Failed Masters sites could be replaced with an international big box retailer

A MAJOR retailer has its sights set on the space left behind by Masters, and it’s one you never saw coming.

THERE could be a new underdog taking over the failed Masters Home Improvement sites, and nobody saw it coming.

There has been a lot of speculation around what big box stores would move into the 13,000 sq m sites that will be abandoned as a result of Woolworths’ failed, multibillion-dollar experiment.

Bunnings, Costco and Ikea were all hot contenders, with the big box stores already expanding across Australia.

But have you ever heard of POCO and could it be the next big thing to take over Australia’s popular retail giants?

National Retail Association chief executive Trevor Evans told news.com.au the closure of Masters was potentially a huge opportunity for international companies that were considering expansion in Australia.

Woolworths pulled the pin on its four-year experiment because it wasn’t a strong competitor in the big box market, but could POCO actually work?

A new big box retailer has its sights set on the Masters Home Improvement stores. Picture: Brendan Radke

WHAT IS POCO?

It claims to have everything to make your house a home.

It’s a furniture, hardware and white goods store rolled into one and has everything from kitchen splashbacks to couch cushions and houses brands like Simpson, TEAC and Breville.

Steinhoff International owns POCO, Freedom Furniture, Bay Leather Republic and Snooze and Fairfax Media reports it has been keeping at least 20 Masters stores in its sights as it plans to expand POCO in Australia.

At the moment there are only two POCO stores in the country and are in Sydney’s outer suburbs — Blacktown and Casula.

ChannelNews reports a Steinhoff International source has leaked the company’s plan to establish more than 45 POCO stores in two years and up to 100 in just five years.

It suggests POCO is currently in discussions with Woolworths about taking over some Masters sites, but Steinhoff International is keeping its plans a secret and Woolworths refused to comment on the speculation.

Woolworths’ failed venture into the DIY market with its Masters Home Improvement stores has left the company with 63 massive warehouses on vast blocks, which will soon be abandoned.

There have also been suggestions POCO could purchase white goods and electrical chain The Good Guys, making it a potential competitor for Harvey Norman and JB Hi-Fi.

POCO opened its second store in Australia just last year after establishing its first store in Blacktown in 2012.

POCO Australian managing director told Retail Biz the store was one of the biggest players in the discount furniture market in Germany.

POCO opens in Casula in 2015. Source: Supplied

DOES IT STAND A CHANCE?

“It’s a very ambitious plan,” Queensland University of Technology retail analyst Gary Mortimer said.

It’s a risky move for Steinhoff International to develop more POCO stores and Dr Mortimer said it needed a model like Costco — cheap products but high membership fees — to really make money.

Dr Mortimer said people wanting basic and low-priced furniture, white goods or hardware could however be looking for a store like POCO.

Retail analyst and managing director of Marketing Focus, Barry Urquhart, didn’t see POCO becoming a major competitor in the big box market, and said it would lose a lot of profit while it expanded its store network over the next five years.

Mr Urquhart said POCO could follow in Masters’ footsteps and fail because it wasn’t focused on doing one thing and doing it well.

POCO instead stretches itself across a number of different markets.

Is that what consumers want? Mr Urquhart doesn’t believe it is.

When it comes to POCO rivalling Ikea on the furniture front, Mr Urquhart again said there was no chance of that.

“Over the last 50 years furniture has been the worst performing sector in Australian retail in terms of sales,” he said.

“When there’s a downturn, the first casualties are furniture.”

With housing prices so high, people aren’t rushing out to purchase new couches for housing they can’t afford.

Mr Urquhart also said POCO had to tread wisely if it wanted to expand the number of stores in Australia at such a rapid rate.

“There will be a period of loss therefore they have to be very careful,” he said.

“If they run out of money, they run out of time and if you run out of time, you’re run out of business.”

Retail experts don’t think POCO will rival Ikea. Source: Supplied