Bunnings domination

With five hundred stores Bunnings absolutely dominates the DIY hardware market like no other company. They have conquered Australia’s home improvement sector, crushing all competition under their proverbial steel-cap boots. Now, as Bunnings expands into unexpected product ranges like pet care, many are wondering what their next move will be. The Bunnings story carries an important lesson for businesses. In competition, never wound what you can’t kill.

In 1886, two brothers arrived at Fremantle Port in Western Australia from England with no plans to stay. Robert and Arthur Bunnings intended only to visit their sister before continuing to America. After witnessing the construction boom unfolding around them, they made a life-changing decision to remain. Initially, they worked on the construction of an insane asylum. Within a few years, the Bunnings brothers had built a small empire of four brickyards. In the 1890s, Western Australia was a land of opportunity. So much so that the brothers struggled to secure enough raw materials to fulfil their contracts.

After Arthur was side-lined by a horse-riding accident, Robert was left to tackle the supply shortages alone. In response, he made a pivotal decision. One that would lay the foundation for the Bunnings we know today.

Recognizing the challenges of relying on external suppliers, he decided that they needed to own the supply rather than fight for his share of it. He sold their brickyards and purchased their first sawmill. In 1914, the sawmill burned down, but by then, Bunnings had already reinvested its profits to expand across Western Australia. By 1936, both brothers had passed away, and Bunnings was left to Robert’s three sons. Until this point, Bunnings’ growth had been fairly routine. That changed when the three brothers opened a hardware store in Perth during the 1960s. Instead of focusing on tradespeople, they shifted their focus to selling directly to consumers. Having already controlled the supply, they now sought to recapture a share of the demand.

While their expertise and business experience provided a strong foundation, it could only carry their new venture so far. The hardware landscape back then was much more competitive and fragmented. Competition was fierce, with many other chains and a large number of independent stores. When Bunnings entered the market they weren’t the big fish in an empty pond like they are today.

They began acquiring stores at an astonishing rate. This marked the lasting legacy of the second generation of the Bunnings brothers. The third generation of the Bunnings family, the cousins, accelerated the company’s growth. They acquired two of their largest competitors in the hardware sector. The largest sawmill company and Alco Handyman stores were now under Bunnings’ ownership. Not long after, in 1993, they acquired McEwan’s

With the McEwan’s acquisition, Bunnings expanded to the east coast of Australia. McEwan’s operated in Victoria and New South Wales, but they also owned several brands in South Australia and Queensland. If there was a defining moment when Bunnings truly conquered Australia, this was it. 

That was, of course, until Wesfarmers noticed the hold Bunnings had on the market. With a six hundred million dollar offer the remaining Bunnings family members stepped away from the business. Wesfarmers’ version of Bunnings is the one we recognize today. The big-box hardware chain quickly became virtually unrivalled.

At this point, many people might wonder how this was ever allowed to happen. Unfortunately for Australian consumers, the ACCC did not consider Bunnings a threat to market competition.

By 1994, Mitre 10 was the last major competitor preventing Bunnings from complete market domination. In 2004, Bunnings achieved what many thought was impossible. They acquired a string of Mitre 10 locations. Until this point, such a move was unheard of. It would be like Woolworths buying a single Coles store. Mitre 10’s business model operates as a cooperative, where multiple independent owners share the same brand. When Bunnings came knocking, many Mitre 10 store owners were eager to sell. In 2008, the ACCC ruled that these acquisitions did not significantly impact market competition and therefore raised no concerns.

The only remaining obstacle was the small, family-run tool shops still struggling to survive. To seal their dominance, Bunnings introduced the slogan every Australian knows. “We’ll beat it by ten per cent.” That was enough to wipe out the few remaining independent hardware stores in rural areas. For these small businesses, a ten per cent price cut slashed their already thin profit margins. But for Bunnings, it barely made a dent in their bottom line.

From there, Bunnings expanded its reach by acquiring businesses in garden care, electronics, and pet care. Step into Bunnings today, and you’ll notice their newest market push. They’ve dedicated three full aisles to pet products, from food and toys to accessories. Independent pet stores are now facing the same fate as hardware shops before them. Bunnings is coming for their market share.

Bunnings remains completely unchallenged, with the ACCC making it clear they have no intention of stepping in. Only time will tell which retail sector Bunnings will dominate next. After all, for Bunnings, lowest prices really are just the beginning.