Big box disruption 2020
Bunnings, The Home Depot, Kingfisher and Lowe's Companies are all disrupting themselves
The demand curve for products
The demand curve for products
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As technology and other forces come to bear on them, most big-box home improvement retailers across the world are disrupting their businesses, which will have consequences for smaller independent retailers as well
HI News Vol. 4 No. 7
If we had to place a label on the next five to six years of development for big-box retailers in the global home improvement sector, it would most likely read "the era of self-disruption".

The four big-box home improvement retailers whose recent results HNN has profiled in this issue - Bunnings, The Home Depot, Kingfisher and Lowe's Companies - are all companies currently undergoing a form of self-disruption. All four of them, we believe, have arrived at disruption after undergoing quite similar experiences, though at different times and under different circumstances.

Looking at the history of the four big-box home improvement retailers we are considering, it's possible to see some similarities in the patterns of their development. One constant is that all four have encountered an event, or a series of events, that have frustrated their plans for expansion, and led them to rethink their growth strategies.

The general pattern is that these companies find themselves close to maturity in certain markets under existing business models. Typically they are not in contraction, but growth rates have slowed, or they have become sensitive to certain fluctuations.

To grow and expand, they seek out additional markets. This could mean exporting their business model to new geographical markets, or applying the familiar model to additional categories in home markets.

These efforts fail, typically, because they are usually an attempt at a type of evasion. The existing business model is well-known, comforting, familiar, and not only has proven to be a good success in the past, it isn't really in trouble, yet. It's still producing revenue and EBIT, just not enough to justify ongoing capex investment.

It takes the rough shock of a real failure in new markets for these companies to fully understand that their only alternative to a slow drift downwards is to self-disrupt, change existing business models, and discover new sources of growth. Often the shock, and the need for sharp change is so strong that this move is accompanied by a change of senior management as well.

To read more, please download the current issue on the following link:
Big Box Disruption 2020 - HI News Vol. 4 No.7
HI News Vol. 4 No. 7

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