British Home Enhancement Trade Association (BHETA), DIY sector director Peter Stone discusses the hotly-debated issue of bricks vs clicks and what opportunities are available for brands to explore
As the Bank of England assures us that we are teetering on the brink of economic recovery, it is time DIY industry players re-assessed some of the other challenges facing the sector - perhaps the most striking of which is whether to build business with bricks or with clicks.
One of the best things to come out of economically challenging times is what some pundits are calling the 'new normal' - a refreshingly realistic acknowledgement that, if all the interested parties demonstrate greater co-operation, more of the interested parties benefit.
Manufacturers, distributors and retailers are, after all, interdependent and they are now learning to align their strategies more effectively and work together more. 'Bricks and clicks' remains something of a fraught area, however, with new online initiatives from any of the links in the chain, especially ones that 'go direct', seeming to make the other links nervous.
The most obvious growth opportunities in the market are clearly in 'clicks' and, with Amazon now declaring that its policy is to enter the DIY market in a seriously meaningful way and other online operators set to follow suit, it has to be asked what the traditionally brick-led retailers are going to do with all their square footage.
For suppliers, the issue is more about the age-old question of how best to support and protect their brands, now that the choice of routes to the consumer is greater; and, in particular, how to do that without alienating traditional retail and distribution partners.
Of course, if you have a really strong brand like Akzo or Hozelock or Karcher, then you can have a clear brand-led policy and apply it to any and every route to the consumer without too much risk of conflict. At the other end of the scale, it is also perfectly legitimate and potentially very lucrative to become an efficient and slick unbranded supplier. Again bricks, clicks and all routes within both are open for exploration.
So, it is the companies with middleweight brands who are really troubled by the 'bricks or clicks' conundrum. Whether you are brand number three or four in a heavily brand-led sector, or you have a decent brand in a sector where brands have less influence over the consumer, you have much to gain from clicks, but on the face of it, also much to lose.
The current retailer perspective is 'build your own retail brand, but keep a place for the traditional consumer brand if and when it adds value to the overall offer.' So, assuming you have a middleweight brand, these are the options:
1) Create an irresistible combination of product innovation, superb service levels, open-to-discussion pricing and marketing support packages based around inspiration and 'how best to' education. Offer ideas and solutions that turn products into projects - ideally ones that appeal to the mass market. This combination is attractive enough to cover off bricks and clicks together.
If that's not an option, but neither is own-label only, then there are further choices:
2) Target the independent market and provide tailored brands for independent online/offline retail listing. This requires some cutting of the cloth in terms of overheads, but can be commercially viable. With relatively few players committing to this route wholeheartedly, this solution probably still offers quite a number of opportunities
3) Abandon bricks and create your own branded ecommerce route to the consumer. This could be combined with an own-label bricks/clicks offer
4) Dual (or maybe triple or quadruple) brand and pick off different bricks and clicks routes either under or over the radar
Explore export - in combination with any of the above. At BHETA, we have members developing successful business in all of the above scenarios, from very big DIY and garden brands who dominate in their sector, to niche players picking their way cleverly to the end consumer - and everything in between. We have found that, while different players may be competing for shelf or web space or both, working together to network and engage with retailers of all kinds is now the best way forward for all parties.
17 April 2014 | 10:16 |