As the official end date for Masters Home Improvement draws closer, the list of retailers potentially interested in taking up the space of the collapsed hardware chain grows.
Speculation on what would become of the empty sites started as early as May this year, when it was speculated that the likes of South African home furnishing store POCO and Ikea had eyes on the warehouses.
In August Woolworths Limited announced a deal for Home Consortium to buy the Masters sites, subject to consent by its joint venture partner Lowe’s, and Home Consortium plans to turn the sites into homemaker centres that contain a range of stores in the construction and home design space, according to Fairfax.
This has thrown up a list of potentially interested retailers including JB Hi-Fi, Harvey Norman, The Good Guys, Super Cheap Auto and Beacon Lighting – which had its share price hit after Masters started to discount lighting stock, but has told Fairfax it is in initial talks with Home Consortium about moving in.
Other big barn retailers have also been thrown into the mix, including Costco, although the US bulk discounter told reporters last week there are no plans to expand into the spaces.
This list of possible new tenants continues to grow at the same time as several local retailers have told SmartCompany they are actually looking at reducing floor space for operations.
But Gary Mortimer, associate professor at QUT Business School, says that for some speciality retailers, a large homemaker centre would make sense – and as the sites are brand new bases, would present an attractive option for businesses looking to expand.
“It’s probably sectors and categories that are showing interest – home brands in particular,” Mortimer told SmartCompany.
“Another emerging trend we are seeing is health and wellbeing – already we’re seeing the likes of JD Sports and Decathlon entering the market [from overseas],” he says.
What would the “homemaker centres” look like?
Mortimer says the draw of a site with multiple individual brands is the individualised service on products that not even Bunnings can currently offer.
“What that model provides is expertise – the people that are selling the tiles are experts in floor tiles,” he says.
“You go into a Masters and you’re going to get, I guess, a sales assistant with more general [experience].”
Brian Walker, chief executive of The Retail Doctor Group, agrees the setup can provide strong value for customers.
“I think there’s a strong example for destination centres,” he told SmartCompany.
“With good access, these businesses do very well.”
But some are sceptical about the location of the Masters sites. Critics pointed out as soon as the chain launched that Woolworths faced a challenge because some of the most attractive areas for stores were already dominated by Bunnings – and that as a late entrant to the market, Masters had little choice about where to set up shop.
“Some of the critics involved said their location was not that great,” says Walker.
Coverage in regional areas appears a key difference between Masters and Bunnings stores, where Bunnings has more significant coverage across the nation.
In New South Wales, Bunnings services places like Wollongong, Ballina, Byron Bay and Port Macquarie, while Masters has steered clear of those bases.
In Victoria, the regional city of Geelong does not have a Masters store, with the closest at William’s Landing, around 40km away, but has two Bunnings outlets in its outer suburbs.
Walker also highlights that many of the brands that would be best placed to take advantage of big shopfronts are those in the building and home improvement sector, which is currently feeling the force of the ongoing housing boom.
“Big box retailing is predicated on home improvement,” Walker says, adding that it’s unclear how long the boom will last.
For retailers, the task will now be looking at all elements of the sites on offer, including location and parking, and making a decision on whether an expansion into the space is worth it.
“Each Masters site has to be evaluated on its own merits,” Walker says.
Woolworths initially set a wind-up date for Masters stores of December 11, 2016. Customers continue to report confusion at the price of stock in the liquidation sale, which is being operated by GA Australia. Phones have now been switched off in stores and last month the brand’s online shopping portal was also discontinued, meaning those looking to buy remaining stock from the chain have to go in store to pick up any bargains.
You can help keep SmartCompany free for everyone to read
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany Supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.
And it’s not all one-way traffic either. SmartCompany Super Supporters get to dial into our monthly editor’s meeting and attend a monthly, invite-only webinar with a big-name entrepreneur.