​Woolworths to offload Masters chain while Wesfarmers jumps in with UK Homebase

The two tales of DIY failure and success boil down to decent customer experience, futurist says

In a double twist of fate, Woolworths announced its decision to offload home improvement and hardware chain Masters, at the same time rival Wesfarmers revealed its DIY expansion with an offer for Homebase, the UK’s second-largest hardware chain.

Woolworths ASX announcement showed it intends to exercise a call out option over US-based Hydrox Holdings Pty Limited held by WDR Delaware Corporation, which is a subsidiary of US company Lowe’s and operates Masters Homes Improvement and Home Timber and Hardware.

“Our recent review of operating performance indicates it will take many years for Masters to become profitable,” Woolworths chairman Gordon Chains, said. “As a result of our engagement with Loew’s, it has advised that it intends to exercise the put option which is available to it under the joint venture agreement.”

The exit process will involve Woolworths buying back a 33.3 per cent interest in the Hydrox venture and will involve negotiation with Lowe’s as well as an independent expert valuation process. Cairns said Woolworths intends to pursue an ‘orderly prospective sale or wind-up of the business.’

“This enables full ownership of the business by Woolworths in a shorter timeframe and gives us access to the widest range of exit options,” he said. “This important decision allows Woolworths to focus its energy and resources on strengthening its plans in our other businesses.”

According to futurist Chris Riddell, Masters failing was quite simply down to customer experience.

"There just wasn’t any," he said. "Canstar Blue published some of the surveys recently conducted, and the comments were overwhelmingly negative about staff being untrained, unhelpful and at worst just not there to even speak to."

He added the announcement signals that the days of stack it high and sell it cheap are well and truly over.

"Masters recent announcement of it finally admitting defeat in the highly competitive market of bricks and mortar retail is no surprise," he said. "The cost of doing business on the ‘high street’ in Australia is at an all-time high, and you can’t win the battle of getting customers in by just throwing money at the problem. Customers are more demanding today than ever, and they are more savvy with the advent of social media and online shopping."

Meanwhile at the same time, rival group, Wesfarmers, confirmed its 100 per cent acquisition of UK home improvement and garden retailer, Homebase, for 340 million pounds, or approximately $705 million.

In a statement released to the stock exchange, Westfarmers announced the rationale behind the acquisition was the attractive and growing UK home improvement and garden market, which is currently worth around 38 billion pounds.

Wesfarmers revealed the first step in its program includes investment in the Homebase team and reinvigoration of core assets, building an exciting Bunnings-branded business over three to five years across the 265 stores currently across the UK and Ireland.

"The 38 billion pound UK home improvement and garden market is a large and growing market with strong fundamentals," Wesfarmers managing director, Richard Goyder, said. "The Bunnings team has done a lot of work to make sure it understands the market and the opportunity, including having visited hundreds of stores, spending significant time researching the market and closely studying international retail expansions into the UK and other markets."

According to Riddell, when it comes to the competitive edge in terms of customer experience and loyalty, Bunnings has a clear win.

"Any store that wants to entice customers in, and more important gain loyalty and repeat business has to focus on the holy grail of creating experiences and treating the customers with respect," he said. "Customers today want to feel like they’re going somewhere that is giving them value, and the experience matches their expectations.

"This is where Bunnings has a clear win. The staff are well trained, they are knowledgeable, and they have a passion for the Bunnings brand. Employees of Bunnings are actually not really employees. They’re part of the fundamental DNA that makes Bunnings who they are. They’re passionate, knowledgeable and they live for the brand. It’s the future of retail, and it’s how experiences are created."

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

More Videos

looking for the best quality of SMM Panel ( Social Media Marketing Panel ) is a website where People Buy Social Media Services Such as Fa...

Kavin kyzal

How to manage social media during Covid-19

Read more

Thank you for sharing your knowledge. Definitely bookmarked for future reading! Check this website https://a2designlab.com/ with lots of ...

Pierce Fabreverg

Study: Gen Z are huge opportunity for brands

Read more

Thanks for sharing. You might want to check this website https://lagimcardgame.com/. An up and coming strategic card game wherein the cha...

Pierce Fabreverg

Board games distributor partners with Deliveroo in business strategy pivot

Read more

Such an important campaign, dyslexia certainly need more awareness. Amazing to see the work Code Read is doing. On the same note we are a...

Hugo

New campaign aims to build understanding around scope and impact of dyslexia

Read more

Great Job on this article! It demonstrates how much creativity, strategy and effort actually goes to produce such unique logo and brandin...

Pierce Fabreverg

Does your brand need a personality review? - Brand vision - CMO Australia

Read more

Blog Posts

A few behavioural economics lesson to get your brand on top of the travel list

Understanding the core principles of Behavioural Economics will give players in the travel industry a major competitive advantage when restrictions lift and travellers begin to book again. And there are a few insights in here for the rest of the marketing community, too.

Dan Monheit

Co-founder, Hardhat

Predicting the Future: Marketing science or marketing myth?

Unicorns, the Sunken City of Atlantis, Zeus: They are very famous. So famous in fact, that we often think twice about whether they are real or not. Sometimes if we talk about something widely enough, and for long enough, even the strangest fiction can seem like fact. But ultimately it is still fiction - stories we make up and tell ourselves over and over until we believe.

Kathy Benson

Chief client officer, Ipsos

Winning means losing in the game of customer retention

At a time of uncertainty and economic hardship, customer retention takes on much greater importance. CX Lavender’s Linda O’Grady examines the big grey area between ‘all’ and ‘best’ customers when deciding who is worth fighting for and how.

Linda O'Grady

Data Strategy Partner & Business Partner, CX Lavender

Sign in