about ‘Why Innovation Matters’.

Dr Barbara Kahn, Professor of Marketing at The Wharton School, University of Pennsylvania, was the first speaker of this topic who discussed The Shopping Revolution,
detailing “How Successful Retailers win Customers in an Era of Endless Disruption”. As Amazon and other disruptors continue to offer ever-greater value, customers’ expectations will continue to ratchet up, making winning (and keeping) those customers even more challenging. For some retailers, the changes will push customers permanently out of their reach – and their companies out of business.

Despite these risks, the physical store is not dead, but customer experience is key with digitally native vertical brands (“a brand born with a maniacal focus on the customer experience”, some of which often move to an offline presence) continuing to put pressure on bricks-and-mortar stores. “Everybody is talking about products and logistics and operations, but they are missing the customer!”, warned Dr Kahn.

Amazon

Amazon continues to put pressure on retailers in all sectors with its “frictionless” customer experience, such as its “One-Click” payment system and same-day delivery services. In 2018 55% of online product searches began on Amazon, as of May this year that figure is more than 70%.

Amazon’s success hinges on its key strategy of providing quality brands with customer experience in mind. “People aren’t paying as much attention to price anymore, once you make it easy for them”, explained Dr. Kahn. Amazon continues to push its presence on the retail sector with its Amazon Marketplace e-commerce service, which allows third party individual and professional sellers to sell new and use products online. Dr Kahn effectively defined the service as “a tech company masquerading as a retailer”.

By applying her own Retailing Success Matrix to an industry specific example, The Home Depot, Dr Kahn demonstrated how it is doing well in the US Home Improvement industry
by harnessing a high-quality customer experience, and by investing in in-store improvements to develop “comprehensive customer understanding and total convenience”, and by providing superior quality brands. While online competition mounts, Home Depot continues to adapt and evolve to meet today’s consumer’s rising demands. “People still want brands, but you have to have a good brand… In this industry there’s a real desire to go into a physical store. As soon as you lose that, you lose a really big edge!”

Innovate or Die

Steve Collinge of Insight Retail Group took to the stage to point out the key macro factors that are affecting the DIY sector, which are influencing how retailers and suppliers are conducting business:

• Lost DIY skills – that used to be passed down through generations
• ‘Generation Rent’ – as fewer people own property, consumers are spending less on DIY products and projects
• Millennials, who have “better things to do” – These consumers are “fundamentally changing the market”. They will choose a brand that builds a relationship with them.

To reach out to the younger market and combat these challenges, Steve suggests that merchants provide further services to customers, such as rental models of certain products, which the likes of Ikea have had success with, and other services like installation and maintenance.

The Summit’s morning session then concluded with a panel discussion on “Why Innovation Matters”. Comprising CEOs of some of Europe’s leading merchants and manufacturers: OBI, Alfred Kärcher SE & Co, Hubo and Bostik this lively debate covered why hardware  businesses should innovate, how, and what the potential pitfalls are.

How are suppliers and retailers in the industry innovating?

• “Cleaning is a difficult business because it needs to be done manually, but we develop new products to make cleaning innovative.” – Hartmut Jenner, Alfred Kärcher SE & Co
• “We use Digital Tools to amplify and work very closely with the traditional retail to innovate.” – Vincent Legros, Bostik
• “We make use of the sharing economy to find new innovations.” – Erwin Van Osta – Hubo
• “We are connecting the customer and the company through digital – like a mobile phone
  as a support device.” – Sergio Giroldi, OBI

Innovation is happening faster than we can adapt, and with growing competition both online and offline and continuing challenges to trade and the global and national economy Home Improvement companies should be looking for innovative solutions that can turn  future business challenges into opportunities.

In the next issue we will look at the next two topics covered at the DIY Summit – digitalisation and how to prepare your team to embrace the digital transformation.