Retail in Asia

In Sectors

Bunnings growth at risk as market reaches saturation, says Citigroup

Bunnings managing director John Gillam has dismissed concerns about the retailer’s strategy of dominating the AUD43 billion home improvement market and squeezing out rivals by opening new stores in a saturated market.

Investment bank Citigroup said Wesfarmers-owned Bunnings already has too many stores and margins are likely to come under pressure if it presses ahead with plans to open 20 stores a year for the next two years, twice the number of new stores planned by Woolworths’ Masters big-box chain and Metcash’s Mitre 10 network.

Australia now has 49 home improvement or hardware stores per 1 million people, compared with 33 per million in the US and 27 per million in the UK. Put another way, there is now one home improvement store for every 20,338 people in Australia compared with 36,822 in the US and 30,662 in the UK.