23 Oct

Bunnings plan to dominate British hardware market

Bunnings has plans to expand across Britain and could buy or lease more than 100 sites in coming years as the Australian group becomes a major presence after buying Homebase last year.

Bunnings owner Wesfarmers bought the chain for $704 million and is converting its 256 stores into its own brand. It has confirmed plans to open 20 stores in Britain by the end of this year.

This would be the start of its push into the British market and it had plans for 102 openings over the next five to eight years, trade journal Property Week reported.

Wesfarmers has pledged to invest more than $1 billion on the Homebase business, which includes the rollout of new Bunnings pilot stores in Britain and a new online store.

To hit these aggressive targets the company will experiment with smaller high street stores of just under 2000sq m to almost 5000sq m, far less than most of its local outlets.

Bunnings said it was adapting its traditional large format model to British conditions and would open the smaller stores this year to test their performance.

As it does in Australia with the support of parent company Wesfarmers, Bunnings said it would look to acquire freehold assets that it could it occupy as well as leasing property.

The group’s managing director, UK & Ireland, Peter Davis, said the company would buy property and turn it over as it went through the investment cycle, and its investment would be “quite big”.

It is also chasing sites of up to 20,000sq m for its more standard warehouses. It has leased three properties and bought one.

In a sign that it will target built-up areas as well, Bunnings said it was weighing up developing multi-level stores where it would operate on the ground floor and units could be built above its stores.

While uncommon in Australia, increasingly supermarket players Coles and Woolworths are working with residential developers in Sydney and Melbourne as sites have tightened up in inner-city areas.

Wesfarmers’ UK and Ireland business in August turned in a $89m loss in its first full financial year since the acquisition of British chain Homebase.

While profit at Bunnings local operations lifted by 10 per cent to $1.33 billion, the British result prompted questions from analysts about Homebase’s pricing model.

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Posted in General by hmaclean@britishchamber.com

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