Joanna Wells explores the pricing power meaning behind the transfer of Blackwoods into the Bunnings business. The move highlights how channel consolidation, growing buyer power, and low-cost competition can gradually reduce supplier leverage and erode margins.
This episode examines why businesses become increasingly dependent on fewer customers over time and how that weakens their ability to defend value. It also explores why companies with a clear, quantified value position are better able to maintain pricing power, while those without one often find themselves competing on price alone.
TIME-STAMPED NOTES:
[00:00] Introduction: Pricing Power Meaning and the Blackwoods-Bunnings Shift
[01:30] Pricing Power Meaning Under Pressure From Buyer Power, Temu, and Channel Decline
[03:46] How Channel Consolidation Reduces Pricing Power and Supplier Leverage
[05:48] Pricing Power Meaning Beyond Price: Building a Commercial Value Position
[07:56] The Three Forces Eroding Pricing Power Over Time
[09:30] Conclusion: Why Pricing Power Meaning Comes Down to Defending Value, Not Cutting Price
Pricing Power Meaning and the Blackwoods-Bunnings Shift
[0:00] This week, Westfarmers announced that Blackwoods, Australia’s largest industrial and safety distributor, will move under the Bunnings umbrella from the first of July. If your business sells through both channels, you’ve just lost another buyer. And there was no category review, no negotiation, just one less place to do business.
[0:26] That announcement sent me back to watch the Four Corners investigation into how dominant retailers treat their suppliers in Australia. The episode was called Hammered, and it featured Bunnings heavily. Check it out if you haven’t seen it. One supplier asked for a price increase. Bunnings put the category to tender. They lost 75% of their business.
[0:53] The Four Corners investigation wasn’t a story about what happened then. It was a warning about what happens when more volume, more categories, and more buyers sit under the same roof. The Blackwoods announcement is what makes it relevant now. One supplier asked for a price increase. Bunnings put the category to tender. They lost 75% of their business. Now, that’s the first pressure.
Pricing Power Meaning Under Pressure From Buyer Power, Temu, and Channel Decline
[1:30] The second: Temu was named Australia’s fastest-growing retail brand in 2025. 3.8 million Australian customers. Products across every category Bunnings carries, direct from Chinese manufacturers at a price point your cost structure was never built to match. Your product is being undercut, not by a competitor with similar overheads, but by a supply chain built without any of yours. That is the second pressure.
[2:08] And the third, the one that doesn’t make headlines but shows up quietly in your account list every year: Hardware and building suppliers retailing revenue has declined 1.3% per year for five consecutive years. The independent trade network, the resellers, the specialist distributors, the trade accounts your business was built around, is contracting. Smaller operators are closing, others are being absorbed, buyers are consolidating upward. Three pressures, none of them temporary, all of them running inside your business right now.
[2:45] When B2B industrial leaders see the Blackwoods announcement, most of them focus on the relationship. What they should be focusing on is concentration because every time two channels become one, the balance of power shifts. That is how buyer power works. It rarely arrives as an ultimatum. It arrives as a gradual reduction in alternatives until one day, you realise the account is no longer competing for your product; you are competing for their shelf space. The question isn’t whether Bunnings would do that to your business. The question is whether your business has enough alternatives left if they did.
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How Channel Consolidation Reduces Pricing Power and Supplier Leverage
[3:46] Last year, Metcash merged Mitre 10, Home Hardware, and Total Tools into a single hardware division. If your business was selling through both, you didn’t just lose a sale; you lost a buyer. Without a category review, without a formal negotiation, the account pretty much looked the same, but the buyer count changed. That is what channel consolidation looks like from the inside, invisible until it isn’t.
[4:16] Now, put three numbers together: the percentage of your revenue going through your top two or three trade accounts, the margin per dollar of that revenue tracked over, say, the last three years, and the number of active accounts in your reseller and independent trade network compared to about five years ago. Separately, each number looks manageable. Revenue is strong, the accounts are long-standing, and the network still looks good and exists. But together, they describe a business that is much more concentrated, less profitable, and more exposed every year.
[5:01] High revenue concentration, declining margin per dollar, a shrinking account base pushing more volume through fewer buyers. You need their volume to cover your fixed costs. They know it, and your pricing may reflect it. That is not a distribution strategy. That is the accumulated cost of channel decisions that were never stress-tested, one merger, one store closure, one direct-from-manufacturer bypass at a time. Most businesses have never mapped all three numbers at once. Most would not like what they see.
Pricing Power Meaning Beyond Price: Building a Commercial Value Position
[5:48] Temu was named Australia’s fastest-growing retail brand in 2025 because 4 million Australian customers found what they needed and at a price point that required no justification. No distributor margin, no retailer margin, no local warranty obligation, but no technical support, no same-day parts availability. The objection most B2B suppliers raise at this point is fair: we cannot compete on price against a supply chain built without our cost structure when Bunnings, Mitre 10, and Total Tools control the channel and a Chinese manufacturer is landing the same category at a third of the price. A value floor feels like wishful thinking.
[6:34] That pressure is real. But here is what that argument actually concedes: it concedes that your only leverage is price. And if that is true, you’ve lost already.
[6:48] The Chinese manufacturer will always win a price argument. They are not carrying your fixed costs, your local service network, your warranty obligations, or your technical depth, or even your same-day availability. But that is not a weakness. That is a commercial value position if you have quantified it precisely enough for a buyer to see it.
[7:16] The B2B suppliers that appear to hold margin in concentrated channels are not out-muscling the buyer or out-pricing the Chinese competitor. They’ve built a precise commercial case for what their product delivers that a manufacturer landing at $8 a unit from Shenzhen cannot replicate. A position the buyer has commercial reasons to respect. Most suppliers have never built that case. Not because it doesn’t exist, because nobody showed them how to find it in their own numbers, their own customer base, and their own business.
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The Three Forces Eroding Pricing Power Over Time
[7:56] Three pressures, three consequences, all compounding inside businesses that appear stable right now. From the buyer, every concession becomes the new floor. This year’s promotional price is next year’s standard margin expectation. This year’s volume rebate is next year’s baseline. There is no commercial position to push back from. The compression is structural, and it does not stop.
[8:27] From the channel, consolidation removes your options and your leverage at the same time. Every merger, every store closure, every independent distributor absorbed into a buying group removes a name from your account list. The business that had once 12 meaningful trade accounts now has 6. Each of those six knows it, and your negotiating position reflects it, whether you acknowledge it or not.
[8:56] From the competitor, the Chinese manufacturer does not need your margin; they need your shelf position. They are establishing a price reference point the buyer will eventually use against you. When your product sits next to theirs at twice the price with no commercial story for why, you lose that conversation slowly and then all at once. All three, compounding inside businesses with healthy-looking revenue lines right now.
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Conclusion: Defending Value, Not Cutting Price
[9:30] Three pressures, all moving at the same time. The buyer, who can put your category to tender on a Tuesday. The competitor, who does not need your margin to take your shelf. The channel, getting smaller around you, fewer distributors, fewer independent accounts, fewer places to hold price outside the dominant three. The lesson is not about any one of them. It’s about whether your business has a commercial position and architecture that means something to the buyers that remain beyond the price on the ticket, something precise, something quantified, something a manufacturer in Shenzhen landing a product at a third of your price cannot replicate.
[10:22] Most of these channel arrangements were not forced on suppliers. They were agreed to without the commercial architecture to protect what came next. Do you have that position now? Or are you still managing the consequences of a decision that was never properly built and executed? Most businesses never build the proper value position they need, so they keep conceding instead. Value is a position. Without it, you are just inventory they haven’t rationalised yet.
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