The advantage Bunnings has is that none of us even know we need half the stuff we buy there until we get there.......

Wesfarmers historical growth rate is significantly higher than 3-4% (I think it's in the 20% region). Thus far they have been exceptional capital allocators and they don't really set limits on where they will or won't go - they seem to just look for opportunities.

I think Bunnings has a moat due to the type of goods they sell - a lot of them aren't really suitable for postage. Often people want the things now also - ie., I want this to fix or do this now.

This being said, I do buy plant pots off ali-express, though I think I'm the odd one.

(DISC Held)

I also hold and agree with you @Stuey727 that they are one of the better capital allocators on ASX and are more diversified beyond Bunnings than they get credit for. API acquisition is going to be interesting and I believe a good fit. It is one of the shares I would definitely have on my list for the "you can only invest in one stick for 5 years" scenario that comes up every now and then

I was just using the average annual growth in dividend per share since 2013, but that might be an unfair time frame given the last 2 years.

Don't get me wrong, it's a very strong business. I just meant that over the long run, given their size and market share, I wouldn't be expecting them to sustain a upper single digit sales growth for long.

Nothing wrong with that of course, but it just means I'd personally want a good starting yield to help make the long term returns more attractive.

I don't think Amazon is a threat to Wesfarmers... not since they spun off Coles.

The trick with Amazon, is that their retail website is not the main act. They make their main revenues from AWS, their cloud services business. They turn over billions in retail for extremely low margins, sometimes just because they can. I think their game is not the 'trade' business of Bunnings. If anything they could go into dark-supermarkets, ie supermarkets that only exist for delivery and don't have a shop front and yhreaten our national duopoly, but only if they wanted, which i'm not sure is their aim/game.

I agree with Andrew here. Though the shares have come back a good way from overvalued levels, they still screen as pricey for a slow growing, mature business. I will probably need to see another 15-20% knocked off the price to find the shares attractive enough to invest.

Great thread.

@Stuey727, I think their moat is their brand. Just phenomenally powerful. Honestly, can you think of a more reputable Australian retail outlet that is loved, treasured and frequented by so many Australians? I think we are talking about the best retail business in the country here, bar none.

A few weeks ago my partner and I had an itch to do something on a Saturday. Perhaps in a testament to how shockingly sad our lives are, we ended up at Bunnings with a sausage in hand looking at plants.

This makes me curious about the ability to use polls on Strawman...and while I don't want to make assumptions, I would take a punt that a larger portion of our members, in the last month, had frequented Bunnings more regularly than they shopped online at Amazon. Yes, perhaps controversial, but is anyone else curious?

I am guilty of having done both. That said, while I think we are well and truly in a digital age, I think a business like Bunnings will last a lifetime provided they can keep reasonably innovative and maintain their brand. Yes, shopping online has its benefits, but there are times when it also doesn't. You might want to look at something in person, need it that day (and don't want to wait 689 weeks for it to be delivered) or perhaps you simply want to look for inspiration. Bunnings have absolutely nailed marketing themselves as the 'jack of all trades' -- tools, lights, grass seed, plants (guilty), decking, toilets, paint -- I could go on, and on, and on. @reddogaustin agree completely with your comment, if you are working in the yard and you need more nails, you don't jump online and grab some off Amazon -- you drive to Bunnings and buy some more nails. Oh, and you also found a new hammer that you like and decided to buy that too. @secondtake88, in short, my counter argument to Rob Scott would be a combination of 1) yes, agreed, but I don't always want to shop online for many reasons and 2) Amazon don't sell sausages straight off the BBQ and allow me to support local community groups.

Another point of contention -- many will choose to support the business that employs 1000s of Australians across the country. Bunnings is also renowned for paying very competitive salaries in contrast to other retail chains, ie they pay their staff well. In contrast, Amazon has a shocking reputation for underpaying staff and just generally treating their employees incredibly poorly. This matters to me and many others.

I don't hold Bunnings (Wesfarmers) -- retail isn't my cup of tea -- but I have the utmost respect for Bunnings and their business model. Heck, maybe I'll end up there tomorrow again? (God I hope not)

Interesting to note that a number of businesses have cropped up built upon the Bunnings brand. For example, a "fetch it from Bunnings" delivery business; and a "fetch and assemble it" handyman business. Basically an extension of the Bunnings brand into service.

There is also the kitchen/bathroom design and build services which are gaining traction. (Just like the Ikea kitchen renovations service which is continually being expanded in their stores - obviously a good money earner.)

Disc: WES shareholder here. Bought for the Bunnings brand, their chemicals business plus Lithium down the track. I just wish their property portfolio was not a separate beast (I can't be bothered managing another share) - I want a slice of their property footprint with some of the best growing locations (extremely large blocks on main arterial roads).

A little while ago I saw a graph of Bunnings revenue over the last 10 years .. it is a beautiful upwardly inflecting curve.

I think it's not controversial to state that Coles was an albatross around the balance sheet for years. Now that has been removed, the question (for me) is whether they have the institutional smarts to get back to the 15%+ ROIC hurdle that Trevor Eastwood instilled as CEO. My thinking is yes, yes they do. Required reading on this point is The CEO, The Chairman and the Board by Rosemary Sayers.

As an aside I heard someone on talkback radio claim an Australian record recently for having visited Bunnings 6 times in a weekend.

As a shareholder in real life, I dips me lid to that man.

I agree that Amazon was largely underwhelming when it first arrived. Far too little was available and just a few key products. The US website has a heap of items that I would spend way too much money on buying pointless items just merely because once you get into a death scroll it's similar to the bunnings allure where you don't even know you need half of the things until you get there haha.

I have noticed in recent months that amazon has started stocking more items, when we search now we do get a few products every so often that we can buy off there. So their product range is clearly increasing. Pricing is OK, but for me it's those 'odd things' you need around the house that you hop onto amazon, (formerly ebay) etc. that make it alluring.

Bunnings - entirely the large browsable range, its like window shopping for older crowds, and previously men (now all sorts of genders and ages obviously peruse it). One thing I find Bunnings lacking in, I find since i've grown up the staff working there are largely young and fresh. They haven't got a clue on the products. Advice is much harder if non existent, it isn't somewhere anymore you couuld go in and ask Bob from aisle 30 the best way to 'paint your house' the first time. Or what tools you need. In fact some of the help/advice is very lacking.

That means they're vulnerable moat wise as it's really range, see and touch, and a generous return policy setting them apart. Once an online site or in person store offers better advice, or a b etter price, then I can forsee bunnings moat being chipped away.

Not something likely now, but if the right people put their minds to it certainly see a way to capitalise on the lack of service/advice. (also it is near impossible to find someone to ask a question at times in the aisles these days).

My door handle broke last week. The option was to get a tradesman in with good quality replacement parts and ensuing hourly rates, or go to Bunnings and replace with something that is OK and do it myself. So what would I be prepared to pay? $120labour+$60parts for the qualified tradesman, or $40 for the replacement handle.

My daughter required some hinges for a school project. Where would I find that? Grossly overpriced but $9 later she was happy and so was I. Frankly, it's just not worth my search time to find better quality and better pricing on hose fittings, obscure light bulbs, laundry basket and snail pellets. Bunnings is good enough for my needs.

Completely agree @Hands the convenience of Bunnings and It's operating hours make it perfect, and those not very good/confident in tackling small jobs Youtube provides a video/tutorial on nearly everything.

Disc - I hold Wesfarmers as part of young daughters portfolio.