In the ever increasing world of the “Do It Yourself” markets, and trade orientated supply chains, has Woolworth’s bitten off more than they can chew?
Within the traditional Australian market, the main competitor that Woolworth’s had was the Westfarmer’s group. On paper the two look similar in the way they offer their products.
One thing was missing for Woolworth’s. A hardware chain.
Woolworth’s as a group of companies has a great diverse range of product offerings to the market place, that caters for multiple segments . Their portfolio speaks for itself. To compete with Coles, part of Westfarmers, Woolworth’s needed to add a “Big Box” supply chain to compete with their main rival. Bunnings!
The home improvement market within Australia is worth over $40 billion a year. It’s one of the few retail segments that has been posting consistently strong growth in recent years.
But have they researched how best to capture that market?
They would of looked at the customer. Step 1 of the 5 C’s.
This would incorporate the home owner, the weekend warrior, the plumber, the carpenter, the gardener and maybe the “jack of all” trades?
Woolworth’s partnered up with the second largest hardware chain in the USA. Lowes, who had a 30% stake in the venture.
Lowes store growth from the 1980’s, of 300 stores to 1234 stores across 49 states by late 2007 , shows that this strategy looked like a good fit for Woolworth’s.
From 2011 up until June 2015 the Woolworth’s/Masters stores grew to have 58 stores. Original plans were to open 160 nationally.
They looked to partner with a company that isn’t well known within the Australian market. Did they do themselves justice by partnering up with an unknown entity within the Australian market? Were there better options?
When Woolworth’s released that they were entering the hardware sector, they gave their competitors too much room to re assess ‘their’ current market and realign the research tools needed to counteract the new threat.
What this did do, was allow Westfarmers to look at optimal sites, within the same geographical area of Woolworth’s and create a like for like experience that the Woolworth’s – Masters brand were looking to target.
There was also 5 key points that Masters failed to address when going head to head in a market that they didn’t have traction in.
Even one of the key members of Woolworth’s was quoted as saying –
A retailer can choose quality sites, good value sites, or do it fast — but no one can do all three at once.
Home Improvement managing director Matt Tyson
If Woolworth’s wanted to go head to head with Bunnings, then they needed to match the qualitative aspects that consumers perceived through Bunnings.
Its fair to say that Woolworth’s wanted to be “Jack of all Trades”, but became “Master’s” of none!
Morgan Cornelius – ID: 214366259