A to Z Directory of Howdens Companies

Howdens Joinery

A very successful company!

Howdens is a relative newcomer to the market and opened their first depot in 1995.

Within the first three years the company had opened 86 depots throughout the UK, and by 1998 the company reported sales of £60 million.

The total number of depots around the UK will soon total about 300 and expansion has begun within North America.

Market Opportunities

The financial performance clearly indicated they had found a significant market for trade fitted kitchens and joinery products. The marketing people back in 1995 had the foresight to see scope for considerable business growth and these potential returns drove investment.

Although a new market for the MFI group the fit into the group worked well and a rapid expansion plan was conceived along with a significantly larger financial plan.

By integrating backwards and forwards the business improved efficiency and by end of 2002 there were over 254 depots throughout the UK.

Sales had grown from £20 million in 1996 with millions of pounds of investment, to £235 million and profits of £25 million in 2001.

Business Development Strategy

Howdens in 2002 was identified as a key growth area of the business as financial performance was impressive and the UK (and world) market was large.

Howdens began to look towards geographic and market expansion - particularly North America and new products.

Sound business principles of low risk and low cost were maintained.

Business to Business

Key to the marketing strategy was development of the business to business opportunities.

The key channel to market is small builders - this group services both businesses and domestic markets.

The new build and renovation market for the booming property letting (buy-to-let) market which had surged in the early 2000's on the back of low interest rates, high employment, house prices, mobile populations, and economic stability and a growing sophistication of purchasers.

These same economic factors encouraged home owners to develop their own homes - particularly kitchens, windows, doors and electrical appliances: washing machines, dishwashers and cookers. But also within general house development such as home extensions where a complete fitted kitchen with units and appliances were very popular.

As a result Howdens developed a 6% share of the kitchen cabinet market, 2% share of the Electrical appliance market, and 4% share of the doors and joinery market.

These markets in the UK alone are worth £5.7 billion. Howden's share = £220million.

Small Builders

The building 'game' is extremely geographically focused but disorganised. Building companies usually find expansion out of a close area difficult as diseconomies of scale - control and cost of moving staff and materials particularly hinder expansion.

Howdens therefore needed to be LOCAL. Local depots for local demand.

The principal success factors were identified as:

1. Marketing to builders

2. High quality products and the right range

3. Best local prices and delivery

Howdens have grown by increasing the local awareness of the service, continuing to develop their exclusive product range, through stringent quality control to reduce the possibility of builder call back, plus competitive prices and high product availability. Howdens has served its target population well.

To back-up this growth Howdens improved design, margins, their infrastructure and costs.

Builders found Howdens both convenient and of the quality their clients required, in short it helped their businesses prosper.

Howdens kept to their core values: Simple and straight forward.

Internally they monitored their Key Performance Indicators (KPI's) - sales, margins and profit; and motivated and managed their staff to meet their service and performance standards.

Externally, Howdens were developing a sustainable business through local business relationships, competitive pricing, and developing local accounts.

Depots concentrated on stocking the ranges, staffing issues, Computer Aided Design and local delivery.

Average sales per depot have increased progressively since 1995, to over £1.2million., with performance per depot reaching over £2m after 5 years.

The trade account figures indicate that growth is principally through the generation of new accounts and that spend par account grows slowly.

The total UK network target is 380 depots based around the major conurbations.

North America

As expansion continued throughout the UK Howdens introduced a US pilot of 12 depots in two locations: Atlanta and Charlotte to gauge demand and market performance in the most promising US region - the South East.

In the US the markets is similar, although houses tend to be larger, disposable incomes higher, greater spending on furniture and a dynamic new build sector.

Similar to the UK there was no specialist trade kitchen supplier.

Careful management has produced results as anticipated and growth in along a similar business direction.