Homebase looks ahead to future renamed as Bunnings

Homebase will be renamed Bunnings next month, with the UK DIY/garden centre's future under scrutiny from business commentators.

Bunnings bought Homebase for £340m in February and has spent the last six months examining and transforming the business.

But veteran Australian business commentator Tim Treadgold said in a recent piece in the Australian business press: "The challenge of 'exporting' the Bunnings hardware business to Britain could not have come at a worse time."

He said this is because of post-Brexit sterling currency changes mean Homebase's value has fallen in dollar terms and because of challenges in the home Australian retail market, Homebase's transformation is a bigger job than first believed.

Treadgold visited the London Battersea store recently.  He said the garden centre was the best part of the retailer, but time, money and competition from B&Q and Wickes are issues Bunnings will have to face.

Insiders suggest that the Homebase low prices every day model will be difficult to implement without changing its supply chain to make it a promotional model - something Bunnings does not want to do.

Piling it high, with higher shelves, less random goods such as mobile phones and beds and employing a builder's merchant model is believed to be the way forward, but there is a question mark on how gardening and plants might fit into that.

Suppliers have heard little from the Australian owners, but are due to meet next week to hear about future strategies. Homebase's plant buying team have gone from 12 to 4.5, with Martyn Hill remaining from Home Retail Group days. Homebase are believed to be looking for more buyers.

Customer transactions at Homebase were up 7.5 per cent in the four months since Australian conglomerate Wesfarmers acquired the retailer.

The UK’s first pilot Bunnings store is on track to open as soon as October, and between four and six Homebase conversions are pencilled in for the 2017 financial year.

Bunnings said last month: "The acquisition of Homebase delivers an established and scalable platform [providing] warehouse merchandising and a low cost operating model, providing an opportunity for Wesfarmers to expand its Bunnings business into the UK market."

Sales for the first four months of ownership were "steady" at £512m Bunnings said: "The core ranges on offer at Homebase are being quickly reshaped to focus solely on the home improvement and garden market.

Wider product choices and deeper stock holdings are being established, with assistance via existing Bunnings relationships with the world’s leading suppliers and by leveraging direct sourcing capabilities.

Over £60 million in inventory investment has been made to support this work. New marketing, pricing and operational strategies have also been implemented as part of this work."

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