Bathroom Strategy 2016 • 2017 • 2018
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HI NEWS Vol. 2 No. 11 BATHROOM STRATEGY 2016 • 2017 • 2018 BUNNINGS AUSTRALIA STRATEGY ECONOMIC FORECASTING What the election hid ACCC DRAFTS UNDERTAKING FOR MITRE 10 IN HTH MERGER • BUNNINGS VS ALDI • BUNNINGS VS MITRE 10 IN TAS • STEINHOFF LOOKING AT BIG W, MASTERS SITES • B&Q OPENS NEW STORE FORMAT contents Bathroom strategy Bathroom suppliers/distributors have been doing great business for three years. As that slows down, the industry sector could be disrupted. 26: click to view Bunnings at home While Homebase is getting the headlines, the MD of Bunnings Aus- tralia, Michael Schneider, faces a tough road to expansion and growth. 41: click to view Forecasting ACCC draft for M10 The transition no one is The Mitre 10/HTH may get the go talking about. ahead from ACCC, if Mitre 10 agrees to strong conditions. 54 8 Big Box Update ....................................3 Europe Update ...................................20 Indie Update .........................................8 USA Update ........................................22 Retail Update ......................................13 News ...................................................73 Suppliers Update ...............................17 Products .............................................77 OUR COVER: The “horizontal shower” is one of the futuristic bathroom concepts developed by German manufacturer Dornbracht. For more details: https://www.dornbracht.com/en-us/products/bath-and-spa/smart-water/ big box update Bunnings faces off against Aldi in this update: Corbett says Lowe’s to blame for Masters fail Bunnings sells WA warehouse Website traffic for Bunnings spikes when scale to bulk order. 3 Aldi runs a special on its hardware and tool A good example is its recent release of an items. That’s according to the manager heading $89.99 cordless hammer drill. The Aldi Work Bunnings to up Bunnings in Australia and New Zealand, Zone cordless tool is 24-volts, has two gears, in- face off Mitre Michael Schneider. Responding to an analyst’s cludes one Lithium-ion battery, and comes with 10 store in question at the Wesfarmers’ Strategy Day held a one-hour fast charger. It also has a three-year Kingston, TAS in June 2016, Mr Schneider explained that his DIY warranty. team was quick to respond to the discounted The closest matching tool from Bunnings Aldi products. would be the Ozito Power X Change 18V Bunnings It’s good for us because competition drives you Compact Drill Driver Kit. It costs more, at $99, new store in to go harder at what you want to do. We’re very and does not offer a hammer option, but does Mandurah quick to respond in terms of putting products in include a five-year warranty. front of customers. In fact, the Aldi tool is a very clever move, tak- At the time, Bunnings Group CEO John Gillam ing advantage of a budget gap in the Bunnings Bunnings sizes suggested that Mr Schneider was being a little range. However, for savvier buyers, it probably up Maitland modest, because the team had worked out how isn’t that attractive. The point of cordless tools NSW to pre-empt competitors through product range is buying a system that relies on a single battery and marketing. system, and Aldi, with its sporadic offerings, can The kinds of items that could pose a compet- really offer the same degree of system accessi- Steinhoff may itive threat include not just drills and saws. bility that Bunnings does. Ultimately, cordless buy Masters Bunnings and Aldi both sell a broad range of tool systems will tend to favour non-discount sites products, from garden hoses and outdoor fur- suppliers. niture to mops, buckets, storage tubs, lighting, Of course, this does not stop the less knowl- heaters and fans. edgeable from making odd comparisons. For Woolworths However, while people can head down to Bun- example, one News Corp journalist compared extends nings on a whim, to get their hands on the Aldi’s the Aldi offering with a bare-skin Ryobi drill at hardware discounts, they have to wait for them to appear roughly the same price. in the grocery retailer’s Special Buys catalogue. goo.gl/0WfkJx discounts These factors mean that Aldi’s threat to That said, the one-off Aldi offerings have Bunnings’ bottom line could be limited. But that garnered an almost cult following among the Bunnings hasn’t stopped the hardware from taking it seri- retailer’s regular shoppers. Some analysts have contests ously. Aldi has its own private label “Workzone” attributed the success of Aldi in Australia to brand, and can get effective discounts from these regular bargains. market with manufacturers by using its massive worldwide [continued next page] hnn.bz big box update Corbett lays blame on Lowe’s Bunnings/Aldi cont. off a stinging criticism A spokesperson for Aldi told SmartCompa- of Lowe’s, that was ny that its Special Buys are designed to “help supposed to help Wool- customers get the best value on products which worths succeed and support their passions and interests”. The navigate in the Austra- spokesperson said: lian hardware sector. Special Buys arrive in store each Wednesday But it failed in the and Saturday and are themed around activities most basic tasks, such our customers are most likely to be interested as recognising seasonal in at that time of the year. [They] deliver hard differences between to beat value because our streamlined business the northern and model enables us to keep our prices low. Our southern hemispheres logistics and supply chain operate with world- that would impact class efficiency, keeping delivery routes short what products needed and employing best practice warehouse tech- to be sold during the niques. Australian winter and David Gordon, retail expert and business ad- Former Woolworths improvement retailer summer. He said: visor at LZR Partners, told SmartCompany that boss, Roger Corbett has Lowe’s, which proved Lowe’s was a partner it’s all about the message the stores are sending. labelled the retailer’s costly for shareholders. there, they were the He said: foray into hardware He told The Australian: hardware experts and I What Bunnings is trying to convey is that the through its Masters Well, I had nothing think … clearly Wool- deals at Aldi aren’t that much more special than 4 chain as a “massive to do with Masters, worths were relying on what consumers can get at Bunnings. strategic mistake”. either in the consul- the expertise of Lowe’s Mr Gordon said Aldi’s marketing works by However, Mr Corbett tancy arrangement or and the execution was triggering a reminder in customers that they placed most of the in its original (for- an absolute disgrace need or want a specific item. The retailer then blame on to Wool- mation), but Masters and it caused a terrible tries to cover all bases with its wide and erratic worths’ US partner was clearly a massive problem for (Wool- range of items on sale. Lowe’s, labelling its strategic mistake and worths) shareholders. It’s a completely different shopping experience claims of experience in it was extremely poorly Current Woolworths between the two. Consumers will go to Bunnings the hardware sector an executed… chairman Gordon with a plan to buy multiple things, where con- “absolute disgrace’’. Woolworths has been Cairns appointed Mr sumers will go to Aldi to buy the one thing that Speaking to The forced to write off Corbett as an advis- might be on sale. People always feel like there is Australian after de- more than $3 billion as er to the company’s a deal to be done at Aldi. claring he would end a result of the Masters board in November goo.gl/DsVvQs his consultancy role experiment. It is still last year, hoping some with the Woolworths negotiating to buy of the shine from his WA warehouse sold at auction board after just seven back Lowe’s one-third years as the head of months. Mr Corbett stake in the business Woolworths during its The sale of a Bunnings Warehouse in Os- said he was unable to and then either sell golden age would rub borne Park (WA) was part of the standout re- continue his consul- the retailer or close it off on the retailer. sults from a Burgess Rawson portfolio auction tancy arrangement down completely. His position was that raked in $30 million in sales. because of the major Industry publication then described as The small format, 1736sqm Bunnings store expansion of Mayne ChannelNews reports a “mentor to senior with a new 12-year lease was purchased by a Pharma, of which he is that a decision has management”, having Perth-based private investor bidding for $7.05 chairman. already been reached been chief executive of million on a 4.65% yield. The company director and that Woolworths the supermarket giant Andrew Marks, Bunnings general manager criticised Woolworths’ will liquidate stock from 1999 to 2006. Mr for property, said the Perth Bunnings sale was decision seven years via “massive sales” in Cairns said Mr Corbett at a record low yield. He told Fairfax Media: ago, under former chief late November and had assisted him in the The sale of our Osborne Park store highlights executive Michael December. role “and has provided the strength of Bunnings’ store format flex- Luscombe, to break http://goo.gl/lKkN9g the benefit of his vast ibility and innovation and the support and into the hardware Mr Corbett, a former experience and passion confidence within the market for these assets. market through a joint director of US retail for Woolworths”. http://goo.gl/eSi7v1 venture with US home giant Wal-Mart, fired goo.gl/0Hl6Iu hnn.bz big box update Bunnings 2nd in Mandurah Bunnings/Mitre 10 The 13,000sqm Bun- and nursing facilities. nings Warehouse Halls During the opening Head was officially ceremony, store man- battle in Kingston opened by former ager Darren Feenstra Fremantle Dockers presented the projects captain Peter Bell, local the Bunnings Halls councillors and Bun- Head team had been nings staff recently.