It was a just a single dot point buried in a 56 slide deck, but it spoke volumes to the real reason Bunnings has just hit the accelerator on its online store hard:
Digitally aware millennials, less natural DIY aptitude
That’s the blunt-as-a-hammer take from Michael Schneider, Bunnings Group’s managing director who this week put the edgy proposition forward at a big picture investor briefing on the retailer’s digital future.
For Schneider, the challenge on his doorstep right now is a whole generation has grown up on the internet, You Tube and Tinder and just isn’t interested in learning how to hang a door or put up a shelf, let alone construct a flatpack.
Worse still, when millennials are interested, they go online first to search out either instructionals or user-generated content that frequently points them to competing products or online stores, unless Bunnings SEO carpet bombing and keyword strike teams take it out first.
So what’s the nation’s biggest hardware chain supposed to do?
Online presence and marketing is now a massive undertaking for Bunnings – Schneider reckons its Australian website averages 15 million sessions per month – and is just about to go super critical now that its grand plan to offer click-and-collect is taking shape.
As revealed in iTnews last month, the core strategy is to get people to buy online and through its warehouses quickly and efficiently without jamming the checkouts and carpark.
For Schneider, and his hard nosed investors, the burning question is how to capture the imagination and transactions of ‘generation click’ in a way that will grow the business rather than just boost turnover at a disproportionately higher cost.
The answer, at least according to Schneider’s latest vision of the future, is a big investment in technology not just as an enabler, but also as a line item that people will by as homes and lifestyles become increasingly digitised
Pumping population analytics
While there’s been plenty made of the push to plug 60,000 products into the online store, the reality most of the profitability upside will be in value-added services, bundles and upsells that would otherwise be too expensive or resource intensive to sell from the floor.
Bunnings is already pushing hard in the cost conscious renovation space, namely kitchens, bathrooms and electrical where it handsomely undercuts up-market specialists with offers like made to order flatpacks.
But what’s about to change is that, aside from being able to browse and buy online, Bunnings could soon resell installation services via its huge base of tradies.
A scenario where a customer picks ceiling fan style, selects the colour and books the installation all via their (or Bunnings’) preferred payment method would conceivably allow it stay ahead of dilution and reduce costs at the same time.
Better still, it’s likely it would be the tradie or the customer doing the delivery.
But it’s learning what different parts of the community want to do in their lives, in their homes, and when that is clearly a big part of the analytics push because the stores simply need to be stocked to match the demands of a geographic population and its mix of dwellings.
With a workforce of 43,000 people – that’s the size of a bank – Schneider has his own societal microcosm to draw wisdom from the crowd and isn’t afraid to use it.
“We have five generations in our workforce now,” Schneider said during the briefing, stressing that “digital plays a more important role than ever before.”
Again, he argued that this wasn’t just about the operations side of the business but a merchandising strategy too, specifically “the use of technology and how customers are thinking about that from a lifestyle point of view.”
“It’s not about selling more hammers or nails or building materials or gardening materials online, but the way customers are being educated to use technology, the way technology is coming alive inside products as well as the products that are being used inside their home,” Schneider said.
If millennials aren’t as hooked on DIY as their forebears, that could be because they’ve learned not to do things the hard way. Is something level? The laser sorts it. Not sure how to start a chainsaw? It’s electric. Detest assembling? They’ll do it for you.
The millennial, it could be argued, has digitally evolved.
“The simplicity, ease and power that a lot of products now have means that some of the core DIY skills our generation may have actually needed to get started aren’t needed anymore,” Schneider offered.
“There is a much more digitally aware generation coming through who actually have very different DIY skills and needs. And it’s not about that generation not knowing or not being interested in DIY. They see DIY in a different way, they see projects being taken on in a different way.”
It also doesn’t take much of a visual store scan to figure out that Bunnings has no intention of letting sales to women slip past them. Just look at the floor staff or the mug shots of apron-wearing toolies at the front door.
“What does installation look like? We have got this enormous and trusted base of trade customers who shop with us, how do we connect that base with our consumer base,” Schneider asked.
You can almost hear the chatbot being trained now.
“How can we continue to invest and innovate in our range so we are leading in areas where we have strong dominance, such as paint and lighting. How can we actually build out our thinking on technology so that that is using the home.”
The obvious answer to that question is building-out customer analytics and data analysis through online engagement and, although it wasn’t mentioned, membership and loyalty programs.
Wesfarmers aren’t shouting it out, but it’s no secret this is what its Advanced Analytics Centre, which is co-located with FlyBuys, was created to do.
Also in the great lake of customer data Bunnings and Wesfarmers is undoubtedly amassing are population, demographic and urban trends – like the increase in people shifting from detached dwellings into apartments and units.
“People are working longer. Kids and family formation is starting later. These all have impacts on the way we can participate with our customers in their homes in actually making them a better place to live for longer periods of time,” Schneider reckons.
And if you’ve ever come across any of those Bunnings how-to online videos that tries to demystify something like putting up a trellis, it’s worth considering the scale of the film set requirements needed by the retailer to make that happen.
Sooner or later you just run out of other peoples’ properties to play with.
Bunnings’ YouTube property requirements are so hungry they require their own capital investment in terms of residential real estate.
“Over the years Bunnings has bought and sold a couple of properties, they have been done to create content for our online and YouTube channels to educate and inspire and show basic DIY skills to customers,” Schneider revealed.
“And we are about to embark on the third of those projects. This one will have a clear bias towards smaller density living to let speak to the range, development and innovation our merchandising team have built out over the last few years in categories like storage, smart homes, temporary fixings.”
As apartment prices keep dropping, he might be onto something.
Digital’s all-ages agenda
If millennials can't be stuffed installing flatpacks, spare a thought for elderly Australians now confronting connected appliances and home automation at every turn. Ever upbeat, Schneider believes that given the right amount of sensitive innovation, technology can help keep people in their homes longer.
With locks, lights, cameras and climate control all now becoming connected – an area where Bunnings is clearly angling to capture share from the likes of Harvey Norman – he cited upside in features like enabling remote property access and monitoring.
"If you have a loved one that is living in the home for longer, installing cameras to know that they are safe, installing lock mechanisms to let yourself in or let someone in to take care of a loved one is important,” Schneider said.
So too is making sure children return home safely or get themselves off in the morning.
“At the other end, how do we let a kid in who’s come home from school,” Schneider asked.
Or, when they get older, you could lock them out.
“We are seeing a move away from products to platforms in the smart home space.”
Given Bunnings’ Wesfarmers retail stablemate Officeworks just bought Sydney consumer and SMB computer support services plat Geeks2U this month, it’s not hard to see where this online adventure is headed.
Hey Google: if my son's friend's soccer mates are in the house, lock the fridge.