Steve Collinge of Insight Retail Group sheds light on the successes of a household name in Irish DIY.
It’s not all that long ago that Woodie’s, along with many home improvement retailers and merchants were struggling just to survive. Ten years on from the financial crisis and in a year when Woodie’s have celebrated their 30th anniversary, the business is rapidly becoming the shining star of the Grafton stable, delivering consistent double-digit growth. But are they just riding the wave of the positive economic cycle that’s pushed Ireland to the very top of the list for GDP growth in Europe, or can the credit for their success really to to the management team that took over the business in 2013?
Woodie’s began its life in 1988 with its first store in Walkinstown under the guise of ‘Pay Less DIY’, and only a year later, the retailer was snapped-up by the Grafton Group and rebranded as Woodie’s DIY. During the mid-1990s and through to the mid 2000s, as our love for DIY grew, the business entered a phase of rapid expansion, reaching an estate which today boasts 37 stores; 15 of which were originally Atlantic Homeware, prior to the acquisition of that business from administration in 2005.
Thirty years on and Woodie’s is not just a survivor; it is now the leading Home Improvement retailer in the country by some distance, and as their 2018 anniversary celebrations draw to a close, we examine exactly what the company has done to achieve such exceptional growth in sales and profits. But first, let’s look at the numbers.
At the end of their most recent financial year (y.e. 31st December 2017), turnover had reached €200m, up from €174m in the full year of 2016; a 14.8% increase (7.4% constant currency basis). Operating Profit was up a stunning 53% from €8.1m to €12.4m and their Operating Margin rose from 4.7% to an enviable 6.2%. At the most recent Grafton Trading Update on 13th November 2018, Woodies had continued to perform with total revenue growth up a shade under 10% for the ten-month period.
With revenue of €200m, Woodie’s accounts for less than 7% of Grafton’s €3bn group turnover. You would easily be forgiven for thinking that Grafton would choose to invest
their funds elsewhere, namely in the remaining 93% of their business which focuses on trade, but that certainly hasn’t been the case.
The company will tell you that the strong performance is down to the positive response from customers to the transformation programme implemented in recent years. The objective of the programme being “to build a business for the future, designed to meet the evolving needs of customers, whilst recognising the unique heritage of Woodies in the Irish retail market”.
Fine words, but what have they actually done and is it really any different to the transformation programmes we’re seeing and hearing about at B&Q’s owner, ‘Kingfisher’, or
any of the other global Home Improvement retailers, who are trying to find their way in this increasingly competitive and digitally focused retail world?
The business tells us that the sales increase has been driven by a healthy rise in both the number of customer transactions and an increase in average transaction values. So what steps have they taken and are they achieving their stated objective to ‘build a business for the future’?
Repositioning of the brand
The change which we believe has had the greatest positive impact on the business is the repositioning of the Woodie’s brand. The new for 2018 “We’re all Homemakers” banner reflects the broad, universal appeal that they believe differentiates Woodie’s in the Irish retail market.
With an objective to further distinguish Woodie’s from its main competitors, Homebase and B&Q, the company focused on improving each and every customer’s in-store experience. Carrickmines in Dublin was the first concept store where Woodie’s developed their new vision and where they developed a new visual style for their point of sale, providing continuity to the customers eye as they browsed the store.
Previously described by MD Declan Ronayne as an ‘Apple’ inspired campaign, designed to ‘put some love and emotion into the business’, the company has introduced much softer, more approachable features to its stores, with female shoppers as the key target. Gone is the high ‘warehouse’ style racking, which is a major feature of their leading competitor B&Q, and in its place, lower shelving and new signage. Even its entrance and exit signs have been replaced with the words ‘Hello’ and ‘Goodbye’.
By the end of 2018, Woodies will have completed its own successful makeover, upgrading 27 of their 37 stores. Four stores were upgraded in the first half of the year and a further three upgrades during the second half. The results of the upgrade programme have been excellent with increased revenue relative to comparable stores, improved merchandising and a much more positive customer experience supported by the deployment of more
colleagues in specific areas to provide customers with advice and assistance.
The retailer is already are one of the leading destinations for paint sales in the country, but also sell goods in all of the main Home Improvement categories, including decorative, DIY, power tools, hand tools, housewares, plumbing accessories, ironmongery and gardening. The business has worked closely with suppliers to improve its product offerings and to deliver greater choice and better value for its customers. Seasonal ranges including garden furniture, barbecues, gardening equipment, plants and exterior decorative products have all performed particularly strongly, whilst Christmas trees and decorations have become a
critical part of the Woodie’s offering. Extended product ranges and initiatives, such as their move into selling kitchens and bathrooms has also delivered incremental growth.
Woodie’s have invested in their online presence, allowing customers the convenience to shop at any time using the direct delivery service, or to click-and-collect from their stores. This has been enhanced with a new website, resulting in a doubling of online revenue. social media also continues to be an integral part of Woodie’s ongoing marketing strategy, with almost 100,000 Facebook likes, 8,000 Twitter followers and over 11,000 monthly views on Pinterest. This effective use of social media has enabled, Woodie’s to engage directly with customers outside of the stores, whilst gaining valuable insights into their shopping habits and preferences.
Investment in Colleagues
As well as the repositioning of the brand, the changes introduced to its in-store experience and the digital investment, Woodie’s has worked hard and invested in improving relations with their 1,400 members of staff.
Quoting statistics collated by research firm, ‘Great Place to Work’, in 2014, only 39% of Woodie’s workforce said the DIY chain was a great place to work, and that figure jumped
to 65% last year.
To achieve the increase, the company has invested in an employee recognition service called ‘Kudos’, which allows managers and peers to give colleagues a pat on the back using a WhatsApp-style platform.
Woodie’s has also worked hard to retain its ‘Great Place to Work’ status, and almost one third of colleagues completed accredited educational programmes, which have helped
to deliver a market-leading service and a positive shopping experience for customers. As part of this, the company brought a roadshow bus to each of its stores to teach workers about different products on the shop floor.
There’s no doubt Woodie’s has and will continue to benefit from growing consumer confidence and increased employment. However, the strategy and the steps taken
by the new management team since 2013 have clearly moved the business forward. Their focus on differentiating the brand from competitors, improving the shopping experience, investing wisely in their digital presence, and all backed up with a well-trained and engaged team has without question delivered a business well positioned for the future, and one which much larger competitors would do well to learn from.