Masters nails 37% sales improvement as competition with Bunnings builds

The battle for the wallets of Australia’s DIY enthusiasts continues to rise with Woolworths reporting a 37% rise in sales from its growing chain of Masters stores in its latest sales update.

Home improvement sales lifted from $211 million in the third quarter of 2012 (the 13-week period to March 31) to $290 million in the third quarter of 2013.

Launched in 2011 in direct competition to Wesfarmers-owned Bunnings (which also own Coles), there are now 29 Masters stores trading following the opening of four new stores over the March quarter.

Masters, a joint venture between Woolworths and US home improvement chain Lowe’s, plans to expand by between 15 and 20 new stores a year “for the foreseeable future”.

“The February ‘Trade Month’ proved to be a great success, with many new trade members signing up to the Masters’ program,” said Melinda Smith, director of Masters.

The success of Masters was also noted by Woolworths CEO Grant O’Brien, who said that “while conditions in the trade segment remain challenging, we continue to be pleased by the progress of this business.”

Last week Property Observer reported that Woolworths had securing a site at the Sydney Business Park (pictured below) in Sydney’s north-west for a new Masters Home Improvement store, where it will go head-to-head with arch-rival Wesfarmers, which has also secured a site in the business park for a Bunnings DIY store.


Yesterday, the premises of Bunnings in Sale were bought by a Melbourne family for $6.36 million on a yield of 7.5%, after being passed in at auction earlier in the day.

Last year Woolworths and Wesfarmers traded blows over a research report written consultancy Madison Cross on Masters with the report referred to the ACCC as being potentially “misleading”.

“A Madison Cross report being circulated to brokers and media by a consultant associated with Bunnings is further evidence of a dirty tricks campaign being waged against the Masters Home Improvement business,” said Woolworths in a statement in September last year.

“Since opening its first store in September last year, Masters is providing much-needed competition in the destination home improvement sector against Bunnings who hold a market-dominant position.
“Masters has created healthy competition, is winning market share and enjoying strong customer support. It appears this report is designed to generate negative, ill-informed commentary about Masters.
“This report is incorrect in its assumptions and its projections, and can only be viewed as an attempt to damage the credibility of the Masters’ business strategy.”

Despite the jump in sales, Woolworths has some way to go to catch up with Wesfarmers.

The Bunnings network currently comprises 211 warehouses, 63 smaller format stores, 36 trade centres and four frame and truss plants operating across Australia and New Zealand.

This article first appeared on Property Observer.


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