A battle of the big box retailers

Published on Wed, 12/01/2011, 12:22:54

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This year appears to be the year of big box superstores with Woolworths entering the hardware sector and US giant Costco set to open its second Australian store in Sydney.

And IbisWorld predicts this is only going to continue to grow.

The business information analysts believe that there’ll be more than 300 retail superstores in Australia by 2015, generating $24 billion a year.

Robert Bryant, IbisWorld general manager, said as it is expected it will create serious competition and put greater pressure on existing retailers.

“While the average supermarket currently generates about $35 million each year, we anticipate the typical new format of supermarket-meets-hardware-meets-homewares megastore will generate $80 million in annual sales by 2015 – accounting for a significant share of the retail sector’s total takings and creating serious competition for current players,” he said.

In a battle to remain competitive, Woolworths intends to expand at an average of 30 stores per year between 2011 and 2015. It has already secured entitlement to 12 sites and is in final negations for another 15 developments, Bryant said.

“It’s all about low price, high volume and the convenience of one-stop-shopping,” he said.

“Woolworths’ move into big box retailing is taking the battle already being waged with Wesfarmers in the supermarket sector to a new level, although they’ll be competing in a slightly different format since they’ve opted to follow the Home Depot retail-friendly format rather than the Bunnings’ style warehouse layout.

“In response, we anticipate a number of Bunnings Warehouse megastores will expand their product range to tackle their new Woolworths’ rivals head on by stocking additional product lines in areas including kitchenware and home furnishings.”


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