Woolworths has revealed that it will be entering the $24 billion a year hardware industry after a proposed takeover of Danks Holding Limited, Australia’s second largest hardware distributor. It also hinted at the development of a new destination store.
The Board Of Woolworths Limited has approved the plans for the company to enter the hardware arena with a multi format strategy designed to meet the everyday home improvement needs of Australian consumers.
Danks is Australia’s second largest hardware distributor supplying 583 Home Timber & Hardware, Thrifty-Link Hardware, Plants Plus Garden Centre stores and 939 independent hardware stores,
In addition to the acquisition of Danks, Woolworths also announced a joint venture with leading US home improvement retailer Lowe’s.
As a part of the new hardware strategy, the company will develop a network of destination home improvement stores with the target to secure more than 150 store sites within the next five years.
Woolworths chief executive Michael Luscombe commented on the new announcement.
“The Australian love of property and high levels of home ownership mean that maintaining and improving homes is an important part of everyday life,” he said.
“There is a real opportunity to increase the overall size of the sector and this significant new distribution and retail investment should be positive for both customers and the industry alike.”
Luscombe emphasised how the new deal will help improve the industry.
“We’re interested in adding choice to the industry and we believe we can improve the pricing, product range and experience for customers,” he said.
“At the moment, the sector is dominated by one major big box player, so there is a real opportunity for increased competition in that part of the sector.”
Luscombe discussed how the company wants to offer something new for the consumer.
“Woolworths is keen to grow the overall home improvement category in Australia and this means significant innovation, investment and opportunity in both distribution and retail,” he said.
“We want to create a fresh new offer in destination home improvement and also give customers a better deal in their local hardware store by working with Danks to grow and improve hardware distribution to the independent retailers. Our entry into these two points in the value chain will be supported by our joint venture with Lowe’s.”