Europe's biggest home improvement chain blueprints sustainability
Richard Gillies has one of the biggest jobs in sustainable business. As group sustainability director for Europe’s largest home improvement business, Kingfisher, he has hardly had time to catch his breath since joining the company 12 months ago. Twenty-nine years at the UK retailer Marks & Spencer’s saw Gillies rise to eventually lead the company’s world-renowned Plan A strategy under the tutelage of Sir Stuart Rose and, later, Marc Boland.
Today, another program — Net Positive — occupies his mind as Kingfisher bids to take soon-to-depart group chief executive Sir Ian Cheshire’s vision to turn the business into a restorative organization that makes a positive contribution to both people and planet.
I met with Gillies at an interesting time in the company’s evolution. Kingfisher hopes another acquisition will further broaden its reach into Europe and consumer offering with franchise stores (it seeks clearance to buy the French DIY chain Mr Bricolage). And Véronique Laury will become the fifth female leader of Britain’s top 100 companies when she jumps into the position vacated by Cheshire in January.
However well-cemented Net Positive is, the transformational shift that needs to happen across Kingfisher’s five operating companies — B&Q in the UK, Ireland and China; Brico Dépôt in France, Spain and Romania; Castorama in France, Poland and Russia; Koçtaş , a joint venture in Turkey; and Screwfix in the UK and Germany — presents a big challenge. And Gillies isn't particularly happy with the pace of change.
“There is a lot of organizational inertia,” he told me as we met inside the company’s London Paddington headquarters. “That is principally down to a lack of capability and capacity to make the changes required to become a sustainable business.”
However, it is a task for which Gillies was specifically poached to tackle — to guide the business through a significant change process, to understand what drivers are required to achieve the bold vision and to work with people in the business to make sense of “the big picture stuff,” as Gillies put it.
Net Positive is Kingfisher’s response to an uncertain future dominated by resource scarcity, social inequality and global climate change. The concept — making a positive contribution, rather than merely doing less bad — has grown in momentum in the last three years.
As one of the biggest users of timber in the world (relying on an area the size of Switzerland every year to service its needs), a restorative approach to forestry was an obvious starting point. “To say we’re sourcing from sustainable forests is not enough,” said Gillies. “We want to be contributing to the reforestation of the planet, not simply slowing deforestation down.”
While the concept adheres to a need to positively affect on the environment and on people, it also means maintaining social responsibilities as an income generator, an employer and a taxpayer. “Our drive towards Net Positive doesn’t stand aside from our responsibility to our shareholders to create wealth, or our responsibility to society to create employment, or to governments to pay and collect taxes.”
Instead, a range of targets for addressing both internal and supply chain goals focusing on such things as timber, community engagement and energy efficiency are in place to kickstart the Kingfisher revolution. “The targets are about getting us up and running. Once people get into the swing and start bringing their expertise and experiences to bear, you can create things you never would have thought would happen. People start to innovate and do things differently. It’s an exciting journey and lots of businesses are on it.”
Scratching the surface
You can tell that the pace of change is frustrating for Gillies. There is an acceptance that Kingfisher’s businesses are merely scratching the surface of the commercial opportunities afforded by a Net Positive approach. “The biggest barrier is momentum."
He asked me to imagine how workers build cars in a factory. “Each person might only put a left-hand wheel on a car all day, every day. And talking to those guys about change is very difficult.
“The vast majority of people in many, many organizations repeat pieces of work in the manner in which they have been taught, or the way the supplier or customer has asked.” The result is a successful business, said Gillies, made efficient by a set of behaviors honed over time. “But we’re now asking these businesses to do something different; for a significant redesign; for different ways of behaving; to put different values on things.”
You’re also asking companies to consider parts of their value chain they have never been asked to worry about before. Never before have teams within Castorama Poland been asked to worry about what their customers do with their packaging at home, for instance. They have only ever been asked to make sure the packaging is attractive and that the product inside doesn’t get damaged. “We’re asking for a range of new requirements. Size, disposability, cost, origin; a whole new set of parameters.”
So, how do you do it? How do you bring about this necessary change? “Sadly, there isn’t a silver bullet. You have to start breaking it down into pieces and use language that the business understands. Let’s not talk about carbon to the logistics team. Let’s talk about the metrics that work for them, like energy use or cubic capacity.”
It’s also important not to try to “cure” everything in one go, he said. “If we reduce the packaging on our power tools, we will not become Net Positive. We will not contribute to social equality or deliver deforestation goals, but we will have started.”
Part of this “moving in the right direction” is driving the strategy across the business right now. It’s not easy, as Gillies admitted, especially given the nature of the business which runs more than 1,150 stores in 10 countries with almost 80,000 staff.
Part of Kingfisher’s need to transport Net Positive thinking across its businesses will be met by the rolling out of the Kingfisher Exchange, an online collaboration platform hosted and managed by the online sustainability community 2degrees.
Since 2012, the Exchange has helped Kingfisher’s property teams share best practice and information as they bid to improve the efficiency and performance of their stores, warehouses and distribution centers across Europe. Now, the network will be extended to support Gillies’ efforts in sharing examples of how people within the business are realizing the commercial opportunities associated with Net Positive — from the development of new packaging to the creation of more sustainable customer propositions.
Acknowledging the importance of getting people engaged and willing to share best practices in the first place, Gillies is excited at the potential for collaborative technologies such as 2degrees in supporting his work. “We need the slickest, fastest, cheapest, most dynamic, most self-controlling, self-generating tools that will allow the free circulation of information and best practice.
“They will do this through their own motivation. But we are also putting in drivers, such as bonus targets for CEOs and transparent reporting across OpCos to assess relative performance, that will create demand and we will put roots to some of the answers like 2degrees.”
The last few years have seen some great examples of innovation being played out in a range of products — from B&Q’s easyGrow bedding plants, which use teabag technology, to Castorama’s 100 percent recycled kitchen worktops. The company's R&D team in Lille works with the procurement teams to develop new products. Much of this is driven by internal targets; getting rid of peat drove the easyGrow concept, for example.
But, unlike the fast-paced food and apparel sectors, which have quick product turnover, the home improvement market must balance innovation with meeting consumer demand. Consistency is required for building materials to meet building regulations, for example.
A shopper examines products at B&Q UK's redesigned Farnborough store.
Innovation is more likely to come in the form of service offerings such as tool rental. Although B&Q’s Street Club initiative — the company’s trial to get neighbors talking, sharing and saving at street level via social media — is under review before any more investment is committed, Gillies knows that evolving a model to rent goods to customers will be important in the future.
“If you want to lay a floor at home, you have to buy a range of tools to get the job done. But you’re only likely to lay one floor. And you’re more likely to do the job and get a quality finish if you can borrow the very best tools,” Gillies said. “You buy the consumables, so I get to make a margin on those and when your floor looks great, you are much more likely to go on to undertake another project. But I don’t need to sell you the tools.”
The rental model is something that is working better in different parts of the world. In the UK, almost all roofers buy nail guns. In Europe, it is almost 65 percent rental, where roofers rent their gun and buy their "nail-ammunition."
It is the diversity of its business model — and ability to best serve region-specific consumer needs — that the business is keen to take advantage of. Kingfisher does not run as a fully centralized business; significant buying is carried out at a local level.
Gillies believes local innovations will meet local needs: “It’s about appropriateness to market and what is most relevant. In Russia, fuel prices are relatively low. In Poland, most people have coal-fired central heating.
“We’re a group of separate companies so it’s much easier for us to respond and it’s the reason we should celebrate our diversity rather than centralize everything and say, ‘London knows best.’”
It is not a super tanker that needs to be turned around, but rather a fleet made up of both bigger, older, more complicated businesses, as well as younger and more agile organizations.
Yes, Gillies and his team in Paddington will continue to talk about Net Positive and the various OpCos will be assessed against the same targets. But Net Positive will be translated into terms that make sense to each business.
For B&Q in the UK, the One Planet Home sustainability framework pre-dates Net Positive and makes sense to its people and customers. Screwfix has just launched its True to Our Trade initiative — its own articulation of Net Positive and something that it hopes will resonate with customers.
But what about these customers? Do they really care about buying eco products? Does Kingfisher need them to care? “If you ask customers whether they care, broadly they say yes. But are customers buying more eco-products? No.
“Either the customers are being disingenuous or the retailers are not delivering the right goods and services to meet the unmet need.
“For us, it’s about creating products that are better for the consumers. Our teabag technology used for our bedding plants is better for the consumer. They are cheaper, more attractive, they are easier to take home (because you don’t get mud all over your car) and they are easier to plant.”
But while B&Q is not selling traditional alternatives to its teabagged bedding plants, it still continues to sell a range of eco-products alongside its traditional, non-eco versions. It offers two brush cleaning chemicals, for example — a white spirit and clean spirit, a white spirit alternative, which is “just as good at cleaning brushes and there’s no difference in price.”
“We still feel a lack of confidence to choice edit,” Gillies admitted. “But that shift will come and we have done it already. The trick for ranges of sustainable products is that the eco product needs to be better, faster, cheaper, sexier, easier, tastier and smarter.”
As I flicked through the Net Positive progress report, I’m overwhelmed by the challenges that lie ahead for this business. So, what’s it like doing this job? Does Gillies often consider the size of the task in hand? “It is a tough job because this is about business transformation.
“But the real buzz I get is that I haven’t yet met anybody that — underneath that hard, crusty commercial surface — isn’t a real, living, warm, breathing human being that gets this stuff at an emotional level and really cares.
“And you can begin to connect people’s rational business self with them as a person. What more can people want than to connect their work to their belief systems?”
With Cheshire’s imminent departure clearly in the thoughts of everyone connected with Kingfisher, I concluded our conversation by asking Gillies to consider how the average tenure of a group chief sustainability officer might compare with the average four-year stint of a FTSE 100 CEO. After spending so many years at M&S, what does the future hold? “It’s early days for the CSO. I don’t know; you’ll have to ask me in another three years.”