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green milan pencil pleat curtainsMitre 10 store owner Julianne Taffa says independent retailers have been ''collateral damage" in the battle between Bunnings and Masters.
target threshold velvet curtains No-one is more relieved about Masters' demise than independent hardware retailer Julianne Taffa.After successfully fending off Bunnings' relentless march across the $45 billion home improvement battlefield over the last decade, the Taffa family was facing a new threat.
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Woolworths planned to open a Masters store next year at Macquarie Park, just 5.5 kilometres away from Taffa's Mitre 10 at West Ryde in suburban Sydney."We don't have to fight that battle now," says Taffa, 42, who with her brother Anthony, 47, runs the business their father Ron founded more than 60 years ago.However, Taffa is under no illusions about the impact of Woolworths' decision to pull the plug on its disastrous $2.3 billion foray into home improvement. Bunnings is expected to grab 60pc of Masters sales. Taffa says independent home improvement retailers have been "collateral damage" in the war of attrition between Bunnings and Masters and it won't get any easier when Masters has been sold or closed. While Taffa's Mitre 10 has managed to maintain sales by offering convenience, superior service and by keeping its prices keen, growth has slowed and margins across the sector have come under pressure as Bunnings and Masters fight hammer and tongs over price and products."

Ultimately Bunnings will be stronger than ever," said Ms Taffa, echoing the concerns of many in the market including Australian Competition and Consumer Commission chairman Rod Sims and former Woolworths chairman John Dahlsen, who owns Australia's largest independent trade hardware chain.Analysts believe Bunnings stands to pick up about 60 per cent of Masters' sales, which will exceed $1 billion this year. The remaining 40 per cent will be split amongst larger Mitre 10 stores and specialty retailers. In the short term, industry margins are likely to come under pressure as Masters liquidates stock."There will be zero competition in the big-box market and over time I can see them [Bunnings] putting their prices up, so it's a double edged sword," Ms Taffa said. "Their stranglehold on this market is unlike any thing else." Shutting up shopWhile Taffa's store is still going strong, 980 independent retailers have quit the market over the last three years, including Mitre 10, Home Timber & Hardware, Thrifty-link and True Value stores, specialist retailers and non-aligned or unbannered independents, according to a report by DGC Advisory.DGC Advisory director Geoff Dart believes another 2800 independents will shut up shop by 2025.

Unable to compete with Bunnings and specialist chains such as Reece and Beacon Lighting, store owners are selling to the chains or simply closing their doors and walking away.Taffa believes a merger between Mitre 10, which is owned by food and liquor distributor Metcash, and Woolworths' Danks and Home Timber & Hardware businesses would boost competition and give independents a fighting chance against Bunnings. "It would make Mitre 10 stronger and that could only be a good thing," she says.Mitre 10's managing director Mark Laidlaw is said to be keen on a merger, as the combined group would have annual sales of $2 billion and 5 per cent of the market rather than the 3 per cent Mitre 10 claims now.However, a Mitre 10/Danks merger would lead to a two-player market consolidating into one, leaving independent retailers with limited choice of suppliers. Buying group Natbuild, which has an alliance with Mitre 10, only supplies the trade market.Some analysts believe a merger would struggle to pass muster with the Australian Competition and Consumer Commission, which has been keeping a close eye on the hardware market since Woolworths kicked off its war with Bunnings by acquiring Danks in 2009 and opening more than 60 big-box stores under the Masters banner.

"One must spare a thought for the independent hardware retailer who is already battling enough but currently has a choice of two suppliers," Deutsche Bank analyst Michael Simotas said in report this week. "If Mitre 10 and Danks were combined, this choice would evaporate and margins could be squeezed even further."ACCC chairman Rod Sims has indicated the regulator may take a more lenient stance than it did when Metcash tried to take over wholesaler and retailer Franklins."If [Danks] wanted to get together with Metcash we'd obviously have to look at it but we'd do so with an open mind," Mr Sims said this week.The ACCC is more concerned about the prospect of Bunnings buying as many as 25 Masters stores, increasing its already dominant share of the DIY market, which is estimated by analysts such as DGC's Dart and Morgan Stanley's Tom Kierath to be close to 40 per cent. "Clearly it's a better outcome if someone other than Bunnings gets hold of these stores,' Mr Sims said. "

We'd prefer they sold Masters to new entrants ... to independents or Mitre 10 or Metcash wherever possible."As for Woolworths, Australia's largest retailer will be aiming to sell to the highest bidder – whatever the colour of its livery – after losing $600 million on Masters in the last four years and investing more than $2.3 billion into a business that won't make a profit for many more years.A line in the sandWoolworths chairman Gordon Cairns drew a line in the sand on Monday, saying the company could no longer sustain the operating losses or huge capital drain and would buy out joint venture partner Lowe's before selling or winding up the business."We couldn't see a way to get to profit for some considerable period of time," Cairns said. Merrill Lynch analyst David Errington, who dubbed Cairns 'Action Man' for biting the bullet, believes Woolworths could raise as much as $1 billion before costs by selling off the Masters and Danks assets.Ironically, as Woolworths confirmed its long-awaited retreat, Wesfarmers announced plans to transform Bunnings into a global brand, starting with the $705 million acquisition of struggling UK home improvement retailer Homebase.Bunnings plans to replicate its successful Australian model, spending another $1 billion fixing Homebase's underperforming stores and building warehouse-style stores twice the size of its existing UK and Ireland shops.

For some, Wesfarmers' confidence in its ability to take on established retailers in Britain and Ireland has uncomfortable similarities to Woolworths' optimistic entry into the Australian market six years ago. "While Wesfarmers has strong hardware credentials and an excellent track record in turning around underperforming retail formats, the path to success in the UK will not be easy," said Simotas, who fears market leader B&Q may respond just as aggressively as Bunnings did when challenged by Woolworths.And while Wesfarmers managing director Richard Goyder and Bunnings boss John Gillam insist Bunnings does not have expansion plans beyond Homebase, most analysts are convinced that when - or if - Bunnings achieves its ambitious 18 per cent-plus return targets in Britain it will creep further into Europe.Does overseas expansion mean Bunnings will finally take its lead-foot off the accelerator in Australia?Dahlsen, who sold three of his Dahlsens stores to Bunnings three years ago, quitting DIY to focus on the trade, certainly hopes so.