BHG: rapidly growing online DIY star

DIY has been one of the most rapidly growing retail segments during the pandemic. Swedish online DIY retailer BHG is a collection of small online brands that together constitute a big online retailer with revenues up to 12,6 billion SEK (1,2 billion €).

BHG has grown very rapidly. Since 2019, the company has grown by +100% and since 2017 growth has been a respectable +220%. This growth has been done profitably with operating margins above 4% since 2019.

Acquire and nurture

Source: BHG Q4/2021 quarterly report

BHG has an interesting approach to building a big retail company. The company uses acquisitions to drive scale and then nurtures the brands (currently 100+) to grow from tiny seeds to bigger retailers. In the process also the parent company can grow rapidly (and often with less bureaucracy).

Kesko DIY & BHG: Same tactics, different channels

DIY has been a big success also for Kesko. It has grown rapidly and also utilised the strategy of driving growth by acquiring a lot of small DIY retailers. Kesko has a strategy of becoming a leading DIY retailer in Europe. For Kesko the main channel for getting there has been through bricks and mortar stores. BHG on the other hand is aiming for the same goal via online.

Online enables BHG to move faster and thus the company has been growing much more rapidly than Kesko. A bit surprisingly, BHG is already 54% of the B2C revenue of Kesko DIY.

It will be interesting to follow how this competition pans out…