Why The Masters Hardware Business Failed

Image: Getty Images

This week, Woolworths sold off its Masters home improvement division, and now 7700 jobs are on the line. The Masters business has been losing about $200 million a year, unlike main competitor Bunnings which is a major contributor to profits at its owner Wesfarmers. Here's what went wrong according to Winning Appliances CEO John Winning.

John Winning, the founder of Appliances Online and the CEO of Winning Appliances, says the failure of the Woolworths-run Masters chain isn’t a surprise. He says consumers already had an established hardware offering from Bunnings and Masters failed to deliver a point of difference.

“Their aggressive store rollout, paired with an inability to differentiate the business, presented a number of challenges,” Winning writes in his blog today.

Woolworths has announced it’s closing its Masters stores by December 11 and selling off the property.

The Masters business has been losing about $200 million a year, unlike main competitor Bunnings which is a major contributor to profits at its owner Wesfarmers.

Writedowns of more than $4 billion before tax on its hardware business and flat supermarket sales brought Woolworths to its worst loss in 20 years.

The shut down was driven by Brad Banducci who was appointed CEO in February. He made exiting the home improvement business a top priority.

The jobs of 7700 people are on the line at Masters. Woolworths says it will work hard to find employees jobs within the group or it will pay full redundancy.

A consortium — Aurrum Group, Spotlight Group and Chemist Warehouse — will buy the 61 Masters stores and 21 development sites.

They plan to turn the sites into multi-tenant, large format centres.

“It’s not surprising that they have taken this approach,” John Winning says.

“As retailers with different businesses, the multi tenant format allows them to house their own brands whilst providing customers with the convenience of other complimentary retail offerings.

“It’s an existing formula that makes sense. However, it’s important to acknowledge that Australians don’t want more of the same thing. Customers crave new brands and experiences that raise the bar and exceed expectations.

“After much of the same, hopefully we will see the centres house some new brands that customers can get excited about.”


This story originally appeared on Business Insider.


Comments

    it was a bizarre place. they worked so hard to be different to bunnings that the place was schizophrenic. you could buy washing powder but not the laundry taps or washers. hammers but limited types of nails. it didnt seem to be anything of itself, just 'different to bunnings'

      but not the laundry taps or washers.

      Right.. I've only been to the one Masters & only went couple of times (because the nearest one is 35 mins away unlike Bunnings which is 5 mins away) but they definitely stocked these items. There were 2 or 3 aisles dedicated to plumbing & bathroom.

    Masters didn't differentiate themselves from Bunnings? I thought clean clean well-lit shops and helpful proactive staff were huge points of difference with Bunnings...

    Their booze outlets are going great guns though. I don't drink, but would I be right in assuming there's no Homebrand booze to undercut the name brands? They really need to get their shit together on this, Coles too, I don't want to see inferior Home brands slowly taking over shelves where the good stuff used to be.

      Lol "the good stuff" the beer in this country is a joke. The mainstream Australian stuff like VB, Toohey's, XXXX, Carlton are over priced, terrible & now owned by a foreign entity. You've also got Coopers which make a good beer & are still Australian owned, but very expensive. When you get down to it, at least the homebrand (exclusive to Dans & BWS) some of them are Australian owned companies which is a nice change.

      Also a staggering amount of wine sold in both is also a "homebrand" also a good portion of spirits. Just because it's owned or has a controlling stake by Woolworths or someone bottles for them under a different name doesn't mean its a bad product. There's stuff in those brands i've found better than the product they're copying honestly.

        I'm not worried about whatever quality is available right now, I'm more worried that sooner or later there will be no competition. Guess what happens when there's no competition?

          It's already like that to be quite honest. In major brands you're either buying a Lion Nathan or CUB product, if it's not Pinnacle Drinks (Woolworths) or whatever the Coles equivalent is.

          and saying that Woolworths import brand name beers and are the Australian distributor for them too. So yeah. What competition. They all play together and do secret deals i'm sure of it.

      Coles, who run Liquorland and First Choice Liquor do get a few beer and wine brands made for them, for example Steam Rail beers. Howeverf that's uncommon: what the duopoly generally do is import massive amounts of cheap but good quality beers from Europe or the USA.
      Woolworths (BWS and Dan Murphy) import Oettinger from Germany and brands such as Amsterdam Mariner from the Netherlands, and Coles have a similar collection.
      Compared to the pretty dismal Australian mainstream beer they sell for around 2/3 the price.
      Many overseas brands are brewed under licence by Lion or CUB - for example Stella Artois, Becks, Heineken.
      What Coles and Woolies often do is to direct import these lines from Overseas, thus cutting out the local brewers and sell at much reduced prices. Last week I bought a carton of UK Stella from BWS, for $40 as opposed to around $50 for the Lion brewed under licence stuff out of Lidcombe NSW.

    It's a pity Masters didn't make it. Despite popular opinion, Bunnings have a carefully limited range, poor pricing and in the last few years, terrible queues on the weekends.

    Masters had great prices for the most part, in some regards a better range (for instance, they carried a lot of American manufactured tools and woodworking consumables at a reasonable price that typically sold at premium prices elsewhere) and an abundance of helpful (although not always knowledgeable) staff.

    Yet again, Australians get stiffed with a near-monopoly controlling the market.

    Last edited 26/08/16 1:31 pm

    My local had the best range of dead plants I'd ever seen.
    Plus for some reason they put the shelves directly under the high Bay lights. So even during the day the store was almost completely dark.

Join the discussion!