Building and construction retailer Beijer is trying out a new light-concept
The acquisition of eleven Cheapy units, with smaller store surfaces, gives an opportunity to provide full service using a central multichannel strategy for professionals.
”It will be a sales machine – and a pilot for our Nordic colleagues to follow”, CEO Anders Jakobsson says.
It’s been almost two months since Beijer Byggmaterial took over eleven Cheapy stores after that Beijer’s and DT Group’s owner Wolseley decided to sell the discount chain.
“For us It was like any other deal, and no group directive”. “So we have critically examined whether this is something that we believe in. But we chose the best facilities from Cheapy based on locations and potential.”
A strategic choice from Beijer is to come in parallel with a single strong local player and hope that the pro-customers will appreciate that it comes in an alternative in the form of another strong brand.
But Anders Jakobsson is also facing a smaller store size than common Beijer stores.
“I’m curious to test a new concept that we do not have an official name for yet, but we can call it “Beijer light”. This means smaller stores in size and a slightly smaller range, but well suited for ‘bread and butter’-products. The idea is not to run a discount concept but a full Beijer facility in light version. The challenge is to convert a consumer targeted unit and retain consumers who likes us and our know-how, but also attract professional customers.
Has something happened in the building material trade which led to this decision?
“We have an omnichannel strategy we started some year ago with e-commerce, traditional stores, applications, and now with a smaller facility size so we can offer a complete solution, and customers recognising us no matter which channel we meet them.”
The idea is to run a facility more efficiently in terms of costs and areas, but with access to a well-functioning logistics from a nearby major facility which also handles all distribution.
“50 percent of the time is spent in receiving goods, repackage it and get it out again. Now we can cut off the whole process from this concept. These procedures happens elsewhere, so we do not need the surfaces for it.
“It will be a sales machine. ”
How have you done so far?
“It is divided into two stages – and we have realized that there is more work put in compared to a traditional purchase. The first phase has been to get the assortment in place before we took over on July 7st. And it has been an incredibly rapid integration in eleven locations simultaneously. ”
“So far it has been a lot of summer season sales, but we have now entered phase two where we’ll meet professional customers. We need to strengthen the skills and train staff so they feel ready for them – and in the fall to go out with targeting marketing and invite professional customers on the location so they understand that it’s not a Cheapy – but Beijer concept”
“It’s now the really exciting work begins.”
But Anders Jakobsson is also grateful to Cheapy-staff for their skills in retail and customer service and hope to get more of it into Beijer.
Beijer’s counterparts in the Nordic neighbour countries, Stark in Denmark, Starkki in Finland and Neumann in Norway, has nothing similar to this smaller format that Beijer will create.
“No, and it makes this business case even more exciting.”
“I am in the Nordic cooperation board within the DT Group and this is a thing where we can create synergies for testing. Does it work as we hope and believe – well then maybe it’s something we want to try more of, both in Sweden and where it may fit in other countries. So it becomes a small pilot for other countries to follow. ”
Then I suppose you get insights from the Stark 24/7 shop in Copenhagen?
“Yes, it’s the same thing – and what I like to discuss when we get together. We’ve seen that there is a customer demand, especially from foreign labor, to have extended opening hours as they work longer. If it’s a success in Copenhagen, we can roll it out in all metropolitan areas.”
Beijer prefers to grow with acquisitions. But has also at some point chose to close stores when sales decline in the same pace as the local population decreases. And if the urbanization effects continues the result can be that some Beijer-facilities find it hard to deliver results which is in line with expectations.
“Facilities in smaller towns are often large in size and are difficult to get an effective staffing on. If we would have a concept that could work on a smaller and more efficient area, it would be a great alternative to closing down completely. This is what we want to learn.”
How do you look at the future behaviour of your customers?
“We have done several studies and had UK consultants from England with super skills in omnichannel working with us. We’ve come to an understanding of both the challenges and opportunities ahead. But we are targeting our e-commerce against pro clients – and maybe not primarily towards the trade, but by providing a tool that makes the professional customer’s day a little easier. For example, to keep track of the order flow and history, business proposals and whatever it may be . ”
“Most private customers choose after all to go and get the goods on site, even if they order through this channel. I thought more would find it easier to push the order through and get it delivered.”
Anders Jakobsson believe there are some challenges in getting Beijer’s own staff to work across the channels and convincing professional customers on this.
After the Cheapy deal there is still a strong demand to grow through acquisitions – and the situation is favourable according to Anders Jakobsson.
“Our owners Wolseley has made clear they want to invest in Sweden in particular as regards the Nordic region. Our focus is ‘bolt on acquisitions’, profitable and healthy companies that are similar to our branches in locations we aren’t present today. They usually belong to purchasing cooperatives as Woody or XL and with a 50-200 million SEK turnover.
You’ve just closed the account year. How did it go?
”The last financial year was a pretty tough year, and we were neither better nor worse than anyone else. But when we look back on it, it was quite ok. We deliberately decreased our profit last year to invest in skills exchanges for 35 million SEK.. Comparing the figures straight off that means we have heavily increased our profit this year. From January onwards, we have a positive growth in the industry. We had a mild winter, which contributed a lot in our market. The figures in March-April are doped as we had no winter so a lot of projects could get started”, Anders Jakobsson says.
“So, we are cautiously optimistic this year.”