Sales within the Australian home improvement stores market grew to A$18 billion in 2012, with a growth rate in current value terms of 3%.
According to a recent report, 'Home Improvement and Gardening Stores in Australia,' the number of outlets grew by 1%, to 9,330. Growth in the number of home improvement and gardening stores outlets was driven by Wesfarmers Ltd's Bunnings and Woolworths Ltd's Masters.
Although Masters only had 20 stores in 2012, the retailer plans to open 150 stores by the end of 2017. Bunnings also intends to execute significant new store roll-outs over the next five years, with 90 sites available for development in its property pipeline. 20 new Bunnings stores are expected to open during the 2013 financial year.
The presence of a foodservice offering within home improvement and gardening stores is an important trend in the retail channel. Bunnings has run a fundraising sausage sizzle and barbecue outside its stores on weekends for many years, while newer Bunnings stores usually offer a café on site. Masters has linked up with McDonald's, meaning each Masters store has a McDonald's on site.
Bunnings is the leading player in the Australian home improvement stores market, with a 22% value share and a 13% share of selling space. The retailer's ability to generate 22% of the retail channel's value sales from only 13% of the channels selling space, coupled with its focus on offering the lowest prices, shows the popularity of the stores as destination stores.
The entrance of Woolworths Ltd and Metcash Trading Ltd into the Australian home improvement stores market is likely to stimulate consumer interest, through aggressive price competition and more innovative approaches to retailing that include services and promotions in the channel.
More attention to private label development in hardware products could occur, given the interest of these retailers in increasing the profit margins that are being eroded by deep discounting.
For more information on the Australian home improvement stores market, see the latest research: Australian Home Improvement Stores Market
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