JOHN GILLAM — BUNNINGS
IN the great blame game over Woolworth’s ham-fisted foray into big box hardware, it’s easy to forget that an outsider has played perhaps the biggest role.
John Gillam made hardware warehouses look easy.
So easy, it seems, that Woolies — lulled into a false sense of security — swanned in, thinking it too could simply build it and they’d come.
Masters Home Improvement opened its first outlet at Braybrook, in Melbourne’s west, in 2011.
At the time, Woolies and its partner in the venture, US retailer Lowe’s, spoke bullishly of their plan to secure, if not open, 150 sites within four years. Four years on, there are 62 stores in the chain and it has racked up some $600 million in losses. On the reckoning of Deutsche Bank analysts, each store is losing on average almost $80,000 every week.
By comparison, Bunnings has 238 warehouse stores, another 99 trade centres and smaller outlets, and chalked up $1 billion in earnings for parent Wesfarmers in the year to June.
Gillam, its managing director since 2004, has built the brand into a star Australian retailer, broadly embraced by the professional tradie and the weekend warrior alike.
In part he has achieved it through smart marketing, shrewd supply-chain deals and a strong focus on customer service.
But Bunnings’ choice of sites has also been pivotal to its success: it has made a habit of snapping up prime locations as they become available, leaving Masters with the crumbs.
Speaking in Melbourne earlier this year, Gillam quipped that Bunnings was “actually a property developer” and had seized on the global financial crisis to buy “like we’d never bought property before”.
Now he is reaping the harvest. And in the process, he has delivered Wesfarmers a rich bounty: a costly distraction for arch rival Woolworths that is at best an almighty fixer upper. Read more at http://www.couriermail.com.au/business/the-master-architects/news-story/ff30954e2289a4ee0449c987016ff561