It’s All Because Of the Sausage Sizzle
Remember how excited all of us were as Aussies when Bunning’s was coming to the UK? Everyone’s immediate thoughts had nothing to do with the hardware store itself but whether Bunning’s would implement the famous sausage sizzle at the front of its stores.
The Aussie DIY retail chain made a dramatic entry into the UK market, making radical changes to the way Homebase conducted its operations. Out with the old, in with the new, was the mantra. They even went as far as sacking the existing senior management team of Homebase.
It made sense at the time. Homebase was a failing business with annual sales and profits gradually declining each year. Bunnings was the rising star, having captured the majority market share in the Aussie and New Zealand markets. They must have been doing something right and everyone believed that they must have the winning formula. If there was one company that could turn around the fortunes of the declining DIY retailer in the UK, it had to be Bunnings.
It seems they got one tiny detail wrong. The UK isn’t Australia. What works in the tropical, hot climate of Australia doesn’t work in the temperate cold weather of the UK.
Now don’t get me wrong. I love a good snag in bread with fried onions and lots of tomato sauce, but really, in the UK, when we can only have a decent BBQ 1 day a year, was it really going to work?
When Bunning’s first came to the UK, it was a battle of the sausage for them. Pork or Beef? They had asked. The very first marketing campaign ran on introducing the sausage sizzle to the British public.
The parent company Wesfarmers planned to invest more than half a billion British pounds into opening new stores and updating existing ones to the Bunnings Warehouse format. They had big plans to replace B&Q as the number one hardware retailer in the UK.
All of that seems like a distant memory now although it happened less than two years ago.
Last week, we saw a massive blow to Homebase when the owning company Wesfarmers sold it back for £1. The Aussie conglomerate giant had invested more than £1bn in the company over its two year run in the UK.
The 24 stores that had been changed to Bunnings brand will now revert back to Homebase as the chain has been taken over by Hilco.
The failure of the Aussie company to build a sustainable business in the UK was not surprising as we have seen the same mistakes with other scaling businesses coming into the country. It isn’t just necessary for a business to have performed well in Australia or New Zealand.
A business coming to the UK must understand the market demographics and build a partnership with local marketing and business development experts.
- Know Your Marketing Strategy – Wesfarmers admitted that they made a number of marketing blunders, such as dropping popular kitchen and bathroom products as well as heaters from their range of items.
- Get A Good Team – Was it arrogance or a huge oversight to think that getting rid of a performing team that knew the market was a good idea?
- Know Your Market – the UK is known for cold dreary wet days and we also love a pint in a beer garden even when we are chucking it down with rain. Why Bunnings thought it would be a good idea to rebrand themselves as a DIY focused on BBQ and grilling in this climate is anyone’s guess.
- Don’t Rely on Past Success and Goodwill – Wesfarmers is quite established and successful in Australia. With success comes a certain degree of confidence. Customers know your brand and you can get away with many things. However, when a business moves to a new location however they should not rely on previous success. Few British people recognized the Bunnings brand and trying to grow too big, too quickly was one reason that led to the company’s problems.
- Don’t Underestimate the Competition – Rob Scott, the CEO of Wesfarmers admitted that the UK market turned out to be more competitive and challenging with retail conditions compared to Australia. UK has a mature retail industry and existing businesses are quick to react to threats posed by new entrants.
Trying to run their UK operations in the same way business was conducted back in Australia turned out to be an unbelievable disaster for Bunnings. It just goes to show that you can be a big fish in a small pond that is the Australian market, but the UK is like an ocean where your past successes just don’t matter.
Check out this little fella who took a trip to Bunnings. Now you won’t find that in the UK
At global front room we see a number of similar issues with companies trying to enter the UK. You can join our network to get guidance from our experts on how to set up your business. We have an on-ground team that can help your company with its market entry strategy as well as building a sustainable
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