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In a move which flies in the face of the economic downturn, Australian home improvement chain Bunnings says it plans to open six new stores in New Zealand, investing $90 million and creating 500 jobs.
The big-format retailer has announced expansion plans which show its retail outlets could grow from the current 16 to 22 stores - and then to 26 in the near future.
Brad Cranston, general manager of Bunnings in New Zealand, said the business would open at Westgate in Auckland, increasing its footprint in Auckland to five big stores.
West Auckland was a significant growth area, and the new store would have a hire shop, free DIY clinics, a children's playground, a cafe and two levels of carparking, he said.
Cranston was not concerned about the economic slowdown.
Sales turnover was down on last year and same-store sales had dropped within the last two months, but Bunnings views New Zealand as an area of high growth, he said.
The sales downturn was "something of a blip" and did not affect the firm's expansion drive.
Bunnings had invested more than $250 million in New Zealand this decade, Cranston said.
The business started here in 2001 following the purchase of the Benchmark Building Supplies stores and now makes annual sales of more than $500 million, Cranston said.
Bunnings owned a new Nelson store and would own the new Westgate store, he said.
The Westgate deal comes after a new large-format Bunnings store was developed in Nelson, where the retailer opened yesterday.
Previously, the chain announced plans to develop stores in Gisborne, Wellington's Lyall Bay and Upper Hutt, and Dunedin. Some of its new stores cover more than a hectare.
Cranston said the business was also examining establishing a further four stores after that. Outlets in Hawkes Bay, Taranaki, South Auckland and the North Shore were quite on the cards, he said. However, plans for those areas were not yet finalised.
Cranston said Bunnings was showing confidence in the market with the new projects. Retail sales have been falling, in line with the shrinking economy, but he is confident about the retail niche Bunnings has carved out since coming here seven years ago.
"The creation of these 500 new jobs will have a positive impact on the community," he said. "As well as offering new employment, Bunnings Warehouse team members are encouraged to play an active part in their local communities by supporting local community groups.
Last year, Bunnings completed the sale and leaseback of 11 retail warehouse properties in Australia and New Zealand, netting A$203 million ($229.5 million). Auckland-headquartered Dominion Funds Management bought five New Zealand properties, while Australian fund Charter Hall bought the remaining six properties in Australia.
Bunnings is owned by Australian conglomerate Wesfarmers, and its main competitor in New Zealand is Mitre 10 Mega, which is also still expanding and aiming for 20 large-format stores.
Mitre 10 has been in New Zealand since 1974 when it was introduced by 15 hardware retailers who had watched the success of the retail formula in Australia.
They felt it was time New Zealanders, too, were offered the cost savings achieved when retailers could pool their orders, buy in bulk and promote nationally, Mitre 10 says.
More than 120 stores are operating under the Mitre 10 banner including more than 15 Mega stores.
BUNNINGS
* Opened in New Zealand in 2001.
* Has 16 large-format stores.
* Plans to have 22 stores soon.
* Melbourne-headquartered business.
* Became a public company in 1952.
* Founded by migrants from London.
