By Claire Reilly
Bunnings is set to embark on an ambitious growth strategy in the coming years, with the hardware retailer planning to open more than 60 Bunnings Warehouse stores across Australia over the next three years.
The announcement was buried in a 243-page “strategy briefing” document released by parent company Wesfarmers today, and will see the brand expand its already sizeable network of 211 warehouses, 66 small format stores and 37 trade-only centres.
Bunnings currently has more than 90 sites in the pipeline and has confirmed that it plans to open more than 20 warehouses per annum for the next three years, followed by 10 to 14 new warehouse openings per annum in the longer term. The company also expects to open 2 to 4 small format stores and 2 to 4 trade stores per annum in the long term.
In the strategy document, the company lists “faster network expansion” as one of the key drivers of growth for the Bunnings business, claiming that a spike in store openings has doubled the growth rate of net selling space across Australia.
In the decade before the 2013 financial year, the retailer was increasing its selling space across Australia by an average of 5.1 per cent per annum. For the 2014 and 2015 financial years, Bunnings is forecasting that it will grow its overall footprint by at least 10 per cent a year. As it stands, Bunnings currently claims a 16 per cent share of the $42 billion-plus Australian home improvement market.
With an existing network of 314 stores and more than 90 sites in the pipeline, Bunnings could well push over the 400 store mark in the coming years.
As a point of comparison, Mitre 10 currently lists 355 stores across Australia on its website, while Bunnings' major big-box competitor, Masters, has just 25.
Despite its comparatively small network size, Masters’ has seen solid growth since launching, with parent company Woolworths reporting a 54.6 per cent year-on-year increase in Masters sales for the first half of FY13, and 10 new stores openings in the same period. In its FY12 preliminary final report, released on 24 August 2012, Masters confirmed plans to secure 150 sites in the next five years, with 112 sites already in the pipeline. Of these sites, the retailer plans to open 15 to 20 stores a year.
With Bunnings setting an aggressive road map for expansion (a total of 100 warehouses, small format stores and trade centres forecast to open in five years) and Masters similarly looking to get a foothold in the big box retailing space in Australia (an expected total of 150 sites), the one limiting factor to growth may be the availability of physical real estate in Australia.
If Masters’ most recent opening is anything to go by — the 13,500 square metre Chullora warehouse — footprints of these stores will not be small. And with Woolworths and Wesfarmers hunting for 250 sites between them over the next five years, all located close enough to population centres to be enticing and commercially viable, big box retail in Australia looks set to get a lot bigger.
This article first appeared on Current.com.au