Finance Finance News Double trouble awaits Bunnings in the UK
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Double trouble awaits Bunnings in the UK

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Australian sports teams tend to do well when it comes to thrashing the Poms, but when we send over management teams to take on the best of British business we’re often sent packing.

Insurance firm IAG lost a motza a few years back on its UK auto insurance venture. National Australia Bank destroyed plenty of shareholder value through its struggling Clydesdale and Yorkshire Bank, which it has just sold off to investors. And law firm Slater & Gordon is sacking UK staff and downsizing its business.

All pretty embarrassing stuff.

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But we do sometimes get it right. Retail virtuoso Solomon Lew appears to have cracked the market for silly plastic, vinyl and paper things, with his firm Premier Investments rolling out dozens of Smiggle stores in the UK.

That’s relatively small beer compared to another much-talked about assault on Blighty – Wesfarmers’ decision to buy out UK hardware chain Homebase, and turn each outlet into a Bunnings store.

What a bunch of tools

But with all the corporate embarrassments in recent years, why does our biggest big-box DIY retailer think this will work?

Much has been made of Bunnings’ successful rout of the competing Masters hardware stores in the past few years, but as others have pointed out, that joint venture between Woolworths and the US hardware chain Lowes had a fundamental flaw – it treated Aussies like Yanks.

Will Bunnings work int he UK? Photo:AAP
Will Bunnings work in the UK?  Photo:AAP

That job may be harder than it sounds, for two reasons.

The first is a few established differences between the Australian DIY customer and the British version. The second is the way that’s already changing.

Britain, like Australia, went through a patch of DIY fever, concurrent with the UK property boom and a rash of home improvement shows explaining how to tart-up and flip homes, and so retire at 40. Something like that.

But even during that boom, the ‘big box’ stores were mostly smaller by necessity, often embedded in high-density residential areas and catering for consumers whose transport is not predominantly car-based.

That’s very different to the Bunnings stores I visit, with acres of car parks, giant buildings, wide aisles, and in many cases Very Large items for sale that almost have to go on a trailer to get them home.

PA Wire
Homebase was sold to Australian conglomerate Wesfarmers for £340 million ($A690.3 million). Photo: PA Wire

As it happens, I also shopped for a couple of years in London at a Homebase store near Wandsworth Bridge that was cluttered, confusing, and staffed by rude and sometimes aggressive staff – I recall a heated argument with a young woman with a clipboard trying to sign me up for their loyalty card.

“But it will save you money!”

“I don’t want it. I don’t want to save money! I like paying high prices!” … after which she went away.

The point is, what customers need and expect in cramped quarters of the UK is quite different to the Australia of urban-sprawl and car dependence.

Announcing the Homebase acquisition last month, Bunnings managing director John Gillam said: “We will combine essential local elements with the best of Bunnings to bring customers in the UK and Ireland an exciting new home improvement and garden offer.”

Okay, but the woman with the clipboard has to go.

Death of a DIY customer

Another clear pitfall for Bunnings’ management team is the current social upheaval affecting the UK.

While in Australia we hear a lot about the influx of refugees, and the ugly backlash coming from some parts of British society, it’s legal migrants from within Europe that are changing the DIY market.

Skilled tradesmen, thousands of them, have flocked to the UK from Poland and other parts of eastern Europe in recent years. They’re much more qualified to re-do the bathroom than your average Brit and will work, whether cash-in-hand or not, for very reasonable wages.

Everseas tradesmen have flocked to the UK. Photo: AAP
Overseas tradesmen have flocked to the UK. Photo: AAP

This has led Britain’s DIY culture to become a “do it for me” culture, according to John Carter, chief executive of  building and plumbing supplies company Travis Perkins.

Thus the ‘big box’ model, in which householders can spend hours poking through boxes of tungsten-tipped screws (what are they for?) is evolving into a leaner, quicker experience targeting time-poor tradies.

Mr Carter’s firm, the Telegraph newspaper reports, is looking to build sales through online orders – what it calls the ‘click and collect’ model.

Bunnings has, if its Australian operations are any indication, a pretty strong management team.

The question hanging over their UK venture, however, is whether they can get their heads around the two points made above – that Brits aren’t like Aussies, and that increasingly they’re not even into DIY.

Read more columns by Rob Burgess here

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