National retail chain Baby Bunting has set its sights on Perth’s competitive baby-wear sector after revealing plans to open its first two Western Australian stores before Christmas.
Baby Bunting has a network of 17 large-format stores in the eastern states and it has signed leases on properties in Cannington and Myaree to launch its brand in WA.
In addition to these first two stores, Baby Bunting is understood to be exploring opportunities in Joondalup and Osborne Park.
Baby Bunting’s business model is based on a floor space of about 1,500sqm, putting it in the big box or bulky goods retail sector.
It’s a slice of the retail sector that has been hit hard by weaker discretionary spending as consumers favoured savings over big-ticket purchases like electronics and furniture.
However, leasing agent and Vend Property managing director, Jeff Klopper, said there were a number of bulky goods retailers keen to set up shop in WA.
He said these businesses were operating in a broad range of retail sectors, from furniture to pet-care products.
“There are probably two or three other retailers looking to come to Perth next year,” Mr Klopper said.
“They traditionally want to roll out their first four stores for their launch, Perth has a population of 1.8 million and with four stores you can cover about 70 per cent of the population.”
Baby Bunting general manager of operations Michael Pane said the business was keen to launch its brand in WA despite the tough retail conditions.
He said Baby Bunting’s point of difference was the breadth of its range, which was built on more than 8,000 individual stock lines.
The internet is an increasingly important part of Baby Bunting’s business and Mr Pane said it was very focused on its internet sales as well as social media.
Baby Bunting will go head to head with WA’s established baby-wear sector, which is predominantly made up of independent operators.
Sydney-based business Headline Group paid $2 million for the WA-owned Baby on a Budget chain in 2010.
Headline has the distribution rights for UK brand Mothercare and almost all the Baby on a Budget stores have since been rebadged Mothercare to reflect the change of ownership.
Sharon Morgan, who has owned and run WA business Baby Road in Booragoon for a decade, said the imminent arrival of a big new competitor like Baby Bunting was a concern in what was a small and very competitive market.
Ms Morgan said there had been a string of closures in the past few years, including Baby Boom, which shut its doors late last year.
“Now we have the majors coming in (to WA) because they think there is so much money over here because of the mining boom,” Ms Morgan said.
“Business at the moment is fine, there is enough for all of us to have our share and survive but going forward who knows.”
Ms Morgan said the Baby Road business was built on service, which was an effective but costly model that would be put under a lot of pressure if Baby Bunting’s arrival triggered a price war in Perth.
“I am quietly confident but no doubt it will affect us and we will change the way we do things again, which is what you have to do, stay one step ahead.”
Like many retail businesses Baby Road has adapted to the rise of online shopping and, while these purchases still only make up a small segment of the market, Ms Morgan said it was growing and customers were using the internet to ensure they got the very best price.