Kingfisher to shift sourcing away from China

City A.M. Reporter
KINGFISHER, Europe’s biggest home improvements retailer, said yesterday it planned to source more products from eastern Europe and Turkey to counter higher costs in China, and build a central warehouse in Europe to improve its supply chain.

The company, which owns B&Q and has suffered from weak demand due to sagging housing markets in many key countries, had tried to improve profitability by buying more goods centrally, and directly, from places like China.

But rising wages in China and other emerging economies, along with increased productivity and flexibility in mature markets, have been eroding the allure of offshore production.

“We are increasingly looking at product from eastern Europe and Turkey due to proximity and the shorter supply chain,” chief executive Ian Cheshire said in an interview on the sidelines of the World Retail Congress in Paris.

Kingfisher, which trades from around 1,070 stores in nine countries in Europe and Asia with a focus on Britain and France, is the world’s third-biggest home improvements retailer behind US groups Lowe’s and Home Depot.