for consumers to share their experience with projects, prod- ucts, and prices, as well as with providers and their service and quality standards. Ever more companies in the DIY sector are dealing closely with these networks and entering into active dialog with their customers.
Opportunities due to internationalization
Over and above the opportunities available in the German DIY market, the company’s expansion into other countries offers additional growth prospects. Numerous leading German DIY store players already took the decision to expand outside their own borders years ago. Outside Germany, they hope to benefit from greater sales potential and higher profitability than in the saturated German market. Not only that, internationaliza- tion also helps companies spread their market risks more widely. It should be noted, however, that regional DIY markets are increasingly gaining in maturity and that some EU coun- tries are having trouble recovering from the downstream impact of the financial and sovereign debt crisis on employ- ment and income levels. These factors increase the strategic, as well as the equity requirements placed in DIY retail players if they wish to generate attractive sales and earnings growth in their international businesses in the longer term as well.
Strategic opportunities
Our aim is to continually expand HORNBACH’s position in the European DIY market by means of organic growth. Our sales and profitability are to be sustainably increased by expanding our internationally successful retail format. This involves focusing on the strategic enhancement of our concept and the expansion of our store network at locations offering above- average growth potential in Germany and abroad.
The company’s strategy focuses on the concept of projects.
HORNBACH is increasingly able to differentiate itself from its competitors with this approach, which is reflected in its product range, service and pricing policies. Our solid fi- nancial resources, public corporate rating and the flexibil- ity available to us in refinancing the business on the capi- tal market will enable us to invest considerable sums in
differentiating HORNBACH’s format in future as well.
One unshakable component of our uniform strategy across
the Group is our reliable permanent low price policy. We believe that we are better able to retain customers at HORNBACH in the long term by offering and guaranteeing the best market price on a permanent basis. In particular, our main target group of project customers, who often un- dertake large-scale renovation work, needs to be able to budget in the long term. This is not possible with tempo- rary discount campaigns.
DIY customers are increasingly according priority not only
to competitive prices, but also to the quality and sustain-
ability of the products and advisory services on offer. Above
all the lifestyle-driven customer target group, who base their lifestyles on health and sustainability factors, is playing an increasingly important role in this respect. These so-called “LOHAS” (lifestyle of health and sustainability) mostly have above-average incomes, and are conscious, critical consum- ers. They accord great value to quality, brand and design. With our focus on the quality and sustainability of our prod- uct ranges, accompanied by professional advice, we are par- ticularly well-placed to meet the high standards of these tar- get groups. We are the DIY sector leaders, for example, in trading FSC-certified timber products.
We believe that we are excellently positioned in the sector
with regard to the ever more important modernization mar- ket and, within this market, especially with regard to the increasingly strict legal requirements governing building
energy efficiency. We will in future continue to present
complex projects, such as the insulation of facades or the replacement of windows and doors, as “Project Shows” at the stores. The “Project Show” is an innovative marketing instrument aimed at intensifying the project concept. Presentations held in special event sections at the stores provide customers with specialist advice, information and suggestions as to how they can undertake renovation pro- jects or realize their dream living space either under their own steam or with specialist support. These activities are accompanied by service packages from our tradesman service. Moreover, further sales momentum may also be
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provided by public sector programs subsidizing the reno- vation of old properties in terms of energy efficiency or to make them senior citizen-friendly. Here, we offer an exten- sive database of subsidy opportunities on our homepage.
Furthermore, we are expanding our range of services,
information and advice in order to attract new customer
groups to HORNBACH. These include home improvement
demonstrations at the stores intended to motivate custom- ers to do it themselves, and special workshops for women. These measures are backed up by the promotion of spe- cialist skills on the part of the store personnel with the aim of achieving a further increase in product expertise and advisory competence, and thus in customer satisfaction. Our DIY megastores with garden centers are also increas- ingly of interest to professional customers. Generous open- ing hours, the stocking of large quantities, the rapid han- dling of purchases at our drive-in stores and builders’ merchant centers, and the uncomplicated acceptance of residual volumes no longer required make HORNBACH an attractive alternative to traditional specialist retail or wholesale procurement sources.
We see the buy-it-yourself (BIY) or do-it-for-me market
segment as offering promising growth opportunities. This segment includes the target group of those customers who are on the lookout for solutions for their home improvement projects and who wish to purchase the product ranges themselves, but who then prefer to have the work under- taken by a specialist. We also view this market segment within the broader context of the ageing population in Germany and other parts of Europe. Our tradesman service aims to tap this potential.
For many of our project customers, it has become abso-
lutely normal to plan construction and renovation projects and the related purchases in detail on the internet. Since its launch in December 2010, our online store (www.hornbach.de) has grown into a high-performance virtual DIY megastore and garden center. The internet plays a key role in flanking our stationary retail business.
To account for this, we now offer this opportunity to pre- pare purchases at our stores with the assistance of our website not only to customers in Germany, but also to those in Switzerland, Austria, and the Netherlands. One core aspect of our internet presence is the direct rela- tionship our customers have to their preferred HORNBACH store. This way, our customers can inform themselves online about products, prices and availability and also compare articles. Numerous text and image guidelines of- fer ideas and assistance in preparing and implementing projects. Customers can have articles delivered directly to their homes by mail order or opt for our “Reserve online and pick up at the store” service. From just four hours af- ter the reservation, all of the articles in stock are ready to be collected from the desired HORNBACH store. This ser- vice is a real timesaver, especially for our professional customers. Not only that, the online shop offers us the op- portunity of acquiring new customers outside our store network catchment areas and arousing their interest in the HORNBACH brand.
The exploitation of opportunities is not limited to further
enhancing our concept or accessing market segments. We are also focusing on optimizing our operating processes. The processes involved in store organization, sales and the links to procurement and logistics are subject to a process of ongoing enhancement. This is expected to have a sus- tainable positive impact on the Group’s sales and earnings performance.
The internationalization of group procurement provides us
with broad-based access to global procurement markets, and enables us to forge strategic, long-term partnerships with suppliers and industry. These partnerships benefit both sides. We offer each supplier the opportunity to sup- ply all of our stores as efficiently as possible. Suppliers are able make large-scale logistical deliveries directly to each location, or to supply the merchandise indirectly via our central logistics hubs. We thus provide regional manufac- turers as well with the opportunity of growing outside their