Mike Schneider, the chief executive of the Wesfarmers-owned Bunnings, said that the hardware giant took its promise to beat any competitor’s price seriously and that critics would not find evidence of it engaging in price gouging. He added he was surprised by the claims, given the company had long advertised using the slogan “lowest prices are just the beginning”. “I had to read it a couple of times when I heard the words price gouging,” he said, according to the Financial Review.
“To advertise using the word ‘lowest’ means we’ve got to do a lot of work to prove that.” Schneider’s comments come as pressure is building for big-box retailers to be subjected to a parliamentary inquiry into allegations of misuse of market power. NSW Nationals senator Ross Cadell claimed to have evidence of one large retailer complaining to a supplier after having to honour a competitor’s lower price in an attempt to block the rival from being able to sell the product in future.
A more influential voice calling for the inquiry though is Opposition Leader Peter Dutton. Last month, Dutton said the difference in profit margins between the Wesfarmers-owned Bunnings and its smaller rivals Mitre 10 and Home Hardware, “is astronomical”. “We want them [businesses] to be successful, we want them to be profitable, but we can’t have price gouging, particularly where you’ve got market concentration,” said Dutton.
“Ultimately, we want a free market to operate effectively, and a free market is not where consumers are being ripped off.” Schneider instead has countered those assertions and argued that the company has invested “tens of millions of dollars” in a pricing ecosystem to track competitor pricing and test claims that it had the lowest prices on items carried by other retailers. While the business had exclusive supply relationships with key brands, including tool giant Ryobi and British Paints, Schneider noted that such arrangements were common in the global hardware sector – and the broader retail sector – and were often required by large manufacturers.
Schneider pointed out that Bunnings offers low prices model daily, rather than running regular discounts and promotions as is the case with grocery retailers. That model is why Bunnings has reportedly stayed out of some product categories that are complex or costly. “That’s the beauty of a model.
It does come back to that flywheel of them being really efficient with what we do. So if we’ve got lower prices, more customers and good earnings, you invest that into price and wages, and you just drive that flywheel.” Schneider argued that critics would invariably find a dissatisfied supplier or former supplier given the size of the business.
“What we want is good, long-term relationships. The vast majority of our suppliers have been with us for 30 years. There are bad marriages that last 30 years, and there are bad relationships that last 30 years, but mostly they’re good.
” Earlier this year, major supermarkets including Coles and Woolworths were hauled in front of the senate to answer for apparent anti-competitive and monopolistic practices within their sector. It led to the establishment of a grocery code of conduct where those supermarket giants could face billions in fines if they were found to engage in conduct that contravened the guidelines of the code. Schneider has said Bunnings should not come under the supermarket and grocery code of conduct, but would adhere to it if required.
“If there’s a code, there’s a code, but we’re not going to change our behaviour because we genuinely want to do the right thing.” Schneider even went on to welcome the possibility of a senate inquiry for big-box retailers adding that it would be a “great opportunity to explain” the group’s pricing approach..
