A £242m injection into transforming the Homebase brand to Bunnings is likely to shake up the DIY market, as new owner Wesfarmers tries to recalibrate the arguably confused brand with UK consumers.
As it stands, Homebase has found itself in a dangerous no man’s land as it straddles home-furnishing and DIY; and is failing to excel in either. A budget furnishings range sits alongside wares from upmarket Habitat (thanks to a £24.5m acquisition in 2011) and its DIY range is failing to compete with the wider offering of B&Q.
“B&Q really ‘owns’ DIY (I mean, they actually do own DIY.com as a URL),” Grey Shopper managing director, Rob Sellers, told The Drum.
“Wickes has more of a trade quality reputation and Ikea owns good value, simple furnishings etc. There’s no understanding why a shopper would head [to Homebase] over any of the other major big-box retailers.”
Homebase's full-year figures paint a similar picture as it was forced to close 27 stores on the back of a total sales decline of four per cent during 2015.
According to analysis firm Brandwatch, there have been just 19,000 mentions of Homebase over the last 31 days, spiking with the announcement of owner Home Retail Group selling it off to Wesfarmers. Yet brand sentiment (classified as most likely positive or most likely negative) has been overwhelmingly strong – 70 per cent of the conversations online have been positive versus 20 per cent negative.
So what will Wesfarmers achieve by rebranding to Bunnings?
Clearly, Homebase is a well-established and readily recognised brand, which has advantages; however, it also means that consumers have established views of it, both good and bad.
“From what I can gather, Bunnings seems like it wants to reinvigorate the brand and invest more in areas like customer service and the product range,” suggested Neil Saunders, managing partner at retail analyst Conlumino. “A new brand will generate interest, although it will also take time to establish itself and have higher marketing costs attached.”
Indeed, rebranding some 265 stores across the UK won't come cheap.
When it comes to the refreshed proposition, Bunnings will likely emphasise service and quality as well as try to strengthen Homebase’s biggest weakness for a “DIY-retailer” – it’s product depth and authority.
Secondly, on a purely operational level, a rebrand to Bunnings will automatically result in a uniformity across the likes of own-brand product, marketing, store sales materials.
And that wouldn’t be a bad thing. Brandwatch data shows that perception around Bunnings as a brand is strong, with sentiment for mentions very positive (80 per cent) over the past month.
“Bunnings are much more a DIY-focused range and scale retailer. Whatever your job, they’ve got it. Much more in B&Q’s space, and their online offering seems slicker and more comprehensive than Homebase’s,” added Sellers.
Meanwhile, Australian-based Elmwood chairman Jonathan Sands recently wrote for The Drum that Bunnings "quite simply, is one of the best DIY stores [...] in the world."
"While its people and expertise are second to none – its customer service standards are truly world class and really set the benchmark – it was the product range that blew me away," he added.
As with any rebrand, time will tell how well it resonate and if Homebase’s seemingly imminent departure from “soft-home improvement” retailer into a serious player in the DIY and trade market will pose any real threat to B&Q.
But, as Sellers points out, the current state of the housing market means that there might not be any real winners. House prices continue to rise, resulting in fewer homeowners and leaving a pool of renters uninterested in DIY projects.
“These same people are living in more urban spaces and don’t have cars, so Homebase [and B&Q’s] traditional ‘big box’ sites are never going to be the places they visit for the light-touch ‘sprucing up’ jobs they might do on their rented flats,” said Sellers.
“As in other retail sectors (like grocery), it’s a trend to convenience that seems to be winning this generation of shoppers over [with] Wilkos, Tiger, Robert Dyas, Clas Ohlson all building on that trend.”