Danks Holdings Ltd
Danks Holdings Ltd - Retailing - Australia-Dissertation Writing Help
Strategic Direction
·
In addition to its traditional
expansionary strategy of attracting new members, Danks Holdings has commenced
acquisition of strong retail players in the industry. In 2008 the company made
its first acquisition of Blue Mountains Hardware, a New South Wales retailer of
hardware and timber. In the face of increasing competition during a tight
economy, Danks has focused on upgrading its member stores and re-development to
eight larger format stores. The larger store formats will be a continuing
strategy in response to competition from Wesfarmers Ltd’s Bunnings and Mitre 10
MEGA stores.
Key Facts
|
Address:
|
414-426
Lower Dandenong Road, Braeside, Victoria 3195, Australia
|
|
Tel:
|
+61 (03)
9264 5000
|
|
Fax:
|
+61 (03)
9587 1719
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|
www:
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danks.com.au
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|
Retail
formats/channels:
|
DIY, Home
improvement and garden centres
|
|
Retail
brands:
|
Home Timber
and Hardware, Thrifty-Link Hardware, Plants Plus Garden Centre
|
Source: Euromonitor International from
company reports, trade press (includes The Age)
|
|
2007
|
2008
|
|
Year end
June
|
|
|
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Net sales 1
A$ million
|
510.4
|
515.2
|
|
Operating
profit A$ million
|
3.9
|
4.0
|
|
Outlets 2
|
630
|
619
|
|
Selling
space 2 (‘000 square meters)
|
3,478.1
|
3,418.1
|
Source: Euromonitor International from
company reports, trade press (includes The Age)
Notes: 1 wholesale sales; 2 Euromonitor
International estimates; annualised figures
Company Background
·
Danks Holdings began its
corporate life in 1859 as John Danks & Son Pty Ltd, a plumbing and
engineering business. The company was listed on the Australian Stock Exchange
in 1974, and subsequently grew to become one of the largest distributors of
DIY, hardware and garden products in Australia. In 2007 it supplied more than
700 Home Timber and Hardware, Thrifty-Link Hardware and Plants Plus Garden
Centre outlets operated by group members.
·
Besides being a distributor
Danks Holdings also provides an array of other services to its group members.
These include promotional programmes, national advertising and marketing, store
design and merchandising, inventory management and logistical and point-of-sale
systems support.
·
Since 2007 Danks has
implemented several key improvement projects, including relocation of the
warehouse to Perth, in response to the growth experienced in Western Australia.
It has also launched a new distribution centre in Victoria, which will aid in
reducing the cost of third-party storage.
·
With the launch of HoME XL,
Danks has taken on larger format stores, in response to competition from
Wesfarmers’ Bunnings and Mitre 10 MEGA stores. These larger format outlets will
be able to increase the range of products available in store.
·
In 2008 the company has made
its first acquisition of retail operations: Blue Mountains Hardware, a retailer
in hardware and timber in New South Wales. The acquisition of strong
independent retail players in the industry will enable the company to grow at a
faster rate than with its traditional strategy of organic growth.
Private Label
·
Danks Holdings offers branded
and private label products. It offers more than 25,000 brands, over 1,000 of
which, such as Worx, Plumbworx, Sirdar, Tekraft, Boulevard, Illusions,
Earthcore, Del Terra and Redcentre, are exclusive to the company.
·
Some of the brand offerings
have performed well at the lower end of the DIY environment, which offers
strong potential given the tightening of the economy.
|
Private
Label Brand
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Sector(s)
|
Comments
|
|
Worx,
Plumbworx, Sirdar, Tekraft, Boulevard, Illusions, Earthcore, Del Terra,
Redcentre
|
Tools,
paint, fixtures, etc
|
Budget
|
Source: Euromonitor International from
company reports, trade press (includes The Age)
Competitive Positioning
·
While Danks has retained its
third place in DIY and hardware stores, after Wesfarmers Ltd and Mitre 10, it
lost value share slightly in 2008. There was a decline in its members over the
review period, and the company has posted weak to flat overall results in the
financial year of 2007.
·
With the decline in housing
development resulting from rising interest rates, company sales have been
affected. Despite strong growth reported in Queensland and Western Australia,
attributed to the housing development in the region with the resources boom, it
has not performed as well in other states. The continuing drought in many
regions has also affected its gardening retail chain, Plants Plus Garden
Centres, to which the retailer responded by focusing on potted plant sales.
·
The continued cultivation of
strong business relationships with retailers and group members gives Danks a
competitive edge. The company’s marketing strategy by participating in
charities such as Guide Dogs Australia and Make a Wish Foundation helps
retailers establish a community presence and a link with customers.
·
With the failed merger attempt
by Mitre 10 in 2007, Danks will continue to focus on pursuing larger format
stores and growing its network through new membership and acquisition.
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Channel
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Value share
(%)
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Rank
|
|
Retailing
|
0.8
|
12
|
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DIY, Home
improvement and garden centres
|
7.4
|
3
|
Source: Euromonitor International from trade
press (includes The Age), company reports, trade interviews
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