This week we saw that the hardware industry has once again stepped into the limelight with lots of commentary on the release of information relating to the Bunnings performance in the United Kingdom and Ireland markets with its subsidiary BUKI (Bunnings UK & Ireland). BUKI had acquired the Homebase chain of hardware stores in the UK and Ireland. One quote contained in an AFR article this week was that the Bunnings losses with BUKI are likely to be ‘worse than Masters’.
Now there’s a record that I was unaware of the fact that anyone was really making an attempt to surpass such a stunning (?) historical achievement; but I’m always happy to be proven wrong.
Amongst the big wash of information about the situation, its depth and how Wesfarmers might extricate themselves was a couple of very salutatory points that every business owner, regardless of size – big or small, MUST remember.
Typical of large organisations that reach a point where they are perceived (or perceive themselves) that they are the leaders and experts in the market any acquisition represents the perfect opportunity for change. Thus it was that upon acquiring the Homebase business the new management stepped in and made two (potentially) fatal changes. The first was to replace a number of existing products with their own products that were no doubt aimed at improving inventory management and profits; at least that’s what the accountants will tell you; and secondly they replaced a large number of the existing staff with new staff that were no doubt more in the mould of what the new organisation saw its real future to be, no doubt clearly on the guidance of the HR team desirous of building the correct ‘culture’.
Alas no one seems to have even thought to make any enquiries of their existing customer base, who promptly offered their opinion after the events by simply shopping elsewhere. BUKI was screwed. A long time ago you could not buy Victorian beer in NSW, then Bond screwed over the Tooheys publicans and almost overnight VB owned NSW!
The customer is king and queen, before you make any serious changes ALWAYS ensure that it’s something that your customers or clients are or will be happy with. If they aren’t then you will surely lose.
The fundamentals of business are just that, and any amount of digitising, systematising or marketing will not really change them. Grow carefully and constructively.