Bunnings keeps competitors off its turf, but smaller players aren't so lucky

Australia Broadcast Center

12-05-2025

When Bunnings announced plans to build a store right next to David Woodman's Mitre 10, he had few options to stop the hardware giant's expansion.
"They really want to put us out of business … I can only imagine that's their plan," David says.
But when a rival wants to move onto Bunnings's turf, that's a different story.
Emails seen by Four Corners show Bunnings has repeatedly used its size and market power to block competitors from setting up in retail precincts where it already has a store.
Such restrictive lease agreements are prohibited in the supermarket sector. But Bunnings is not subject to the same competition rules as Coles and Woolworths, despite rivals believing it has more market power than the pair combined.
Documents show a specialty tools retailer was looking to open a store in a homemaker centre on the NSW Central Coast last year, only to be told by the leasing agent: "Bunnings have exclusivity in the centre for tools."
It was the same story in 2021 on the Gold Coast and again in Melbourne.
"Bunnings have put a restriction clause on the development for all tool operators … not happy … I tried to get around it, however, it's in their contracts," the tool shop was told by another retailer who was looking at the Melbourne site.
Bunnings, which has 310 warehouses across the country, says such agreements are only used on "select occasions" to protect its investment and that these usually only last 10 years.
Such agreements were phased out in the supermarket sector from 2010 because the regulator, the Australian Competition and Consumer Commission (ACCC), saw them as a major impediment to competition.
This followed Coles and Woolworths agreeing to an enforceable undertaking with the ACCC.
Professor Clinton Free from Sydney University Business School says Bunnings is not subject to the same scrutiny as Coles or Woolworths.
"There's a number of interesting angles to the Bunnings story. It's an enormous success financially, but it also starts to raise big questions about market power," he says.
This general lack of scrutiny, despite its dominant market position, has allowed Bunnings to continue expanding with little pushback from the ACCC.
David Woodman has experienced this firsthand.
In 2019, Bunnings purchased the vacant block next to his Mitre 10 store in Jimboomba, south of Brisbane. Plans have been approved for a warehouse eight times larger than David's shop.
David, whose family has been in the hardware business for 90 years, is not optimistic about the prospects for his store.
"We'd expect to lose sales to the point where business will ultimately become unprofitable … we can't sustain that, so we'd probably end up shutting the store," he says.
He believes Bunnings chose the site to put him out of business.
"They know from other sites that that's what happens," he says.
Bunnings denies this, saying new store openings are about "enhancing", not eliminating, competition.
It says it engaged with the ACCC on the Jimboomba store, which it anticipates will open next year.
The ACCC said it could not comment.
But unlike Bunnings, David will find it difficult to block the hardware giant from setting up next door.
In a last-ditch effort, he has briefed lawyers in the hope of taking Bunnings to court for "misusing its market power".
He notes there are already three Bunnings stores within a 30-kilometre radius of his store and more than a dozen in greater Brisbane.
His is not the only local store that could be impacted.
Within a few blocks, there are businesses selling plumbing and landscaping supplies, mowers, water pumps, chainsaws, pool supplies and blinds. Some say the hardware giant's arrival could benefit their business, while some are deeply concerned.
Bunnings said in a statement its new store would bring more choice and competition and provide local jobs.
The creeping expansion of Bunnings is set to come under greater scrutiny when new competition laws come into effect next year.
These are expected to give the ACCC greater power to review purchases of existing shops, land or new lease agreements to determine if they lessen competition.
Treasurer Jim Chalmers is hedging his bets on whether Bunnings should be subject to a code of conduct similar to that imposed on the supermarkets.
"I'm aware that people have raised concerns about Bunnings," he says.
"Our primary focus is supermarkets, but we've given the ACCC the resources that they need and the ability to recommend to us a broader focus, if that's warranted."
The code of conduct is designed to help level the playing field between Bunnings and suppliers like George and Katherine Mingin.
For eight years, their regional Queensland business supplied live composting worms to Bunnings.
"At first it was great. It was fantastic," George says.
In the early years, the couple felt they had a solid partnership with Bunnings and had opportunities to grow their business. At their peak, their sales to Bunnings reached $1.3 million annually.
COVID hit, and like many businesses, the Mingins' costs rose sharply, eroding their margins and pushing them into $150,000 of debt. They were losing money on every packet of worms sold to Bunnings.
"Little by little they started applying more pressure on their suppliers, certainly on us, and the expectations started to grow," Katherine says.
The couple had no choice but to ask for a price increase.
"We just instinctively knew that asking for a price increase, however big or small, was not going to go well," says Katherine.
After months of being strung along, Bunnings eventually told the couple it was putting their contract out to tender. They say they were told Bunnings didn't want to sacrifice its profit margins — margins that were already very healthy.
The Mingins were selling a pack of 1,000 worms to Bunnings for $29.94, which was then sold in-store for $49.90 — a 66 per cent mark-up.
But this does not capture all the profits flowing to Bunnings.
Like many other suppliers, they had to pay money back to Bunnings, in the form of rebates based on their sales volumes.
During their time with Bunnings, documents seen by Four Corners show the Mingins paid a volume rebate of 7 per cent, a 15 per cent rebate for sales into new stores, and even a rebate to cover errors made in supplying orders into Bunnings.
Suppliers can also be charged for marketing or if their stock is discounted.
"It was just plain highway robbery," George says.
In the end, the couple lost the tender and more than three quarters of their business.
After eight years of supplying to Bunnings, they had little to show for it and were given just one week's notice to finish up.
And then Bunnings sent them a final bill for $5,000 in rebates.
Bunnings told Four Corners it does not comment on specific supplier agreements, but conducts business with "integrity, honesty and respect".
"We are committed to dealing with our suppliers fairly and ethically," it says.
Bunnings's market share is highly disputed.
It says it only accounts for 17 per cent, as it competes across several sectors, against a range of stores like Amazon, Coles, Myer, Spotlight and Petbarn.
Market research firm IBISWorld says Bunnings's parent company Wesfarmers has a 33 per cent share of the retail hardware sector, noting it is "far and away the leading player in the hardware retailing space". Some competitors claim the figure is much higher.
Bunnings was not always so dominant. While it began life as a WA timber company prior to federation, it only opened its first hardware warehouse in 1994. Back then, Mitre 10 was cited in news reports as being the dominant player with around 10 per cent market share.
Since then, Bunnings has expanded aggressively.
In 1993, it took over McEwans hardware, then in 2001 it moved on BBC Hardware, also trading as Hardware House, giving it a national footprint and allowing it to expand into New Zealand.
As the new millennium began, Bunnings had $1.4 billion in sales across 47 stores.
Today, its revenue is 13 times that across a massive empire called the Bunnings Group.
As well as 310 warehouses in Australia, stores in New Zealand, and an arm that makes timber trusses, it has specialist tile and tool chains, acquired with no objection from the ACCC.
Clinton Free says Bunnings deserves far more scrutiny given its size and market power.
"Attention needs to go into a category which is very large, which affects lots of consumers, affects lots of suppliers," he says.
"They really should be subject to the same sort of scrutiny and regulation as our big retailers."
David Woodman says if stores like his go, it is shoppers who will miss out — on choice and service.
"Hardware is heading exactly the same direction as the supermarkets. Only worse because they've at least got two bloody dominant players," he says.
"I am concerned that if Bunnings continues with its current conduct, many Australians will have no choice but to buy their hardware from Bunnings and nowhere else."
Watch Four Corners's full investigation, Hammered: Inside the Bunnings Machine on ABC iview.