Lexi Webster
In Australia, large-format retail stores, or big-box stores, are typically found in commercial land use zones or shopping centres. The big-box phenomenon reached Australia in 1969 with the opening of Kmart's first five big-box stores. Since then, several other big-box retailers have entered the market, including Bunnings, Mitre 10, Costco, and IKEA. Kmart, Bunnings, and Costco are often considered the Australian equivalents of Walmart, along with Target, Big W, and Woolworths.
| Characteristics | Values |
|---|---|
| Retail category | Large format retail |
| Location | Shopping centres, retail parks, service or highway commercial type land use zones |
| Examples | Kmart Australia, Costco, Bunnings, Mitre 10, IKEA, Harvey Norman, JB-HI-FI, EB Games, Amazon Australia, Woolworths, Big W, Coles, Target, Officeworks |
| Size | 250,000-600,000 square feet |
| Type of merchandise | General merchandise, speciality stores |
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What You'll Learn
Kmart Australia
In 1978, Kresge exchanged its 51% stake in Kmart Australia for a 20% stake in G.J. Coles & Coy (later Coles Myer). In 1988, Kmart expanded to New Zealand, opening a store in Henderson, a suburb of Auckland. In 2006, Coles Group announced plans to integrate Kmart, Bi-Lo, and Coles Group liquor brands into larger-format stores. However, these plans were deferred in March 2007, pending the sale of the Coles Group to Wesfarmers.
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Costco
As a membership-only warehouse club store, Costco offers a range of products for bulk purchases, including groceries, electronics, furniture, and more. Tyre installation is also available for members who purchase tyres from Costco, either online or in-store.
The Costco model, along with other big-box stores, has contributed to a shift in the retail sector. Traditional retailers and supermarkets have started to embrace the big-box format, expanding their physical footprints to compete with the growing popularity of big-box chains. This has led to the creation of extra-large supermarkets, like Tesco and Asda, that offer a broader range of non-food items and are typically located in out-of-town shopping centres.
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Bunnings Warehouse
The Bunnings Warehouse brand is closely associated with sausage sizzles and cake stalls hosted by community groups and causes on weekends and weekdays at some sites. This has become an iconic part of Australian culture.
Bunnings reported AU$16.871 billion in revenue for the fiscal year 2020-2021, a 12.5% increase from the previous year. Bunnings' parent company, Wesfarmers, has also made international acquisitions, including the UK-based hardware chain Homebase in 2016.
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Harvey Norman
The history of Harvey Norman dates back to 1982 when Harvey and Norman purchased a shopping centre in Auburn, Sydney, for A$3 million and opened the first Harvey Norman store. Initially intended to be a single store, its success led to further expansion. In the early 1990s, the company adopted the superstore format, entering the computer and furniture markets. The first computer superstore opened in late 1993 in Bennetts Green, Newcastle, with much fanfare.
The operating structure of Harvey Norman is unique, with each store department (flooring, bedding, furniture, computer, and electrical) managed by a separate entity. This means that many superstores are a combination of three or four independent businesses contributing revenue to Harvey Norman Holdings Ltd. through lease payments and sales. The company has also diversified, with subsidiaries like Harvey Norman Design and Renovations, specialising in home renovations, and Domayne, a furniture, bedding, flooring, computers, and electrical chain with a focus on fashion and design.
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Woolworths
The company commissioned a report by consulting firm Urbis to support its application for a 13,500 sqm site in Geelong. The report also estimated the potential impact on competitors, predicting a 16% drop in revenue for nearby Bunnings and Mitre 10 stores. However, the Geelong store proposal was rejected by a special planning advisory committee. Woolworths had secured more than half of the 150 planned sites for this new store model.
The introduction of a big-box hardware format by Woolworths caused concern among its rivals, with Mitre 10 store owners fearing significant sales declines of up to 30%. Bunnings boss John Gillam, however, welcomed the competition, believing it would boost the overall hardware market.
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Frequently asked questions
Some big box stores in Australia include Kmart, Bunnings, Mitre 10, Costco, and IKEA.
JB Hi-Fi, EB Games, and Harvey Norman are some of the biggest electronic stores in Australia. Bing Lee and Jaycar are also popular, depending on the type of electronics.
Kmart, Target, and Big W are the closest equivalents to Walmart in Australia.
JB Hi-Fi is the closest equivalent to Best Buy in Australia.
