Woolworth’s expansion plans hits land block
Woolworths may be in for a difficult time achieving its plans of expanding because of a lack of sites and unclear planning laws.
The retail giant's $1.4 billion plan to dominate its competitors in the home improvement market hit a giant block in limited land space in key sites. Bunnings, the leading hardware retail store and the one Woolworths is gunning for has already gobbled up land during the global economic crisis.
Woolworth has pledged to open 150 stores in an attempt to rival Bunnings. Instead it has found that its rival has already acquired the key properties in the sites and it has even opened stores there. According to Geoff Dart, a hardware industry consultant from Madison Cross, there is a limited amount of land in the right position and Wesfarmers has already acquired some significant sites.
"We've had cases of Woolworths making an announcement and then Bunnings having a brand new store opened within a year."
Additionally there are questions as to how big the big box hardware sector can expand and how many stores it can sustain. Mr. Dart adds that the warehouse concept will eventually plateau.
A Woolworth's spokesman has claimed that the retailer already has the 150 store sites and is ahead of schedule in reaching its target.
Wesfarmers has faced preliminary investigations from the competition watchdog over allegations that it bought new store sites to block Masters' entry in the location. A Wesfarmers spokesman said that the company was a growth business that always had a pipeline of new stores and sites.
A submission to the Productivity Commission inquiry into the performance of the Australian retail industry from a lobby group representing big box retailers calls into question the planning laws from each state. The Bulky Goods Retailers Association says that there isn't enough room in government mandated 'activity centers' for retailer expansion.