Bunnings flags huge changes in wake of soaring house prices

Bunnings is going to radically “reimagine” its business in a response to soaring house prices across Australia.

Bunnings is going to radically “reimagine” its business in an attempt to target high-spending Gen Z Australians born between 1997 and 2012 — who have been shafted by an astronomical increase in house prices.

Home ownership in Australia is at lows not seen since the 1950s, posing a significant threat to the hardware giant which relies on customers wanting to make improvements to their dwellings.

Bunnings is clearly aware of this, and its chief executive Michael Schneider has vowed to transform the business to appeal to a younger generation — the majority of whom still live with their parents.

Speaking at the Global DIY Summit in Denmark, he said Bunnings would increasingly reach out to social media influencers and bloggers, as well as boosting its presence on YouTube and developing apps to help young people visualise their living spaces.

He appeared sympathetic to Gen Z Aussies who he said made up around 20 per cent of the population in the Asia-Pacific region, but had been smashed by a rising house prices and spending some of their most formative years in lockdown.

“We believe Gen Z have defined attitudes and preferences that will require a reimagining of the DIY shopping experience,” he said at the conference, according to the The Australian.

Bunnings is trying to appeal to a younger audience. Picture: Josh Woning

“Today, they are infrequent purchasers of DIY products, relative to the average DIYer. And while that’s probably not too surprising given most still live at home, it means there are fantastic opportunities to connect and engage and inspire them around all things DIY.”

Bunnings eyes huge opportunity

Bunnings’ push to appeal to a younger market comes as Gen Z and Millennials are swiftly becoming a force to be reckoned with when it comes to retail spending.

Research from Afterpay shows currently account for 36 per cent of the total retail spend in Australia stemming from those two generations alone — who are spending up to 7 per cent above pre-Covid levels.

It is anticipated that their share of retail spend will grow to 48 per cent by 2030, as more of Gen Z (currently aged 9-24) enter the workforce.

Home ownership is a key barrier to these generations being able to spend their disposable income at shops like Bunnings, as they have become increasingly frozen out of the housing market by over-inflated property prices.

Mr Schneider however said he believed that young Australians were still focused on buying a home.

“I say this because our research shows they are absolutely thinking about their future homes and, despite affordability challenges, they’re optimistic they will own a home one day,” he said. according to The Australian.

He said Bunnings would target social media influencers and platforms like YouTube to help Gen Z discover the Bunnings brand and be inspired about home projects.

Bunnings Managing Director Michael Schneider.

“They want to source their DIY inspiration and discover products much in the same way as they curate their social media feeds and use other digital services,” he said. “For Bunnings that’s meant doing things a bit differently, seeking out social influencers and brands on social media, and thinking about apps to help visualise a space online, blogs and YouTube videos.”

Bunnings faces a new challenger

This all comes as a new challenger has vowed to take on Bunnings’ dominance in the DIY retail space with a huge range of home improvement products such as fans, lights, bathroom vanities, kitchen fixtures, and wallpaper, and much more to come.

Online furniture retailer Temple & Webster this month announced it was moving into the $26 billion DIY space with the launch of a new business called The Build, no doubt aiming to claim some of the renovators who would otherwise head to Bunnings.

The company said it will spend $10 million setting up The Build, with plans for an initial offering of 20,000 products across 39 categories.

Temple & Webster chief executive Mark Coulter said further categories including tools and building equipment will be added over the coming months.

“Australia is a country of home renovators, we love our homes, and we love making them more beautiful,” Mr Coulter said.

Bunnings currently accounts for about half of the Australian market in the DIY space.

“The Build by Temple & Webster is aimed at making home improvement jobs, big or small, easier, cheaper, and better.”

Having already carved out a foothold in the furniture space Mr Coulter said The Build aimed fill a gap in the online DIY market, which accounts for just 4 per cent of home improvement sales in Australia compared to 25 per cent in the UK.

The company has its work cut out, as Bunnings currently accounts for about half of the Australian market.

– with NCA NewsWire