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Anonymous

{audio:0:00:01} Terry, could you start by sharing some context to your role and responsibility at Benchmarx?

{audio:0:00:08} I was the commercial director at Benchmarx, until January 2019. I’d been there since the start of a project and was part of a small team of senior managers that was asked to set up a project to set up a trade kitchen business, for the Travis Perkins group, that sprang out of combined efforts of Wickes and Travis Perkins. The four senior managers set up a test format which was deemed successful, and then we went on to open, from a standing start of zero, up to 187 branches, to take on the trade kitchen market. I was looking after the product marketing of the business, so was in charge of the range, what we sold, how much we sold it for and how we marketed it to tradesmen and customers.

{audio:0:01:12} What was the market structure, when you started in 2006?

{audio:0:01:18} In 2006, it was more retailed dominated, I’d say. You still had the DIY sheds trading successfully, in that arena. Other than Magnet Trade and Howdens, there weren’t any real multiple trade businesses, to speak of; there were lots of independents in the sector. It was mainly retail oriented, with installation services provided by retailers. But the trade business was seen to be a growing part of the sector, and that’s proved to be the case, since then.

{audio:0:02:03} What is the core difference in the value proposition, between retail and trade kitchen offerings?

{audio:0:02:09} The trade and retail businesses are very similar, but targeted to two distinct types of customers. The trade operation is built around the tradesperson and their needs. Specifically, local branches, within a 20-minute drive time; well stocked, so things can be collected straightaway; negotiated prices with the local branch management; and a service and price really packaged around them and their needs. It’s all about local relationships, having a great relationship with the local branch management and looking after the tradesmen in every way they can.

{audio:0:03:02} Whereas, for retail, it’s the mass market; it’s not about the relationship, but about appealing to consumer’s needs and aspirations, trying to get them into the store to spend. The trade area is much more about working behind the scenes, to build up relationships with the tradesmen and demonstrate that you can deliver on time, reliably, at a great price, with a great service and a great product. It’s all about being built around the very specific needs of a tradesman. They don’t want to shop in retail. They don’t want to queue; they don’t want to wait behind consumers. They want to go straight to a place where they are recognized and can get served quickly and readily.

{audio:0:03:50} Why do you think we’ve seen such a s shift, in the UK, from retail to trade, over the years?

{audio:0:03:57} There was a time when people would go off and do their kitchens themselves or get their mate or a friend or a builder to do it. The skill base is disappearing, certainly for consumers; no one is keen to tackle those sort of jobs anymore. We’ve heard the phrase, time poor; people want more do-it-for-them services. The tradesman is in a perfect place to help them do that. They can come in and, basically, take the project off them, in lots of ways. That’s where the trade kitchen sector steps in and helps the tradesman do that and tries to make it easy for everyone to do business. It’s just a general shift in consumer patterns, towards wanting more people to do it for them, I think.

{audio:0:04:57} Can we walk through a typical buying process in the UK? Let’s say that I want to refurbish my kitchen; I have £10,000 to spend. What is the process for me to eventually buy from a Howdens, for example? Do I have to contact my builder, he comes round? What’s the step by step process?

{audio:0:05:18} Typically, you will have been thinking about a kitchen for some time; perhaps for a considerable time and maybe years. You’re out shopping in B&Q and DIY stores at weekends, you’re online, browsing; you’re being fed TV adverts from Wren. Over time, you are accumulating a notion that you want a new kitchen. You get a little bit more serious and you start visiting retail branches, because you probably don’t know about Howdens yet. You start getting a few quotes and then you want to talk to a builder and he will step in, at that stage, and say, the good news is, I can get you want you want, at trade prices. Here’s a Howdens brochure; have a look through there, choose what you want and I can get it for you at a trade price. The consumer feels as if they are getting a good deal and the tradesman is fulfilling his role in helping the customer make an easy decision.

{audio:0:06:18} It’s really about that long burn. The consumer might be vaguely aware of Howdens, in the background, but it’s when they come into contact with the builder that things really change, because they will direct them towards Howdens, in most trade cases.

{audio:0:06:37} Does the old retail customer not contact the builder and just go to Wren or Magnet and purchase the kitchen themselves?

{audio:0:06:48} The other way of approaching it is, I’m having some work done on my house; I’ve got a builder and they’ll do the kitchen for me. By the way, I need a kitchen, where do you recommend, and Howdens will come into the conversation. That’s the other route in. They’ve got a builder in their pocket and need a kitchen and he will direct them towards Howdens. Or they’ll be directed towards it, once they make contact with a builder.

{audio:0:07:24} So there needs to be a builder involved, somewhere?

{audio:0:07:26} Yes; you can walk into a Howdens and say, I want a kitchen, but the first thing they will say is, have you got a builder? They won’t recommend a builder but they will put them in contact with two or three people that they know well, to get them quotes.

{audio:0:07:46} What I’m curious about is the actual retail process. I’m trying to think about in what situations it really makes sense for them to choose that option, where they choose a builder and trade, versus builder and retail?

{audio:0:08:03} The builder, for trade and retail, are the same person. If you go and buy a kitchen from Wickes and want it fitted, it may be that the builder is the same person that shops at Howdens. Your specific request is, I’ve brought a kitchen from Wickes and I’d like you to fit it please. It’s the same builder. There are not two different markets of builders out there. There are just two ways of arriving at it which are, you’ve been thinking about a kitchen for a long time and have been put in contact with a builder, or you’ve gone out and found one because you’re having a number of projects done in your house, at the same time.

{audio:0:08:42} In the trade route, I contact my builder; the builder gives me the Howdens brochure and then I choose one from there. Do I got to the depot or does the builder go? Do I get to touch and feel it?

{audio:0:08:57} Typically, he would want to direct you to Howdens, so they will either come out and do a home survey or you visit the branch, or both. At that point, he’s not interested in the aesthetics, the layout, the design; he wants to step away from it, at that stage. He wants to be back in on it when there’s a conversation about price. Howdens don’t want to negotiate the price with you or me; they want to negotiate the price with the builder. Yes, you will go into the branch, as a consumer and have a plan or a home survey done and the tradesman steps away at that point.

{audio:0:09:38} Do Howdens have kitchen designers that they employ, to help you? The builder communicates to Howdens that they’ve got a customer and they will, basically, commission a kitchen designer to help design the kitchen for the end customer?

{audio:0:09:50} Yes. There are perhaps two or three kitchen designers in a branch; they are well known to the builder and will have a good one on one relationship. A good designer from Howdens can move branch and take customers with them, such is the relationship. They will be in contact regularly saying, I’m doing a kitchen for Mr and Mrs Smith; this is what the quote is looking like. Here’s the price; what do you think, until the deal is done and things move to the next stage.

{audio:0:10:27} How important are the kitchen designers, for Howdens?

{audio:0:10:30} They are really important. A good designer can earn good money. They’re not easy to find and once you get a good one, you want to look after them and retain them as much as possible. It’s a relatively skilled job. It’s a huge investment for the consumer, in their house and home and the way they live. Mistakes are difficult and costly to correct, so it’s important that you have a good and reliable designer, to manage that process.

{audio:0:11:09} At Benchmarx, how did you really look to try and onboard builders and kitchen designers, to compete with Howdens?

{audio:0:11:20} In terms of the builders, they are a difficult breed to get hold of. It’s very much, under the radar, word of mouth; they’re not advertising and there are not a lot of websites. So you have to go out and find them. You will have reps in branches, or the local branch manager, on the phone, out and about, talking to contractors, talking to other trades, to get them to open an account. The account opening and the account management is equally important to the business. Those trade kitchen businesses are pretty fanatical about getting new customers on board, managing their dormant customer base and their new customer base, getting them to spend and becoming a loyal customer and then keep topping up the fuel tank of customers, over a period of time, as builders go in and out of the market.

{audio:0:12:31} So there is a lot of activity, a lot of local marketing, by branches, to attract and retain builders.

{audio:0:12:41} What’s the proposition though? Let’s say I’m a builder, in my local area and I’m with Howdens at the moment. You come along, from Benchmarx; what can you really offer me that would make me switch?

{audio:0:12:52} They will decide on lots of factors but the ones that, typically, come to the top of the pile are, how good a relationship would I have with this new company and the local manager, in particular? Are you going to be able to supply me consistently, on time, in full? What’s the product quality like? What are the prices like? Are you going to look after me? It’s really an emotional attachment that they have to their local branch and it’s difficult to break that cycle. If we come along and say, we’re better than your old suppliers, it’s a really difficult nut to crack. But if you can prove that you are equal, on all of those important factors and edge ahead on a couple, like service, for example, if they really can rely on you to turn up on time, with all the goods, when you said you would, that’s a major factor for them, because it means that they can get on with the job and earn their money and make their profit.

{audio:0:13:59} What dissuades customers from using you is, frequent delivery failures, quality issues that mean they have to go back to a job. That means that they are spending more money than they quoted the customer, which means they lose money on the deal and so on and so forth. That’s really the crux of the successful trade kitchen, if you can be consistent, be good on delivery, be good on product. Price is in there, but it’s not always top of the pile. You can win lots of new customers on the back of a great service offering.

{audio:0:14:38} What was the biggest challenge you had, in persuading builders to switch?

{audio:0:14:44} Howdens have been around since about 1997. They had been at it for 20 years. Persuading customers to come over was the biggest challenge. They are very loyal; they get used to trading with and working with certain products and working in certain ways. They’re fairly conservative people. Change is a bit risky for them; it’s a risk to their business. You have to be really good at convincing them that you won’t let them down and that they are going to get looked after in the right way.

{audio:0:15:23} You have to meet certain hygiene factors, in terms of product quality, guarantees, the shopping environment, being able to trade with them and payment terms. Those are all almost a given. What will crack it for you is being a reliable and consistent service provider.

{audio:0:15:50} Back to this example of me refurbishing my kitchen, how does the pricing typically work for me, as an end customer? I want to purchase from Howdens, so how does Howdens charge the builder and the builder then charge me?

{audio:0:16:09} In any kitchen purchase, you’re not just buying some units, some worktops and appliances. Typically, you’re having more refurbishment than that. In your kitchen, your flooring will be done. You might have a new boiler, new lighting, decoration; you might be extending. The kitchen gets wrapped up in all of that price of the things the builder is completing.

{audio:0:16:35} The process will be, you will go in and have your design done and you will choose the range, the appliances and the worktops and all those things. The designer will design the kitchen and then say, thanks very much, I’ll talk to your builder about the price and then quote the price to the builder. Let’s say the kitchen is £5,000, the end consumer doesn’t really see the line level detail of what the price is; they’re just interested in the total price of the job, from the builder. If he’s charging you £20,000 for a kitchen extension refurbishment, the kitchen price of £5,000 is within that. You might get an invoice that says, kitchen provided, £5,000. If you want more detail in that, I’m sure the builder would provide that, if asked.

{audio:0:17:32} Typically, you’re given a large quote for a lot of refurbishment. It isn’t a line level, this is £20, this is £50, this is £100 type transaction.

{audio:0:17:48} The builder charges the materials from Howdens, plus the time to fit?

{audio:0:17:55} Yes; and he will make a margin out of that because he’s adding some value to that, as well.

{audio:0:18:03} I suppose the builder goes to Howdens and they can pay within eight weeks, but you said that was a commodity in the market? That’s table stakes, at this point?

{audio:0:18:11} A trade business would expect to have 30 days payment terms, as a minimum. Often, he can be paid for the kitchen by the consumer, before he has paid for it. He’s managing his cash flow and he’ll have accounts at Benchmarx, Howdens, Magnet to spread his credit and have a couple of competitors up his sleeve.

{audio:0:18:41} Does the builder, typically, suggest more than one kitchen provider? If they’ve got accounts with Benchmarx, Howdens and Magnet, do they suggest all of them to the consumer?

{audio:0:18:53} They may do, yes. He may get a design done from Howdens and then walk next door to Benchmarx or Magnet and say, look, I’ve got a quote for £5,000 from next door; can you do it any cheaper? There might be some negotiation there, about that. That’s fairly frequent, by the way; that’s often the case, particularly when times are tough and volumes are hard and margins are stretched for everybody. Often, these places are right next door to each other, so it’s not too much for him to take a kitchen quote elsewhere and get another competitive quote.

{audio:0:19:38} You might then go back next door and say, I took your quote next door and they took £200 off it, what are you going to do? There’s quite a bit of haggling that goes on, in some cases.

{audio:0:19:52} How would you compare the price positioning of Howdens, Benchmarx and Magnet Trade?

{audio:0:20:00} All of them can compete on price. It’s really the margins behind that. The businesses like Howdens are vertically integrated and you look at their accounts and their stated margins are significantly higher than others that don’t have vertical integration. They have a cost and scale advantage there. They’re 10 times the size of their competitors. They all compete around the same price, it’s just the margins behind it that will differ.

{audio:0:20:49} Magnet has some vertical integration but Benchmarx doesn’t?

{audio:0:20:54} Correct. Magnet has manufacturing capability for cabinets and fascias, as does Howdens. Benchmarx doesn’t have that capability.

{audio:0:21:10} Why did you decide not to vertically integrate, at Benchmarx?

{audio:0:21:16} There’s a large cost in setting up or purchasing a manufacturing facility. You do the math that says, will we get a return on that investment, over time? Whether they will revisit that in the future, I can’t say. It’s just a huge investment, getting hold of that type of capability. It’s a strategic choice for the business as to whether you want to be a manufacturer, as well. The Travis Perkins group isn’t a manufacturer of things; it is a distributor of things.

{audio:0:21:56} Do you think we are seeing pricing pressure in the market, in the trade business?

{audio:0:22:03} My personal view is that I think you will. There are lots of news that says the market is very busy at the moment. We don’t know what that is going to look like in six to 12 months. If the housing market continues to bubble then there won’t be as much pressure. But if housing transactions drop and unemployment grips and things like that take hold, then that usually leads to more competition in the market. It’s just such an unknown at the moment. It’s a difficult one for everyone to call. When times are tough for everyone, as you’d expect, margins get thinner for everyone.

{audio:0:22:50} Going back to the point on margins, I was looking at Magnet’s reports from the parent company. They have a 40% gross margin and only a 4% to 5% operating margin, versus Howdens’ 65% and 15% - 16% respectively. There’s a huge difference in the margin profile of Howdens and even Magnet, which is also vertically integrated. What is it about Howdens that enables them to have such a large margin?

{audio:0:23:24} There’s a greater in-house capability to manufacture, at Howdens. They’re doing more things, so they will make worktops, for example, whereas Magnet don’t make worktops. They just have more capacity to do more things, at Howdens. Also scale. If you can go to a factory in Europe and say, I want to buy a million doors a year, as opposed to 10,000, that’s an awful lot of buying power and you’re going to get the best price, because of that. Scale is definitely an advantage. If you are buying chipboard for your factory, you’ve got that tremendous scale to buy better than smaller competitors. Howdens huge advantage is that scale that they have; they have tremendous power, in that respect.

{audio:0:24:27} How do the depot managers work, in managing pricing?

{audio:0:24:32} They will be given a target to achieve. Their local management will say, I need you to hit X% margin this year, this month and the manager, typically, has freedom to trade within that. He may take some sales that are very low margin, providing that he makes it up on other sales and achieves that target. Then there will be lots of conversations about whether you’ve hit your margin target this month, or not and trade that off against sales. There’s a lot of local flexibility to manage that themselves. That’s part of the model. Again, it’s about that local relationship, local entrepreneurship, and being able to take a loss on some, make a gain on others, provided you hit the overall number. If that’s the case, typically, everyone is happy.

{audio:0:25:29} Is that a gross margin target they have at the depots?

{audio:0:25:31} Yes; there is much more emphasis on that. Obviously, there are conversations about net margin and profitability, but that includes all the spend and cost and head count and things like that. On a day to day basis, the focus will be on your trading margin, gross margin and hitting that target.

{audio:0:25:54} That’s where the depot manager can have a relationship with those local builders and work a price with them, to maintain relationships?

{audio:0:26:00} Yes. The local builder knows that he gets a certain set level of discount and that could be different from the customer behind him, who may not be as regular, may not be as loyal. If the builder rings up and the manager is not there it’s, okay, Terry Brown, he gets 30% off every deal and everyone in the branch knows that. It’s a really tight, close-knit relationship, and a confidential one, obviously, that they have, that enables the manager to trade at the business they want.

{audio:0:26:47} That makes it interesting because it seems as if it’s very difficult for other trade businesses to compete with Howdens, given their scale and vertical integration; given the fact that the depot managers manage that margin, closely, on a local level? Barring a Brexit or a big macro event, that hits everyone, it’s difficult to out-compete them on price?

{audio:0:27:11} It is, yes. But as I said earlier, the price is not always top of the list. It’s in the top five, I’d say; it might be number three. But it’s much more about, are you going to look after me, as the local branch manager? When I need help, are you going to come and help me really quickly? Are you going to be looking after my end consumers, because my reputation is at stake, if it goes wrong? Are you going to deliver on time? You said you’d be here Monday; I need to start the job Monday afternoon so it all needs to be there. There’s much more at stake and at play than just price.

{audio:0:27:53} As I said, if you can work towards winning on those sort of things, you can convince customers to shop and, possibly, pay more. It’s pointless saving a few quid on a kitchen, if you’re having to go back, two or three times, to put it right. It may be worth paying that little bit extra, if you can rely on the service. It’s not impossible to trade. You’re right; it’s tough, but not impossible. Magnet and Benchmarx combined trade successfully against Howdens. Howdens advantage is scale and the number of branches that they have. Where I live, there’s probably four branches within 20 to 25 minutes of where I live, which makes it really easy to get hold of stock.

{audio:0:28:53} Talking about reliability and looking after the builder, what does Howdens do so well, in looking after builders, versus other players?

{audio:0:29:07} It’s managing that overall relationship. It is ensuring that everyone in the branch is on the same page, looking after that customer, that they get served quickly, that they’re responded to quickly; if things are out of stock, they are responded to quickly. Designs from designers are delivered promptly and quotes and designs are accurate. There are about nine or 10 things, I’d say, before you get to a price, that are really important to the builder, that you have to score on, to win, right up until the point of delivery.

{audio:0:29:58} Post-delivery, if there are changes or alterations or any sort of snagging to do, that that gets dealt with quickly and promptly. The customer will love you if you fix a problem within 24 hours. If it’s any longer than that, his patience starts to thin and his loyalty starts to wane. The quicker you can put a problem right, he will love you for that.
{audio:0:30:31} As I say, it’s relationship, delivery, quotation, accuracy, prompt recovery and then price. Price is, obviously, a factor; being in the right ball park.

{audio:0:30:56} Can we talk about the ‘always in stock’ tagline or phrase? How difficult is it to commit and meet this demand?

{audio:0:31:29} If you go to a Howdens, there’s a reasonably large warehouse attached, full of stock. Typically, customers don’t turn up and say, I’d like a kitchen today. There is planning and lead time, which could be weeks to months. Where they do need stock is for recovery, alterations, damages and so on. That stock there, really is a comfort blanket for the builder, should it go wrong, more often than not. It’s extremely important but, again, provided you can recover quickly, it’s not absolutely essential that you have that stock, there and then. But it is their preference. It is an advantage to have it there. Howdens are pretty good at either having it in stock or having it in stock within a local branch. As I said, their network is such that it can be accessed really quickly.

{audio:0:32:37} For Benchmarx and Magnet, it’s a bit more difficult, geography wise. Recovery might take longer and that’s, again, where Howdens can win, because they’ve committed to that significant stockholding and that level of stock, in each branch. It’s essential. I don’t think you can trade successfully, in trade kitchens, without a significant stock level to support that.

{audio:0:33:05} That’s critical, because the builder doesn’t get paid until he finishes the final job?

{audio:0:33:12} Yes. Let’s say your kitchen is due to be finished on Friday and, at 11 o’clock Friday morning, there’s a damaged door, he really does want to drive 20 minutes, pick up a new one, drive back, fix it and leave, as he said, on time. If he has to come back Monday, he can’t start the next job on Monday, so he lets a customer down, he’s incurred extra costs and it snowballs from there. Access to local stock is really important, or you need to find a way of getting it to him really, really quickly. That’s costly. If it involves couriers and overnight delivery and things like that, that can get expensive. If you really want to compete with Howdens, that stock investment is essential.

{audio:0:34:03} How do the smaller players, like Magnet and Benchmarx, do that?

{audio:0:34:08} I think they will attempt to replicate that, but their warehouses are, typically, smaller. I think they place more emphasis on recovery via transport, couriers and so on, rather than the local stock level. There just isn’t as much stock held in branch, as at Howdens. They’re proud of it. If you drive in front of a branch, you will see a big sign saying, every kitchen held in stock and piles of stock outside and just inside the warehouse door. It’s a very visible sign to customers.

{audio:0:34:50} The ‘always in stock’, it matters that it can get to the builder quickly, therefore, you need scale and lots of depots geographically around the country, to be able to do that?

{audio:0:35:03} Again, that’s certainly an advantage that Howdens has; access to stock is readily available. Even if they haven’t got it, the supply chain is such that it can get to the branch pretty quickly. But the local stock is pretty good. They won’t always have everything, but nine times out of 10, they’ll get it for you quickly.

{audio:0:35:25} Can’t Magnet use the retail units as quasi-depots?

{audio:0:35:33} Yes. I think the issue for Magnet is, the tradesmen like specific trade premises. If they are visiting a retail/trade premises, there’s a bit of a mixed feeling there about, is this a retail outlet? Is this a trade outlet? I really want a specific trade outlet for my needs and this is sending a few mixed messages, for me. That’s why, I think, Benchmarx was successful, because it didn’t mix retail and trade messages; it was a trade business, very similar to Howdens, in that respect.

{audio:0:36:13} What are Magnet doing, exactly, when they are repurposing or reformatting to trade business? Is that, similarly, on industrial parks and very separate to the retail, or do they have some kind of retail trade split, in some branches?

{audio:0:36:33} I’m not sure. As I understand it, there are a number of standalone trade outlets and then there are trade outlets combined within the retail. I don’t believe the format of the has changed dramatically, over the last few years. I think, they have less stock on hand, than previously and they’ve narrowed the stockholding down quite a bit, to focus on a few bestsellers, as I understand it. But the actual premises are split between trade and retail and solely trade premises.

{audio:0:37:10} How, exactly, do you look at Magnet competing with Howdens, given their new shift towards trade?

{audio:0:37:19} I think Magnet have gone after a slightly different sector of the market that Howdens don’t really, currently – I wouldn’t say take seriously – but their focus is much more on the local, small builder. They do have a contract side of the business, but it’s not as focused as Magnet now appear to be shaping up to. That’s a good thing for Magnet and I think they will do well. Those sort of customers are slightly different from your local builder. They want more professionalism, more focus, more TLC in terms of the things that they need. It’s much more about building contracts, over time, getting specified, than the local deal. Magnet are going after, as I say, a slightly different sector of the trade business, which may well pay off for them.

{audio:0:38:26} A sector with larger, project-based jobs?

{audio:0:38:28} Yes. A builder that is doing 10 to 50 houses, I think, yes, he’s a target customer for Howdens, but I don’t think they address it in the way that Magnet look to be doing it. Larger customers, such as 50 to 200, that’s not really Howdens main core business. I think it sounds as if that is what Magnet are after.

{audio:0:39:01} Can Howdens not serve that customer base?

{audio:0:39:04} In the past, the focus has always been on the small local builder. To be fair to them, that’s paid dividends for them. They’ve stuck to their guns, they’ve stuck to their strategy relentlessly, over the years and it’s paid off. It may have been seen as a diversion from that core business, in the past, in Howdens. There is a new CEO there; I don’t know what the feeling will be and I can’t speak for them, obviously. But up until recently, that was their focus, that small builder.

{audio:0:39:44} Moving on to look at product, specifically, now, I think Howdens have around 65 ranges, which they need to keep refreshing every year, to keep on top of new demand. How do you look at the optimal number of ranges, for trade players?

{audio:0:40:06} From a personal point of view, I think they’ve got it about right now. They’ve tended to drift upwards, recently. Between 50 to 65 is about right, I’d say. I think they got caught up in a bit of a product war with Wren. Wren have come onto the market, offering a huge diversity of products and, I think, there was a bit of a desire to replicate some of that, at Howdens. I think they’ve pulled that back now and realized that, actually, that might not be the right way to go and have gone back to a more focused range, which in the trade business, for me, is 45 to 65 max. If I was opening a trade kitchen business tomorrow, I’d aim for 50 ranges and let’s see where that takes us.

{audio:0:41:12} Wren is a retail format, offering different styles?

{audio:0:41:18} Yes, but taking significant share in a very short space of time, in the market.

{audio:0:41:24} How did they manage that?

{audio:0:41:27} They’re the only out-of-town kitchen retailer left now. If you exclude the DIY sheds from that, there is no one left on the retail parks. MFI used to be there and they, obviously, went some years ago. Wren have, effectively, taken that space; actual physical space, sometimes. They are aggressively marketing. You can see them on TV, in the national press; they’ve spent lots on marketing. They are also aggressive on price and selling tactics. It’s a hard sell, in Wren. So a combination of very aggressive tactics has had a large impact on the market.

{audio:0:42:23} How much cheaper are they than Howdens?

{audio:0:42:26} Everyone claims to be cheaper than everyone else. The reality is, everyone is charging about the same; it’s all about the margin behind that. Again, they are vertically integrated, to a good extent, and will be price advantaged, because of that. They will have more room to trade, because of that.

{audio:0:42:47} But they can’t be more advantaged, margin wise, than Howdens, given they have to pay for more expensive retail space and marketing?

{audio:0:42:54} That will be one of the trade-offs, certainly. No one else is doing it on retail parks, so their footfall in the branches will be matched by their location, so there are some advantages in that expensive retail space; that’s why you pay for it. But you trade that off on rent, certainly.

{audio:0:43:20} That’s interesting, because if they can at least match Howdens, somewhat, in the supply chain or vertical integration, to get lower cost prices, Howdens have such a large margin that they could take a much lower margin, much lower price for the end customer, and have a business that drives, as you said, a lot of market share or much more volume, from Wren?

{audio:0:43:53} I think they’ve already done that. They’ve taken on the DIY sheds in price and caused a good deal of disruption, in the market, that the sheds have had to respond to, I think. They will definitely have had an impact on the shed’s margin. Not so much Howdens because, again, it’s a retail versus trade business and there’s no real competition in the trade sector, against Howdens.

{audio:0:44:21} But do you see them competing against each other, in a way? How do you look at that?

{audio:0:44:26} Ultimately, if that builder is employed by the customer, to fit a kitchen and because they were shopping in Wren, one weekend, and they particularly like a design, then yes. The salesman has convinced them it’s the right one for them and it’s the right design and product. Finance is another option. If you’re shopping at Wren, you’d be offered some kind of finance deal. So yes, they are absolutely a competitor. If you look at their growth over the last few years, it’s been tremendous. The published figures are there. I think I saw 612 million, as their last numbers.

{audio:0:45:10} At a much lower margin, I imagine?

Former Commercial Director at Benchmarx Kitchens & Joinery, Travis Perkins

Competing with Howdens Joinery

Differences between a trade and retail kitchen buying experience

A typical trade kitchen transaction process

How pricing is set for kitchens in the trade channel

What builders care about and how it was difficult for Benchmarx to compete with Howdens