Supply chain issues have been a major headache for the home improvement industry over the past year, but Bunnings has shown resilience as Australians emerge from lockdown. Schneider said that while the impasse in the supply chain had been lifted, the situation in certain categories remained “fluctuating”.
Bunnings’ revenue rose 5.2% to $17.8 billion in 2022 and contributed $2.2 billion to the Wesfarmers group. But analysts are cautious about how much momentum the hardware giant can maintain into the new year.
As the world emerges from lockdown, Bunnings has remained resilient.
UBS cuts Bunnings profit forecast for 2023 ahead of DIY spending slowdown – but notes that, like Wesfarmers partner Kmart, Bunnings is better positioned to handle spending compared to peers slowing environment.
“Each company offers a strong value proposition to consumers and lowers/rein in prices in the face of cost inflation,” analyst Sean Cousins said in a note to clients.
Schneider said the company’s commitment to offering the lowest prices on the market remained a key differentiator for Bunnings over the competition as households endured higher interest rates.
“Clients are very focused on value for money … Bunnings is very well positioned in that space.”
His time on the store floor also underscored the strength of Bunnings’ broad product range, he said.
“Whether it’s a paint roller or a potting mix, you have a range of products at different price points – so customers have choice.”
“Also, if the first product they’re looking for isn’t available, or isn’t available in the quantity they want, we can provide them with an alternative product,” Schneider added.
Australians have maintained their spending momentum ahead of the festive season, but households are expected to reduce their interest in homewares and furniture next year as the pandemic-induced spending spree of the past two years ends.
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Spending Pulse data from Mastercard for November showed overall spending rose 5% in the month compared to a year earlier, but home goods saw the biggest drop, down 4.1%.
Schneider said the more cautious spending environment is a reminder of the importance of getting retail fundamentals right, including staffing.
“That said, a beautifully furnished shop, a really friendly team…we have people who have years of experience with the tools, whether as builders or electricians, and our guys build fantastic decades of career career.”
