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.