However, Bunnings revenue and earnings increased by a relatively modest 2.4 and 0.7 per cent respectively for the second half of the financial year. Anticipating that the cost of doing business would remain elevated in financial year 2024, Bunnings has invested heavily in its in-store technology and stock management systems to drive productivity. The brand has reported task-time savings for staff of over 2.4 million hours, which can now be used for more complex, customer-centric activity. As part of its ‘whole of build’ strategy – which is aimed at enhancing the strength of its offer – Bunnings’ management noted that it is committed to further optimising floor space, is planning to expand its frame and truss offer, and has taken steps to enter categories that were previously outside of its scope, such as pet care.   Wesfarmers chief financial officer Anthony Gianotti said that Bunnings had seen strong consumer demand continue for necessity products – such as recurring home repairs and maintenance –  as well as smaller-scale DIY projects. Building activity, and robust demand from commercial customers, have also bolstered its customer spend. However, in comparison to the previous year, he said that customers have demonstrated caution around big-ticket purchases, as well as the commencement of larger projects. Despite this, Bunnings’ $2.2 billion in earnings for the year reflected a “remarkable period of growth” for the brand, up 42 per cent since 2019. Regarding Bunnings entry into pet care, Bunnings managing director Michael Schneider noted that one category alone could never define the breadth of the brand’s offer. However, the move represented Bunnings most significant category expansion in about two decades. It also reflected the brand’s capacity to enter a new category “at scale and at pace.” “The market research behind it has been really good, and it’s absolutely brought new customers [into] the business. We’ve never seen more customers shop in our store, and [I] think a very strong value proposition for the four-legged member of the family is a really important thing,” Schneider said. Schneider added that the trend of reduced spending on DIY projects would likely carry into the first half of 2024.  “When things are going tough, there’s absolutely a [move] to value. But it also means that you need to find things to be doing around home, rather than away from the home. We’re well positioned across the category to be able to do that,” Schneider said. Halo effect Brian Walker, founder and CEO of the Retail Doctor Group, believes that Bunnings 2023 sales figures reflected a tale of two halves. But, he told Inside Retail that its overall financial results were pleasing – with the brand “sticking to its knitting” well, while also showing an openness to diversification. As the downturn starts to hit – and the number of DIY projects falls away – he believes that Bunnings has cleverly expanded into other categories.   He also noted that Covid-19 was a golden period for home improvement projects. But, with more consumers travelling and spending less time at home, there’s potentially fewer opportunities for retailers in the home improvement sector. As such, Bunnings, which serves as a bellwether for retailers in the home improvement sector, has expanded into categories such as pet care and gym equipment partly as a response to this. It also provides an opportunity for the retailer to bring other audiences, not traditionally associated with Bunnings, into the stores.   Walker added that brands like Bunnings benefit from the ‘halo effect” due to its size and brand penetration, with customers expecting that it would hold all types of products. As such, the move does not appear to be as much of a deviation away from its bread and butter. “From Bunnings’ perspective, entering pet care makes perfect sense. When you look at Wesfarmers’ commercial, tradies and residential division, they’re really focused on being this one-stop shop for everything to do with home. They’ve developed credibility in this space” Walker said. “They’ve seen the growth of pet care – which exploded during Covid-19, and is still looking strong – and I expect they’ll move more vigorously into other categories in the future.” More conservative results Amid financial pressures related to inflation, wages and domestic supply chain costs, Walker believes that Bunnings would continue to invest in its digitisation and automation strategy, particularly across its inventory and fulfilment capabilities. However, he said that Bunnings would be conscious of its reputation around workplace conditions – with the brand recently trialling a four-day work week – as it implements measures that are aimed at improving productivity. This is particularly important, with the brand recently cutting 100 jobs across NZ’s head office. Schneider also noted that weather conditions can shift customer behaviour – with a long and wet Spring in Australia’s east coast over the last few years proving to be frustrating. The brand is optimistic about the Spring period ahead, which is expected to be warmer and drier, and is anticipating growth off the back of that. Walker affirmed that weather conditions can affect sales of certain products, but with Bunnings offering such a broad range, they are relatively well-equipped to manage variability. “Bunnings knows their customer and business model well, they are able to adapt and they have a scalable and replicable model. However, I expect we’ll see slightly more conservative results for next quarter.”