Masters in Nerang on the Gold Coast will be one of many to shut its doors. Picture: Dave Hunt
THEY are the massive blue boxes dotted throughout Australia.
From Mandurah in Perth to Springfield in Queensland, in cities and in regional centres, Woolworths’ disastrous foray into the DIY hardware market will leave behind 63 massive Masters warehouses plonked on vast blocks.
And as an estimated 9000 employees consider their uncertain futures, customers throughout the nation are wondering what will become of the Masters store in their suburb.
Woolworths announced this week that it would finally cut its losses and wind up its Masters home improvement business.
If it goes ahead and sells stores, the supermarket giant has a sizeable property portfolio to offload.
Each store is an average of 13,000sq m in size. Its unfinished store in Nowra, NSW, for example, is worth an estimated $14 million, and with 62 other stores to sell throughout Australia, they are assets likely to be of interest to a host of other businesses.
So is your local Masters likely to magically transform into another Bunnings? What about an Ikea or Costco? Or is it likely to become a ghost store forever more?
Here’s what the experts think.
HERE COME THE BOX RETAILERS
Will Ikea take over some of the mammoth blocks where Masters stores currently stand? Source: SuppliedSource:Supplied
National Retail Association chief executive Trevor Evans said the closure of the 63 stores across Queensland, NSW, Victoria, Western Australia and South Australia meant there was potential for other big box retail developments.
“There’s a trend at the moment and a lot of different categories, like furniture and supermarkets, are looking at opening big box type stores,” he said.
“I think it will be really interesting to see what sorts of players come forward.”
Mr Evans said companies such as Ikea and Costco were expanding but there was a lack of sites that could hold big box developments.
“Australia has a good shopping landscape but big box spaces can be a little less commonly available,” he said.
“I think the closure of Masters is potentially a big opportunity for a lot of people, including domestic players and international companies who are watching Australia and might be considering opening their first store here.”
National Retail Association chief executive Trevor Evans says Masters sites might not just attract hardware stores.Source:Supplied
Australian Retailers Association executive director Russell Zimmerman is concerned by the number of people who could lose their jobs.Source:News Corp Australia
An Ikea spokeswoman said the furniture giant was in a period of expansion in Australia and was always looking for opportunities in the market, but was not currently in discussions with Woolworths in relation to Masters sites.
Queensland University of Technology retail expert Gary Mortimer predicted Costco could snap up some existing stores and blocks of land, making the business’s expansion into the Australian market more aggressive.
“I think those sites where Bunnings or Mitre 10 wouldn’t rebrand may potentially be attractive options for global retailers,” he said.
Dr Mortimer believes some sites will be more sought-after than others.
“If they are in high traffic flow areas then they will probably go quicker than those in rural and regional areas,” he said.
It is predicted Costco will look at expanding to some of the Masters sites. Picture: Chris EastmanSource:News Corp Australia
WILL WE SEE EVEN MORE BUNNINGS WAREHOUSES?
It’s hard to drive through our capital cities without seeing a Bunnings Warehouse every few suburbs, but will the DIY giant snap up the abandoned Masters stores?
Fairfax this week reported Bunnings Warehouse was eyeing between 15 and 25 Masters stores for purchase, especially in areas where it didn’t already have a presence.
The hardware giant, however, said it would not be appropriate comment at this time.
Experts have also suggested Mitre 10 may consider taking over some stores, but the company remains tight-lipped.
Dr Mortimer said Masters’ failure presented an opportunity for Woolworths’ rivals.
“I think that Wesfarmers will certainly be looking at sites where they don’t have a Bunnings nearby and they will look to purchase existing stores and rebrand them,” he said.
“Metcash owns Mitre 10 and they may also have a look at smaller sites — I don’t think they’ll buy any but they will certainly have an interest.”
Bunnings is rumoured to be interested in buying a number of Masters stores.Source:News Limited
Former Woolworths chairman John Dahlsen has urged the Australian Competition and Consumer Commission to block Bunnings from buying Masters stores in areas where they already have a presence, Fairfax reports.
“There’s no equilibrium in the DIY market because of Bunnings’ massive share,” said Mr Dahlsen, who owns Australia’s largest independent trade hardware chain, Dahlsens.
ACCC chairman Rod Sims said the organisation would prefer the stores be sold to a new entrant.
“We’d be concerned if these stores were sold to Bunnings,” he said.
WILL THEY BECOME GHOST STORES?
Ghost store … This Masters store in Nowra is unlikely to be completed now Woolworths has abandoned the business. Picture: James CroucherSource:News Corp Australia
The first Masters store opened in Braybrook, Victoria, in September 2011, and there are stores now under construction that will never see the light of day.
A Masters store almost ready to open in Nowra will now close before it opens, similar to one in Parafield, South Australia, that was meant to open midyear.
Masters stores were also promised for Norlunga, SA; Fairy Meadow, Kirrawee and Bennetts Green in NSW, Maroochydore, Queensland; and Chirnside Park, Victoria.
Australian Retailers Association executive director Russell Zimmerman said he also would not be surprised if Bunnings took over some of the Masters sites.
He hoped the sites would not remain vacant for long as it could be a detriment to other businesses that set up around established Masters stores.
“There is the Masters store at Canberra airport that has a few other stores developed around it and Masters’ closure could result in a lack of traffic so it’s important the spaces are filled relatively quickly so the surrounding retailers can profit from trade,” Mr Zimmerman said.
“The flow-on effect could be quite concerning.”
Shoalhaven Mayor Joanna Gash outside the construction site of a Masters warehouse in Nowra. Picture: James CroucherSource:News Corp Australia
He said it was disappointing to see Masters stores close and his biggest concern was the number of employees who may be left without a job.
On average, about 100 people work at one Masters store and there is an equal number of fulltime, part-time and casual roles.
Curtin University School of Accounting professor John Evans told Fairfax that it was unlikely Woolworths would find a buyer to take on all 63 stores.
He said it would be more likely that Woolworths would sell off the stores individually.
And if you already have a Bunnings, Harvey Norman or JB Hi-Fi in your suburb already, don’t expect to see double-ups.
“I can’t think of a business that would go in there and buy the whole business, someone might buy the premises and the assets and put a different business in there,” he told Fairfax.
“But you look around, what would you put in there? We’ve already got Harvey Normans, we’ve got JB Hi-Fis.”
A Woolworths Limited spokeswoman said the ultimate fate of Masters would not be determined for months.
US company Lowe’s owns a third of Masters and the spokeswoman said the hardware business would not be offered for sale for at least two months, after Woolworths acquires Lowe’s 33.3 per cent share.
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