IBISWorld Market Research
The competition between Bunnings and Masters is projected to remain a crucial part of the industry's structure over the next five years.
Melbourne, Australia (PRWEB) March 24, 2015
The Hardware and Building Supplies Retailing industry has performed strongly over the past five years. Industry revenue fell in 2009-10 and 2010-11 due to subdued expenditure on private homes, but has since returned to growth in 2012-13 and 2013-14, boosted by positive consumer sentiment and greater expenditure on DIY renovations and home improvement projects. According to IBISWorld industry analyst Spencer Little, “an undersupply of affordable housing and rising housing prices have also contributed to this growth, as it has become extremely expensive and time consuming for homeowners to upgrade to bigger and better homes.” As a result, many homeowners have been deterred from moving, seeking instead to improve their existing homes through DIY renovations. In addition, the abolishment of mortgage exit fees has made it easier for homeowners to refinance and unlock equity in their homes, which can be subsequently put towards home improvement projects. As a result, revenue is estimated to increase at a compound annual rate of 3.5% over the five years through 2014-15. Rising capital expenditure on private dwellings and increasing household discretionary income are set to contribute to further growth of 3.3% in 2014-15, with revenue reaching $14.6 billion.
The industry is expected to continue to perform moderately over the next five years. Steady rises in capital expenditure on private dwellings, discretionary income and the number of households are likely to contribute to this performance. “The competition between Bunnings and Masters is projected to remain a crucial part of the industry's structure over the next five years,” says Little. Both companies have signalled their intentions to build several new big-box warehouses over this period in an effort to increase their dominance. Smaller hardware retailers are therefore likely to find it extremely difficult to remain competitive.
A medium market share concentration characterises the Hardware and Building Supplies Retailing industry. Hardware retail chain Bunnings has significant dominance over the market. However, the industry also consists of a large number of smaller, independent operators. According to ABS counts of business data, in 2012-13 over 30.0% of firms in the industry were non-employing and a further 64.6% of enterprises employed less than 20 staff. These trends indicate that there are many smaller scale firms that operate in the industry in conjunction with the three major players. The introduction of Masters hardware stores and Woolworths' rapid expansion has increased market share concentration substantially over the past five years. In addition, Wesfarmers has sought to maintain its dominance over the industry and has also aggressively expanded its Bunnings big-box warehouse network. This expansion has contributed to further increases in market share concentration over the past five years.
For more information, visit IBISWorld’s Hardware and Building Supplies Retailing industry in Australia report page.
Firms in the Hardware and Building Supplies Retailing industry primarily retail hardware and building supplies to households and tradespeople. These retailers stock a range of goods including hardware, timber, tools, paint, plumbing supplies and garden tools. The industry excludes companies that primarily retail garden supplies such as plants, seeds and soil.
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Executive Summary
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Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
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Products & Services
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