Each of our local depots are dedicated to helping local tradespeople build their businesses. Within each one, builders can find the best local prices, plentiful stock, design support and knowledgeable, proactive staff to support their needs.
At a local level, a Howdens depot opens with a manager and a small number of staff. The manager and staff are responsible for growing their account base and their sales, and for managing their own depot margin. Profit-sharing is calculated locally, not centrally. Everyone is strongly incentivised to grow a profitable, local business.The depot manager’s autonomy is a key element of Howdens’ business model. Depot managers hire their own staff, do their own local marketing, set local pricing, manage the level of discount applied to their account holders and manage their own stock levels to suit their own local customers. This means our distribution operation has to be attuned to the different needs of around 700 depots. No two deliveries are alike, and each one must be correct, complete and on time.
Trade professionals have the know-how to install our kitchens to the highest standard, which is why we only sell directly to trade.Howdens is focused solely on the small builder and everything the business does is geared towards making the builder's life easier. Howdens offers builders a relevant, well-designed, high-quality range of kitchens, together with appliances, joinery, flooring and hardware, via trade-only depots that are always in stock. The builder benefits from a confidential discount and good credit terms that allow him to manage his business and determine an appropriate margin for each job he undertakes.
We have more than 700 depots nationwide that have thousands of products available from stock. This means that builders' can get the products they need, when they need them and our builders customer can get free design advice and see many of our products first hand.
The business has identified scope for up to 850 depots in the UK, and opened 39 new depots in 2019, including five in Northern Ireland.
Howdens also expects to be able to realise further growth from the 25% of depots that are not yet mature, and to effect continuing performance improvements across its depot portfolio. Howdens benefits from a flexible, scalable infrastructure that will allow it to deliver further efficiencies as the business grows.
Our strategy is to expand our depot network and expand the range of products we can sell to the builder, increasing our total addressable market.
While we take account of market conditions in planning the roll-out of new depots, we continue to see untapped requirement by builders for a local and convenient service in much of the country. This need is illustrated by the fact that when we add a new depot near to an existing one, we see an overall sales increase in the area within a short time.We believe that there is some way to go before we have saturated the UK market and we see continue to see significant opportunities to grow our business, with scope for up to 850 depots, some of which will utilise a smaller depot footprint.
A typical depot currently occupies around 10,000 square feet, is located on an industrial estate and costs a fraction of high street retail properties. We have been looking at using new storage methods in our depots which will allow us to look to redesign them, including the possibility of opening new, smaller, depots that are roughly half the size of our traditional offering.
Throughout 2019, we progressed our testing of a new depot format, the new depot layout included better space utilisation, open offices to bring our depot staff closer to customers, a small range of everyday essential items alongside a new counter area. The results have shown a reduction in picking times, greater staff visibility and increased space in which to display kitchen designs – all with the advantage of the same fit-out cost and a smaller footprint.
The redesign enables us to open more depots, further improving local stock availability and helping builders to mimic our growth
At the end of 2019 we had 25 depots in France and two in French-speaking Belgium – managed by the French structure.
During 2019 we added 5 depots in France, mainly around our cluster of existing Paris depots, allowing us to capitalise on the brand presence and customer base which we have built in that area.In contrast to the UK, we have found that these markets have a lower proportion of integrated kitchens and a higher proportion of kitchens that are sold through retail, DIY and specialist shops. This provides us with potential growth opportunities as the kitchens purchased become more integrated and customers appreciate the benefits of buying a kitchen in a different way, the Howdens way.
In 2019 we opened a total of 38 new depots across the UK, including 5 in Northern Ireland.
This represents an increase in the number of openings compared to recent years (in 2018 we opened 33 and 19 in 2017).
In 2020 we have plans to open a further 30 depots across the UK using the new format and evolving the already successful design to continue to best apply it across the existing depot estate.
We hold regular feedback sessions with our trade customers so that we can identify any areas where we need to improve our offer.
Hundreds of our trade customers have now attended these sessions which shows that our builders appreciate that we’re listening to them.Our depots view our relationship as a business partnership, so it’s in their interests to invest their time to help us make it even easier for them to serve their customers.