Internship Study

Danish market analysis Schmidt Nordic, Kolding.

2012

SUMMARY

1. Competitors Analysis 3

1.1 Our seven bigger competitors 5

1.2 Schmidt through our competitors 7

2. Schmidt through interview in Odense with Karsten. 8

3. Consumers demand Analysis through our competitors…………………………………………………….11

4. Danish market Analysis………………………………12

5. How to grow up in Denmark? ............................166

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1. Competitors Analysis

Kitchen furniture consumption in Denmark amounted to EUR 379 million in 2010, growing by 3% in comparison with 2009.

Four main Scandinavian players provide 80% of the total kitchens sold in Denmark: Nobia Group, Ballingslöv Vordingsborg, and Nobilia.

TCM Group is Tvis/Modulia and Concepta, which are suppliers of kitchens, bathrooms and wardrobes.

Nobia group is HTH, Invita and Unaform

Tvis/Modulia (TMK) is the 3rd largest focused kitchen manufacturer in Scandinavia with strong brands such as Lifa design, Svane Køkkenet, Modulia and Tvis Køkkener.

Ballingslöv markets its products in Denmark under six different brands: Kvik, the most popular, JKE Design, Multiform, 3BO (storage products) and Geisler (worktops)

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Danish’s turnovers seller.

Company Country Sales in Denmark % Market shareNobia Group Sweden 189.5 50

Ballingslöv International Group

Sweden 55.4 14.6

Vordingborg Køkkenet Denmark 30 7.9

IKEA Europe Sweden 21.9 5.8

DESIGNA Denmark 16.4 4.3

JKE Design Denmark 12.5 3.3

Nobilia Deutschland 10.1 2.7

Tvilum Møbelfabrik Denmark 4.5 1.2

SALM France 1.3 0.3

Only two companies are out of Scandinavian market. Nobilia and Schmidt. Scandinavian groups have 97% of the turnover.

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1.1. Our 7 bigger competitors:

Invita:

Payment facilities: Zero payment, zero interest and zero fees up to 250.000 DKK over 24-48 Months.Lower price than Schmidt

Svane:

The most direct competitor of Schmidt kitchens, good quality, new kitchen concept (push door)Communication: Web spot.Payment facilities: Buy a kitchen without payment, without charges and without interest: in 24 months or 48 months.The Shop in Kolding is the most beautiful; there is kitchen like in a house, with walls

Kvik:

Ready to assemblage.Kvik invest a lot in advertising, having a TV Spot broadcast.Warranty: 25 years for all moving parts (drawers, rails, hinges…) and 10 years for the doors.

Kvik X-Large ® cabinets are 80 cm high and gives 15% more storage space than in a Basic kitchen. Depending on the table top, giving it a good ergonomic working height of 90-100 cm. Combining X-Large ® while Kvik XX-Large ® drawers, you'll actually 40% more space in the drawers than in a Basic kitchen. It's smart design

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Possibility to design kitchens on the websiteVery low price.

HTH:

Less quality than Schmidt but good onesHTH is part of the Swedish group Nobia, Europe's largest kitchen manufacturer.HTH is represented in 12 countries through a large retail chain of more than 130 inspiring shops.HTH kitchens certified by the Danish Indoor Climate Labelling.HTH factories follow the international ISO standards in environmental management.Payment facilities: Zero payment, zero interest and zero fees up to 250.000 DKK over 24-48 Months.Possibility to design kitchens on the website.

JKE:

Almost the same quality as Svane and Schmidt.Payment facilities: Zero payment, zero interest and zero fees up to 250.000 DKK over 12-48 months.

TVIS:

TVIS Kitchens is 100% Danish owned by private equity, Possibility to book meeting on the website.Warranty: a lifetime warranty on moving metal parts, 5 years warranty for others parts (possibly to extend by 5 years more if the kitchen in fitted by TVIS.Environment: Solid wood is FSC certified (Forest),

Designa:

Ready to assemblage, less quality but really cheaper, same king of shop as Kvik.

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1.2 Schmidt through our competitors

Schmidt kitchens is one of the most quality seller, our best advantage is that our bord (hardboard?) are thicker than the large party of our competitors (19mm, usually it’s 16mm) making it stronger.

The second Advantage is that we can offer all colour’s possible inside the storages, it’s usually just with or dark making the storage more beautiful and design.

Evolution 130 is still a good advantage for us, more storage, more practical at the same price even if some competitors have the same thing.

The bigger problem is that Schmit is not known enough in Denmark, and more expensive.

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2 Schmidt through interview in Odense with Karsten.

How many staff members?3 in Full Time, 2 owners and 1 employee, Bonuses just for the owner, fixed wage for the employee.

What is the relationship between owners and Schmidt Nordic? Not a large relationship, the marketing help is not important (and The owners have to pay a part of. No help to install the shop.

How many customers comes each days?50 during the last month (June) for only 3 sold kitchens, Namely 6%

What is the average price of sold kitchens?13.000 € , Recently, a sell of 34.000 € has been made.

What is the advantages for the new customers ? (gift ? reduction ?)Big book and the Glove (like in France)

How customers knows Schmidt kitchens ? ( word of mouth ? local advertising ? billboard ?)Only 10% of potential customer knows Schmidt. A large part of them know Schmidt because of the World of Mouth.

What is the brand image of Schmidt?Quality images but very expensive, more than the competitors.

Do you often speak about Evolution 130? Yes but it’s not a revolution, other kitchens seller have the same things, even better.

What is the best model selled ?

1. APPIA2. Arcos Brilliant

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Which kind of materials ?

Storage furniture

Lacquered, often Bright

Work surface

Often granite

Which colour?White

What is the average discount made? (Asked and done)10% maximum, There is always a problem of price. Schmidt is more esxprensive than the competitors like SVANE, 15% more expensive.

10% of the sold kitchens are for Schmidt Nordic, Morten and Jacob.

There is a partnership with real state agencies which advice customers to buy their kitchen at Schmidt.

MY REPORT ABOUT THE INTERVIEW

According to this interview, the biggest problem is that Schmidt is not known enough, a very poor number of consumers come, 50 in a month. Consequently, there is just 3 kitchens sold in a month!

The major party of the consumers knows Schmidt by the world of mouth, someone advising friends to come in Schmidt. That is a good way to have a good reputation but it’s not important enough to grow up and becoming real competitors in the Danish market of kitchens.

Investment is communication become a necessity. Communicate a lot represent a very big cost, a real investment but will probably impact a return on investment. More people coming at the shops, more sold kitchens, sales growing. We have to invest if we want to continue to sell Schmidt Kitchens in Denmark. By the way, there is a major thing important to do before invest in communication: increase the number of stores in Denmark. There is only 5 shops and this is not big enough for a big communication campaign.

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There is many ways to do communication; on the TV is the best way to be seen by a major party of person. The cost is, for myself, to expensive. But there is a cheaper way: Internet. Broadcast a spot on Internet cost really less and this is the second best way to make communication, a large part of person goes everyday on internet being more addictive on the advertising.Kvivi broadcast on the TV, Svane on Internet.I think that the next trainee coming in Kolding should focus on the way to communicate in Denmark.

According to Karsten, the relationship between Schmidt Nordic is not really intensive, no a big help to install the shop, not a massive marketing investment… People who decide to invest in Schmidt Nordic should be helped massively. It ‘is a big bet to invest in a company just known a bit. Every thing should be made to motivate us to increase sales and reputation of our brand. Schmidt has to be a good investment for them, apparently not the case for Odense.

Schmidt Kitchens is more expensive than the major part of our competitors, more expensive and less known that is not a good relationship is spite of our quality image.Evolution 130 is a big advantage in France front of competitors, not in Denmark; Kvik has the same thing, even better.

Only a maximum 10% discount is made for selling a kitchen. It would be a good solution to increase it, sell more taking down our margin. This is a good solution to favourite our notoriety and the world of mouth. More buyer, more person who speak about Scmidt, more people coming to the shops, more sold kitchens… We have to be on the same price line than our direct competitors, offering the same quality. There is no discount made when costumers use our payment facility, that is normal, I think.

Every personal member should be paid with bonuses, even the employees. They have to be motivate, increasing their wage selling more study on Danish market and competitors.

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3 Consumer’s demand Analysis through our competitors.

Doors’ material:

Invita: 15% Veneer, 15% Laminated, 70% Lacquered

Tvilum: 50% thermoplastic foils, 50% Melamine

Unoform: 35% Solid wood, 20% Veneer, 20% Laminated, 20% Lacquered, 4% Aluminium, 1% Glass.

Kitchen Style

Unoform: Compact kitchen 10%, Angle Kitchen 40%, Island Kitchen 50%

Kitchen Colour

Invita: White: 70%, Bright Colour: 30% Neutral Colour 0%

Door’s Style :

Invita: Bright: 15%, Opaque: 85%

Worktop Material:

Invita: Solid surface Material: 10%, Engineered Stone 10%, Laminated 50%, Tiles 0%, Steel 5%, Wood 20%, Glass: 5%

Number of built in appliances sold every 100 kitchens:

Invita: Hobs-Ovens-Hoods: 80%, Microwaves oven: 80%, Refrigerators: 80%, Dish-Washers: 80%, Coffee machine: 80%, Sinks:80%, Worktop: 100%

Unoform: 90% for all

It would be important to install the shop regarding the specific

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4 Danish Market Analysis.

Population : 5.551.451 (2010)Gross National Product/inhabitants : 300 241 DKK (2009) -> 40 032 € (8th)Biggest cities: Copenhagen: 1.100.000 h, Aarhus : 237.551 h. Odense : 158.163 h. , Aalborg : 100.873 h.

Opportunities Weaknesses

Politics

Economics

Easiest place in Europe to do business. (To up the number of shop in Denmark) due to very low costs.One of the most flexible hiring and firing rules (advantage when the activity fall or drop, reduce costs)Very good place to do business: natural gateway between the Northern Europe (Finland, Norway and Sweden) and the Central Europe (Germany, Poland…)The world’s lowest level of income inequality: increase the number of possible future consumer with the world’s highest minimum wage: increase the consumer’s budget (23573 $ / years or 1964 per month!)

High company tax rate of 25%: increase the price or low the profit margin;

France don’t export a lot in Denmark: Germany 21.1%, Sweden 13.7%, Netherlands 7.3%, China 6.8%, UK 6.1%, Norway 5.5% (2010)

The Danish market for kitchen is small: just 3% of the total kitchen market in EU (379 Millions of Euros)

Denmark doesn’t import kitchens: 5.7 % of total kitchens sold in Denmark (29 Millions Euros). 0,3 % of the total imports are from France in 2010. ( apart from Scandinavian suppliers)

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Low unemployment rate of 7.4% (Average of 9.6% in EU)

One of the 3 highest Human Development Index

60% of the kitchens sold are sold in a kitchens specialists (like Schmidt)

65 outlets needed to cover the Danish market Area

Denmark is the 3rd kitchen exporter in Europe with 124 millions in 2012, behind Germany and Italy.

Very hard to find a bank which can borrow money to finance new businesses due to the crisis

Big cities: Copenhagen: 1.100.000 h, Aarhus: 237.551 h. Odense: 158.163 h. Aalborg: 100.873 h. where it’s very important to be.

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Social and demographic Danish people spend lot of time at home after work: increasing the importance of kitchen, lot of time spend there.

Internet has become a very important trade channel in Denmark. Internet usage in Scandinavia is higher than anywhere else in Europe, but for furniture it is still quite low.

Technologic

EnvironmentVery important point in Denmark: One of the World Leader on Wind Energy. Member of Ecolex, First country to introduce an environmental law (1971), Member of Antarctic Treaty and Climate change-Kyoto Protocol, many environmental researches. Schmidt Kitchen respect the environment

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It’s very important to have partnerships with others company like estate agencies, there is many ways to find partnerships:

• The Association of Danish Furniture Industries : http://www.danishfurniture.dk. • The Furniture Retailers Association - http://www.moebler.com or

http://www.moebler.dk.• CODE, the Copenhagen Design Fair - http://www.bellacenter.dk or

http://www.furniturefair.dk - takes place in September each year at the Bella Center.

• Møbel&Interiør is the main furniture trade publication, published by the Association of Furniture Industries Erhvervsbladet – http://www.erhvervsbladet.dk - is a business magazine targeting small businesses.

• The Scandinavian Retail Institute – http://www.retail-institute- scandinavia.dk.• The Federation of Danish Industries - http://www.di.dk - and the official Danish

website - http://www.denmark.dk - are important contacts.• The Danish Import Promotion Programme– http://www.dipp.eu-maybe helpful.

It provides information on exporting to Scandinavia/

Danish market offers many possibilities to make business, low costs and many rules profitable for the companies to grow up. Despite, The difficulty to borrow beside the bank is a problem.

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5 How to grow up in Denmark ?

The Seventh bigger competitors in Denmark

SELLERS NUMBER LOCALITY

INVITA 22

Copenhagen and around (Roskilde, Hillerød, Glostrup, Køge), Hobro, Randers, Viborg, Tilst, Skanderborg, Silkeborg, Holstebro, Spjald, Ryomgård, Åbenrå, Esbjerg, Vejle, Hjørring, Aalborg, Aarhus, Aabenraa, Lyngby

SVANE 28

Aabenraa, Aalborg, Aarhus, Aars, Bornholm, Esbjerg, Herning, Hillerød, Holbæk, Holstebro, Horsens, Hjørring, Kolding, Copenhagen, Køge, Lyngby, Nykøbing F, Næstved, Odense, Randers, Roskilde, Silkeborg, Skive, Slagelse, Svendborg, Sæby, Vejle, Viborg.

KVIK 39

Aabenraa, Aalborg SV, Amager, Ballerup, Egå, Esbjerg, Fredericia, Frederikshavn, Frederikssund, Gentofte, Glostrup, Helsingør, Herning, Hillerød, Hjørring, Højbjerg, Holbæk, Holstebro, Horsens, Hørsholm, Ishøj,

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Kolding, Copenhagen, Køge, Lemvig, Næstved, Odense, Randers, Rønne, Roskilde, Silkeborg, Skive, Slagelse, Sønderborg, Svendborg, Thorshavn, Tilst, Vejle, Viborg

HTH 26

Aalborg, Hjørring, Skive, Viborg, Holstebro, Skive, Aarhus, Silkeborg, Herning, Horsens, Ølgod, Vejle, Kolding, Esbjerg, Aabenrnaa, Odense, Svendborg, Slagelse, Næstved, Holbæk, Roskilde, Glostrup, Copenhagen, Lyngby, Hillerød, Nykøbing.

JKE DESIGN 30

Aalborg, Amager, Århus, Bjerringbro, Brønderslev, Esbjerg, Grenà, Herning, Hillerød, Hjørring, Hobro, Holbæk, Holstebro, Høruphav, Horsens, Kolding, Copenhagen, Køge, Lyngby, Nykøbing, Næstved, Odense, Ringsted, Roskilde, Silkeborg, Skive, Svendborg, Thisted, Viborg, Vojens.

TVIS 19

Aalborg, Holstebro, Herning, Velling, Silkeborg, Hammel, Aarhus, Grinsted, Ribe, Sønderborg, Vojens, Odense, Nyborg, Næstved, Roskilde, Slangerup, Greve, Frederiksberg, Rønne.

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Designa 35

Aalborg, Aarhus, Amager, Bogense, Esbjerg, Faaborg, Farsø, Frederikshavn, Grenaa, Grindsted, Haderslev, Herning, Hillerød, Hjørring, Holstebro, Horsens, Kjellerup, Kolding, Køge, Lyngby, Møldrup, Nexø, Nykøbing F, Odense, Ringe, Roskilde, Ry, Rødekro, Skagen, Skive, Skjern, Slagelse, Taastrup, Thisted, Vejle

City by city

CITY InhabitantAabernaa 15,760Aarhus 252,107Aalborg 126,556Aars 8010Amager 171,210Bornholm 42,154Ballerup 46,914Brønderslev 11,840Bogense 3,679Esbjerg 71,579Fredericia 50,193Frederikshavn 23,295Frederikssund 15,468Faaborg 7,178Farsø 3,253

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Glostrup 21,650Grenà 14,308Greve 47,773Grindsted 9,548Hammel 6,881Hillerød 30,570Hjørring 24,867Herning 46,873Holbæk 27,195Holstebro 34,378Horsens 54,450Helsingør 46,300Højbjerg 22,000Hørsholm 45,865Høruphav 6,527København 1,213,822Køge 35,295Kolding 89,412Kjellerup 4,795Lyngby 51,449Lemvig 7,140Nyborg 16,492Næstved 41,857Nykøbing 19,236Odense 191,610Randers 61,121Roskilde 47,828Rønne 13,904Ringsted 21,412RyomgårdRy 5, 553Rødekro 6,098Silkeborg 42,807Skanderborg 18,253

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Skive 20,562Slagelse 32,133Svendborg 26,897Sæby 8,875Sønderborg 27,304Slangerup 6,822Skjern 7,665Skagen 8,515Thorshavn 13,000Thisted 13,005Taastrup 32,719Vejle 51,804Vojens 7,694Viborg 91,405

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Now, the best thing to do is to pick up cities where the population is more than around 30.000 inhabitants.

Cities Inhabitants Competitors’s Number

Competitors

Aarhus252,107

5 SVANE, INVITA, DESIGNA,JKEHTH.

Aalborg 126,556 5 INVITA,SVANE,KVIK,HTH,JKE

Amager 171,210 3 KVIK,JKE,DESIGNA

Bornholm 42,154 1 SVANE

Ballerup 46,914 1 KVIK

Esbjerg 71,579 6 INVITA,SVANE,KVIK,

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HTH,JKE,DESIGNA

Fredericia 50,193 1 KVIK

Greve 47,773 1 TVIS

Hillerød 30,570 6 SVANE,KVIK,HTH,JKE,DESIGNA,INVITA

Herning 46,873 5 SVANE,KVIK,HTH,JKE,DESIGNA,

Holbæk 27,195 4 SVANE,KVIK,HTH,JKE

Holstebro 34,378 6 INVITA,SVANE,KVIK,JKE,TVIS,DESIGNA

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Horsens 54,450 5 SVANE,KVIK,HTH,JKE,DESIGNA.

Helsingør 46,300 1 KVIK

Hørsholm 45,865 1 KVIK

København 1,213,822 5 INVITA,HTH,SVANE,JKE,KVIK.

Køge 35,295 5 INVITA,SVANE,KVIK,JKE,DESIGNA.

Kolding 89,412 7 INVITA,SVANE,HTH,KVIK,HTH,JKE,DESIGNA

Lyngby 51,449 5 INVITA,SVANE,HTH,JKE,

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DESIGNA.Næstved 41,857 5 SVANE,

KVIK,HTH,JKE,TVIS

Odense191,610 6 SVANE,

KVIK,HTH,JKE,TVIS,DESIGNA.

Randers 61,121 2 SVANE,KVIK.

Silkeborg 42,807 6 INVITA,SVANE,KVIK,HTH,JKE,TVIS.

Slagelse 32,133 3 SVANE,KVIK,DESIGNA.

Svendborg 26,897 4 SVANE,KVIK,HTH,JKE.

Taastrup 32,719 1 DESIGNA

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Vejle 51,804 5 INVITA,SVANE,KVIK,HTH,DESIGNA.

Viborg 91,405 5 INVITA,SVANE,KVIK,HTH,JKE.

There is 2 points to focus on, the inhabitant number and the competitors’ number.The minimum rate inhabitant number/ competitors’ number needed to install a shop is 10.000 inhabitant per stores.

Obviously, there is 17 cities which are a good opportunities for us:

Aarhus, Amager, Bornholm, Ballerup, Esbjerg, Fredericia, Greve, Horsens Helsingør Hørsholm København Lyngby Randers, Slagelse Taastrup, Vejle Viborg

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17 cities may are a great opportunity for us to expend our brand in Denmark, in addition to Aaalborg, Kolding, Odense and Odder in which we are

This the map of the potential cities   :

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