News National Two hardware chains tipped to take on Bunnings
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Two hardware chains tipped to take on Bunnings

Bunnings must monitor its competitors.
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The hardware industry could be in for a shake-up if two franchise chains join forces to take on Bunnings, to the benefit of home hardware buyers.

A price war could be instigated if a reported $2 billion tie-in between Metcash’s Mitre 10 and Woolworths’ Home Timber & Hardware goes ahead, according to Fairfax Media.

Unnamed industry sources reportedly told Fairfax that Metcash had approached Woolworths, but that the supermarket giant rebuffed the offer because it was “too early” for talks.

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The proposal could result in a network of between 800 and 900 stores.
The proposal could result in a network of between 800 and 900 stores. Photo: Twitter

The merger between the two franchise chains could result in between 800 and 900 stores, potentially competing with Bunnings on brands and prices.

But the hardware juggernaut may be eyeing off its own acquisition – Woolworths’ Masters Home Improvement stores, a relatively new entry to the industry.

Fairfax reported that Bunnings had already flagged at least 15 Masters sites it would purchase if the business was liquidated.

Hardware expert Geoff Dart told Fairfax he found it “hard to believe” that Bunnings would be worried about a potential plan between Woolworths and Metcash.

Home Timber & Hardware’s trade sales were worth about $350 million, while Mitre 10’s was about $450 million – paling in comparison to the $1.5 billion in trade sales of Bunnings, Mr Dart said.

“I find it hard to believe Bunnings is worried about Home-Mitre 10 on the retail side, but it would be more of a challenge … on the trade side, which is the strength of Home and Mitre 10.”

Exciting time for industry, suppliers, shoppers

A major price war could be emerging in Australia with some big-name home improvement brands involved.
A major price war could be emerging in Australia with some big-name home improvement brands involved. Photo: Getty

For shoppers, there could be a major hardware price war emerging in Australia – with some potentially big-name home improvement brands involved, including Hitachi, Yates and Wattyl.

According to Mr Dart, the proposed corporate activity “could chart the course of Australia’s home improvement sector for the next 10 years” meaning huge changes for shoppers and suppliers “in this $46 billion sector”.

“It’s an exciting time for the industry, but suppliers are really the ones who are going to have to look at channel strategies, what they do, where they seek growth,” he said.

“For suppliers who are in both [Bunnings and Masters], they will be fine because their customers will just go to Bunnings … but the suppliers that aren’t there, it will be challenging for them.”

Mitre 10 and Home Timber & Hardware also have solid consumer brands, with analysts saying they could promote those exclusive brands to pump-up sales, according to Fairfax.

Market leader Bunnings currently has an 18 per cent share of the market, Mitre 10 about four per cent, and Home Timber & Hardware three per cent.

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