Vision and business concept
The Byggmax vision is to be number one in the market for DIY enthusiasts.
The business concept is to retail building supplies and other products to DIY
enthusiasts at the lowest price. Shopping at Byggmax should be quick, cheap, easy and friendly.
The Byggmax concept and business model
The Byggmax concept and business model
- Low price and focused product range: Byggmax sells building supplies and other products to DIY enthusiasts. Our products have a high level of quality, the lowest possible price and the same low prices for everyone. With only around 3,000 items in the store, administration and management become simpler. To still be able to offer a broad variety, we have an even larger product range online.
- Drive-in model and self-service: In our drive-in model, customers pack their goods directly into their vehicles, helping us keep our costs down. The stores are located in suburbs that are easy to access by car.
- Continuous improvement: We challenge every process to enhance efficiency and to improve operating profits in all our areas of operation. We love to challenge old established truths.
- Strong corporate culture and cost focus: The foundation of Byggmax’s corporate culture is a genuine entrepreneurial spirit. The store managers and all employees feel pride in their own areas of responsibility. This means staying on top of costs and maintaining a focus on key performance indicators to perform well.
- Customer-oriented website: Because we have a focused product range and limited personnel at stores to keep our costs low, we invest particularly in our website. There, you can find detailed instructions for different DIY projects, a complete product range of over 50,000 items and naturally, information about all of our stores.
Business model Affordable high-quality products for the most common maintenance and DIY projects – this is what you can find in Byggmax stores, regardless of if you are in Sweden, Norway or Finland. We focus on consumers and in the product range you can find standard building materials, such as lumber, insulation, sheets and boards as well as paint — all at the same low price, regardless of who you are. With its focused range and the best prices on the market, we handle large volumes and can obtain economies of scale in purchasing and logistics.
Today, Byggmax has a strong market position, an extensive store network (with over 150 stores in the Nordic region) and a recognized brand. We intend to strengthen our market position over the long term by working systematically with sustainability issues.
Byggmax does not own any factories, instead purchasing goods from independent suppliers primarily in the Nordic region, though also from other European countries and Asia. Byggmax does not own the store premises either; it leases store premises from international and local landlords.
The service office is in Solna, Sweden. The business model serves as a platform to generate continued organic growth through both the expansion of the store network and increased comparable sales per store. Byggmax affects society where we operate through growth and job opportunities. We have over 1,000 employees and make many of our customers’ building dreams a reality
The picture above refers only to Byggmax business model.
Financial goals and strategies
Byggmax’s solid business model and the healthy conditions in the Nordic DIY market mean that Byggmax is well placed for continued growth, both organically through the establishment of new stores, and through continued growth in sales in comparable stores.
Byggmax’s financial targets
Byggmax has established the following long-term goals for the Group:
- Organic sales growth of 10 to 15 percent per year.
- The EBITA margin should be 7 to 8 percent per year. Previsous year EBITDA margin should be 9 to 10 percent per year.
- Distribute at least 50 percent of net profit.
Follow-up of targets
Sales for the Group decreased by 4 percent, and profitability measured as EBITDA excluding non-recurring items was reduced to 6.8 percent (8.9). Sales have been affected by a weak consumer market and the choice to reduce unprofitable sales at Skånska Byggvaror.
Byggmax posted average annual net sales growth of 9.8 percent during the 2010–2018 period.
Byggmax posted average annual EBIT growth of -4.1 percent during the 2010–2018 period.
Buildor was acquired in late 2015, and Skånska Byggvaror Group AB was acquired in early 2016. The two acquired business activities have shown lower EBIT margins than the Byggmax segment. The numbers above do not include extraordinary items. The outcome for 2018 was affected by disadvantageous weather conditions and a dramatic increase in the price of lumber.
Strategies for achieving the targets
The Byggmax Group launched an updated strategy in June 2017. The updated strategy is based on the attractive position the company currently holds in a good market, and on a number of unique strengths:
- Byggmax a strong brand that holds the low-price position.
- A unique store format, close to customers and featuring self-service.
- A strong e-commerce position.
- The lowest costs in the industry.
- Ability to deliver growth.
- Strong culture of cost awareness and entrepreneurship.
The future strategic orientation is based on two cornerstones: a simple, efficient operating model, and focused growth based on our strengths in store expansion, online shopping and product range development.
Simple and efficient operating model
The Byggmax Group works on continual improvement. This entails, for example, improving operations by further expanding its use of economies of scale at its purchasing function by handling larger product volumes and through procurement from low-cost countries. The organization will enhance its resource-efficiency by implementing continuous business process improvements and reducing overheads. Furthermore, Byggmax will capitalize on newly opened stores becoming more profitable once they reach maturity and on increasing sales in already well-established stores.
For the Byggmax segment, the focus for 2018 was on building for growth. We opened 18 new stores and 12 garden sections. The new format for smaller communities and the garden sections have performed well and are part of the future offering at Byggmax. In autumn 2018, we also tested a somewhat upgraded store concept at two stores. This initiative, known as Store 3.0, mainly entails our addition of certain selected product ranges and organizing the stores into clearer sections.
For Skånska Byggvaror, 2018 was a conversion year to a modern leader in “Garden Living,” i.e. primarily such items as sun rooms, greenhouses and associated products.
Focused organic growth
The Byggmax Group will deliver focused growth in three main areas
- New shops: grow to an identified potential of 210 stores in current markets (Sweden, Norway and Finland) and in addition test a smaller Byggmax format for profitable growth in smaller localities – a segment representing 20 percent of the market where Byggmax currently has a low presence. The smaller format is now available in eight communities.
Number of stores
The diagram illustrates the development of the number of stores since the beginning in 1993. During the past four years, Byggmax has opened an average of eight new stores every year.
- Online store: Byggmax launched online shopping back in 2008 and currently occupies a unique position with the possibility of gaining in online shopping moving forward. This, given the strong Byggmax brand, a strong position in the low-price segment, a broad online product range and the possibility of using the Byggmax store network to create efficiency in logistics and an omnichannel experience for customers. Byggmax aims to profitably grow faster than the online market.
- Product range development: In addition to continually upgrading its product range offering, Byggmax has developed a Byggmax concept for gardening products. The concept is built on Byggmax’s strengths: a store format with a drive-in and ease of shopping, a focused product range with quality products and the lowest possible prices. In 2018, the first Byggmax 3.0 store opened. A new store format with a focused product range, clearer store fittings and integrated garden sections. Quite simply, a better Byggmax.
Byggmax has a resource-efficient organization with the majority of business activities centrally managed. Aside from the sales force, which is based in Byggmax stores, most business processes are managed from the service office in Solna, Sweden, function-wide across all brands and stores, which promotes efficiency and the economies of scale that characterize the Byggmax business model.
Byggmax’s organizational structure is presented below:
Value drivers are factors that affect the development of Byggmax in the short and long term. The following are the most relevant according to management assessments. Many factors impact operations in both the short and long term and, as such, are listed under the category where they are considered to have the greatest impact.
- Trends in purchasing prices – Purchasing prices affect Byggmax’s gross margins. Historically, the market has passed on adjustments in purchasing prices to the customer.
- Competitor’s pricing – Byggmax pricing strategy is based on underpricing the competition with the aim of being the cheapest. Therefore the competition’s pricing affects margins.
- Short-term trends in the DIY market – Byggmax operates in the DIY market and, accordingly, its trends impact the company.
- Weather – Byggmax sells a substantial amount of products for outdoor use, which is why sales are impacted by weather conditions.
- The availability of attractive store locations – The establishment of new stores forms a key element of Byggmax’s strategy both in the short and long-term, and therefore the availability of new store locations is important.
- The ability to maintain the strong corporate culture – The Byggmax culture has played an important role in the company’s success, and retaining this culture is a key factor.
- The ability to implement the company’s strategy and business concept – Maintaining stringency throughout the range and pricing, as well as continuously tuning the organization through constant improvement are a few of the keys to success.
- The ability to renew concepts and strategies when needed – The Byggmax concept has remained true to the original since the beginning. However, the concept has developed over time and new ideas have been tested and incorporated or discarded.
- Long-term development of the DIY market – Byggmax operates in the DIY market and is thus impacted by market trends.
- Trends in the attractiveness of the low-price segment in the DIY market – Byggmax’s operates in the low-price segment. Trends in the long-term development of this sector are therefore importan. Trends in the long-term development of this sector are therefore important.
- Strategies of the competition and their implementation thereof – Byggmax operates in a competitive market and the actions of the competition affect the company.
- Trend in demand for sun rooms — Sun rooms represent an important product group for Skånska Byggvaror, one of the companies in the Byggmax Group.
- E-commerce trend in building supplies — E-commerce comprises a significant portion of Byggmax’s sales and is an area in which the Byggmax Group is investing.
- Sustainable development – Sustainability is important for Byggmax, and it impacts the Group’s decisions.
Byggmax’s competitors are other retail chains, online stores and purchasing organizations, as well as independent stores.
The Swedish market
The Swedish market has been dominated by Beijer and local DIY retailers, but the international chains and, above all, Byggmax are the companies growing rapidly. Many international chains, for example Bauhaus and K-rauta, are expanding.
The Norwegian market
The Norwegian market is dominated by a few strong chains with Byggmakker as the market leader. These chains sell to private consumers and the trade. Other competitors include Maxbo, Coop Bygg and Bygger’n.
The Finnish market
The market in Finland has been dominated by Rautakesko, with its K-rauta concept. In recent years, the only international chain to establish operations in Finland has been Bauhaus. Other competitors in Finland include Starkki, and SGroup.