A housing boom, a promise to meet competitors' prices, cheerful advertising and sausage sizzles have helped Bunnings become one of Australia's most liked and best performing retailers.
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Amazon by the numbers
Get to know the online retail giant before it sets up shop on Australian shores.
But now the country's dominant hardware chain faces three big challenges: fears Australia's housing market is a bubble, the looming expansion of online retail giant Amazon, and Bunnings' controversial expansion to the UK.
Investment bank Morgan Stanley this week said Bunnings had "never experienced a significant or prolonged period of negative or flat growth in housing prices" and tipped Amazon would nab 5.6 per cent in market share in hardware and furniture by 2026.
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The health of the housing market is beyond Bunnings' control, but the UK expansion and its response to Amazon are not.
Take online. You can buy a toilet from Amazon's US site. But here in Australia, Bunnings has virtually no online sales and no medium-term plans to introduce a full online offering.
Now, most visitors are faced with adding items to a "Wish list", which can be printed off for the shopper's next visit to one of Bunnings' 270-plus stores.
Bunnings' website changes depending on what store is local to where you are accessing it. There about 30 stores in rural and regional areas where a customer can place a tentative offer online, and the store calls the customer to confirm.
Bunnings had a good incentive to develop a strong website when rival Wooolworths launched a home improvement chain, Masters. Bunnings won that war - Masters was closed down in 2016 after billions of dollars in losses.
Bunnings has been able to get away with its weak online offering, despite digital sales accounting for 7.3 per cent of overall retail spending, or $22.37 billion in the year to April, according to National Australia Bank.
Customers can buy everything from spas to barbecues from the website of Bunnings' newly purchased UK hardware business, Homebase. About 5 to 6 per cent of home improvement sales in the UK are made online, said fund manager Ian Carmichael.
Improvements to come
Online purchases can be fiddly. The retailer must pick the item, pack it, send it off and deal with more returns than they would like. It's more profitable to make customers come to a store, and entice them to buy extra items when inside.
It would also be hugely expensive and complex to sell online the 40,000-odd products Bunnings stocks in its stores, products that range in price from pocket change to tens of thousands of dollars.
Bunnings Group managing director Michael Schneider said Bunnings would improve its website "over the next year or so" so people will be able to see whether the product they are searching for is available at the nearest store.
Customers would also be able to order Bunnings "special orders range" online in the same timeframe, he said. This range, currently only available for order instore, is the thousands of products from suppliers that are currently not available instore.
Mr Schneider said, "Our customers continue to respond well to our digital offer, with more than 13 million visits to our Australian website a month and more than 1 million visits to our New Zealand website a month."
He added that "customers enjoy the engaging experience they receive in store, particularly through our DIY [do it yourself] workshops and being able to seek advice from our helpful team.
"We will continue to listen closely to customers to understand their online needs and ensure that when we do offer products and services online they are provided in a way that customers will value."
Market dominance allows online no-show
Mr Carmichael, consumer analyst at Watermark Funds Management, said Bunnings' weak online offering was a "a reflection on the lack of competition in Australia" and left it vulnerable if Amazon started to sell high-margin, private-label products such as paint brushes and drop sheets.
"Online is a necessary part of doing business in markets where you've got more than one retailer," he said. "In the UK, France and the US, a good ecommerce offering is the bare minimum of what is needed to compete."
Mr Carmichael said while hardware was "one of the last consumer categories to take off in ecommerce, it's growing quickly and is where most of the growth is coming from.
"The data is pretty clear in the US and Europe, that this is the channel where DIY sales are growing quickly."
Retailer Home Depot has an estimated 20 per cent of the online DIY market in the US, which is close to its bricks and mortar market share, Mr Carmichael said.
Analysts said Bunnings' online offering was offset by its focus on range, pricing and service. Researcher Canstar said Bunnings was last rated as Australia's top hardware store for three years in a row.
And fund manager Bruce Smith said many Bunnings products were "probably resistant" to Amazon's expansion until the challenger started to offer three-hour delivery.
People people tended to buy stuff in Bunnings that they needed immediately or wouldn't necessarily buy online, he said.
Former Perpetual senior portfolio manager Peter Morgan said Bunnings' online offer was possibly a problem in the long term, but the health of the housing market was a more pressing one.
"It's potentially an issue but do I think Wesfarmers will be on top of it? Probably," he said. "Do they look like they are on top of it? No. It's an issue that there's longer term."
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