The Australian hardware market

The Australian hardware market has grown considerably over the last decade and is now generally accepted to include home improvement, home leisure and building products. The market is currently estimated to generate sales of approximately $22 billion per annum. Sales cover a wide range of merchandise including:

• building products;
• decorator products;
• garden, nursery and outdoor leisure products;
• home hardware;
• tools; and
• electrical and lighting products.

Australia's per capita hardware consumption is one of the highest in the world, with high levels of home ownership, large garden sizes, and dry weather conditions.

• co-operatives and buying groups such as Mitre 10, True Value, Home Timber and Hardware and Thrifty-Link Hardware;
• category specialists such as Dulux Trade Centres and Barbeques Galore; and
• variety/discount stores such as BIG W and Kmart.

New South Wales and Victoria account for about 60 per cent of the market because of the population size and older housing stock in both of these States. With relatively high levels of economic growth, Western Australia and Queensland are accounting for a growing share of the total market.

History of the warehouse format

Retailing through warehouse outlets is relatively new in Australia. The emergence of this approach to marketing follows an established trend in the United States of America and Western Europe.

Warehouse retailing formats occur on both single tenant stand-alone sites as well as multi-tenant retail parks. Retail parks are large in area and are tenanted by a number of bulky goods retailers.

Bunnings Warehouses are normally stand-alone sites. Construction of retail warehouses - both stand-alone and multi-tenant parks - has been very active in Australia over the last four to five years accounting for approximately one third of total retail sector completions.

Bunnings Group Limited

Bunnings - a wholly owned subsidiary of Wesfarmers - is a specialist retailer of home, garden and building products. It serves both the home improvement market and the home building industry, particularly small to medium-sized builders and owner-builders. Bunnings operates throughout Australia under the "Bunnings" trade name.

Bunnings is the leading player in the home improvement market. The fragmented Australian hardware industry provides Bunnings with significant growth opportunities. In addition, today's retail and trade customer has become more sophisticated, and is demanding a higher level of service, value for money and product variety.

Recognising the changing dynamics of the hardware market, Bunnings launched its Bunnings Warehouse retail strategy in 1994. The Bunnings Warehouse format offers customers:

• a large product range
• low prices
• high service levels

The Bunnings Warehouse format is now well developed with a proven record of success. Customers have supported the strategy with warehouse stores accounting for a steadily growing share of Bunnings' annual sales.

Warehouse Facts

It takes approximately 22 weeks to design and construct each Bunnings Warehouse. A further 6 weeks are required to fitout and merchandise the store.

The height of each Warehouse is equivalent to a three story building with an under roof area of about 8,800 square metres. All that space is enough to fit 36 standard homes.

Installed into each Warehouse is a network of 16 kilometres of fibre and conventional data cabling to support the latest IT equipment used throughout each store.

26 kilometres of electrical cabling is used to supply enough electricity to power 150 homes.