Accessible Retail Property Conference - October 2017
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Accessible Retail Property Conference October 2017
Agenda 1. The Bunnings Story 2. Homebase Acquisition 3. Bunnings Property Objectives 4. Format Diversity & Flexibility
The Bunnings Story
Bunnings History
1886 1952 1989 1994
Arthur and Robert Bunning arrive in Bunnings expand in the WA market, adding Bunnings purchase Alco Bunnings open their first Bunnings
Western Australia. Bunning Bros Pty Ltd is building supplies to the existing timber Handyman operations in WA Warehouse
founded. Soon after they purchase their business; become a public company and and merge operations to in the Melbourne market and Wesfarmers go
first sawmill. significantly increase exposure to 100% ownership.
the leading supplier of WA hard woods to
the housing construction industry. to the D.I.Y. market.
1993
Bunnings purchase McEwans Ltd
in Victoria and SA. Enabling
expansion of operations to the
East Coast.
2001 2016 2017 Today
Purchased the BBC Hardware network Wesfarmers purchase the Homebase The first store in St Albans, Hertfordshire Bunnings continues to expand its operations with new
including Hardwarehouse and Benchmark network, expanding into UK and Ireland. United Kingdom opens. warehouses, smaller format stores and trade centres
stores in Australia and New Zealand, throughout Australia, New Zealand, United Kingdom
allowing Bunnings to expand internationally and Ireland.
into the New Zealand Market.
Bunnings
Leading retailer of home and garden improvement products.
• Caters to consumer and commercial customers
• Part of Wesfarmers Limited
– Wesfarmers owns and operates a number
of diverse divisions
– Wesfarmers has a market cap of c. A$45bn
and is Australia’s largest private sector
employer with over 200,000 employees
• Bunnings is one of the top 10 global home
improvement and outdoor living retailers
Lowest Widest Best Prices Range Service
Strong track record of investment in Australia & NZ
% $m
45% NSW network 900
Post BBC Stronger investment for
investment
40% acquisition future growth 800
(Project XLR8)
35% 700
30% 600
25% 500
20% 400
15% 300
10% 200
5% 100
0% 0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Capex (RHS) ROC (LHS)
Note: Australian and New Zealand figures shown only. Excludes Homebase acquisition and UK and Ireland investment from 2016 onwards.
Market Leading Returns Over the Long Term
Business Behaviour that Builds Trusts Over the long term with core stakeholders • Team members – focused on building high performance culture • Customers – price, range & service • Community – “we live here too” • Suppliers & landlords – build long term relationships • Shareholders – provide long term sustainable returns
Part of the Community
Homebase Acquisition
Attractive Market Entry Opportunity
UK home and improvement market estimated to be £38 billion and growing. Market size1
Market overview £38b¹
• Market size estimated to be £38 billion1 (consumer & trade) 1.6x £38b
£23b²
• Highly fragmented with top two players having < 15% market share competing £23b
across a variety of formats
• UK market forecast to grow at a similar rate to Australia
• Brexit uncertainty, HI&G fundamentals remain strong
UK population2
• Consumer confidence softening post June election
Housing fundamentals
2.8x 64.1m
• Similar home ownership rates (60% UK, 62% Australia)
23.1m
• Smaller & older dwellings
– 56% of England’s housing stock is over 50 years old3
• Higher wear & tear due to size & climate
UK households2
– Higher refresh & replacement activity & weighting of spend in key categories
(kitchens, bath, flooring & garden)4
• New household formation ~1.5 times that of Australia2
3.0x 26.4m
• Bipartisan consensus – 1 million new homes by 2020
8.7m
Sources: (1) Bunnings estimates based on industry analysis; (2) 2013 population, housing formation, occupied household estimates & gross
disposable income sourced from Office for National Statistics (UK) & Australian Bureau of Statistics; (3) English Housing Survey Headline
Report 2013-14; (4) HIA “Renovations out of the block” June 2014Addressable Market
Addressable market wider than home improvement & garden.
Wide range of products with everyday use in repairs, refits, maintenance, construction, business.
toilets in every building light fittings everywhereHomebase Acquisition Overview
Homebase provides an established & scalable platform to build a Bunnings branded business.
• Attractive and growing market
• Homebase provides an established & scalable platform
• Right-sized stores & well located network
• Network supports warehouse merchandising
• Latent capability for a low-cost operating model
• First step in a programme including investment in the Homebase
team & reinvigoration of core assets, building an exciting new
Bunnings-branded business over three to five years
• Long term investment opportunitiesBusiness plan to deliver long-term returns
Phase 1 Phase 2 Phase 3
• Combine essential local
• Retail basics focus
elements with best of Bunnings
• Invest in team to build new business
• Invest in core business • Warehouse format
activities • Lowest prices, wider choice with
• Develop pilots for Bunnings trusted brands, great service
Warehouse • Easy to get to with hours to suit
all customers
• Extensive digital engagement
• Servicing both consumer & trade
• “Everything you want under
one roof”
First 24 months In 3 to 5 years 5 years plusLONG-TERM VALUE CREATION
1. A winning 2. An engaged, 3. Business 4. Sustainable
offer to focused & behaviour returns
customers committed that builds
team trustProperty Objectives
Bunnings UK & Ireland - Property Objectives
Significant investment in stores to help build a Bunnings branded business in the long term.
Develop Pilots Currently 8 Pilots open
for Bunnings Warehouse 15-20 Pilots open by Xmas
Secure best sites
14 lease renewals
at low cost
More to come!
Significant maintenance
Invest in the store network
LED lighting program
3 new stores committed
Acquire new stores
Freehold investmentNew Stores
• Ability to access capital through Wesfarmers
Leverage parent
• Freehold or leasehold opportunities
support
• Greenfields or brownfields
• Prominent sites
• Easy access and egress
Site Selection
• Highly populated areas
• Generally 40 – 80,000 sqft with a garden centre of c. 15,000 sqft
• Important to ensure long term tenure as well as controlling long term
Control Costs occupancy costs
• Commercially disciplined; driving return on spaceBunnings Warehouse
Bunnings Warehouse – St Albans Hatfield Rd Before: After:
Bunnings Warehouse – St Albans Hatfield Rd Before: After:
Format Flexibility & Diversity
Format Diversity
Right size store for the market we operate in.
Multilevel
& elevated
• Cornerstone brand • format adaptability supports growth • Smaller format
• ~50,000 sqft to ~200,00 sqft • ~50,000 sqft to ~200,00 sqft • ~20,000 sqft to ~50,000 sqft
• Large format, continually evolving • innovating unlocks market • Acquisition and greenfield
• Low cost, warehouse merchandising opportunities • Highly flexible
• Flexible footprint including multi-level • inner-urban & tightly held suburban • Regional and metro markets
• Retail and commercial customers • achieves strong customer outcomes • Retail and commercial customers
• can combine store with other property
elementsThank you
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