Bunnings Warehouse (Essay Sample)

Bunnings Warehouse
Student’s Name
Institution Affiliation
Bunnings warehouse
According to Montgomery (2012) Bunnings Warehouse has for many years operated many buildings and stores for home improvements which deal in sales of building products to people like plumbers, builders, electricians, landscaping contractors, painters and the general public. The giant company has brought together gigantic trade supplies under one roof to ensure efficiency and convenience of the goods to their huge consumer and commercial clientele. There are basically three Bunnings formats: there is the Bunnings warehouse which covers over 3000 square meters, there are stores with a small format which are commonly known as Bunnings and finally there is the Bunnings Trade Centre that deals in huge deliveries directly to the site which are meant for their commercial clients (Montgomery, 2012, p. 19).
Pettinger (2004) alleges that the store brandings at Bunnings are differentiated by the size and the goods offered in every store which is usually reflected in larger or smaller range of products. Apparently, Bunnings has 24 warehouses. 4 of them are Bunnings trade centers while the other 20 are Bunnings based in New Zealand. The giant company is working hard to ensure that its network of all the formats grows extensively in New Zealand. A strategic area that was identified for expansion was Canterbury and the Christchurch region. It took the firm 10 years to make it happen and currently there are four stores. Amongst these, there is a Bunnings warehouse situated at Shirley, one in Riccarton, another in Ashburton as well as a Bunnings trade located at Hornby (Ries and Ries, 2009). However, because of the earthquake that hit Christchurch the development of the store is yet to be pursued. Further options in respect to other stores that are within Christchurch were being looked into in case of future similar calamities such as earth quakes.
Nonetheless, with the increasing population growth in the rebuilt city and the uptake and expansion of the brands in places like the South Island, focus has been maintained to develop more stores in Christchurch (Montgomery, 2012, p. 68). The products that Bunnings deals in are numerous and are grouped into outdoor and indoor timber, flooring materials, builders hardware, paint, building products, tools, decorating supplies and slippery, plants, plumbing supplies, electrical fixtures, storage, outdoor furniture, garden tools, bathroom fittings and landscape supplies. Each warehouse at Bunnings accommodates about 46,000 product lines that are meant for improvement of homes and trading in the markets. The firm standardizes its products because of the standardized design of its buildings together with the layouts. This is one thing that the company’s rivals are yet to embrace (Pettinger, 2004, p. 146).
The extensive network that the company has continues to demonstrate economic success which is pegged on three simple pillars that are structured around the implementation and design of the warehouses. These pillars are best service, lowest price and widest range. Bunnings ensures lowest prices by reducing the costs that the customers incur when purchasing their products (Ries and Ries, 2009). This is achieved through simple fit out, efficient operation and simple building design. The scale of the operations at Bunnings enables the company to purchase their goods on large scale and allow the customers enjoy the discounts but at the same time maintain a profit margin through what is popularly known as economies of scale. Similarly, the company fulfils its aspect of widest range by stocking a great variety of commodities to allow choice of the customers. They do this after realizing that their competitors do not embrace it.
According to Pettinger (2004) the company extends its pillar of service not only by helping clients in making purchasing decisions in the stores but also making it easy for them to drop by the stores and shop. This aims at helping the clients find, access and navigate the stores and look for the products with ease. Bunnings ware house has two main competitors. There is Woolworths which has an 8% stake of the vast Australian market share and uses its subsidiaries such as Home Hardware and Timer, Thrifty Link and Masters Home Improvement. There is also Metcash which has a 7.3% market share and uses its subsidiaries its two subsidiaries: True Value Hardware and MITRE 10. According to the report by IBIS World (2013) the industry today is worth 13.1 billion US dollars and the two main business rivals dominate just less than 20% of the total market share. Wesfarmers which is popularly known as Bunnings has the largest stake in the market at 68.8% while other upcoming firms take the rest. However, Ries and Ries (2009, p. 261) note that the competitors’ small size is critical for the achievement of economies of scale. The main determinant of the firms’ competitive advantage is their ability to carry out an extensive market research and satisfy the current and emerging demands by consumer.
The prospects of survival and competitiveness of Bunnings depends largely on the growth and capacity of the real estate industry. The products are meant for the improvement of homes and outdoor and DIY living which are concerned with housing. For the past 10 years the government in Australia issued grants and other packages to the citizens with the aim of stimulating the housing industry. Nevertheless, the economic recovery that happened after GFC crisis led to a decrease in incentives and the recent increase in the prices of houses due to the investments in overseas led to an upsurge in the supply of houses. This is an opportunity and threat in equal measure to Bunnnigs because a reduction in incentives may prompt the public to avoid purchasing. However, an increase in supply translates to a huge demand for renovation an...