Big box update
Bunnings UK outlines its strategy
Bunnings UK and Ireland managing director PJ Davis at the BHETA in the UK
Bunnings UK and Ireland managing director PJ Davis at the BHETA in the UK
 
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Shepparton will have a bigger Bunnings store and Bunnings asks for land to be re-zoned
HNN Sources
Bunnings unveils pilot store plans to the UK industry; larger Bunnings store planned for Shepparton (VIC); potential re-zoning for Bunnings-owned land at Tura Beach (NSW); Bunnings Yarrawonga is set to open; and Bunnings UK could present opportunities for some suppliers.
PJ Davis presents at UK event

Bunnings chose a recent networking forum run by BHETA (British Home Enhancement Trade Association) to outline plans for the roll out of the brand in the UK and Ireland.

In a presentation held at the Ricoh Arena in Coventry, Bunnings UK and Ireland managing director PJ Davis revealed that the first Bunnings Warehouse pilot store would open mid-February at St Albans in Hertfordshire.

This will be followed by at least three more pilot stores by the end of June as the company phases out the Homebase brand, and a further four to six by the end of 2017.

Industry publication, Horticulture Week reports that Mr Davis said the pilot would have a "wider assortment than anything you've seen in this country before". The UK pilots will also have the warehouse format. He added:
All the (range) changes we're going to make we've made.

Duvets and cups and saucers have been replaced by a lot more home improvement, timber, hardware and storage. Mr Davis said:
We'll buy where we can get best value and the best innovative product. It's not just value, it's easy to use. We'll source from wherever...

Mr Davis also said he and finance director Rodney Boys made some mistakes this year when adding GBP80 million (AUD132 million) of product to stop out-of-stock issues. He said:
We were not going to allow empty shelves. In some cases there was too much stock. Some stores were a bit messy.

Mr Davis told 350 BHETA members there is a "big job to be done" at Homebase, with areas such as tills and systems up to 20 years out of date. There are also distribution, legal, property and head office issues to separate from previous owner Home Retail Group.

Mr Davis believes the UK has a GBP38 billion (AUD68.2 billion) growing DIY market. He said Homebase stores are generally the right size and in the right places but he wants to add new builds as well as conversions.

Mr Davis said the 200,000sq ft. or 145,000sq ft. average Bunnings warehouse in Australia is too big for Britain because it is "hard to drive around here". He said Australian stores have a 15.5-minute drive time ideally, and up to AUD90 million turnover, "but in the UK 15 minutes doesn't get you far". He added:
We probably need a few more stores. I just don't think they will be as big. We'll convert a few pilots to find out what customers really want then convert a lot more. We also expect to build new stores and take over other properties, which is cheaper than converting our own stores.

In terms of pricing, Mr Davis said it will be "very difficult" to put prices up because wages are not rising as fast as inflation.

Many UK import prices have risen by up to 20% post-Brexit and retailers and suppliers are debating on who should bear the brunt of the increases. Mr Davis said:
Inflation is going to be driven by exchange rates not wages, which makes it very difficult to put prices up. If we put prices up, less will be sold. If wages were going up and there was more disposable income, it would be a good reason for prices to move.

He said pricing is about trust because people can search prices instantly on the internet.
They know when you're ripping them off.
Online

Mr Davis said Bunnings' website was in the top five in Australia with 130 million hits but bunnings.com.au is all about pre-shop and advice with its 760 how-to videos.

He explained how his father taught him how to change a tap washer and car tyre but younger customers are no longer taught these tasks. Mr Davis said:
We don't do online transactions in Australia.

He said customers don't like them and trust Bunnings to have product in stock so there is no need for click and collect. They also enjoy store visits "but this market is different. It will be a fully transitional site".
Lessons from Masters

Mr Davis said Bunnings had learnt from Lowe's setting up Masters as a failed rival to in Australia. He said this was "one if the most expensive case studies in the world when Lowes took us on", adding that they lost AUD3 billion and were "very arrogant" and Bunnings would not show the same attitude in the UK.

He said that he did not want his buyers to try and develop innovation:
We're hopeless at it and so are a lot of other retailers in this country...I want them [my buyers] to work out how to sell more.

Mr Davis said he wanted DeWalt or Bosch to wake up thinking, "How can we make better drills for less money?"

Mr Davis also sees advantages in older British homes with 40% being over 50 years old, in contrast to Australia's newer homes.
Bunnings gets bigger in Shepparton

Bunnings plans to build a brand new, larger facility on Benalla Road in the regional town of Shepparton (VIC).

The store's larger facility, with more car parking, space and jobs comes on the back of several other major projects in the area - the $70 million magistrate's court precinct, the $40 million Shepparton Art Museum and the relocation of the Coles Express service station to Riverside Plaza at Shepparton's southern entrance.

The investment should augur well for a growing city. It also poses some questions - what will become of the old Bunnings site?
Community uses

According to a recent article in the Gold Coast Bulletin, there are some interesting possibilities for empty Bunnings stores in Queensland, with local councillors checking out the recycling of large empty bulk goods stores.

For example, the former Bunnings Warehouse in Burleigh (QLD) has been earmarked for conversion to a community centre by Cr Pauline Young.

The councillor confirmed she was running the ruler over the store, which has been tipped by property industry insiders as a possible facility for the staging of the Commonwealth Games. She said:
We're running very tight on community centres in Burleigh and would like to think that post-Commonwealth Games we would be able to put something together. It's only very early days as far as the process goes...

This comes as the number of groups using council's community centres booms, with five new centres opening in the past four years. Cr Young also said buying a bulk goods centre offered other benefits.
We don't want to go out and design something and this store has already got car parking which is not metered so with a large number retirees looking to use a community centre that's perfect.
Bunnings' rezoning request

Another zoning review will be made of Bunnings-owned land at Tura Beach (NSW) after the big box retailer asked council for its support.

The review request follows the NSW Department of Planning and Environment's gateway determination that a change of zoning to B5 business, be refused. It is not the first time that owners of the land have tried to get the zoning changed without success, according to Merimbula News Weekly.

Some of the issues raised by NSW Planning were that the proposal did not fit council's view of Tura Beach as a village and the "primacy role of Bega" which it said was a "major regional centre".

The matter will be taken to the Joint Regional Planning Panel (JRRP). Director of planning and environment, Andrew Woodley said that it was council's submission going to the JRPP that, if successful, would go as a recommendation to the state government. If the government agrees to let the matter proceed, the rezoning would be publicly exhibited and receive submissions.

Only then, after a successful rezoning would Bunnings be in a position to lodge an application as development of this type is currently prohibited on this land, he explained.
Final prep for Bunnings Yarrawonga

Local newspaper, The Yarrawonga Chronicle toured the new Bunnings Yarrawonga store prior to its official opening.

A typical warehouse operation, it has an extensive garden and outdoor furniture range, paint supplies, a large tool shop and a two-lane trade drive thru. In line with the retailer's commitment to sustainability, Bunnings Yarrawonga will implement a number of energy and water saving design features including energy efficient lighting and rainwater harvesting tanks.

The new store forms part of the redevelopment of the Kaiela Industrial Estate on the Murray Valley Highway in Victoria and is more than 6,000sqm in size. Development of Bunnings Yarrawonga represents an investment of more than $10 million including a lease commitment, fit out and stock.

Deb Thompson has been appointed store manager and will oversee over 70 staff. She said:
Team members have supported a number of community groups already, working together to assist in local community projects including refurbishing the Fairy Garden, building a Mud Kitchen and raising garden beds at Yarrawonga Kindergarten as well as refurbishing the school veggie garden, fertilising, weeding and mulching the garden bed and fruit trees and installing a garden shed at Sacred Heart Primary School.

Bunnings Yarrawonga was sold to Chinese investors for a reported $11.5 million earlier this year.

Related:
Big box update: Bunnings Yarrawonga has Chinese owner - HNN
Bunnings UK looking to suppliers

There is an opportunity for garden suppliers to add to a broader offer being introduced by Wesfarmers-owned Bunnings UK, according to Horticulture Week.

Phase one of the new Bunnings-branded offer will be introduced over the next three-to-five years to "combine essential local elements with the best of Bunnings to build new business". This will include more local sourcing, including plants.

The warehouse format will include "lowest prices, wider choice with trusted brands and great service". Opening hours could be extended, and Bunnings will aim at trade as well as consumer customers, becoming more of a builders' merchant format.

The "always low prices" approach will mean not having discounter-style seasonal plant promotions and having more customer-facing staff. There will be higher stock weights and wider assortments, including for plants and gardening goods.

Wesfarmers will prioritise bringing higher store merchandising standards to Homebase, with refits likely. Bunnings stores are refitted every five or six years.

Long-term growth will be through a stronger team, better stock flow, higher productivity and deeper community involvement. This will all include more customer value, a better customer experience, greater brand reach and more merchandise innovation, which will be led by big brands. Rival B&Q has moved towards own brands in recent years.

Store closures have also stopped but Bunnings UK will not consider any new outlets until the pilots are working. Omagh in Northern Ireland is the latest of 18 stores to be reprieved within the chain after a renegotiation of tenancy.

Bunnings UK managing director Peter Davis and finance director Rodney Boys are leading a team that includes general managers Craig Castelino (merchandise), Shane Mealor (store development), Craig Wallace (operations) and Keith Murray (marketing). Property general manager Andrew Mason is ex-Halfords and Wickes. HR general manager Martina Kay is ex-Marks & Spencer.
HNN Sources


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