The ACCC is currently looking at the merger of Adeliade Tools into the Bunnings stable. They aren’t thinking it is a good move by the tone of their statements so far. This got me thinking about Bunnings, their place in the market, have they become too big, are there too few competitors left to create a fair market. There are a number of questions that may interest us to explore. Another question is have the ACCC left the action until too late (has Bunnings already killed the market)?
There has long been a problem with Bunning’s dominance in the h/w field. They were lucky in that they hit upon a formula that worked when they first opened up. Unfortunately they haven’t modernised their systems at all since then and their market dominance has just grown.
They are now at a point where I think that only a large established player from overseas (we don’t have any real competition for them here) could challenge their grip on the market.
They were lucky in so many ways, including perhaps not being seen as an essential service.
Considering how the banks and supermarket chains have evolved.
What would we say if it came to pass there was just one big bank, ubiquitous and with much more than 50% of the business? Or the same with just one giant supermarket chain?
Has Bunnings really come in under the radar?
I wonder what the professional builders and tradies think?
@Fred123 beat me to it. Reality is our market and we customers are unlike those in most other countries, and even Wesfarmers Bunnings foray into the UK was a major write off with failure and retreat, as was Woolies-Lowes Masters effort here, but with Wesfarmers management more accepting of failure and cutting their loss when their recipe wasn’t working.
I hope our brilliant managements don’t try to go into the US unless they learn something from both Lowes and Home Depot about how American consumers are unlike our own.
General observations indicate that it isn’t a good move. When Bunnings move into a local area, other smaller (usually family run) retail businesses tend to disappear over time. The only ones that seem to remain are the (major) chain stores such as Tool City, Sydney Tools, Trade Tools etc.
Losing another direct competitor is not good for the consumer in the long run as product variety will decrease while product costs may increase.
Whilst the Mitre 10 and such like stores disappeared, a locally grown hardware outfit, Cairns Hardware, has gone from strenght to strenght, with numerous buildings in Cairns and outlets in Cooktown, Mossman, Atherton, Mareeba and Innisfail.
It was sold some years ago to Dahlsens in regional Victoria for $22 million but continues to operate as Cairns Hardware.
I believe that the have the lion’s share of the commercial sector and are way too strong for Bunnings to affect.
Bunnings have driven the local independent hardware stores in my regional area out of business. No having abandoned their lowest price guarantee no doubt they will start easing up prices.
Of course some of us may have always read the slogan in two parts. The second part “just the beginning”, is very open ended in what it might be suggesting. Imaginative?
Equally useful if you are promising shareholders market or future world domination.
I pointblank refuse to shop at Bunnings due to the detrimental impact they have on smaller businesses. My local family run hardware store here in Nowra closes next week due to inability to compete. So I will shop at the other small local chain, no matter the extra cost. I value the service and knowledge provided at the smaller stores.
For me the Bunnings slogan “Lowest prices are just the beginning” should have been been followed by “Now we takeover or destroy the competition” and “Finally we will raise prices and sell you what ever brand we see fit”.
Over the last 20yrs I’ve seen the transformation from competitive prices and array of products which were in store year in year out (so you could get a direct replacement, matching addition or accessories for tools/hardware/homeware). Now prices are not mostly competitive and you can’t rely on getting an accessory for a product you bought there 12 months ago (Grr pressure washers is an example). I’m finding smaller businesses that beat the big green shed, an example https://www.perthirrigation.com.au/ most line items better than Bunnings price.
Bunnings business model is rewarded by the lazy consumer (why waste time looking elsewhere), the misinformed consumer (marketing spin), and the uninformed consumer (there are no alternatives).
I’ve left consumer ignorance out of the list as that might describe all of us. Few of us know the true value of any product, technical differences and manufacturing variances between products, or the final gross markups.
You would have to believe the majority of consumers are still keen to reward Bunnings. As I’ve mentioned previously our local community is about to render itself into a caldron over an application to develop a new shopping precinct to accommodate said Green Giant? This will include a Coles, MacDonalds, and an unnamed hardware/garden outlet, plus others on nearly 20 hectares of farmland.
Bunnings is more of a DIY shop than specialised hardware, timber, metal, machinery, trade tools, etc shops. It’s like a supermarket with easy parking and a broad range of basic products for most home consumers to get in one go.
In a city trying to get a park near one of the small local hardware shops is near impossible and so only small amounts can be bought and carried.
A builder’s account seems to be the only way of buying paint from a local paint shop.
The local hardware shops are being squeezed by Bunnings, chains of speciality carpentry and woodworking shops and online retailers.
One thing about Bunnings is that a diverse range of people are employed, particularly older folk who know how to do DIY and who seem to know where everything is (so much of older folk not being able to remember things).
Another thing about Bunnings is the support it gives to not-for-profit organisations not only with the outside sausage sizzle but also donations of money and gear. I volunteer for a not-for-profit organisation and recently Bunnings contacted us to find out if we needed anything more stuff.
At the end of the day, Bunnings is no different than Coles and Woollies who have progressively pushed out the corner stores, the butcher shops, the bakeries, the fishmongesr, the delis, the green grocers and other such small shops along with the milk men, the bread vendors, the mobile green grocers, the mobile seafood vendors, the soft drink delivery vehicles and so on.
At the two locations where we lived when I was going to school in Cairns, there were several corner stores, a butcher shop and a bakery nearby.
At the three locations we have lived in Cairns since getting married, there were no small stores nearby, with the nearest outlets being major shopping centres.
However, the only large hardware store operation in FNQ, Northern Builders Supplies, was sold in the 1970’s and ended up being finally owned by Bunnings who closed it down when the first Bunnings store opened.
The founder’s son set up Cairns Hardware which has outlets all over FNQ and is the tradies go to supplier.
It was sold a few years ago to Dahlsens from regional Victoria for $22 million, and is way too strong for Bunnings to affect.
Not our experience of any one of a number of paint shops in Brisbane and smaller towns. Just avoid going in too early or late in the day when they may be busy with tradies.
There’s more food shops than ever before. It’s just that the owners decided to move to or set up in a shopping complex because that was where the shoppers go. In the shopping centres, the supermarket acts as the anchor tenant and the speciality food shops, take-ways etc set up around the supermarket. The corner store is now set up on the ground floor of apartment blocks and again because that is where people are. Foot traffic and cost of rent are the same parameters for shop owners whether in large city or country town.
The milk men, etc disappeared in the 1960s because it was not cost effective. But home delivery is back with a vengeance in white delivery vans everywhere in suburban streets. As online grocery shopping becomes more prevelant, then grocery item storage and logistics of delivery becomes increasingly large scale and beyond the capability small shops - just a fact of life.
Choice is a service to consumers and consumers have made their choices how and where they will shop.
