Wesfarmer buy-out will change Homebase model

Suppliers are speculating that there will be big changes to Homebase's buying model now it is owned by Wesfarmer, owners of the Austrialian DIY giant Bunnings.

Cheaper approach: a business model rethink - image: Homebase
Cheaper approach: a business model rethink - image: Homebase

Discount is becoming an increasing focus of the industry which saw Wesfarmer take over Homebase for £340m this spring. One supplier told Horticulture Week: "We're seeing the first stage of what all the industry is expecting - Bunnings coming in and really challenging the market. They're going up against B&Q and Wickes and the wider DIY market.

"When you check out Bunnings Australian website, the message you see is 'We want to be cheapest in the market'. It's a bit of a scary message. It's concerning because the current Homebase model won't fit that. They will have to change to a discount-orientated model. As suppliers we'd have to change our model to supply them.

"At the moment, we go in over a period of 10 weeks so we have to manage that. With discounters, the start and finish date is set and they take it all at once so the supplier can cost according to that model. The retailer is saying they want to buy at discount price levels, but are not coming up with that model yet."

Some growers have used that method to supply Aldi. With Homebase changing ownership, more potential suppliers are set to ask for business. Packing bedding and pot plants are likely to be what the firm concentrates on in the UK.

Wesfarmers will relaunch about six high performing UK Homebase stores by the end of the year with new Bunnings branding. The company is also believed to want to start expanding store numbers again after previous owner Home Retail Group planned to cut store numbers by 80 to 240 between 2014-18.

The HRG and Homebase offices in Milton Keynes are now split.

Using the discount model will mean a narrower range being available to the mass market, said retail consultant Andy Newman: "The new Homebase will be very seasonal, selling big obvious volume stuff. They will just look at what products have the biggest volume as opposed to niche stuff." This means cheap pack bedding, 'price point perennials' and possibly cheap barbecues.

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