Urban Bunnings

Urban Bunnings

Travelled overseas recently? Enjoyed the unique little stores that you can’t find at home? Did you also notice the same stores that you see everywhere else? Walking along the most famous streets in London, Singapore, Paris or Ireland you cannot help but notice the world is becoming bland and generic. Gloria Jeans, KFC, Tag and Topshop spawn, like mould below a damp course, killing individuality and even community. No wonder humans are in a race to live on Mars!

Ben’s blog today is a story about diversity and community, about profits versus people and whether the desire for ever-lower prices can live in harmony with the desire for ever increasing wages and living standards.

Here’s Ben’s blog:

This month I went down to the local hardware store in search of a new mower. Unfortunately, the shopkeeper only had two in stock, both of which were not suitable to manage the small patch of grass masquerading as my backyard. It was recommended that I should visit the nearest Bunnings to see what they had in stock.

I found it interesting that the local hardware store felt comfortable to suggest this. Sure, the nearest Bunnings is a few suburbs over, so it doesn’t compete directly in the local area. What’s more, mowers are bulky, and expensive-to-store products that would not be as profitable to stock in a small metro store. As long as the local shopkeeper is able to earn a decent margin on smaller items like taps and sandpaper, it wouldn’t really hurt their bottom line if their customers make the trek to Bunnings for their larger hardware purchases. Or would it?
At a recent conference, Terry Bowen, the Finance Director for Wesfarmers, noted that management is focused on expanding the Bunnings chain into urban centres. When you consider that Woolworths is also looking to open 150 Masters stores in order to compete in the home improvement sector, it will only be a matter of time before the suburban and industrial areas reach critical mass.

The boom in Do-It-Yourself and Do-It-For-Me renovations should support the urban expansion. Dulux Paints released their half-year results this week and reported that over 60 per cent of their business is related to existing homes. So while housing with large backyards is less common in the inner city, it may prove to be a profitable market for the home improvement retailers.

And before you think that Bunnings is constrained to the outer suburbs with their “big box” warehouses, management is now rolling out multi-level warehouses with underground carparks that are more economical for smaller, premium real-estate.

So it seems that the constant pursuit for growth will drive management to open sites in more and smaller or more densely-populated areas – indeed, competition may become so intense that there may be a time when my local hardware store will shy away from making the same recommendation, lest he disappear altogether. But the romantic in me would like to think that Bunnings’ bulk-purchasing business model might aspire to allow community and diversity to prosper also.