Mike Jeffree: Donaldson has made significant moves in the kitchen market recently. Is it part of a strategy to become still more of a finished timber products business?
Gerry Watson: The acquisitions of Kitchens International and Smith & Frater [in 2021 and 2020 respectively], created an exciting opportunity to diversify the Group’s product offering and establish an Interiors division within the Donaldson Group portfolio. Subsequent investment in each of the brands within the division throughout the past 12 months, including the rebranding of MGM Kitchens and Optima Kitchens, has allowed us to create a more comprehensive offering that caters to the whole house and home.
MJ: Are MGM Kitchens and Optima in different price point sectors of the kitchen market?
GW: Each of the kitchen brands within our Interiors Division (Kitchens International, Smith & Frater, Optima Kitchens and MGM Kitchens) have a unique proposition to the retail, contract and trade markets in which they operate, allowing us to cater to multiple segments and price points within the KBB (kitchens, bedrooms and bathrooms) sector.
MJ: Are there synergies between the kitchen operations – for example, does MGM Kitchens also offer the Optima brand?
GW: Each brand within the Interiors Division has a unique proposition supported by their own objectives and strategy to deliver relevant products and services to their target audience. At present there are few range similarities between the brands. Some appliance and solid surface brands are available across the businesses, but the specification available for each business will be relevant to the target audience.
MJ: How has MGM Kitchens developed since its launch last year and what is the ambition of the business in terms of branch numbers and geographic spread?
GW: Over the past 12 months MGM Kitchens has had a clear focus on developing its existing, significant account base with our German kitchen offering to our trade audience, which is available in just three weeks at each of the 12 MGM Kitchen showrooms throughout Scotland. Our newest showroom in St Andrews is already engaging with the local audience and delivering exceptional kitchens at unbeatable value.
MJ: How significant is the partnership with Magnet for the growth of the business?
GW: The partnership between MGM Timber and Magnet is at an embryonic stage, and we will continue to closely monitor and develop this partnership model in the coming months and years ahead. Since the partnership announcement earlier this year, we have opened two Magnet at MGM Timber showrooms within our existing Clydebank and Wishaw branches, with a third to follow at a new location in Broxburn in the coming months.
MJ: Similarly, what is the aim in terms of numbers of Optima showrooms?
GW: This will largely be dictated by the current economic climate. However, it is our intention to explore adding an additional one or two Optima showrooms at strategic locations in the central belt of Scotland to the portfolio in the coming 12 months.
MJ: Do the two kitchen operations serve both private consumers and the new build construction/developer sector?
GW: Each of our five brands (Kitchens International, Smith & Frater, Optima, MGM Kitchens & Magnet) operate in the contracts (construction/developer) sector and Kitchens International, Optima, MGM Kitchens and Magnet also serve customers in the retail sector.
MJ: More broadly, how has Donaldson seen the kitchen market develop in the last year?
GW: Market performance was slower than anticipated over the past six months. However, with new initiatives at each of our Interiors brands now coming to fruition, we are starting to see an increase in consumer confidence and a number of new and exciting opportunities in each segment of the KBB market and a more positive outlook for the next 12 months.
MJ: How have high interest rates and inflation impacted the business?
GW: As is the case for most businesses, high interest rates and inflation have undoubtedly had an effect on sales and price points over the past 12 months. [But] with small glimmers of hope in the economy and a diversified offering across the Group portfolio, we are looking forward to the journey ahead.
MJ: What is the outlook for Donaldson’s kitchen businesses?
GW: With clear objectives, our Interiors strategy provides a framework for decision making that has allowed us to develop clear plans to support and grow each business. We are already starting to create and explore a number of exciting new opportunities in 2024 and we have a more positive outlook for the year ahead.
