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Kitchens – what’s in it for electrical retailers?

Kitchens may need a strong commitment to do them properly, but they bring good profits and solid customer demand, says Bill Miller, managing director of the Kitchen Bathroom Buying Group

 

Independent electrical retailers are under increasing pressure from rising costs, tough market conditions and eroded product margins.

They have had to face a huge number of challenges over the past five years and the most successful, who have overcome this adversity, are the ones with an entrepreneurial, flexible attitude to business.

Healthy businesses need to be constantly challenging themselves on how they can improve and better meet the changing needs of their customers.

Indies are fighting for their very existence. The traditional trading boundaries between supplier, retailer and consumer have become blurred. The rapid increase of internet sales, and the chase for continual growth, has led some suppliers to bypass retailers and sell directly to the consumer.

Threat
In addition, with distributors having to reinvent themselves, independent retailers feel under threat. This threat not only comes from traditional competitors, but from those that were previously considered suppliers.

The market for fitted kitchens is worth around £1 billion. The product is margin-rich and can provide dealers with a protected return. The majority of kitchen sales are still completed in traditional bricks-and-mortar showrooms, meaning the independent continues to be a great place for consumers to buy a kitchen.

Based on an average sale of just one kitchen a week, you could be looking at an annual profit of £130,000. This excludes margin from any appliances, a sink and tap, lighting and accessories, which are all linked to the purchase of a kitchen.

By adding kitchen displays, independents can also significantly enhance their built-in appliance presentation, as they can be displayed in a realistic kitchen setting. They are already selling increasing numbers of built-in appliances – some are replacements, but some will be for customers who are purchasing a new kitchen. As these customers are already in-store, it makes sense to offer them both kitchens and appliances.

Bill Miller, MD, KBBG

We have already seen movement in the independent electrical retailing market, with 40 Euronics members already displaying and selling kitchens. There are increasing numbers of retailers successfully doing the same, but it is not without potential pitfalls.

Getting started should be seen not as a challenge but rather a tremendous business opportunity. There is now a simple and cost-effective way for independents to make the move.

The Kitchen Bathroom Buying Group (KBBG) has formed a unique cooperation with Euronics to help its members successfully enter the kitchen market and support those who are already successfully selling kitchens.

The KBBG offers members a unique and comprehensive support package, backed by its extensive experience in the kitchen market. In addition to the supply of best-selling ranges of kitchen furniture, the KBBG also provides access to the purchase of leading ranges of kitchen worktops, sinks, taps, kitchen lighting and accessories.

To further support those independent retailers who are new to the kitchen market, the KBBG offers Euronics members excellent rental terms on the Compusoft Winner kitchen CAD system, a place on the Mascari Principles of Kitchen Design training course, help finding local approved kitchen installers and access to a specialist logistic and warehouse company – LVT.

Der Kreis, parent company of the KBBG, has nearly 40 years’ experience in the fitted kitchen market and is one of Europe’s largest and most successful kitchen buying groups – exclusively supporting independent kitchen retailers in nine countries with more than 3,000 members.

The KBBG is 100 per cent dedicated to supporting independent retailers. Our objective is to create a strong and sustainable independent channel, to ensure retailers achieve their full business potential.

Effective
The KBBG also offers retailers an effective and alternative way of buying. KBBG leverages better buying conditions for all of our members across a number of market-leading brands. In addition, we generate and provide access to a number of unique, own-label ranges and promotional campaigns only available to our members.

Entering the kitchen market is not for every independent retailer. There needs to be a total commitment to make kitchens as important within the business as appliances. Floor space needs to be found to display the kitchens effectively and staff need to be either recruited or found within the existing sales team. Those who are going to become the ‘kitchen champions’ will need to engage with customers, undertake the kitchen design and manage the whole kitchen project.

Despite these challenges, for those who are successful, the additional turnover and margin rewards will be significant and it creates an attractive and effective ‘one stop shop’ for your customers, both old and new.

 

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