Hardware retail giant Bunnings has addressed concerns regarding its market dominance, saying it only accounted for a quarter of Australia’s garden plant market.
They also alleged that Bunnings used its dominant market power to force growers into unfair agreements, resulting in significant uncertainty and losses for suppliers.
However, during a recent Senate hearing, Laura Gaspert, an ethical sourcing manager at Bunnings Group, told the Select Committee on Supermarket Prices that the hardware retailer did not have a monopoly.
“We understand that the greenlife industry is worth around $2.9 billion (US$1.86 billion) in sales. When we compare that to our gross sales, we expect it to be 25 percent,” she said.
“In addition, if you consider our supplier segmentation, we know that about 1,200 growers operate within Australia, and we have direct relationships with 220.
Bunnings Questioned About Its Agreements With Suppliers
The hearing also scrutinised Bunnings’ agreements with suppliers. While some farmers described those agreements as non-binding documents that were a norm in the sector, Bunnings representatives asserted that they were legally enforceable contracts.“All of our suppliers have our trading terms, which really sets our contractual relationships with suppliers,” Ms. Gaspert said.
Nevertheless, Bunnings representatives acknowledged that the agreements did not contain any commitments to buy a certain amount of products from growers.
Instead, they provide the farmers with sales data, so the farmers can plan how much to grow.
“What we do with the suppliers is to provide all suppliers with weekly sales through all of those products in stores at each one of our locations,” said Belinda Rakers, a category manager at Bunnings.
“The information provided to our suppliers helps them plan and forecast their growing.”
The Committee also questioned the fairness of Bunnings’ practices, particularly regarding alleged fluctuations in purchasing commitments.
It pointed out allegations that Bunnings had encouraged suppliers to grow and supply a certain amount of plants and then unilaterally decided to either reduce the number of products purchased or not purchase any products.
A Bunnings representative defended its approach, saying that many of its suppliers had not sought any formal commitments from the company.
The reply caused a member of the Committee to lash out at the Bunnings executives, saying that they offered opinions rather than actual evidence.
In response to the negative experiences of some suppliers, Ms. Rakers said she was shocked to hear the evidence, commenting that it was in Bunnings’ best interest to maintain its relationships with producers.
“We rely purely on our suppliers’ oversupply, and having not really strong relationships with our suppliers is of no commercial benefit for us,” she said.
“We have to have long-term, viable supplier relations here.”
