Following its purchase of Coles Group in 2007, diversified conglomerate Wesfarmers became one of Australia's two biggest retail groups, home to a collection of different chains. The most significant of these is Coles itself, the country's second largest grocery retailer, now battling to regain its lead over arch-rival Woolworths. The supermarket chain is partnered by a selection of other sizeable local brands including general retailers Kmart and Target and leading home improvement store Bunnings. Wesfarmers' acquisition of Coles Group, a business three times larger than itself, was designed to call a halt to several years of steadily declining performance as Coles struggled to make sense of its sprawling retail operations. It also brought greater focus to Wesfarmers itself, which up until then had dabbled in a wide variety of different sectors ranging from mining and chemicals to insurance and DIY. Following the Coles purchase, almost 90% of Wesfarmers' revenues are generated by retail. Coles and Wesfarmers both celebrated their centenaries in 2014. The group took its first steps into the UK in 2016 with a deal to acquire local DIY chain Homebase. That experiment proved disastrous, though, and Wesfarmers was forced to abandon the business after two years and losses of A$1.4bn.
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Adbrands Social Media 8th Aug 2018: Australia's AJF Partnership has this gorgeous spot out for local retailer Target, which despite its name and logo design is no relation whatsoever to the US retailer of the same name. (As was the case with Australia's local Woolworths chain, whose name was nicked not licensed, the Aussies probably originally thought they were far enough away from the US to evade a copyright claim). But take care! Those spectacular landscapes are in the Kimberley, an unspoilt region in the far north of Western Australia that is itself three times the size of England. Despite what the ad suggests, it's definitely not a place you might go for a casual jog.
Adbrands Weekly Update 31st May 2018: A disastrous foray into the UK by Australian retail giant Wesfarmers was brought to an ignominious end by the sale of home improvement chain Homebase for just £1 to turnaround specialist Hilco. Wesfarmers' total losses on the whole sorry saga are expected to reach A$1.4bn - around US$1bn. It was an unanticipated disaster for the group, which owns leading Australian supermarket group Coles as well as a collection of other local retail chains, including Australia's homegrown DIY champion Bunnings. Homebase is the UK's second largest home & garden store after B&Q, but performance has been weak for several years. Wesfarmers attempted to restore its fortunes by implanting the Bunnings model and branding; however it failed to heed the critical differences between Australian and British DIY customers, dropping Homebase's popular offering of soft furnishings and garden ornaments in favour of power tools and barbecues. That, combined with poor weather, the fallout from Brexit, and the removal of virtually the whole existing Homebase management team in favour of newcomers to the business conspired to deliver an even more dramatic slump in performance. Hilco is expected to restore the Homebase branding, but it will also close the worst performing stores.
Adbrands Weekly Update 1st Sep 2016: Australia's biggest supermarket group Woolworths, a former high-flyer that has been struggling with poor performance for the past 18 months, reported a shock loss for the financial year to June. Reported revenues of A$58.1bn (around US$42bn) were 4% less than last year, but a 40% slump in earnings in its core grocery business and a huge write-off against its disastrous move into home improvement, resulted in a net loss of A$1.2bn. Woolworths' main rival Wesfarmers, the owner of Coles and Bunnings, also delivered a disappointing set of results with large impairments against its general retail chain Target and heritage coal mining operations. Net profits plunged 83% to A$407m, despite a 6% increase in revenues to A$66bn.
Adbrands Weekly Update 21st Jan 2016: Australian conglomerate Wesfarmers confirmed the acquisition of UK-based DIY and gardening chain Homebase for £340m. It will become a local partner to the group's Australian business Bunnings, the leading Ozzie home improvement chain. Wesfarmers is expected to phase out the Homebase name in favour of the Bunnings brand. The announcement coincided with related news from Wesfarmers' domestic rival Woolworths, which said it is pulling the plug on its own struggling DIY chain Masters, a joint venture with America's Lowe's. The sale of Homebase also significantly boosts Sainsbury's chances in its pursuit of Homebase's sister chain within Home Retail Group, Argos.
Adbrands Weekly Update 14th Jan 2016: UK supermarket Sainsbury's continued to press its case to acquire local general merchandise partner Home Retail Group, with a new financial proposal expected imminently, though so far few institutional shareholders have been persuaded to voice their support. Intriguingly all talk has been of synergies between Sainsbury's and HRG's Argos business, with second-string DIY chain Homebase conspicuously absent from any discussion. Stories have begun to emerge that Australian group Wesfarmers - which owns that country's Coles supermarket business as well as DIY chain Bunnings - is engaged in separate negotiations to add Homebase to its portfolio for £340m in cash.
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