A predictable outcome

If I was a Woolworths shareholder, I would have been more than a little annoyed at their somewhat questionable strategy of going head to head with Bunnings.

I’ve spoken about it a few times, such as

Rockem Sockem
Thought it was a stupid strategy, and today’s news is clear evidence why.

Guess we will watch this space, but it isn’t good from a competition perspective, or challenging Bunnings customer service.

Going…….going………and soon will be gone


Update: I wonder what this is going to mean for Triton, seeing as they finally had just managed to negotiate their way back into a large box hardware store (and Bunnings historically have not wanted to take them on again after the GMC saga)?  901 tools (aka the old GMC) that was being sold again in Masters will be without a home too, and I am sure that will be true for many products.  Not always a bad thing in the case of some brands.

Wonder if there will be a  (very large) garage sale on the horizon?

7 Responses

  1. I’m not sure that Bunnings and customer service (unless preceded by a severe lack of) should ever be used in the same sentence.

  2. Perhaps I should have said (lack of)

  3. I think you have the bull by the horns to some extent as I believe the problem with Masters is that they did no go head to head with Bunnings. Bunnings specialise in supplying goods at the bottom end of the quality scale while Masters tried to go upmarket as far as quality is concerned. Bunnings turnover is something like75% from the trade mostly from relatively small businesses. How many tradies are going to pay 10% to 20% more for a sheet of ply or whatever for perceived better quality. Australian building practices are all about getting a job completed as cheaply as possible. Masters was chasing a market that doesn’t exist in Australia. Sadly.

    Gary Grennan

    • Yes I agree. I’ll be sad to see it go, I use Masters for quite a few of my consumables and tools because of the higher quality and brands that are no longer available at Bunnings. Things like Bahco files, Aussie decking oils, Organoil. Wattyl and good but cheap spray paint brands. Now I’ll have to hunt around for a supplier again and pay sky high prices. I was only just getting used to them and learning what they had compared to Bunnings. They should have advertised what they had over Bunnings and promoted why they are better. Took me a while to learn myself. So many companies can no longer deal with Bunnings so this move is really going to hurt those businesses who used Masters now as their main outlet. This is not good people. Not good at all. Whatever your opinion of Woolworths is. We’re the ones who will suffer.

  4. Will be interesting to see how Lowes responds. There are a couple of Masters stores not far from me that do a reasonable amount of trade, that should be viable concerns if sold. Lowes might be able to salvage something from it if they can partner with another group such as Metcash under the Mitre 10 brand.

    Woolworths could have fixed it from the start if they’d listened to the customers, who have been saying what was wrong with it from the very beginning.

  5. Lowes is gone. They exercised their option in the partnership agreement to sell their 33.3% to Woolworths after 5 years, (last October) and now Woolworths has decided to shut it down or I suppose try to sell it (not likely). Lowes are required to give 13 months notice, so Masters will likely shut early next year I imagine.

    • It’s been on the books since Oct as a non current liability, but that isn’t the same thing as Lowes exercising the put option. It’ll be quite a while before we see just how Lowes receives their one third stake. But in some ways they might be better served negotiating alternatives to cash, such as taking over Home hardware which is modestly profitable instead of taking a bath on the independent valuation of Masters.

      Doesn’t look like they’re in a hurry to get rid of stock, they’ve upped the price on the pullout pantry mechanisms I bought two weeks ago by $35. No clearance sales for a while yet.

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