Praktiker redefines the DIY center of the future

Praktiker redefines the DIY center of the future
Shopping made easy: six Easy-to-Shop pilot stores at the start

  • Pre-selection and optimized assortment facilitate purchasing decision
  • Better orientation in the stores and at the shelves
  • More than € 2 million invested so far
  • Better customer retention, more incentives to buy, higher sales expected

Gerlingen/Kirkel - 31. July 2006. With the opening of the first six Easy-to-Shop stores Praktiker offers its customers a new shopping experience. Easy-to-Shop means: a targeted assortment optimization facilitates and accelerates the customers' decision to buy. A clear store layout and a largely self-explanatory merchandize presentation in addition also set new standards in terms of logistics and clarity. "We offer our customers everything they need", stressed Praktiker's CEO Wolfgang Werner at the inauguration of the pilot store in Gerlingen, "but he will now be able to find what he is looking for much faster than before". This summer alone, Germany's second largest operator of DIY and home improvement centers invested more than € 2 million in the pilot phase of this new sales concept.

With around 270 locations in Germany, Praktiker is regarded as the price leader in this segment. Easy-to-Shop complements this positioning by offering not only good value for money but also by making shopping easy and fast. Thanks to its absolute customer orientation and reduction to the essentials this concept represents a true innovation in its line of business – and the key to strengthening the competitiveness and extending the market share of Praktiker.

Easy-to-Shop is Praktiker’s answer to the changing demands of today’s DIY center customers. Market researchers found out that for half of the German customers the price is the key factor when choosing where to shop. Only seven percent considered service to be more important. This not withstanding, other surveys found that 45 percent of all customers who frequent DIY centers on a regular basis complained that the service was insufficient. The reason: in most cases they found no assistance regarding orientation in the store, trying to find specific assortments or answers to product-specific questions relating to price and quality. Werner: “This is where Easy-to-Shop comes into play. We are creating the self-explaining DIY and home improvement center where such minor questions will be largely a thing of the past. This will allow our staff to concentrate even more on project advice and services in those areas where they are really needed“.

Reduction in the number of articles by 20 percent on average
Easy-to-Shop is a strategic concept that involves a number of different elements. The main aspect: in order to facilitate the customers’ decision to purchase, Praktiker noticeably streamlined the offer – by reducing both the number of articles and also the variety of models and brands.

That less can be more is an insight that Praktiker has realized ahead of others. Up until the year 2000, Praktiker featured more than 300,000 different articles that could be ordered by the stores at their own discretion. After the introduction of a centrally controlled modular system the assortment dropped to around 85,000 articles in 2002 and to 72,000 today.

The rollout of the Easy-to-Shop concept involves a further reduction of the assortment depth by an average of 20 percent. This means that, ultimately, the total number of articles on offer will level out at just below 60,000. This concentration of the offer thus goes much further than originally announced. And since Praktiker is also streamlining the brand variety, the number of suppliers (up to now 700) will drop by around ten percent. Praktiker’s CEO Wolfgang Werner is convinced that this is the right concept: “We make a meaningful preselection and thereby fight the waste of time which the customers experience nowadays in many mega-stores.“

One example: Before, Praktiker used to offer 36 different lawn mowers. Starting from 2005 the offer – in anticipation of Easy-to-Shop – was limited to 14 types in the smallest format: seven gas- and seven electric-powered mowers, sorted by performance and requirements and graded in three price classes. The result was that Praktiker sold more instead of fewer mowers. This was because the customer was now able to find the most suitable mower for his needs and his wallet much faster.

Some other topical examples from the pilot stores: when converting to Easy-to-Shop concept, the assortment of bathroom and kitchen fittings will be reduced from 245 to 102 and that of water heaters from 39 to 21. Where customers up to now could choose between 75 different toilet lids they will in future only find 55 models. Regarding hammer drills the choice of 16 models and six brands will be reduced to nine models from three brands. For jigsaws, the offer was reduced from 20 to 12 saws and the number of brands was brought down from six to four. And when looking for measuring tape, customers will in future be able to choose among eight designs from one make – up to now there had been 31 tapes from three suppliers on offer.

Another example demonstrates that this assortment streamlining also creates more price transparency: up to now, Praktiker offered seven different pliers. Prices ranged between € 4.00 and € 21.98, with the entry-level pliers of our private label Budget alone being followed by three products offered at almost the same price (€ 8.94, € 8.99, € 9.99). In the Easy-to-Shop assortment we will continue to offer the four-euro Budget model, which will be followed by only four brand pliers in a logical price range (€ 9.99, € 16.49, € 21.99). Although the selection is smaller it is now much more clear.

Better orientation and orderliness in the stores and at the shelves
Easy-to-Shop also means that customers will in future be able to find their way faster and easier at Praktiker than elsewhere thanks to a better orientation inside the stores and at the shelves. This includes

  • a clearly structured store layout with a broad axial center aisle, prominent promotion areas and an unequivocal navigation to the different departments,
  • easy to understand color-coded navigation systems supported by pictograms in the departments and at the shelves,
  • a logical presentation of goods that clearly differentiates between entry-level brands, private labels and brand products,
  • information columns with product descriptions that leave scarcely any more questions open,
  • direct correlation between sample products and the packed merchandize (e.g. bathroom furniture, electrical appliances) as well as core assortments and the corresponding accessories (e.g. paints and brushes)
  • clearly visible, unequivocal price messages (assortment prices = blue, promotion and special prices = red).

Result of many years of market analyses and monitoring
This new strategic orientation did not grow overnight. It is the result of analyses of the latest consumption trends, a continuous monitoring of our competitors in Germany and abroad and also the evaluation of successful sales strategies in other retail or services sectors. What simple purchasing means can best be seen when looking at the fashion chain Zara, IKEA, Aldi and Lidl or at the discount airline Ryanair, for example.

A project team of Praktiker then developed the concept to maturity within one year’s time. The team worked hand-in-hand with industry and the main suppliers who were to accompany us on this innovative road. Individual elements – such as the reshuffle of the lawnmower assortment – have already been rolled out to all our stores. Others took their final shape in a 5,000 sqm test store in Kirkel. We left nothing to chance but carefully planned, sorted and signposted each merchandize department in close cooperation with our partners from industry in a scale of 1:1 and then integrated these departments consistently into the overall concept.

The result was so convincing that we have rolled it out to six pilot stores instead of the originally planned three stores. They officially went into operation on 31 July after a six-week conversion period. In addition to Gerlingen, Easy-to-Shop can now be found at our stores in Weingarten (Southern Wurttemberg), Wolfen (Saxony-Anhalt), Chemnitz-Wittgensdorf (Saxony), Essen (North Rhine-Westphalia) and Delmenhorst (Lower Saxony).

No representative showcase stores
The decisive factors for determining the locations were the criteria regional structure, competitive environment and area productivity. We deliberately refrained from making representative showcase stores even more attractive. Instead, we opted for mostly older, mid-sized Praktiker stores with a selling space ranging between 5,000 and 6,000 sqm. This is the size of 47 percent of all Praktiker outlets in Germany. The pilot phase is to demonstrate that the Easy-to-Shop concept fits ideally to this “manageable“ format and that it represents a true value added for the customers and the company also under unspectacular and sometimes even difficult conditions.

The DIY and home improvement center in Gerlingen, a former location of Praktiker’s second sales division TopBau, meets these criteria. With a selling space of around 6,400 sqm it is – besides Weingarten – one of the two Easy-to-Shop pilot stores in Baden Wurttemberg. The store was gradually converted to the new concept over the last six weeks while the shop remained open. A particularly distinctive and immediately visible change was the broadening of the center aisle from 2.5 to six meters, which gives the store a new, clearly structured atmosphere.

Over the next years, Easy-to-Shop will be rolled out to all German Praktiker stores. Current plans involve the conversion of around 50 stores to the new concept in 2007 - another 100 locations are to follow in 2008.

Conversion costs and expected sales
Praktiker already invested more than € 2 million into the six pilot stores this year. Werner: “This investment was calculated sharply, used efficiently and is money well spent because, in the end, Easy-to-Shop results in more purchasing incentives, higher customer satisfaction and thus stronger customer retention. Therefore, we expect sales to rise by about 10 percent in the medium term“. Higher sales – at lower assortment depth – lead to a faster merchandize turnover at the store, lower inventories, higher area productivity and thus a higher profitability of our domestic business. “Easy-to-Shop therefore is not only good for the customers but also for Praktiker“, stressed Werner.