In September 2011 Woolworths launch a new ‘Big Box’ retail competitor into the Australian hardware and building supply market and its name was Masters Home Improvement. With assistance from their partner Lowe’s, a major player in the American hardware and building supply game, set out in search of a major share in a market which IBISWorld reported a yearly revenue of $15.9bn and also to launch an assault on a company that already held the largest piece of the pie, the Wesfarmers hardware offering Bunnings Warehouse.
THE MASTER PLAN
Jane Turner of The Herald Sun reported Masters Grand plan, a rapid influx of up to 100 big blue stores Australia wide. Masters was not subtle with their message to the marketplace asking the consumer “Don’t you just love competition?” The product range was to be mammoth with Masters to carry everything imaginable from a hardware and building supply retailer, and probably more than required (example: white goods). The stores presented magnificently with wide aisles, bright lighting and clean and well displayed stock on the shelves, like a supermarket for example.
RESULTS DON’T LIE
Woolworths though, like many large and small retailer businesses before them, announced on the 18th of January 2016 that they would be looking to sell off or close their hardware and building supply business after less than five years of trading. Even after gaining a market share of 6.6% in the hardware and building supply market The Sydney Morning Herald reported that Woolworths losses in just over four years had exceeded $600m, Bunnings in this same period held a market share of 39.6% and will record an expected revenue of $6.3bn in 2015-16. Bunnings market share in the hardware and building supply market had dropped by 2% during the existence of Masters Home Improvement which was not even close to the impact that they were hoping for have on the market. In actual fact the addition of Masters to the market had harsher effects on the smaller independent hardware and building supply market and urged Bunnings to not only open new sites across Australia but also to reinvest into existing premises in the form of relocations and renovations.
‘ME TOO’ APPROACH NOT ENOUGH TO CONVINCE THE CONSUMER
So why did Masters fail in winning over a larger share of the hardware and building supply consumer market? Adam Basheer of Fit4Market consultancy group believes that if your main objective in business is to destroy your opposition then you lose sight of what you are really in business for, to satisfy and win over the consumers. With Masters focusing purely on having the bigger retail premises, a bigger stock file which includes categories which may seem to be irrelevant to the market they set out to conquer (I say again white goods?) and aggressive marketing at bringing the fight to Bunnings it may have distracted the company from what should have been their true focus, building a relationship with the market consumers.
Jason Murphy of The New Daily speaks of how Bunnings built their relationship with the market consumer over a long period of time with trademark slogans such as “Lowest prices are just the beginning” and “We’ll beat it by 10%”. Other techniques such as utilising their own staff in commercials and the warehouse feel of the stores all contributes back to the clear message to the consumer that their only focus is not spending money on anything unnecessary to keep the prices as low as possible.
Although Masters believed that a market as big as the hardware and building supply industry was ripe for the picking, over time it showed that Bunnings Warehouse had a much stronger hold than first expected and the consumer confirmed their trust in the brand with their feet and their wallets. Masters may have been better to dip their toe in the water and build a brand that wasn’t just another ‘Me Too’ hardware retail offering which as explained by Michael Janda of The Drum missed the mark with the consumer in almost every instance.
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