Masters Home Improvement

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Masters Home Improvement
Company typeSubsidiary
Industry Retail, Home Improvement
Founded1 September 2011;12 years ago (2011-09-01)
Defunct11 December 2016;7 years ago (2016-12-11) [1]
Number of locations
63 (prior to closure)
Area served
 Australia, New Zealand
Key people
Grant O'Brien (Woolworths CEO)
Matt Tyson (Director, Home Improvement)
Melinda Smith (Director, Masters)
RevenueIncrease2.svg A$903 million (2017) [2]
Increase2.svg A$59 million (2017) [2]
Parent Woolworths Limited, Lowe's Home Improvement
Website www.masters.com.au

Masters Home Improvement was an Australian home improvement chain operated by two retailers; Woolworths Limited [3] and Lowe's Home Improvement. It was established as a way for Woolworths Limited to enter the hardware retail market, which has been historically dominated by Bunnings Warehouse, owned by their competitor Wesfarmers. These two companies also compete with each other with groceries, liquor, fuel and general merchandise. Most of the stores shared the same format of conventional Lowe's stores and borrowed elements from Bunnings Warehouse for the garden and trade areas.

Contents

The joint venture was ultimately a failure for Woolworths Limited, accumulating losses of over A$3.2 billion over a 7-year period, and caused Woolworths to leave the hardware market. All stores were closed and sold off by 11 December 2016. A key reason for the failure was the lack of product localisation to the Australian market from company leadership, with product schedules based upon the United States Northern Hemisphere seasons, which do not align with Australia's opposite Southern Hemisphere seasons. The failure is regarded as one of the biggest disasters in Australian retail history and left Bunnings with a near-monopoly over the retail hardware market in Australia. [4]

History

Woolworths Limited announced a plan to enter the Australian hardware market by establishing a joint venture with United States based hardware chain Lowe's on 25 August 2009. [5] The plan was to develop 150 stores within a 5-year period. [6]

The Masters brand name was announced on 3 May 2011, [7] plus coinciding with the launch of the official website at masters.com.au. [8] Hans Hulsbosch, who has already designed brand identities for Woolworths and Qantas before, designed the Masters brand and logo. [9] At that time, there were 14 stores under construction, with building approval for an additional 10.

The first outlet, in Victoria, opened on 31 August 2011. [7] Masters differentiated from their competitors by having stores be brightly lit and colourful by using polished concrete, large colour signage, and store display. They also intended to place an emphasis on attracting female shoppers. Buzzers were scattered around the store, which, when pressed, will send a nearby staff member to that location to help out a customer. While a customer's paint was being tinted, pagers were handed to customers, enabling them to continue shopping. Masters also sold more 'non-hardware' lines such as whitegoods as well as having McDonald's restaurants with McCafés in selected stores. The first stores to open in each state were in Queensland on 11 October 2011, [10] New South Wales on 4 December 2011, Western Australia, and South Australia in August 2012. [11] It became clear during 2013 that the company was struggling. Leadership changes and product-line adjustments did little to keep the company afloat, and in August 2014 the store roll-out plan had been revised. [12]

The final store to open was at Penrith in New South Wales, which opened in December 2015. [13]

In January 2016, Woolworths announced that it intended to "either sell or wind up" Masters Home Improvement. Chairman Gordon Cairns said that it would take years for Masters to become profitable, and that the ongoing losses cannot be sustained. [14] To facilitate the sale or wind-up, Woolworths would buy back a one-third interest in the joint venture held by the Lowe's subsidiary WDR Delaware Corporation. [15]

Following an 8-month review process in which offers for the business were considered, it was officially announced on 24 August 2016 [16] that all Masters stores would cease trading either on or before 11 December 2016; GA Australia was appointed to manage the sale of inventory, providing an underwritten recovery to deliver gross proceeds of approximately $500 million. Home Consortium, a private joint venture between Aurrum Group, Spotlight Group and Chemist Warehouse, planned to acquire the Masters property portfolio, including 40 freehold trading sites, 21 freehold development sites and 21 leasehold sites. A number of the sites were to be converted into Bunnings Warehouse stores, with the remaining sites to be reformatted into multi-tenant format centres. Woolworths acquired 3 freehold sites and took assignment of 12 leases.

After a 3-month fire sale period, all the stores were shut down on 11 December 2016. [17]

Locations

There were a total of 63 stores in operation Australia wide, including one in the Australian Capital Territory. There were 17 stores in New South Wales, 16 stores in Queensland, two in South Australia, 18 in Victoria, and nine in Western Australia. 20 more stores had been planned, but were never built. The stores were supplied by a small number of warehouse distribution centres. There were no stores in Tasmania or the Northern Territory.

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References

  1. ↑ Letts, Stephen; Morgan, Elissa (24 August 2016). "Woolworths to shut Masters by year end, Metcash buys Home Timber and Hardware". ABC News. Retrieved 25 August 2016.
  2. 1 2 Sales report. "Discontinued Operations - Financial Year 2017, Page 99" (PDF). Retrieved 4 November 2017.
  3. ↑ "Masters Plan For DIY Market". Melbourne: theage.com.au. 3 May 2011. Retrieved 18 May 2011.
  4. ↑ "Hardware group Masters aspired to be a jack of all trades, but mastered none". www.couriermail.com.au. 2 September 2016.
  5. ↑ "Woolworths to enter $24 billion hardware sector" (PDF). Woolworths company announcement. 25 August 2009.
  6. ↑ "The rise and fall of Masters hardware stores". ABC News. 18 January 2016. Retrieved 6 September 2019.
  7. 1 2 Speedy, Blair (3 May 2011). "Woolworths reveals plans for hardware venture". theaustralian.com.au. Archived from the original on 27 April 2015. Retrieved 6 September 2019.
  8. ↑ "Masters Website". Masters Home Improvement. Retrieved 18 May 2011.
  9. ↑ "Billion dollar battle for DIY". australiancreative.com.au. Archived from the original on 8 May 2011. Retrieved 18 May 2011.
  10. ↑ Nancarrow, Dan (7 October 2011). "Masters by name, but it's more Miss friendly". The Sydney Morning Herald.
  11. ↑ "$80m shopping complex opens". borderwatch.com.au. 10 August 2012.
  12. ↑ "Update on home improvement" (PDF). Woolworths Limited company announcement. 12 August 2014.
  13. ↑ "Is this Masters store the most shortlived retail outlet in history of shopping". Sydney Morning Herald. 19 January 2016.
  14. ↑ "Woolies winds up Masters". Courier Mail. News Corp. 17 January 2016.
  15. ↑ Ryan, Peter; Janda, Michael (17 January 2016). "Woolworths to exit doomed Masters hardware venture". ABC News. Retrieved 11 July 2016.
  16. ↑ "Woolworths Update On Home Improvement Exit". Masters News. Masters Home Improvement. 28 August 2016. Retrieved 5 September 2016.
  17. ↑ Low, Catie (7 October 2016). "Masters cancels orders and cuts phones amid fire sale fail". Sydney Morning Herald.
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