Australian Retailing under the microscope

It’s always interesting to see ourselves as others see us, so I read with interest UK Home Improvement and Gardening commentator Steve Collinge’s recent review of DIY and related retailing in Australia.

The full article is well worth a read. Click on Disruption just around the corner. Below you will find a few facts and takes from this.

“Bunnings has an existing store estate of 372 branches - 317 in Australia and 55 in New Zealand. Of the 317 Bunnings stores in Australia, 265 of those are big-box.”

By the way, in a comment to Steve Collinge’s article, Steven Doherty from Marketing Grunt in Melbourne advises that 77.4% of the Australian population lives within 2km of a major supermarket and 67.5% of the population is within 5km of a Bunnings store.

Back to Steve Collinge:

“Store cannibalisation is already impacting on the performance of Bunnings as the majority of new stores cannibalise at least some sales from existing locations and therefore deliver less truly incremental gains. Despite this, the business appears to be blindly continuing with a relentless new store opening programme, with 14 huge, new warehouses currently under construction and six upgrades and expansions.”

“I visited a number of Kmart and Target stores whilst in Australia and they were uninspiring, uninviting stores, stocked with low to mid quality unfashionable clothes that will not stand a chance once ASOS, Boohoo and the other big online players get a significant foot-hold in Australia.”

“The confidence with which Wesfarmers is currently choosing to stake its future and the income and livelihoods of its investors and shareholders on Bunnings, reminds me a little of the misplaced confidence with which they turned up in the UK, all bold and brash and threatening to transform the market, only three years ago.”

I’m not saying I agree with all Steve Collinge’s observations, though we did have the same view from early on about what would happen to Bunnings venture into the UK. You may recall my last comments on this – What is the price of arrogance?

It will certainly be interesting to see how Australia’s most dominant and successful retailer copes over the next 3-5 years.

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Jurek Leon is a storyteller, speaker and trainer. Subscribe to Jurek's FREE monthly 'Terrific Tips' e-newsletter at http://www.terrifictrading.com/terrific-newsletter/. Alternatively, email info@terrifictrading.com.