Bunnings has warned its suppliers to prepare for a major expansion after the hardware behemoth swooped on 11 former Masters Home Improvement stores across Australia and announced plans to open nine new stores across NSW, Victoria and Queensland.
The transformation of the Masters sites has piqued the interest of the competition watchdog but only in relation to the four Masters sites that represent new trading locations for the Bunnings network.
More BusinessDay Videos
- Video duration
- 01:42
Wesfarmers half-year mixed bag
Wesfarmers half-year mixed bag
The retail giant reported strong results from Bunnings, Kmart and Officeworks, but a decline in earnings from Coles and Target.
Up Next
Achieving gender equality
- Video duration
- 01:32
- Video duration
- 01:32
Achieving gender equality
Achieving gender equality
Former Sex Discrimination Commissioner Elizabeth Broderick and Unilever's Clive Stiff discuss how businesses can achieve gender equality. (Vision courtesy Unilever)
Up Next
ANZ promises accountability
- Video duration
- 04:07
- Video duration
- 04:07
ANZ promises accountability
ANZ promises accountability
The bank has breached the rules 27 times, but now ANZ's CEO is promising greater accountability.
Up Next
Bank boss rejects naming and shaming
- Video duration
- 01:46
- Video duration
- 01:46
Bank boss rejects naming and shaming
Bank boss rejects naming and shaming
The head of the Commonwealth Bank has rejected any suggestion the identity of senior executives who oversaw scandals within the bank should be revealed.
Up Next
Gas producers locked in legal battle
- Video duration
- 01:52
- Video duration
- 01:52
Gas producers locked in legal battle
Gas producers locked in legal battle
After splurging $200b on the world’s biggest gas export plants, producers are now locked in legal battles with contractors over who should shoulder billions of dollars in liabilities sparked by delays and cost blow-outs.
Up Next
Rates on hold for foreseeable future
- Video duration
- 01:59
- Video duration
- 01:59
Rates on hold for foreseeable future
Rates on hold for foreseeable future
The Reserve Bank leaves the cash rate at 1.5 per cent - and Peter Martin says interest rates are not about to change anytime soon.
Up Next
Scott Morrison's budget burden
- Video duration
- 01:46
- Video duration
- 01:46
Scott Morrison's budget burden
Scott Morrison's budget burden
Can Scott Morrison really tackle housing affordability, rental stress and homelessness in his second budget? Michael Pascoe comments.
Up Next
When household savings aren't just savings
- Video duration
- 02:21
- Video duration
- 02:21
When household savings aren't just savings
When household savings aren't just savings
How can we keep boosting our spending by a lot more than our income without it all ending in tears? Michael Pascoe comments.
Wesfarmers half-year mixed bag
The retail giant reported strong results from Bunnings, Kmart and Officeworks, but a decline in earnings from Coles and Target.
Seven of the Masters stores slated for transformation are in suburbs where there is already a Bunnings warehouse and the chain is shutting these stores and moving into the revamped Masters premises.
Australian Competition and Consumer Commission chairman Rod Sims said there were only a handful of new stores, most of them were "swaps" from current Bunnings stores.
Related Content
"We've also got to assess how much interest there is in these stores from other hardware players," Mr Sims said.
"We are still looking at it but we are conscious there are only a small number of new stores and there ... aren't a lot of other people clamouring to take them over as hardware stores."
Mr Sims said the ACCC also made a distinction between somebody who gets dominance by outplaying everybody else on the field, versus someone who does it by mergers that shouldn't happen or any "anti-competitive behaviour".
"Bunnings are in the best place to buy them but they've really earned their way into that," he said.
The Wesfarmers-owned Bunnings would not comment on the new store openings except to confirm its planned store rollout included a number of former Masters stores.
In a communication sent to suppliers, which BusinessDay has seen, Bunnings said it would be embarking on a "very busy new store opening program" from April to September.
"We ask that you [suppliers] plan ahead to ensure you have sufficient stock and representative coverage to support the current store network as well as the ... new locations," Bunnings chief operating officer Clive Duncan said.
Mr Duncan said the Masters sites were subject to Home Consortium's agreement with Woolworths and Lowe's.
Home announced the acquisition of 61 Masters properties and 21 development sites in August last year but the deal, led by former UBS banker David Di Pilla and backed by retail rich-listers Morry Fraid and Zac Fried, who own Spotlight and Anaconda, as well as Chemist Warehouse owners Mario Verrocchi and Jack Gance, still requires final approval from Lowe's.
Lowe's was Woolworths' US partner in the disastrous Masters hardware venture and the two retailers have been mired in arbitration for months after failing to reach agreement over a value for Lowe's stake in the failed operation.
Including its planned makeover of the 11 Masters properties, Bunnings will open 21 new outlets by September, taking its total store network to about 335 stores.
It's not clear what Bunnings will do with the properties it is exiting, which include two that are held by the BWP Trust.
Bunnings is competing with a consolidated independent hardware sector, following Metcash's $165 million acquisition of Woolworths' Home Timber and Hardware business in August last year.
It's not yet known whether Metcash will unite the mainly franchised stores under a single brand, with sources close to the operation suggesting a decision will not be made until later this year.
Bunnings' expansion plans for Australia reveal Wesfarmers' $705 million purchase of UK hardware outfit Homebase has not blunted its attack on the local home improvement sector.
Earnings from Wesfarmers' home improvement operations in Australia and New Zealand surged by 9.8 per cent in the first half to $770 million and revenue expanded by 8.3 per cent, supported by the collapse and closure of Masters.
However, its fledgling UK hardware business, Homebase, slumped to a $48 million loss in the half as it pushes ahead with plans to transform the UK and Ireland store network into Bunnings UK.
Wesfarmers launched its first Bunnings UK pilot store early last month. At its half-year results, managing director Richard Goyder said further pilot stores were already under development.
0 comments
New User? Sign up