WOW - Woolworths Group

[Tsubodai]

I prefer them Masters to Bunnings and think they are great!
The idea isn't to make a lot of money but to seriously harm the Bunnings model which can be used to help pay off the Coles dept and so on.
Bunnings has been pretty much a monopoly ever since it took over Hardware House which was terrible for the consumer.
Masters is air conditioned and the staff are far more helpful, although Bunnings has lifted it's game in customer service since Masters came along.
As far as I can see Masters is getting more popular too.

My understanding is that WOW did a gap analysis and found that, while Bunnings was the dominant player in hardware, there was actually a lot of market share still up for grabs, (about 40% I think). If this was the case then WOW were targeting the last of the independents not Bunnings.

I think McCoy Pauley is probably right about W/farmers strategy to block available land forcing Masters into not so desirable locations or even into direct competition with Bunnings. This is great for the independents but not WOW.

W/farmers don't seem to consider masters a threat as they are opening a new bunnings next to an existing masters in my old home town. W/farmers are super aggressive retailers like most that are highly successful. They do know what they are doing and I would not like to go up against them. Most times in retail, ego gets in the way of good decision making. Can't see them both going gangbusters long term and Masters has a lot of ground to make up.

Still, I have been out of the retail corporate landscape for over 6 years now so I could be way off base....

 

[piggybank]

I admit that although I'm a WOW holder, I do buy hardware, etc, from Bunnings as it's difficult to break my habit.

Hi McCoy Pauley,

I suppose you take your Bunnings stuff home in a non Australian made vehicle as well?

PM

 

[oldblue]

I prefer them Masters to Bunnings and think they are great!
The idea isn't to make a lot of money but to seriously harm the Bunnings model which can be used to help pay off the Coles dept and so on.
Bunnings has been pretty much a monopoly ever since it took over Hardware House which was terrible for the consumer.
Masters is air conditioned and the staff are far more helpful, although Bunnings has lifted it's game in customer service since Masters came along.
As far as I can see Masters is getting more popular too.

That strategy is called "killing your enemy by drowning them in your own blood"!

No, there's got to be more to it than that and if Masters doesn't breakeven within a couple of years I reckon we'll be seeing a change of strategy on WOW's part.

 

[skc]

That strategy is called "killing your enemy by drowning them in your own blood"!

No, there's got to be more to it than that and if Masters doesn't breakeven within a couple of years I reckon we'll be seeing a change of strategy on WOW's part.

Is Master's losing money from an accounting point of view or a underlying cash basis?

WOW has invested a lot in Masters and with high initial set up costs and lots of D&A which could take account profit down.

Whether Masters will meet WOW's long term ROE/ROCE type hurdle however remains to be seen.

 

[Valued]

WOW's senior operations management don't really know what's going on in a store operational level. When a big manager comes to visit a store the store gets managers to pull longer shifts (they have to do reasonable overtime) and take a lot of the wages allocated and dump it into the day before the visit and the day of the visit. When senior management come they see a perfect store with a lot of staff. The senior management get left scratching their heads since they see perfection and wonder why they arn't making more money. They should do surprise visits to stores on the busiest trading days. Prior to their visit they should tell area management down they will be interstate for a conference.

 

[Murloc]

I think Woolworths are putting their Masters stores close to Bunning's by choice. Woolworths want Bunning's customers so there's no point in putting their stores at the opposite end of town. A lot of people shop at Bunning's in the belief that Bunning's prices are better than anyone elses and therefore don't bother shopping around. Woolworths aim to change that perception. I notice Masters has taken Bunning's "...or we'll beat it by 10%" motto verbatim and are using it for themselves. I can imagine soneone going back and forth between the two stores getting successively better 10% discount offers until they get what they are after for free.

Once Bunnings loses the best prices magnet there's no good reason to prefer shopping there, except maybe to get some empty cardboard boxes.

 

[stewiejp]

Correct Murloc - when Woolies first announced Masters they made the bold claim (I think it was Luscombe) that they would build one near every Bunnings store. Rather ambitious IMO but if they want to compete they need to be reasonably close to them. Will be difficult to find the real estate especially in more densely populated areas IMO.

Someone said something about losing money for 3 years... with a new business model that size, I would have thought 3 years of losing money would be on the conservative side. I like the new Masters stores but there's something about them which makes me think they won't do well. Hope I'm wrong.

I'm really surprised Woolies hasn't gone down the pharmacy route - they were looking at that 20+ years ago when I was working for them, and they redesigned their "Health and Beauty" sections with the plan to put pharmacies in there.

 

[McCoy Pauley]

I'll think you'd find what Luscombe said was corporate spin after WES locked WOW out of the premium sites.

 

[Murloc]

I'll think you'd find what Luscombe said was corporate spin after WES locked WOW out of the premium sites.

Goodness gracious. Implying that Bunnings want Masters on their door step is like saying Bunnings wants to fill their car parks with Masters' billboards. Masters don't have a customer base to lose, Bunnings do.

Bunnings' team member: "Thank you for shopping here. Yes, that is a M6 thread and by the way did you notice the air-conditioned, better and more brightly lit alternative across the road? If you can read you will know it is called 'Masters'. If you want one washer and don't want to buy a packet of 25 to get it, I suggest you shop over there, but you didn't hear it from me."

Trust me on this: Bunning's is a lumbering dinosaur, okay in its current undisturbed environment, and Woolworths + Lowes is the comet that will wipe it out.

 

[Tsubodai]

Goodness gracious. Implying that Bunnings want Masters on their door step is like saying Bunnings wants to fill their car parks with Masters' billboards. Masters don't have a customer base to lose, Bunnings do.

Bunnings' team member: "Thank you for shopping here. Yes, that is a M6 thread and by the way did you notice the air-conditioned, better and more brightly lit alternative across the road? If you can read you will know it is called 'Masters'. If you want one washer and don't want to buy a packet of 25 to get it, I suggest you shop over there, but you didn't hear it from me."

Trust me on this: Bunning's is a lumbering dinosaur, okay in its current undisturbed environment, and Woolworths + Lowes is the comet that will wipe it out.

Your loyalty and optimism for WOW is admirable but McCoy Pauley is right. Masters don't have a customer base to lose because they aren't making a dent. If they want to get into a war with WES they will lose much of their share holders money just as Coles Myer did opening World for Kids to combat Toys 'R' Us. But this is on a much bigger scale.

Air conditioning and pretty lighting? When Bunnings opened every serious tradie I know thought they were to fluffy compared to a real hardware. Even those green and white flyers and simple tv adds are deliberate. they don't cost less to produce, they just look that way. WES know their customer well and are ruthless. Since acquiring Coles they have increased their market share in the toughest retail gig there is.

My bet, Bunnings will prevail and masters? who knows. If I were WOW I would be looking for another big box idea to fill the retail space they will be stuck with.

 

[ROE]

Trust me on this: Bunning's is a lumbering dinosaur, okay in its current undisturbed environment, and Woolworths + Lowes is the comet that will wipe it out.

I think it maybe the other way around, the dinosaur will survive and the comet may crash and burned.
you know why Masters cant get the people and sale through the door? your beloved CEO told you it's the scale
I disagree, its not scale it is something that WOW cant fix with money...

it is the location...WES snapped up all the prime real estate and WOW left with second rate far away land no one want to go there and shop, and WES continue to snap them up and hold them so WOW cant get in.

your CEO tell you they break even in a year or two or make profit... and I think not, they be losing money for
a while yet, how long who know but in 2 years time he has to face the music with shareholders..

he cant use the scale excuse any more he may has to face front up and be honest...we late to the game...we cant get prime real estate and bunnings is a good operator and not some mum and dad push over.

I dont have either stock but looking to short WOW close to the day they face the music.

Like all good and great business they get to stage where they becomes complacent and the rejuvenate rival start to attack they left back pedalling..

WOW have an opportunity to kill WES when they took over Coles but they under estimate WES .... WOW could have gone on an all out price war and kick while Coles is down and WES was under massive debt pressure back then, they would have taken it out but management too complacent
and gave them a 4 years of easy time...

it now is too late and the game reverse ...

 

[keithj]

it is the location...WES snapped up all the prime real estate and WOW left with second rate far away land no one want to go there and shop, and WES continue to snap them up and hold them so WOW cant get in.

Anecdotally, a mate of mine sold his regional hardware store in a prime location a few years ago. He had offers from Bunnings, Mitre 10 & others - the highest being from WES. He refused to sell to Bunnings on principle, and sold to Danks instead (who are now owned by WOW).

 

[ROE]

Anecdotally, a mate of mine sold his regional hardware store in a prime location a few years ago. He had offers from Bunnings, Mitre 10 & others - the highest being from WES. He refused to sell to Bunnings on principle, and sold to Danks instead (who are now owned by WOW).

one site out of how many WES already hold and own drop in the ocean for WES ...

the fact is some market WOW cant get in, easy to find out where WES bunnings locations compared to masters, you see WES locations are far far superior.

WA I think WOW have a hard time there, ACT nothing left for them except at the airport, who go to airport to get hardware when a local bunning in 5-10 minutes way...the list can go on take NSW.

Market now price WES at a premium to WOW so the collective wisdom is WES will trump WOW in the near future.

When the facts change I change my mind ...I used to like WOW now I like WES more

 

[Murloc]

Your loyalty and optimism for WOW is admirable but McCoy Pauley is right. Masters don't have a customer base to lose because they aren't making a dent. If they want to get into a war with WES they will lose much of their share holders money just as Coles Myer did opening World for Kids to combat Toys 'R' Us. But this is on a much bigger scale.

Air conditioning and pretty lighting? When Bunnings opened every serious tradie I know thought they were to fluffy compared to a real hardware.

I'm not blindly loyal to Woolworths. I bought WOW stock because of Masters and also because Woolworths had the good sense to dump DSE. Bunnings don't care a whole lot about trades people. Bunnings promotes the idea that trades people shop at their stores because it enhances their image, giving Bunnings an aire of gravity and making them seem less like a chain of toys-for-boys stores.

I laugh when I look at their "Trade Entrance" signs. I go in and out of their stores where I please and no-one has yet asked me to produce a trade certificate...

Me: *Wandering through Trade Entrance*
Team Member: "Wait! Let me see your trade certificate"
Me: "Sure, here it is."
Team Member: "That looks suspiciously like a fake certificate you produced with MS Word and a cheap DSE inkjet printer."
Me:"You are right. It is fake."
Team Member:"Okay, I'll give you the benefit of the doubt. Now, are you serious?
Me: "What?"
Team Member: "Are you serious?"
Me: "Are you serious?"
Team Member: "No, are you serious?"
Me: *punches team member in the face*
Team Member: "I'll take that as a yes. Good to go, my man. You may enter."

Bunnings is an out-dated business model that is entombed in stone. Masters does every thing Bunnings does but better. There is no reason to prefer shopping at Bunnings. End of discussion.

 

[Tsubodai]

I'm not blindly loyal to Woolworths. I bought WOW stock because of Masters and also because Woolworths had the good sense to dump DSE. Bunnings don't care a whole lot about trades people. Bunnings promotes the idea that trades people shop at their stores because it enhances their image, giving Bunnings an aire of gravity and making them seem less like a chain of toys-for-boys stores.

Correct, this is marketing 101 and has worked well for them...

I laugh when I look at their "Trade Entrance" signs. I go in and out of their stores where I please and no-one has yet asked me to produce a trade certificate...

Me: *Wandering through Trade Entrance*
Team Member: "Wait! Let me see your trade certificate"
Me: "Sure, here it is."
Team Member: "That looks suspiciously like a fake certificate you produced with MS Word and a cheap DSE inkjet printer."
Me:"You are right. It is fake."
Team Member:"Okay, I'll give you the benefit of the doubt. Now, are you serious?
Me: "What?"
Team Member: "Are you serious?"
Me: "Are you serious?"
Team Member: "No, are you serious?"
Me: *punches team member in the face*
Team Member: "I'll take that as a yes. Good to go, my man. You may enter."

Bunnings is an out-dated business model that is entombed in stone. Masters does every thing Bunnings does but better. There is no reason to prefer shopping at Bunnings. End of discussion.

LOL, End of story? I think not. Just the beginning. Good luck and I hope you are right. I will not be visiting or posting on this thread again.

 

[piggybank]

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[piggybank]

Up 4.5% over the past couple of trading days

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[McCoy Pauley]

Looks like Woolworths is exploring an opportunity to divest itself of its pubs but would take leases back over the sites.

http://www.businessspectator.com.au...rths-confirms-it-investigating-property-sales

 

[McCoy Pauley]

Interesting article in today's AFR about Wesfarmers finally paying attention to its liquor division. The gist of the article is that the new Coles managing director believes that their liquor outlets have been neglected for too long and given that Woolworths' liquor division has double the market share of Coles', one suspects that if Coles' latest strategy is successful, Woolworths' earnings derived from its liquor division (eg., Dan Murphy's and BWS) will suffer.

 

[trinity168]

https://au.finance.yahoo.com/news/accc-sues-woolies-over-faulty-054242490.html

Looking for a good price to buy into WOW. Wondering if these news will bring the share price a bit.

( am a newbie, looking for long term shares to hold )