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When Kingfisher, the owner of B&Q, opened its first DIY store in Poland eleven years ago, an elderly customer walked through the door and politely asked a bemused manager where the sausages were. She had mistaken the name of the chain, Castorama, for Carrefour, the French supermarket group, with a shop across the road.
More than a decade later and it would be hard to imagine the same thing happening. As thousands of builders and plumbers return home from Britain and boost their native country's economic revolution, sales at Castorama Poland are going through the roof.
The business, which is now the clear market leader in Poland with 44 huge DIY “sheds”, is trading so well that it is expected to make underlying profits of £115 million in 2008-2009 — enough to overtake Britain and become Kingfisher's second most profitable country behind France. Ian Cheshire, Kingfisher chief executive, says: “This is the jewel in our crown.
“Our two largest stores by volume anywhere in the world are here in Warsaw, and I think Poland offers one of the best growth opportunities of any of our businesses, because of the number of openings we could be seeing over the next few years.”
As B&Q suffers from the beginnings of a recession, Mr Cheshire's strategy as chief executive, a job he took in January, has been to divert more capital expenditure into higher growth areas. This could see the number of stores across Poland, Turkey and Russia double over the next three years.
Kingfisher is also considering plans to speed up expansion into Ukraine and Lithuania by seeking out franchise partners in both emerging markets — a first for the business and a model it may use to break into India. However, the group is clear that Poland offers the most potential. Kingfisher introduced Brico Depot, a smaller DIY-store format, into the country alongside Castorama two years ago, in an attempt to take more market share from its rivals. It plans to have 70 Castorama stores and up to 30 Brico Depots trading in the country by 2013.
Given the nascent nature of Poland's economic boom, the product mix in the Castorama stores is far more rudimentary than a British shopper would find at a typical B&Q. Instead of glitzy bathroom and kitchen showrooms, large parts of Castorama stores in Poland are given over to cement, plasterboard and doors. The Warsaw Targowek store, opened in 1999, sells 1,000 doors a week.
Despite talk of a concerted effort to appeal to more female customers, local managers joke that they are only likely to be interested in the few plants on sale out the back. Yet there are signs that this too could change.
As more Poles return from Britain, up to a third of the 1.2 million working in Britain are expected to leave to escape the recession, consumer tastes in their home country are changing.
Instead of basic white sinks or paint for the house, more Poles now want colour. They are trading up and buying more “decoration”, or home furnishings, which is forcing retailers to react.
Mr Cheshire concedes that the Polish economy will inevitably suffer in the global fallout from the credit crunch. A 17 per cent fall in the value of the zloty against the US dollar recently reflected a creeping caution about the country's prospects. However, Poland's GDP is still expected to be 5.5 per cent this year and retail sales rose by 13 per cent in the first half of 2008.
Mr Cheshire says: “When I came to Poland in 2000 we had ten stores and I remember thinking how good it could be. “There is enormous opportunity here to expand and to keep growing.”
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