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Aussies big love for sausage Bunnings is profitable. It raked in $1.25bn last year and Australians show no sign of losing their love of a tin of paint washed down with a sausage chaser. https://www.news.com.au/finance/business/retail/bunnings-having-its-masters-moment-inbritain/news-story/42e6765a681d1bd8ecd64ae712fadb00 Open their first store with sausage celebration (KIEM LINK NEU CAN)

Bunnings’s mistakes Homebase is Britain's number two home improvement chain, with a store network of 265 stores. It plays second fiddle to British multinational B&Q, which pioneered the big-box home improvement concept that Bunnings adopted in Australia. Homebase has been struggling, closing down underperforming stores and shifting its focus to different products such as homewares. But this is exactly why Bunnings thinks it has an opportunity to re-brand and re-build the business. https://www.afr.com/chanticleer/bunnings-british-diy-homebase-push-comes-with-renovation-risks-forwesfarmers-20160114-gm5qgn Wesfarmers had planned to convert the chain into an outpost of its successful domestic chain Bunnings, which, in Australia at least, is famous for low prices and sausage sizzles. So far only 23 of Homebase’s 250 stores have been converted to the Australian brand and it is unclear whether the group will continue with the costly refurbishments. https://www.theguardian.com/business/2018/apr/26/homebase-salesplunge-20-after-beast-from-the-east-froze-garden-sales Attempt to replicate the oversea chain success but ran up heavy losses after misreading the market and alienating Homebase’s existing customers Added to that, the UK hardware market is very different to Australia. "The UK market has evolved over the last 10 to 15 years, away from people that understand DIY themselves, and they've moved more away from DIY to 'do it for me'," Mr Delo said (https://www.abc.net.au/news/2018-02-28/bunnings-fails-to-learn-from-masters-mistakes-uk-hardwarepush/9494228) Unlike Australian customers, their UK counterparts want things done for them, rather than do things themselves. Australians are into DIY, whereas in the UK, the preference is for Do-It-For-Me services. You can easily imagine that a DIY business model will not work well in a DIFM market (https://excelbizsolutions.com.au/bunnings-lesson-can-learn/) "The need and the requirement to have home improvement done in their homes, being done more by professionals." Much of that is arranged online, with the internet having a much bigger presence in the British hardware market — another issue Wesfarmers apparently misread.

(https://www.abc.net.au/news/2018-02-28/bunnings-fails-to-learn-from-masters-mistakes-uk-hardwarepush/9494228#:~:text=Bunnings%20UK%20goes%20head%2Dto%2Dhead%20with%20dominant %20rival&text=According%20to%20IBISWorld%20research%2C%20B%26Q,home%20furnishings %20rather%20than%20DIY.) The brand takeover "When Bunnings sought to set out its stall in the UK, by moving itself very close to the number one in the UK it effectively lost a lot of its points of differentiation," Mr Delo told ABC TV's The Business. That is because the UK already has a successful Bunnings-style store, B&Q. "Homebase itself, whilst suffering for many years from under-investment, it still has an awful lot of very loyal customers and those loyal customers were probably looking at the Wesfarmers investment, the Bunnings purchase, as potentially an opportunity for Homebase to be revived and to take its position in the marketplace," Mr Delo argued. (https://www.abc.net.au/news/2018-02-28/bunnings-fails-to-learnfrom-masters-mistakes-uk-hardware-push/9494228) The Bunnings brand is literally unknown in the UK. Coming into the market by merely taking over a business that was not doing well in the UK did not do Bunnings any favors either. https://excelbizsolutions.com.au/bunnings-lesson-can-learn/ Brand unknown in UK market (NOT APPEAL IN UK) https://www.afr.com/chanticleer/bunnings-british-diy-homebase-push-comes-with-renovation-risks-forwesfarmers-20160114-gm5qgn . ALIENATING HOMEBASE’S EXISTING CUSTOMERS -

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Current trading is in stark contrast to the stormy period under Wesfarmers, owner of Australian DIY market leader Bunnings, which saw the management team cleared out twice and an ill-fated focus on Antipodean best-sellers such as giant BBQs that flopped like soggy sausages in sunshine-inhibited Britain. (https://www.forbes.com/sites/markfaithfull/2020/11/11/howhomebase-came-back-from-bunnings-big-bbqs-and-a-multi-billion-dollar-fiasco/? sh=63a09ce81711) New Wesfarmers boss Rob Scott made no attempt to hide from the mistakes when he spoke to the ABC's The Business last week. "We removed a lot of the local team that had a lot of local expertise; we removed a lot of the ranges that really resonated with Homebase customers; and the Bunnings team had a very ambitious implementation plan that we didn't quite deliver on," he said.( https://www.abc.net.au/news/2018-02-28/bunnings-fails-to-learn-from-mastersmistakes-uk-hardware-push/9494228#:~:text=Bunnings%20UK%20goes%20head%2Dto %2Dhead%20with%20dominant%20rival&text=According%20to%20IBISWorld%20research%2C %20B%26Q,home%20furnishings%20rather%20than%20DIY.) Unlike Australian customers, their UK counterparts want things done for them, rather than do things themselves. Australians are into DIY, whereas in the UK, the preference is for Do-It-For-Me services. You can easily imagine that a DIY business model will not work well in a DIFM market. ARTICLE ARGUE THAT BRITISH (GEN Z) ARE INTO DIY CULTURE  SEE BUNNINGS TARGET CUSTOMERS.

The answer is that Homebase’s customer was quite different from Bunnings’ traditional target. She (note the gender change) has been described by Homebase as “the home and garden enhancer: generally female customers/households with children, of ABC1 demographic, with above average income.” (The ABC1 demographic makes up about 53% of the UK population and is described as higher, intermediate and junior managerial positions and professional occupations.) It’s clear that Bunnings stripped out popular concession brands such as Laura Ashley far too quickly and ended up with a poor line in kitchen and bathroom products. EXPLAIN THE CASE OF DAVID JOSES AND WHY BUNNINGS NOT SUCCESSED https://hbr.org/2019/03/are-you-ready-to-change-your-target-customer#:~:text=Take%20the %20highly%20successful%20Australian,one%20working%20in%20a%20trade. DIY GEN Z https://www.idealhome.co.uk/news/why-brits-prefer-to-diy-235109 -

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UK customers want to see aisles and displays that provide inspiration for home projects—and buy finished projects, rather than tools and parts that one needs to work on them. The Bunnings model provided the tools, but not the finished product. UK customers have no interest in outdoor furniture or BBQ grills—products that are very popular in Australia but are not so in the UK. One factor for this taste difference is the difference in the weather in the two markets. https://excelbizsolutions.com.au/bunnings-lesson-can-learn/ He said the chain appeared to be unaware of the British climate. “Australia has longer summers that make it a bonanza for Bunnings. Also, it’s more likely Aussies have their own private backyard than Brits — so I really don’t see how they would’ve created demand when weather and space work against them.” Leaving the store untouched. In a recent note, the JP Morgan analyst, Shaun Cousins, calculated it would cost Wesfarmers about £600m to throw in the towel versus more than £800m to finish the job. Neither option looks attractive. A third route would be to keep the 23 converted Bunnings stores open and close the rest. “The least-bad outcome is exit,” was Cousins’ stark assessment. (https://www.theguardian.com/lifeandstyle/2018/mar/30/homebase-isundoubtedly-the-most-disastrous-retail-acquisition-in-the-uk-ever) Wesfarmers' strategy for the Homebase acquisition was to roll out changes across the existing stores in preparation for converting them to the Bunnings model. In the process, it exited a number of product lines in the kitchen, bathroom and decorative ranges, while expanding the hardware range. "The pace and nature of this change was not well received by traditional Homebase customers," Mr Scott said. https://www.abc.net.au/news/2018-02-05/wesfarmers-1.3-billion-write-down-bunningsuk/9395898 Take brand. Customers were used to the Homebase brand. Its colors are soft green and white. Bunnings’ brand colors are dark red and green — “brash” and “masculine” you might say. There’s no mistaking the change. It was literally in your face. https://hbr.org/2019/03/are-you-ready-tochange-your-target-customer#:~:text=Take%20the%20highly%20successful%20Australian,one %20working%20in%20a%20trade

Poor management Poor performance and Revenue decline (Jobs cut and shut stores)

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Instead, the management team, seconded from Australia, rushed to tear up the original plan, initiating a wholesale clear-out of local management and Homebase’s extensive concessions, alienating core customers amid an increasingly challenging retail trading environment. It also made disastrous product decisions, most infamously showcasing the huge BBQs popular in Australia in a country that neither has the climate nor the rear garden space for such beasts. (https://www.forbes.com/sites/markfaithfull/2020/11/11/how-homebase-came-back-frombunnings-big-bbqs-and-a-multi-billion-dollar-fiasco/?sh=63a09ce81711)

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The collapse in Homebase sales has in part been self-inflicted after the original

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Australian management team axed senior managers and key departments, including home furnishings, which had appealed to British shoppers. The former B&Q executive Damian McGloughlin has been drafted in to run the chain. https://www.theguardian.com/business/2018/apr/26/homebase-sales-plunge-20-after-beastfrom-the-east-froze-garden-sales The job cuts come amid speculation that Homebase is considering a company voluntary arrangement, a form of insolvency, which would enable it to close up to 80 stores and renegotiate leases with landlords. The company has already shut 17 unprofitable stores and confirmed plans to close at least 23 more. Industry insiders said a CVA involving between 60 and 80 stores was one of a number of options being considered by Homebase’s new owner. (https://www.theguardian.com/business/2018/jun/28/homebase-cuts-300-jobs-as-more-storeclosures-loom) wrote off A$1bn (£547m) in the deal. https://www.theguardian.com/business/2018/apr/08/homebases-australian-boss-flies-in-totour-troubled-diy-chain Management was “arrogant” thinking Brits would be won over by a “copy and paste” Australian model and the stores were stocked with the wrong products — super-sized barbecues beloved in Brisbane weren’t selling in overcast Birmingham.

“Reduced price” Strategy (Despite low price is a strength of Bunnings in Australia, still not work in UK (SWOT analysis) https://www.mbaskool.com/brandguide/lifestyle-and-retail/9229-bunningswarehouse.html) -

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Homebase had historically been more expensive than the competition and this was justified through a better shopping experience, more up-market ranging and a higher income, mainly female target market. This single step, to deliver the key element of Bunnings Strategy ‘Lowest prices are just the beginning’ wiped out any remaining small profit Homebase had been making and delivered little uplift in volume to counteract the margin decline (https://hardwarejournal.com.au/bunnings-uk-ireland-what-went-wrong/) Wesfarmers had intended to spend £500m giving the Homebase chain a facelift, turning it into a British version of its successful Australian DIY chain, which is famous for low prices and sausage sizzles. However, in a tough UK market hit by a slowdown in house buying, Bunnings struggled to find a foothold amid stiff competition from rivals such as B&Q, Argos and Wickes. The company was expected to make a loss of nearly £100m in the first half of this year alone.

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The difficulties at Homebase are partly self-inflicted by a decision to stop selling home furnishings and remove popular concessions such as Habitat and Argos. But they also reflect wider problems in the UK retail sector that have led to mass closures by chains including New Look, Carpetright and Mothercare. (https://www.theguardian.com/business/2018/jun/28/homebase-cuts-300-jobs-as-more-storeclosures-loom) Then there’s price. Bunning’s slogan, “lowest prices are just the beginning” has been a big winner for it in Australia where it dominates the hardware market. The problem was Bunnings’ price-focus didn’t resonate with Homebase’s ABC1 customer. https://hbr.org/2019/03/are-youready-to-change-your-target-customer#:~:text=Take%20the%20highly%20successful %20Australian,one%20working%20in%20a%20trade.

Product ranges, increased stock level and loss focus on kitchen Product ranges -

Consider product range. Homebase’s traditional customers couldn’t help noticing the sudden alteration in range from bathroom and soft-furnishings to home-improvement. Out went the china, homewares, installation and planning services. Bunnings admits it stripped out popular concession brands such as Laura Ashley far too quickly and ended up with a poor line in kitchen and bathroom products https://hbr.org/2019/03/are-you-ready-to-change-your-targetcustomer#:~:text=Take%20the%20highly%20successful%20Australian,one%20working%20in %20a%20trade.

Increased stock level -

As these products had no in-store location they cluttered up the aisles and promotional ends, giving more of an impression of being a discount, clearance store than the inspirational, attractive shopping experience that Homebase once was. Comments from consumers on social media included ‘What’s happened to Homebase!! It looks more like a car boot sale!’ (https://hardwarejournal.com.au/bunnings-uk-ireland-what-went-wrong/)

Loss of focus on kitchen - The Kitchen Category was critically important to the Homebase business and drove sales of many other categories including decorative, lighting, flooring and housewares. By simply copying and pasting the Australian model into the pilot stores with an emphasis on lower value kitchens and a dramatic reduction in space allocation, their credibility for kitchens was seriously damaged. When combined with a decision to move away from the footfall driving high/low promotional discounts, without being replaced with interest free purchase offers and a decision to no longer offer their own kitchen installation service and kitchen sales were in free-fall (https://hardwarejournal.com.au/bunnings-uk-ireland-what-went-wrong/) - EXAMPLE THE PRODUCT IN BICESTER https://www.insightdiy.co.uk/news/its-not-a-bunnings-andits-not-a-homebase/6000.htm The Kitchen category in Bicester is so small, that if this is rolled out to the full Homebase estate, their exit from the kitchen market will be almost 100% complete. Similarly, Bathrooms is almost non-

existent and tiles an after-thought with no category credibility at all. The hand and power tool department is as strong as ever, as is seasonal garden, but the store now feels far too reliant on those categories, the latter of which may drive sales and profit 365 days a year down under, but in the UK, you've got five good months at best.

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The addition of the new brands and cluttered aisles coincided with the removal of the existing Homebase point of sale and replacement with hand-written pricing signage, so predominant in the Australian Bunnings format. Also gone was the neat and tidy merchandising, the perfectly filled secondary displays and the inspirational, ideas driven focus. What Wesfarmers didn’t realise at the time, was that it was the Homebase shopping experience that differentiated the retailer from its functional, warehouse style competitors including B&Q and Wickes. Each of these fundamental changes made by Wesfarmers removed good reasons to shop in a Homebase and worst still, completely alienated the once loyal, predominantly female high spending shoppers, who left in their droves, to retailers such as Dunelm, The Range and a reinvigorated B&Q. ) JUST FIX SOME PART OF HOMEBASE AND KEEP THE REMAINING MAKING IT TO BUNNINGS  POOR SOPHISTICATION AND PREPARATION From the outside, this is clearly a Bunnings and as you enter the store, you're greeted with the same friendly welcome you receive in all of their warehouses. The till area, customer service, special order desk and high profile front promotional ends are full of stock and topped with the familiar hand-written descriptions and pricing. The store has the usual red Bunnings racking, but only around the perimeter and approximately 40% of the inside of the store. What sits in the middle is the old silver, Homebase System 52 racking that’s been wiped down and used again. At times, it’s obvious you’re in a Bunnings Warehouse and others it’s not; you're only reminded of the fact when you see one of the numerous members of staff in their smart new uniforms or the hand written pricing labels. Interestingly, the garden center is virtually unchanged from the Homebase, with the exception of some shiny, new racking towards the one end. Just putting slightly different products and ranges on the same Homebase shelving does not make this a new format. It’s just not right and seems incomplete. Many of the bays under Homebase had brightly coloured headboards and all these have gone and have been replaced with nothing, just the struts sticking up in the air or blank pegboard – look at the paint, wallpaper and tile adhesive fixtures. Retailing has never, and should never, be about just making do, trying to replace the dying Homebase format with something that might be just a bit better and hopefully won't cost too much. Retailing has never, and should never, be about just making do, trying to replace the dying Homebase format with something that might be just a bit better and hopefully won't cost too much. https://www.insightdiy.co.uk/news/its-not-a-bunnings-and-its-not-a-homebase/6000.htm

Business model canvas Bunnings’s actions Homebase is to cut 1,500 jobs as part of a rescue deal that will save the DIY chain from bankruptcy and give it breathing space to recover from the disastrous stewardship of its previous owners. Creditors voted in favour of a company voluntary arrangement (CVA), that will lead to the closure of 42 out of 241 branches, with landlords of a further 70 stores agreeing to accept rent cuts of up to 90%. Homebase’s chief executive, Damian McGloughlin, said: “We now have the platform to turn the business around and return to profitability. We can look to the future with great confidence, and we will be working closely with our suppliers to capitalise on the opportunities we see in the home improvement market in the UK and Ireland.” (https://www.theguardian.com/business/2018/aug/31/homebaserescued-from-collapse-at-the-cost-of-1500-jobs) In February, Wesfarmers said it was considering quitting the UK after losses spiralled at Homebase which has more than 200 stores and 12,000 staff. Customers had dwindled after the new owners stripped out home furnishings ranges and turned some stores into outposts of Bunnings, its successful DIY brand in Australia. For now, there is a change at the top, with the unit's managing director Peter 'PJ' Davis announcing his retirement. He will be replaced by Damian McGloughlin, who previously worked at UK home improvement chain B&Q. (https://www.abc.net.au/news/2018-02-05/wesfarmers-1.3-billion-writedown-bunnings-uk/9395898) https://www.insightdiy.co.uk/news/so-what-are-bunnings-going-to-do-with-homebase/4606.htm

Despite some certain success in capturing the market as stated above, Bunnings, like other businesses made mistakes. Firstly, Bunnings’s attempt to replicate the oversea chain success but ran up heavy losses after misreading the market and alienating Homebase’s existing customers. CUSTOMER + DIY According to Kenny (2019), Homebase customers are quite di...