Bunnings blows away the competition

Bunnings St.Albans has officially been open for a week and I wonder what the first week's sales reveal? Certainly, there’ll be a very different product, sales and margin mix from that achieved by the Homebase store that stood on the same spot just 12 months ago.

I've just returned from another visit to the store on a cold, grey Thursday morning and it was busy, very busy and an interesting mix of the usual pensioners and clearly tradesman, the latter all falling in love with the new tool section.

We’d love to be a fly on the wall at the Bunnings/Homebase Milton Keynes head office, as the team start to analyse the first sales and basket data and try to extract learnings from what is now clearly an entirely new concept for the UK market.

But I guess we’ll just have to wait until the Wesfarmers half year results briefing next Wednesday 15^th February. During the session, we should receive an update on Homebase's performance for the last six months and we’re sure to hear words such as ‘encouraging’ and ‘positive’, relating to St.Albans.

After publishing our initial impressions of the new store last week, it’s time to get down to business and to see whether Bunnings are truly delivering on their stated policy of ‘Lowest prices are just the beginning’.

As part of this policy  (a cornerstone of their strategy alongside 'widest range' and 'best service') they state that they check competitor prices daily and that whenever they find a lower price, they drop theirs, so therefore staying the lowest.

But how do we know whether this is the case?

As you may know, we’ve been publishing comparison price baskets across the key home improvement retailers for over five years. To date, these have focused on the Decorative and Garden Categories with the iPaint30 and iGarden30 baskets. Both feature directly comparable products, both brand and retailer own label, with prices taken on the same day across B&Q, Homebase, Wickes, Wilko and for the iGarden30 basket we include Wyevale.

The results are published regularly within the Price Baskets section of the Insight DIY website, which you can see here – Insight DIY Price Baskets.

iPaint30 Basket

This basket consists of a robust mix of the best selling Decorative products including Dulux and own label paint, Hammerite, paint brushes, roller sets, white spirit, sugar soap, paint stripper, painters tools etc.

This basket is published fortnightly and for many months now, Wilko has been the lowest price retailer by some distance. In our basket checked on 30^th January 2017, Wickes was the most expensive at £337.18, followed by B&Q at £304.64, Homebase at £282.82 and Wilko at £260.05. Out of interest, Wilko were cheapest on 21 of the 30 lines in the basket. 

Let’s put that into context, Wickes are 30% more expensive than Wilko, B&Q 17% and Homebase 9% more expensive.  This is not a one week scenario either, this has pretty much been the same picture for the last six months.

I’m not sure why we expected the retail prices in the Bunnings St.Albans store to be comparable to Homebase? Probably because the Bunnings UK team took the dramatic steps last year to slash the prices of tens of thousands of products by anything up to 25% as they moved from the previous high low pricing strategy to Always low prices.

However, we could not have been more wrong.

On the opening day 2^nd February, we completed the iPaint30 basket comparison in the new Bunnings store and we were gob-smacked by the results. Not only had they reduced their prices further, but they were now selling some high volume Decorative lines at prices that we haven’t seen in the UK for many years.

Of the 30 lines in the iPaint30basket, Bunnings is cheapest on 22 of them, with an overall basket value of £244.36, totally blowing away the competition with Wilko at £258.80 (+6%), Homebase still at £282.82 (+16%), B&Q at £304.73 (+25%) and Wickes at £330.16 (+35%). 

We’ve consistently heard how aggressive Bunnings are in Australia and NZ and that they genuinely mean ‘Lowest prices are just the beginning’. For us, this is the first clear, factual example of what they intend to bring to the UK market and the incumbent retailers had better wake up and smell the coffee - these guys are serious……..

If you’d like a copy of the 2^nd February 2017 iPaint30 basket, including Bunnings, then email me at steve@irg.co.uk and we’d be happy to share this with you.

You can download the 30^th January basket here.

We currently track the prices, promotional activity and consumer reviews of 560,000 individual home improvement and home enhancement products across 22 different bricks and mortar and online only retailers. If you’d like to know more about what we do and how we can help your business to remain competitive, contact me on steve@irg.co.uk

Source: Steve Collinge - MD - Insight Retail Group Ltd

Follow my insight and opinion on Twitter @InsightDIYSteve

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