Woolworths eyes bright future in hardware market

Woolworths primed to grab a slice of $36 billion hardware market when its first home improvement store opens next year

By Brad Gardner | November 18, 2010

Retail giant Woolworths is banking on securing a slice of the lucrative hardware market when its first home improvement store opens in less than a year.

Speaking at today’s Woolworths annual general meeting, CEO Michael Luscombe talked up the company’s decision to rival the market dominance of Bunnings by partnering with US big-box hardware retailer Lowe’s.

Luscombe says Woolworths is ahead of schedule to have 150 sites secured by 2014, which has been helped by the Victorian Government’s decision to fast-track planning approvals for 10 stores.

"To say that we’re excited about this is something of an understatement," Luscombe says.

"By our estimation, the market is worth some $36 billion and with just one single dominant big box player, so you can certainly appreciate the opportunity that lies ahead of us."

He says the Woolworths’ decision to enter the hardware market will drive investment in jobs and infrastructure.

"We have obviously conducted a lot of research into the home improvement sector and talked to a lot of customers about what they like and don’t like," Luscombe says.

He says Woolworths is investing heavily in training staff following feedback from customers calling for greater emphasis on service.

"We’re committing 10,000 hours worth of training to customer service alone in order to build a culture of service that’s second to none so that our customers will be able to find what they need and get the help they want quickly," he says.

The Australian Competition and Consumer Commission (ACCC) last year supported Woolworths’ foray into the hardware sector on the basis it will improve competition.

Despite the economic uncertainty from the global financial crisis, Woolworths recorded $51.7 billion in sales last financial year – a 4.2 percent increase.

Its supermarket division alone increased sales from $42.4 billion to $44.2 billion. The increase propelled a 10 percent profit increase to $2 billion.

Woolworths is also planning significant investment in its distribution centres and supply chain to cut costs across its warehouse and transport divisions.

New DCs are being built in Tasmania and Sydney, following the opening of a new centre in Brisbane last year.

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