Feature: Bunnings has the ‘Works’

Not content to dominate the hardware industry, Bunnings has opened an experimental spin-off store called HouseWorks. There is only one HouseWorks store to date, in Joondalup, an outer Perth suburb. If this trial store performs strongly, more stores will open nationally, posing a potential threat to retailers such as Harvey Norman, Freedom and Ikea. The HouseWorks concept is replacing the 17-store discount retail division, WA Salvage, which operates in Perth only. According to Wesfarmers Chief Executive, Richard Goyder, the only area they won’t go into is whitegoods. The layout of HouseWorks, like Bunnings, has a bare concrete floor but the green colour scheme has been replaced with dark blue and a red-and-white slogan reads, “A better home for less.” There is a diverse range of goods including lighting, paint, chairs, cushions, sheets, garden furniture and DIY flat-pack furniture. HouseWorks is being kept very low key by Bunnings – when the Hardware Journal attempted to source a photograph of the store, none were forthcoming. Bunnings’ Managing Director, John Gillam, admits Houseworks is an experiment but said it is a part of a series of changes at Bunnings. “We are looking at a range of growth options,” he said. “That includes making better use of space in our warehouses, growing our distribution centres, increasing our overall range of products and expanding our special orders offering through the use of catalogues and putting those offers on the web.” According to Rob Brierley, a research analyst at Hartleys, there is no doubt that Wesfarmers sees the current downturn in retail trade, as an ideal time to expand. Brierley says that even though the latest sales figures (third quarter of 2005) for Bunnings were weak, they were better than those of its competitors. “The store on store growth of 1.1% for Bunnings looks poor, until you measure it against the market and they you see that they grew when rivals shrank,” he said. “They see current conditions as ideal to grab market share and they are certainly not going to slow the rollout of their warehouse stores or the refurbishment of their older stores.” Asked if the growth of Bunnings and its retail experiments aimed at broadening its product range is a threat to national retailers such as Coles Myer and Woolworths, Brierley says the threat is more one of ‘creeping’ into new markets rather than a full frontal assault. “I think they would like to sneak in under the radar to compete with Kmart and Big W,” he said. Gillam says the store that was opened recently in Vermont South (Vic), the biggest Bunnings yet, is another example of a retail experiment, and one that he believes will be successful. “We are not closed to any ideas,” he said. “There is a hell of a lot of space in the home improvement market to explore.”