The UK DIY market is set for a radical shake-up that will impact B&Q, Wickes, Screwfix and Selco Builders Warehouse; and may well have significant knock-on effects for UK tile retailers.
The reason. Australian home and DIY retailer Bunnings Warehouse has opened its first UK store in St Albans, Hertfordshire
The new 67,000 sq ft warehouse, which replaced one of the previous Homebase stores, is the first step in a £500 to £750 million investment plan by parent company Wesfarmers, which had acquired Homebase in January 2016 in a £340 million deal.
Wesfarmers plans to open at least four pilot Bunnings locations by June, and a total of 10 stores could be achieved by the end of 2017.
As part of its investment plan, Wesfarmers aims to roll out Bunnings – an iconic retail chain in Australia known for its charity “sausage sizzles” – across the UK and Ireland over the next three to five years, rebranding former Homebase stores as Bunnings.
Wesfarmers has hired Matt Tyson, a former executive at UK rival Kingfisher, to work alongside retail guru Archie Norman to develop the strategy to revise Homebase’s fortunes.
Bunnings is a very dynamic retailer, and generates 10%+ operating profit; far higher than either Homebase or B&Q. Wesfarmers’ five-year investment plan is dependent on the success of the 12 pilot UK Bunnings stores due to be rolled out over the next 18 months.
Since taking control of the business, Wesfarmers has removed almost the entire Homebase executive team, axed 20% of the employees at the DIY retailer’s HQ and agreed to pay all staff at least £7.20 an hour.
“Our policy is to offer customers the lowest prices, the widest range and best service, and hopefully our first pilot store demonstrates that,” sates Bunnings UK and Ireland Managing Director, Peter Davis.
“We are laying strong foundations on which to build the Bunnings Warehouse business in the UK and Ireland for generations to come,” Davis added.
The St Albans warehouse will stock 30,000 different home and garden lines, and include both a 19,000 sq ft garden centre and a DIY workshop where customers are coached in home improvement skills like tile cutting. The store also has a cafe and indoor children’s playground.
It employs 68 staff with a third aged over 50: a mixture of former plumbers, painters, electricians and landscape gardeners and other tradespeople. It also features a 19,000 square foot garden centre and a DIY workshop area, cafe and indoor children’s playground.
“We’ve made the decision to be a home improvement and garden retailer and have got rid of the duvets, cushions and coffee cups,” Davis told the FT. “We’re going back to the core of home improvement and garden. We don’t want to sell the soft side. There are plenty of other retailers, like Dunelm, Ikea and Next, doing a good job of that.”
Bunnings can be expected to take the ceramic tile category in its UK stores going forward. In Australia is has partnered with expert suppliers such as Décor8, Bellazza, Johnson Tiles Australia, Cotto, James Hardie, Roberts Designs, Kimgres and DTA Australia, and is respected as a significant force in the sector. IN the UK it can be expected to capitalise on the indoor-out trend with a strong range of exterior-friendly floor tiles, along the lines of its 300 by 300 and 600 by 600mm Element and Coulson ranges, as outdoor living is a key component of Bunning’s Australian offer.
Bunnings UK has released details of the three remaining pilot stores, with a second earmarked for St Albans in April and the other two planned for Hemel Hempstead and Milton Keynes. Although dates are not yet known for the third and fourth outlets, Wesfarmers has confirmed that the store developments have been carefully planned to capitalise on the important summer 2017 trading period.
Bunnings revenue across the 2015 financial year totalled $9.5 billion. In December 2016 there were 248 warehouses, 73 smaller format stores, 33 trade centres and three frame and truss centres operating across Australia and New Zealand, employing over 40,000.
A new post by Joe Simpson, Diary of a Tile Addict, February 2017.