👉 Background: Bunnings is owned by Wesfarmers and is Australia’s most beloved (and only) major hardware chain. In fact it generated over $19 billion in annual sales last year — that’s a lot of snags and sledgehammers. Back in the 90's, Bunnings actually used to sell car parts. And, now it’s circling back to its auto-roots.

‍👉 What happened: Bunnings is trialling a new range of 400 car products as part of their plan to diversify away from just tools and timber... particularly with less construction on the horizon. Over the past few years, Bunnings has successfully expanded its product range into cleaning, pet supplies and more recently aged care and disability-related products.

‍👉 What else: It’s believed that the auto parts and lubricants industry is worth more than $1.5 billion per year. But there's one major obstacle for Bunnings - it will need to overcome the moat of its new-found competitors like Supercheap Auto and Autobarn.

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‍What's the key learning?

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‍💡A competitive moat is what protects a business from its rivals. In business terms, it’s what keeps competitors from easily stealing your market share. A moat might be a strong brand, exclusive supplier deals or maybe even deep product expertise.

💡Specialist retailers like Supercheap Auto and Autobarn have developed moats based on their deep product range and ‘expert’ service. In particular, they have access to premium brands like Castrol and Penrite who are refusing to supply Bunnings because they’re worried it may upset their existing relationships.

💡On the other hand, Bunnings has a different kind of moat. It’s got insane scale, it’s got a heap of foot traffic and of course pricing power. While it might not stock everything, the products it does stock will certainly be easy to grab while you’re picking up plywood and a screwdriver.