Australia Tools and Equipment
While retail concentration is high in Australia, there are a number of independent distributors selling hand and power tools, tool accessories, storage solutions and and outdoor equipment through a number of trade and DIY customer channels.
The Australian Competition & Consumer Commission (ACCC) announced that it would not be opposing a proposed acquisition of a specialist retail chain in South Australia by Bunnings Group, a major retailer with existing considerable market share. In assessing the proposed acquisition and any impacts on the level of competitiveness in the industry, the ACCC found that there were still multiple channels available for retail sale of tools and equipment (specifically, hand and power tools, tool accessories, storage solutions, and outdoor power equipment).
The ACCC’s assessment of the state of the market, explains why, despite the high level of retail concentration in the DIY segment, multiple retail channels still exist for trade and DIY customers. While few independent retailers remain in the market, independent distributors have been sustained by the existence of multiple channels. These independent distributors have expressed interest in sourcing high-end U.S.-made products that might be used by both trade and DIY customers. Less opportunities appear to exist for U.S.-made low value items.
Bunnings Group is owned by Wesfarmers and operates 302 hardware stores nationally. Wesfarmers also owns Blackwoods, the largest retail/distributor of industrial goods in Australia.
The hannels include: Multi-category retailers. The largest of these is Bunnings. The only other significant player is the Independent Hardware Group (IHG) which owns Mitre 10, Home Timber & hardware and True Value Hardware.
Specialist retail chains that sell mainly to trade customers. The only chain that operates at a national level is Total Tools. It has 81 stores run as franchises. The next largest chain is Sydney Tools, which is privately-owned, and operates 32 stores mostly in NSW and Victoria with one store in Queensland. The other chains are limited to one state. These include: Trade Tools (18 stores in Queensland); Toolmart (12 stores in Western Australia); and Adelaide Tools (five stores in South Australia).
Industry-specific retail chains. Reece supplies a selection of tools and equipment as part of its broader line aimed at plumbers. Rep and Supercheap Auto sell to automotive customers. Laurence & Hanson sells to electricians.
Buying Groups. There are a number of different buying groups that purchase on behalf of small independent stores. These include Natbuild, Australian Industrial Suppliers, Hardware & Building Traders and United Tools. Some of the stores operate under their own brand while others operate under the buying group’s banner.
The ACCC also found that while many retailers had an online presence, online sales represented less than 10 percent of total retail sales.
American manufacturers of tools and equipment for the trade and DIY market can potentially enter the market by tapping into one or more of the retail channels mentioned. For more inforrmation on the market please contact the U.S. Commercial Service in Australia, email: john.kanawati@trade.gov