Kingfisher eyes franchise model to chart new territory

The world’s third-largest home improvement retailer already has wholly owned operations throughout Europe and China, but is now looking into franchising as a way to expand further into different territories, although it said in the short term it wants to concentrate on its existing markets.

Kingfisher head of international Peter Høgsted said: “The world is an interesting place and full of opportunities. I can imagine a franchise model for Kingfisher could be a way to expand our business across other territories.”

But he added: “There is massive room for us to expand on the national markets we are in. The concentration is to go deep into those countries, not thinly.”

Høgsted would not specify which countries are on the retailer’s hit list, but it is thought it will concentrate on the European market initially.

Kingfisher already operates 198 stores in France, 51 in Poland, 21  in Turkey as part of a joint venture, nine in Ireland, nine in Russia, 16  in Spain and 62 in China, where it plans to close about 20 stores as part of a restructure to revitalise its ailing business there. It also has a 21 per cent interest in German DIY retailer Hornbach.

Kingfisher has a long history of dipping its toe into international waters. In 2008 the retailer withdrew from Italy, blaming a worsening economy across Europe. In 2007 it pulled B&Q out of South Korea.

In the past Kingfisher has also withdrawn from countries including Brazil, Canada and Belgium.

Shore Capital retail analyst Kate Calvert considers franchising a good move for Kingfisher. She said: “Franchising is a fantastic way of getting into new markets when you don’t have the knowledge. It’s a perfectly sensible route, especially with the amount some retailers are over-spending in new markets. Kingfisher in China is a perfect example of that.”

But she warned that Kingfisher should not make any sudden moves in the area. Høgsted ruled out India in the near future, saying: “It’s far too early.”