Europe update
Bunnings UK & Ireland has a new leader
Managing director of Bunnings' UK business, PJ Davis, is retiring after going on extended leave in January
Managing director of Bunnings' UK business, PJ Davis, is retiring after going on extended leave in January
click for next slide
click for first slide
click for last slide
click for next slide
Travis Perkins works strategically with suppliers and Grafton Group has better-than-expected performance
HNN Sources
Damian McGloughlin is to become managing director of Bunnings' UK business, taking over from Peter "PJ" Davis who is retiring; Bunnings opens more new stores; hire business drives growth trajectory at Travis Perkins Group; and shares in Irish builders merchanting group Grafton jumped nearly 7% on the back of a strong end of year trading update.
Senior executive shuffle at BUKI

Wesfarmers recently announced that Bunnings UK & Ireland (BUKI) managing director Peter "PJ" Davis, who has been on extended leave since January, is retiring after 25 years with Bunnings. He will be replaced by Damian McGloughlin who previously worked at UK home improvement chain B&Q.

There were reports at the time that Mr Davis, who was initially taking a three-month break, that the time-out was pre-planned and allowed him to return to Australia to spend time with family. A statement from the big box retailer confirmed that Mr Davis "will be taking three-months' leave starting mid-January".

While some in the media speculated that the decision was due to poor performance and losses in the UK business, Wesfarmers quashed those rumours and said back then that Mr Davis was simply keen to return home for a short period, adding that "he will be back".

Mr Davies re-located to the UK to head up Homebase when Wesfarmers acquired the business from Home Retail Group in February 2016. He had been tasked with transforming the chain and launching a Bunnings proposition in the UK market.

As the new managing director, Mr McGloughlin is expected to be assisted by acting chief operating officer David Haydon, who was previously Homebase trading and commercial manager. Mr Haydon was drafted from sister chain Officeworks to run Homebase, and has worked for Wickes and B&Q.
Merchandise manager moves on

BUKI general manager - merchandise, Craig Castelino, is leaving the business, according to a report in Insight DIY.

It is understood Mr Castelino will be working on special projects and that he and his family will be returning to Australia in April. Once back in Australia, he will be taking on a senior leadership role in the Bunnings Australian and New Zealand business.
Homebase store conversion continues

BUKI have now officially opened 19 stores in the UK, with at least another four currently being converted, according to Insight DIY. Two of the stores will be in Waltham-on-Thames, a large affluent market town on the River Thames in Surrey, and Frome, in eastern Somerset.

A small-format Bunnings will be located in Herne Bay, a seaside town in Kent. A more traditional Bunnings Warehouse will open in London Penge, considered an archetypal commuter suburb in Bromley.

The following stores have already opened for business.

This outlet in west London, was one of a number of Homebase branches to be fitted out with a mezzanine floor during a store refit program under former owner Home Retail Group, according to a report in DIY Week. It is over 57,00 square feet and carries the same branded ranges seen in other Bunnings conversions, as well as the stand alone "tool shop".

This store doesn't have a cafe but has installed a children's play area and seating space on the mezzanine floor.
High Wycombe

The High Wycombe store is almost 50,000 square feet, in a large town in Buckinghamshire, which is one of the most affluent parts of England yet still contains some considerably deprived areas.

This store is over 37,000 square feet in a market town in Suffolk, approximately 105 kilometres north of London. To celebrate the opening, former professional footballer Mick Quinn, joined a welcome breakfast for team members.

The Bunnings Walthamstow store is in the largest district of Waltham Forest in east London, and measures over 74,000 square feet. Another former professional footballer, Fabrice Muamba, joined a welcome breakfast for team members.

A new Bunnings store opened in Chichester, a city known for its cathedrals in West Sussex, south-east England. It measures over 80,000 square feet. Sarah Ayton OBE, double Olympic gold-winning sailor, helped to celebrate the opening.

Another Bunnings store opened its doors in Rochdale, a town in Greater Manchester. This store is the largest Bunnings Warehouse yet, at over 110,000 square feet and occupies a former B&Q site in Sandbrook Park, a retail park. The big box retailer submitted a successful application to occupy the site in August 2017.

The Homebase store in Sprowston has closed to reopen as a Bunnings Warehouse. Sprowston is a small suburban town bordering Norwich in Norfolk.
Tool hire delivers for Travis Perkins

The Travis Perkins Group seems to be on a growth trajectory with the company growing its revenue from GBP4.8 billion in 2012 to GBP6.2 billion in 2016. This is an increase of nearly 30%. As a result, Travis Perkins is now the UK's biggest supplier of construction materials, both to the construction and home improvement markets.

It has approximately 100,000 different products available from more than 600 stores across the UK.

Not all parts of the business have grown at the same rate. The tool hire division is a stand-out, now operating from 250 stores - and an additional 250 satellite locations - with 1,200 product lines and more than 80,000 assets available.

In 10 years, the hire business has gone from having a revenue of just GBP22 million to in excess of GBP100 million, an upsurge of 355%. Travis Perkins group hire commercial director, Yas Swindell told Construction News:
[The growth] ... probably outstrips most of the competition in terms of percentage growth. We have had a massive impact and TP Hire is now well-established as a national tool hire provider.

A key part of this growth has been down to some suppliers working more closely with Travis Perkins in delivering a better service. Mr Swindell said:
It's a new way of challenging suppliers and some welcome that challenge. But change has to happen ... We cannot stand still in tool hire and keep accepting that's all our suppliers can offer. It's not. They really have to partner with us much more than they have done previously. We're challenging every single supplier that trades with us.

While Travis Perkins now enjoys a better relationship with a majority of its suppliers as a result of the initiative, it says one company stands out from the crowd: Hilti. Mr Swindell explains:
The relationship with Hilti has been established for more than 10 years now, although I've known them for a lot longer. That really has ramped up over the last 12-18 months when we've been talking to them about issues that the business faces on a day-to-day basis and how they could look to assist us in developing different ways of doing business.

The evolving relationship between the two companies has resulted in a greater volume of products being available at short notice from a larger number of Travis Perkins outlets. Mr Swindell said:
We have been developing new ways to bring the product into the business in volume. In the last 12 months, in excess of 10,000 assets have been brought into our current network, which just allows for stock availability. Hilti now represents 20% of our stock.
Forward planning

Immediate availability is extremely important to Travis Perkins, given that tool hire still isn't something its customers always plan for in advance. Mr Swindell said:
It's still very much led by them believing that those tools will be there if they walk into any of our branches across the UK. Hilti has worked with us extremely well to try to alleviate that problem and to introduce product lines that we wouldn't necessarily have done in volume previously.

Hilti assets now available at short notice don't just include the sort of standard items that customers might expect to be available at short notice, but also more specialised and cutting-edge equipment. Mr Swindell said:
It's about areas such as diamond drilling, rotating lasers and certainly dust extraction.

He said the addition of so many product lines brings with it the issue of service and repair.
Under the terms of the agreement all service and repairs will be undertaken by Hilti at their Glasgow Service Centre, with tool collection to redelivery taking a maximum of 72 hours. This means we can optimise our fleet accordingly.

It isn't just Travis Perkins that benefits from the new relationship, according to Mr Swindell.
Hilti benefits too, not just in terms of sales, but also education in relation to feedback from our customers, our workshops and our colleagues in branch. I have to take my hat off to them - 500 stores is a huge challenge to any supplier. They have listened very carefully and formulated a plan with us. The customers have seen the benefits too.
We want to be offering hire from every location that we have over the next 12 months. Hilti is listening and responding - we can't ask more of them than that.
Strong rise in revenue for Grafton

Builders merchant and DIY retailer Grafton Group said it is benefiting from a surge in spending on construction and home improvements in Ireland. The London-listed group owns the Woodie's DIY retail brand but generates more than 90% of its sales from its UK merchanting division.

In a trading update, the company said its group revenue increased by 8.8% to GBP2.7 billion. Its total Irish revenues jumped by 16.2%, while its UK revenues increased by 4.7%.

The company noted that daily like-for-like revenues in its UK merchanting operations softened - as expected - with trading conditions in the residential renovation maintenance improvement (RMI) market mixed. Like-for-like growth in UK merchanting in the last three months of 2017 slowed to 3% from 4.7% in the third quarter. Grafton said that the RMI market was impacted by general economic and household uncertainty and a competitive pricing market.

Revenues in its Dutch operations increased over 49% higher as the broadly based economic recovery there continued to support increased activity in the housing and non-residential construction markets. Its Belgian revenues were also higher, rising by 7.5%, during the year. Grafton's chief executive Gavin Slark, said:
We are pleased with the progress made across the group during 2017 which reflects the benefits of self-help and strategic initiatives to grow the business.
We enter the new year in a favourable position well placed to implement our growth strategy supported by good cash flow from operations, a strong balance sheet and low net debt.
HNN Sources

Bookmark permalink

Click to visit the HBT website for more information