- Docenti:
Fabrizio Zerbini
- Studenti:
Carola Diligenti, Antonio Paolo Fucci, Maggie Purnawa Jeniawati, Yunho Kim, Yunhe Su, Maria Tuzi
Despite the rapid increase of digital innovations in retail, the DIY (Do-It-Yourself) sector remains inert, with digital strategies mainly focused on e-commerce. Younger customers no longer choose DIY retailers solely based on product assortments. They seek a marketplace where they can find the right products for their needs and value crowdsourcing such as product reviews and online tutorials (Euromonitor International).
Due to the Covid-19 pandemic, Italians quickly gained interest in DIY projects, raising the sector’s sales value by 9% in 2021 (Euromonitor International). Economic recession and high inflation are expected to drive consumers towards DIY instead of DIFM (Do-It-For-Me) in years to come, as Gen Z and Millennials – DigiCo’s main target - become increasingly interested in home improvement. Furthermore, customers have enjoyed the benefits of one-stop solutions and have become more comfortable with the online marketplace. We expect these trends to continue post-pandemic.
The €2.9B market, characterized by low margins and medium-high stock turnover, is highly
fragmented both at the European and Italian levels and is forecasted to grow at 2% CAGR until 2026 (Euromonitor International). Market characteristics and customers’ growing interest make the DIY sector attractive to potential retailers. But how can retailers combine and even enhance customers’ in-store experience with digital innovations across channels? DigiCo Home aims to answer all these questions by transforming the customer purchase experience using digital tools that ease purchasing decisions for simple-to-complex DIY projects.
DigiCo Home is a DIY store of 500 sqm located in Milan, near Porta Venezia, a residential but highly trafficked area. Our compact layout differentiates DigiCo from competitors, large retailers typically in suburban areas, often overwhelming to navigate, and are only accessible by car. We adopt a deep assortment strategy by leaving gardening and furniture out of our assortment and focusing on the largest three categories (bathroom and sanitary ware, home painting, and floor covering) that are not easily found at other mixed retailers. Our small store footprint combined with our assortment approach is enabled by the “endless aisle concept,” which allows in-store shoppers to order products online.
Our digital strategy amplifies operational efficiency and integrates valuable customer data across all channels. Customers have the ability to see product ratings and live stock availability and receive personalized product recommendations. By using algorithms to predict customer needs, we maximize revenues by increasing customer loyalty and purchase frequency, as well as boosting our cross-selling opportunities. The hybrid retail model unties DigiCo from traditional inventories and allows a significant store area for workshops. Through digital innovations in our operating model, DigiCo can further provide core differentiation through our e-commerce and store application, where we offer free tutorial videos and online help forums and connect customers with professional services for their DIY projects. All these tools allow DigiCo to become a place where customers can fulfil their DIY needs end-to-end. Customers can book a virtual appointment with professionals for consultation before booking services. Furthermore, we further diversify our revenue sources by including commission-based revenue without any liability of offering our own services. By being digitally adept, DigiCo can adopt a test-and-learn methodology with our retail marketing approach at a low cost. A set of coherent in-store and online promotions, including a social media campaign, will be used to engage customers and foster online purchases, which are expected to be ~50% of DigiCo’s revenues by 2027.
DigiCo also recognizes the importance of supporting customers’ sustainability goals and offers a green section of the store where eco-friendly products are sold and ranked based on energy savings. For many customers, sustainability factors are shifting from the “nice to-have” to the “must-have” category. DigiCo allows customers to see “green scores” on all products through DigiCo unique EcoCoins rating, which is rated based on a set of internal sustainability criteria. Once established in Milan, DigiCo will expand our reach to other urban and green European cities such as Berlin, Amsterdam, and Paris. We seek to continue to exploit our digital competitive advantages and offer an end-to-end solution for younger customers who value sustainability and creativity in their DIY needs. Our digital strategies allow us to stay ahead of our competitors in this fast-paced, urban, and digital environment.
