Bunnings is facing resistance from some auto brands suppliers

Some auto brands are refusing to supply Bunnings for fear of upsetting chains like Supercheap Auto and Autobarn, but the hardware boss warns get on the ground floor with us or miss out.

Bunnings boss Mike Schneider. Picture: Peter Mathew

Bunnings boss Mike Schneider has sent a chilling message to auto brands refusing to supply the hardware giant for fear of upsetting existing relationships with chains like Supercheap Auto, Autobarn and Burson.

The hardware giant owned by Perth-based conglomerate Wesfarmers has revealed its new plan for radically expanding its in-store offer of auto parts and products, such as oils, lubricants, cleaners, and tools, with the retailer eyeing off a $1.5bn addressable market that at the moment is dominated by a handful of specialist auto chains.

The expanded auto offer, unveiled on Thursday at an investor day, will see Bunnings expand its current limited range to 300 new auto products that will be rolled out to more than 300 Bunnings stores in 2025.

However, Mr Schneider has revealed to The Australian that many well-known auto brands have declined to be sold into Bunnings as it might jeopardise their existing relationship with larger auto chains such as Supercheap Auto, owned by Super Retail Group, and Bapcor’s portfolio of stores that include Autobarn, Burson, Autopro and Midas.

They may come to regret it.

“One of the things that is interesting is that some brands have chosen not to join us, and we respect that, they’ve told us that they don’t want to jeopardise relationships with others,” he told The Australian.

“But the thing that we said to all of them is, that what we know from other categories is that if we get going and this is successful, if you miss out on the ground floor, we’ll probably grow with other partners.

“And that can be something they’ll probably look back on as a missed opportunity.”

He declined to name which auto brands were not interested in being stocked at Bunnings.

Bunning boss Mike Schneider says some auto brands are refusing to supply the hardware giant’s expansion into auto. Picture: Peter Mathew

Mr Schneider sees huge growth potential in the auto category for Bunnings as people walk into his hardware stores thinking about their home garage, and he sees it tracking the similar success of its recent move into other categories such as pets.

For auto brands that refuse to supply at this ground level, they could be missing out on a booming category and Bunnings shoppers.

“This is the start of something. We love competition. This is helping us understand how this resonates, but if it is anything like we’ve seen with other categories there’ll be auto 2.0 down the track with an even bigger range.”

Supercheap Auto and the chains owned by Bapcor have struggled lately due to the pullback in consumer spending and cost-of-living pressures also squeezing budgets for home mechanics and car enthusiasts. Both companies have also had management disruptions and scandals, with Super Retail dragged into a workplace bullying and sex scandal and Bapcor suffering from sliding profitability and a turnover of CEOs.

Mr Schneider offered some free advice to these auto brand suppliers that it made good business sense to spread their customer base beyond just the auto specialist chains.

“I think actually you should be in lots of places if you’ve got a good brand,” Mr Schneider said. “I think that’s actually good for the customer and good for convenience, and we love the idea that there’s strong competition, but we never rest on our laurels.

“And we’ve seen lots of cycles, and all we know is that if we can turn up for our customer with a compelling value proposition, and we earn the right to be chosen, and hopefully that brings another level of intensity of competition into this category.”

In a note to clients, Citi said it was “slightly more cautious” on Bapcor and Super Retail given Bunnings expanded push into auto.

“Bunnings has been sharp with its pricing on auto products, has been able to secure some major brands, and the products appear largely non-discretionary, which could impact foot traffic to Supercheap Auto and Autobarn.”

However, it noted it was unclear to what extent Bunnings’ entry into the auto category will hurt the incumbents, noting the half an aisle of auto products is positioned at the back of the store (which could have implications for how quickly customer awareness builds), and the range does not exactly overlap.

At the investor day, Bunnings reiterated it saw its current addressable market for its business at around $110bn, which included a recent move into pets and home cleaning. The hardware group has also detailed its aspirations to improve its sales density at its stores.

“Bunnings has identified significant opportunities to accelerate momentum in sales density and return on space growth,” it told analysts.

It said its US hardware peers had sales density rates that were 1.5 to 2.1 times that of Bunnings.

Originally published as Bunnings is facing resistance from some auto brands suppliers