Eli Greenblat
September 12, 2012
The Age
A dirty tricks campaign has broken out between Woolworths and its arch rival in the hardware sector, Bunnings, over the style and format of Woolworths new hardware chain, Masters.
Woolworths issued a statement today saying that a critical report was being circulated to brokers and the media by an organisation called Madison Cross, a consultant associated with Bunnings. Bunnings is owned by Wesfarmers, which also owns Coles, Target and Kmart.
“[It] is further evidence of a dirty tricks campaign being waged against the Masters Home Improvement business,” the Woolworth
s statement said.
The Madison Cross report is believed to criticise Masters over its ‘female friendly’ format which it claims is turning away traditional tradesmen. Woolworths said it will refer the report to the competition regulator.
“The unreasonable nature of the assumptions makes the Madison Cross report misleading and Woolworths will refer it to the ACCC.
“Since opening its first store in September last year, Masters is providing much needed competition in the destination home improvement sector against Bunnings who hold a market dominant position.”
“Masters has created healthy competition, is winning market share and enjoying strong customer support. It appears this report is designed to generate negative, ill informed commentary about Masters,” Woolworths said today.
“This report is incorrect in its assumptions and its projections, and can only be viewed as an attempt to damage the credibility of the Masters’ business strategy.”
High stakes
Since announcing its intention to break into the $40 billion Australian hardware market two years ago, Woolworths and its US-based partner, Lowe’s, have spent nearly half a billion dollars buying up land and buildings for their Masters hardware joint venture.
The duo currently has 22 Masters stores and plan to roll out 150 stores over the next few years.
It is believed Madison Cross has provided advice to hardware rival Bunnings in the past. The Maddison Cross report estimates that Woolworths’ joint venture with Lowe’s lost $104 million in 2012 and forecasts the losses to rise annually before peaking at $237 million in 2016.
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