Woolworths hardware stores could help local retailers, experts say

Local retailers will benefit from a proposed Woolworths hardware store in Geelong, but they need to offer more than a better price and start giving more personalised and professional attention to customers, one expert warns.

The comments come after Woolworths’ proposal was knocked back by the State Government, citing recommendations from an independent advisory committee. A separate report from consulting firm Urbis, commissioned by Woolworths, has found a nearby Bunnings outlet would have its revenue slashed by 16% if the project goes ahead.

But some experts believe local retailers would benefit from the increased foot traffic. Retail Doctor chief executive Brian Walker says there is no doubt larger retailers bring more shoppers to local stores.

However, he also says these smaller retailers need to leverage that increased traffic appropriately to increase sales.

“There is potential here for big anchors to draw foot traffic to regions near these larger retailers. But there is also a need for those smaller retailers to compete not only on price, but on community involvement.”

“They have to use their expertise over and above price. If you look at a store like the Athlete’s Foot, they offer running shoes – a simple product. But they add expertise, knowledge and have highly developed skills to personalise their customer service. That is what smaller stores need to offer in comparison.”

Walker says community involvement is key – supporting local schools, charities, and so on. He says if local retailers can start offering a personalised level of service and get to know their customers well, they will be able to turn that increased foot traffic into higher sales.

“It’s an entirely different game for the smaller stores because they simply don’t have the volume. But they can benefit from these larger stores if they differentiate with their model and start offering community support and involvement.

Retail expert Selma Mehmedovic from the Monash University Centre of Retail Studies says large outlets, particularly stores such as IKEA and Bunnings, increase traffic for local retailers.

“The main thing that customers are doing right now is price comparison. If customers go and visit a hardware store, they’re going to visit some local stores around there as well if they’re looking for a particular product if they can get cheaper.”

“These types of environments produce very busy shopping districts. Costco is a very good example of this in Melbourne,” she says.

But while smaller retailers may possibly benefit from larger department stores, the new Urbis report suggests a Woolworths hardware store could slash Bunnings and Mitre 10 revenue by 16% in the area.

Urbis was contacted for comment, but no reply was received before publication. However, Fairfax reports the study shows the proposed site would take in $30 million and would offer customers hardware, timber and gardening products. Some whitegoods and cooking products would also be sold.

Urbis was contacted for comment but no reply was received before publication.

The report claims a nearby Bunnings store would see its revenue slashed by 16.2%, with two Mitre 10 stores to see revenue fall by 11.9% and 9.7%.

It is reported the official advisory committee considers any revenue cut of over 10% as significant, and said the proposal ”may impinge upon both the viability of activity centres that contain the affected stores as well as the future financial strength of other stand-alone businesses”.