Start-up stores shouldn’t fear Woolworths’ move into the hardware retail market, analysts and industry groups have claimed.
The retail giant plans to roll out a 150-strong big box hardware chain, offering a mix of hardware, timber and garden products, as well as whitegoods such as washing machines.
Woolworths has secured around half the sites needed for the launch, although it recently suffered a planning setback in its attempts to start building on a 13,500-square metre location in Geelong.
An Urbis report commissioned by Woolworths found that the rollout could generate the firm $30 million a year in sales and significantly dent the income of rivals such as Bunnings and Mitre 10.
Urbis had not returned calls at the time of publication but analysts and industry groups downplayed fears that the expansion would severely impact smaller hardware stores.
Rather than crush start-up operators, the Woolworths chain could bring fresh customers through their doors, according to industry commentators.
Russell Zimmerman, executive director of the Australian Retailers Association, says: “Retailing is an extremely competitive environment and small and large retailers need to operate alongside each other.”
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“Small retailers can remain competitive by focussing and nurturing their relationships with local communities and loyal consumers.”
“Larger retailers in local communities can also increase foot traffic and attract more shoppers to local stores.”
Retail Doctor chief executive Brian Walker, CEO of Retail Doctor, added: “There is potential here for big anchors to draw foot traffic to regions near these larger retailers. But there is also a need for those smaller retailers to compete not only on price, but on community involvement.”
“They have to use their expertise over and above price. If you look at a store like the Athlete’s Foot, they offer running shoes – a simple product. But they add expertise, knowledge and have highly developed skills to personalise their customer service. That is what smaller stores need to offer in comparison.”