The news today that Wesfarmers, owners of Bunnings, is to close up to 1 in 6 of its 240 Homebase store estate comes as no surprise.
Announcing a A$1bn write down of the business, Wesfarmers MD, Rob Scott admitted that ‘a lot of the issues we are dealing with today are self-induced’.
Whilst the honesty might be refreshing, it is the reasons given for the shambolic state of affairs which are, frankly, incredulous.
A management team with little or no knowledge of the UK market led to the dropping of popular product lines combined with underestimating the winter demand for others, such as heaters (this is the UK not Bondi Beach after all).
Quite possibly the most blatant case of corporate arrogance in recent memory
Two years ago, just prior to the sale of Homebase from Home Retail Group to Wesfarmers, it was trading profitably albeit not spectacularly so. And let’s not forget that then HRG CEO John Walden announced a store closure programme of up to 25% of the estate under the Homebase Productivity Programme.
However, the appointment of new CEO Echo Lu from Tesco in March 2015 was bearing fruit with like for like sales hitting 5%. Clearly there was a more customer centric approach to the business and this was having a positive impact.
But, just weeks after completion of the sale of the business in February 2016, the entire Homebase Board had been ousted.
Quite possibly the most blatant case of corporate arrogance in recent memory.
In a statement this week, Michael Schneider, head of the Bunnings group, said: “A significant amount of change has been driven through Homebase since the acquisition and the disruption caused by the rapid repositioning of the business has contributed to greater than expected losses across the Homebase network”
The news that Bunnings UK Managing Director Peter Davis is retiring alludes to where Wesfarmers feel the blame lies.
But this is to deflect from the real issue.
Misunderstanding both the market and the customer for a business successful in their home market is nothing new – think Best Buy, Tesco Fresh & Easy for starters.
But throw into the mix a breathtaking arrogance and you have a recipe for disaster.
Homebase employs 12,000 people, many of which are now facing an uncertain future – the store closures won’t be announced until June (yes, you read that correctly) and this perhaps is the most disturbing aspect of this sorry tale.
Not taking the basic trouble to understand your market and your customer is amateurish at best; putting peoples livelihoods at risk through corporate arrogance is unforgivable.