Home Timber and Hardware likely to be biggest loser from the struggles of Masters
Woolworths’ announcement it will sell or close its embattled joint venture Masters hardware chain captured headlines but it is the smaller, more successful Home Timber and Hardware chain that looks set to be the big loser.
With American giant Lowes pulling out of the joint venture, Woolworths plans to abandon the sector – a move likely to see the Masters brand disappear from the landscape.
But while Masters has bled more than $600 million from the business, Home Timber and Hardware has been a profitable part of the business and Woolworths will come under pressure to maintain marketing for the brand and continue to support franchise and store owners who license the brand and contribute to the marketing pool.
While Masters drained $245 million from the Woolworths’ coffers in the 2015 financial year, Home Timber and Hardware managed to report earnings before interest and tax of $20.9 million – up 198 per cent on the previous year.
The company is expected to come under immense pressure to keep its popular ‘Go where the tradies go’ and mascot dogs Rusty and Sandy campaigns running on a full media schedule, with many store operators feeling they are victims of Woolworth’s failed big box strategy as it exits the sector.
Woolworths and Lowes first partnered in the hardware space in 2009 when they teamed up to take control of the Danks, which operates Home Hardware and Thrifty Link.
The partnership acted as a test bed for the expansion into big box retailing with Masters.
The failure of the Masters push is expected to signal the disappearance of the Masters brand, designed by Hulsbosch Design, from the landscape.
While those close to the Masters brand say that there is no expected change in spending, and Woolworths has vowed to continue full support for the business until a final decision on its future is made, once its future is clear it is expected that Masters marketing will be significantly reduced.
The reduction in spend across the board will hit Match Media and Cummins & Partners.
Cummins won the Home Hardware business early last year and Woolworths consolidated Masters along with it late in the year, giving the agency a huge boost.
Despite being backed by a $15 million media budget the brand has struggled to gain traction, despite good reception to its lighter and more female friendly stores, compared with Bunnings.
In 2014 Woolworths brought in Dion Workman, a former staffer for ad agency DDB who had gone on to work with McDonald’s before joining former McDonald’s Australia CEO Guy Russo at KMart, where he helped to turn the brand around.
However, Workman’s stint with Masters was short-lived and he left the company after just 13 months as the joint venture continued to bleed cash.
Luke Dunkerley, Woolworths’ manager of corporate marketing, has stepped into the role. Dunkerley has held a succession of senior marketing roles at the retailer after joining the business from the advertising side where he worked with STW Group on the Commonwealth Bank and helped to setup M&C Saatchi’s retail division when it originally won the business.
Masters opened its most recent store in Penrith last weekend.
Simon Canning
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They opened 58 Masters stores and not one of them was profitable. You would imagine they might get the format right before they roll them out next time.
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Best living example of the board room big swinging dick decision making in ages. Wesfarmers may be headed down that same thought process in the UK
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Home need to better leverage the mascot dogs. They are so cute and kids would love them. Big stuffed toys should be available at stores. Make kids force their parents to go with pester power.
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