Retail -
Dominic Powell / Monday, June 27 2016
Australian
retail markets could soon have another big player in their midst, with rumours
that South African retail group Steinhoff International is seeking to acquire
Big W are accurate.
According to
Inside Retail, the chief executive of Steinhoff International, Markus Jooste,
has been in Australia recently to talk with Big W owner Woolworths about a
potential purchase.
The
acquisition could also include a number of Woolworths’ Masters home improvement
sites, which falls in line with the speculation that Steinhoff may be looking
to pick up Masters sites for its home improvement brand POCO.
POCO has been
referred to as “the Aldi of the home-hardware scene”, selling low cost
furniture and household items.
An acquisition
of this size would firmly establish Steinhoff International as a big player in
Australian retail.
The group
already has an impressive portfolio of well-known stores, including Freedom
Furniture and Snooze.
The
acquisition of Pepkor Group in 2014 added Harris Scarfe and Best & Less to
Steinhoff’s Australian investments.
The group owns
over 6500 stores worldwide, with 477 of them being located in Australia, and
has annual sales of nearly $17 billion.
Sean Sands,
managing director of ACRS at Monash Business School, told Inside Retail a quick
rebrand may not be what Steinhoff will look to do.
“They may
consider developing a hub and spoke store network feeding off larger
distribution stores and tailoring smaller store formats to local communities in
terms of range/offer,” Sands said.
“Steinhoff
obviously see opportunity in the local market; I am excited to see what they do
and how they compete.”
David Gordon,
retail expert and business advisor at LZR Partners, told SmartCompany Steinhoff
is an “important player already” in the Australian market.
“I think what
they’re doing is trying to utilise their international supply chain, which is
much non-apparel consumables,” Gordon says.
“Pepkor, who
they acquired, is fashion apparel, if you put the two together you have a very
comprehensive sourcing capability.”
Gordon says
that this supply chain might mean that some Australian businesses could be
overlooked if Steinhoff goes ahead with its POCO expansion.
“They will use
their international supply chain, they may not need Australian wholesalers,” he
says.
“Also, a lot
of Bunning’s suppliers would not be wanting to repeat what happened with
Masters, they picked their sides and the Masters side was the wrong one.”
Brian Walker,
chief executive of the Retail Doctor Group, says any possible acquisition would
have implications for Woolworths.
“Woolworths
needs to work out what Big W mean for them strategically, should they sell it
to Steinhoff and focus on supermarket retailing?” Walker says.
“Woolworths
also used locational strategies when it came to Big W, placing them next to
their supermarkets. An acquisition by Steinhoff could damage their supermarket
sales if customers choose to shop at Steinhoff’s stores.”
Walker says
Steinhoff’s acquisition of the Masters sites would be a sensible alternative
strategy, saying the group already understands the furniture market due to
their ownership of Freedom Furniture.
“In the
furniture market, the margins are slim and it is ultra-competitive,” he says.
“Masters will
provide the sites, but as the majority of them are in regional Australia,
Steinhoff may struggle to grow the business.”
SmartCompany contacted Steinhoff International and Woolworths but did not receive a response prior to publication.
The President
of the Emerald Chamber of Commerce, Mr. Victor Cominos expressed concern because
Woolworths operate a Big W store in Emerald and had also acquired a site with
the intention of establishing a Masters store.
“The big question remains, what does the future hold for the Masters site in Emerald”, said Mr. Cominos.
This story has been brought to
you by the Emerald Chamber of Commerce Inc.
(Ph: 07 4982 3444)
(Ph: 07 4982 3444)
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