‘Savings barely cover a snag’: Big problem with Bunnings’ lowest-price guarantee
It’s the 19-word slogan every Aussie know by heart – but critics suggest Bunnings’ famed commitment could be too good to be true.
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It’s the 19-word commitment every Australian know by heart: “Where you find a competitor’s lower price on the same stocked item, we’ll beat it by 10 per cent.”
So goes the famed slogan of Bunnings which, with its weekend sausage sizzles, dog-friendly store policy and iconic green umbrellas, has become one of the country’s biggest and most beloved brands.
But an investigation by the ABC’s Four Corners, which will air Monday night and delves into how the hardware giant “went from weekend destination to one of Australia’s most powerful retailers”, has questioned if Bunnings’ lowest-price guarantee is actually too good to be true.
The program pointed to the retailers’ application of its promise to products from Citeco, advertised on TV and in-store.
Where Citeco is concerned, though, “we’ll beat it by 10 per cent” doesn’t apply, Four Corners said. “There is no competitor that stocks (Citeco) … because Citeco is a Bunnings home brand. Not only is it manufactured for Bunnings, the hardware giant also owns the Citeco trademark.”
Approximately 9000 of the 300,000 home, commercial and lifestyle products Bunnings stocks in-store and online – or 3 per cent – are own-brand.
In a statement to news.com.au, a Bunnings spokesperson said this variation was to “differentiate our offer and give customers choice”.
“We do not use (owned brands) to exclude operation of our lowest prices or as a reason to not apply our price guarantee,” the spokesperson said.
“Our lowest prices policy applies across like-for-like products and we reduce prices on our exclusive products where we identify a competitor’s similar product which may be at a lower price.”
The retailer has also published its full response to Four Corners’ questions on its website.
Competition lawyer and former Woolworths chairman, John Dahlsen, told Four Corners the hardware giant’s 10 per cent commitment was both “misleading” and “illusionary”.
Now chair of his own family’s eponymous hardware store and building business, Mr Dahlsen, said it was not only difficult for customers to find a similar item to Bunnings’s own-brand offering, but to then convince a staff member to apply the price guarantee.
Even then, he said, Bunnings only has to reduce the price on one item.
While Professor in Accounting, Governance and Regulation at the University of Sydney Business School, Clinton Free, told Four Corners that any savings a customer may make by shopping at Bunnings “barely cover a snag”.
“Given Bunnings’ towering market share, buying power, ruthless supplier negotiations, and healthy margins, ‘lowest prices are just the beginning’ looks more like marketing spin than a meaningful promise,” Professor Free said.
With 310 stores across the country, as well as other retailers including Tool Kit Depot and Beaumont Tiles, the Bunnings Group rakes in almost $19 billion revenue a year for its parent company, Wesfarmers. Bunnings considers everywhere from Coles, Woolworths and Aldi to Amazon, JB Hi-Fi, Petbarn and Spotlight a rival.
Critics who spoke to Four Corners suggested that while Australia’s supermarket duopoly have been subject to intense scrutiny in recent years, Bunnings has flown under the radar, despite having a higher profit margin than either retailer.
While Coles has a profit margin of 8.9 per cent and Woolworths of 9.9 per cent, Bunnings’ is 16.8 per cent.
“Having a very trusted brand, having a CEO without an enormous public profile, it meant that it’s not been subject to scrutiny in the same way that, for example, Coles and Woolworths have,” Prof Free said.
Though the Australian Competition & Consumer Commission’s (ACCC) “primary focus is supermarkets”, Treasurer Jim Chalmers said he was “aware that people have raised concerns about Bunnings” and the ACCC has the resources and ability to recommend “a broader focus, if that’s warranted”.
According to the ACCC, stores are not legally required to identify own-brand products, though it may amount to misleading or deceptive conduct if an item is promoted as if it was produced by a third party.
Bunnings said it complies with all legal and regulatory requirements that apply to labelling its products, and that its registered trademarks are available to the public.
“We are always seeking to provide the best value and shopping experience for our customers,” the spokesperson said.
“To achieve this, Bunnings works closely with our suppliers to offer a mix of products under Bunnings owned brands and supplier-owned brands which ensures customers can access a wide range of quality products at low prices.
“It is normal practice for both retailers and large suppliers to develop and offer customers products under a range of brands. This practice is consistent with other Australian brands.”
Bunnings has earned the trust of its customers, suppliers and the Australian community “through a genuine commitment to value, service and fairness, and we don’t take that trust for granted”, the spokesperson said.
“We are committed to delivering the best possible value for Australian and New Zealand households, with a mix of owned and well-known brands, underpinned by our everyday lowest prices policy and a strong focus on trust, transparency and fairness.
“Our 50,000-plus team members across Australia are the heart of our business, helping us deliver meaningful contributions to the communities in which we live and operate. Last year alone saw over $60 million in community support, through tens of thousands of local initiatives, reflecting our deep commitment to the communities we serve.
“We are also a human organisation and recognise that from time to time we don’t always get it right, however when we make a mistake we work hard to put it right as soon as we are made aware.”
Originally published as ‘Savings barely cover a snag’: Big problem with Bunnings’ lowest-price guarantee
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