Wesfarmers owned retailers Officeworks and Bunnings are well known in the industry for the pressure they put on suppliers, some call it “bullying”, now brands are saying no to suppling the big Australian retailer.
Bunnings who already have a dominant position in the hardware market which has been described in the past as a ‘monopoly’ especially when it comes to DIY and Hardware products, now want a share of the automotive market with Bunnings boss Mike Schneider appearing to get the hump because brands have stood up to him and said “no” to supplying stock.
The move could see Bunning dive into the supercheap Chinese supplier market in an effort to flog cheap automotive accessories, after being snubbed by the premium brands sold by the likes of Super Cheap Auto.
Bunnings revealed its new plan for radically expanding its in-store offer of auto parts during an investor briefing with the Company looking to sell oils tools, and lubricants the only problem is that suppliers are not having a bar of the way that Bunnings does business with suppliers.
In the Officeworks market, management decided to take a pot shot at JB Hi Fi when they moved to sell TV’s, JB Hi Fi responded by selling one of Officeworks most profitable products printer inks at cost.
Bunnings claim that despite the snub the retailer will range 300 new auto products that will be rolled out to more than 300 Bunnings stores in 2025.
Schneider revealed to The Australian that many well-known auto brands have declined to be sold into Bunnings as it might jeopardise their existing relationship with larger auto chains such as Supercheap Auto, owned by Super Retail Group, and Bapcor’s portfolio of stores that include Autobarn, Burson, Autopro and Midas.
“One of the things that is interesting is that some brands have chosen not to join us, and we respect that, they’ve told us that they don’t want to jeopardise relationships with others,” he told The Australian.
“But the thing that we said to all of them is, that what we know from other categories is that if we get going and this is successful, if you miss out on the ground floor, we’ll probably grow with other partners.
“And that can be something they’ll probably look back on as a missed opportunity.”
There was no mention of margin and what Bunnings could do to a product category when they start discounting a product out.
He declined to name which auto brands were not interested in being stocked at Bunnings.
For auto brands that refuse to supply at this ground level, they could be missing out on a booming category and Bunnings shoppers Schneider claims.
“This is the start of something. We love competition. This is helping us understand how this resonates, but if it is anything like we’ve seen with other categories there’ll be auto 2.0 down the track with an even bigger range.” he said.
In a note to clients, Citi said it was “slightly more cautious” on Bapcor and Super Retail given Bunnings expanded push into auto.
“Bunnings has been sharp with its pricing on auto products, has been able to secure some major brands, and the products appear largely non-discretionary, which could impact foot traffic to Supercheap Auto and Autobarn.”
However, it noted it was unclear to what extent Bunnings’ entry into the auto category will hurt the incumbents, noting the half an aisle of auto products is positioned at the back of the store (which could have implications for how quickly customer awareness builds), and the range does not exactly overlap.
