Homebase is the most disastrous retail acquisition in the UK ever’

Homebase is the most disastrous retail acquisition in the UK ever’

It’s an Aussie institution in crisis after aggressive management led to disgrace and embarrassment overseas. It also knows a thing or two about sandpaper.

This is not the country’s cricket side, but Bunnings, the Australian DIY retailer, that set out to conquer Britain by revamping Homebase but ended up writing off A$1bn (£547m) after a catalogue of major mistakes.

The coming days will be critical to Bunnings’ future in the UK, as Britons emerge from winter hibernation to go shopping, buying the plants and materials for the gardening projects, weather permitting, they will start to tackle over the Easter weekend.

“Homebase is undoubtedly the most disastrous retail acquisition in the UK ever,” says Global Data’s retail analyst, Patrick O’Brien. “I can’t think of a worse one that has made these kinds of losses so quickly.

“The double bank holiday is extremely important for DIY retail because it sets the tone for spring/summer,” he says. “How important it is to Bunnings depends on whether they are actually making a decision [about the future] or have already made it.”

The scale of the Homebase DIY distress became clear last month when Rob Scott, parent company Wesfarmers’ managing director, announced the write down after bungling the 2016 takeover to the point where quitting the UK becomes a real option.

Perth-based Wesfarmers, one of Australia’s biggest companies, bought Homebase for £340m two years ago, but by Christmas the heavy losses emerging from its UK outpost had become untenable. The chain

Scott admitted the management team led by Bunnings veteran Peter “PJ” Davis had made mistakes. Perhaps the most glaring error was axing the entire Homebase senior management team and about 160 middle managers as soon as they got the keys to the stores.

“A lot of the issues we are dealing with today, to be frank, were self-induced,” a contrite Scott said last month.

Scott, who inherited the acquisition signed off by his predecessor Richard Goyder, also lamented the decision to jettison the large home furnishings business that had been a big draw for Homebase’s legion of female shoppers.

Faced with the might of market leader B&Q, Homebase tried to attract female shoppers with “personalised mood boards” and attractive displays of cushions, throws and other nick nacks from brands including Laura Ashley and Habitat. But almost overnight that USP disappeared as the Australians chucked out the chintz en masse and turned its stores into no-nonsense DIY sheds.

Bunnings Warehouse stores are definitely not designed with women in mind. With floor-to-ceiling shelving akin to the depressing, warehouse area near the checkouts in Ikea, the industrial chic of the recently refurbished store on the outskirts of Twickenham in south-west London is clearly aimed at hardcore DIY-ers.

There is a large section devoted to what looks like a breeding ground for power tools with £250 mitre saws nestling among an exhaustive selection of cordless drills. There are huge £700 four burner gas barbecues and £130 log splitters. Ideal for a large spread in the Melbourne suburbs perhaps. Not so fab for the average British back garden.

“There’s definitely less girlie stuff,” one shopper tells the Guardian. Her partner, however, is impressed by the wide choice on offer. Bunnings stocks more than 30,000 products, or 40% more than the average Homebase ever did.

Scott admitted the management team led by Bunnings veteran Peter “PJ” Davis had made mistakes. Perhaps the most glaring error was axing the entire Homebase senior management team and about 160 middle managers as soon as they got the keys to the stores.

“A lot of the issues we are dealing with today, to be frank, were self-induced,” a contrite Scott said last month.

Scott, who inherited the acquisition signed off by his predecessor Richard Goyder, also lamented the decision to jettison the large home furnishings business that had been a big draw for Homebase’s legion of female shoppers.

Faced with the might of market leader B&Q, Homebase tried to attract female shoppers with “personalised mood boards” and attractive displays of cushions, throws and other nick nacks from brands including Laura Ashley and Habitat. But almost overnight that USP disappeared as the Australians chucked out the chintz en masse and turned its stores into no-nonsense DIY sheds.

Bunnings Warehouse stores are definitely not designed with women in mind. With floor-to-ceiling shelving akin to the depressing, warehouse area near the checkouts in Ikea, the industrial chic of the recently refurbished store on the outskirts of Twickenham in south-west London is clearly aimed at hardcore DIY-ers.

There is a large section devoted to what looks like a breeding ground for power tools with £250 mitre saws nestling among an exhaustive selection of cordless drills. There are huge £700 four burner gas barbecues and £130 log splitters. Ideal for a large spread in the Melbourne suburbs perhaps. Not so fab for the average British back garden.

“There’s definitely less girlie stuff,” one shopper tells the Guardian. Her partner, however, is impressed by the wide choice on offer. Bunnings stocks more than 30,000 products, or 40% more than the average Homebase ever did.

Question:

What did ‘Bunnings’ do wrong?

 

 

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