Masters Home Improvement

Masters Home Improvement
Subsidiary
Industry Retail, Home Improvement
Founded 1 September 2011 (2011-09-01)
Defunct 11 December 2016 (2016-12-11)[1]
Number of locations
 63 (prior to closure)
Area served
 Australia
Key people
 Grant O'Brien (Woolworths Limited CEO), Matt Tyson (Managing Director, Home Improvement), Melinda Smith (Director, Masters)
Revenue IncreaseA$903 million (2017)[2]
IncreaseA$59 million (2017)[2]
Parent Woolworths Limited
Website www.masters.com.au

Masters Home Improvement was an Australian home improvement chain operated by retailer Woolworths Limited.[3] 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 rival Wesfarmers. The 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 Home Improvement stores, and borrowed elements from Bunnings Warehouse for its garden and trade areas. Masters 2.0 format stores were rolled out in 2015, as they were designed to create a more consumer-friendly experience.

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 exit the hardware market, with all stores being closed and sold off by 11 December 2016. It was also regarded as one of the biggest disasters in Australian retail history.[4]

History

Woolworths announced its plan to enter the Australian hardware sector by establishing a joint venture with U.S. based hardware chain, Lowe's on 25 August 2009.[5]

The original plan was to develop an excess of 150 stores within a 5 year period.[6]

The Masters brand name was announced on 2 May 2011,[7] coinciding with the launch of the website at masters.com.au.[8] Hans Hulsbosch, who has designed brand identities for Woolworths and Qantas 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, located in Braybrook, Victoria, opened to tradesmen on 31 August 2011, and the general public on 1 September 2011.[7] In the Sydney Morning Herald, Masters' first CEO Don Stallings was attributed as saying that staff will be trained for at least 100 hours, and the stores will offer over 35,000 products.[10] Ways in which Masters differentiated from its competitors included stores which were more brightly lit, more colourful with polished concrete, large colour signage and store displays, it also aimed to place more 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 their 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.

In June 2012, Masters Home Improvement launched their transactional website that offered more than 30,000 products nationwide, giving them the title of Australia's first online hardware and home improvement retailer.

The first two stores in Queensland opened at Springfield Central, and then at Tingalpa on 11 October 2011;[11] the first store in New South Wales opened at Gregory Hills on 4 December 2011; the first store in Western Australia opened at Baldivis in August 2012 and the first store in South Australia opened in Mount Gambier in August 2012.[12] The second store in South Australia followed at Adelaide Airport in December 2014.

Matt Tyson was appointed as new managing director, replacing Melinda Smith, who had replaced initial managing director Don Stallings in July 2013.

On 12 August 2014 it was announced that due to lower than expected sales per store and ongoing trading losses, the store roll out plan had been revised, and previously advised targets would not be met.[13] The store roll out plan would be slowed, with a target of 10-15 stores per year from thereon, with a focus on metropolitan stores in New South Wales, Queensland and South Australia.

Also announced was a revised in-store offer, with more space to be allocated to hardware, gardening and trade categories, and further differentiation in project categories such as kitchens and bathrooms. Only a few of the older stores were retrofitted to include the new offer.

The final store to open was at Penrith in New South Wales, which opened in December 2015, with an official opening on 16 January 2016.[14]

Closure

On 17 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 to become profitable and that the ongoing losses could not be sustained.[15] To facilitate the sale or windup Woolworths would buy back a one-third interest in the joint venture held by the Lowe's subsidiary WDR Delaware Corporation.[16]

Managing Director Matt Tyson departed in February 2016 and was replaced by the general manager of finance, David Walker.

Following an 8 month review process in which offers for the business were considered, it was announced on August 24, 2016 [17] that all Masters stores would cease trading on or before 11 December 2016, GA Australia (part of the Great American Group, a wholly owned subsidiary of B Riley Financial) was appointed to manage the sale of inventory, and provided 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 large format centres. Woolworths acquired 3 freehold sites and took assignment of 12 leases.

The closing down sale commenced on 29 August 2016. In the first week of the sale, the discounts ranged from 10% to 30%, it received heavy criticism from consumers for discounts that were not as advertised.[18] However, discounts were eventually raised afterwards, and rose to 90-95% in the final days.

Aftermath

News items after the closure of Masters Home Improvement include:

9 February 2017: Bunnings Warehouse took over the former Masters stores at Mount Gambier (SA),[19] Gregory Hills (NSW)[20] and Rockhampton (QLD)[21] plus 4 locations in WA (Baldivis, Landsdale, Bayswater and Mandurah).[22]

21 April 2017: Woolworths buys back the one-third interest held by Lowe's, allowing the sale of the properties to Home Consortium.[23]

28 June 2017: Home Consortium places 8 properties on the market for sale or lease as they were deemed surplus to their requirements.[24] The properties are located at Bibra Lake (WA), Bundamba (QLD), Cairns (QLD), Forrestdale (WA), Heatherbrae (NSW), Nerang (QLD), Roxburgh Park (VIC) and Taree (NSW).

15 August 2017: 10 former Masters stores (in NSW, Victoria & Queensland) to reopen as shopping malls in time for Christmas, with another 30 to follow in 2018. The new centres are to fit one three retailing categories; supermarket and liquor-related "daily needs", leisure and lifestyle, and homewares and electrical.[25]

Sep-Oct 2017: Bunnings confirms the opening to the former Masters locations at Mount Gambier (SA) and Dandenong (VIC), with 6 locations to be open by May 2018.[26]

7-14 October 2017: The first Home Consortium centres open at Rutherford (NSW), and at South Morang (VIC).

12 October 2017: Completion of the $525 million sale of the remaining sites to Home Consortium by Woolworths.[27] In a separate $187 million property deal, Charter Hall acquired 6 sites from Home Consortium, which allowed Bunnings to take over the stores.[28] The store locations are Albion Park (NSW), Bayswater (WA), Hoxton Park, Mandurah (WA), Rockhampton & Landsdale in Wangara (WA).[29]

20 October 2017: The Home Consortium website (www.home-co.com.au) was launched. A total of 47 centres are earmarked to open by early 2019.[30]

Locations

There were a total of 63 stores in operation across all mainland states, including one in the Australian Capital Territory (ACT). There were 17 stores in New South Wales (NSW), 16 stores in Queensland (QLD), 2 in South Australia (SA), 18 in Victoria (VIC) and 9 in Western Australia (WA).

There were no stores in Tasmania or the Northern Territory.

These locations were:

ACT: Canberra Airport.

NSW: Albion Park, Bathurst, Chullora, Coffs Harbour, Gregory Hills, Heatherbrae, Hoxton Park, Lismore, Marsden Park, Northmead, Penrith, Rouse Hill, Rutherford, St Mary's, Taree, Wagga Wagga and West Gosford.

QLD: Bundall, Bundamba, Cairns, Everton Park, Mackay, Morayfield, Nerang, North Lakes, Parkinson, Richlands, Robina, Rockhampton, Springfield, Tingalpa, Toowoomba and Upper Coomera.

SA: Adelaide Airport and Mount Gambier.

VIC: Ballarat, Box Hill, Braybrook, Burnside, Carrum Downs, Cranbourne, Dandenong, Hawthorn East, Keysborough, Knoxfield, Mornington, Northland, Oakleigh South, Pakenham, Roxburgh Park, South Morang, Sunbury and Williams Landing.

WA: Baldivis, Bayswater, Brighton, Bibra Lake, Ellenbrook, Forrestdale, Joondalup, Landsdale and Mandurah.

There were an additional 20 development sites across Australia where a Masters store was planned for construction. This included sites at Banksmeadow (NSW), Bennetts Green (NSW), Bundaberg (QLD), Chirnside Park (VIC), Dubbo (NSW), Fairy Meadow (NSW), French's Forest (NSW), Gungahlin (ACT), Kirrawee (NSW), Macquarie Park (NSW), Maroochydore (QLD), Noosaville (QLD), Port Macquarie (NSW) and Warragul (VIC).

There were 3 Masters stores that had finished construction and were planned for opening in South Nowra (NSW), Noarlunga (SA) and Parafield (SA).

There were also a number of distribution centres, including a 50,000 sqm centre at Hoxton Park (NSW), a 13,000 sqm facility in Acacia Ridge (QLD), a 52,000 sqm centre at Hoppers Crossing (VIC) and a 28,000 sqm centre at Dandenong South (VIC). These properties were leased.

Operating results

A Masters Home Improvement store in Canberra, Australian Capital Territory

According to Woolworths Limited annual reports,[31] Masters results were:

Financial YearSales A$ millions+or- % Prior YearEBIT A$ millionsStores open at end of FY
2011-2012$146N/A($117.4)15
2012-2013$529262%($156.6)31
2013-2014$75242%($176.0)49
2014-2015$93024%($227.4)62
2015-2016 $1,133 22% ($233.5) 63
2016-2017 $903 -20% $159.0 0

References

  1. ↑ Letts, Stephen; Morgan, Elissa (2016-08-24). "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. ↑ http://www.abc.net.au/news/2016-01-18/timeline-the-rise-and-fall-of-masters-hardware/7095438
  7. 1 2 Speedy, Blair (3 May 2011). "Woolworths reveals plans for hardware venture". theaustralian.com.au. Retrieved 18 May 2011.
  8. ↑ "Masters Website". Masters Home Improvement. Retrieved 18 May 2011.
  9. ↑ "Billion dollar battle for DIY". australiancreative.com.au. Retrieved 18 May 2011.
  10. ↑ "Woolies aims to master hardware". www.smh.com.au. 3 May 2011. Retrieved 18 May 2011.
  11. ↑ Nancarrow, Dan (2011-10-07). "Masters by name, but it's more Miss friendly". The Sydney Morning Herald.
  12. ↑ "$80m shopping complex opens". borderwatch.com.au. 10 Aug 2012.
  13. ↑ "Update on home improvement" (PDF). Woolworths Limited company announcement. 12 August 2014.
  14. ↑ "Is this Masters store the most shortlived retail outlet in history of shopping". Sydney Morning Herald. 19 January 2016.
  15. ↑ "Woolies winds up Masters". Courier Mail. News Corp. 17 January 2016.
  16. ↑ Ryan, Peter; Janda, Michael (17 January 2016). "Woolworths to exit doomed Masters hardware venture". ABC News. Retrieved 11 July 2016.
  17. ↑ "Woolworths Update On Home Improvement Exit". Masters News. Masters Home Improvement. 28 August 2016. Retrieved 5 September 2016.
  18. ↑ Low, Catie (2016-10-07). "Masters cancels orders and cuts phones amid fire sale fail". Sydney Morning Herald.
  19. ↑ SCA Property Group company announcement (6 February 2017). "SCA Property Group announces First Half FY17 results" (PDF).
  20. ↑ "Bunnings Group could take over the Masters Home Improvement site at Gregory Hills". Daily Telegraph. 2 February 2017.
  21. ↑ "Bunnings reveals future of Yaamba Road warehouse". The Bulletin. 1 February 2017.
  22. ↑ "Bunnings swoops on 4 old Masters stores in WA". WA Today. 9 February 2017.
  23. ↑ "Update on Home Improvement Exit - Woolworths Group". 21 April 2017.
  24. ↑ "Masters stores for sale as Woolies-Lowe's battle nears end". Sydney Morning Herald. 21 July 2017.
  25. ↑ "Ten Masters stores to reopen as shopping malls in time for Christmas". Sydney Morning Herald. 15 August 2017.
  26. ↑ "2018 First Quarter Retail Sales Results". 25 October 2017.
  27. ↑ "Woolworths closes door on Masters saga". news.com.au. Retrieved 2017-10-12.
  28. ↑ "Ex-Masters sites: Major player loads up on Bunnings stores". Realcommercial. 12 October 2017.
  29. ↑ "More Masters drama: Charter Hall pounces on $180m of stores". Sydney Morning Herald. 29 September 2017.
  30. ↑ "About Us - Home Consortium". Home Consortium.
  31. ↑ woolworthslimited.com.au
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