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Power tools and sausage sizzles: Bunnings DIY opens first UK store
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Before dawn on Thursday Aussie retailer PJ Davis will be throwing his first snags on a barbie carefully sheltered among flowers and plant pots in a former Homebase store on an unglamorous retail park in St Albans.
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The barbecue chef is the new UK boss of Bunnings, often billed as Australia’s favourite retail chain and famous for its “sausage sizzles”. Drizzle may have replaced Aussie sunshine at Bunnings’ first UK outpost, but the waft of onions and sausages through the store will give British shoppers the first taste of how they do DIY down under.
“There’s always a sausage sizzle,” says PJ Davis, the 57-year-old company veteran who has been seconded to Britain to lead the charge on the UK’s £38bn home improvement and gardening market. Dressed in the Bunnings staff uniform of a green apron and red fleece, only the numerous badges, awarded for long service and training, pinned to his bib give away the seniority of the down-to-earth Australian.
Bunnings, which is part of the Wesfarmers conglomerate, sees a chance to take on market leader B&Q. “We think there’s a real opportunity to grow in the UK,” says Davis. “The housing stock in this country is reasonably old compared with what we are used to in Australia and the British are keen gardeners. No one has a market share of more than 15% … We think the large amount of players is an opportunity.”
As soon as Bunnings got the keys to Homebase they axed the entire Homebase senior management team and around 164 middle managers. “You have to drive strong management change and to do that, you need to change the senior team,” says Davis. He was also unimpressed by the shape the 260 stores he inherited.
He says there is no question Homebase had been starved of investment to keep the stores in good shape: “I don’t think, I know,” he says. “The next store we’re doing had no lights. It was disgusting.”
The St Albans store is the prototype of the DIY chain that will replace Homebase stores over the next five years. The Homebase of old sought to attract female DIY shoppers with “personalised mood boards” and attractive displays of cushions, throws and other nicknacks from brands including Laura Ashley and Habitat. But Davis has chucked out the chintz, ushering in a new era of basic warehouse chic, where special offers at the checkouts include incinerator bins and disposable boiler suits.
“We’ve made the decision to be a home improvement and garden retailer and have got rid of the duvets, cushions and coffee cups,” he says “We’re going back to the core of home improvement and garden. We don’t want to sell the soft side. There are plenty of other retailers, like Dunelm, Ikea and Next, doing a good job of that.”
Fans of Homebase are in for a rude awakening, with St Albans shoppers greeted with rows of serious-looking tool boxes and display tables featuring the latest thinking in power tools.
Bunnings is an institution down under, famous for its customer service, massive range of products and low prices. It took a big gamble with last year’s purchase of Homebase chain for £340m. The retailerhas promised to spend another £500m giving the chain a complete facelift – the biggest DIY SOS the British high street has seen in recent years.
Foreign retailers, even those with enviable track records at home, have come unstuck in the UK. The biggest disaster in recent times was Best Buy’s assault on the electricals market in partnership with Carphone Warehouse. The stores were launched to great fanfare in 2009 but closed down two years later.
“Bunnings is clearly an effective DIY force in Australia, but the fact some key analysts and shareholders have been vociferous critics of the move into the UK suggests that there are some misgivings,” says TCC Global analyst Bryan Roberts. “The decision to adopt a scorched earth policy in the Homebase boardroom and basically transport the Australian store concept, complete with brands, to the UK is a risky move that lobs it straight back into the B&Q/Wickes battleground.”
In the year to 27 February 2016 Homebase had a turnover of £1.4bn versus B&Q’s £3.8bn. But the decision to ditch homewares has instantly cost Homebase £200m of sales that it will have to win back from elsewhere. Davis says the short-term pain is a necessary step towards building a business that has long-term success in the UK.
“We have lowered the prices dramatically and introduced new ranges,” says Davis of the rest of the chain where the stores now stock 40% more products than before. Only four pilot stores will be open this year but once the template has been refined it will be rolled out quickly to the rest of the chain.
Some aspects of Bunnings are refreshing in a digital age. In Australia Bunnings doesn’t sell online although its website is very popular thanks to its plethora of “how-to” DIY videos. It is selling online here, because it has to, but Davis says it won’t do click and collect or “any of that rubbish”.
“The most obvious thing is to have products on the shelf and to come and pick them up,” he says. “I think click and collect is borne from retailers not being reliable or out of stock.”
In Australia Bunnings wins plaudits for in-store standards thanks in part for its decision to recruit retired tradesmen to work in its stores. It is following the same successful formula here. “We’ve got quite a few old buggers like me,” says Davis who started working for the company on the shop floor at 17.
The arrival of Bunnings promises to put pressure on market leader B&Q but Davis also views Wickes, Screwfix and Selco Builders Warehouse as threats. “There’s no doubt the competition is strong but we think we have got something different to offer,” he says Davis. “Homebase didn’t have a strong pricing position and we changed all that within three months.” Bunnings runs daily price checks and promises to be 10% cheaper than rivals.
Bunnings has been set a three-year target to break-even in the UK. “We hope to do better but this is a long-term investment,” adds Davis, who hails from Fremantle but is currently living with his wife and daughter in Hampstead. “I plan to be here between three and five years.”
Last year more than 100 former Homebase staff were flown out to Australia to learn more about the business, but Davis does not plan to play the Aussie card here – although it does intend to sell a lot of barbecues. “No mate, we are not going to do that,” he says, deadpan. “We won’t be arrogant about it. We’ve got four pilots, then we’ll look at the feedback from customers and staff and see how they perform. Then we’ll look at rolling it out.”
On Sunday Davis gave suppliers and workers’ families the first glimpse of Bunnings debut store and he says the feedback was positive even from the suppliers who are “pretty hard nosed buggers”. One of the badges on Davis’s bib is a gold hammer that celebrates a career milestone 20 years ago when a Bunnings store delivered a bumper profit. The hope presumably is that the turnaround of Homebase will earn him another badge of honour.
