Will big box superstores squeeze out retailers?

By Keri Algar

SYDNEY, NSW: Woolworths' 2011 venture into the homeware and hardware sector and Costco’s slow to start but tenacious Australian operation could signal even tougher times ahead for traditional retail, according to a report by IbisWorld.

The so-called information analysts predict that by 2015 at least 9 per cent of Australia’s retail revenue will be generated from more than 300 superstores.

IbisWorld general manger, Robert Bryant, said this will pressure retail operators with niche markets.

“While the average supermarket currently generates about $35 million each year, we anticipate the typical new format of supermarket-meets-hardware-meets-homewares megastore will generate $80 million in annual sales by 2015 – accounting for a significant share of the retail sector’s total takings and creating serious competition for current players,” said Bryant.

“Woolworths has indicated it intends to expand at an average rate of 30 stores per year between 2011 and 2015 as it looks to exploit its ability to penetrate high-density shopping centres and take advantage of the burgeoning Queensland housing development sector.

“In response, we anticipate a number of Bunnings Warehouse megastores will expand their product range to tackle their new Woolworths’ rivals head on by stocking additional product lines in areas including kitchenware and home furnishings.”

IbisWorld statistics indicate that in the United States consumer electronics account for 22 per cent of product share in the big box sector.

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