Drop in consumer DIY demand will increase Wickes’ reliance on trade customers, says GlobalData

Following today’s release of Wickes’ figures for Q1 FY2022/23; Kunaal Shah, retail analyst at GlobalData, a leading data and analytics company, offers his view: “Posting a similar set of results to key competitor Kingfisher PLC, Wickes’ Q1 performance is up against tough, lockdown-driven comparatives. Group sales remain well ahead of pre-pandemic levels, up 20.5% on Q1 2019/20, while core sales are 34.8% ahead of the same period.

“Do-it-for-me (DIFM) revenue is growing fast but is still behind pre-pandemic levels, 7.9% down on Q1 FY2019/20. It has grown 24.8% against Q1 FY2021/22, however unlike the rest of the business, DIFM had a much weaker performance during the pandemic as consumers were doing a lot of their own DIY in lockdown. Its performance has also been driven this year by consumers returning to normal life and spending less time at home. They are also cutting back on non-essential DIY as a result of budgets being increasingly squeezed and needing to divert spend to essentials. As a result, Wickes – like Kingfisher – could see its sales under increasing pressure later in the year.

“The boom in trade DIY can be seen through the increase in TradePro customers at Wickes, growing by 40,000 year-to-date. Just like TradePoint – B&Q’s trade-only arm – consumers get a 10% discount, but Wickes needs to further enhance its proposition and offer rapid delivery, similar to Screwfix Sprint. The combination of trade discount and rapid delivery will make Wickes’ trade proposition more robust than those on offer at B&Q or Screwfix – where customers get either rapid delivery and varying trade discounts at Screwfix, or a 10% discount and no rapid delivery at B&Q.

“Overall trade does look to have improved in the seven weeks following the end of Q1, with group l-f-l sales in the first 20 weeks down 0.6% vs the same period in FY2021/22, and 22.4% ahead of pre-COVID levels. GlobalData predicts the DIY & Gardening market will decline 4.6% in 2022, with volumes forecast to fall 9.2% as high inflation impacts consumers. Wickes will be relying on trade customers to boost its performance as consumer DIY demand continues to fall through the year.”