Is Bunnings sharp enough for the UK market?

Greg Cullen looks at lessons Bunnings should learn from Masters’ failure in Australia as it prepares to enter the highly competitive UK home improvement market.

Screen shot 2016-03-02 at 12.34.59 PMAs it enters the UK home improvement market, what could Bunnings learn from Travis Perkins in order to avoid becoming the failed ‘Masters’ of the UK?

For CMO’s, Big Data is no longer a buzzword, it’s essential for making strategic business decisions. The most successful companies in the world are those that use data to unlock value that was previously unknowable. These companies are deriving significant competitive advantage from leveraging data to get real-time insights around client behaviour, product offerings, pricing, promotions, store locations, stock turns and E-commerce activities.

In Australia, the home improvement market is a sizeable one – worth almost $45 billion – and it’s growing at around 4% each year. Here, Bunnings is seen as the leader and until recently the Woolworths owned Masters chain was one of its primary challengers.

Interestingly, Bunnings will now find itself the challenger as it looks to enter the significantly larger UK home improvement market this year and successfully compete against the Northampton-based retailer Travis Perkins and others.

So how can Bunnings continue to evolve and learn from its new UK competitors?

And how did a player with the clout, scale and backing of Woolworths fail so abysmally in this market?

The analysts will tell you that the failure was linked to poor execution and a lack of focus. I believe that a large part of the blame can be apportioned to a complete failure by the business and IT systems to provide insights that would inform business decisions.

The age-old pillars of marketing, the four Ps – price, product, promotion and place – rely on applying customer data insights. The $500-million epic fail at Masters can be clearly linked to not leveraging data that should be readily available.

Masters had the wrong product on the shelves at the wrong price; retail outlets in the wrong places and no real success with promotions designed to drive clients in store or online.

With an IT budget that exceeded $100 million, how was it that Woolworth’s systems were not providing the right information to the executive team?

Adversely, Bunnings in Australia is killing it. It has the product mix right, loyal and well-skilled retail teams, outlets in the right locations and innovation with their packaging and promotions. Does this mean that it will be successful in the UK?

The competition is going to fierce, with large players like B&Q and Travis Perkins that has over 1900 outlets and 200 years of trading history, already well established.

Travis Perkins we know is already leveraging Big Data software to help boost online sales, streamline its product data depositories, warehouses and e-commerce functions. The new data solution, enables Travis Perkins employees to easily identify and address duplicates in the inventory system, so that staff have the correct view of what is being sold and the company can accurately display its products online.

So beware Bunnings, your competitors are big, agile and understand how to use data. They will be able to quickly out manoeuvre the ‘Aussie battler’ who can not rely initially on a strong brand, a loyal retail team and lack of competition to take market share.

Bunnings isn’t an Uber, or an Apple or an Amazon, but it is a market leader. I’m confident it can make a huge success of the UK market if it is able to harness real time insights and convert them into key metrics to give it the needed competitive advantage.

 

 

  • farridge

    As a Brit I have to say that Bunnings’ management must be as “sharp” as a rusty hacksaw if they think that re-branding Homebase is a good idea.

    Homebase may have an image as a dull perennial underperformer in the UK, but the brand name is universally known, can be made to look contemporary and snappy, and “does what it says on the tin”.

    Antipodean customers are no doubt so familiar with Bunnings that they’ve simply never noticed that it’s an odd name with a rather old-fashioned feel.

    But British customers are unlikely to warm to such a strange name which has no obvious link to the nature of the business, and sounds like it’s a local family company.

    Given that I can’t imagine that many products on the shelves will be jointly sourced between the businesses at opposite ends of the world, there would seem to be no compelling logic for the re-brand, apart from corporate arrogance.

    This decision combined with the removal of the entire UK board makes Bunnings look like either a genius operation, or a company with an over-inflated sense of its own abilities. I guess time will tell which it is.

  • Terryiom

    Hi Greg, nice article, and yes agree with person below, coming from the UK, Bunnings has some fierce competition, with the likes of B&Q dominating the market, it is going to take a big hammer (sorry for the pun) to crack the UK market.

    About a year ago I sat next to a senior manager from Bunnings at a BI conference and she told me that Bunnings didn’t have any BI tools or any idea of the best sellers to promote. I nearly fell of my chair.

    It is a shame that Masters is heading for the graveyard, mainly their focus was all wrong, their strategy was to focus on females, a nice safe haven DIY store that the female would bring their husband/partner and he would in turn buy the DIY products. Their trade card is a pathetic 5%, tradies want more. Don’t get me started on their staff, I found if you went in during the weekdays between 7-4 you might find a great ex-tradie, but after 4pm or weekends they employ younger inexperienced staff (this is the time that most DIYers go to the store for help). I was in a store last night, young girl on the pay desk “how much wood do you have in total”, 10 pieces of 2.1m lengths, she had to get her phone out and use the calculator.

    Another area which most Brits will swear by is the online shops such as Screwfix Direct, they have a great range of tools and fixtures at great prices and great customer service to boot. Hope Bunnings have looked closely at their competition, they are not operating as a duopoly like they do here.