In this issue our colleague and friend Thierry Coeman asks that we consider the often overlooked and profound impact European institutions have on the broader Home Improvement industry. Recent European legislation is poised to open the exploration of new market segments in the near future.
The rise of circularity in DIY
The recent approval of the ‘right to repair’ directive by the European Parliament marks a significant milestone. This directive aims to promote sustainable consumption by facilitating the repair of defective goods, thereby reducing waste and supporting the repair sector. The newly adopted legislation aligns seamlessly with the Net Zero Agenda and the objectives of the European Green Deal, encouraging consumers to opt for repair rather than the replacement.
What implications does this legislation hold for the DIY industry?
According to a Eurobarometer survey, close to 80% of EU consumers express a preference for repairing goods rather than replacing them. However, many end up discarding items due to the high cost of repair or lack of available services. Another obstacle to sustainable consumption is built in obsolescence; some appliances malfunction after a certain period, contributing to the growing waste stream, particularly in electronics and power tools.
In theory, repairing should logically be a more cost-effective option than outright replacement. However, the reality often paints a different picture. The efficiency of supply chains, driven by economies of scale, has led to relatively low unit costs for new products. Yet, there exists a darker aspect to this streamlined linear chain. Electronic product obsolescence, causing them to degrade over time or become incompatible with newer software and accessories, leads to higher product costs and also contributes to the paradoxical situation where the price of new products is relatively low compared to the cost of repairs.
This new legislation will soon require manufacturers to make spare parts available at acceptable prices. Among other things, they will have to create all conditions to make second-hand parts available for sale for at least 10 years and allow them to be developed and sold, through the use of 3D technology.
The 6 R-Ladder of the Circular Economy
Repair is a vital aspect of the circular economy journey. The R-ladder model, encompassing Rethink, Refuse (consume less), Reduce (use less materials), Reuse (consider the second hand option), Repair (extend lifetime), and Recycle, guides us towards preserving product value and minimising the demand for new raw materials.
How DIY can ascend the ladder of sustainability
The EU estimates that 35 million tonnes of products are discarded each year that could actually still be repaired. The ‘right to repair’ offers retailers a major opportunity to align with consumer preferences for sustainability. By embracing repair services, retailers can enhance customer relationships, satisfaction, and loyalty while also improving brand image. Repair initiatives generate additional revenue and also drives foot traffic to DIY stores, potentially leading to increased sales across product categories. Furthermore, mandatory repairs can spur innovative business models, such as offering refurbished or repurposed products, appealing to consumers seeking quality, affordable, and sustainable alternatives.
Collaboration with manufacturers, repair specialists, and fellow retailers can enhance repair capabilities, mitigate costs, and broaden market reach.
In a nutshell, the ‘right to repair’ signifies a pivotal step towards a circular economy. While it presents challenges for retailers, it also unveils avenues for differentiation and innovation in meeting evolving consumer demands for sustainability and circularity. Educating consumers about the benefits of repair over replacement remains crucial in effecting lasting change in consumption patterns.
EDRA, the European Retail DIY Retail Association, supports the Right to Repair approach taken by the EU but believes more needs to be done for consumers to change behaviour. “Proper incentives, education, access to repair facilities and the legal framework should all combine to create a business case for retailers to offer repair services and for consumers to use them as their first choice over replacement. This will need a systemic change and doing more than simply providing information for customers. But this legislation is a step in the right direction and we applaud the EU institutions and the Belgian Presidency for agreeing this measure”, states Alisdair Gray, Director EU Affairs for EDRA in Brussels.
Challenges and Opportunities
Most retailers rely on selling new products to thrive. However, the ‘right to repair’ directive poses a potential threat to this model. This is especially true for independent retailers, who have diminished economies of scale, financial resources and bargaining power than chains and thus find it harder to compete with manufacturers, professional repairers or online platforms offering repairs. Prolonged product lifespan or increased repair rates could translate to reduced sales and profits for retailers.
Additionally, compliance with the new legislation may entail additional costs, such as offering repair services, sourcing spare parts, and extending warranty periods.
However, these challenges also present opportunities for retailers to differentiate themselves by catering to the growing demand for sustainable products and services. By offering or facilitating repair, retailers can strengthen customer relationships, increase customer satisfaction, enhance customer loyalty and improve brand image.
Repair can also be a source of additional revenue, or a way to attract customers to the DIY store, where they may also purchase other products or services. This is already the case in the concept of Click & Collect and BOPIS (Buy Online, Pick-Up Instore). There are not just financial drawbacks to mandatory repairs. For instance, retailers or manufacturers can rethink a new business model by offering refurbished or repurposed products. This can be an attractive alternative for consumers looking for quality, affordable and sustainable products. By working together, retailers can improve their repair knowledge, competences and infrastructure, share costs and risks, increase their economies of scale and market reach.
The right to repair is an important step in the transition to a circular economy, in which raw materials are used as efficiently and sustainably as possible. Simultaneously, the right to repair also presents opportunities for retailers who want to differentiate themselves and respond to the growing demand for sustainable and circular products and services.
Together, as we embrace sustainability in our mindset and practices, we obviously pave the way for a brighter, more circular future whilst creating new business models.
Case Study: RIGHT TO REPAIR KITCHEN AID
In Antwerp-Bruges’ bustling Belgian port, Katoen Natie, a global logistics leader, has pioneered an innovative circular approach to the ‘Right to Repair’ concept. Partnering with esteemed American brand Kitchen Aid, a team of expert technicians, housed within a vast warehouse, efficiently conduct over 20,000 repairs annually on a diverse array of household appliances sourced from across several European countries. “This transformative initiative underscores a commitment to sustainability but also heralds a paradigm shift in service delivery for reusable products. Undoubtedly, this groundbreaking case sets the stage for widespread adoption among leading Home & Kitchen brands seeking to align with environmentally conscious consumers and embrace the circular economy ethos”, says Pascal Jacobs, Business Unit Manager DIY.
