Bunnings first UK pilot for St Albans as new Homebase plans are explained

The first Bunnings Warehouse pilot store will open in mid-February at our existing site in St. Albans Griffiths Way in Hertfordshire, UK and Ireland managing director PJ Davis has revealed.

PJ Davis
PJ Davis

Bunnings plans to open at least four pilot stores by the end of June 2017 is it phases out the Homebase brand bought in January 2016 for £340m.

The current Homebase store will close at the end of the month.

There could be 8-10 pilot Bunnings in the UK by the end of 2017. The St Albans store will include a covered area in the garden centre planteria, as well as the removal of the mezzanine.

Bunnings has £500m to spend on transforming the DIY/garden centre business. He said gardening was one of the key strengths of the Homebase brand and " we want to make sure we don’t lose that strength" as a Bunnings warehouse.

Davis told 350 DIY industry professionals at a BHETA event in Coventry on 3 November there is a "big job to be done" at Homebase, with areas such as tills and systems up to 20 years out of date. There is distribution, legal, property and HQ issues to separate from previous owner Home Retail Group. Bunnings will relocate within Milton Keynes next month.

Davis said the UK has a £38bn market growing DIY market. He said Homebase's stores are generally the right size and in the right places but he wants to add new builds as well as conversions.

He said: "In five years Homebase will disappear off the face of the world," adding that the 265 store Homebase estate "is a good base for building the Bunnings warehouse network".

Davis added that the Australia 200,000sqft, or 145,000sqft average Bunnings warehouse was too big for Britain because it is "hard to drive around here".

He said Australian stores have a 15.5 minutes drive time ideally and up to $90m turnover "but in the UK 15 minutes doesn't get you far".

Davis added: "We probably need a few more stores. I just don't think they will be as big.

"We'll convert a few pilots to find out what customers really want...then convert a lot more. We also expect to build new stores and take over other properties, which is cheaper than converting our own stores."

He said the pilot would have a "wider assortment than anything you seen in this country before".

On pricing, Davis said: "Inflation is going to be driven by exchange rates not wages, which makes it very difficult to put prices up.

"If we out prices up less will be sold. If wages were going up and there was more disposable income it would be a good reason for prices to move."

He added: "We’ll buy where we can get best value and the best innovative product. It’s not just value, it’s easy to use. We’ll source from wherever."

Davis says it will be "very difficult" to put prices up because wages are not rising as fast as inflation.

Many imported product prices have risen by up to 20 per cent post-Brexit and retailers and suppliers are attempting to decide who should bear the brunt of the increases.

Davis said pricing was about trust as people can search prices instantly on the internet: "They know when you’re ripping them off."

He said the UK has a £38bn market growing DIY market and that Homebase's stores are generally the right size and in the right places but that he wants to add new builds as well as conversions.

He added: "In five years Homebase will disappear off the face of the world," saying that the 265 store Homebase estate "is a good base for building the Bunnings warehouse network".

Davis explained how Homebase had copied Home Depot for its warehouse format in 1994, with its family focus, coffee shop, playground, hire shop and kids DIY clinics.

The UK pilots will also have the warehouse format, with the focus on hardware and garden rather than soft furnishings.

Davis said: "All the [range] changes we’re going to make we've made."

Duvets and cups and saucers have been replaced by a lot more home improvement, timber, hardware and storage.

He added: "We’ll buy where we can get best value and the best innovative product. It’s not just value, it’s easy to use. We’ll source from wherever."

Davis said he and finance director Rodney Boys had made some stocking mistakes in this year when adding £80m of product to stop out of stock issues:

"We were not going to allow empty shelves. In some cases there was too much stock. In some cases stores were a bit messy."

Meanwhile, 120 UK staff have made Australia trips, while 300 have been on leadership training programmes.

He emphasised that Bunnings are in the UK "for the long term" and that "we’ll go through ups and downs".

On online, he said Bunnings’ website was in the top five in Australia with 130m hits but bunnings.com.au is all about pre-shop and advice with its 760 how-to videos.

He explained how his father taught him how to change a tap washer and car tyre but the younger customer aren’t taught these tasks.

Davis added: "We don't do online transactions in Australia." He said customers don't like them and trust Bunnings to have product in stock so there is no need for click and collect. They also enjoy store visits "but this market is different. It will be a fully transitional site."

The 38 year veteran of the business told how in 1886 the Bunnings left Southampton to set up in Australia, to build a $12bn turnover 60,000 staff business.

He explained the developments, including the $1bn New Zealand business, but added: "This is a bigger leap, a lot bigger."

Davis said only 20 per cent of its staff said they shopped at Homebase: "If they're not going to shop at Homebase why would anyone else?"

He said Bunnings had learnt from US giant Lowes setting up Masters as a failed rival to Bunnings in Australia.

Davis said this was "one if the most expensive case studies in the world when Lowes took us on," adding that they lost $3bn and were "very arrogant" and Bunnings would not show the same attitude in the UK.

He said that he did not want his buyers to try and develop innovation: "We're hopeless at it and so are a lot of other retailers on this country."

Davis added: "I want them [my buyers] to work out how to sell more".

He said he wanted De Walt or Bosch to wake up thinking "how can we make better drills for less money".

Davis said he liked old British homes as 40 per cent were over 50 years old, which contrasts to Australia’s newer homes.

He said he had been visiting as many stores as possible and had been to Ireland twice this year, the first time the MD had been in five years.

See more in HW next issue.

#Meanwhile, B&Q is rolling out its new design format to 10 stores by March 2017 and will launch a one hour click-and-collect service in 2017.

The retailer launched its first new concept store at its 140,000 sq ft Cribbs Causeway branch in Bristol in June, as part of the ONE Kingfisher strategy, which aims to unify the global business.


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