Woolworths has just announced it will be entering the $24 billion hardware sector with a recommended takeover of Danks Holdings Limited (Danks), Australia’s second largest hardware distributor.
The board of Woolworths Limited (Woolworths) has approved plans for the company to enter the hardware sector with a multi format strategy designed to meet the everyday home improvement needs of Australian consumers.
Danks supplies 583 Home Timber & Hardware, Thrifty-Link Hardware, and Plants Plus Garden Centre stores plus 939 independent hardware stores.
Woolworths also has plans for the development of a network of destination home improvement stores with a target to secure more than 150 store sites within the next five years, in addition to a joint venture equity agreement with leading US Home Improvement retailer Lowe’s Companies Inc (Lowe’s).
Woolworths chief executive Michael Luscombe believes the home improvement sector in Australia is under-serviced and there is a genuine opportunity to bring competition and grow the sector with an enhanced offer.
“The Australian love of property and high levels of home ownership mean that maintaining and improving homes is an important part of everyday life,” said Luscombe.
“There is a real opportunity to increase the overall size of the sector and this significant new distribution and retail investment should be positive for both customers and the industry alike.”
Woolworths supply platforms along with its global sourcing and distribution capabilities make it well placed, together with Danks and Lowe’s, to grow Australia’s hardware sectors.
“We’re interested in adding choice to the industry and we believe we can improve the pricing, product range and experience for customers,” said Luscombe.
“At the moment, the sector is dominated by one major big box player, so there is a real opportunity for increased competition in that part of the sector.
“Woolworths is keen to grow the overall home improvement category in Australia and this means significant innovation, investment and opportunity in both distribution and retail. We want to create a fresh new offer in destination home improvement and also give customers a better deal in their local hardware store by working with Danks to grow and improve hardware distribution to the independent retailers. Our entry into these two points in the value chain will be supported by our joint venture with Lowe’s.”