Bunnings pet expansion slammed by small businesses: Big box effect of economy

An irate small business owner has criticized Bunnings for destroying family-run stores after the hardware giant announced it would massively expand its range of pet products.

Bunnings will expand its range of pet products from a few hundred items, including dog beds and kennels, to 1,000 products across its national network by the end of March.

The move is likely to be a boon for pet owners in Australia, with the warehouse chain already popular for its convenience, affordable price and famous Saturday sausages.

However, business owners have accused Bunnings of ruining the industry, and experts have warned that big stores have an unfair legal advantage over small businesses in the “war” for customers.

Emmanuel Devo’s family has owned Junction Pet’s Pantry in Sydney’s Bondi Junction since the 1970s, but it will now close in four weeks.

“The problem with all these big companies is that they reduce diversity in the industry,” he told Daily Mail Australia.

‘We used to have more suppliers who offered more specialities.’

“Now they don’t have enough small stores to sell specialty items to, so those products are just not available anymore.

‘You have to sell special products, you have to give people a reason to come to your store. Companies like Amazon offer free delivery options, we can’t compete with that.

‘They have systems that rip off employees in exchange for offers, such as free delivery.

“They have the illusion that they are cheap.”

His cousin Spiros Gial has also recently seen his small business collapse.

Mr. Gial’s family had owned a shop in Maroubra since 1952, but has now been bought out by developers after a long legal battle.

“These stores used to buy real estate for you, now it’s hard to make ends meet,” he said.

Consumer experts have also warned that the expansion of so-called big box stores could spell trouble for small retailers.

Andrew Terry, a professor of business regulation at the University of Sydney Business School, told Daily Mail Australia: ‘If Bunnings comes to town it will be bad news for local businesses.

“The local businesses look to our laws to protect them, but the reality is they are not there to protect small businesses. They exist to enhance consumer welfare and competition, helping companies like Bunnings, Coles and Woolworths to thrive and gain more customers.

“Bunnings has done a really good job with their Saturday sausages and they are very smart with their market research. They know what to do for their market and brand.

‘In the past, small businesses were open longer and had that personal connection with customers. However, now you have extended shopping hours and special offers and promotions from the major brands.

‘Ultimately, the market is war. It’s a war for customers and they want to win that war. It’s all about competition and with the introduction of 1,000 new pet lines, Bunnings wants to win.’

His comments were echoed by several other pundits, who called on the government to ensure there was more protection for small businesses against growing behemoths like Bunnings.

Sharon Latour, an international consumer and marketing consultant, said the Australian market favors larger companies.

“The way the Australian market is structured favors big brands like Bunnings as business expansions come with major investment in real estate and unfortunately means smaller private brands are being pushed out of the market.

“The cost of doing business and the tax regime for smaller businesses is stifling for all industries in Australia, which is why our manufacturing is dying and our hospitality businesses are closing by the dozen every day.

“There has to be some reform to allow smaller companies to breathe a little bit and be able to compete, otherwise we will continue to see the Bunnings of the world take over entire sectors.

Is Australia’s future big companies and chains? The amount of ‘for rent’ signs in all major cities certainly indicates that.’

However, some have suggested that the pet industry will adapt and thrive in light of Bunnings’ expansion.

Anthony Ramsey, president of the Pet Industry Association of Australia, believes pet shops are under less threat than they fear.

Unsurprisingly, Bunnings has decided it wants a slice of the $13 billion pie that is the Australian pet industry.

“The rollout of large companies with online-only chain stores and pet product retailers has already led to a significant reduction in the number of independent pet stores over the past 15 years.

‘Those who have survived have done so because of their distinctive points, namely their service, advice, range, quality of products and the in-store shopping experience. It is highly unlikely that Bunnings will compete with these types of companies that are already so good at what they do.

“I would imagine Bunnings will be targeting the consumer who already shops in large chain stores, not independent stores. Independent pet stores also have the option of selling families the pets themselves, whether it’s a parakeet, puppy or kitten, guinea pig, lizard or fish.

“This is a further snare for many independent pet stores and a business that will never be able to compete with specialty pet stores.

“All in all, I can understand some companies’ concerns as they see Bunnings enter the pet industry, but I do believe they pose far less of a threat to their business than they may think.”

Graeme Samuel, former head of the ACCC, also said pet companies have less to fear than they think.

He said, “They are all horses for courses. Small businesses will adapt, they always have. Consumers will have to weigh up whether they want to pay a little more for a more personal service or rather pay less for convenience and convenience.

“There will always be a baker or butcher or grocer near these chains that will be popular.

‘That’s the trick with these places. They know that customers who want a more personal touch will come to them, while some people want the convenience of places like Bunnings.”

This isn’t the first time Bunnings has been accused of shutting down smaller businesses.

In 2015, a GDC Advisory forecast blamed Bunnings and other major retailers for a collapse in Australia’s hardware stores.

The forecast suggested that the number of hardware stores in Australia would fall from 20,920 to 14,050 over the next 10 years, with 6,142 independent retailers set to close by 2024.

Speaking to GDC Advisory director Geoff Dart, Bunnings, as well as Woolworths and Miter 10, said competition was intensifying.

New products offered by Bunnings include food and toys for dogs, cats and birds in a 40 square meter sales area.

Bunnings boss Mike Schneider told Daily Mail Australia the expansion wasn’t necessarily bad news for small businesses.

“Pets is a really exciting growth category and we believe there is plenty of room in the market for larger operators and specialist providers,” he said.

“The role of pets is becoming increasingly important to many Australians, and we look forward to joining the range of companies targeting pet lovers to offer customers even more choice.”

Mr Schneider said the new direction was in line with the explosive growth of pet ownership over the past three years.

Bunnings has allowed pets in its stores since 2015 as long as they are carried, leashed or in a shopping cart.