Wickes has entered the current price battle between multiples B&Q, Ikea and Homebase.
The move comes after Homebase made clear its intentions to “undercut” B&Q across the board.
Homebase, which is now owned by Australian retail group Wesfarmers, will be rebranded as Bunnings over the next three years. It has introduced an ‘everyday low price’ model into its stores, which is part of the Bunnings strategy.
Bunnings also promises to beat competitors by 10% in its home market, which is expected to carry over to its UK operation.
Homebase has seen all promotional point-of-sale removed from its stores and website. More than 500 price changes a day have been tracked over the past few weeks, 85% of which are price reductions – this includes changes to kitchens and bathrooms offerings.
Wesfarmers has invested £500 million in the restructuring and rebranding of Homebase. It has also been making changes to reduce the cost of the business with 149 head office redundancies already announced.
John Carter, chief executive of Travis Perkins, which owns Wickes, confirmed its willingness to compete in the price battle. He said: “I’m not against good competition, as it helps drive the market forward. Competition is going to heat up, but we think we have a good plan. If we have to adjust and invest a little bit in price, we are willing to do that.”
Wickes currently generates annual sales of £1.1 billion compared with Homebase at £1.5bn and B&Q at £3.6bn.
Rugby Fitted Kitchens owner Trevor Scott believes these discounting tactics won’t work out in the long-term and will have little affect on independent retailers. “It sounds like a race to the bottom to me,” he said. “Historically, they’ll all end up being losers in the long run as it becomes unsustainable in the end. Inevitably, in the short term the consumer is delighted at being able to bag such good bargains. Price is king but eventually the retailer will run out of profit and have to raise prices or close their doors.
“I guess Westfarmers think they can see off at least one of their competitors and drive them out of business. Thats a risky tactic if that is the plan.
“For KBB specialists, the personal and professional service we offer can never be matched by the multiples and the quality of our products is generally much higher. We only want/need the 10% of the 10%, so we’re better off rising above this sort of aggresive price slashing and selling on all our other more important attributes. Discerning consumers are demanding much more from their KBB suppliers than just price nowadays and it’s important for us to remember that.”