18 September 2009

Value for money

Never has the phrase 'mixed messages' been more apt.

This week has seen The Kingfisher Group (owners of B&Q) announce its pre-tax profits were up 35% for 26 weeks (ending 1st August) thanks to strong results in UK and Poland, notably in the diy field.

Ian Cheshire, Group CEO, said: “We have delivered a strong set of results against a generally tough economic backdrop in our major markets. We grew market share and our self-help initiatives are working, particularly in the UK, where a stronger B&Q was able to capitalise on better weather and the renewed consumer interest in the home and DIY."

Meanwhile, down at the John Lewis Partnership (JLP), the John Lewis stores' operating profit, excluding property, was down 49% to £20.9m.

This could be taken as a sign that Jo Public was driven by price alone when they went shopping, as B&Q are past masters at price promotion.

That is, unless you take into account that JLP's Waitrose - a supermarket famous for quality rather than price cuts - saw its operating profit, excluding property, rise 18.7% to £121.1m in the six months to August 1, buoyed by the launch of its value Essential range and free online delivery offer.

Now I admit there is a world of difference between buying an Essential tin of beans from Waitrose and a kitchen to cook them in from John Lewis, but the key word here is 'value'.

The consumer can apparently see the value of the Essentials range from Waitrose, and it would seem, believes that B&Q offers value with its products too.

How else can you explain how one interiors supplier is up by 35% and another is down by 49%?

Humm, where does this leave the independent kitchen and bathroom retailer?

If the consumer is really saying: "stuff the service what's the price?" the independent sector of any market, let alone us in KBB-Land, have one heck of a problem as they all major on service.

However, if the consumer is actually saying, "show me the value", what is called for is a slight sharpening of the act, stressing how a combination of great product quality and first-class service produce the best value.

It isn't going to be easy, but it is an argument that can be won.

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