Bunnings, which accounts for almost 60 per cent of Wesfarmers’ group profits are setting their sights on further bolt-on acquisitions in the hope to win over more of tooling and trades market share.
Bolt-on acquisition refers to the acquisition of smaller companies, usually in the same line of business, that presents strategic value. In 2019, Bunnings acquired the Adelaide Tools retailing chain in South Australia.
Bunnings has an estimated market share of close to 50 per cent of the Do-It-Yourself hardware market in Australia and has been increasingly chasing more growth in supplying tradespeople.
Managing Director of Bunnings, Michael Schnieder said, “professional tradesmen tended to shop for products such as power tools, flooring, lighting and plumbing from retailers other than Bunnings.”
By acquiring speciality hardware retailers, Bunnings can capitalise on strong demand for tools from the pandemic. The organisation has recently lodged trademark applications for Benchmark Tools, Project Tools, Dontas Tools and Onya Tools, hinting at a new brand name in coming months.
“It’s an opportunity for us to deepen the connection with specialist trades in [trades] categories,” Mr Schneider said at a Bunning’s strategy day.
He believes sales at new stores will be supported by strong growth in the housing and construction sectors and tap Bunnings further into tooling and trades market share.
2019 Leading Hardware Customer Satisfaction ratings: Bunnings, Mitre 10 and Other
According to the AFR, Bunnings’ earnings jumped 36 per cent to $1.27 billion and total sales by 24 per cent to $9 billion in the December-half, helped by the opening of nine new warehouses and two new small-format stores.