Homebase’s decision to review its £27m advertising account comes at a difficult time for the brand – and the DIY market as a whole.
The Home Retail Group-owned DIY chain has been underperforming, reporting a 4.1% drop in total sales to £498m for the 18 weeks to January 5. Homebase’s like-for-like sales for this period slumped 6.3%.
Homebase marketing director Ajay Kavan says that it is the “right time” to review the brand’s marketing strategy, but declines to comment further.
Richard Perks, Mintel’s director of retail research, believes industry trends have worked against Homebase: “In 2007 it was the heavy [building supplies] end of the market that did better, not the softer [decorative] end which Homebase is moving towards.”
Homebase’s decision to focus more on “decorative” goods means there is a much greater need to advertise, according to Verdict consulting director Neil Saunders.
He adds that DIY is a low priority for consumers because of the uncertainty in the housing market and increasing household bills. Unlike the “hard end”, where purchases are needs-based, the “soft end” of the DIY market is seen as “discretionary spend”, which consumers will curtail when there is financial pressure.
The current lack of interest in DIY means there is a “great need for the sector to push its credentials”, believes Saunders. He thinks that DIY retailers that fail to do this risk losing out to other leisure sectors.
“DIY doesn’t have the same status as shopping for clothes,” says Saunders. “Going DIY shopping is not a leisure activity – it isn’t fun.”
Market leader B&Q has also struggled, showing that the challenges are sector wide. B&Q’s total sales for the 13 weeks to November 3 increased just 0.8% to £961.9m and were down 0.2% on a like-for-like basis. According to Mintel, B&Q has a 49% share of the DIY market, while Homebase and Wickes have 18.6% and 9.8% respectively. Focus has 8.1%.
The downturn is also due to DIY becoming ubiquitous, according to Saunders: “A few years ago, there were so many TV programmes. This interest can only be stimulated so far. People got fed up and that has had an effect on all DIY players.”
Perks agrees that the market has become saturated. “The DIY sector has been somewhat driven by superstore openings,” he adds. “But that is over now. DIY programmes have tailed off to be replaced by cooking shows.”
Perks says the question is “who will lose least?” Wickes came top in a recent Verdict customer satisfaction survey and Saunders thinks that this, coupled with its focus on the trade end of the market, puts it in a good position. He also tips Focus as a potential winner, due to its recent store improvements.
This year will be a hard one for DIY, and the big players are likely to concentrate on tweaking their ranges and stores, rather than significant expansion. Homebase is hoping a fresh advertising approach will help get it back on track.