Retail update
Smart home zones in Beacon Lighting stores
Beacon Lighting is creating smart home zones in its stores
Beacon Lighting is creating smart home zones in its stores
 
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Temple & Webster is looking to expand its products in the home improvement market
HNN Sources
Beacon Lighting believes consumer demand for "smart" lighting can lift sales; and Temple & Webster looks to capture a greater portion of the dollars that consumers spend on their homes.
Meeting the demand for smart products

Wi-fi has been deployed across all of Beacon Lighting's 109 stores, which the retailer will use to set up smart home demonstration zones in each location. Chief information officer Mick Tan told IoT Hub the wi-fi network would be used to help the retailer educate consumers on the benefits and requirements of smart home automation setups. He said:
What we're doing at Beacon is creating an area where we put smart lights by Phillips and LIFX in two different areas [of each store]. We attach them to a Google Home and Amazon Echo and we talk to them. We're actually demonstrating to customers how it works and what you need device-wise to have it in your house.

Mr Tan said that Beacon Lighting will also be launching its own brand of lights that would be more cost effective than the big brand systems already in the market. He said that he has been testing Beacon's own smart lighting technology in his own home. He said:
I'm experimenting with the products from our manufacturer and have become the test case for them. I like that when I'm watching TV I can lower the lights, or that if I'm not home in winter by 6pm the light is on [automatically] so my dogs are happy [and] can see where they're going.

Mr Tan revealed that Beacon Lighting may also use the wi-fi network to trial some beacon technology in stores for location-based marketing and footfall traffic measurement purposes. The retailer may be looking at smart price tags on products on the showroom floor.
Sales expectations

In a trading update at its annual meeting recently, Beacon said same-store sales were flat in the September quarter after growing 1.6% in 2018.

However, chief executive Glen Robinson expects consumer demand for "smart" or internet-connected lighting and strong growth in Beacon's international, street lighting, solar and architectural lighting businesses - to lift top-line sales. He told Fairfax Media:
There's been a lot of coverage of [smart lighting] on home renovation shows like The Block and [replacing standard lighting with internet-connected lighting] potentially has just as much upside as the LED transition has had.
That's been a real benefit to Beacon in the last decade and I see smart lighting in a similar transition.

Beacon also expects an uptick in renovation activity to counter the impact of weaker house prices, housing starts and churn. Mr Robinson said:
People aren't selling houses as much as they were, and that's had a bit of an impact on sales. However, we expect renovation activity will start to pick up and that should be positive ... at the moment we're in a lull between those two points.

New stores are also cannibalising sales at existing stores, but Mr Robinson said about 20 stores opened in the past two-and-a-half years were starting to mature and earn their keep.

Beacon Lighting's gross margins rose 230 points to a record 65.7% in 2018, helping to deliver a record net profit of $19.6 million. Mr Robinson said further gross margin growth was unlikely this year because of the weaker Australian dollar, which will push up the price of lights imported from Asia in US dollars.
Temple & Webster moves into home improvement

Online homewares and furniture retailer, Temple & Webster is targeting the home improvement market to expand its business.

The web-based retailer plans to add products such as flooring, window coverings, sinks, taps and baths to its existing range. Chief executive Mark Coulter told Fairfax Media:
Home improvement is a big category - a bigger category than furniture and homewares.
We won't go into selling timber and building materials - that's not our game - but what we will be looking at is categories that make sense and are a natural extension to our range...[For example, curtains and potentially larger appliances]
You may go to Bunnings for your building materials, but if you're looking for inspiration you come to us - we think there is an opportunity there.

The retailer has taken initial steps towards offering more home improvement and DIY products when it introduced a paint range in May 2017, but Mr Coulter said the company will begin going after the market more aggressively this year.

The home improvement category has even lower online penetration in Australia than furniture, with Bunnings only recently launching a limited e-commerce site and Mitre 10 offering buy online, pick-up in-store. Mr Coulter told Inside Retail:
I think Bunnings not being online is an opportunity for us, but I think we'll play in a different space. Like Amazon, Bunnings is definitely about convenience and price, whereas we're about inspiration and making a home beautiful.
Progress

The company sees the next phase of its journey as one all about growth. With only 4% of furniture and homewares being currently purchased online, it believes it is well placed for strong growth for years to come.

It predicts sales will shift online at a faster rate as Millennials aged 22 to 35 start spending money in the homewares and furniture category.

The web-based retailer recently reported a solid first quarter in what it expects to be its first profitable year of trading since launching in 2011. Gross revenue was up a record 39% year-on-year in the first quarter of FY19 and earnings before interest, tax, depreciation and amortisation (EBITDA) were in excess of $200,000.

The group finished the quarter ended September 30, 2018, with a cash balance of $10.5 million and net cash flows of $600,000.

The number of active customers grew by 30% year-on-year, reaching 214,000, and a record number of first-time customers were added during the quarter at a cost of $55 per customer. Forty-five per cent of orders were made by repeat customers.

First-time customers are profitable during their first year with the group, said Mr Coulter. He added:
This means that we can now begin to accelerate marketing spend beyond digital channels to ensure more of Australia is aware of Temple & Webster.
Expansion

The online retailer is planning for an app due to launch before Christmas. Mr Coulter explains:
Interestingly, we are thinking about it slightly differently. We want to make sure our mobile site is a fast, transactional site, and our mobile app is the place where you go to experience the world of Temple & Webster.

It also plans to open a small-format design store to provide in-person styling services and advice to customers out of its head office in St Peters, Sydney. Mr Coulter said:
It's a place to come and experience Temple & Webster in the real world, see samples of products, meet a consultant and have a more human experience. The whole point is to make [the customer's] shopping journey easier.

At the same time, it is an opportunity for the retailer to test a new bricks-and-mortar format, having already trialled a clearance outlet and a showroom in its Richmond (NSW) store. Mr Coulter said the company will continue to experiment with different physical formats, though its "main game" is online retail.

The company is also testing the market in New Zealand, setting up shop on TradeMe before possibly establishing a dedicated website and app. If the expansion is successful, Mr Coulter said the team will look to launch in other markets, with South East Asia a probable area of focus.
HNN Sources


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