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A joke, popular in the 1960s, tells of an alien spacecraft that arrives above Earth. After several months of the giant craft hovering over New York City, Earth scientists work out a way to communicate with the aliens. But what question should the aliens first be asked? After a month of polling, referendums, newspaper editorials and debate, a single question suitable for this "First Contact" is established. In a small room beneath the huge dish antenna aimed at the alien craft, a white-coated scientist finally pecked at a keyboard, typing in the query "Coke, or Pepsi?"

The point is, of course, that whenever a culture encounters anything essentially a little alien to it, the first instinct is to interpret whatever it is in terms of how it will affect that culture. This is only natural, but it does leave to one side an equally important question: how will this new thing itself regard the culture with which it is set to interact?

That has certainly been the case as regards the US online (mostly) retailer Amazon, which is set to establish a physical, warehouse-based presence in the Australian market, possibly near the end of November 2017 (though this may be limited at first). While there have been numerous commentaries published on how Amazon might affect Australian retailers and consumers, there has been much less written about how Amazon sees itself and views its coming interaction with the Australian consumer market.

Also, much of what has been written has often varied between raw speculation and conclusions based on apparently either non-existent or very poor research. In particular, we've seen this lack of rigour in what has been reported of discussion at some forums specifically related to retail.

Amazon was, apparently, much discussed The Australian Financial Review Retail Summit held in Sydney in early November 2017. Relying on reports on this event from the Australian Financial Review (AFR), we can roll through some of the objections raised as to why Amazon will somehow falter when it enters Australia.
Australia is like Canada, Amazon did not do well in Canada (initially), so Amazon will not do well in Australia

An interesting thesis that seems a bit thin when you look at the actual facts.

Looking back to calendar 2015 (when the comparison was still a little relevant, as Amazon has increased Canadian sales over the past two years), Canada had an estimated USD24 billion in online sales, while Australia (using Roy Morgan figures) had USD29.5 billion in online sales.

That said, population density is similar, with Canada's overall average four people per square kilometre, and Australia's three people per square kilometre. The population of the three largest cities is also similar: Toronto has 5.9 million, Sydney 5.0 million; Montreal has 4.1 million, Melbourne 4.7 million; and Vancouver has 2.5 million, matching closely to Brisbane at 2.4 million.

However, when you consider that Canada's population is 50% higher than Australia's, it's evident Australia has a far higher degree of urban concentration. You can add to this that the distance between Vancouver and Montreal is around 4500km, and the distance from Brisbane to Melbourne is around 1600km. The spread of that arc is obviously going to affect logistics.

Additionally, Australia has a higher GDP per capita than Canada, and a lower unemployment rate as well.

So, Australia has much higher per-capita online sales, higher earnings per capita, more relative employment, and higher relative urban concentration, with its three major cities in an arc about 40% the size of the comparable arc in Canada. Roy Morgan figures indicate online sales for Australia in 2017 are 10% higher than they were in 2015. It is difficult to see how one could compare the environment Amazon encountered in Canada three or four years ago, to the environment in Australia today.

This is a conclusion that is not limited to HNN's analysis. Respected investment analyst Craig Woolford of Citibank has reached a similar conclusion:
Despite differences in economic development, we see five common elements across Amazon's international markets: high internet penetration and share of retail sales in e-commerce channels; modern IT and telecommunications infrastructure; strong logistics infrastructure; high income per capita; and experience selling products in the targeted market.

Whatever retailers may be saying to each other publicly, it's apparent that those supporting the "Australia is Canada" argument do not seem to have provided much in the way of supporting facts.

Finally, while Amazon did start slowly in Canada, its impact is now being felt. To quote from one Canadian news source commenting on the influence of the US online retailer:
Old-guard retailers are furiously transforming their business models in an attempt to compete against the Seattle-based online giant, while analysts and investors are scouring quarterly sales figures, wondering if any retailers will be immune to Amazon's corrosive impact on sales and profits.
Canadian transformations
Amazon doesn't know what it faces when it comes to dealing with unions in Australia

The AFR reported that it was suggested Amazon might not be aware that it would be dealing with Australia's Transport Workers Union, and that, as one participant put it, "this could be fairly exciting for them."

It is worth noting that Amazon throughout much of its 20-year history has had dealings with the US International Brotherhood of Teamsters union. This is one of the largest unions in the world, and the 11th largest US political campaign contributor.

Recently, Amazon has had a dispute with the Teamsters over the working conditions of the contracted pilots flying Amazon-owned Boeing 767s. A typical engagement would be the 2016 dispute in Los Angeles California:
Amazon's dispute with the Teamsters union

Further, the person whom Amazon has appointed country manager for Amazon Australia, Rocco Braeuniger, was formerly with the company's German operations, and has dealt extensively with unions there. German unions are certainly regarded as some of the more communicative and collaborative in the world, but they are also, politically and in the workplace, some of the most powerful.

It's also worth noting that the person backing him up, Fabio Bertola, who is head of Amazon Marketplace for Amazon Australia, worked at Amazon in Italy for a year, and has three years of in-country Australia experience working for the Winning Group, which runs Appliances Online, as well as other websites.

In line with the above comment, HNN has also seen some comparisons of warehouse labour costs in the US being substantially lower than in Australia. Some of these report wages of USD9.00 an hour. Glassdoor, a service which helps rank US employers for jobseekers, estimates Amazon pays an average USD12.00 an hour. According to the US Bureau of Labor Statistics, the mean hourly wage is for this type of work (classification code 43-5071) is USD15.94, while the median is USD14.99 (goo.gl/G3EJ9X). It is likely, however, that Amazon pays in the lower 25% percentile, where the wage averages out to USD12.11.

According to salary comparison site indeed.com, the Australian average for work of this type is $25.02 an hour, which equates to USD19.20 or so. However, it is notable that employers such as Harvey Norman are listed by indeed.com as paying around $20.44 an hour (goo.gl/noieG8). It would not be surprising to see Amazon secure a similar rate in its employment contracts, which would bring its hourly wage cost down to USD15.64 per hour, an increase of 30% on its US wages.

Offsetting that is the fact that the warehouse facilities that Amazon builds in Australia will be, in its second round of expansion, as fully automated as any that Amazon owns, which will radically reduce the number of workers being utilised, and likely result in a wage for productivity result around 8% to 12% higher than that of the US. If you add in a further decline in the AUD to USD exchange rate, likely by a further 5% during 2018, it is difficult to see how fullfilment costs will be such an overwhelming issue.
Amazon will abuse its global market power to run at a loss for several years, and the Australian Government will step in to prevent "dumping".

According to a report in the AFR, the head of the Australian Competition and Consumer Commission (ACCC), Rod Sims, said:
In terms of misuse of market power, if you open a store in a new town and you set a common price point, you are going to lose money initially if you don't have scale. Eventually if you get your business plan right you will make money at that price point, that is in no way illegal.... It is not illegal if Wesfarmers do it with a Coles supermarket in a new town and it is not illegal if Amazon comes in and sets a price point that only makes money at a certain scale.

That would seem to scotch rumours of intervention by the ACCC, for the first three years or so, at least. But what about elsewhere in the Government? While everyone from small business ombudsman Kate Carnell to small business minister Michael McCormack have made the expected statements about looking over Amazon's shoulder, it seems unlikely that anything other than minor discussions would be held.

It is worth thinking about the reasons why Amazon will likely be running at something of a loss initially. It's not just price and margin, it's also considerable investment in infrastructure, estimated at $700 million. That will no doubt include the construction of custom warehouse facilities, most likely in regional or exurban areas, where there is substantial low employment.

It's a little bit difficult to imagine the Federal Government making moves to inhibit the development of a company that is spending big on construction, technology, and adding jobs in regions where they are needed the most.

More than that, though, pricing at Amazon is not driven so much by super-discounting products, but more by placing immense pressure on suppliers, and picking up unexpected deals on a global basis.
The Amazon effect: how much, and where?

In the US, online shopping is being credited with a considerable decline in key areas of physical retail. In terms of overall marketshare, Amazon seems big, but not huge. It is estimated that online retail accounts for around 10% of overall US retail, and that Amazon is expected to show it holds 43% of that online revenue for calendar 2017. Some estimates suggest that over half of all product searches begin on Amazon in the US. Contrast that with, for example, Wal-Mart stores' share of the USD800 billion US grocery market, which is estimated to be 21.5% in 2017.

The scary part for US online retailers is that the 2017 numbers for Amazon represent an overall increase of over 5% in net market share, or growth for Amazon of 14%. Meanwhile, its closest competitor in revenue terms, eBay, is expected to slip from 7.8% marketshare in 2016 to 6.8% in 2017, while Apple will pick up 0.4% to hit 3.6% marketshare, and Walmart will add 0.8% to also reach 3.6%.

In the US Amazon holds a 41% marketshare of online men's apparel sales, according to One Click Retail (goo.gl/4Ub1nJ), and a 36% share of women's apparel sales. The growth aspect comes through in other areas, however, such as baby apparel, where Amazon's 2017 Q3 sales hit USD50 million, up from USD30 million in the previous corresponding period (pcp), an increase of 67%.

Amazon is not so much a marketshare story, as a growth story, with a potential for continued growth that cannot be matched by competitors, even in a market where those competitors have spent big on developing online services. Estimates currently predict Amazon will hold 50% of all online sales in the US market by 2021. And that seems, to some, a pessimistic forecast.
European market

What about outside of the US? It is estimated that online sales in the UK reached GBP60.43 billion during calendar 2016, and that Amazon accounted for GBP7.3bn of those sales, which equates to a 12% market share.

In Germany, overall online retail sales are estimated at EUR52.7 billion for calendar 2016, and Amazon's share of that is estimated at EUR12.8 billion, which delivers a 24% marketshare.
Amazon in Australia

There has been a great deal of dispute over exactly how much impact Amazon will have on the Australian market, especially over its first two to three years of operation. One number that has gained some credence was suggested by Mr Woolford. He estimates the company could attract around $4 billion in online sales by 2022, which would equate, according to projections, to around 12% of the online retail market, and 1.1% of the overall retail market.

Mr Woolford has highlighted, in particular, the effect of Amazon on retailers in the electronics industry, such as JB HiFi. Results from a May 2017 survey conducted by Nielsen seeking to explore Australian consumer attitudes to Amazon back up his assessments. The three top categories where consumers expressed interest were: Electrical/electronic items (60%); books (54%); and clothes (46%).
Nielsen results from May 2017 survey

As some commentators have pointed out, the real risk to established Australian businesses is unlikely to peak in those first five years, but to rapidly increase in the subsequent five. That is what is indicated by Amazon's experience in the UK and other worldwide markets, including Germany.
Hardware category effects

Of course, what is of prime interest is what effect Amazon may have on the home improvement category. Some commentators have suggested that this may be minimal, due to the nature of home improvement, which features relatively high delivery costs, and often a "hands on" aspect that other categories - such as electronics - do not.

A good source to check on this subject is One-Click Retail, which has published some statistics on Amazon's presence in the US, UK and German markets. This can be accessed at:
One-Click Retail statistics on Amazon

Certainly, the largest home improvement retailer in the US, The Home Depot, would disagree with that assessment. Home Depot has shifted its business model quite radically over the past three to four years, moving most of its expansion spending from physical stores to building the infrastructure needed to boost its online business. Ecommerce sales for Home Depot reached USD5.6 billion in 2016, up from USD4.7 billion in 2015, an increase of 19.5%, and representing 6% of overall company revenue.

In terms of the US, the overall home improvement market for 2016 was estimated at USD313 billion, up by 6% over 2015. Amazon's share of that market is estimated at USD5 billion. The real figure of interest here, however, is in terms of growth: that market grew by 35% for Amazon from 2015 to 2016.

The four top growth categories were handtools, up 40%, power tool accessories, up 25%, safety equipment, up 20%, and woodworking tools, up 30%. In terms of individual products, door knobs and lock sets grew by 45%, fasteners and hooks by 45%, lighting controls (such as dimmer switches) by 85%, and kitchen/bath tapware by 30%.

In case this seems like a "US-only" situation, it's not. In the UK, Amazon achieved an estimated GBP300m in sales in the GBP36 billion overall home improvement market, which is over 8%. Again, though, the real story is growth, as Amazon grew its revenue by 20% over 2015.

In Germany 2016 online home improvement sales reached EUR600 million, in a market worth around EUR40 billion, or a roughly 1.5% marketshare. Growth, however, was a highly positive 45% over 2015 figures.
Estimates

It is not possible to generate a single number that would indicate how much marketshare in home improvement Amazon will eventually win in Australia. Some estimates put this at around 2%, which would accord with Mr Woolford's estimate of $4 billion in what could by 2021 be a $80billion market. However, HNN would point to the fact that there are few if any real competitors online to Amazon in home improvement, and that those which exist are unlikely to develop an effective response until after they have suffered significant losses. We therefore think a better estimate would be between 2.5% and 3.0% of the market in the 2021/22 financial year.

Leading up to that, based on past experience, what we can likely expect is considerable noise and excitement over Christmas in 2018, followed by slightly disappointment in 2019, with the real effect of Amazon first taking hold in 2020. This means that Australian retailers who will be affected would be advised to develop plans over the next two years, or face having to catch up to Amazon for several years thereafter.
Effects

While many independent hardware stores will feel some effects some two to three years after Amazon's entry, there is little doubt about the retailer that will experience the most effect of its business: the Wesfarmers' owned Bunnings.

There are a number of reasons for this. The two main ones are that Bunnings is far more reliant on the consumer/DIY trade than most independent retailers, and that it has made its low prices part of its major attraction to consumers. To take one category, power tools, Amazon already has good international relations with major companies such as Bosch, Makita and Stanley Black & Decker. While these are sold directly by Amazon, it appears that tools from Techtronic Industries (TTI), such as Milwaukee and Ryobi, are sold through Amazon by third-party sellers.

Doing a price comparison indicates that with suppliers such as Bosch, Amazon does, on some specific tools, enjoy a considerable price advantage. From example, the Bosch DDB181-02 drill driver kit (charger, case, two 2.0 amp batteries) retails on Amazon for USD99, while it sells at Home Depot (online-only, not in-store) for USD159.

Effectively, what is likely to happen is that, just as today many DIYers will check the price of a tool on the Bunnings website before buying it elsewhere, they will start to check with both Bunnings and Amazon Australia in the future.

It is worth mentioning that there is another area of potential competition as well. Amazon has been building out its offering in terms of helping to sell the services of Amazon approved installers for products sold through Amazon. These approved quotes appear as part of the sales process for products such as large wallscreen TVs. Amazon goes through an extensive approval process in certifying these installers for its website, and monitors customer feedback closely. This could have an impact on budding services services such as Home Improvement Pages (HI Pages) and Oneflare, which attempt to offer services to match homeowners with tradies.
Reactions

HNN has spent considerable time over the past three years trying to work through the puzzle of Bunnings and online ecommerce. Our end conclusion has been that, as an organisation, Bunnings is simply not built for online. What it does well is to build good physical stores, encourage people to visit those stores, and to sell those people a basket of items from which it derives a workable margin.

In particular, it is a retailer that tries to avoid making things complex as much as it possibly can. Even if complexity offers additional margin, it will prefer to stick with systems and strategies where execution can be easily controlled.

Online, from Bunnings' perspective, has two main disincentives: it would likely lower overall margins, and it would introduce the complexity of delivery and other logistical systems. Additionally, there is the possibility that by entering online commerce at this point, Bunnings would be acting as a "pathfinder" for Amazon, establishing a market which the US-based retailer could then leverage to market its own products.

However, there is another possibility. If we look at the experience of Kingfisher in the UK market, that home improvement retailer really did not "get" online retail until it experienced the runaway success of its Screwfix brand. Screwfix continues to be the real growth story in a slightly declining UK market, though much of its recent growth has come from leveraging its well-developed online reputation to build a successful physical presence.

What if Bunnings also went down the sub-brand route when it comes to online commerce? As an example, suppose Bunnings chose to take its Ozito captive brand, and to develop a website that sold that brand of power tools exclusively?

This has a number of advantages. It terms of the stocking/picking/dispatch logistics, having a single supplier reduces complexity considerably. Given its control over margins for this brand, Bunnings could offer online goods at a discount to in-store purchases. That's particularly useful for the Ozito range, as it virtually defines "price sensitive" for power tools. A reduction of $5 off a $95 drill is enough to act as a "buy" trigger for many consumers in this market. With an exclusive brand, price competition with other websites is much less of an issue. When it comes to expensive matters, such as returns, Bunnings could also effectively leverage its physical store presence.

It's a tactic which utilises established strengths, and some of in-place investments, in a way that at least minimises complexity. It would enable Bunnings to develop a better understanding of online commerce, in an environment that reduces capital expenditure and risk as compared to a more general rollout. With at least six major captive brands in different areas, it also offers the potential for future expansion.
Amazon Marketplace

HNN has so far skipped over a large section of what Amazon has to offer, namely the third-party Amazon Marketplace (AM), where retailers have the option of selling goods through the Amazon site, with Amazon optionally looking after the logistics of picking and sending.

One of the real benefits of this service is for small suppliers and product developers who have a great idea they cannot get larger retailers to stock. It offers a near-instant means of achieving market presence. Some retailers in the US and elsewhere also use AM as a means of off-selling overstocks, or testing new products to gauge demand.

One of the more interesting aspects, however, is a burgeoning market for specialised sellers who concentrate on doing nothing else except AM, and don't care particularly which products they are selling. Instead they concentrate on finding a product where they can beat the Amazon price (if it exists) and the prices offered by other AM sellers. If they achieve the best product plus shipping price, they will "cream off" all the orders for that product.

In the US, this has opened up sources of secondary supply. That includes companies that have over-ordered some lines and need to clear warehouse space, and also, of course, grey market goods. It will be surprising, for example, if the Australian AM doesn't see some goods come in from South-East Asian markets that bear a familiar brand name, but are sold for much less.

This could also influence the online home improvement market. What happens, for example, if a trader buys a lot of reconditioned cordless Milwaukee or Ryobi tools, then offers those for sale on the Australian AM?
Analysis

Amazon certainly will face unique conditions on entering the Australian market. It seems somewhat unlikely, however, that these conditions will be any more exotic than those the company faced in entering the French, German, Italian or UK markets. HNN would also guess that they are nowhere near as exotic as those the company faced in entering the Japanese market (a country where Amazon still struggles, despite having first entered it in 2000). Some of these conditions will no doubt cause small setbacks, but it's highly unlikely they will, in the end, have much influence over Amazon.

In general, much of the response of major Australian retail business to Amazon has attempted to portray its entry into the Australian market along the lines of a physical store retailer making the same move. Nowhere is that more apparent than in the repetition of the fact that Mr Braeuniger apparently revealed in a conversation in early 2017 that he was unaware of Australia's holiday penalty rates for retail workers. It seems somewhat germane to this point that Amazon, for at least its first two years of operations, is unlikely to employ any retail workers.

Equally ill-founded was a comment the AFR reported being made by a former senior Wesfarmers retail executive that Amazon's frequent change of prices would somehow not work in Australia as it annoys consumers. This approach has been central to the strategy that helped Amazon power its way to annual revenues of USD136 billion, and a market capitalisation of USD536 billion. The reality is, of course, that online what Amazon is doing is tracking the same prices consumers will see doing a Google search. It's simply making sure it stays in the running.

The Australian retail industry really has to come to terms with the fact that Amazon has arrived, and that it will, over the next decade, wreak considerable changes on the retail market. While it's possible to make some predictions about the next four or five years, predicting what Amazon will do out to ten years is much harder.

While home improvement will likely suffer less than many other categories in terms of competition with Amazon, it's worth noting that the two largest home improvement retail brands in Australia are owned by companies heavily reliant on revenues and profit from grocery retailing. In the end, the greatest effect on home improvement may come from Amazon disrupting that market, which is already under considerable stress.

It is also worth seriously considering what second-order effects of Amazon's entry will have on the home improvement market. If Bunnings or other major retailers respond to Amazon - such as by opening HNN's hypothetical Ozito online store - that may have greater consequences than Amazon itself. In stretching to ensure that it does not lose marketshare to Amazon, Bunnings could, in other words, take yet more marketshare from other retailers.
Retailers
Murphy's Mitre 10 Monbulk, Victoria
Murphy's Mitre 10 is perched on a round-about in Monbulk (VIC)
HI News Vol. 3 No. 11
Julie Murphy at her desk
Inside Murphy's Mitre 10 in Monbulk (VIC)
Click to visit the HBT website for more information
There is something a little mystical about the journey through the steep-sided hills that lead up to the low mountains that make up Victoria's Dandenong Ranges. One moment you are driving through what seems like dense bushland, and the next it is as though you have entered a different realm, one of tall trees and low, spreading tree ferns. Early tales tell of trees that were far taller and wider than the giant redwoods of California. All gone now, of course, but there remains something a little primordial about this place.

Monbulk sits on the edge of this area, surrounded by a patchwork of small properties, cleared 100 or more years ago by those early settlers. It's the kind of place that has a main street named "Main Road" lined with all the usual suspects: a great bakery, a Chinese restaurant, a couple of banks, the fancy cafe where the "in" crowd of teenagers and twenty-somethings go, a cafe for the older or less hip, a big Woolworths supermarket, a primary school, and, clustered around that, a bowls club, playing field and recreational centre.

And at the very top of Main Road, where it intersects via a giant roundabout, at the point where the Monbulk-Olinda Road becomes just plain Monbulk Road as it turns away north into the nearby area of Silvan, sits Murphy's Mitre 10.

Potential, real potential, is something you don't see too often in retail - not even in home improvement retail. But if you want to see what it looks like, then Murphy's Mitre 10 could prove to be a good example.

Potential is seldom made up of one element. It is more likely, as in the case of Murphy's, to come from a range of sources. One element is certainly the premises themselves, which have a great location, with both room for expansion and a built-in diversity of retail space. A second element is the community of Monbulk itself. Unlike modern suburbs, Monbulk is not just a line on a statistical map somewhere. It's a real and genuine community, with a unique history, and many personal and family links.

The third element is that Monbulk is poised on the brink of a likely change in its demography, as the increasing house price pressure of the Melbourne suburbs converts it into a more viable "dormitory" suburb.

All that counts, but the main source of this potential is, without doubt, the current owner and manager of Murphy's, Julie Murphy herself. It is a potential that is already reaching beyond her Monbulk store, which she has been managing full-time since 2016, into the home improvement retail industry itself, as she has become one of the driving forces behind the launch of the "Women in Hardware" movement.

This potential is a consequence not only of the evident abilities of Julie herself, but also because she brings with her one of the things the Australian home improvement industry is in urgent need of: cross-fertilisation from other industries and areas.

To get an understanding of how all this could come together, we need first to look at the history of the Monbulk area (including its economics), the legacy effect this has had on town-planning, the shift in the region's demographics over the past five years, as well as how all this plays into some of the effects-at-a-distance generated by Victoria's capital city, Melbourne, some 45km away to the west.
The Store

On entering Murphy's Mitre 10 your first impression is that Julie and her floor manager Nick have managed to create a space that feels bigger than its nominal 2800 square metres of floorspace. That is quite a feat in hardware retail, where both very small and very large products are featured, and part of the name of the game is to have as broad a range as possible. Many hardware stores, even those larger than Murphy's, manage something you might call the "reverse Tardis effect": they make a big space seem much smaller than it really is.

What Julie has done with the space is to clearly follow through on three basics of good retail design: "staging" of the customer journey through the store, the application of appropriate scale to the displays, and a good understanding of how to manage standard sales displays of typical merchandise, and the display of more "impulse" buys.

[Text omitted]
Staging

Of the three, the one that Julie and her team excel at, and which is, for a smaller store, of key importance, is staging. Staging really refers to tracking the progress of customers through the store, and providing them with a set "view" at each stage of that journey.

In Murphy's Mitre 10 this begins with the first thing the customer sees when coming in the front entrance: a long, wide discount table, with two levels of discounted goods. Immediately to the right of this are two aisles of power tools.

These aisles and the adjacent aisles are kept low, providing a clear view of the back walls, and promoting the open, spacious aspect of the store. Turning right and facing towards them, behind to the right are power tool accessories, such as cutting wheels. Along to the left, are the more specialised power tools, such as nailguns.

The endcaps on the power tool aisles are used for a mixture of seasonal sales, in spring barbecue charcoal and storage containers (spring cleaning), along with more discount stock, such as the last of the winter's electric heaters. Turning back to the main direction of entry, the endcaps of the aisles just beyond the big discount table are a mixture of more seasonal goods, in this case axes, along with "specials" that hint at the products on the aisle shelving, such as fasteners, in this case for nailguns. This meshes nicely with what customers looking at the nailguns along the back wall will see these when they turn back towards the centre of the store.

One of the important elements to creating successful staging is the colour palette used in the store. All too often stores tend to use a dominant darker colour (in Mitre 10 usually the brand's darker blue). That can work in larger spaces, such as the dominant red that runs through Bunnings stores (dark green is actually the brand's foreground colour). In smaller stores, the dark colours tend to add to the reverse Tardis effect, shrinking the space.

Universally, you really need to go with a light colour, accented with darker colours. Murphy's has a very tightly controlled palette, with the main background in a softer white, outlined with racking and shelving in a "clay" colour, which splits the difference between a soft grey and an off-white. This is accented with the three shades of Mitre 10 blue, which contrasts with the whites to produce a sense of crispness and liveliness.

There is a lot going on in this entryway space, but it's not annoying because underlying the displays is a form of "narrative" that helps to make sense of what is seen. The discounts are enticing, and, like the "pods" of specials in a Bunnings warehouse, they provide the drama of "surprise", resetting customer expectations of what they can afford. The seasonal goods trigger the "oh, that's right, I'm going to need that now" buying behaviour, which can turn a $10 pick-up-a-lightbulb shopping trip into a $100 buying-the-essentials shopping trip.

While she has been very inventive, Julie has some concerns about the displays, and the ways in which she has changed the store. As she explains:
I like the merchandising side of it. When I first started here full-time last year, I spent a lot of time cleaning up what was done, changing areas. We re-jigged the paint area and changed where plumbing and housewares were placed, as previously this was stuck in the corner. But I wonder if that's because we have got a few females on staff, and females look at it a bit differently.
Sometimes I find I put my views across more than probably what I should, I should probably be thinking more of the customer. I often think I like it like that so that's the way it should be. But then I wonder if the customer likes it like that. Is a male customer going to look at it and think, "That's not the way to do it"?

If there is something that could be identified as "feminine" about the layout of the store, it's that it is borrowing heavily from the way that women's fashion and homewares retailers design the shopping experience. That design, however, has as much to do with male designers as women, so what Julie is doing here is very far from the idea of a "woman/s touch" and more to do with a cross-fertilisation from forms of retail that are considerably ahead of home improvement retail in this regards.

"Traditional" home improvement retail design relies primarily on defined categories that are laid out in an understandable way, like an indexed collection for the customer to browse, with the odd impulse-buy, cross-category display thrown in. This is, essentially, the way goods for the building trades get displayed, because tradies (mostly) know what they want, and need to get in and get out and back to the job as quickly as possible. Particularly when it comes to Mitre 10, this has been (unfortunately) a little cross-fertilised with supermarket-style displays.

The kind of display that Julie and her team are promoting at Murphy's Mitre 10 is actually needs-based. Good fashion retailers are not just putting goods out for sale, they are also informing and assisting their clients, reminding them what is in style, and showing how they can follow those styles in a way that suits their body shape and the rest of their wardrobe.

The entryway at Murphy's is showing off what is new, what is discounted, and what the customer will be needing this season. It is prompting, reminding and enticing. This enticement takes place at both ends of customer expectations: this is going cheap, and this over here is brand new and different.

One area that Murphy's Mitre 10 really shows up as lacking industry-wide for many independent hardware stores is power tool ranging. Julie mentions this as one of the areas that she and Nick are concentrating on developing.
We fixed that [the power tool display] about six months ago. Mitre 10 do an HSA , they come through the store and critique you, in a way. They say this area needs doing or improving, and they do it once or twice a year. And they did it not long after I started in the chair full-time. The first results were not really good. One of the things they mentioned were the power tools. It was pretty messy, so we decided to focus on the power tools. Nick and I did the power tools.
We did the first bay of power tools that features Rockwell/Worx and that is nice and bright. But the next bay we are still working out what to put there. It's hard for me at the moment know which power tool sells. It's really hard to know what will sell up here.
It's getting to know your demographics. At the moment, we have Makita and DeWalt and Bosch. So with got a bit of everything at the moment to trial it but we're trying to streamline it now. And now I'm looking at the Makita MT series which is slightly cheaper, but still has the name. But you get to know what sits there on the shelves for a while.

While Julie, in typical good retailer fashion, looks to herself and her store's own practices in relation to fixing the power tool range problem, the reality is that most of the power tool manufacturers distributing in Australia are really letting down independent retailers in terms of the ranges they offer. Instead of providing clear "hero" tools that consumers and the handyman trades can buy with confidence, they've presented a bewildering range of possibilities, that only an online-based retailer, a specialty shop, or Bunnings could possible begin to stock. For example, Makita alone now offers 18-volt, compact 18-volt, 12-volt (aka 10.8-volt), and the MT Series.

Julie thus faces the same problem that most smaller independents face: find a way to work with the mainstream brands, or head off into some of the better-suited, but less known alternatives. For example, Hitachi offers just the right kind of range for smaller independents, but it's a lesser-known brand with which consumers are not comfortable. The Bosch Blue 12-volt range is a great choice for consumers as well, but none of the manufacturers have done a decent job in marketing 12-volt.

There is a lot more that could be said about how Julie and her team have developed staging in Murphy's, including making the back end of the lower level which leads directly on from the entrance into a packed ranging of a wide variety of essentials, including automotive, fasteners and clothing, where it's easy to select goods and the main choices are displayed clearly. It is not universally great everywhere, but the places where attention has been paid, Julie has found some slightly unconventional solutions that really work.
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The above is an extract from a longer article. To download the full edition of HI News, complete with this article, please click link below:
HI News Vol. 3 No. 11: Murphy's Mitre 10
News
HI News V3 No. 12: Amazon is coming to town
Download the latest issue of HI News Vol. 3, issue no. 12
HI News
Amazon is about to launch in Australia
HBT recently held its Business Solutions conference in Melbourne
Click to visit the HBT website for more information
A large part of the current edition is about the retailer that has been taking up a lot of headlines recently: Amazon. We go through some of the background and research needed to understand what effect this new market entrant will have on Australian retail.

Simply click on the following link to download this edition:
HI News V3 No. 12: Amazon is coming to town

In terms of local news, we report on the Hardware & Building Traders (HBT) state conference. It continues to confirm its credentials as a buying group that helps retailers be truly independent.

We also report on Oldfields product launch in Melbourne and look at its latest results.

Bunnings continues its rollout of bricks-and-mortar stores both in Australia and the UK, with more in the development planning phase. Other retailers to open stores include Tradelink and Langs Building Supplies.

Suppliers have been active with Assa Abloy's purchase of smart lock maker, August and Portwest's acquisition of another Australian workwear company.

In the US, Ace Hardware has acquired a majority stake in e-commerce startup The Grommet, bringing two entrepreneurial companies together. Lowe's has also launched two augmented reality apps and will offer Craftsman tools in-store.

In addition to Oldfields' new paintbrushes, HIlti has a new set of smart tools, Knipex releases new gripping pliers and Kohler's Exhale showerhead is inspired by the dahlia flower.
Retailers
HBT Business Solutions conference
Steve Fatileh, Anthea & Chris Moorfoot, Mike LoRicco, and Julie Murphy
HNN Sources
Don Edmonston, Wayne Littler, Gavin Keane, and Leslie Littler
Melissa Guthrie, Melanie Spinucci and Rachel Roper from Detail Retail
Click to visit the HBT website for more information
Hardware Building Traders (HBT) decided to change up its usual state-based conferences for 2017, and instead host a single conference entitled "HBT Business Solutions" hosted at Melbourne's Etihad Stadium, near the Southern Cross railway station.

The single event made it easier for suppliers to concentrate their resources, so some 62 suppliers (including 22 of HBT's key suppliers) attended, along with 150 representatives of 92 retail stores. True to its promise, HBT served up a mixture of speakers on subjects ranging from succession planning and internet ecommerce, to insurance planning and better retail space design.
The state of the group

To get things going, HBT's group manager, Mike LoRicco gave members an overview of the industry today, followed by HBT's two group buying managers, Gavin Keane and Steve Fatileh, who outlined what the supplier/retailer interface looks set to develop into the future.
Mike LoRicco: four becomes three

Mr LoRicco concentrated on providing an overview of how the industry has changed through 2017, especially after the exit of Masters Home Improvement in late 2016, and how that is affecting retailers.

The main change has been, of course, the move from four different supply chains to just three: Bunnings, the Metcash-owned Independent Hardware Group (IHG), and HBT. While this opens up some new opportunities for HBT, Mr LoRicco is more concerned with its effect on HBT's ongoing development of the key suppliers to the group:
So, what the reduction in supply chains means is that as the suppliers realign themselves there are going to be some suppliers who will be left out.
This makes it a good opportunity for us to grow our relationships with our suppliers. What is really important - and I know that we have a lot of suppliers - is that our key suppliers get the support of our members. These guys are the ones that are putting extra effort into supporting our stores. We need to show support for them. Over the next 12 months, my goal is to concentrate on the key suppliers, get our relationship with them to work even better. As part of that, we are working on a list of standards as to what a key supplier should be. And we're going to support them, just like they support us. Obviously, our focus is on both the member and the supplier, and there needs to be a win for both of them in any deal. It is not a one-way street.

Mr LoRicco also shared more information about HBT's ongoing growth story. From around 240 members in 2014, the buying group has now grown to 670 members. The top 100 stores in the group account for 62% of its purchases by value. A sub-group of HBT, the Industrial & Tool Traders (ITT) has grown rapidly over the past four years, and now accounts for 22% of the group's purchases by value.
Gavin Keane: value from the second tier

Mr Keane provided a historical perspective on ITT, the part of the group to which he devotes most of his time. It began, as he describes in his inimitable style, almost by accident back in early 2013, and has now reached 162 stores, or 24% of the store numbers.

Mr Keane was particularly eager to point out how one of HBT's main strategies, finding high quality suppliers who were held in the second or third tier of the market, and then making them first tier suppliers for HBT, had worked over the years.

One of his main examples was Haymes Paints.
Great company, family owned company. Based in Ballarat. They now represent 56% of our paint business, as compared to Dulux [from Australia's DuluxGroup] which has around 16%. It's a good supplier, they work with us, understands us, and are passionate about independents. They are our number one.

Mr Keane spoke of other suppliers who had also become number one for the group. Macsim was one of the first fastener companies to take HBT seriously. Klingspor, makers of specialty cut-off wheels for grinders, now holds around 50% of the HBT demand for the product. Silicone and adhesive maker Soudal is another HBT success story, beating out other well-known brands such as Bostich and Selleys, to be the number one supplier in its category for the June 2017 quarter.

Later Mr LoRicco revisited this issue, explaining that, from HBT's view, accepting less valuable deals from top tier suppliers meant that HBT effectively subsidised the exceptionally low prices these suppliers offered the competing supply chains going into Bunnings and IHG.

One of Mr Keane's ongoing concerns is that the Australian market simply has too many suppliers for its size. As he put it, HBT members have access to around 483 of these, and there are probably almost as many they don't have access to. He expects that the coming years will see a degree of rationalisation, with some companies exiting over-supplied markets. Mr Keane sees this as a further reason why HBT should stand by and support its key suppliers.

In a rapid overview of the industry, Mr Keane gave some numbers for other buying groups. AIS now has 80 stores, CSS has grown to have 86 stores. Synergy, which was a breakaway group from CSS, now has 52 stores, and Tradesmart has 64 stores.

In terms of the tool sector, Total Tools now has 66 stores. Mr Keane remarked that this was quite an aggressive group, but they did seem to have higher overheads, with something like 50 head-office staff, in his opinion and estimation. United Tools has 47 stores, Trade Tools has 16 stores. Sydney Tools has just reached 15 stores, with news it is opening a new store in Bayswater, a suburb of Melbourne, Victoria.
Steve Fatileh: a better deal

Mr Fatileh began by saying that the acquisition of Home Timber & Hardware (HTH) by Metcash to form IHG had created some anxiety in the hardware retail market. Part of that anxiety was among members of the newly formed IHG, who face changed conditions, but it was also a fact for the suppliers to that group. As IHG uses more of its buying power to narrow its supplier base so as to improve individual supplier volumes and crack down on supply prices, more suppliers are turning to HBT as a means of securing future retail outlets.

This has opened up new opportunities for HBT, according to Mr Fatileh.
This gives us a position of power when we are negotiating. Never before have Gavin and I been in this position. We are not accepting every deal that a supplier presents to us. We are their next option. If they have been kicked out, or they have been hit "with a big stick" by IHG, they are coming to us. As a consequence you will find that the new deals that are coming through have higher than usual rebates attached to them.

This isn't just smaller suppliers either, according to Mr Fatileh. Among newly acquired suppliers is global lighting company Philips.

Mr Fatileh's special passion has been HBT's move into "H" branded hardware stores. These stores provide fully independent retailers with a brand identity. In 2017, in addition to expanding the number of branded stores, the H has also been active in launching special H branded products, and starting to distribute a catalogue for participating stores as well.
There are currently eight H branded products that we have put out there. The products that we have introduced have had a very good success rate. The H paint itself from Duralex has turned over $200,000 worth of purchases, just in that product. The Soudal H Brand silicone and adhesive package has taken off really well, and the branded measuring tape is doing great.

The catalogue has been as much an experiment as a commercial venture during 2017.
We dipped our toes this year into a new catalogue program, it is the first time we have ever done it, a little bit of teething problems, it is a lot of work, but we thought let's just do it, and if it is going to have some problems, or things that we can learn from, we will do it better next year.

Meanwhile, the H Hardware push itself has been going well. Mr Fatileh set himself the goal of ending calendar 2017 with 40 bannered stores, up from 26 at the start of the year. He just concluded a deal to secure the 39th store, and is "pretty confident" he will hit 40 before the end of December 2017.
Detail Retail

While many of the presentations given at the conference were impressive, one of the most interesting was provided by Melissa Guthrie of Detail Retail, a Melbourne-based firm specialising in store fitout.

Detail Retail is very much a full-service company, that is ideally sized to help provide small hardware retailers with improved store premises that generate a better return.

Ms Guthrie has a background in industrial design, and she is backed up by a fellow retail designer, Melanie Spinucci, architect and 3D modeller Manuel Perez, and 3D artist, animator and architectural modeller Simon Bolivar.

The company relies on advanced, modern techniques of digital rendering to both assist them in their design, and, just as importantly, to communicate their ideas to customers.

The company doesn't stop at just designing stores, but also helps retailers build them as well. It supplies retailers with shelvings, fittings and cabinetry. The company can arrange for these to be installed, or they can be designed so that retailers can install the elements themselves.

Ms Guthrie's industrial design skills means she understands "buildability", and she can help retailers combine all the aspects of helpful visuals with the practical needs of product display, stocking, cleaning and light maintenance.

Ms Guthrie emphasises that the company is very practical in its approach. While it remains focussed on delivering the best (and most profitable) experience to the customer while in the shop, they also work to make sure that dollars are spent wisely on aspects of store design that are going to deliver results. As Ms Guthrie put it in her presentation:
We have a really good understanding of marketing, of customer movement within the store, of product merchandising, how the customer will go through the store, what they will see when they first walk into the store, what catches their attention, and so forth.
We understand what messages you should have at what location in your store, how to orientate your fixtures correctly, and how to move your customers through, to the counter and to the sale, which is the most important thing.

The problem is, of course, that for retailers who spend more time in their stores than anywhere else, it is often difficult to return to the customers' perspective. As Ms Guthrie puts it:
It is very hard for store owners, because most retailers are so busy trading, to step back and see what the customer sees when they walk in the doors of your store.

It is this sense of new perspective that Detail Retail can bring to store design.
Design considerations

The company begins by looking at exterior signage, asking if it is at the right height, and if it is conveying messages that communicate what the store is about.

Some of the key questions that Detail Retail help retailers answer about their stores are:
  • What about the location of the checkout counter? While this seems simple, it is in many ways one of the most important centres of the store. Can it be seen easily, so customers can locate it when they have product in hand? Does it function as an additional sales area, with discount and impulse buys readily to hand?
  • What about supply stands? These often present retailers with something of a dilemma. While many stands are very well designed, and present product in an informative and encouraging way, they don't always play nicely with each other. Sometimes stores will have three or four of these stands jammed all together, with different shelf heights, radically different colour schemes, so that they present a kind of visual cacophony. Sometimes going with something simpler might actually improve sales.
  • Is a product a brand choice, or a price/use choice? A common mistake is to separate a particular line of items based on its branding, when really customers are more interested in a broad range and selection. If too much branding takes over a store, customers will wander about slightly bewildered as to where they can locate some of the simplest items.
  • Store navigation is a key item for stores to consider. This relates in part to signage, but also the relationship between the height and width of aisles is important. If really tall modules are used to form an aisle (2200mm to 2400mm), it is necessary to make the aisles wider - as wide as two metres in some cases. This is partly to avoid a "maze-like" feeling on the part of the customer, but it also relates to lines of sight. Standing in the middle of a 2400mm high aisle that is only 1200mm wide, it might be impossible to see the sign over the adjacent aisles indicating what is located there.
  • Use bright colours to emphasise what is important, wall colours to fade out what doesn't matter. Painting the door to the stockroom bright orange will make people want to open it. The same applies to stairs that lead to the administrative area.
  • Lighting. While fixing lighting has something of a bad reputation for being expensive, nothing is so expensive as a customer not buying a product because they can't see it properly. Ms Guthrie points out that there are some creative solutions that don't cost as much as many retailers think, such as embedding LED strip lighting into racks and shelving. Ms Guthrie is clear about what the goal of this should be: "What we are trying to do with lighting is increase the colour rendering index. Get that as high as possible to match the light."
  • Bulk materials. A persistent problem in many Australian hardware stores is a habit of "dumping" some products on the shop floor with little indication of what they are or how much they cost. Wandering through piles of cement, compost, sand and pool chemicals is not a great retail experience. Detail Retail has designed many systems to display bulk goods in a way where they are easily accessed.
  • Detail Retail website
    Companies
    Oldfields FY2016-17 results
    CEO of Oldfields, Richard Abela, with Betty Tanddo, Hardware News Network publisher
    HNN Sources
    Results for Oldfields FY2016/17
    Oldfields' new Pro line of brushes
    Subscribe to HNN weekly e-newsletter
    Over the past five years a familiar pattern has emerged for smaller Australian manufacturing companies in the hardware sector. Typically, these are companies that have tried to maintain a majority Australian-manufactured product, and have found that this has not worked out. Inevitably their competitors sort out the quality and communication problems with overseas (mostly China-based) manufacturing, and are able to offer better value products, which then impacts on marketshare.

    After witnessing a dip in their revenues, these companies make the move to overseas manufacturing, either completely, or on a hybrid basis, with some Australian operations maintained.

    One of the more successful companies to go down this route is GWA Group, the South Australian-based manufacturer of sanitaryware and tapware. Nearly three years ago the company changed direction, divesting itself of divisions such as hot water heaters, moving most of its manufacturing overseas, and reducing its Australian manufacturing operations. It then revitalised innovation at well-known brands such as its Caroma sanitaryware, and began taking these products to market in a more effective manner.
    Oldfields moves up

    Oldfields is one of the latest Australian companies to travel down this same path - though in its case, as we say these days, "it's complicated". That complication comes from two areas, which both have to do with how what it terms its "consumer products" are distributed.

    The company had a major contract with the now defunct Masters Home Improvement. As the company states in its annual report for FY 2016/17, that contract only provided sales for July and August of 2016, as Masters ceased resupply in September as it began a lengthy process of stock liquidation. Needless to say, this left something of a gap in Oldfields' sales forecast.

    The second factor, which doesn't really apply to the reporting period, but is important for the company's future, is that it decided in late 2017 not to pursue a contract with the Independent Hardware Group (IHG) for distribution. According to the Oldfields 2017 Annual Report:
    In the latter half of the year Oldfields completed negotiations with Mitre 10. These negotiations resulted in the termination of the prohibitive trading terms for sales through the Mitre 10 warehouse system. Commencing in the new financial year, Oldfields will distribute direct to Mitre 10 store owners that establish individual accounts. Whilst sales to the Mitre 10 network will initially be lower, all sales will now be profitable and should reduce the loss currently being incurred by the consumer division.
    The Group is further developing its strategy to operate in multiple channels to market in order to reduce or eliminate excess costs within the value chain.

    This is a fairly big step for the company to take, as it now faces the task of developing new channels to market. It is ramping up distribution to retailers in buying groups such as Hardware & Building Traders (HBT), as well as trade-oriented retailers who sell directly to professional painters. Fortunately, however, it has laid a solid groundwork for this new distribution through both better operational efficiencies and new product lines which seem a good match for the current market conditions.
    Results

    The results for Oldfields follow a pattern that is familiar in companies undergoing this kind of restructuring. For the current reporting period, FY2016/17, the company is showing a net profit of $0.312 million. Results for the pcp were marked by some writedowns, in particular $0.341 million for "impairment of property, plant and equipment", with the year producing a net loss of $0.722 million.

    Overall sales were $26.721 million, down by 6.0% on the sales for the previous corresponding period (pcp), which was FY2015/16.

    The real story, however, can be seen in numbers such as the company's administrative costs, which went from $2.735 million in the pcp, to $2.171 million in the current period, a savings of $0.564 million, or 20.6%. Marketing expenses were also reduced, coming in at $0.307 million, down by 22.1% on the pcp. These are very respectable operational efficiency gains for any company, but especially for a smaller listed company such as Oldfields.
    Markets

    In terms of what has been shaping the company, Chart 1 shows some of the underlying numbers. While pure sales of products, including painting equipment and sheds, have continued to decline, revenue from the installation and rental of scaffolding has continued to grow.

    Comparing the company's two segments directly, consumer products sales came in at $7.722 million, a fall of 24.5% over the pcp. Earnings before interest, taxation, depreciations and amortisation (EBITDA) for this segment recorded a loss of $0.966 million, an increase in loss of over 40% on the pcp.

    In contrast, scaffolding revenue was $19.13 million, up by 4.3% on the pcp. Scaffolding EBITDA also rose, by 13.5% over the pcp, coming in at $2.85 million.

    Chart 1 (in the PDF magazine version of this story) shows the steady increase in revenue from scaffolding rentals, and the decline of sales. The scaffolding market in Australia is - to say the least - peculiar, with unexpected constraints in certain regional markets. Nonetheless, it is an area where Oldfields has operated for some time, and the underlying increase in construction in Australia - especially multi-storey - has boosted the overall market.

    In the consumer products markets, Oldfields faces considerable competition from a range of painting tools and accessories manufacturers. As far as its Treco range of sheds, aside from the extra costs associated with having its production base in Australia, new competitors have emerged over the past two years. In particular, Globel Industries sells sheds that are produced in China and have what some regard as a marked similarity to those produced by Oldfields. The company has moved to counter these competitive forces in 2017 by starting to offer the sheds for sale directly online.
    Outlook

    There are three stages companies transitioning to overseas production typically go through: consolidation of operations, either through divestment of non-core activities, and/or reorganisation and reduction of administrative and other costs, as they cut staffing; development of new and innovative products to better suit a changing market, which are then manufactured overseas; and the marketing of those products, as they seek to both emphasise the long-established advantages of their brand, while also building on its new capabilities.

    Oldfields is about to embark on the third part of its transformation process. With costs clearly in hand, the company has developed new ranges of products, including brushes. It is currently developing new channels to market, and further enhancing its brand image.

    The key to these developments is its ongoing work in product innovation. Oldfields is, in particular, making a strong push into the painting brush market. Its approach has two parts to it.

    The broader part of this approach is to present an overall simplified range of brushes. These break down into three areas: The "Classic" brush aimed at DIYers; the "Tradesman" brush aimed at tradies for whom painting is a part of their work; and the "Pro" brush for professional painters.

    All three of these brushes have been improved over previous Oldfields brushes. The Classic comes in a total of 12 varieties, with six sizes of wall brush running from 25mm to 88mm, and two sized each of sash cutter, angle sash, and oval cutter. These brushes are made from 100% PET filament (polyester). Oldfields states that the pulling force on the brush has increased from 325g to 715g, paint load increased from 26g to 31g, and paint release increased from 15% to 32%.

    The Tradesman brush range comes in a total of 12 varieties, including five wall brushes ranging in size from 38mm to 88mm, three sash cutters from 50mm to 75mm, two angle sash brushes, and two oval cutter brushes. The brushes are made from 70% PBT and 30% PET, providing a different brush feel from the Classic. Oldfields claims the pulling force has been increased from 518g to 546g, the paint load increased from 20g to 30g, and paint release from 30% to 37%.
    The Pro brush

    It is the third brush type, the Pro Series, that really reveals the second direction in which Oldfields is heading. While the other two ranges continue many of the company's past efforts, with improvements, the Pro indicates a more defined and genuinely new direction. Oldfields has spent a good deal of time and expertise coming up with what it considers to be an "ultimate" brush. It has developed its own filament material, which it calls E4 Mark II, which it claims has a number of significant advantages, including "maximum paint hold and release" and "continuous solid coverage". There are four sizes of wall brush that are square cut, but the rest of the range - three sizes of wall brush, three sizes of sash cutter and two angle cutters - are all oval shaped.

    Very clearly what Oldfields is doing (in part) with this market move is supplying a range of independent stores - both hardware and paint specialists - with brushes that will at least equal if not exceed the quality of brushes supplied by Austbrush's Monarch brand (among others). This is a very clever move, as it provides a strong, non-Bunnings brand, and a point of clear difference for small suppliers.
    Marketing

    As part of this push into new product lines, it has become more important than ever before that Oldfields engages with marketing on two levels, both direct to the actual users of the product, and to the retailers who will be selling to those users.

    Certainly the initial efforts the company has made show true promise. HNN attended an event held in Melbourne to help launch the new ranges of paint brushes (another event was held in Sydney). It was a smaller mid-sized event, which gave a select group of retailers and some end-users the chance to get to grips with the new range. There were sample packs of the brushes, and also an opportunity to try them out by using the painting station (complete with smocks) that Oldfields supplied.

    It's an intelligent way to begin the marketing push, and it brings Oldfields staff into direct contact with elements of the market, and gives them a chance to get direct feedback on the brushes themselves, but also on how the audience responds to the marketing effort.

    In terms of the marketing, Oldfields is faced with a familiar dilemma. On one hand with an over 100 year history in Australia, the company wants to stress the strength of its heritage. On the other side, the new paint brushes are the result of considerable modern technology being brought to bear.

    Combining those two messages is difficult, and Oldfields is still experimenting with this. However, there are good signs in terms of marketing collateral such as brochures and advertisements, that the company is well on its way to developing a brand identity suited to the current market.
    Analysis

    In the somewhat hard cold world of stockmarkets it's to be expected that companies will be judged purely on the basis of numerical performance. However, it does seem to HNN that there should be room in the hardware industry itself to consider other elements of a company. Companies like Oldfields (and GWA Group) really did spend time, money and effort trying to retain their Australian workforces, and only gave up when it became evident this would not succeed. That they have managed to reorganise, and to build on their major strengths - product design, servicing of clients, and marketing - is something that really does deserve to be acknowledged.
    Bigbox
    Big box update
    Devonport Bunnings building from project management company, Willow Frank
    HNN Sources
    Roy Morgan Hardware Store Customer Satisfaction September 2017. Source: Roy Morgan Single Source Australia, October 2016 - September 2017. n=14,910. Base: Australians 14+.
    A Bunnings in Auckland's Grey Lynn sold in September on a 4.9% yield for $37.77 million with a 12-year lease
    Click to visit the HBT website for more information
    Bunnings stores continue to be built around Australia with more in the pipe line; proposed stores in Kingaroy (QLD) and Cootamundra (NSW) gain momentum; customers vote for Bunnings over Home Timber & Hardware; Bunnings Kawana has welcomed its first customers, providing competition to the nearby Kawana Hardware and Garden Centre; the site of the Bunnings Fyshwick (ACT) may have a different future; four newly-built Bunnings stores have been sold to property investors; and Woolworths has completed the sale of its shares in Masters' holding company.
    Bricks and mortar builds for Bunnings

    In the next few months and going into 2018, new Bunnings Warehouses will open in Devonport (TAS), Heatherbrae (NSW) and Rockhampton (QLD).
    Devonport store

    Bunnings general manager - property, Andrew Marks, told The Advocate the new Devonport store is expected to be open sometime in December. Construction work is almost complete at the site. He said:
    Recruitment has been completed with more than 80 residents...Bunnings Devonport will cover more than 8,000sqm...The development represents an investment of over $19 million.

    The Bunnings Devonport store is where the K&D Warehouse was located.
    Bunnings in Port Stephens

    The large, blue former Masters Home Improvement store at Heatherbrae (NSW) has begun turning green. The new Bunnings store will span more than 12,000sqm. Mr Marks said the new store was expected to open in time for Christmas.

    According to real estate firm, Cushman & Wakefield, who sold the three NSW-based stores for Home Consortium - the purchaser of all 61 of the Masters sites across Australia as well as 21 development sites - the Heatherbrae Masters site sold for $12.3 million. The Heatherbrae sale included a total land holding of 45,730sqm, including two facilities: a 13,153sqm purpose built hardware retail warehouse and a 4,029sqm large format retail development with four retail tenancies.
    Rockhampton opening date

    Bunnings' new location at the former Masters Rockhampton site will be open to the public mid-2018. It received approval at the start of the year to move from its current location on Yaamba Road to the vacant Masters site.

    This location, where Bunnings signage has recently been installed, will see the store nearby other stores such as Freddy's Fishing and Outdoors, Petstock and Autobarn. Mr Marks said:
    We can confirm we have reached an agreement with the landlord to convert the former Masters Rockhampton site into a new Bunnings Warehouse. Conversion and reformatting works will occur in the coming months and the new store will span over 13,000sqm.

    The Bunnings trade centre will remain in its current location.
    Kingaroy, Cootamundra developments

    Bunnings is a step closer to setting up shop in Kingaroy (QLD) after South Burnett Regional Council approved its development application at a recent meeting. The company will now move to square things with the state government before it breaks ground, according to the South Burnett Times.

    Not surprisingly, Bunnings general manager - property, Andrew Marks welcomed the decision. He said:
    We can confirm we have received development approval for a new Bunnings Warehouse in Kingaroy and will continue to work with the council throughout the planning process. The new warehouse will represent an investment of over $15 million...

    In the lead-up to the vote, the council was petitioned by a group of concerned business owners who thought the development would spell doom for smaller traders. But in approving the application, planning portfolio councillor Terry Fleischfresser said a Bunnings store would complement the retail offerings in Kingaroy.

    While the council is prohibited by Queensland law to consider commercial competition when approving development, Cr Fleischfresser said Bunnings would be good for the town. He said:
    I've heard people say they are disappointed with us accepting a Bunnings application, however I can say every tradesperson in the South Burnett that I speak to keep asking me the same questions: are they coming and when are they going to be here?
    The advantage of this business coming to town far outweighs the negatives.

    https://www.southburnetttimes.com.au/news/bunnings-clears-hurdle/3266980/
    Support for Cootamundra store

    An extraordinary meeting of Cootamundra-Gundagai Regional Council was held to discuss a proposed Bunnings store. The location of this store is the corner of Wallendoon and Hovell Streets, opposite Thompson's Rural Supplies.

    Council staff had recommended the proposed store be refused development consent, citing a number of shortcomings in the application put forward by Colin Blake. However councillors disagreed.

    Absent from the meeting was Craig Stewart, who is employed by Cootamundra Mitre 10 and thus declared a non-pecuniary interest, and Leigh Bowden, who was in Sydney.

    In a letter to the council, Cr Stewart declared he was in favour of new development and business in the Local Government Area.

    Deputy mayor Dennis Palmer acknowledged that staff had prepared the instrument for refusal in accordance with adopted council policy and guidelines, however felt this could be varied in particular circumstances. He said:
    We have been elected to look after the future of our towns and we must be proactive...

    Cr Palmer said a newly developed side would be better than the current building. He also argued the car parking code could be altered subject to Traffic Committee approval. He added:
    This council needs to be a 'can-do' facilitator, rather than a 'can't do' authority.

    Doug Phillips held concerns the incomplete application may lead to legal ramifications for council and was the only councillor not to vote for Cr Palmer's motion. "I have no issue with the hardware store, I think it would be good competition for Mitre 10," he said, but stated the incomplete application should not have even been discussed by councillors.

    Mayor Abb McAlister said that council must always be on the front foot when it comes to development before declaring his support for the hardware store.
    Bunnings beats HTH on customer satisfaction

    Bunnings has replaced Home Timber & Hardware (HTH) to be Australia's leading hardware store in September 2017, according to the latest rankings from Roy Morgan Research. It scored a customer satisfaction rating of 89.0%, up 0.1% from a year ago.

    HTH came in second with a customer satisfaction rating of 88.6%, declining 0.4% points over the course of the year, but enough to beat out Mitre 10 in third with a customer satisfaction rating of 86.9%, down 3%.

    Rounding out the hardware store "Big 4" is True Value Hardware with a customer satisfaction rating of 76.3%, down slightly on a year ago.

    According to the Roy Morgan, approximately 13.1 million Australians visited a hardware store during the last three months. Michele Levine, CEO, Roy Morgan Research, said:
    Bunnings is undoubtedly Australia's best known hardware store...Today's customer satisfaction results show Bunnings' impressive reputation is built on a high rate of customer satisfaction - now at a market leading 89% in September...
    HTH has performed consistently well over the past few years winning the annual Roy Morgan Hardware Store Customer Satisfaction Award in four out of the last five years (2012, 2013, 2015 and 2016) although the 2017 Annual Award looks set to go down to the wire with Bunnings aiming for its first victory in the category since 2011.
    Bunnings Kawana open to customers

    Store manager Emily Sweet of the new Bunnings store on Kawana Way in Warana (QLD) said the team has been excited to welcome the local community to the store and celebrate with them at the grand opening event.

    However Kawana Hardware and Garden Centre owner Ian Witten expects his business will take a hit with the launch of the Bunnings outlet.

    Mr Witten moved to the Sunshine Coast from western New South Wales in 1998 to take over the store. One of his sons had bad asthma so he gave up farming for an entirely different career where harsh winter weather was not a problem.

    In the two decades since then, he has seen a number of independent hardware stores close down in the Kawana Waters, Buderim, Caloundra and Maroochydore areas. His enterprise has survived but he expected sales would be affected by a new competitor. He told the Sunshine Coast Daily:
    When Caloundra (Bunnings) opened, we really felt it and that lasted six to eight months, then it went back to normal. I think we will see a fall in sales through the Christmas period.

    He said Bunnings had excellent marketing.
    I don't know how we compete with it.

    He said a focus on customer service and providing products outside of the Bunnings range were among his tactics.
    We try and stock what they don't.

    Mr Witten said he was getting some benefit from the commercial and residential expansion at Birtinya and Bokarina.
    We supply the bricklayers and landscapers but a lot of it is corporate purchases. When people need maintenance on their houses later on, that is where we come along.
    Bunnings Fyshwick may become train station

    News that Bunnings could take up the former Masters site at Majura Park (ACT) may be the first move that could see the relocation of Canberra Railway Station to Fyshwick.

    Bunnings staff at the Fyshwick store on Newcastle Street have been aware all year that they would be transferring to Majura Park in 2018. One staff member told the Riot Act the ACT Government and Bunnings had been in negotiations for some time with the aim of the Government acquiring the site to develop a new railway station.

    Bunnings said in a statement that a final decision had not been made on the future of the Fyshwick site, but it was likely that it would continue to trade "in one form or another". Acting state operations manager, Robyn Hudson, said in a statement:
    Team members will either relocate to the new Canberra Airport site or remain at the current Fyshwick store. We will continue to ensure our team members and the community are kept up to date with any progress on our plans.

    But Bunnings did not respond to questions about whether it had been involved in any negotiations with the ACT Government.

    Land between the rail line and Bunnings is vacant and being used as a makeshift car park. Combined with the Bunnings site, it could allow for a rail and bus interchange, car park and integrated mixed use development, as recommended in 2009 by the Railway Master Plan for the ACT.
    Bunnings' latest stores remain outside metro areas

    In recent months, Bunnings has officially opened stores in Windsor Gardens (SA), Toowoomba North (QLD), Bellambi (NSW), Bonnyrigg (NSW) and Dalby (QLD).
    Windsor Gardens

    The new Bunnings $47 million outlet at Windsor Gardens will be one of the largest in South Australia. Complex manager Simon Ahladas heads the team at the new store at 432 North East Road and spread over 13,000sqm. He said:
    We have been a part of the local community for over 15 years.

    It's the second Bunnings store in the northeast, with another established at Modbury.
    Toowoomba North

    Australian rugby league great Shane Webcke helped to launch the Toowoomba North Bunnings store on the site of the old foundry. The opening marks the 42nd Bunnings store to open in Queensland and the 260th warehouse to open around Australia, New Zealand and the UK.

    Toowoomba's second Bunnings Warehouse is one-and-a-half times the size of the first at 18,000sqm. The big box retailer said the project represents more than $50 million worth of investment, and is expected to inject $4.7 million worth of wages from 170 jobs into the local economy in the first year of operation.
    Bellambi

    Former Australian international cricketer, Brett Lee officially opened the new Bunnings Bellambi Warehouse. The store presented an opportunity for a career change for team member Bianka Hoswell who grew up in Bellambi and worked as a nurse in aged care for eight years.

    But she is now working in a supervisory role in the leisure and landscape section of the store. She told the Illawarra Mercury:
    Their approach is beautiful. They have this whole family feel about the business. There is plenty of innovation and team development so Bunnings was very appealing to me.

    And she hopes her story about changing careers will encourage others. She said:
    I'm really happy to have a second family here with the team that I am working with. I am incredibly grateful.
    Bonnyrigg

    The new Bonnyrigg store replaces the previous warehouse located next door and was opened by Parramatta Eels rugby league legend Peter Sterling. He was joined by Bunnings Group CEO Michael Schneider, complex manager Andrew Shalala and staff.

    The new Bunnings has an approximate total store size of 15,000sqm.
    Dalby

    Bunnings Dalby store manager, Jodie Ianna, is joined by over 25 Dalby locals who are now official team members of the new $12 million, smaller-format store. Ms Ianna has worked at Bunnings for 12 years. She told The Chronicle:
    Team members have supported a number of community groups already, working with Goodstart Early Learning Centre to extend the centre's outdoor environment with a sensory garden, as well as helping to revamp the Dalby Diehards Football Club's 100-year-old grandstand.

    Bunnings Dalby is located at the corner of the Warrego Highway and Eton Street in Dalby (QLD).
    Four more warehouse stores sold

    A portfolio of four newly-built Bunnings hardware stores have been sold to CBRE Global Investors in a transaction worth $180 million with yields in the five per cent range.

    The hardware chain has offloaded stores in Windsor Gardens (SA), the Auckland suburb of New Lynn in New Zealand and the Sydney suburbs of Caringbah and Bonnyrigg. All four sold with 12-year leases in place to Bunnings.

    CBRE Global Investors said that all four freehold assets are located in metropolitan areas on arterial roads. Factors expected to drive growth in these markets include household disposable income, renovation activity, housing churn, value and formation, weather, lifestyle and demographic trends, government activity and technology.

    Bunnings' general manager - property, Andrew Marks said the sale was consistent with the group's long-term strategy of diversifying its investor base and recycling capital on lease terms that provide it operational flexibility. He told Fairfax Media:
    We are pleased to have completed another successful sale at a yield that is reflective of the market and on lease terms that take into account our operational objectives.

    CBRE Global Investors director Chris Johnston said the group intended to work with Bunnings on future transactions for similar assets. He said:
    This portfolio provides exposure to a strong credit tenant who is a leading retailer in the home improvement market with quality assets and attractive lease terms.
    Woolworths makes final exit from Masters

    Woolworths has finally extricated itself from its failed Masters hardware venture by completing the sale of its store sites.

    The supermarket giant said it has completed the sale of Hydrox - the joint venture company it set up with US firm Lowe's to run Masters - to the privately owned Home Investment Consortium for a headline sale price of $525 million.

    Home Consortium plans to convert the Masters stores into large format retail centres featuring outlets including Spotlight, Anaconda, Chemist Warehouse, JB Hi-Fi and The Good Guys.

    Lowe's handed over its 33.3% stake in Hydrox to Woolworths in August, in line with federal court proceedings, allowing the local retail giant to make the final step in selling the former Masters stores.

    Woolworths previously said the capital losses associated with the sale of Hydrox were about $1.8 billion.

    The sale to Home Consortium includes 40 Masters freehold trading sites, 21 Masters freehold development sites and 21 Masters leasehold sites.
    Retailers
    Indie store update
    The proposed Total Tools store for Tamworth (NSW) is located very close to the existing Bunnings
    HNN Sources
    The Langs Building Supplies store in Caloundra (QLD) has just opened
    Inside a Langs Building Supplies store
    Click to visit the HBT website for more information
    Total Tools looks to open hardware store in Tamworth (NSW) for local tradies and Lang's Building Supplies launches a $20 million store on the Sunshine Coast (QLD).
    Trade store planned for Tamworth

    Total Tools has submitted a development application (DA) to Tamworth Regional Council, for a $300,000 development in Taminda (NSW), on the corner of Lockheed and Jewry Street. The proposed site is located opposite Bunnings Tamworth on Lockheed Street.

    If the Tamworth development is given the green light, it will be the company's furthest inland store in NSW. Total Tools project manager Mike Lazzaro said Tamworth "ticked all the boxes" in regards to demographics and population. He told the Northern Daily Leader:
    Regional Australia is no different to the high-density areas, it creates a market for us.

    Mr Lazzaro said Total Tools had no problem being located across the road from home-improvement giant Bunnings. He said:
    In fact, we rather destination-type centres, it provides the focus for a lot of customers to come to us. It suits our footprint if you like. It's all about providing competition and being able to promote the brand.

    If approved, Mr Lazzaro said the store would "be looking to open in December", with at least six staff working at any one time.

    The development application indicates a Total Tools store can serve up to 100 customers a day, with an average of 55 customers a day.
    Langs store opens in Caloundra

    A $20 million drive-through trade store was unveiled recently on the Sunshine Coast (QLD). Langs Building Supplies has opened its second store in the state and is expected to inject an annual economic contribution of $193 million. Along with a trade store, it will provide the local community with a bulk building supplies and on-site manufacturing of roof trusses, wall frames and floor trusses.

    Sunshine Coast Mayor Mark Jamieson opened the store. He said:
    It will support local building and construction industry as well as providing great employment opportunities for locals. It's the investment shown by companies such as Langs, along with the growth existing in our region, that helps to support positive business confidence ... Langs plan to double their existing staff numbers in the next 12-18 months, followed by an additional 50 jobs when the company starts on-site aluminium window frame manufacturing.

    A decade of planning has culminated in the centre's opening, with the Caloundra-based store doing battle with southern rival Ipswich. But for Langs general manager David Wuiske, the move here was one full of confidence. He said:
    We had two choices, a site at Ipswich and here, we did our research and thought there was a lot of growth potential here. From the coast we can easily service the north side of Brisbane and right up which made us very confident. The sheer scale of the place is exciting. Bob Lang hasn't built this business by halves.
    Companies
    Supplier update
    An August smart lock, now owned by Assa Abloy
    HNN Sources
    Portwest has been growing at a rate of 30 per cent a year and sells in 110 countries
    GearWrench has undergone a brand identity change
    Subscribe to HNN weekly e-newsletter
    Old-guard lock company Assa Abloy bought smart lock startup August for an undisclosed amount; Portwest has reached an agreement to acquire a second workwear company in Australia; Brickworks has purchased the Urbanstone business; Husqvarna said its latest products are designed to make lawn and garden care more productive and intuitive for operators; Bunnings Group's venture into the UK is providing opportunities for Selleys; Milwaukee Tool has been awarded USD27.8 million in case against Snap-on; and TTI introduces portable generators with EFI technology.
    Assa Abloy buys smart lock maker

    Swedish lock conglomerate, Assa Abloy said it has signed an agreement to acquire August Home, a business that makes smart locks and smart home access products and services. Based in San Francisco, August Home primarily focuses on developing solutions for the DIY market.

    According to Thanasis Molokotos, executive vice president of Assa Abloy and head of the Americas division, the acquisition of August Home will strengthen the company's residential product portfolio through the addition of smart locks, video doorbells and solutions for home delivery. He told Security Info Watch:
    August is an entrepreneurial company that is innovating in the traditional lock space by enhancing access control through software and service experiences. It is a strong complement to our current focus.

    In addition, Mr Molokotos said August Home is very synergistic with Assa Abloy's Yale brand.
    August's focus is primarily the DIY channel with retrofit locks that offer an exceptional user and software experience. Through the Yale brand, Assa Abloy's focus is on full replacement locks that are connected and served by the professionally installed channel.

    Founded by Jason Johnson and Yves Behar, August Home has developed three generations of smart door locks and two generations of video doorbells, placing them among the leaders in the smart home industry when it comes to technology, partnerships and retail sales. For example, the company has entered into recent partnerships with Amazon, Apple, Google, Nest and Airbnb.

    This has helped to make August Home, which has seen lock sales increase by 300% year-over-year with more than 260 million lock operations and 500,000 users.

    August raised USD25 million in July to help fund its recent launch of new, cheaper August Smart Lock Pro locks intended to make the high-tech gadgets more appealing to mainstream consumers.

    When asked how August Home will be integrated into Assa Abloy, Mr Molokotos said that they will "jointly evaluate" their opportunities once the acquisition closes, which is expected to occur during Q4.
    We believe keeping the August culture and leadership intact after acquisition is vital for success for all involved so we are excited Jason Johnson will remain and focus on implementing the vision.

    Now in the arms of a bigger company, August will get more direct help to sell its products to the masses, the tradeoff being that it loses its independence as a more nimble startup. The acquisition also highlights the challenges consumer hardware startups face creating big-hit products that result in big enough sales to help them compete with much larger businesses.

    The acquisition is subject to regulatory approval and customary closing conditions. Financial terms of the agreement were not disclosed.

    Related:
    Making house keys obsolete - HNN
    Irish workwear firm expands in Australia

    Wesport, Ireland-based safety clothing and protective equipment maker Portwest has spent EUR10 million buying another Australian company to expand its presence in this market.

    Portwest said that due to a non-disclosure agreement, the name of the Melbourne business cannot be disclosed for the moment. Six months ago the firm acquired Australian company Prime Mover Workwear in a deal worth EUR7.5 million.

    The second acquisition will more than double the Irish company's turnover in Australia and New Zealand to between EUR20 million and EUR25 million, which will represent about a tenth of its overall business. Brett Birkill, chief executive of Prime Mover, told the Irish Times:
    This acquisition now follows on from the original acquisition six months ago. It catapults it to the next stage of growth.

    Australia's buoyant construction industry made Portwest's additional investment sensible, while pushing further into this market would "help spread the load" of mitigating risk from Brexit, according Mr Birkill.

    Trading since 1904, the company is being run by the third generation of the Hughes family, led by brothers Cathal, Harry and Owen Hughes. It has 2,100 employees and sells its products in 110 countries. CEO Harry Hughes said:
    The company is working to a 5-year plan with a growth rate of 30% per year. Although all growth to date has been organic, acquisitions will play a more important part of future expansion. Our sights are firmly fixed on our new markets of US and Australia and we have an outstanding pipeline of new designs and innovations to drive this growth.

    Related:
    Workwear category dominated by UK player - HNN
    Brickworks grows its masonry business

    West Australian paving and masonry company, Urbanstone has been sold to Brickworks for $13.5 million. Family-owned Schaffer Corporation has divested the last of its building products assets with the sale of Urbanstone to Brickworks.

    The deal does not include Urbanstone's land and buildings in WA, which will be occupied by Brickworks under a long-term lease with Schaffer Corp.

    Schaffer executive chairman John Schaffer said the sale would allow the group to focus on its automotive leather business, its Delta precast division and its property investments.

    Brickworks said Urbanstone was a logical bolt-on acquisition for its masonry business, providing additional scale and diversifying its product range and geographic exposure.

    The sale is expected to generate an after-tax profit of $3.9 million for Schaffer, one of WA's oldest listed companies, having joined the stock market as Calsil in 1963.

    Schaffer Corp made a net profit of $5.9 million last financial year on revenue of $215 million, including a break-even result from its building materials division on sales of $38 million.

    The bulk of its revenue is derived from its automotive leather business, which supplies manufacturers including Nissan, Mercedes and Audi from plants in Australia, Slovakia and China.

    Brickworks' portfolio includes Australia's largest bricks producer Austral Bricks, Austral Masonry, Bristile Roofing, Austral Precast and Auswest Timbers.
    GearWrench unveils new brand identity

    Apex Tools-owned GearWrench has a rebranding campaign. The company sees its new identity embodying the brand's commitment to excellence in manufacturing and innovation. The rollout involves every aspect of the GearWrench brand, including its logo, tagline, colour palette, typography, and product design.

    The new Gearwrench logo, "Forge Ahead" communicates the brand's approach toward forward-thinking, according to the company. Ray Smith, vice-president - marketing, North American Hand Tools, said:
    The GearWrench brand has grown remarkably over the past 20 years. We've undertaken this comprehensive new brand identity program to reflect that progress. This new visual identity will help communicate the high quality of our products, our customer-focused culture, and our commitment to innovation.

    The logo it replaces has represented the brand since it appeared in 1996 when GearWrench introduced the first professional grade ratcheting combination wrench.

    Looking forward, the company plans to continue expanding its redesigned product line. By the end of 2017, GearWrench said it plans to have 4,100 different products available for purchase.
    Husqvarna demonstrates latest products

    The annual Green Industry and Equipment Expo (GIE+EXPO) in Louisville, Kentucky positions itself as the largest trade show for the outdoor power equipment, lawn and garden equipment, light construction and landscape industries. Husqvarna introduced several new products at the recent 2017 event.

    A new model for its Automower robotic mower series was presented, as well as additional products for the company's lineup of battery-powered range and new chainsaws and chainsaw accessories for professional landowners and farmers.

    In 2018, the Automower 310 can serve 0.25 acres and slopes up to 22 degrees. This model also features "Connect from Home", its new connected Bluetooth functionality.

    The Automower X-line will be introduced next year, which Husqvarna says makes the Automower Connect app standard for those models. This app allows owners to control the mower from their smartphone no matter where they are.

    The app works for Android and iOS devices and lets owners receive their Automower's current status and change settings remotely. It also transmits the Automower's precise GPS-tracked location in the event of a theft.

    Husqvarna said it will give its 400 e-series saws a full upgrade in 2018. The 435e, 440e, 445e, 450e and 450e Rancher chainsaws will all have improved start-ability through Smart Start for low rpm ignition, a slimmer saw body and flip-up tank cups, snap-lock cylinder covers and quick release air-filters.

    Additionally, Husqvarna also introduced new saw accessories. The X-Cut SP33G is the company's first-ever chain designed, developed and manufactured from the materials to final product in its production facility in Sweden. The carefully engineered thickness of the chrome layer ensures a lasting sharpness and a high capacity, and the chain requires less power from the saw than the standard cutting systems.

    Available with a 48- or 54-inch commercial ClearCut deck, Husqvarna says the V548 and V554 stand-on mowers provide excellent grass cutting and management. Its latest zero-turn mower series consists of 11 products, four Z500 models and seven Z500X models, ranging from the Z548 to the Z572X.

    The company also announced a line of commercial zero-turn mower blades featuring Fisher Barton's laser edge cutting technology. Husqvarna says these blades feature long-lasting sharpness, reducing downtime for lawn care professionals and increasing cut quality and fuel efficiency.

    With its new BLi100, BLi200, BLi300 batteries, Husqvarna introduced a new line of lithium-ion technology that will replace the current models. The company says these offer faster charge times (50-80 minutes), higher capacities and 100Wh, 200Wh and 300Wh respectively.
    Selleys sees UK opportunities

    The Selleys brand is working with Anthem Worldwide (Australia) to help break into DIY market in the UK with the latest revamp of its brand and packaging, tailoring it towards the British consumer.

    While Selleys is relatively unknown in UK and competing in a category with many established brands, the extreme Australian weather conditions provides strong credentials for Australian brands claiming superior strength and performance. However, with up to 40% of consumers walking away from shelves empty-handed, understanding how customers navigate this category was the focus of Selleys' launch. Ami Heath, account director, Anthem Worldwide (Australia) told Build.com.au:
    Entering such a category as an unknown brand provides both great challenges and opportunities. While brand awareness and trust will always take time to gain traction, opportunities such as this are rare - to be able to reassess norms and provide customers with a fresh approach to old category problems. Targeting both unconfident and confident DIY-ers, we really needed to use design carefully to both appeal to the new British consumer, as well as respect 75 years of Selleys' proud heritage.

    Creative director, Marcel Wijnen added:
    Addressing an age-old category problem of intolerable clutter, we took a bold new iconography-led approach to differentiate from competitors who mostly led with technology cues.

    Paired with a strategic use of colour, the new range significantly simplifies the packaging hierarchy, greatly improving range navigation. This straightforward approach still pays homage to Selleys' no-fuss Aussie persona, but allowed the brand to also unify the range and complement it with a newly refreshed Selleys brandmark.
    Snap-on to appeal patent suit

    Tool maker Snap-on said it will appeal a US federal court's verdict that awarded Milwaukee Electric Tool (not to be confused with the Techtronic Industries-owned Milwaukee brand) nearly USD28 million in a patent-infringement lawsuit.

    The federal lawsuit, filed three years ago in the Eastern District of Wisconsin, involves three Milwaukee Tool patents for battery packs used with cordless power tools.

    The Journal Sentinel reports that Rick Secor, director of corporate communications at Snap-on said the company strongly disagrees with the jury's verdict and will "vigorously appeal."

    In the lawsuit, Milwaukee Tool said the lithium-ion battery packs it invented greatly changed the industry after being introduced in 2005. The technology replaced packs that used nickel-cadmium batteries. A spokesman for Milwaukee Tool said:
    The introduction of Lithium-Ion technology to the professional power-tool industry was groundbreaking and resulted in multiple patents for our company that we continue to aggressively defend. [The] jury verdict by the federal court affirms Milwaukee Tool's leadership in new-to-world technology in cordless tools for the trades.

    Milwaukee Tool asserted in its lawsuit that "no other technology could offer the combination of high power, light weight and compact size made possible by Milwaukee Tool's inventions."

    The lawsuit contends Snap-on infringed on Milwaukee Tool's patents when the company made lithium-ion battery packs for Snap-on tools. But Snap-on argued in court filings leading up to the trial that Milwaukee Tool's claims were invalid because Canadian battery maker E-One Moli Energy had actually developed the technology and brought it to Milwaukee Tool. Moli eventually gave up its patent ownership rights in 2006 and established a license agreement with Milwaukee Tool.

    "Snap-on does not believe, that there was anything inventive about using a Li-ion cell in a high-powered cordless tool battery pack. But assuming...there is an invention here, Moli conceived of it, and not (Milwaukee Tool)," Snap-on attorneys wrote in seeking a summary judgment.

    The jury hearing the case concluded that it was more likely than not that Snap-on's lithium-ion battery packs infringe on Milwaukee Tool's patents. It determined the award was a "reasonable royalty" after determining Snap-on had likely willfully violated elements of three different Milwaukee Tool patents.

    Milwaukee Tool's victory in its lawsuit alleging patent infringement was not surprising, said Scott Hansen, one of the lawyers who represented the company.
    The amount was fairly based on the amount of Snap-on's infringing sales.

    He noted that the jury deemed the infringement willful. That finding, Mr Hansen said, allows the court to increase the damages Snap-on could have to pay by up to three times the amount of the jury's award.
    TTI portable generators with EFI technology

    Techtronic Industries Power Equipment (TTI) said it is bringing closed-loop electronic fuel injection (EFI) technology to its Ryobi branded line of portable generators.

    EFI technology has been used extensively in the automotive and houseboat industries as an environmentally responsible advancement in engine technology. TTI is introducing the performance enhancing advantages of EFI technology to its product lineup.

    The new EFI engine option is featured on the RY907000FI model generator and provides up to 20% greater fuel savings, compared to a standard carburetted engine while also improving starting and performance at all elevations. Most significantly, the on-board electronic engine management system greatly reduces Carbon Monoxide (CO) exhaust emissions emitted from the engine. Lee Sowell, president of TTI Power Equipment Outdoor Products division, said:
    The most effective way to mitigate the potential for CO related injury is to first address the hazard at the source by lowering the amount of CO produced. This new engine technology being applied to portable generators has the potential to save lives and prevent countless injuries...

    TTI began production of the Ryobi model RY907000FI generator in September 2017.
    Retailers
    Retail update
    Tradelink's Wade Young, Dean Walton and manager Shannon Ryan from the Bundamba store
    HNN Sources
    Mitre 10 New Zealand has 81 stores in its group
    Neil Cowie, Mitre 10 New Zealand chief executive
    Click to visit the HBT website for more information
    Housing and renovation hubs are the ideal location for Tradelink, according to its management team; and Mitre 10 New Zealand continues to operate in "a highly competitive market" as it presents its latest results.
    Tradelink branch opens in Ipswich

    A Tradelink store has opened in Bundamba (QLD), less than a kilometre from the newly opened Bunnings.

    Next door is a paint store, over the road is a bathroom design store, a carpet store, and just down the road is a Dulux paint store, plus work is nearing completion on a new Taubmans store. It is now a highly concentrated area for those keen to do some home renovations.

    Tradelink has added to its 220 branch network with this location which currently employs three local staff.

    Manager Shannon Ryan from Springfield made the move from assistant manager at the Underwood store to take the reins at the Bundamba location, and loves the fact that he is bringing his 15 years of experience to those who live and work in his own town. He told the Queensland Times:
    I think people are renovating more than ever. They are improving what they have. Instead of buying brand new homes people are choosing to improve the homes they already have, and it's always only going to improve the value of your property.
    There is a definite opportunity in this area. We have three paint stores within 500 metres of each other and the Bunnings up the road has helped...it's a hub for tradies and people with the renovation bug.

    This is the seventh store Tradelink has opened across Australia this year, and plans are under way for another 13.

    Tradelink's general manager Tim Broxham said that the new store was another example of how the business was identifying opportunities to continue improving their service offering to the trade community by positioning stores in convenient locations.
    We know that plumbers prefer not to travel more than 15 minutes from a job to get parts, so no matter where our customers are working, we want to make sure that there is a Tradelink branch nearby.
    Mitre 10 NZ posts gain in full-year profit

    Mitre 10 New Zealand posted a 38% gain in full-year profit after reining in some expenses including wages, helping to offset some margin pressure on seasonal products.

    Profit was NZD4.4 million in the 12 months ended June 30 from NZD3.2 million a year earlier, the Auckland-based company said in a statement. Revenue from the sale of goods rose to NZD818 million from NZD767 million.

    The hardware retail co-operative, whose shares are held by its store-owning members, supplies goods and services to the 81 outlets in the group. Chief executive Neil Cowie said:
    We're cautiously optimistic. There's been some softening around the edges through the 2017 election but people will still be investing in their homes and there will still be homes being built. If you look at construction, the new coalition is looking like investing in houses and having a push on infrastructure.

    Mitre 10 Chairman Martin Dippie also said a number of external and internal factors its drove growth over the past year.
    Our members are continually investing in their stores, upgrading, expanding and finding new ways to deliver the best in-store experience for our customers. Complementing this in-store growth is our commitment to create a complete online experience for our customers as well...

    Reflecting this, Mitre 10's online sales grew 48% compared to last year, and the company added another 7,000 SKUs (stock keeping units) to its online product range.

    Mr Cowie said the omnichannel approach has strong appeal with customers in both the retail and trade segments because they can easily buy online, and it offers the freedom to get inspiration and advice and compare products and prices, 24/7.
    Having done their homework online, our customers then have the option to visit their local Mitre 10 store and take advantage of our showrooms, range, product knowledge and advice. Our recent kitchen showroom rollout helped drive a strong increase in kitchen sales, compared to 2016, and we are also rolling out our new bathroom showrooms which we expect will perform well.

    Total stores fell by one during the year as a result of the earthquake-related close of the Kaikoura outlet. The aggregate of Mitre 10 store sales rose to NZD1.36 billion in the latest year, from NZD1.24 billion.

    Cost of sales rose to NZD747 million in the latest year from NZD692 million. Margins were squeezed after a mild winter last year, which saw the chain forced to mark down heating products. This year, Mitre 10 has faced a wet spring season. Mr Cowie said:
    It's still early days so hopefully there's a bit of pent-up demand. Seasonal categories can be under pressure. But we're picking that it's still going to be a strong year for our business.

    Mr Cowie said as part of Mitre 10's restructuring it moved to paying member rebates by installment rather than at the end of each year, which helped its members manage their cash flow and reduced the financing "bulge" it previously faced.

    Unlike rivals such at Fletcher Building's Placemakers and ITM, the Mitre 10 outlets rely less on trade sales and the split is currently 70% retail and 30% trade, Mr Cowie said. Mitre 10 stores are currently rolling out revamped bathroom departments having spruced up its kitchens departments in a move that led to a 30% increase in kitchen sales, he said.
    Our trade strategy is to not just to sell concrete and Pink Batts - we're happy to sell them (builders) the kitchens and bathrooms as well.
    Retailers
    Europe update
    Inside the newly-opened Bunnings Basildon store
    HNN Sources
    Travis Perkins reassures on profits despite rising costs and market volatility
    Toolstation continues to expand its network of branches
    Click to visit the HBT website for more information
    Bunnings in the UK has confirmed plans to open 20 stores in Britain by the end of this year and is exploring a number of formats. Travis Perkins said it faced an "increasingly difficult market environment" in the third quarter but its Toolstation achieved "excellent" like-for-like and overall sales growth.
    BUKI looks at different format stores

    According to UK trade journal Property Week, Bunnings United Kingdom & Ireland (BUKI) could trial smaller format stores. This would see stores ranging from 30,000sqft to 80,000sqft open in central city areas as part of the expansion drive, directly targeting the millennial market. BUKI managing director Peter (PJ) Davis said:
    We would love to have a network of 80,000sqft stores, but the reality is not like that. We will be opening Bunnings stores before Christmas to test how that smaller format will work in the UK.
    We are happy to buy property and turn it over as we go through the investment cycle. Our investment (in the UK) in future is going to be quite big. We will continue our test, learn and improve approach through our Bunnings pilot store programme in the UK and Ireland, which includes many varied formats, including smaller stores and larger warehouses.

    Mr Davis added that it would also be seeking warehouse sites between 50,000 and 200,000sqft in high-footfall areas.

    Michael Schneider, CEO of Bunnings Group, has also stated that previous reports of 100 stores opening the UK were incorrect. He said:
    We have no current plans for network expansion in the UK. Our absolute priority is on proving up the Bunnings pilot concept and improving execution in the Homebase stores. While we will always look to optimise locations of our stores, references to plans for large scale store openings are completely incorrect.

    In a sign that it will target built-up areas as well, Bunnings says it is weighing up developing multi-level stores where it will operate on the ground floor and units could be built above its stores.
    Store openings and plans

    BUKI officially opened its first Homebase conversion in Essex in early October 2017. It measures 57,000sq.ft. Basildon complex manager, Neil Potter, said the team helped with projects in the local area ahead of the opening.

    BUKI also launched a 76,000sqft store in Worle, a large village in North Somerset. The outlet is on the site of the former Homebase at Queensway Centre. former British number one tennis player Andrew Castle was part of the opening.

    Another Homebase conversion store opened in Harlow, west of Essex. The new store is 78,000sqft and managed by complex manager Joanne Broadhurst.

    A smaller store in Bicester will open in December.

    BUKI also announced plans to open a store on Twickenham Road in Hanworth, early next year. Hanworth is an urban and suburban London district on its south-west edge. Historically in Middlesex, it now forms part of the London Borough of Hounslow.

    A Bunnings Warehouse has been proposed for Loudwater in 2018. It will open in place of Homebase - which is in the process of shutting down - in Knaves Beech Retail Park.

    In addition, a new store on Oaks Drive in Newmarket is being planned for next year. Newmarket a market town in the English county of Suffolk, approximately 65 miles north of London.
    Travis Perkins sales up despite uncertainty

    Builders' merchant and DIY supplier, Travis Perkins, recorded a 3.5% year on year increase in revenues in the three months to the end of September despite what it described as "market volatility".

    On a like-for-like basis, the rise was 4.1%, though it noted that the results were in part boosted by a "weak comparable" in 2016. Like-for-like sales in the group's consumer division, which includes the Wickes DIY chain, slowed to 2.4% from 4.7% at the half year.

    The past year has been a difficult one for Travis Perkins with economic uncertainty intensifying concerns about the group's prospects. John Carter, Travis Perkins' chief executive, said:
    We have delivered a good like-for-like sales performance across the Group in the third quarter against a challenging market backdrop of input cost inflation and market volatility...Trading conditions in our markets continue to be mixed, with consumer discretionary spending under pressure from rising inflation and on-going uncertainty in the UK economy.

    The results come after the latest survey of purchasing managers in the construction sector suggested activity in September declined for the first time in 15 months, off the back of "fragile confidence and subdued risk appetite" in the commercial building sector.
    Toolstation accelerates expansion

    Travis Perkins-owned Toolstation is ramping up its property portfolio with ambitions to accelerate its number of store openings per year. It is looking for a range of sites, including small units measuring 2,800sqft and standard units measuring between 3,750 and 6,000sqft, to add to its existing 280-branch network.

    The retailer is also on the lookout for London high street locations measuring 4,000sqft with parking in close proximity.
    Retailers
    USA update
    Ace Hardware makes a strategic purchase in acquiring The Grommet
    HNN Sources
    Lowe's releases two new augmented reality apps
    Craftsman tools will be distributed through Lowe's, not the Home Depot
    Click to visit the HBT website for more information
    Ace Hardware is betting on the on growing Maker Movement where inventors create new products to fulfill emerging needs and the consumers in search of them; Lowe's continues to explore new technologies that have advanced uses for retail; and Stanley Black & Decker has chosen Lowe's as a channel partner to sell the Craftsman tool brand.
    Ace Hardware invests in e-commerce startup

    Ace Hardware has acquired a majority stake in The Grommet, an e-commerce startup that brings to market products from independent entrepreneurs and emerging companies.

    Launched in 2008, The Grommet has worked with more than 2,500 inventors, entrepreneurs and small businesses to launch dozens of household products and brands on its website. FitBit, IdeaPaint and SodaStream are among the items that were showcased on The Grommet as they were launching. Co-founder Jules Pieri explains:
    We've both been duking it out for the little guy. Ace has been doing it for 93 years and we've been doing it for just under nine years. There's a lot of heart and soul and passion for helping people realize their dreams.

    Ace Hardware is now the controlling owner of The Grommet but will not alter the company's strategic direction, according to a company statement. Employees will continue to have some equity ownership of the company and will remain autonomous. Terms of the deal were not disclosed. John Venhuizen, president and CEO of Ace Hardware said:
    We both stand as strong advocates for the underdog. From the very beginning we have appreciated our alignment in support for and advancement of the independent maker. Under Ace's ownership, I believe The Grommet can offer our customers more of that which fuels global economies and makes America special - the unbridled creativity of the local entrepreneur.

    The Grommet evaluates and selects products called "Grommets" across 16 categories and promotes them on its network by telling the stories behind each product. Only 3% of all products submitted and evaluated are launched on the site.

    Ms Pieri said they took a gamble by establishing the company in 2008, during the height of the economic crisis. Now, the company has grown to 85 employees and boasts more than 3 million subscribers.

    In 2016, The Grommet partnered with Ace for a pilot program called Innovation Incubators - a freestanding Grommet display in Ace's bricks-and-mortar stores that holds about 40 different products they test each quarter, Ms Pieri said.

    About 20 products have graduated from the incubator program into "the big leagues" and are being stocked in all 5,000 Ace stores, according to Ms Pieri.
    It's a way for us to really expand the opportunities for the companies we work with into a really healthy and long term relationship with Ace.

    Ms Pieri said the goal of the incubator program was to bring new, unique and otherwise undiscovered products from entrepreneurs into select Ace stores. Products range from traditional hardware to personal accessories and pet products.

    The Grommet helps emerging companies and entrepreneurs market their products in the "post-Kickstarter phase," explains Ms Pieri, adding that retail was the company's "next natural step."

    The deal aligns with Ace's focus on being a champion for small business and bringing locally relevant, innovative products to its independently owned stores, according to Ms Pieri.
    While we get a lot of data and interaction from our e-commerce site, the reality is that over 90% of retail is still physical. So we're living up to our promise to our makers by making them realise their business potential.
    Lowe's has two augmented reality apps

    Lowe's Companies is launching two apps leveraging Apple's new ARKit capabilities - Measured by Lowe's and Envisioned by The Mine - to transform smartphones into measurement and design aides.

    Unlike other apps, Measured by Lowe's allows users to get instant measurements and share measured moments on social media, straight from the app. It is one of the first accessible apps using augmented reality to turn any iPhone model 6S or newer into a visualisation tool to measure an object or distance within the phone's camera view. It can be done quickly and easily, and saved it for later.

    Envisioned by The Mine (a Lowe's company) allows users to view high fidelity digital images of furnishings at scale, in their own home or a commercial space. Customers begin their journey by navigating through The Mine's designer-inspired product catalogue.

    Once an item is selected, users can immediately place a high-quality, accurate-to-scale 3D version into their room, and modify, rotate or duplicate. The app's photo mode then allows users to capture images, share and purchase.

    The app also integrates with TheMine.com to provide a seamless shopping experience with existing, high fidelity 3D models that are generated by Lowe's Innovation Labs proprietary 3D content creation and distribution technology called LIL 3D. According to Michelle Newbery, president of The Mine:
    Our customers come to The Mine for a seamless, high-touch shopping experience that combines design-inspired home furnishings with a personal concierge level of service. With our new app, we're taking this virtual showroom a step further to build customer confidence before they buy.
    Lowe's to sell Craftsman tools

    Lowe's is betting the Craftsman name, once linked to Sears, will give it an advantage over Home Depot Inc.

    Starting in the second half of 2018, Lowe's will offer the 90-year-old tool brand. Almost as important, this means Home Depot won't, giving Lowe's a way to differentiate from its top rival. The deal also includes developing exclusive Craftsman-branded products for Lowe's. Jackie Pardini Hartzell, a spokeswoman for Lowe's, said:
    We always try to have a wide breadth of brands that people know and trust, and Craftsman is certainly one that will help us deliver on that.

    Stanley Black & Decker bought Craftsman from Sears Holdings Corp. earlier this year for USD900 million, part of a years-long run of asset sales by the struggling retailer. Sears had kept distribution of the tool brand tight with only about 10% of purchases coming at other chains.

    In buying Craftsman, Stanley aimed to revive it by investing in product development and expanding distribution. It has chosen Lowe's as the next retail destination for its Craftsman brand.

    Lowe's will also sell the products online. Orchard Supply Hardware, a small retailer Lowe's bought in 2013, was already offering Craftsman items. They are also sold at Ace Hardware, which has more than 5,000 stores.

    Craftsman is still sold in Sears stores and on its website. The purchase by Stanley Black & Decker provided Sears the right to sell Craftsman products made by its existing suppliers, royalty-free, for up to 15 years.

    Related:
    Craftsman sold to Stanley Black & Decker - HNN
    Products
    Pliers built for tough jobs
    The 8" long-nose gripping pliers are specially designed for areas difficult to reach
    Utility Products
    The Knipex 11" welding gripping pliers have moveable jaws with clamps for cumbersome workpieces
    The 10" universal gripping pliers feature a pivoting bottom jaw that automatically adjusts to any workpiece in the field
    Click to visit the HBT website for more information
    Knipex Tools has released its series of gripping pliers. The 10" universal gripping pliers feature a pivoting bottom jaw that automatically adjusts to any workpiece in the field, including square, round, hex and flat materials. The pliers have toggle lever action for a high clamping pressure grip, making the pliers ideal for secure, one-handed operation.

    The 8" long-nose gripping pliers are bright zinc-plated and feature narrow, long jaws at a slim width of 1/4". The pliers are specially designed for areas difficult to reach. These pliers also have a non-serrated gripping area for pinching off hoses.

    The Knipex 11" welding gripping pliers have moveable jaws with clamps for cumbersome workpieces and sections with high ridges up to 1 1/2". The maximum gripping capacity of the pliers is 3 17/32".

    All Knipex Gripping Pliers have a heavy-duty design with an adjustment screw and release lever for ease of use. They feature one-hand operation and a toggle lever action for high clamping pressure. The body of the gripping pliers is made from high-strength rolled steel and the gripping jaws are forged out of chrome vanadium electric steel.
    News
    HI News V3 No. 11: Murphy's Mitre 10 Monbulk
    Download the latest issue of HI News Vol. 3, issue no. 11
    HI News
    A view of Murphy's Mitre 10 store in Monbulk (VIC)
    Natbuild accuses Mitre 10 of breaching its website, page 26
    Click to visit the HBT website for more information
    An in-depth story on the Murphy's Mitre 10 store in Monbulk (VIC) and the woman who runs it, Julie Murphy dominates the pages of the latest edition of HI News. We also analyse the potential ramifications of Natbuild's accusations that Mitre 10 allegedly breached its data.

    Simply click on the following link to download this edition:
    HI News V3 No. 11: Murphy's Mitre 10 Monbulk

    In other Australian industry news, we write about long standing supplier Romak Hardware and its role in helping to establish Hardware & Building Traders as a buying group.

    Bunnings is also facing opposition to its planned store in Kingaroy (QLD) and Tasmanian hardware retailer Kemp & Denning explains its change in strategy to its shareholders.

    On the international front, we cover Kyocera's planned acquisition of Ryobi power tools and the issues currently facing plumbing specialist, Reliance Worldwide as it stocks its products in both major US big box retailers, Lowe's Home Improvement and Home Depot.

    Still in the USA, Home Depot has teamed up with Google so that it can start selling its products online through voice commands and Lowe's launches its latest social media campaign on Instagram Stories.

    Over in Europe, we include stories and about Kingfisher's latest results and Bunnings United Kingdom & Ireland transitioning the Homebase website.

    Black & Decker's GoPak battery, Cabot's latest deck coating system, the Festool Hybrid Sander and the cordless pruning saw and chainsaw from Worx all feature in the products section.
    Editorial
    NatBuild accuses Mitre 10 of breaching website
    Natbuild has a substantial online presence
    HNN Sources
    The TradeNET login
    Google Authenticator eases use of two-factor authorisation
    Give to Amnesty International
    Sometimes it can seem like the internet's second purpose is to function as a giant irony machine. In that vein, it's worth noting that October 2017 marked the fifth iteration of Cyber Security Month across much of the world. Nicely synchronised with that, it was also the month when allegations emerged that person(s) working for Mitre 10 (part of the Independent Hardware Group (IHG), which is owned and operated by the Australian Stock Exchange-listed Australian wholesaler and retailer Metcash) had made an unauthorised access to the website of The National Building Suppliers Group (NatBuild) in late September 2017.

    News of this alleged breach was scooped by Sue Mitchell of Fairfax Media, writing in the Australian Financial Review (AFR) of 2 October 2017. Her article can be accessed here:
    Mitre 10 in legal stoush with Natbuild after website breach - AFR

    Since then, further details have emerged, largely through filings with the Federal Court of Australia. We summarise below what is known so far, and how that information came to light.
    What we know so far
  • The AFR article states that an "emergency audit" conducted by NatBuild indicates an alleged unauthorised access of its TradeNET website took place on 22 September 2017.
  • TradeNET is used by NatBuild members to access information about the confidential trade agreements reached between it and suppliers.
  • The investigation is centring on a specific individual who worked at Mitre 10. (Though it is publicly available, HNN has chosen to not disclose his name at this time.)
  • As far as HNN can tell, this individual seems to have previously occupied a senior middle-management position at Mitre 10, apparently the equivalent of a category manager.
  • The AFR also states that this unauthorised access is alleged to have made use of the credentials of a person who works with long-term NatBuild member Dahlsens.
  • That access is alleged to have been made by a computer using the Mitre 10 and HTH/Danks internet access point, as indicated by the computer's IP address.
  • According to an affidavit cited by the AFR, NatBuild's emergency audit alleges that the unauthorised access included 44 supplier agreements worth $359.7 million, 17 price lists, and the minutes of meetings with suppliers.
  • There have been two Federal Court hearings to date, with a third scheduled for 23 October 2017.
  • The first Court order names four respondents: Mitre 10 Australia, Home Timber & Hardware Group (HTH), Danks Holdings, and the individual alleged to be responsible for the unauthorised access.
  • Orders stemming from the first Court hearing were largely to do with preserving potential evidence held on Mitre 10 and HTH computers, as well as devices used by the person on whom the allegations are centred.
  • Orders stemming from the second Court hearing went to further securing evidence, in particular the forensic examination and copying of data from one particular smartphone.
  • These Orders also sought information about all persons at Mitre 10 who would have had any access to any information that might have been obtained in the alleged breach.
  • How alleged breach was uncovered
  • Individual from Mitre 10, in negotiations with supplier Corinthian Doors, is alleged to have indicated knowledge of highly confidential deals between Corinthian and NatBuild.
  • Notified of this allegation, NatBuild cannot determine any way individual could know of these deals, and so instigates emergency audit of website.
  • Audit allegedly indicates one suspicious access of those deals, obtained by a user allegedly using login details that belonged to an employee of long-time NatBuild member Dahlsens.
  • Further investigations indicate that the person using those login details allegedly did so through the internet access point operated by Metcash subsidiaries Mitre 10 and Danks/HTH, as indicated by the IP addresses used.
  • The damage done

    The affidavit is said by the AFR to cite NatBuild product category manager Jon Rodman as alleging that the direct damage done by the unauthorised access could be between $8 million and $18 million. Further, according to Mr Rodman, this would place Mitre 10 in a better position to lure existing NatBuild members away.

    Ms Mitchell's AFR article quotes NatBuild chairman Martin Hartcher as saying:
    We are concerned that the information has been accessed unlawfully and we are concerned that this will impact on the confidentiality of our agreements with suppliers. We are at a point in time where we are openly competitive with Mitre 10 for independent building supplies firms, and that this forms part of that competitive struggle.

    Much of the investigation into this alleged breach is going to centre on exactly how much damage could result. Beyond giving a legal rendering of the extent of damage caused, it is also, of course, vital in an operational sense to NatBuild, which now finds itself, through no fault of its own, embroiled in an effort to control and limit any damage caused by the alleged behaviour.

    The core difficulty with unassociated breaches of highly confidential information that have occurred in the past is that, to use an American expression, they represent a bell that cannot be unrung. Once confidential information has been accessed, it cannot be unaccessed. Even if it can be proven that confidential information was not widely disseminated, it is always the case that little can prevent its future dissemination.

    Beyond NatBuild, there are also the concerns of the suppliers themselves, who are uninvolved bystanders. Corinthian Doors, in particular, has found itself at the centre of these issues, and may face exposure to the public of many of its confidential dealings with NatBuild, though it is likely steps will be taken to limit any harm from this by the Courts. It is a risk that applies whether the allegations are proven true or not.

    Just how vulnerable any interference in the business of negotiating rebates with suppliers can make Mitre 10 parent Metcash is revealed in the statements of Metcash's auditors, Ernst & Young, in its audit of annual accounts:
    The Group [Metcash] receives income from suppliers which is determined based upon a number of measures including quantities purchased, quantities sold, purchase values and the performance of promotional activities.
    We considered this to be a key audit matter as supplier income contributes a significant value to the Group's results, there are a large number of varied agreements in place and some of the arrangements require judgment to be applied in determining the appropriate consolidated statement of comprehensive income classification based on the terms of the agreement.
    This is not a "hack"

    While some commentary has suggested that what is alleged is that "Mitre 10 hacked NatBuild's website", what is alleged is really not a hack in the conventional sense.

    In purely general knowledge terms, there is just no way that anyone with any real computer knowledge at all (including many savvy 15 year-olds) would ever use unauthorised credentials to access a website from a known, fixed IP address. At the very least, even if you aren't very technical, you could use the WiFi at a shopping centre, a library, even a McDonald's. If you are technical, there are a dozen different ways of masking an IP, by using a proxy server or VPN host, and so forth. Sites such as Hidester (/https://hidester.com/proxy/}Hidestar.com) offer these services for free.

    Speaking entirely hypothetically, based on experience in other, different cases, sometimes people have obtained confidential login information, and think the "safe" thing to do is to log onto the website using a smartphone, so as not to compromise their company's systems. Except, of course, that the smartphone turns out to be connected to the office WiFi, and therefore uses the company's IP address.
    Who is to blame?

    Setting aside the specifics of this particular case, we're really looking at a very common type of situation in the world today. There are three players in these situations: the company that has the online data resource; an individual or small group of individuals that has obtained information, altered information, faked data or something of that nature; and then there is the company that person or people work for, which stands to benefit (theoretically) from their activities. It has a very wide range, from conventional hacking for information, to what happened at Volkswagen over its intentional hacking of tests for diesel engine pollution.

    Much of the debate in these cases comes down to whether we are willing to accept the narrative of the "rogue employee", or if we acknowledge that the company that employed the hackers shares some responsibility as well. In cases such as Volkswagen, and even in the case of "rogue" financial services traders, it is increasingly the case that the individual and his/her employer are seen as sharing the blame.

    Senior managers at Volkswagen are now undergoing scrutiny and prosecution for what is seen as their part in emissions dodging. French Societe General trader Jerome Kerviel was convicted for his part in EUR4.9 billion in trading losses. While his conviction was upheld, Societe General has now been judged unjustified in his firing and forced to pay compensation. Additionally, instead of being required to pay back billions of euros, Mr Kerviel is now held accountable for EUR1million. That's because the courts recognised that Societe Generale was largely responsible for those losses through their past conduct. (Society Generale is appealing these rulings.)

    In general terms, there has been a shift to see employers as having an active responsibility in these matters. The questions that get asked include: did they provide clear ethics guidelines to all employees? Did they enforce ethics, or covertly encourage unethical behaviour by concentrating only on results, and not on means? Was there any audit/review process in place to ensure employees were acting ethically?

    It's likely that as the business world comes to terms with the allegations involving NatBuild that all of Metcash operations are going to come under this kind of scrutiny.
    NatBuild's role

    First and foremost, NatBuild really should be congratulated, especially NatBuild's IT team. This is some great work, and they deserve kudos. Not only were systems set up which enabled NatBuild to trace information accessed by a specific login, but also they were evidently able to act swiftly and effectively in getting that information to management.

    HNN notes also that NatBuild has a very good terms and condition document on their website. (We checked, this is the same one they had in February 2017, so it wasn't updated after the fact.) Among its terms and conditions it states:
    You must not: republish material from this website (including republication on another website); sell, rent or sub-license material from the website; show any material from the website in public; reproduce, duplicate, copy or otherwise exploit material on this website for a commercial purpose; edit or otherwise modify any material on the website; or redistribute material from this website.
    Where content is specifically made available for redistribution, it may only be redistributed within your organisation.
    If The National Building Suppliers Group provides you with a user ID and password to enable you to access restricted areas of this website or other content or services, you must ensure that the user ID and password are kept confidential.

    And later adds:
    Without prejudice to The National Building Suppliers Group's other rights under these terms and conditions, if you breach these terms and conditions in any way, The National Building Suppliers Group may take such action as The National Building Suppliers Group deems appropriate to deal with the breach, including suspending your access to the website, prohibiting you from accessing the website, blocking computers using your IP address from accessing the website, contacting your internet service provider to request that they block your access to the website and/or bringing court proceedings against you.

    So not only a good IT team, but a good legal team as well.

    That said, as of 22 September 2017, the rules for data security in the home improvement industry have radically changed, and this applies as much (if not more) to NatBuild as to anyone else.

    From now on the minimal acceptable standard for securing data online will be a two-factor authentication (TFA) system. If a company securing valuable data online is not using TFA, and there is a data breach, they could be held responsible. Beyond that, as the NatBuild situation indicates, even the suggested breach of this kind of data has long-running, severe consequences, and no company can risk that happening.

    TFA is a system that many are by now familiar with. Accessing services such as MyGov, for example, typically requires TFA. After logging in with a username and password, the system will text a four-digit temporary "PIN" to your mobile phone, which you then enter to obtain access.

    Had TFA been used on the NatBuild website, the alleged unauthorised access would have been almost impossible. In the case of an unauthorised access, the person whose credentials are used would receive a PIN notification, and could alert NatBuild's IT department that an attempt had been made.

    Fortunately, TFA systems have become more sophisticated and easier to deploy. Companies such as Trilio offer packages that include TFA. Also Google Authenticate is an app for both Android and iOS devices that eliminates reliance on texting for TFA. The app enables you to set up a special PIN generator, based on a "secret" that users share with the website they are accessing. When you want to access the website, you enter your username and password, then look up the PIN on your smartphone, and enter that as well.

    It is vital that every buying group, as well as suppliers, and even retailers, make the move to TFA. These security needs are only going to increase.
    Analysis

    It is important to note that the progress of these allegations through Australia's legal system is in its very early stages. We really cannot tell, objectively, how much substance there is to the NatBuild allegations. That is what the Federal Courts are for. HNN will be following every aspect of this case as closely as we can.

    For many of us in the home improvement industry, however, these allegations do not come as a big surprise. We've all been aware of how heated the competition has been to get the best possible price and biggest ever rebate from suppliers. There has been for some time a fair amount of "grey area" dealing around this, with some retail buying groups working on the very edges of what is ethical when it comes to finding information.

    Perhaps the real question we need to ask is whether this concentration purely on knocking suppliers down to the lowest price possible is such a great idea. One cause behind it all is the perceived need to compete with the giant of the industry, Bunnings, on its own terms.

    HNN would contend that this is a massive misreading of the market (and of Bunnings). Certainly, Bunnings does seek low prices from suppliers, but it does so in the context of demonstrated, consistent high volumes of sales across a broad range of products. It also has arrangements that enable it to work closely with suppliers to tailor products to the needs of its stores and the markets they serve. Captive brands such as Ozito and Tactix provide it with unique advantages, as do exclusive distribution deals with brands such as Ryobi and AEG.

    To respond to such a sophisticated supply infrastructure by merely negotiating over small percentages of margin for a very limited range of products is to demonstrate an inability to grasp how the home improvement market differs from broad commodity retailing in areas such as supermarkets. It limits the ability of suppliers to effectively market their products, makes innovation very difficult for them, and will, eventually, create markets controlled by supplier duopolies.

    HNN would strongly suggest that it is not simply the case that "customers want low prices". Customers actually want a lot of things, and low prices is just one of them. It is possible that some retail buying groups have become obsessed with low prices and little else because the other deliverables -- real product knowledge by staff, genuine in-store help, and a focus on helping customers get things done -- are a lot harder to achieve.
    Companies
    Profile: Lawrie Peck, Romak
    Lawrie Peck, national sales manager, Romak Hardware Distributors
    HNN Sources
    Lawrie Peck, left, Mitch Cameron, right, and Betty Tanddo, middle
    Lawrie Peck with Romak's new display stand
    Subscribe to HNN weekly e-newsletter
    In a business environment where the relationship between home improvement suppliers, buying groups and retailers can seem a little fraught at times, Lawrie Peck and hardware company Romak could serve as an example of a better world.

    Romak, of course, is one of the best known names in hardware in Australia. The list of what it can supply is so extensive it's hard to grasp. This includes: Bed fittings, brackets, cabinet fittings, door fittings, door handles, door locks, flyscreens, gate and garage fittings, cabinet and door hinges, wheels and castors, curtain fittings, grommets, nuts, washers, sheds, house numbers, mailboxes, signs, bathroom and plumbing accessories, child safety accessories, padlocks, mirror fittings, cleaning products, garage system storage, and, of course, a wide range of shelving storage.

    Over the past 25 years and more it has filled a slot as a supplier of choice to many hardware stores, big and small, corporate and independent.

    Lawrie has been part of Romak almost from the beginning. Recently, the company has restructured, with the result that Lawrie has found himself once again more heavily involved with the side of the business that he most relishes: dealing directly with independent retailers.
    Lawrie's background

    Lawrie's own life in hardware began at a very early age.
    My father was a roof tiler and, during school holidays, I would go with him on work sites and help him with roof tiling. I used to talk to the builders working on the houses and knock off all their nails. I used to pinch some of their tools and stuff! So I was always in that environment.

    After leaving school at 15, Lawrie ended up working at what seems to have been virtually the university for many hardware stalwarts, the hardware retailer McEwans.
    Like a lot of people in the industry today, I started at McEwans. I was with them for 13 years. That was back when the Luxton family owned the business. So back then, in a sense it was a family-owned business, an independent business. And it was one of the major hardware stores.

    A little less than a third of McEwans was sold to Repco in 1979, which resulted in a partial exodus of staff, who went to work elsewhere in the industry. Lawrie ended up leaving the hardware industry for a short term, going to work for an electrical company.

    However, he wasn't gone for long, soon returning to work for HM Cowdroy. He parted ways with that company in the depths of "the recession we had to have", which began in mid-1990. After working elsewhere for a brief period, Lawrie accepted a position with Romak around 1993, and has stayed with the company ever since.
    Romak

    Lawrie's career at Romak started shortly after its original owner had sold the company to Mark Wu. Mark had been joined by Oscar Lin, who is a director, and one of the hands-on executives involved in the business.

    Lawrie sees Romak as being in a very fortunate position. It has a manufacturing base in China, with Chinese owners, but a strong presence in Australia.
    We are lucky at Romak, we have China-based owners, we have manufacturing plants in China, we have a big distribution centre in China. We are lucky in the sense that we have a lot of openings that we can go to. For arguments sake, if there were products made in China for storage or flat pack stuff, we would be able to source it. We can respond quite quickly to different product demands.
    We do our own manufacturing which is fantastic. We have a lot of people contact us to see if we can make products for them. So they can send samples and we'd just get it done and give them a price, and it would have to be in the thousands for it to work, but we are open to that.

    Romak has a wide-ranging business, including sales to North America.
    Out of China they also export to America. We also manufacture for ED Oates, some of their buckets and things. They sell those scissor brooms so we do those for them. We manufacture for McIntyre Steel and we used to manufacture a bit for Geelong Sales, their tool boxes.

    Romak at the moment is going through something of a growth spurt, according to Lawrie, as it moves into new areas.
    We are currently in the process of improving some of our product ranges, and increasing our ranges especially in the gate hardware side of the business. We are almost doubling the size of that business.

    One piece of news that is really going to excite a lot of Romak customers is that the company has finally gotten around to redesigning its packaging. While Romak products have long been held in high regard, it has become almost traditional for long-standing customers to rag Lawrie about the slightly "daggy" design of Romak's packaging.
    We are also looking at our packaging - which will probably make a lot of people happy out there. We are redesigning our packaging! We are currently employing a designer to do this.
    We've designed some new boxes and we are doing them in yellow to go with HBT colours. We are producing labels with a photo on the front et cetera. And we'll be using them for a lot of our bulk products. We are doing all this in-house which is exciting.

    Romak is also pursuing deals with fellow suppliers, with a view to presenting a comprehensive solution for retailers.
    I can see a lot of growth for Romak hardware in the next 2 to 3 years. That's got a lot to do with the changes we've discussed with some complementary suppliers.

    Nowadays, much of Lawrie's attention is on the independent Australian retailers.
    I mainly concentrate on the HBT group. We do a bit with the Natbuild group which is backed up by Bowens and Dahlsens, always have been. Then there is Hardware & General up in Sydney.

    It's a nice change from some of the tasks he's had to do in past years.
    I was tied up in the office for about three years. I was still very involved with the independents, but at the time we needed someone with knowledge of the industry to service inquiries that originated with Bunnings customers. A lot of end-consumers bought products, who had DIY issues with them. That took up a lot of my time before we employed a few people to look after that side of the business.
    We used to receive about 90 to 100 calls per day, nationally. They would ask, how do I install a door lock? Well they probably shouldn't have bought one in the first place! They would mistakenly buy a privacy lock and ask advice on how to install it, as a front door lock.

    Not that Lawrie was idle during that time. Aside from managing customer service calls (he was the only person who was completely across all the Romak products), and dealing with his favourite independents, he also helped get stuck into the website tech.
    We relaunched our new website a few years ago. The website connects with the nav system. And the orders go straight out to the warehouse. We never had that before, we just had order pads and it was all manual.
    The new program has been fantastic. If we do any changes to our price files or anything, this a 24-hour change around and the website is updated. So a member can login, there is a history of their sales that they can look at, they can automatically see what we got in stock or what's out of stock when they are placing orders. Once they placed an order, they automatically get confirmation back about their order. And we've never had that before so that's been a great improvement.
    It has speeded up the picking in the warehouse, and our order turnarounds have speeded up. Now a lot of the orders can go out the same day whereas before it took 3 to 4 days. Very rarely are we sitting on orders that are two days old.
    HBT origins

    While Lawrie has contributed to Romak's success in a wide variety of ways, it's evident that it is in dealing with independents, and especially HBT, that his talents come into sharp focus. It actually wasn't that long after Lawrie started working for Romak that the first stirrings of what would come to be the Hardware & Building Traders (HBT) began.
    When HBT was first formed, wholesalers like Romak used to close over the Christmas period for three weeks or so. Prior to this one Christmas, I heard a rumour in New South Wales that there was going to be a split. There were some unhappy people that will with the Danks group at the time. Back then we didn't have a great deal of business in New South Wales, we only had a handful of customers. So I was desperate to find out about this group.
    It came up to the Christmas holidays when we traditionally shut down so when we came back I started to put out the feelers again to try and find out what was going on. And then I received a call from Margaret Manwaring saying, look, we've got this group of people that want to break away and form another group. I thought, wow.
    So we set up a meeting just outside of Sydney. That's where we met Mitch Cameron Mike Coates and Jeff Cornford. I took Oscar Lin with us. Anyway, we sat around this table and they told us the story, and I said yes let's go with them, because I love the independent side of the business and I want to see these guys flourish. I said, let's go ahead with it.
    So Oscar and I came away, and I put a proposal together. We submitted it to the group and they accepted it. So that's where it all sort of started.

    Looking at how successful and well-organised HBT is today, it's hard to believe, but the group really was started on the spur of the moment, when a number of store owners reached a breaking point with the buying group they belonged to.
    In terms of history, there was so much negativity regarding that particular buying group, this provided the motivation to start another group. Mitch Cameron was the main driver, because he was over it. It was a big gamble for them at the time, it really was, it was a huge gamble for them to do it. And good on him. I mean he just stood up to the pressures and saw the opportunities.
    So I think it was a gutsy decision. I don't think there was a lot of actual thought, prior thought put into it. He just had enough and came up with this crazy idea, let's form our own buying group.
    I think he walked out and he was followed by three or four others at that particular meeting, and they went and had a coffee somewhere and that's where it all sort of started. So it was really over a coffee where they decided, let's do this, and that's how it happened. It wasn't preplanned or anything. It was like a spur of the moment thing -- and they were probably absolutely panicking at the time!

    HNN will definitely get the inside story of what happened from Mitch one day, but all that Lawrie could tell us is that there were questions Mitch wanted answered by Danks, and he didn't get the responses he needed. There were also, Lawrie tells us, some problems with catalogues.
    At the time, there were the catalogues which forced members to take on product that they don't really need. They couldn't return that stuff if they couldn't sell it, so they were stuck with it. And that's what HBT don't do.
    HBT Stage 2: Tim Starkey

    In the late 1990s HBT began employing the services of one Tim Starkey to help manage the group. By 1999 HBT had grown large enough that Mr Starkey could work full-time, as the group's hardware manager.
    If you look at the history of HBT, I said to a few people at the last conference, if anyone wanted to kick off that same sort of scenario they would really struggle in this day and age. The story of HBT will never happen again, I don't think, to be honest. HBT will just continue on.
    Tim Starkey used to say the only thing is that there will be an exit of members because they are family businesses and the kids don't want to take over. That's the only negative side of it, I guess.
    HBT members are so entrenched in what they are doing, I don't see another group coming out of that. If another buying group was formed, he would have to be very special circumstances for them to change.
    Tim has locked everyone in, bless his soul, he is the forebearer virtually of what HBT is today. So many members had so much respect for Tim. So I can't see anyone forming another buying group and taking away members from HBT. And a new group would have to sign up suppliers. !If suppliers already have a deal with HBT then why would they bother? The only way they bother is if the deal wasn't as tough as what HBT might have negotiated - but then they wouldn't be in the marketplace, would they?
    HBT Stage 3

    It's hard to believe, but it is a year since Tim Starkey passed away. In that period HBT has continued to build on the foundations he helped to establish, and really thrived. One particular bright spot has been the ongoing development of the H Hardware stores.
    It's exciting to see where HBT are now, especially with the H Hardware stores coming along and expanding. Let's hope they do keep expanding and I hope they don't go down the corporate path - but I doubt it because that's not their culture.

    In some ways, Lawrie was out ahead of the H Hardware plan by a considerable margin.
    I presented some H branding for hinges to the group about eight years ago. It was when they were first talking about the H business. And I said at the time we were set up to do that but we would need a commitment from the stores, because we would be just duplicating a product for a brand. So I had our design team put together some product cards etc. to set up the branding. Took it to the conference and presented it. However, it was knocked on the head, at the time.

    Lawrie has some ideas about how H branded products are likely to develop in the future.
    I think further down the track -- and they are probably already doing it -- they will have an indent type of order. One-off special order branded stuff. Like they do with the wheelbarrows and things like that.
    Branding product can get complicated because there are so many categories in a hardware store. Specifically for our area, I've got about 23 different categories crossing over a whole hardware store. I selected hinges for the H-branded product, and that's already a huge range. So I'm not sure where it's going but we are open to it. We can do it.
    Ongoing relationship

    While many people know about the role people like Mitch Cameron and Mike Coates played in getting HBT going, fewer realise what a key role Lawrie has played in the lives of many HBT store owners. Lawrie has found good retailers who were in HBT but starting from a low base, and helped them bring there stores along.
    You talk to Wayne at Wynyard (Tassie store). I was just down there a week ago and he still says to this day, that when he first decided to join with HBT, his business was in a real mess. And he did say that there were suppliers that wouldn't take him on. We were one of the ones that said, okay let's go with you.
    So he was like Chris Moorfoot, just buying ones or twos, and we supported him. I just said, let's get on with this guy, and his margins went from really small to really big. To see his business today, it's just incredible.

    So that's the relationship that Romak has had with HBT, you hear those stories quite a lot. We asked Chris Moorfoot to comment on his relationship with Lawrie:
    I would call Lawrie a "seasoned campaigner". Someone who has always been in hardware; it's in his blood; his DNA.
    He is so experienced. It's great talking to people like him because they have a lot of history in the business and so much knowledge to willingly share. He seems to know all facets of hardware and it is obvious that he cares about his customers and the success of each of their businesses.
    And he is such a likeable bloke; we are always happy to welcome him into the store, in fact we don't even ask.

    Chris is particularly impressed with the way Lawrie handles the supplier relationship:
    He/Romak was the first supplier to spend the time with us to identify the right core hardware lines we needed in the store. He went through aisle by aisle; category by category; and page by page of the catalogue.
    Lawrie really helped us out when we started because the business was a mess when we took it over. I could only buy one or two of each product just to represent the range and re-establish the categories.
    The relationship flows through to today. We are working closely with Lawrie to develop a bulk offering in some categories instead of carded (like the corporate stores). He is researching and developing the requirements for us to merchandise a number of different products to better serve our customers and increase our margin.
    Lawrie just seems to always find a way to make things happen!

    Of course, it is not all one-way traffic, and, in the best HBT tradition, while Lawrie has benefitted HBT, HBT has also been of benefit to Romak.
    It's been a good area for Romak to grow. When I first started, we had about 1500 product lines, and now we have over 5000. We went up to about 7000, but we have reduced it now. A lot of that has to do with our connection with HBT.

    One of the recent highlights of Romak's product expansion has been its letterboxes and signs, which were requested by HBT. As Chris says, Lawrie just has a talent when it comes to making things happen.
    With the letterboxes, I was very lucky because we are very close to Sandleford. We actually manufactured some of their products. So that was our connection. When I was approached by HBT about letterboxes, I did initially go offshore to find some, but it was too difficult. So I approached a Sandelford. And now it is working quite well.
    When an order comes through from a customer, we just place an order with Sandelford and it is here the next day. It was initially slow but picking up now. Since the conference with had pretty good success with it.
    The future

    Lawrie's long experience in the industry has left him a little philosophical when it comes to its future.
    I've seen lots of changes in the industry, some good and some not so good. But that's life and that's the industry. I think it's in a good place at the moment.
    I had a close look at the Masters thing, we all know what happened there. I just couldn't believe that they went ahead to be honest. And we never really had a connection with them. We made an executive decision not to go down that path.
    I can't see many other major changes. Bunnings will continue to keep growing obviously. With Mitre 10/IHG, I'm not really sure where that's going to go. There's a lot of uncertainty there.

    Lawrie does think that independent retailers do need to pursue a strategy of specialisation.
    Tim Starkey hit the nail right on the head, when Woollies announced they were going down the track of hardware in relation to Masters, and there was that scare campaign and HBT members were worried, and that sort of thing. One of Tim's discussions he had at a conference was, he says we've got all this happening as well is Bunnings, you've got to get your little niche and be different. He was onto that and kept pushing it. That's one thing I remember.
    A lot of the little hardware stores that we see today do have their little niche in the market. They cater for their local area. For example at Chris [Moorfoot]'s store, how many hardware stores do you see have toboggans? He was the first one to do it. Which is great.

    Lawrie is particularly a fan of longer term strategic planning for investment.

    A lot of forward thinking is required. Dave from Cooma is a good example, he says.
    Dave is expanding, he is building a huge business up there. He's got a new shed, H Hardware branded. A few years ago, he bought a roof truss plant to go with his business. So that's all forward thinking.
    And he's got the main hardware store with all this timber and his hardware, then he's got the truss plant on top of that, he's actually built it himself. He poured all the concrete slabs for it. He showed me photographs at the conference. It's a huge place.
    He is offering a huge service. His main market is farms, rural. He would also be supplying a lot of stuff to the snow areas too, Jindabyne and places like that.

    Things are also looking good for Lawrie himself.

    For Lawrie personally, the future is looking especially bright, because he gets to do the things that he is most keen on.
    I'm on the road a lot, I try to get out a fair bit. I love doing that, making good connections. Need to do the face-to-face but I don't get out as much as I'd like to.

    For Lawrie, the business always comes back to relationships, and to establishing real trust.
    I think back about the early days of HBT, and I have so many friends there. So it's been a wonderful experience for me. Taking myself out of Romak Hardware, just meeting these people like Mitch Cameron, and Ian and Graham Stafford, Margaret Manwaring, Jeff Cornford. Up in Byron Bay you've got Mike Ahern, and his son Matty, they are just lovely people. And I have found that throughout the whole group. There's Dave Kent, he's a character.

    Then there is Lawrie Peck, in with that group. A bit of a character too, and just about the very definition of a solid bloke you can rely on.
    Bigbox
    Big box update
    The map indicates the close distance between the Sunshine Mitre 10 store and the proposed Bunnings store in Kingaroy (QLD)
    HNN Sources
    The ex-Masters store in Heatherbrae (NSW) is just one of several that is being turned into a Bunnings store
    The Bunnings Bonnyrigg store has moved next door
    Click to visit the HBT website for more information
    A number of local business are petitioning the South Burnett Regional Council to reject Bunnings' application to build a store in Kingaroy; the ex-Masters Heatherbrae store in NSW will become a Bunnings Warehouse; the Burnie-based Bunnings store in Tasmania has been purchased by Charter Hall; and Bunnings Bonnyrigg is re-opening on the site next door.
    Objections to Bunnings in Kingaroy

    Mitre 10 owner, Metcash claims Bunnings has not adequately addressed negative impacts on local employment for its proposed Kingaroy (QLD) store. A spokesman said the impact of the proposal on employment and the economy in an area was a relevant matter to be taken into account by the South Burnett Regional Council. He told the South Burnett Times:
    We believe council should require Bunnings to undertake a proper retail impact assessment, with a focus on job impacts, or alternatively the size of the proposal should be significantly reduced.
    Industry experience at Mitre 10 is that a Bunnings store of the size proposed in a town the size of Kingaroy will lead to a reduction in competition, not add to it.

    Bunnings submitted a development application to the South Burnett Regional Council in June. The total retail space of the proposed store, to be situated on the corner of Walter Road and the D'Aguilar Highway, would be about 7597sqm.

    Bunnings said the Kingaroy store would provide a "number of key benefits" to the community. General manager - property, Andrew Marks said the store would bring millions of dollars of investment and new jobs.
    If approved, the new warehouse will represent an investment of over $15 million and would create over 60 new jobs and an additional 130 jobs during construction...
    Locals organising to reject Bunnings

    Besides Mitre 10's concerns, several South Burnett businesses have joined forces to lodge objections to the planned Bunnings Kingaroy store.

    Business owners told southburnett.com.au the planned store is too large and reject claims by Bunnings that it will create 60 jobs. Instead, they believe the store will create fewer than 25 jobs and say this will be offset by the loss of a much larger number of jobs in Kingaroy and other South Burnett towns.

    A letter to Council also questions Bunnings' job creation claims. The letter has been written by a hardware chain employee who formerly worked for Bunnings in operational roles from 2010 to 2014. It states:
    When a Bunnings store first opens, more staff are employed than required for the long-term operation of the store. In the first four weeks of a Bunnings store opening, the store will be over-staffed. The staff numbers will then be thinned out to operate the store within a tight wage budget.
    Generally speaking, staff numbers will be reduced by between 30-40% during this time. The staff jobs that are removed are mainly the staff serving on the floor, working on the registers, or filling stock.
    Although Bunnings have claimed this new store in Kingaroy will be providing 60 jobs, I know in reality the long term number for a 7600sqm Bunnings store is closer to 35-40 people, which is really between 20-25 full-time equivalents (FTEs).
    Anything more than 25 FTEs would make the store unviable in my experience, having been part of the operational budget setting for Bunnings stores.
    The management team for all new Bunnings' stores will be current employees brought in from other stores. This includes the complex manager, the operations manager and three department managers.
    A 7600sqm Bunnings store also requires a significant level of sales to be viable. In my experience, a store of this size needs to have an annual turnover of at least $15 million, and total hardware turnover across the South Burnett is less than $15 million now.
    I am concerned about the effect this very large hardware store will have on other local businesses in Kingaroy and the surrounding areas. When $15 million of trade is taken from local businesses, they will reduce their staff numbers dramatically. Some of those local businesses will close altogether. The net result will be fewer jobs in Kingaroy and the surrounding areas.
    The Council can confirm all the above statistics by requiring Bunnings to provide it. Bunnings will have already prepared modelling for the operation of this new store, which will include staffing and sales projections.
    If Bunnings is not prepared to provide this data publicly, the Council should not be prepared to approve this application. I am certain this application will reduce jobs and be the nail in the coffin for many small businesses in the Kingaroy region.
    Size matters

    A number of South Burnett store owners are also circulating a petition calling for South Burnett Regional Council to reject the large-format store claiming the proposed size would push smaller retailers out of business and lead to underemployment.

    Other business people have pointed out the impact of a Bunnings store would be felt more widely than just general hardware sales. Retailers selling anything from floor covering to paint and garden tools would also be affected, and so would non-competing retailers when they were hit by the loss of local jobs.

    Earl's Paints manager Mark Petrakis said he backed the petition and it was likely he could lose at least one staff member if a Bunnings of the proposed size was built. He told the South Burnett Times:
    By all means Bunnings should come to Kingaroy, we're not saying no, but does it need to be a store the size of the Toowoomba?

    South Burnett Mayor Keith Campbell said the council did not take commercial competition into account when assessing development applications.
    The potential impact of the Bunnings store on retail competitors is not a relevant planning matter to consider by Council and existing case law confirms that Council may not consider trade objections in its decision making.
    There will be positive wider economic benefits of the proposal in that it will attract more people to Kingaroy that are currently travelling to Dalby and Toowoomba to visit a Bunnings store.

    The Murgon Business and Development Association and the Nanango Tourism and Development Association circulated a form Letter Of Objection and copies of a petition opposing the Bunnings project to their members. Some members of the Kingaroy Chamber Of Commerce and Industry also circulated the documents.

    Objections to the development application closed on September 13.
    Ex-Masters Heatherbrae turns into Bunnings

    Heatherbrae's former Masters store will become a Bunnings Warehouse. The big box retailer confirmed to The Newcastle Herald it had reached an agreement with the land owner to convert the site into a Bunnings Warehouse.

    Bunnings general manager - property Andrew Marks said the new store was expected to open later this year.
    Conversion and reformatting works will commence in the coming weeks and the new store will span over 12,000 square metres...

    This change over has come about as property fund Charter Hall Group took control of six former Masters stores worth about $180 million recently. According to a report in the Sydney Morning Herald, these properties are located in Western Australia, NSW and Queensland.

    The former Masters stores bought by Charter Hall were sold with long-term leases in place to Bunnings. Large-format retail leases typically stretch to 20 years with several options to renew.

    Bunnings has initiated development plans that will allow it to reformat the Masters sites to suit its retail offering.
    Bunnings Burnie store

    Charter Hall purchased another Bunnings-leased property in Burnie, Tasmania for $21 million.

    The 3.04-hectare site has a 12,254sqm Bunnings store, providing a net income of approximately $1,285,085 per annum. The current 12-year net lease will expire in 2026 with options through to 2056. The Bunnings site also has annual fixed rent increases of 3%.

    Charter Hall's chief investment officer Sean McMahon told the Sydney Morning Herald:
    The Burnie property is strategically located in a land constrained, core location with no direct competition providing an ideal long-term facility for Bunnings.

    The Burnie site is located at 1-5 Reeves Street, in a major regional centre and has the state's busiest port. This warehouse was constructed in 2014.

    The site will be the first property to underpin Charter Hall's Direct Diversified Consumer Staples Fund (DCSF). The company is understood to have earmarked several more assets for the fund, which is targeted at giving investors exposure to retailers on long-term leases.

    Related:
    Big box update: Bunnings expansion through Masters sites - HNN
    Bunnings Bonnyrigg moves to site next door

    The Bunnings store in Bonnyrigg (NSW) will make way for a new $40 million facility, next door. The new store will replace the existing one.

    The brand new Bunnings Warehouse will have an approximate total size of 15,000sqm as well as the main warehouse that will stock a larger range. All current staff members will transfer to the latest store and will be joined by 40 additional team members to take the total team to more than 150. Bunnings Bonnyrigg complex manager, Andrew Shalala told the Fairfield Champion:
    Team members have supported a number of community groups already, working together to assist in local community projects including renovating the kitchen at Bonnyrigg Police Citizens Youth Club and planting garden beds at the Cerebral Palsy Alliance.

    The new Bunnings Warehouse Bonnyrigg is located at 1-9 Bonnyrigg Avenue, Bonnyrigg (NSW).

    Related:
    Big box update: Bunnings building at Bonnyrigg - HNN
    News
    Indie store update
    Rose Bay Hardware in Sydney's eastern suburbs closes after 35 years
    HNN Sources
    Tasmania's Kemp & Denning recently held its annual general meeting
    K&D as been serving Tasmanians since 1902
    Click to visit the HBT website for more information
    The owners of Rose Bay Hardware will permanently close the store after being in business for 35 years; and the chairman of Tasmanian retailer Kemp & Denning has told shareholders "the bleeding has effectively stopped".
    Locals farewell Rose Bay Hardware

    After 35 years of serving tradies and DIYers in Sydney's eastern suburbs, the Rose Bay Hardware store is closing its doors. Owner Paul Shillan told the Wentworth Courier:
    I haven't had a holiday in 25 years. We were the first shop in Rose Bay to open seven days a week ... for 11 years I worked every day.

    Not surprisingly, Mr Shillan and his wife Gloria are looking forward to a holiday after working hard for so long. He said they had loved working at the shop because of the customers.
    I've seen three generations of customers going through. It's quite bizarre when you look back like that, it makes it real that you've been there that long. I look in the mirror and still see a bloke in shorts that feel 21 - although nobody else does.

    Mr Shillan said there had been many challenges along the way, including the floods in 1984 when his shop was washed into the harbour, as well as a global financial crisis and a couple of recessions. He said:
    You just stick your head down and work through it. It's just the way of life I guess.

    The Shillans decided to close their store when its building was sold and the lease was up. Mr Shillan said:
    It was time to move on. There was no point battling any further. People these days, they're not as handy as I grew up being three generations ago.
    People are more likely to pick up the phone and call somebody to change the light bulbs, mow the lawn or their landscaping whereas 35 years ago everybody, well most people, did it themselves.
    Strategic change and "improved outlook", says K&D

    Shareholders at the recent annual general meeting of Tasmanian hardware retailer Kemp and Denning Limited (K&D) have been told that the company's outlook is "greatly improved". Chairman Greg Goodman said the company expects to break even this financial year after a $9.8 million loss in 2016-17. According to The Mercury, he said:
    We have now closed this very difficult chapter in our history and I am delighted to report the bleeding has effectively stopped...Your directors believe the potential for shareholders is greatly improved as a result of our efforts to quickly close loss-making operations and sell our trade business.

    In an announcement likely to increase speculation about the future of its Melville Street store in Hobart, Mr Goodman said there had been a revaluation of the K&D's property assets by several registered local valuers. Mr Goodman said:
    While the variations have not yet been adopted by the Board, it is pleasing to note that there is additional equity in our property holdings.

    The site was valued at nearly $18 million in the latest annual report and is believed to be of interest to commercial rivals.

    Mr Goodman has said in the report that the company "has a clear strategy to get more value out of its real estate holdings".
    With the well-established positioning of our CBD sites (103 Melville Street) K&D is poised to meet the challenges ahead. To maximise our impact we will increasingly look for opportunities to maximise the benefit of these properties.
    Bunnings forced strategy change

    K&D also dropped its 2016 strategy of focusing on supplying the building trade and closed stores because it feared a price war with Bunnings and Clennett's Mitre 10. Shareholders were told the company faced a potentially devastating cash flow squeeze from the expansion of Bunnings.

    In 2016 then-chairman Ray Brown told shareholders that the sheer weight of increased competition in the retail landscape had prompted the board to transform the business model so that it was predominantly trade focused.

    Mr Hutton, who replaced former CEO Nick Fazzolari in March, was asked why that strategy had been abandoned. He responded:
    The market changed quickly and consequently we believed the Tasmanian trade market was not big enough for three players [Bunnings, Mitre 10 and K&D].
    Profitability in the trade area is largely dependent on scale and we thought it was too risky to engage in a price war that we couldn't fund. If we lost significant market share there was chance that asset values would fall.

    The also meeting heard that the early termination of a lease at the Cambridge store cost the company $500,000 with redundancy costs of $530,000 while early termination of a lease at Devonport cost $2.5 million. Tenders for K&D's Kingston site, valued about $3 million, closed recently.

    Related:
    Indie store update: K&D store closures - HNN
    HI News 3.7: K&D trade sold to

    Clennett's Mitre 10, page 13
    Companies
    Supplier update
    Kyocera looking to buy Ryobi power tool operations
    HNN Sources
    The Sharkbite product could be de-ranged from more Home Depot stores
    A new era for Rhino Tanks as it becomes part of Kingspan
    Subscribe to HNN weekly e-newsletter
    Kyocera seeks to diversify through purchasing Ryobi power tools; Reliance Worldwide remains upbeat despite facing a potentially bigger backlash from Home Depot; Bisley Workwear could change hands; speculation surrounds the sale of Gerard Lighting; new industrial premises for GWA Group; and Rhino Tanks transitions into Kingspan.
    Kyocera takes on Ryobi's power tool operations

    Japanese electronics maker Kyocera is seeking to acquire the power tool business of Ryobi for about 15 billion yen.

    Ryobi's power tool sales are believed to reach almost 20 billion yen annually, making it the third-largest player in Japan after Makita and Hitachi Koki. Kyocera aims to expand its product lineup and sales network with the acquisition, which would include a Ryobi plant in Dalian, China.

    The world's power tool market is growing at a 3.9% on an annual basis, and is expected to be worth USD30 billion by 2021, according to research by US-based Freedonia Group. Emerging economies in Asia are key drivers of the trend.

    Kyocera's main business in ceramic products has enjoyed strong demand for smartphone-related parts, among others, but is still vulnerable to macroeconomic factors. The Kyoto-based company has also closed and streamlined factories under its flagging solar battery and mobile phone businesses. The company is now looking to diversify, particularly into the power tool sector.

    It aims to expand group sales by about 500 billion yen to 2 trillion yen in fiscal 2020.

    Related:
    Supplier update: Kyocera is the new owner of Senco - HNN
    Plumbing specialist remains confident on growth

    Plumbing products designer and manufacturer Reliance Worldwide reported a 26% rise in net profit of $65.6 million in its first full-year financial results, exceeding its prospectus forecasts.

    Revenue of $601.7 million for the 12 months to June 30 was up 12.6% on its pro forma results the previous year, while earnings (EBITDA) of $120.7 million was 21.8% better than the pro forma $99.1 million.

    Net sales grew 2.4% on the prospectus forecast while net profit after tax rose 4.8%.

    Reliance, which raised $919 million in Australia's largest initial public offering of 2016, is forecasting robust earnings growth of between 20 and 24% in 2017-18, but a potentially dark shadow is hovering above it in the US.

    The company has its Sharkbite push-to-connect plumbing fittings now being sold through most of the 1700 Lowe's hardware stores in the US, after making the decision to try to have both Lowe's and Home Depot as major retail distribution channels.

    But Home Depot, which still stocks Sharkbite in most of its 1900 US outlets, has cut the product in just under 100 of its outlets in the Pacific Northwest region. It has dropped Sharkbite in those stores and replaced it with a rival push-to-connect product called Tectite.

    More than six months ago, Home Depot had already ditched some other Reliance products in PEX pipe and crimp fittings in most of its 1900 stores. There is a risk, therefore, that further losses of Home Depot contracts can occur.

    But Reliance Worldwide chief executive Heath Sharp said he was confident that Home Depot wouldn't go much further and remove Sharkbite from more of its stores, or even worse, from all of its stores. He told The Australian Financial Review:
    They would have preferred we didn't go to Lowe's.

    He said the two big retail chains in the US hardware market often aspired to having "exclusive" products. He said:
    They both watch what the other does very closely. When they can, they want to have brands that are exclusive.

    Mr Sharp said Reliance was taking the view that Sharkbite, as the leader in a new category of push-to-connect plumbing fittings which save time and costs, would become the prized brand across the entire market and therefore a "must stock" item for all hardware retailers. He said:
    It's a young category and it's still early on its growth curve.

    It would take time to convert more plumbers, who had grown up using traditional methods to attach fittings.

    "We believe in the fullness of time we can get it back," he said, referring to the lost business from Home Depot. He used the analogy of a big tissue brand like Kleenex in consumer goods, with customers across the board expecting to be able to purchase it from all retailers. Reliance produces 72% of its total sales from the Americas region.

    Mr Sharp said the forecast lift in earnings in 2017-18 would come from a combination of expansion of the push-to-connect business in the Americas, a full-year contribution from the Holdrite plumbing products business in North America acquired for USD92.5 million, opportunities in the Asia Pacific, new plumbing fittings products and efforts in commercialising the latest "Internet of Things" applications for water flow monitoring.
    Supplier update: Reliance inks deal with Lowe's - HNN
    Supplier update: Plumbing company IPO - HNN
    Bisley Workwear could see change in ownership

    Independent expert Deloitte Corporate Finance is deciding if the proposed $35 million sale of the Bisley Workwear business by ASX-listed Gazal Corporation to one of its major shareholders is fair and reasonable.

    Bisley, which competes against the Wesfarmers-owned workwear brands King Gee and Hard Yakka, generated a 4.2% rise in annual sales to $62.1 million and produced earnings before interest and tax of $5.7 million for the 12 months ended June 30, 2017.

    The Bisley brand has a sponsorship arrangement with the Sydney Roosters in the National Rugby League competition, emphasising its high-vis workwear in promotions with Scott Cam, the host of the Nine Network's renovation show The Block.

    The booming Sydney housing construction and renovations market had given the workwear category impetus, while increasing regulations around health and safety were also a driver for purchases.

    IBISWorld said improvements in the mining industry were also lifting demand in the workwear segment. Demand has been strong in the housing construction market over the past five years even though housing starts are now tapering off from record levels, while a renewed pipeline of infrastructure spending by governments around Australia is also a driver of demand. This is offset by the decline in manufacturing as the automotive industry shuts down by late 2017.

    But loyalty to a particular brand was diminishing. "People are often willing to give other brands a go," said Maurice Mulfari, owner of At The Coalface, a workwear and safety boots retailer in Sydney's North Willoughby. Fashion was behind the big rise in popularity of "wheat" coloured work boots, which he said now represented about 70% of total work boot sales.

    Nathan Cloutman, a senior industry analyst with IBISWorld, said the growth of young brands like FXD had been symptomatic of the shifts in the industry away from a highly generic uniform look. He said:
    Over recent years, the industry has begun to shift towards incorporating design into the functionality of workwear.

    Companies had also been expanding their workwear ranges for females, in line with higher participation rates.
    Ownership change

    Gazal has owned the Bisley trademark since 1991. It owns 50% of an Australian joint venture vehicle with United States brand owner PVH Corp, and distributes the Calvin Klein and Tommy Hilfiger brands in Australia.

    The proposed Bisley sale to David Gazal, one of the veteran retailing brothers who control Gazal Corp, will leave the firm with its stake in the PVH Corp joint venture as its major asset.
    Gerard Lighting could be target of sale

    Sources have told the Dataroom column in The Australian that private equity firm Anchorage Capital could be circling Gerard Lighting with a view to buying the recapitalised business.

    However Gerard chief executive Les Patterson said no talks were in progress with any parties surrounding an acquisition and it had no plans for a sale.

    Earlier this year, Gerard Lighting was in discussions with its lenders and has been up for sale in the past two years through investment bank UBS. But the business was offered a lifeline by Investec and Bain Capital in the past few months when the lenders bought the operation from Champ Private Equity.

    Still, Bain and Investec are seen as unlikely long-term owners of the operation and a divestment may prove another lucrative turnaround opportunity for Anchorage.

    Phil Cave's Anchorage Capital Partners was the group that amassed massive profits from the acquisition of Dick Smith Electronics from Woolworths for less than $100 million in 2012. In 2013, Anchorage floated the operation for $520m.

    However, Dick Smith later collapsed after it was listed with cashflow pressures and excessive debt costs blamed for its failure.

    Anchorage is seen as an opportunistic buyout firm that targets turnaround scenarios and is likely to be fielding plenty of approaches to acquire out-of-favour companies in the media and retail space.

    Gerard Lighting is a supplier of lighting for the commercial, trade and residential markets, along with major construction and infrastructure projects. Bain and Investec have been long-term lenders of the operation and part of the terms of its acquisition was to invest capital into the business to reduce its debt.

    Related:
    Supplier update: Restructure deal for Gerard Lighting - HNN
    GWA moving into new industrial site

    GWA Group is consolidating its manufacturing and warehouse operations into a new facility at Charter Hall's M5/M7 Industrial Estate on a 10-year lease. Located at 290 Kurrajong Road, Prestons (NSW) the project is estimated to cost $45 million.

    The bathroom and hardware supplier is redesigning its distribution network to include a purpose-built distribution centre, in order to reduce their operational costs and environmental footprint. This facility is also expanding GWA Group's R&D resources. GWA group general manager Sean Mitchell told the Urban Developer:
    The transformation of our warehouse management system will future-proof our business. The outcome will provide us with flexibility to grow with improved supply and operational efficiencies.

    Construction of the 31,029 square metre facility is currently underway by Charter Hall. It is anticipated to be operational in 2018.
    Rhino Tanks undergoes brand refresh

    The owner of Rhino Tanks, Kingspan Environmental, has invested in new signage at its Deniliquin (NSW) distribution centre, signalling a new era for Australian made Rhino Tanks.

    Eastern states operations manager for Kingspan Environmental, Chris Butcher, said it has removed the "Rhino" from the recognisable logo, but it's "business as usual". He said:
    Kingspan's logo features a lion, so we have updated the Rhino logo to support our parent brand...So visibly there are some changes, but our water tanks are the same - they are still made in Perth from BlueScope Steel and lined with the most stable and safest food grade materials available.

    The company plans to capture new markets and grow its network of distributors and installers. As part of its commitment to the region, Kingspan Environmental has renewed its lease in Deniliquin for another three years. Mr Butcher said:
    Along with our Kingspan Rhino Rural range, we also offer residential made-to-measure water tanks with capacities ranging from 500 litres to 29,000 litres across the eastern states, and our new BioDisc sewage treatment range Australia wide. Our commercial range goes up to a capacity of approximately two million litres.
    Kingspan produce other waste water treatment solutions and solar and wind power products, so there is a huge potential to grow in the future and expand into other markets.
    Retailers
    Working with Amazon: SRG, Beacon Lighting
    Amazon Australia is launching very soon
    HNN Sources
    Amazon Marketplace is open to vendors wishing to sell on the online platform
    Beacon Lighting grows its digital sales in its 50th year of business
    Click to visit the HBT website for more information
    Super Retail Group (SRG) - owner of Supercheap Auto, Rebel, Amart Sports, BCF and Rays - is tackling the impending arrival of Amazon in Australia head-on, opening up a dialogue with the US retail giant and strengthening its digital offerings.

    Chief executive Peter Birtles confirmed to the Courier Mail the company has had "conversations" with Amazon when asked whether it would consider selling goods through the US online retail behemoth.

    Meanwhile SRG's digital sales have grown substantially. In the last financial year digital sales in the company's auto-division grew by 75%, sports division was up 73%, while the leisure division was up 150%. Mr Birtles said:
    As a company you explore all options. We work with eBay today, and we will explore that (working with Amazon) too. Amazon are a really great organisation who have great capabilities. You have to be open to considering every single option.

    Unlike Harvey Norman founder Gerry Harvey, Mr Birtles remains upbeat about the company's ability to compete with Amazon. He said:
    We recognise that the retail industry is going through unprecedented change as the result of the impact of ever more demanding customer expectations, global competition and digitisation.
    We have been considering these forces for a number of years and our strategy has been developed to ensure that we continue to succeed in this evolving environment.

    SRG's investment into its digital strategy has helped deliver growth in this part of the business. Mr Birtles said much this was largely driven by click-and-collect - a competitive advantage a retailer with a large physical network of stores had over online only businesses. He said:
    The advantage that we have is we can serve the customer in whatever way they want to be served - they can shop with us how ever it is they want to shop.
    Beacon Lighting

    Another retailer that recently listed on the ASX is also looking at Amazon as an opportunity for growth. Beacon Lighting founder and executive director, Ian Robinson told The Australian:
    Our e-commerce model in Australia has been very successful and we have the opportunity to expand that internationally.

    Online now represents more than 4% of sales and was up 54% over the past year.

    Beacon already sell into the US and Europe with Amazon and has registered as a supplier in Australia. Chief executive and son, Glen Robinson said:
    If you have your own brand like we do, we are in a pretty good position. It is another way for us to get to our customers. We will cater a range to suit the Amazon platform for Australian buyers.

    The lighting retailer turns 50 this year and now employs 1000 people worldwide, exporting to 26 countries. Ian Robinson recounts the early days:
    I started with nothing. And we went through many years of really hard times. We went through the '89 recession and really just survived and had to reinvent the business. I still have the memories of difficult times.
    I am still very aware of keeping your feet on the ground and not getting carried away. Tomorrow you could lose the whole lot. You are in business and you have no certainty it will continue forever. I wish the family all the success for the future but businesses do fail and if it fails it fails - do not take it too much to heart if it does happen. But all things being equal it should be very successful.

    Beacon saw its shares rise to dizzy heights in the two years after the float, soaring to three times their issue price before a profit downgrade 15 months ago sent them crashing to earth.

    They have since remained below their listing price and remain down more than 20% over the past year. They fell further after the group reported a 9% fall in net profit to $16.6 million, a result hit by the discounting of lighting lines following the closure of the Masters Home Improvement chain last year.

    The tough times are testing the resolve of the leader of the second generation, Glen Robinson, but he wouldn't have it any other way. He said:
    What a perfect induction, training process you have when you get to work with your old man in the business. We get to discuss things. Some of the things we are discussing are big decisions that need to be made. And you don't need to worry about the Ps and Qs. You just go for it.

    The younger Robinson started on the Beacon shop floor when he was 12 years old. He said:
    The family runs the business, my brother and two sisters work in the business. It is absolutely important for us to grow this business into the second, third and fourth generation.

    Beacon remains one of the larger beneficiaries of ongoing strength in the housing market and soaring energy prices, which are driving demand for more energy efficient lighting.

    Beacon will open 14 new stores this calendar year and its goal is grow to 145 stores from the current 102. It has also taken over six stores owned by three competitors this year.

    And while he may no longer have his hands firmly at the controls, Ian Robinson is adamant the family can continue to grow revenues in the broader business ''at 10 per cent-plus per annum''. He said:
    I have enjoyed building a business over a long period of time. Every day is a challenge in retail, you have to do 1000 things right every day. And it keeps you mentally stimulated. You have your ups and downs along the journey.
    Retailers
    Europe update
    Kingfisher's One strategy remains on track despite H1 pre-tax profit decline
    HNN Sources
    Homebase home delivery comes to a halt as BUKI revamps the website; image credit: Mike Brocklebank, flickr
    Grafton Group's Heiton Buckley delivered revenue gains in its first half results
    Click to visit the HBT website for more information
    Home improvement group Kingfisher said the transformation of its business is on track; Bunnings United Kingdom & Ireland is moving the Homebase website to a new online platform; Grafton Group remains confident about Irish and UK construction despite weaker demand; and French DIY website raises EUR60 million to take on B&Q in the UK.
    Restructure keeps Kingfisher's pre-tax profits down

    UK home improvement group Kingfisher - owner of B&Q, Screwfix in the UK and France's Castorama - made pre-tax profit of GBP402 million in the six months ended July 31, compared with GBP427 million a year earlier. This represents a fall of 5.9%.

    Total group sales rose 4.5% to GBP6.01 billion, but like-for-like sales declined 1.3%.

    The retailer saw solid growth at its Screwfix brand and also in Poland, but this was offset by a 5% fall in sales in France.

    Kingfisher is also investing in digital, with B&Q at 4% online sales, up 17% this year. A mobile platform is launching soon at B&Q.

    The company said it remained comfortable with full-year earnings per share expectations but chief executive Veronique Laury is "cautious on the second half backdrop in the UK and France."

    A recent survey by UBS analysts suggested such caution might be warranted: !Intention to spend on DIY remains weak in the UK and (surprisingly) in France ... In France, Leroy Merlin is continuing to outperform Kingfisher, with Castorama scoring particularly poorly.

    The company is working its way through a five-year plan, which it began 18 months ago. This includes streamlining the products it offers across its outlets. This has meant offering products it planned to phase out at discounted prices. Kingfisher's revamp has also included widespread changes to its IT system as well as closing some B&Q stores.

    Kingfisher said it will deliver a GBP500m "sustainable" annual profit uplift by the end of 2021, which will cost GBP800m, but that until it has finished streamlining the business, it will not be able to expand by much.

    Analysts at Barclays have suggested "the turnaround plan will take longer, will provide substantial disruption to company operation in the next several years and will eventually provide a smaller benefit than is currently expected."

    Some analysts have also suggested the company may work better broken up. Screwfix is growing faster than the rest and France's Castorama is underperforming.

    But Ms Laury said this was "not something we would consider at all". She added:
    The power of the group is to be together.
    BUKI revamps Homebase website, store update

    The home delivery service at Homebase stores has been suspended while Bunnings United Kingdom & Ireland (BUKI) completes its separation from previous owner Home Retail Group and moves to a new web platform. A Bunnings spokeswoman said:
    This is temporary and part of the website re-platform, to make it easier for customers to browse our great ranges, advice and ideas.

    Bunnings said Homebase's home delivery service would return soon after a transitional period is complete.

    It marks another stage of the retailer's journey to transition from Homebase to Bunnings. BUKI continues to convert a string of Homebase stores and plans to have between 15 and 20 Bunnings Warehouse stores fully operational by the end of this year.
    Broadstairs and Chichester stores

    BUKI also officially opened its latest warehouse store at Westwood Gateway Retail Park in Broadstairs, Kent. It measures 67,000 square feet and the second Bunnings store in Kent, following the Folkestone store in July. Broadstairs' complex manager, Simon Woodhall, said:
    It is great to finally open our doors. All our team members have worked really hard to get the store ready for opening and have undertaken many hours of training to make sure we have the expertise to help customers with home or garden projects."

    It has also been announced that the Homebase store on Discovery Park, Barnfield Drive, Chichester will close in November, as work commences on its conversion to a new Bunnings Warehouse store, which will open later this year.
    Uncertainty in UK market, says Grafton

    Grafton Group has reported a 9% rise in revenue for the six months to the end of June as its pre-tax profits rose by 16%.

    The building supply company, which includes brands like Heiton Buckley and DIY chain Woodies, made a profit before tax of GBP75.4 million in the six month period, on the back of almost GBP1.34 billion in revenue.

    Looking ahead, Grafton said that recent softer trends in the UK economy are likely to be sustained over the remainder of the year. The company stated:
    The strength of housing starts should support house building activity while the residential RMI (repair, maintenance & improvement) market is expected to be broadly flat with continuing competitive pricing conditions.

    However Grafton Group chief executive Gavin Slark said he expects construction in both Ireland and the UK to grow. He believes fears of a skills shortage, around Brexit and the slow pace of homebuilding in Ireland and the UK would impact the construction sector were premature. He told the Irish Examiner:
    The underlying fundamentals in the UK are relatively strong. There are 60 million people living there and it is a mature economy. The need for housing isn't going to go away and the need for repairs and maintenance isn't going to go away. You might see a few speed bumps along the way but we look at the next three to five years in the UK with a fair degree of confidence.

    Breaking down its divisions, Grafton said that revenues in its merchanting division rose by 8.6% to GBP1.221 billion while adjusted operating profits were up 13.4% to GBP74.6 million. The division makes up 91% of total group revenue.

    Meanwhile revenues at its retail division - which makes up 6% of group revenue - rose by 15.5% to GBP84.4 million while operating profits increased by 53% to GBP4.7 million. Grafton's DIY chain Woodies saw its like-for-like revenue increase by 6.6%.
    French DIY website looks to UK for growth

    Paris-based online DIY marketplace, ManoMano has raised EUR60 million from private equity investors to fuel expansion across Europe, with Britain one of the top markets in its sights.

    Its latest fundraising round was led by General Atlantic, the private equity and venture capital firm. Chris Caulkin, a principal at General Atlantic, said ManoMano has an opportunity to capitalise on the relatively low take up of online sales in DIY and gardening in the UK. He told the Financial Times:
    DIY is one of the last retail categories to start transitioning online. If you compare it to categories like clothes where maybe 20% of sales are already through the online channel, this category is below 5% in many countries. There's a very attractive medium-to-long term growth opportunity in looking to shift DIY online.
    We believe the DIY and gardening category today has low online penetration despite the advantages over traditional retail, including a wider product offering and the ability to search and filter products and drill into technical information.

    This funding injection will be spent on a marketing blitz across all markets, as well as increasing the product range, and hiring more business development staff in the UK and Germany. Christian Raisson, cofounder of ManoMano, said in a statement:
    In the UK, we will be focusing on a number of key issues, notably: implementing new logistics and delivery services for consumers and sellers, facilitating cross-border trading and European expansion for partners, as well as redesigning the website to allow for easier navigation, a simplified purchase funnel and more efficient pre-sales advice.

    In its 18 months of operation in the UK, the company has made GBP9 million in sales. ManoMano co-founder, Philippe de Chanville said:
    In France, the web represents roughly 3-5% of its sales; in the UK, close to 8% of its sales are on the web. We are aiming to get the biggest market share online.

    ManoMano also hopes its Europe-wide supplier network will help it keep costs down. Mr de Chanville said:
    Spain and Italy are well-known for faucets, bathtubs and showers; electricals come from France, power tools from Germany and the UK. Anything can be shipped from anywhere in 24-48 hours so we don't add cost by building huge warehouses.

    Founded in 2013, ManoMano sells DIY tools, products and furniture from a network of merchants, and is on track for overall sales of EUR280 million in 2017, up from EUR89 million last year. It operates in six countries in Europe and Germany is its fastest-growing market.

    The business said it has 1.9 million customers across Europe and has 1.2 million products listed on its platform.

    The company also plans to launch SuperMano, its DIY handyman service, in the UK after trialling it in France with over 1,800 handymen for the past 14 months. 

    Related:
    Europe update: ManoMano hails successful first year in UK - HNN
    DIY start-up ManoMano to challenge B&Q - HNN
    Bigbox
    USA update
    Home Depot is expanding its omnichannel strategy through its partnership with Google
    HNN Sources
    Lowe's recently launched an Instagram Stories campaign
    Lowe's is creating longer shifts for its store staff to enhance customer service
    Click to visit the HBT website for more information
    Home improvement big box retailer, Home Depot is joining Google Express, a move that will give its customers the ability to shop just by speaking their orders; Lowe's latest social media campaign uses Instagram Stories; and Lowe's plans to hire more customer-facing store workers after its latest earnings disappoint.
    Home Depot gets into voice shopping

    Home Depot said it would start selling its products online by means of voice commands customers give to Google Home devices and via the Google Express website and mobile app.

    By adding Google Assistant to the mix, customers will be able to shop via voice on Google Home devices, or the Google Express website or app.

    The new option expands Home Depot's omnichannel strategy, which currently encompasses 2,282 store locations and a digital endless aisle available online and through mobile devices. The retailer's online president and chief marketing officer Kevin Hofmann said:
    We're focused on delivering convenience and value as we continue to invest in best-in-class interconnected experiences for our customers. Google has been a key strategic partner for us over many years, and we're excited to take our relationship to the next level with the Google Assistant and Google Express.

    The move also takes direct aim at Amazon and its Alexa voice-controlled device - especially as the online giant continues to steal more wallet share from the tools and home improvement category.

    Despite its success, the big box home improvement retailer cannot fall behind in a growing tool people are using to shop. According to an eMarketer report earlier this year, some 35.6 million Americans will use internet-connected devices to carry out a voice-direct task at least once a month this year, more than double the number in 2016.
    An Insta-friendly campaign for DIY projects

    Lowe's has launched an Instagram Stories campaign showing DIYers how to redecorate a vertical room through a mobile-friendly, full-screen video. The retailer recently unveiled the first "story" of the campaign, which includes 64 microvideos that total a combined 35 seconds.

    Lowe's partnered with the ad agency BBDO New York to create the Instagram campaign. The campaign was born out of the annual Facebook Creative Hackathon, and is designed to take an engaging, light-hearted approach to project videos, while showing how consumers can quickly change a small space into a more functional area. Derrick Wood, vice president of brand, content and advertising at Lowe's told Retail TouchPoints:
    There is great opportunity to get creative when reaching DIYers about projects. This campaign taps the narrow spaces of Instagram Stories as a platform to show transformations in micro spaces - using the exact ratios of Instagram Stories to flip an alcove to a kid's nook, a pantry to a coffee bar, and a closet to a bike storage.

    When filming the microvideos, Lowe's considered that many Instagram users are prone to skipping through stories. The teams decided to upload multiple still frames as microvideo clips to do the skipping for them. Mr Wood explains:
    These clips are short, and each will immediately skip to the next, creating a flip book effect of the room being transformed. The simplicity of each project is matched by a quick swipe to more detailed instructions and to easily purchase the supplies needed to complete it.

    On the final frame of the stories, there are prompts for users to swipe up, which directs them to a mobile-optimised experience with how-to instructions and all the items from the project the user has just seen.

    "This campaign highlights the creative potential that Instagram Stories can hold for brands," said Kay Hsu, Global Instagram Lead at Facebook Creative Shop.
    Lowe's cleverly leverages the full screen vertical format to demonstrate how narrow spaces can be easily transformed with a smart hack. The brand shows a deep understanding of Instagram Stories and how audiences interact with the format - automatically skipping ahead before the viewer even had a chance to do it themselves. The result? Lowe's transforms boring, tight spaces into beautiful rooms that are Instagram-worthy.
    Lowe's longer shifts for workers

    Lowe's is increasing hours for store workers to improve customer service. This follows the US home improvement retailer's second quarter sales and profits results that were below what Wall Street was expecting. CEO Robert Niblock said in a statement:
    While our results were below our expectations in the first half of this year, the team remains focused on making the necessary investments to improve the customer experience. This includes amplifying our consumer messaging and incremental customer-facing hours in our stores.

    That probably means sacrificing some profit.

    For a chain like Lowe's, store workers are a key tool for making the case a shopper should buy there rather than on Amazon.com. Advice for a big project is not what Amazon can offer, but it is a major selling point for the likes of Home Depot and Lowe's.

    Spending on home improvements in the US is also set to continue for a while, meaning Lowe's needs to take fuller advantage of this tailwind.

    Lowe's hopes to ride the wave of stronger shopper traffic with the investment in store-level workers - with a primary focus on weekends and peak traffic times during weekdays, the company said. Mr Niblock said in a call with analysts:
    We've said all along that productivity is not just about cutting costs. It's about investing in areas that matter most to the customer.

    Lowe's has also restructured other parts of the company, including layoffs of over 120 corporate tech workers recently.
    Products
    GoPak power tool battery
    Black + Decker has launched the GoPak System powered by the new 12V Max GoPak battery
    Torque Expo
    The system includes a drill/driver
    It can tackle household tasks and DIY projects
    Click to visit the HBT website for more information
    Black + Decker has launched the GoPak System, a four tool combo kit powered by the new 12V Max GoPak battery. Available as a four-tool combo kit, the system includes a drill/driver, jigsaw, detail sander, pivot-head LED work light and GoPak battery - the latter doubles as a power source to charge mobile devices on-the-go via a USB port.

    The drill/driver features an 11-position clutch to help prevent stripping of screws and the jigsaw blade can be changed without the need for another tool.

    The slim, compact design of the GoPak battery makes it easy to handle and take on-the-go. The integrated USB port, with 2.4A output, quickly charges devices such as phones and tablets, allowing users to charge devices when there is no traditional power outlet in sight.

    Rubber corner bumpers increase the battery's durability and the onboard LED state-of-charge feature shows the percentage of the battery's remaining charge.

    Targeting the DIY market, the GoPak System has been available in the US in October 2017. The GoPak battery will be available separately.
    Products
    Cabot's makes coating faster
    New Timber Prep imitates the effects of weathering, by drawing out the timber's tannins and oils
    HNN Sources
    Aquadeck promises a durable, lightly pigmented finish
    Deck Clean should be used on both new and weathered timber prior to coating to remove dirt and excess tannins
    Click to visit the HBT website for more information
    Cabot's has introduced its fastest deck coating system ever - Finish in 1 Day - to speed up deck prep.

    With data from Pollinate Decking Consumer Research 2016 revealing 52% of deck owners take more than a day to complete the coating process, and one in five have never coated their deck, Cabot's three step Finish in 1 Day system responds to a demand for more time-efficient coating.

    As the name suggests, the Cabot's Finish in 1 Day system turns what is usually a six-week process into a one-day job, thanks to a series of new product developments.

    Designed to enhance and protect the natural look of exterior timber, Cabot's Aquadeck decking oil now has a new formula, cutting down the recoat time from two hours to just one hour.

    Cabot's recommends teaming Cabot's Aquadeck with Cabot's Deck Clean and Cabot's New Timber Prep, a new product that allows deck owners to skip the four to six weeks of weathering typically recommended for new timber. James Fisher, senior brand manager for Cabot's, said:
    We know that many deck owners struggle to dedicate time to maintaining their deck, despite it often becoming the hub of the home during the warmer months. With this in mind, the Cabot's Finish in 1 Day system has been developed to make sure deck owners are able to spend more time enjoying their deck than they do caring for it.

    In three simple steps for new bare timber, or two for pre-weathered/grey timber, deck owners can achieve a finish that can be easily touched up as required throughout the year.
    News
    HI News V3 No. 10: Bunnings Australia grows
    Download the latest issue of HI News Vol. 3, issue no. 10
    HI News
    The development of Bunnings revenue and EBIT since 2010
    Joe Galli, CEO of TTI Group, being interviewed on Bloomberg Asia
    Click to visit the HBT website for more information
    Home improvement corporates dominate the latest issue of HI News: Bunnings, Techtronic Industries and GWA Group. We analyse their latest financial results and strategies.

    Simply click on the following link to download this edition:
    HI News V3 No. 10: Bunnings Australia grows

    Tasmanian hardware retailer, Kemp and Denning posts a major loss in FY2016-17 and Home Hardware store owner Craig Stibbard continues his vocal protest against changes to retail trading hours in Queensland.

    In terms of supplier news, fastener brand Senco has been bought by Kyocera and Mr Fothergill's buys a UK tool business. Closer to home, Adelaide Brighton said it will raise prices on pre-mix cement again.

    Our regular section on statistics takes a closer look at the end of the effects of historically low interest rates on housing. We also launch the People section which features Paul Hoye, managing director of Kilingspor Australia.

    European home improvement group, Kingfisher has taken over the Praktiker stores in Romania. In the UK, Travis Perkins has raised prices to help offset rising costs.

    US-based big box retailers Home Depot and Lowe's compete directly for pro customers. Ace Hardware and True Value also report on their second quarter results.

    Backpacks and other soft-side storage products are taking over the traditional metal toolbox. Other products in this issue include Boral Timber's newest flooring and Cub Cadet's brushcutter.
    Bigbox
    Bunnings-Wesfarmers results FY2016-17
    Bunnings FY2016-17 results
    HNN Sources
    Bunnings revenue and EBIT
    Store numbers and growth
    Click to visit the HBT website for more information
    The headline element in the full-year results for Australian big-box home improvement retailer Bunnings is its return on capital (RoC) ratio. For its Australian operations, this hit 41.8%, the highest it has been in eight years.

    Masters Home improvement, the failed effort by Woolworths to compete with Bunnings, finally exited the market in December 2016. In 2017 Bunnings' heavy investment in expanding its network is tailing off, and some operational expenses, such as staff hours, have moderated.

    For Bunnings as a whole, however, including its UK-based operations, RoC came in at just 30.3%, the lowest it has been since 2014. Those overseas operations lost $89 million, despite considerable investment in refurbishing Homebase, the retail operations Wesfarmers acquired from the UK's Home Retail Group.

    The concern among investment analysts is that, in the wake of Masters' exit, Wesfarmers has conjured up an equivalent problem through an uncharacteristically poorly disciplined and hastily executed entry into the UK market. With conglomerate parent Wesfarmers facing the handover to a new CEO in November 2017 - one with banking experience, but no retail experience - there is a question if the loss-making BUKI operations can be restored over the year to come.
    Wesfarmers

    Meanwhile, Wesfarmers has produced what it describes as a "record level of earnings" for its FY2016/17. In results released on 17 August 2017, the company reported sales were $68,444 million, up by 3.7% on the previous corresponding period (pcp), which was FY2015/16.

    Earnings before interest and taxation (EBIT) were $4402 million, up by 27.2% on the pcp. Net profit after taxes for the year was $2,873 million. This represents as increase of 27.6% on the pcp, if write-offs of $1844 million are excluded from the pcp results. (The FY2015/16 write-offs related to a revaluation of the company's Target retail operations and other assets.)

    In comments reported in the Wesfarmers results news release, Mr Goyder stated:
    The results achieved during the year demonstrated the strength of the Group's conglomerate structure, as well as our focus on cash generation and capital efficiency. A strong recovery in the performance of the Industrials division reflected higher earnings across all three business units, and was driven in particular by higher coal prices and increased coal production in the Resources business. Retail earnings were also above the prior year, supported by continued strong momentum in Bunnings Australia and New Zealand (BANZ), Kmart and Officeworks.

    Coles overall saw revenue fall by 0.1%, with EBIT declining by 13.5% on the pcp. Its food and liquor business had returned a lift in revenue of 1.6%, but the convenience area recorded a loss in revenue of 8.2% compared to the pcp.

    Kmart saw revenue lift by 7.5% on the pcp, with EBIT gaining by 17.7%. Target's sales fell by 14.6% on the pcp, while EBIT remained negative overall, but was positive by $3 million, with the omission of significant items. Meanwhile, Officeworks saw revenue lift by 6.1% on the pcp, with EBIT climbing by 7.5%.

    In Resources, revenue increased from $1008 million in the pcp to $1746 million in the reported year, a lift of 73.2%. EBIT was $405 million, up from a loss of $310 million in the pcp.
    Bunnings

    Bunnings now operates in two divisions, Bunnings Australia and New Zealand (BANZ), and Bunnings United Kingdom and Ireland (BUKI). Michael Schneider is the overall CEO of the combined Bunnings, and also managing director of BANZ. Peter (PJ) Davis is the managing director of BUKI.

    BANZ revenue came in at $11,514 million, up by 8.9% on the pcp, while EBIT was $1334 million, up 10% over the pcp. Total store sales growth was 8.9%, while store-on-store (comp) sales were 7.3%. BANZ delivered a return on capital (RoC) of 41.8%, up from 36.6% in the pcp.

    The company noted that results for the fourth quarter of 2016/17 were particularly strong, with total sales up by 11.4%, total store sales up 11.7% and store-on-store sales up by 10.4%, as compared to the fourth quarter of 2015/16. During the reporting year, Bunnings opened 18 new trading locations in total, consisting of nine warehouses, eight small stores, and one trade centre.

    BUKI reported revenue of $2072 million (GBP1229 million). This generated a loss of $89 million (GBP54 million). The company reports that for the fourth quarter of 2016/17 total sales decreased by 6.8%, with store-on-store (comp) sales down by 4.3%, as compared to fourth quarter 2015/16. However, transaction numbers for the quarter were up by 3.2%.

    BUKI opened four Bunnings Warehouse stores during the reporting period, three in East England and one in South England. The company also closed nine Homebase stores, reducing the network size to 251.

    Total revenue for Bunnings was $13,586 million, up by 17.4% on the pcp. EBIT was $1245 million, up by 2.6% on the pcp. The overall home improvement operations delivered a RoC of 30.3%, down from 33.7% in the pcp.
    Comments

    In his overall remarks on the company's performance, Mr Goyder stated:
    Bunnings in Australia and New Zealand recorded strong earnings growth of 10% after expensing a number of matters relating to the store network. Homebase's trading performance in the UK and Ireland was affected by the pace of repositioning the business. Pleasingly, the four Bunnings pilot stores opened during the year have been trading well as has the fifth, just recently opened.
    We continue to be excited about the opportunity in the UK and Ireland, albeit trading in the Homebase stores is weaker than we would like. We are strengthening the team and working hard to make this a good investment over time.
    BANZ

    In his comments on BANZ, Mr Schneider began by highlighting the retailer's progress in light trade sales:
    Sales growth was strong in both our consumer and commercial segments, with very strong performance among our light commercial segments, reflecting the good work that's gone into product innovation and offerings relevant to the various trade segments we serve as well as improved pricing in digital engagement.

    The subject of trade sales came up later in his remarks as well:
    Our engagement of light trades as well as deeper relationships with larger builders ensures we're well-positioned to meet the needs of this sector of the market.

    Mr Schneider also highlighted some of the extensive work that has been undertaken to significantly upgrade the existing store network:
    The images on the bottom of this slide show the demolition work underway at Caringbah and an illustration of our new warehouse, which gives a sense of the scale of these sort of projects. As we continue to develop our network, it's likely that similar scale developments will become a feature of our network planning.

    In the formal accounting documents accompanying Wesfarmers 4e report, it was mentioned that one negative offset to the good earnings growth was:
    ...higher store closure provisions within BANZ's trading results, arising from the agreement with Home Consortium for new sites, together with additional writedowns in the second half related to future network changes and in-store display assets.
    Further investment in store upgrades and category refresh works was supported by a disciplined capital expenditure program.

    In his remarks, Mr Schneider also said:
    Of note is our expectation that we'll be able to finalise our lease arrangements with the Home Consortium later this year, which will enable us to develop the remaining Masters sites that we've indicated we'll move into during the second half. This will also see an increase in capital expenditure this year.

    The formal documents stated:
    Access to the majority of the former Masters sites remains dependent on the outcome of the valuation process between the two joint venture partners. In the meantime, agreements have been reached with landlords of two stores and conversions are well progressed.

    Taken together, these remarks may indicate two things. The first is that Bunnings' expansion plans for the near future may be more concentrated on improving its existing store network, rather than in further geographic expansion. It is possible that, having had the opportunity to examine the higher amenity warehouse stores that Masters built, it may incorporate many of those features into its own future builds. That benefits consumer, of course, but it also benefits Bunnings staff. (Some of the older warehouses are not pleasant places to work in at the dead of winter or the height of summer.)

    Secondly, there may also be a hint here that Bunnings is increasing its efforts in the trade area to some extent. With some of the turmoil generated by the acquisition of the Home Timber and Hardware Group by Metcash, and some significant independent hardware store closures over the past six months, Bunnings may see room for expansion.

    Of course, it is also necessary to issue the usual Bunnings warnings: objects that appear in the mirror of the results announcement may be obscuring other strategies directly behind them. For example, Mr Schneider made no mention of a pending deal with GWA Group.

    This was mentioned in that company's results announcement by its CEO, Tim Salt:
    Finally, an area where we haven't been as focused and we're starting to wake up to the opportunity, is in assisted living, which some people call age care, but that's an area that Bunnings are certainly themselves looking to drive harder and we're partnering with them very strongly now to create growth opportunities both for us and for them in that space.
    BUKI

    It is hardly surprising that BUKI attracted a good deal of attention from analysts. Mr Schneider laid out a staunch defence of its operations and future prospects. He began by outlining those areas where BUKI had suffered setbacks:
    Trading during the year was impacted by price deflation following the introduction of Every Day Low Pricing across the Homebase business as well as lower volumes of high-value kitchen and bathroom sales as those categories were significantly repositioned away from an installation and in-home services model.

    He went on to outline what BUKI was doing to mitigate these problems:
    Our new range of kitchens is now in all pilot stores. A refresh and relaunch of this offer across the Homebase network is now underway. Whilst we are pleased with the new offer, we are conscious it will take some time to get traction with customers as they have become very used to a promotion-driven installation model across the market.

    Expansion plans, according to Mr Schneider, include up to 20 Bunnings stores in the UK by the end of calendar 2017.
    Our aim is to end this calendar year with between 15 and 20 Bunnings stores open or near completion. These will give us some important benchmarks to trading patterns and customer participation across the northern winter. As we've always said, further investment is predicated on successful pilots. Proof of concept is a very big area of focus for the business in the year ahead.

    He concluded by admitting to the difficulties BUKI faces, but reiterated that this is a long-term project.
    I expect trading to remain challenging for Homebase at least in the short-term as customers continue to adjust to the new offer. In addition, until we reach sufficient scale with the roll out of the Bunnings format, business performance will continue to be negatively affected by disproportionate non-operating costs and disruptions associated with the new store openings. As I said before, this is a significant long-term transformation project and PJ [Davis], the team and I are committed to driving the agenda hard in the year ahead.

    Respected analyst David Errington of Merrill Lynch picked up on some of these points in his questions:
    On BUKI, one of the most concerning things I've heard on this call was Mike saying that you're trying to convert UK customers to a non-promotional offer.
    Now you've lost a lot of money in this business this year. You lost - the biggest trading period, you've lost nearly $30 million, and that's your best trading period. And you're going to try to convert a market. Now most of us who have covered whether it be wine companies or the UK retail is the whole UK market is a promotional market, that's what the UK customers are based - that's what they deal on, whether it's BOGOFs [buy one get one free] or whatever it might be.
    You're going to try to convert the market to being non-promotional. That, to me, is a real worry, and I'd like to hear why you think that strategy is going to be successful going forward.

    Mr Schneider responded to this criticism by saying in part:
    We're seeing from the first five pilot stores that have been opened that when you're really clear on what EDLP is and you really strive to create breathtaking value for customers, they trust it and they shop with the store. So we're seeing that in the transaction sales [going] up ... in the pilot stores.

    He went on to agree that EDLP was "no silver bullet", but said this was only part of the developments at BUKI:
    The other thing that we've got is a whole lot of work happening now around different types of marketing collateral, both traditional and digital, to engage customers in the Homebase business. It's going to be a long slog, but certainly from what we're seeing in the way we've established the Bunnings pilots that they're performing well on an EDLP basis.

    Mr Errington responded with an acute point:
    But what's the worry, Mike, [is] that the Homebase stores, which is the bulk of the priority - the 260 Homebase stores that you're converting to being non-promotional. What's the risk that they turn into a real disaster?

    Mr Schneider agreed that there was a risk, but sees it as being offset:
    Well, I guess there is a risk. I think the challenge that the team have got in front of them and the work that we're doing is all about positioning the stores as a core home improvement and garden offer, and that's one of the big things that's sort of underestimated, I guess, in seeing the transition... It will take time for customers, irrespective of the pricing framework, to actually understand what those stores are there for, because that market's grown up with that business being something different.
    Analysis

    For what was a relatively tough year through at least three of its quarters, the results from BANZ are quite good. Not only did weather play a role in decreasing sales, but there was also, nearly a year ago, a high level of discount sales activity coming from the closing Masters stores.

    If there remains an open question around Bunnings' future, it involves the company's commitment to digital, online engagement. While there has been something of a dismissal in the past of the potential effect the entry of Amazon could have on the home improvement industry in Australia, it is worth noting that analysts this year have been sounding a note of caution about home improvement retailers The Home Depot and Lowe's Companies as regards competition coming from the biggest online retailer in the world.

    This has been partly fuelled by Amazon's move into selling larger home appliances sourced from Sears, but the greater point is that much of what Amazon currently stocks can suck sales away from home improvement: flashlights, lighting, batteries, light globes and so forth. Certainly, Amazon is better established in the US, but The Home Depot is headed for 2017 sales of USD100 billion and EBIT close to USD15.5 billion, yet is regarded as vulnerable.

    However, what has really drawn most analysts' attention is the activity at BUKI, whose success or failure could have consequences for what BANZ does here in Australia. To understand why analysts are so concerned, and why the investment in BUKI - only 8% of total Wesfarmers capital, according to incoming CEO Rob Scott - is seen as so critical, it's a good idea to look at how the different Wesfarmers interact, and how this plays into Wesfarmers' competition with its main rival, Woolworths.
    Segment overview

    Understanding the interplay between the different activities at Wesfarmers is of particular importance at the moment, as Mr Goyder is set to be replaced by the person who has managed Wesfarmers' industrials segment, Mr Scott, at the company's annual general meeting in November 2017.

    Speaking to a gathering at the Melbourne Business School in May 2017, Mr Goyder said:
    I don't worry too much about legacy. I'll walk to the next challenge. Rob [Scott] will change things, and he should change things.

    Mr Goyder went into particular detail about the importance of the Wesfarmers board:
    I was lucky. I always had a board that was patient. When I started at Wesfarmers, the board were all farmers, and now I think I'm the only farmer. There's a culture of being patient.

    This comment is notable, as some analysts have suggested Mr Scott could be overly influenced by the current chairman of the Wesfarmers' board, Michael Chaney. Mr Chaney was managing director of Wesfarmers immediately prior to Mr Goyder, and he was the primary instigator of setting up Bunnings, modelled on the US home improvement big box operator Home Depot.

    There are two areas at Wesfarmers Mr Scott will need to consider seriously. The first is exactly how a conglomerate such as Wesfarmers can function most profitably in the modern era. To what extent does each business division remain in its own operational silo, and to what extent are resources shared?

    The second is how the company manages its ongoing competition with Woolworths. At the moment the two companies are locked together in a duopolistic struggle over several retail markets - groceries, liquor and discount fashion - while, external to this struggle, the overall retail market continues to fragment, due to the entry of overseas competitors, and increased online competition.

    These two areas interact in interesting ways. In fact, if you wanted a tagline for this year's annual results from Wesfarmers it might well be "Grant O'Brien got one thing right". That one thing that Mr O'Brien - former Woolworths CEO and author of its disastrous rollout of Masters Home Improvement - got right was that Bunnings posed a direct threat to Woolworths' grocery business.

    This year, sales for Woolworths supermarkets in Australia rose by 4.5%, while EBIT fell by 2.4%. Coles, as mentioned above, saw EBIT decline by 13.5%. However, this represents less of a "winning" or "losing" situation, and is more an indication of how aggressive each retailer has become. As the managing director of Coles, John Durkam, put it in his remarks to analysts:
    We saw significant investment from our competitors, combined with a subdued consumer market. In response to these conditions, we took the deliberate decision to use FY 2017 to invest in the long-term sustainable growth of the Coles business.

    Wesfarmers can accept that kind of decline in Coles earnings as an investment in lower prices and gains in market share, because it has higher overall earnings, and more diversified depth, than Woolworths. Bunnings is an important contributor to that.

    It is also worth remembering just exactly how badly Masters and the mismanagement of its grocery business has affected Woolworths. Woolworths' market cap in 2007 was about $33.3 billion, while Wesfarmers at that time was at $17.7 billion. Allowing for inflation, that would translate into over $40 billion for Woolworths in today's dollars, and $22 billion for Wesfarmers. Today, Woolworths is still at around $33 billion, and Wesfarmers is around $48 billion.

    It's not really possible to make a straight comparison on a market cap basis over time (due to acquisitions and divestments, in part), but this does give something of a picture of what Woolworths has lost.

    This does not mean, however, that Wesfarmers has "won", or even that it is currently winning. Woolworths remains a strong competitor. The current CEO of Woolworths, Brad Banducci, appointed 18 months ago to the role, has managed to move its grocery business in a positive direction. In discount fashion, Woolworths' Big W retailer remains a disaster, and last year, through a major writedown, Wesfarmers acknowledged its failure with Target. Both operations could not be sold in the current market, and neither company can shut down its fashion retailer, as this would instantly hand an advantage to their competitor.

    The key strategy for Wesfarmers is to continue to fight what has become a war of attrition, between two competitors which are good at customer retention, but less good at increasing market share. Woolworths, in contrast, simply must innovate, potentially through increasing vertical integration in fresh food. That comes at the cost, though, of a higher risk profile.

    In this context, for some analysts Wesfarmers' investment in BUKI is similar to seeing a long-distance runner sign up for a 400 metre sprint right before the main race. It's a distraction, requires capital, and has an uncertain outcome.
    BUKI

    Wesfarmers' own point of view is quite different. Far from being a possibly destabilising development, the BUKI expansion is seen as potentially providing a form of longer-term stability.

    The expansion of the Bunnings store network in Australia in response to the launch of Masters was definitely an excellent strategic move, but it did open the company up to further risk in the event of a downturn.

    That is because, once a store network has expanded, there is no simple way to diminish that exposure. While the housing market currently continues to perform well, there is little doubt that at sometime in the next decade the market will contract, ceasing to grow at its current accelerated rate. By expanding overseas to the UK and Ireland, Bunnings is gaining entry to an economy that is associated with the Australian economy in only a minor way. In the event of a downturn, it could provide a much-needed continuation of growth.

    It is also a matter of timing: if Wesfarmers is to expand overseas, then late 2016 was a once-in-a-decade (at best) event. With Bunnings coming directly off a five-year campaign to reduce the impact of Masters, it was over-staffed with highly competent executives at the peak of their game, and teams existed which were used to working on aggressive expansionary tactics.

    That said, there is little doubt that Bunnings did underestimate the depth of the task BUKI represented. One part of that was that Homebase turned out to be, operationally for Bunnings, in worse shape than thought. The more important aspect, though, was that Bunnings did not understand how difficult making the necessary adjustments to a different culture, and a different market position, would be.
    Kitchens

    The place where the need for this kind of adjustment has become clear was revealed by Mr Davis during a site visit by investment analysts to Bunnings UK in mid-March 2017. In a tense question and answer sessions with Mr Errington, Mr Davis admitted that sales in the kitchens and bathrooms had not performed as expected. In part Mr Davis said:
    To be fair we didn't expect to lose the volumes in kitchen and bathrooms that we did. All right. So some of the strategic moves and the repositioning of the business have had impacts that we didn't project into the future. But we are reestablishing that right now.
    ...
    Well kitchen and bath [originally] consisted of] five brands. Some of it is produced in Germany, some of it is produced by one of our key competitors in this market. Three of the brands have not come across from HRG [Home Retail Group, former UK owner of Homebase].
    So we are going through a major transition in relation to kitchen and bath. Key principles are that we do not want to support one of our major competitors, in manufacturing, key principles are that we want a simple execution. We have closed installation down because we don't believe that it is key. We believe that, people will tell you can't sell kitchen and bathrooms unless you install them. We'll go talk to some other big players in the world that don't install kitchen and bath, including ourselves in Australia.

    Mr Errington then asked:
    But what about in the UK. Do they expect you to install in the UK?

    Mr Davis replied:
    But we had already had a large proportion of our business in this market that is not installed. What we want to do is to grow the non-installed part so that... Some of the issues we had were in remedials. So after a kitchen or bathroom is installed in someone's house, prior to us owning the business, we would've had to go back and repair it, and there are a lot of costs associated and a large team that were going back and fixing kitchens and bathrooms.

    It would seem that BUKI's solution to the kitchen problem has been to get its Australian supplier, Kaboodle, to design kitchens it thinks are suitable for the DIY UK and Irish markets, with a slight rebranding to "Kit+Kaboodle". Marketing for these kitchens has been launched in a brochure and on the Homebase website.

    As far as HNN can tell by looking at the illustrations, these seem as serviceable as any Kaboodle kitchen. The brochure goes to great lengths to assert the quality of the products, including a 10-year warranty, and a "lifetime advantage" extension of the warranty for customers who install kitchens in their principal place of residence.

    The parts of the brochure that deal with the mechanics of kitchen selection and installation are well done as well, following the pattern of Kaboodle's Australian marketing.

    However, much of the actual front-of-book display marketing is much less successful. This begins with a rather odd naming system. Two styles of kitchen are offered, classic and contemporary. The names for the classic styles are: steamer, roaster, griddle, poacher and baker. The names for the contemporary styles are glaze, simmer and miller.

    The copy used to describe these kitchens seems less than entirely professional. This begins with the airy paragraph:
    So, we found a way that families can save and still enjoy designer styling with high-end kitchen features. Imagine a kitchen designed by you, that comes in a box and is easily put together. The results? Take a look through our brochure and see for yourself!

    Not great, but not awful. The actual descriptions of the kitchens are less successful.

    For the "steamer" kitchen:
    Steam up a new kitchen in your space with my solid timber doors! Our Shaker style doors come in natural oak and two painted finishes - just in case you want to tone me down. My classic style is adaptable to suit both traditional and modern style kitchens.

    For the "griddle" kitchen:
    Try using my light blue country styled doors in your kitchen for a modern take on traditional. My retro farmhouse look is sure to steal glances and will bring your space to life. You'll be able to cook up a storm in no time!

    For the "poacher" kitchen:
    I am country, classy and everything in between! My poached cream doors with stylish grooves are an everlasting look that won't date your space. I work wonders with a timber worktop and plenty of natural light.

    ("Poached cream", as far as HNN can tell, is a form of Polish moulded custard.)

    Leaving aside the pronoun confusion in the first example, this copy seems to be emulating the text of a first-year reading primer. The marketing merit of conversationally inclined kitchen cabinets is somewhat questionable. It is not an approach that shows an effective track record elsewhere.

    The contrast with kitchens offered by B&Q is quite strong. Cooke & Lewis Carisbrooke, Santini, Stonefield, Sandford, Chilton, and Cooke & Lewis Appleby are names of kitchens offered by B&Q. The description of the Chilton White Country Style kitchen reads:
    Our Chilton White Country Style kitchen is tastefully traditional with modern updates for that easy, laid-back atmosphere. White units on white walls are a trend-led feature, anchored by a darker statement worktop, completing the look.

    That is professional copy. Equally, the kitchen images from Kaboodle are adequate, but the images used by B&Q to promote its kitchens, to an existing, well-established market, are more professional, showing people in the kitchens, and adding key background elements.

    As HNN has mentioned above, Kaboodle is generally a competent company when it comes to marketing, making a little go a long way. What seems to be happening in this case is that the company is being called on to manage a very difficult task - essentially the introduction of a new category of kitchen to a part of the market unfamiliar with the product - with only a very limited budget, limited means, and an imperfect understanding of the market it is approaching.
    Structural problems

    The point of this is not at all to criticise Kaboodle. It's that this minor misstep in marketing points to larger possible problems at BUKI. To really get to the roots of what that problem may be, it is helpful to go down a theoretical path.

    A helpful source is one of the more popular market development books of recent times. Jobs to be Done: Theory to practice by Anthony Ulwick has been a very influential work, especially on Clayton Christensen, author of The Innovator's Dilemma, which gave us the modern business theory of "disruptive innovation".

    To read the rest of this article, please download edition 3-10 of Hi News:
    HI News Vol.3 No.10: Bunnings-Wesfarmers results 2016-17
    Companies
    TTI 2017 first half results presentation
    Joe Galli, CEO of TTI Group, being interviewed on Bloomberg Asia
    HNN Sources
    Ryobi's best-selling ride on mower
    Milwaukee Tool has entered the drain clearing business
    Subscribe to HNN weekly e-newsletter
    CEO of global power tool and floorcare manufacturer Techtronic Industries Group, Joe Galli, presented the company's results for the first half of FY2017 recently.

    Following is a transcript of his presentation, edited for the sake of clarity.

    It is a pleasure to share with you record breaking results once again. Sales in local currency were actually up over 8% for the first six months. That reflects our ongoing guidance of growing strongly at a single digit. The Milwaukee growth engine was up again, over 20%.

    Our power tool equipment segment demonstrated outstanding growth and momentum. In the first half it was up 12.5%. I will share more detail with you in a moment about that. There are some fantastic highlights that made up that extraordinary level of growth.

    Floor care down 12%. That number obfuscates a bit the momentum and the progress we are making in floor care. First of all we exited our shredder business which we were in last year. That was a significant business that we dropped completely.

    Secondly, the floor care cordless stick-vac market, stick-vac business for TTI in a number of different brands was actually up over 50% in the first half. So our cordless floorcare focus area is growing like crazy. Of course the corded, the traditional legacy business, which was a big part of our floor care business in the past, is down sharply, and will continue to decline.

    The good news is that our cordless growth will overwhelm that. We have a bright future in our floor care business as you will see in the coming years.

    We were very excited about our first-half performance in gross margin. We were up another 50 basis points this year, which continues an extraordinary trend. Really it is a record-breaking trend. Our EBIT is up 15% on sales growth of 7.3%. That is after currency. This shows outstanding leverage.

    We actually maintained SG&A at a flat level, although we are investing like crazy in research and development on new products, which you will see in a moment, we still were able to generate excellent leverage. EBIT growth up over 15% is something we were excited about.

    Gross margin as we pointed out was up 50 basis points over last year first-half. This is encouraging. But when you look back for a moment on what we have been sharing with you for the past nine years, we have actually increased our gross margin as a percentage of sales over nine consecutive years from the 31.5% starting point in 2008, to this year's 36.6%.

    This is a track record that we are proud of. I can assure you that this trend will continue over the next five years. We have so much high-margin, accretive new product on the way that we believe we can continue to drive gross margin to higher and higher levels, which will generate increased EBIT percentages as we go forward.

    One of the basic productivity measurements we always use, is sales growth versus headcount, once again we grew sales 8% in change, while headcount grew by 2.7%. So, with all the investments we are making in geographic expansion, around the globe, with all the money, and all the heads we are pouring into research and development, and product management, to generate this kind of productivity and leverage in headcount is encouraging. I am very pleased with our team's disciplined performance in controlling these expenses.

    We were able to grow our power equipment business in all regions. Actually, when North America has the slowest level of growth, you know that our geographic expansion efforts are gaining great traction. I was really excited about how our

    European team performed in the first half. And, of course, rest of world means Australia, New Zealand and South Korea, and those numbers are exciting as well.

    And then, when you shift gears and look at only Milwaukee, Milwaukee was once again up over 20% in the first half of 2017. That 20% is an exciting number on a small base, but when you have a significant base, which we now do in Milwaukee, 20% is not so easy to generate. And yet we are committed to a 20% growth level on Milwaukee this year, the next five years.

    I don't think we have even scratched the surface yet in terms of the long-term potential of this vast cordless, industrial market that we are developing with our technology and our new products.

    You know, the geographic performance of Milwaukee is also a highlight. Again, North America up almost 20%. I was really proud of our European team. The European theatre is a tough environment. And yet throughout Western Europe, actually Eastern Europe, including Poland and Hungary, Czech Republic, Slovenia, Bulgaria, Romania, etc., these Eastern European countries are really selling Milwaukee like crazy.

    And of course once again, rest of world means Australia New Zealand and South Korea, where we are growing at rates that are unprecedented. It is very exciting where this is all going to lead.

    Now in the first half, our largest competitor actually reported impressive results, in fact our largest competitor announced that their organic growth for the last six months of 2017 for their tool and storage business, which is comparable to our power equipment business, they were up 7.1% in the first half. And we were impressed with that. That shows good performance.

    Certainly our competitor trumpeted that as an outstanding performance. Except that, we were up 12.5%. Of course, Milwaukee is up 21.5%, but if you take Milwaukee out, our DIY brand was up 10.4%. That is organic growth.

    Even the tactical AEG brand was up almost 10%. So, while our competitor is doing well, you can see that there is nobody taking any market share from TTI. And I can tell you that there will be nothing but a continuation of this kind of trend, over the next five years with the new product flow that we have on the way.

    There is one other interesting thing. You know, a lot of investors have asked me about a new, flexible voltage launched by our largest competitor. I have been answering these questions for nine months. And it is interesting, that since our competitor launched this flexible voltage cordless system, our growth rate in Milwaukee cordless and Ryobi cordless have increased.

    So, while our competitor are doing great with their program, I'm sure, we are doing even better than we were before they launched. So, I think it is obvious that there is going to be no slowdown in Milwaukee, or Ryobi cordless growth, based on competitive actions.

    This is an example of our strategy at TTI. We don't worry about what our competition is doing. We don't worry about macro economic issues beyond our control. Or political issues that are brewing in various parts the world. What we worry about, is things that we can control.

    New product development, hiring outstanding people, motivating our team, having a disciplined strategy that we focus on relentlessly. We have a geographic expansion program, that is not based on headlines, on geographic regions, but very specific countries, specific attacks in markets, where, like in South Korea, or like in Australia, we have focused and attacked with our strategy and we have achieved great results.

    So, our competitors are doing a fine job, and we respect them. But we don't react to them, and I can assure you that we intend at TTI to, of course outperform our competitors for many, many years to come.
    Ryobi

    Let me show you why I feel so confident. First of all the Ryobi brand, the Ryobi brand has become the most common brand in the world for DIY tools. This is an amazing statement. You know there was a brand called Black & Decker, it is a company I worked at for 19 years. It was number one in the world, for 80 years. For Ryobi to overtake the former leader, and to become the number one DIY brand in the world, is pretty special. The interesting thing is that not only are we number one, but we are outgrowing any other DIY brand in the world, and it is because of this amazing flow of cordless products.

    It is really the same strategy at Milwaukee and Ryobi. Ryobi One+ is now the number one brand of cordless tools in the world, and although we have over 100 One+ tools already, we are about to launch more in the next six months than at any former period in our company's history. So we have a new mitre saw, for Ryobi One+, that is the first ever cordless DIY mitre saw that performs like a corded tool.

    We have a new brushless motor cordless angle grinder, same technology as we use with Milwaukee. We were able to adapt it at the right price point for our Ryobi family, and with brushless of course you get more power, less weight. This thing will actually outperform a corded version of the same tool. Same with the brushless motor cordless Ryobi circular saw, this is a cordless circular saw that is lighter than corded, and will actually cut faster and more accurately than the corded DIY saws with which we compete.

    Then we have the metal shears, brand-new category, and then we have the pin nailer, brand-new category, then we have our second drain cleaning product. This drain cleaning is a technology that we have pioneered, in Milwaukee. The Ryobi team not wanting to be outdone, also wanted to have a DIY version of drain cleaning. The first one that we launched last year sold so well, that now we have a step-up drain cleaner in our DIY line.

    This is a Ryobi cordless bolt cutter. Yes, a bolt cutter instead of using a manual bolt cutter you can now buy one of these devices. You can cut chains, you can cut rebar, and for the burglar, of course, it is a perfect choice. Now we don't have a lot of control of these things! We just make the products.

    This is a fascinating product. This is a cooling cooler. So in warm climates we have a Ryobi cooler. You pack it with ice, your favourite beverage. And when you fire this up, it actually is an air-conditioner for the jobsite. So believe me, the contractor loves to stand in front of the cooler, not to only to enjoy the beverage now, but also to enjoy the cool breeze that comes from this unique cordless device.

    On to outdoor. So one of the things that people tend to miss about the Ryobi program, is that we have the only overarching platform of cordless, to serve the global DIY market. Not only do we have all of these fabulous power tools you see on the wall [of the conference room], we also have outdoor power equipment that works off the same 18-volt battery as our power tools, and this gives us a unique way to bring people into our system.

    When you walk into a Home Depot, no matter if you buy a drill, or a string trimmer or a chainsaw, doesn't matter, we serve that DIYer with the same Ryobi One+ battery. This is one of the reasons why we have been so wildly successful with this program.

    In the outdoor business alone, we are rolling out the six new products in the second half of this year, and for 2018. This will give us 30 different outdoor products in the One+ system. So, 30 outdoor products in the One+ system, which now gives us over 130, total Ryobi products that all work off that same battery. The same battery that we had 15 years ago when we launched One+, which gives us a backward-compatible system that is unique around the world and is gaining traction like crazy.

    In addition we have pioneered high performance cordless outdoor products. So in some applications, if you have a large yard, let's say in Australia, or Canada, or the US, you might require more runtime and therefore more power. That is why we developed the 40 volt platform of Ryobi outdoor.

    This platform has actually taken off so well, that we are going to launch all these new products next year to feed that 40 volt platform, which will give us something like 30 products in just the 40 volt system, just for outdoor. One of the most exciting developments at Ryobi and TTI over the past six months has been the category of cordless mowing.

    Not only have we pioneered the first ever DIY level, value-priced cordless riding mower - it costs USD2499 - we sold completely out of these last year. We intend to grow, we will probably triple our sales on this device next year, and we are just getting started adapting our unique technology to applications like this riding mower. So this is exciting, this is the flagship of the Ryobi brand.

    However what may be the most exciting development over the past six months is the unbelievable stampede that is going on from petrol mowers, which have been around for a long time, to the Ryobi cordless mowers system. If you think about it, as exciting as cordless is in power tools, when you switch someone from a cord to cordless, it is, there is an even more obvious benefit to switching from petrol outdoor products, to a cordless product.

    So, for example, a petrol mower has a pull cord that you have to pull, which is a challenging and frustrating process just to start the product. Then you have the issue of the fumes, because this is a petrol-burning engine. The fumes, of course, are not great for the environment, or that great for the user either. Of course with cordless, there are no fumes. Then you have heat, the petrol engine gets very hot, there is no heat in cordless. Then you have the noise.

    Our cordless mowers are one third the decibel level that you have with petrol mowers. Then you have the annual trip to the lawnmower shop to have these tuned up, replace the spark plugs, clean the carburettor. You have none of that with cordless. And don't forget, the petrol supplied by people such as Exxon, we don't get any of that revenue. But on the cordless mower, we sell the batteries. So the aftermarket we have for the power source, is a revenue stream that most investors have not yet even thought about.

    We were able to sell four times more mowers than our original forecast last year. I should say rather for the first half of this year. Four times more. Now you say, well, wait a minute, maybe the base was small. The base was not too small. But wait until you see what the base is next year.

    This may well be the fastest growing new business area in all of TTI over the next five years. That is because the market for global petrol mowers is vast, and our competitors have not focused on this category in the way that we have. So I think you will see exciting things in the future here.

    We were also able to develop a very exciting floorcare product in our Ryobi line. Floorcare at TTI is not just Hoover and Vax, we also in Milwaukee and Ryobi will sell floorcare products. This is a good example, this is a cordless pole-vac in the Ryobi system, that is going to be sold globally, and that will be a very significant contributor to the power tool business, although it really is floorcare.

    That is one reason why we are so excited about floorcare, because the technology works in a lot of places. Here is another example, this is a cordless wet dry vac, using the 18-volt One+ battery system. This is more powerful, it has better suction than a corded wet dry vac. And it is cordless, there is no cord so there is no electrocution risk, and there is unbelievable convenience and benefit here with cordless.
    Milwaukee

    Okay, so let's shift gears and talk about Milwaukee. You see from the three-dimensional display in our triumphant arch over here that we are very excited about the momentum that Milwaukee has. Yeah, we grew 22% in the first half, however I think that investors continue to underestimate the long-term potential of Milwaukee. We have just begun here, we are just getting started, in converting the global industrial market to cordless. We are leading the charge, our competitors are also doing a good job, a rising tide will lift all boats, but I can assure you we are committed to being the global leader in industrial cordless, Milwaukee will be number one, as we implement our strategy.

    We have so much new product on the way, that I cannot begin to get through it today, though I will try to give you some highlights of what we are launching over the next six months.

    First of all we have two platforms in Milwaukee. We have 18-volt, and we have subcompact 12-volt. I have been in the power tool business since 1980, and the most important launch in the history of our industry, is Milwaukee Fuel. The reason is, this is a revolutionary platform, with a unique battery, a unique motor, and unique onboard electronics. The electronics are the key to everything in cordless. We are so far ahead here that we believe we are still three years ahead of our competitor in terms of Milwaukee Fuel.

    So the Milwaukee Fuel range is set to expand a lot. This year and over the next six months we will roll out a whole new family of impact wrenches. These are heavy duty, heavy torque wrenches for driving lag bolts for infrastructure, bridge construction, tunnels etc.

    There is also a version for the automotive market. Every auto dealership in the world, every auto repair shop in the world will shift from pneumatic to cordless - in our opinion - in some degree, and we will lead that charge. This is our family of impact wrenches, that's only impact wrenches. No one anywhere in the world has this kind of range of cordless impact drivers, and that is one of many, many categories.

    We have in addition a brand-new 7 1/4 inch dual bevel mitre saw. Last March we shared with you our new 10-inch mitre saw, full-size. But to be honest cordless means lighter, more compact, easier to carry, easier to use. This 7 1/4 inch saw does something like 75% of the cuts you would do with the full-size mitre yet it weighs a lot less, the blade costs one third as much to replace, and it just works great. In addition we have a new hacksaw, a new full-size hacksaw utilising Fuel technology.

    This is another breakthrough product it is called a mud mixer. What is a mud mixer? That is American slang for a device that mixes concrete, paint, epoxy, and various other compounds that you use on a jobsite. You use it in new construction, and what is the common theme of new construction?

    There is no power, so having to operate one of these things corded is a real nuisance, because you need a generator and a long extension cord. That is over now, with the Milwaukee cordless mud mixer. And we have the same torque, the same power and torque with our cordless tool as traditional mud mixers had with the cord.

    Again we have a heatgun, this is a first ever cordless heat gun. This is a heat gun, it uses no butane, no dangerous gas cartridges. It is strictly lithium technology that we have created. It works like a normal AC heat gun. There are tons of applications for heat guns on jobsites. And in automotive. The full-size 18-volt line of Milwaukee cordless is the broadest in the world, it is growing like crazy.

    Okay, subcompact, 12-volt. We have pioneered finally full power 12-volt ratchets. These are for use in the automotive industry, and for other mechanical hand tool applications. So we are converting people here from traditional mechanics handtools, such as sockets and wrenches, to a cordless ratchet.

    Today, in automotive, people either use handtools, or they used pneumatic, which is loud, noisy, needs maintenance and so forth. Ours is quiet, and actually has more torque than pneumatic tools. So this is a stapler, a brand-new cordless stapler. It is used for installation of carpet, or insulation, or other fabrics that you attach to wood. Here is a new soldiering iron, a soldiering iron that heats up enough with our 12-volt technology that it can replace a corded soldiering iron. Brand-new technology.

    So it is interesting, our competitors talk about changing the market, in cordless, and leadership in cordless, and yet the fastest growing market for cordless is subcompact, the whole idea of cordless, just like your iPhone is smaller than payphone or a landline, the whole idea of cordless is smaller and lighter and more compact, more convenient, less unwieldy.

    That is what subcompact gives us. We have the broadest line, we have over 80 subcompact tools. No one in our industry is even close to being this committed to the fastest growing segment of cordless which is subcompact.

    But this keeps going. Let us talk about some new businesses that TTI is going to enter with our Milwaukee industrial brand. This is the drain cleaning market. Now I mentioned in Ryobi that we have DIY drain cleaners, but for the plumber, for the commercial plumber, or for the residential plumber, clogged drains are nasty business, right?

    We are going to give the plumber a safe, as in you don't get electrocuted, safe and fast way to deal with these unpleasant challenges that come up at various times in restrooms around the world. This is an air snake, so that instead of firing a cable through the drain to unclog it, this actually builds up enough pressure to blow air, blast air through the drains and unclog them, without the unpleasantness of having to feed a cable through the system. Now however there are times when you do need a cable, we will have the first ever cordless cable drive drain cleaners, this is a drain snake that is cordless, and it will outperform a corded version of that drain cleaner.

    Here is something that is called a switchpack, this is really cool. If you need 50 feet of cable to clean the drain, you can attach one drum to the switchpack and you can perform the application. If you need 150 feet, you can plug three of those drums together and you end up with a 150 foot cable.

    Fired from a cordless delivery vehicle, first-ever, so you can now deal with drains that are longer than you can imagine. This is the full family of drain cleaning products in Milwaukee, so this is a category we have never been in, we are famous with plumbers, this is one of the key applications of any plumber, and we have gone from never being in this, to global leader in the cordless versions of drain cleaning.

    So, the new businesses keep going. Another new business that we have shared with you is lighting. Lighting has become an immense opportunity for Milwaukee cordless. Why? Think about any construction site ever, a construction site needs light, whether you're working in the evening, or whether you are in a building that doesn't have light and power.

    Cordless lighting is a vast opportunity. So we are going to bring some more products to market here. Here is a good example. This is a we call this a Radius light, so you fired it up, and it gets very bright on the jobsite, that is working off of our batteries, but this particular light can also be activated from your iPhone. So this is our One-Key system, so from 200 feet away you can turn on 10 of those, with the iPhone. So if you are the foreman at a job site, you can control when the lights go on and off.

    In addition, that particular light also charges your battery. So if you can utilise the light and you can also put two batteries in and charge them so that you can use them later in your power tools. We think many users will also enjoy that application. Here's another cool light, this is an under-hood light for the automotive market. If you are repairing your car, let's face it, if you are in a garage even if the garage is well lit, under the hood, it is not very well lit. Now we provide the user with a cordless way, to work under the hood of the vehicle, and repair the car.

    Here is a shot of the current lighting line, this will be our lighting program by the fourth quarter 2017. Once again, that slide is going to change a lot over the next three years, we have so many lighting ideas that it will blow your mind. Remember, selling lights, this is like selling a power tool without a motor, which means the gross margin here is highly accretive, and it means that the same battery operates in these lights, but we see it as a very very exciting new business area.

    Okay another new area is personal lighting. We have had so many requests from end-users for lighting, that, say, a coalminer would use, or a contractor would use, or even DIYers, farm use, etc. There are thousands of applications for what we call personal lighting. We intend to have the Milwaukee brand become a leader in the space. This is what we're launching, in just our opening salvo. This is just our first step here. However it is quite exciting.

    Okay. Now let's shift gears. Of course power tool accessories matter a lot to us, we have engineered a line of what we call carbide-tipped Torch blades. Torch is a sub-brand. So the Torch blade with its unique carbide tooth technology will out-cut existing reciprocating saw blades.

    Torch cuts metal, with we also have a version of these blades that we call Ax, that is for cutting wood. In both cases we outperform anything in the market. The sales of high-priced, high-end blades are running right now about double what we had forecast. The margins are excellent. So we're very excited about our power tool accessory businesses, and this is a good example of that.

    Okay, brand-new business for TTI. This is something that we have never been in. It is called storage. We have competitors that classify storage as something so important that they actually name the entire business segment "storage". So, we intend to participate aggressively in the storage arena.

    This system is called "Packout", we rolled this out last month. This Packout is a revolutionary interlocking system, that is indestructible, it is convenient because you can interlock hundreds of different of storage devices eventually into the system, and you will be able to attach radios and lights and fans also to things.

    We think we are going to sell so many tools to our users, that they are going to want to store our tools in our storage solutions. And this is a good example that. Do not underestimate the long-term impact of storage.

    Every single user we sell to, has to store their tools. They either store them permanently, in a garage or workshop, or remotely in jobsites, or in vans, and they need wheeled storage solutions, much like your wheeled luggage through the airport. The reaction to this program has been just incredible.

    Okay, another new area. We promised you, what, four years ago we said we would build a billion-dollar global handtools business. We had never been in handtools. Our largest competitor feasts on this category, because the margins are inherently higher, there are lower distribution and transportation costs, people don't return handtools so there is zero returns at the retail level, and we need to be there.

    But we never said we are going to handle business with "me too", commodity boring traditional products. Every single handtool that we launch is designed to be innovative, a leading postion, priced at a premium, but it is designed to outperform our competition.

    This is a great example. We just rolled out 29 new screwdrivers. These have ergonomic grips, and better business-end tips. You might not have thought that we could reinvent the screwdriver, but we did. I'm very proud of our team, and this program and we believe this is going to sell like crazy.

    Another example, tape measures. We've been in this category now for three years. We are going to roll out 16 new tape measures over the next six months. 16 new tape measures. We have features here, and durability, that are unsurpassed in the handtool industry. This is a picture here of our hand tool range as of October. Four years ago that picture would've had nothing on it. Take a good look at it, because while there is a lot of stuff on it, believe me, a year from now it will be a very crowded slide and we will need two slides again.

    Let me make another comment now about the floorcare space. So floorcare is obviously an area that is going through transition. Are we pleased with the revenue results, with the profit results from floorcare? Of course not, in the first half. But there is no alarm here, we are participating in, and we intend actually to drive the stampede, the revolution from corded to cordless. You have to remember when you look at our results, that floorcare is not just Hoover, Vax, Oreck and Dirt Devil, it is also Milwaukee and Ryobi.

    In fact, these floor care products used to clean the surfaces of job sites and DIY areas and even around the home, these floorcare products in every single case are smash successes in our cordless family.

    Because we have so many people in our cordless systems, in both Ryobi and Milwaukee, that we have a presold line of floor care. So anytime that we roll anything out in these two battery platforms there are legions of loyal customers that will buy our floorcare, because they have the battery.

    And that means yes, they won't buy Dyson, won't buy Shark or any of the other competitors. In many cases they will go right to the power tool brand, which are really no longer power tool brands, these are broad power equipment brands, including cleaning devices for floors.

    To read the rest of this article, please download edition 3-10 of Hi News:
    HI News Vol.3 No.10: TTI results presentation by Joe Galli
    Retailers
    Indie store update
    K&D is forced to tighten its belt as tough trading conditions result in $98m loss
    HNN Sources
    Craig's Highfields Home Hardware is not in favour of the changes to retail hours in QLD
    The late Tim Starkey was inducted into the National Hall of Fame recently. The award was presented by HBT's Mike LoRicco and accepted by Tim's daughters, Maddison and Georgia.
    Click to visit the HBT website for more information
    Competitive pressures has forced K&D to tighten its belt and changes to store hours in Queensland will not benefit independent retailers, according to Craig's Highfields Home Hardware.
    Trading conditions lead to K&D's $9.8m loss

    Tasmanian-based hardware retailer Kemp and Denning Limited (K&D) has made cost cutting culture a priority after recording a $9.8 million loss in 2016-17.

    A competitive environment resulted in an 18% reduction in revenue from $89 million to $67 million. The after-tax loss increased from $558,846 to $9.83 million.

    General manager Jason Hutton said it had been a period of particularly tough and adverse conditions for retail and trade. He wrote in his report:
    Both markets have been very competitive with challenges around sales and margin retention. In response, the Board and management determined that in order to remain viable we must simplify our operations and implement an aggressive cost reduction culture.

    Chairman Greg Goodman said directors had taken decisive action to restructure the company with the closure of unprofitable operations in Devonport and Glenorchy and the sale of the trade division to Clennetts Mitre 10. He told The Mercury:
    The sales have significantly strengthened our balance sheet and facilitated the repayment of all outstanding debt [$6.8 million].
    The board decided to sell the trade business to eliminate ongoing operating risk and ensure shareholder value was preserved. Excellent progress has been made in the reduction of operating costs and working capital.

    K&D also closed its Cambridge store, despite an ongoing lease going through until March 2018. It plans to sell the land and buildings at Kingston by the end of September.

    The company's annual report says K&D has a strong balance sheet, assets of $38 million compared with liabilities of $14 million, and a clear strategy to get more value out of its real estate holdings. The directors report to shareholders said:
    To maximise our impact we will increasingly look for opportunities to maximise the benefit of these properties.

    The report also indicates that K&D's continuing operation in Melville Street, Hobart earned $22 million revenue but contributed $4.5 million to the loss.

    The discontinued operations, including Glenorchy and Devonport, earned $44 million in revenue in the year to May but lost $5.2 million.

    Related:
    Indie store update: K&D store closures - HNN
    QLD trading hours changes: Not happy

    Craig's Highfields Home Hardware owner Craig Stibbard has criticised the Queensland Government's changes to trading hours, saying it would put more pressure on small businesses.

    The amendments to opening hours for hardware stores, butchers, shops at international airports and tourist areas were passed through the Queensland Government recently, after Labor secured the LNP's support through extra changes.

    But Mr Stibbard said allowing all hardware stores to open at 6am every day would only benefit large chains like Bunnings. He told The Chronicle:
    I think it's crazy - most of the hardware stores are already open at 7am. It's just ludicrous. The big guys are just trying to squeeze the little guys out, there won't be any small ones left.
    I probably don't think it's achieved a lot - you might be able to attract people outside of the normal trading hours, (but) with your overheads, your electricity prices, labour prices, opening a door is all a cost.

    Toowoomba Chamber of Commerce CEO Jo Sheppard had a mixed reaction to changes which were designed to give small businesses more flexibility with their opening hours to help attract customers.

    She said it was unlikely to be the last time the state government reviewed opening hours, considering the changing nature of business in Australia. Ms Sheppard said:
    A couple of points I'd make is we need flexibility for businesses to have extended trading hours. Customers' expectations are that they are wanting extended hours for those bigger regions.
    Toowoomba is one of the biggest online shoppers in the country, so to compete with that side of shopping traders need to be able to open more often. I don't think any government should look at this and say that's final.

    Mr Stibbard said he was also unlikely to extend his opening hours.

    Related:
    Indie store update: Impact from new QLD retail hours - HNN
    Products
    Alt-toolboxes for tradies
    Stanley 4-in-1 toolbox
    HNN Sources
    Irwin tote bag
    Milwaukee Tool's bucket bag
    Click to visit the HBT website for more information
    It's no secret that, for most trades, the number of tools each tradie needs to tote around increases every year. Whether its hand tools, power tools, or measuring and inspection tools, designers and manufacturers keep coming up with better ways to accomplish construction and maintenance tasks.

    With great power comes ... well, the need to tote around a lot of gear, actually.

    While for many the traditional style of toolbox continues to work well (pull up in ute/van, put tools in box, go to work), for many, especially those who find themselves working on multi-unit dwelling construction, tool transportation has become a bigger issue.

    Depending on the task at hand, there are two potential paths for this need breed of tradies to follow: they can go for the big, pull-along toolchest, which means they can take everything with them, or they can go for more easily transportable solutions, such as backpacks.

    Backpacks have been growing in popularity in part because they've become so much a part of our culture - it's what you carry your sporting kit in, your groceries, photography equipment, and so forth - and because they are a great solution when your workday begins with a kilometre walk, followed by a long climb up scaffolding and ladders to reach your worksite.

    What HNN is presenting here might be called the "alt-toolboxes", some well thought out solutions to new ways for tradies to keep their tools about on the different sorts of work environments they encounter.
    Veto Pro Pac's Tech Pac

    One of the best made and best designed (and more expensive) solutions, this backpack is specifically designed for use by tradies who need to walk a fair distance to the jobsite, or who need to work doing tasks such as servicing equipment on a ladder or elevated platform. The backpack has 56 pockets for tools in total, and is designed for quick and easy access to all of those pockets.

    The design was tested in the field, and resulted from a great deal of research.

    According to the designer of the pack, Roger Brouard:
    We wanted to see first hand how tradesmen in the field deal with those conditions, so I spent weeks with them on the job observing them - from looking at OSHA standards of three points of contact on ladders, hauling tools up with a rope, to the need for a backpack that would fit through cages and stand up when being used, to a backpack that is comfortable and won't get wet when placed down in wet or muddy conditions.

    Like better hiking packs, the pack features a thermo-formed EVA padded back panel that helps cushion the load, and also provides structural stability. A padded load displacing shoulder strap system with multiple adjustment strap points makes it easy to wear the pack for long periods. It's designed to not tip over when stood upright on the ground, and is the right size to fit through safety cages on construction sites.
    Veto Pro Pac's Tech Pac
    Milwaukee Jobsite Backpack

    While this is a smaller pack, with just 35 pockets, its designed to suit most builders and construction workers. It features a total of 35 pockets, and six elastic straps to hold tools. On the inside it has a large pocket in the centre, two medium pockets to either side of that, a further 10 small pockets, and three zippered storage pockets. On the exterior, there are two side pockets, and another zippered pocket on the back, as well as four straps. Finally there is one very large pocket on the back, which could hold a hard hat.
    Milwaukee Jobsite Backpack
    Stanley Fatmax 4-in-1 Mobile Work Station

    This is a unique product from Stanley. Packed up for transport, it's the usual tall and wide toolbox we're all used to. Deployed for use, however, it transforms into a four-area tool access stand, including a toolbox, parts bin, portable flat tray, and an oversized lower bin for items such as power tools. It comes with its own built-in wheels, and includes a telescoping handle. The designers even thought to include a V-groove in the top of the work station, making it easy to hold materials such as lumber and pipes steady for cutting. The whole box of tools can be locked at a single point.
    Stanley 4-in-1 toolbox
    Stanley Fatmax Tool Back Pack

    With 50 pockets, the Stanley offering provides extensive flexibility for storage. It also features an internal sleeve for tool storage that can be lifted out of the backpack to provide ease of access to a wide selection of the tools. The backpack has a separate pocket for the storage of a laptop, or power tool.
    Stanley Fatmax Tool Back Pack
    Irwin Centre Tote Tool Bag

    Something like a combination of a backpack and a more traditional toolbox, This tote bag offers 42 pockets for storage, along with a separate power tool holder. It features an open design that makes it easy to find and access tools. Comes with a padded shoulder strap, making it easier to carry tools and leave hands free.
    Irwin tote bag
    Milwaukee Bucket Organiser Bag

    A great idea from Milwaukee, this is a like a tool belt for a bucket. It's a nylon belt that wraps around a standard bucket, and provides storage via 30 exterior pockets, plus two large zippered pockets.
    Milwaukee Bucket Organiser Bag
    Milwaukee Bucketless Organiser Bag

    Like the above, but without the need for a bucket. Provides an additional 20 storage pockets, bringing the total to 50. Includes a hammer holder that keeps the hammer upright, and easy to grab a hold of.
    Milwaukee Tool's bucket bag
    Companies
    Supplier update
    Kyocera has purchased Senco
    HNN Sources
    Adelaide Brighton will increase prices on pre-mixed cement for the second time in 2017
    Mr Fothergill's expands with Darlac purchase
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    Kyocera's acquisition of Senco has strengthened its position in the fastenings category; Adelaide Brighton is expecting to raise prices again; Mr Fothergill's Seeds has bought garden tools and equipment supplier Darlac; and Tenaru is actively supporting the Master Painters association.
    Multinational takes Senco from private hands

    Japan-based Kyocera Corporation has acquired Senco Brands, a fastening tools and fasteners maker since 1948, for an undisclosed sum. This will expand Kyocera's fastening tools business in the residential, commercial, manufacturing and construction sectors.

    As a result of the acquisition, Senco will now operate as a part of the Kyocera Global Tool Cutting Division. Renamed Kyocera Senco Industrial Tools, the company will continue to be headquartered in Cincinnati, Ohio (USA).

    Kyocera takes on Senco in a move that takes the business out of private ownership. Ben Johansen, CEO of Senco Brands, told Pro Tools Review:
    We expect this acquisition to strengthen our new product development capabilities, bolster our ability to provide innovative fastening solutions to a wider range of customers and enhance our global distribution network.

    Senco is known for its product quality and diverse line, which includes pneumatic and electric nailers, staplers, screw systems and compressors, as well as nails, staples, screws and specialty fasteners.

    Kyocera first entered the industrial tools market in the 1970s with a line of high-speed metal processing tools, and has steadily expanded into precision tools for electronics, aerospace, automotive, medical and woodworking applications. Kyocera's 2011 purchase of the Unimerco Group in Europe added a fastening tool product line that should have synergies with Senco's expertise in the fastening tools and fasteners market.

    With the acquisition of Senco, Kyocera plans to increase its sales of fastening tools and fasteners to JPY40 billion by the fiscal year ending March 31, 2021.
    Price increases from Adelaide Brighton

    As Australia's largest cement maker, Adelaide Brighton is set to lift prices for pre-mixed concrete a second time later in 2017.

    It announced recently a 10.9% drop in net profit after tax to $68.7 million for the six months ended June 30, 2017. Revenue increased by 4.7% to $718.4 million.

    The housing and infrastructure boom on the eastern seaboard is triggering price rises for pre-mixed concrete and aggregates used in construction.

    Adelaide Brighton chief executive Martin Brydon said that demand was continuing to rise, particularly in Melbourne and Sydney and a second round of prices increases for a range of products was anticipated later this year.

    The company had already instituted a round price rises for various products on April 1.

    Mr Brydon said rival companies had already signalled to the industry that they would implement "meaningful increases" on October 1. He said no final decision had been made but Adelaide Brighton was also expecting to raise prices again later in calendar 2017.
    I think it's likely we will follow the market.

    Mr Brydon declined to comment on the likely amount of the price rise. He said 2018 was looking very strong for the property construction industry, while the growing number of big infrastructure projects on the drawing board augured well for future demand.
    Mr Fothergill's expands through Darlac acquisition

    According to a report in Horticulture Week, Mr Fothergill's Seeds has bought UK garden tools brand Darlac. The company hopes that by adding the 50-year-old brand it will make its business less seasonal. It is also aiming to double turnover through this acquisition, and intends to keep its main focus on seeds.

    Mr Fothergill's joint managing directors, John Fothergill and David Carey took over the company shares held by their fathers in March 2017. Regarding the purchase, Mr Carey said:
    This is a significant step for our business. We remain committed to being one of Europe's largest seed houses...However, Darlac offers us wonderful opportunities to expand our portfolio in the UK and abroad.

    Turnover for Darlac is currently under GBP1 million. Horticulture Week believes the take over of Darlac is part of a growing trend for large garden centre and general retail garden suppliers to expand ranges. Larger suppliers have been buying several niche companies recently.

    These acquisitions make the most of existing head offices, websites, catalogues, warehouses, merchandising, transport and trading relationships.
    Tenaru partners with Master Painters association

    Tenaru Timber & Finishes has become a silver sponsor of Master Painters Australia (NSW), the peak industry body for the surface coating sector in NSW. Tenaru is the exclusive Australian distributor of brands that are the preferred choice for professionals, including Sikkens, Hammerite, Mirka and Dynamic Paintware.

    The sponsorship provides Tenaru with opportunities to engage with the association's members through awards programs, events and training sessions.

    Tenaru will be sponsoring a category and be a guest presenter at the Master Painters Awards for Excellence in October, and via product demonstrations at member networking events.

    According to Brian Hamilton, Tenaru managing director, as the Tenaru portfolio evolves there is a growing need to have a direct communication channel to the professional painter. He said:
    Tenaru's portfolio includes the globally established, premium products Sikkens, Hammerite, Dynamic Paintware and Mirka. Each brand complements the others and provides a full suite of surface coating solutions for our customers and trade professionals.
    Tenaru has a very experienced team, passionate about problem solving and providing the best advice for projects. We are keen to share our expertise by working more closely with MPA (NSW) members.

    Master Painters Australia (NSW) CEO, Therese Lauriola, said, "We are excited to have Tenaru partnering with us and look forward to some great times ahead."
    Retailers
    Europe update
    Kingfisher buys DIY retailer Praktiker in Romania
    HNN Sources
    Travis Perkins, owner of Wickes, hikes prices amid profit slump
    Travis Perkins also owns Toolstation stores in the UK
    Click to visit the HBT website for more information
    Kingfisher is adding the Praktiker DIY stores operating in Romania to the group and Travis Perkins chief executive John Carter said the company delivered "pleasing" results as it protects its margins through implementing higher prices. He also believes there will be continuing pressure on the business as householders choose overseas holidays instead of weekends at home sweating over time-consuming DIY projects.
    Kingfisher set to buy Praktiker chain

    European DIY retailer Kingfisher will acquire its rival Praktiker in Romania for an undisclosed sum. Kingfisher is the owner of French-based Brico Depot which already operates in Romania. Adela Smeu, CEO of Brico Depot Romania, said the deal will allow the company to expand its market share on the back of a growing market for DIY and interior design.
    Romania is an attractive, growing home improvement market and we have always been clear about our intention to expand our business over the medium term. Subject to competition approval, the strategic acquisition of Praktiker Romania, combined with our existing Brico Depot business, gives us a strong presence right across the country.

    Kingfisher purchased the DIY chain from Turkish businessman Omer Susli who is an active investor in the construction sector. He said:
    We are satisfied that we have managed to grow the business up to this level, where Praktiker is one of the main players on the DIY retail market, reaching a turnover of about EUR140 million in 2016 - up 3% from the previous year - with a network of 27 stores...

    Praktiker has invested EUR1.2 million in the revamp of two of its stores in Ploiesti and Oradea and the company aims to reach 20 redesigned outlets by the end of 2017.

    Brico Depot has 15 stores and around 900 employees in Romania.
    Travis Perkins hikes prices as profits dip

    British builders' merchant and home improvement retailer Travis Perkins has raised prices to help offset rising costs from the weakened sterling as it posted a 4.5% drop in half-year profits.

    For the half-year period ending June 30, the parent company of DIY retailers Wickes and Toolstation reported pre-tax profits of GBP168 million, compared to GBP176 million in the same period last year.

    It said it was also affected by weakening housing transactions and consumer confidence during the period, but group sales grew 3.5% to GBP3.2 billion, and by 2.7% on a like-for-like basis.

    Travis Perkins said trading volumes were impacted by price rises that were implemented to offset soaring costs brought about from the post-Brexit depreciation in the pound and rising commodity prices. Despite this, the company said raising costs has helped protect profit margins (at the expense of volume).

    Its consumer division, which includes 642 Wickes, Toolstation and Tile Giant stores, was also buoyed by a 2.3% increase in underlying earnings to GBP45 million and like-for-like sales increasing by 4.7%. Overall sales in this division rose 7.3% to GBP822 million.

    During the period, Wickes continued with its store refurbishment program, completing a further 18 refits. The retailer also bolstered its online proposition, with range extensions and same-day, one-hour delivery slots.

    Travis Perkins also continued to expand its Toolstation network, opening 19 new UK stores in the period, as well as five in the Netherlands. It said its newly improved digital customer experience, including reduced click-and-collect times, better product reviews and personalised offers, drove a "significant step up" in sales growth.

    However these results were weighed down by the company's plumbing and heating arm, where earnings crashed by 32% to GBP13 million.

    As a result, Travis Perkins revealed a turnaround plan for the division, including integrating its City Plumbing and CTS branches to be run by one management team. The turnaround plan also includes changes to the company's ranges, pricing and online offering, while setting up a dedicated supply chain.

    Chief executive John Carter said the company's overall performance was "solid" against a "challenging market backdrop of pronounced input cost inflation and market volatility".

    Mr Carter also believes British consumers are preferring holidays to DIY. He said:
    With DIY you are competing against holidays, sofas and new cars. In the past few years we have been successful because if they can afford it, consumers want to improve their homes. But with consumer confidence and worries about the economy, they are leaving doing up the kitchen or bathroom because they work hard and definitely want to go on holiday - that's almost a given.

    The core business supplying builders reported revenues 1% higher at GBP1.055 billion, though it is facing similar issues. He said:
    People are looking at repairs, and those have to be done, maintenance, which leads to repairs if not done, so they are spending there, but improvement is being put off.
    Bigbox
    USA update
    Lowe's trails Home Depot in the second quarter of 2017
    HNN Sources
    Ace Hardware reports its second quarter results
    True Value said it has progressed in the most recent quarter
    Click to visit the HBT website for more information
    Professional renovators have provide growth for Home Depot and leaves Lowe's behind; Ace Hardware has its biggest revenue result of USD1.5 billion; and True Value CEO said he is encouraged by the company's "strong achievements" in the second quarter.
    Pro customers deliver for Home Depot, less for Lowe's

    Home Depot and Lowe's have both been beneficiaries of the improving housing market in the US. But there has been a stark divergence in their results, with Home Depot consistently beating out Lowe's, including the latest quarter.

    The difference largely comes down to how they serve the "Pro" customer.
    Q2 results comparison

    Home Depot's net income for the second quarter grew to USD2.7 billion compared to USD2.4 billion, one year ago. Revenue came in at USD28.11 billion for the period, a 6.2% increase from the same time last year.

    Sales at stores open for more than one year rose 6.3%, while comparable sales at US stores increased 6.6%, Home Depot said.

    Lowe's said that its net profits rose to USD1.4 billion in the second quarter from USD1.2 billion in the same period last year. Its second quarter sales increased 6.8% to USD19.5 billion compared to the prior-year period.

    Comparable sales were up 4.5% and hit a peak of nearly 8% in July, executives said in a statement.
    Pro customers

    Home Depot has catered more aggressively to the professional customer, which includes renovators, general contractors (tradies) and small business owners. In fact, 40% of Home Depot's sales come from this customer category, which tends to spend more, take more trips to the store and conduct bigger projects.

    In contrast, Lowe's only gets about 30% of sales from this category.

    This is a notable gap, especially as Home Depot's professional comparable sales growth was 9.6% in its most recent quarter compared to 4.6% comps in its DIY category, according to Wedbush Securities analysts. Meanwhile, Lowe's pro comps were estimated to be roughly 4%.

    Importantly, the professional customer spends more on big-ticket items, which has dominated sales growth. This category includes appliances, roofing and special-order kitchens.

    At Home Depot, comparable store sales for purchases of USD900 and above were up 12.4% last quarter. This has helped to lift overall results, as big-ticket items make up 22% of sales at Home Depot.

    Serving pros with big-ticket items has been in focus as these areas are seen as more immune to encroachment by online retailers. Home Depot has continued to drive share in these categories with more exclusive products, more financing options, and delivery alternatives. The big box retailer recently beefed up this business with its acquisition of Interline Brands in 2015.

    All of this is aided by a superior online strategy, analysts say, which is critical given increased concerns about Amazon getting into the home improvement category.

    Last quarter, Home Depot e-commerce sales grew 23% year-over-year and now account for 6.4% of total revenue. The company has emphasised its order-online, pickup in store option, with 43% of online orders still being picked up inside stores.

    Lowe's online business, while also growing rapidly, represented just 3.5% of sales as of the end of 2016.
    Ace Hardware reports Q2 sales increase

    Ace Hardware Corp. posted net income of USD51.1 million for the second quarter of 2017, down USD12.3 million from the 2016 period. In the second quarter, it recorded a USD7.8 million of one-time pre-tax charges primarily related to the future closure of certain warehouse and distribution facilities. The charge and higher expenses hit net income.

    The retailer also reported a 3.2% increase in comparable store sales from the 3,000 of its affiliated retailers who share daily retail sales data. This is a gain it attributed primarily to the combination of more favourable weather and strong retail execution.

    Net revenues for the second quarter were USD1.5 billion, up USD66 million or 4.6% from last year's period. Increases were noted across most departments with outdoor living, housewares, impulse and tools showing the largest gains.

    Retail revenues from Ace Retail Holdings -- Westlake Ace Hardware stores -- were USD90.3 million versus USD87.4 million in the second quarter of 2017. This represents a 3.3% increase from the second quarter of 2016, and was the result of new retail stores added over the period.

    Operating income was USD53.6 million versus USD67.3 million in the year-prior quarter.

    Ace added 27 new domestic stores in the second quarter of 2017 and cancelled 28 stores. This brought the company's total domestic store count to 4,357 at the end of the second quarter of 2017, an increase of 42 stores from the second quarter of 2016.

    On a worldwide basis, Ace added 52 stores in the second quarter of 2017 and cancelled 31, bringing the worldwide store count to 5,024 at the end of the second quarter of 2017.
    Amazon-proof?

    In an interview with Business Insider, Ace Hardware CEO and president John Venhuizen, said of Amazon:
    [It] is quite arguably the most disruptive company in the history of business and they impact everybody without question.

    That Amazon can lose money to help its customers and still hold Wall Street's support is "terrifying," he said. The online retailer recently forecast its first quarterly loss in two years.

    Investors have sent Amazon's stock up 31% this year, compared to a 10% gain for the S&P 500. The US iShares home construction exchange-traded fund, which includes major players like Home Depot and Lowe's, is also surging, up 26% year-to-date.

    But home-improvement retailers won't enjoy endless favour from Wall Street. Home Depot shares fell after Sears announced it planned to start selling its Kenmore-branded appliances on Amazon, and was launching a line of appliances that can be voice controlled with Amazon's Alexa.

    Longer-term, however, stores like Home Depot and Ace Hardware have three key attributes that can protect their market share from e-commerce giants: what they sell, service, and location.

    The nature of the products they sell lends itself to human interaction. Buyers still want to ask a person how things work, or how to mix paint, or which colours to select in the first place.

    And the more exceptional the service, the better. Mr Venhuizen said:
    When a local business provides an irrational level of service to their local neighbours, that's hard to compete with on a big-box or a dotcom national scale. Every small business can do that.

    Although free shipping is convenient, having thousands of stores near the neighbourhoods that customers live in is also a big advantage, Mr Venhuizen said.

    Ace Hardware, like other hardware retailers, has billions of dollars worth of inventory sitting in its stores across the USA. One way to exploit that is by promoting online pick-ups (online orders that are picked up at a store), essentially blending online and offline strategies.

    Mr Venhuizen said Ace Hardware's online sales grew 61% in the second quarter. Ninety-three per cent of those transactions were picked up in the store. The company is also starting to experiment with home delivery, he added.
    Many people like to still physically see and touch and have the five senses. We had a big 5,000-store celebration...Many of them were out there smoking meat on a grill. You can't smell that on Amazon.
    Progress and expansion in Q2, says True Value

    True Value Company saw its comparable store sales edge up in the second quarter, as the hardware retail co-operative said it progressed with its multi-year strategic growth plan.

    Total comparable store sales were up 0.9% for the quarter ending July 1, 2017, with increases in seven of twelve regions in the US and in six of the company's nine product categories.

    Targeted initiatives and investments led to a 22% increase in visits to TrueValue.com and a 19% increase in online sales. Destination True Value format comparable store sales were up 1.8% in the quarter and 1.1% year-to-date.

    Revenue was USD430.4 million, a decrease of 1.9% or USD8.3 million.

    The company posted a net margin of USD16.7 million in the second quarter, up 28.1% from a year ago. The increase in net margin was primarily driven by good gross margin rates and tight monitoring of overhead expenses, according to the company. President and CEO John Hartmann said:
    We are now in the third year of our multi-year strategic plan and I'm very encouraged by the strong advancements we are making. After a record-breaking year for ground-up and remodelled stores in 2016, we have continued to make good progress in building a stronger business.
    Our retailers are benefiting from strategic initiatives in areas such as omnichannel, retail excellence and product assortments that improve the customer experience and generate sales growth. And we are doing all of this at the same time as delivering strong net margin expansion.
    Looking forward, we will continue to look for ways to accelerate our strategic growth plan to ensure that True Value is helping our stores to remain relevant in their communities and supporting their long-term growth, profitability and independence.
    Products
    Equipped for adventure
    The new spade from Rhino-Rack is useful to bring on outdoor adventures
    HNN Sources
    It is detailed with slip resistant grip that provides optimum handling
    Rhino-Rack's Facebook page
    Click to visit the HBT website for more information
    When off-roading, overlanding or adventuring with mates, the quality of tools is an important consideration. Quality that ensures they are in working condition every time that they needed, and minimises maintenance.

    The new spade from Rhino-Rack wants to be one such tool. It is crafted using heavy duty, heat treated hi-carbon steel, and finished with zinc plating and a powder-coating.

    It is detailed with slip resistant grip that provides optimum handling. The spade is designed for comfort, ease of use and convenience.

    It is a compact 42-inch in length for increased manoeuvrability under vehicles. The size also aids in storage, whether it is stored inside the vehicle or utilising a mounting bracket.

    The versatile spade can dig out the vehicle when it gets stuck in the mud, or assist with other outdoor adventure related events.
    News
    HI News V3 No. 9: Yarra Junction H Hardware
    Download the latest issue of HI News Vol. 3, issue no. 9
    HI News
    The story of how Chris Moorfoot gave a community back its hardware store
    Comparison of growth in hardware retail revenue over recent financial years reveals a trend
    Click to visit the HBT website for more information
    Yarra Junction H Hardware has a starring role in the latest edition of HI News. It is a store run by smart, savvy and enterprising independent retailers.

    Simply click on the following link to download this edition:
    HI News V3 No. 9: Yarra Junction H Hardware

    In other retailer news, Beaumont Tiles has launched two exclusive collections of Italian design and manufactured tiles.

    Stanley Black & Decker reports its first half 2017 results that are focused on the sales of its FLEXvolt power tools. Hitachi Koki is also preparing for a buying spree with the help of US buyout firm and new majority owner, Kohlberg Kravis Roberts.

    We take a look back on the last financial year of hardware retail statistics. In Europe, Bunnings UK & Ireland posts another loss as it opens more stores and Kingfisher's B&Q experiences a sales slump.

    US-based hardware retail co-op True Value may be up for sale and its rivals, Ace Hardware and Do It Best have expressed their interest in buying it.

    Back in Australia, renovations are taking on an increasing number of environmentally friendly features.

    Lasers levels are moving beyond the traditional tradie market and into the DIY consumer market. Other products in this issue include Milwaukee's Packout modular tool storage system and Makita's new plunge cut saw.
    Bigbox
    Europe update
    Sales declines and losses at B&Q and Bunnings
    HNN Sources
    Bunnings Warehouse store in Folkestone, Kent
    Australian homewares specialist House is planning to launch in the UK
    Click to visit the HBT website for more information
    Big box retailers, B&Q and Bunnings experience losses; a Bunnings store opening in Kent; Australian retailer House is launching in the UK; and a Homebase store in Somerset will turn into a Bunnings Warehouse.
    B&Q sales fall in Q2, losses at BUKI

    British and European consumers appear to be turning their backs on DIY as B&Q reported a slump in sales and Bunnings UK & Ireland (BUKI) posted a loss of more than GBP50 million (AUD81.2 million).

    B&Q owner Kingfisher said sales at the home improvement chain were down 8% in the second quarter, or 4.7% on a like-for-like basis.

    Meanwhile BUKI reported a GBP54 million (AUD87 million) annual loss in its first full year of ownership of the DIY chain.

    Kingfisher said ongoing problems in its French business had continued over the past three months, with sales declining 3.8% to GBP1.2 billion (AUD1.9 billion).

    In the UK, Kingfisher said B&Q was affected by a tough comparison with last year, as total sales fell by 7.8% to GBP967 million. The decline was partially offset by the Screwfix business, where sales rose 10.8% thanks to new specialist ranges and its "digital capability".

    The company is undergoing an GBP800 million overhaul of its business, which it hopes will bring in around GBP500 million more in profit each year by 2021. But Kingfisher warned that the transformation was causing "business disruption".

    Chief executive Veronique Laury said there was a "significant amount of change" planned for the second half of the year. She added that she was "well aware this year would be challenging given the step up in transformation activity" and that Kingfisher remained "cautious" on the outlook for the second half of the year.

    BUKI said that onerous costs related to its purchase of Homebase as well as work to overhaul stores had affected trading, with sales of kitchen and bathroom products particularly affected.

    BUKI owner, Wesfarmers said the first four Bunnings pilot stores were opened in the UK and Ireland during the year with a format that was "resonating well with customers". Outgoing managing director Richard Goyder added:
    While significant transition, separation and integration activity was undertaken throughout the year to progress the acquisition agenda, the volume and pace of repositioning Homebase affected store execution and consequently trading performance.

    The company warned that "trading is anticipated to remain challenging, particularly in the short term, as customers continue to adjust to the new offer".

    (Editor's note: HNN will take a more extensive look at Bunnings and Wesfarmers latest results in the next edition.)
    Kent gets more Bunnings stores

    The fifth Bunnings Warehouse in the UK opened its doors to customers in Folkestone, Kent recently.

    The new store at Park Farm Retail Park is the first Bunnings Warehouse in Kent. It is over 74,000 square feet and stocks over 30,000 products including a mix of international and British brands - from Purdy's paintbrushes to Ryobi and DeWalt power tools. There is also a colour wall with more than 3,000 colour tiles and paint mixing from Johnstone's Trade, Crown and Dulux.

    British skeleton Olympic champion Lizzy Yarnold MBE joined a welcome breakfast for team members.

    The big box retailer also confirmed two more Bunnings stores will be opening in Kent this year. Following the opening of the Bunnings Folkestone outlet, there will soon be branches in Broadstairs and Sittingbourne.
    Basildon launch this year

    The town of Basildon, Essex, will also be a location of a Bunnings Warehouse later this year. However it is not known if it will be converted from the Homebase store on London Road in nearby Vange, or launched on a different site.

    The big box retailer said the move was inspired by positive feedback from customers to two new Hertfordshire warehouses.
    Aussie retailer House in UK launch

    Australian homewares specialist House has plans to open 75 stores in the UK market in the next three years, according to Retail Week. It aims to open its first stores by April 2018 and will also launch a transactional ecommerce platform.

    House has 104 stores in Australia and is owned by Global Retail Brands. It typically carries 4,000 core SKUs including cookware, glassware, small electrical appliances, knives and crockery. The House website sells an additional 8,000 lines, including products in the bathroom, bedroom, decor and pet categories.

    House's entry into the UK follows a other Australian retailers already operating in this market including Bunnings, Typo, Kikki.K, Smiggle and Lovisa.

    Executive chairman Steven Lew told Retail Week he was "pumped" to be bringing House to the UK after visiting almost 100 potential locations up and down the country over the past 18 months. He said:
    Over the last couple of years we've looked at different markets and different markets internationally, watching the traffic flow, footfall, shopping habits, the internet - and the UK seemed like a very good fit for us.
    We think 75 stores is a safe number, but it will be opportunity-led. We are not fixed on that number. If we can't get the right stores and we end up with 50, then that's still a good job.
    Likewise, if we find 90 great stores then we'll have 90. So long as the market is there we will keep opening. We like to under-promise and over-deliver. But we want a sustainable product. We are not about putting a showcase on Oxford Street. We want the first store to be the same as the 75th store.
    Somerset Homebase turning into Bunnings

    Bunnings United Kingdom & Ireland (BUKI) has confirmed that the current Homebase store in Worle, a large village in North Somerset, would be replaced by a new store under the Bunnings brand later this year.

    All existing staff will be retained, with up to 20 additional full- and part-time positions being created. A BUKI spokeswoman said:
    We can confirm that the next Bunnings Warehouse pilot store will open in Worle later this year, replacing the existing Homebase on Bristol Road. The new store is approximately 76,000sqft...

    This will be the first Bunnings store to open in the south west. Existing stores are confined to the south east in locations like Folkestone, Hemel Hempstead, Milton Keynes and St Albans.
    Retailers
    USA update
    True Value could be purchased by a rival
    HNN Sources
    Lowe's launches UpSkill Project to build DIY skills across America
    A study by Market Force Information shows that Ace Hardware is America's favourite home improvement retailer
    Click to visit the HBT website for more information
    Speculation over True Value sale; Ace Hardware pledges to provide customers with everything they need to tackle paint projects in one trip; Lowe's is teaching DIY skills; A study by Market Force Information reveals America's favourite home improvement retailer; and Home Depot is with working with a digital decorator startup.
    True Value's potential sale attracts interest

    Hardware retail co-operative True Value Co. is weighing up a sale that could value the home improvement chain at about USD800 million, sources told Bloomberg.

    The company said it is working with an investment bank to examine strategic options, including a sale. The process is expected to attract private equity firms. However no final decision has been made and the company may elect not to pursue a sale.

    According to a report in the Chicago Tribune, Ace Hardware is open to making a bid for True Value. In an email to the newspaper, Ace president and CEO John Venhuizen wrote:
    It is our understanding that True Value is evaluating or conducting a formal auction process for the sale of its business. At this point, we have received no contact to participate in that auction process. If contacted, we would have interest in exploring it.

    The Tribune's business columnist Robert Reed believes Ace is signalling it is serious about competing with other suitors, should True Value hit the selling block. Among those he expects to evaluate a True Value deal include private equity groups, national or regional hardware and retail chains and, perhaps, online seller Amazon or another web-based consumer goods company. He writes:
    A buyout of True Value, with nearly 4,400 stores, would almost double Ace's retail store network of about 5,000 stores. Ace has 17 product distribution centres compared with 13 for True Value.

    Another retail chain, Do It Best also said it is interested in acquiring True Value. It told Chicago Business it is "enthusiastic about the many growth opportunities" an acquisition of competitor True Value could provide.

    Do It Best operates nearly 4,000 stores, with 20% of them outside the US. In 2016, the company generated USD671 million (AUD852.8 million) in net income, according to its annual report.

    Spokesman Randy Rusk said the retailer does not break out revenue but that Do It Best is the second-largest home improvement co-op in the world, with Ace first and True Value third.

    Ace generated USD5.13 billion (AUD6.5 billion) in revenue in 2016 and operated 4,994 worldwide stores as of December 31. True Value generated USD1.51 billion (AUD1.9 billion) in 2016 revenue and operates more than 4,000 stores.

    True Value would benefit more from a sale to Do It Best than to Ace because True Value and Do It Best share a company culture focused on keeping stores independent, Mr Rusk said. He said Ace feels more like a franchise, with every store looking the same and stocking the same products despite their different locations. Do It Best President and CEO Dan Starr said in a statement:
    While our top priority is generating sustained growth among our current member base, we're also focused on expanding our business by adding new members from other co-ops like True Value.
    Ace Hardware's latest paint guarantee

    The Extra Mile Promise[tm] is a guarantee that Ace has the expert advice and supplies needed to help consumers successfully tackle any paint project with just one trip to the store.

    It was created to address the frustration they deal with when faced with the proposition of yet another trip to the store as a result of forgotten items or not enough paint. By providing the right products and expert knowledge, Ace said it is committed to helping consumers complete their paint projects successfully the first time.

    The retailer is so confident in their one trip guarantee that they are willing to go "the extra mile" and provide free delivery to consumers who may be in need of additional paint supplies. President and CEO, John Venhuizen, said:
    While it hurt our pride to learn this, the truth is that while consumers trust Ace as the Helpful Place, far too many of them believed that our speedy sized stores didn't have enough product to complete their paint project.
    We know this isn't the case, so to assuage these misperceptions, we decided to stand behind our large paint assortment with the Extra Mile Promise. Our objective is simple: to be known as the #1, best, most convenient, most helpful and most credible store for paint in the neighbourhood.

    The Extra Mile Promise applies to all brands of paint and paint supplies available at Ace, and is only applicable with the original paint purchase receipt showing the purchase of minimum of one gallon (3.78litres) of paint.

    You can see the TV commercial here:

    Empowering new generation of home improvers

    Lowe's has introduced the UpSkill Project, a program committed to teaching DIY skill-building and helping customers become confident home improvement project-doers. Through the UpSkill Project, more than 200 homeowners across 40 US cities will learn skills from Lowe's teachers and complete a DIY project, combining hands-on expertise, real-world experience and training.

    Lowe's research reveals that while home improvement spending increases, attitudes toward DIY are changing as new and existing generations cite a decline in confidence to complete home projects. With the introduction of The UpSkill Project, Lowe's is addressing the home improvement skills gap.

    The UpSkill Project enlists the help of both Lowe's associates and specialised experts, including designers, general contractors, craftsmen and teachers, to help participants - known as UpSkillers - define their project, plan it, style it, purchase materials and tools, and master the skills necessary to realise it.

    The experts don't do the project for them - they roll up their sleeves and teach and guide as needed. They help participants overcome obstacles by showing them failures are a normal part of the process and by instilling confidence to make the next time, the best time.

    Once an UpSkiller has completed the project, Lowe's will give the homeowner an opportunity to "pay their skills forward" to their friends, family and neighbours.

    Aspiring DIYers in each market apply to become UpSkillers by submitting a video describing their project and skill goals. Winners are selected based on a number of criteria, including passion and excitement for learning home improvement skills.

    Link to video:

    America's favourite home improvement retailer

    Ace Hardware has beat out its big box competitors to rank as the America's favourite home improvement retailer in a recent study by Market Force Information. It achieved a composite loyalty score of 63%, according to the study.

    Menards ranked second, with a 60% score, followed by Lowe's, with 55%, and Home Depot, with 51%. (In order to be included in the category, a traditional home improvement brand must have been selected by 100 or more respondents representing 2% or more of total. Only Ace, Menards, Lowe's and Home Depot qualified).

    Market Force also looked at how the retailers fared in operational and product attributes that matter most to consumers. Ace Hardware ranked first in most categories, with particularly strong marks for ease of finding merchandise, staff service and knowledge, and speedy checkouts.

    Menards scored highest for merchandise variety and value, while Lowe's earned the top spot for parking availability. Home Depot ranked last of the brands in all service categories, as well as cleanliness and value.

    Market Force's research revealed that 60% of consumers consider themselves "DIY enthusiasts" who not only purchase the materials and products themselves, but also complete their own home improvement projects. Another 22% fall in the "do-it-for-me" group that purchases the materials and products, but outsources the labour.

    In other findings:
  • Home Depot's app is most popular, with 45% using it, followed by Lowe's, Walmart, Ikea and Menards. Of the 18% of consumers who indicated they have used an app, 93% of them said the app was helpful.
  • One-fifth reported that they participate in the loyalty program offered by the retailer they most recently visited. Ace Hardware's program is overwhelmingly the most popular with 67% participation, Lowe's ranked a distant second with 21%, Menards was third with 11% and Home Depot trailed with 8%.
  • Nineteen per cent indicated they have a home improvement store-branded credit card, with most choosing Lowe's (25%) and Home Depot (21%). Just 7% have a Menards card and 3% have an Ace card.

  • For the home improvement rankings, Market Force polled more than 7,800 consumers. The participants were asked to rate their satisfaction with their last experience at a home improvement or furnishings store and their likelihood to recommend it to others. That data was averaged to rate each brand on an aggregation of the two measures - a composite loyalty Index.

    Market Force also looked at the attributes that drive these preferences, analysing factors such as merchandise and brand selection, cleanliness and value.
    Digital decorator partners with Home Depot

    Home Depot has joined with Laurel & Wolf, which describes itself as a "digital decorating platform" to provide customers with a professional designer. Through the Home Depot Pro Referral Service, Laurel & Wolf connects customers with "top designers to transform your space" online through a flat fee - from USD59 to USD259 - using Home Depot supplies.

    The program will integrate Home Depot's existing Pro Referral service into Laurel & Wolf's platform, essentially referring its customers to Laurel & Wolf depending on their project needs.

    Laurel & Wolf is an online startup formed in 2014 that has expanded to a team of more than 60 employees and a marketplace of more than 1,000 interior designers, according to the company's website.

    The video shows an example of how the two companies are working together. You see it here:

    Careers
    Seeking opportunities
    A brand manager opportunity at DuluxGroup-owned British Paints
    HNN Sources
    Uni-Pro is seeking a salesperson for a Sydney-based territory
    Corporate BDM role at Whites Rural
    Visit the Mecca Website
    The brand manager for British Paints will focus on growing retail market share; Uni-Pro Painting Equipment is seeking a Sydney-based salesperson; and a corporate business development manager is required at Whites Rural.

    Click on the logos to find out more about each role.
    Commercial and strategic involvement

    The role of the British Paints - brand manager ANZ for Dulux will manage the British Paints brand across Australia and New Zealand and deliver channel marketing programs targeted at retail stakeholders. This role involves collaboration with the broader Dulux marketing team to deliver a "seamless and aligned brand offering" to Bunnings.
    A brand manager opportunity at British Paints
    Paint equipment sales

    The role of sales territory manager at Uni-Pro will involve selling to paint retail outlets including paint specialist stores and hardware retailers. The Sydney-based territory includes both metropolitan and country travel.
    Uni-Pro is seeking salesperson for a Sydney-based territory
    Engaging rural retailers

    The corporate business development manager at Whites Rural will be responsible for growing sales in the retail agriculture industry as well as looking for opportunities to break into the government fencing market. The right candidate will have "disrupter" approach and be keen to challenge traditional thinking as a change agent.
    Corporate BDM role at Whites Rural
    Products
    Manufactured stone cladding
    The Pro-Fit Modera range from Cultured Stone is suitable for outdoor entertaining areas
    HNN Sources
    The bricks are available in a dark grey Carbon colour
    Cultured Stone is distributed by PGH Bricks & Pavers
    Click to visit the HBT website for more information
    Pro-Fit(r) ModeraTM Ledgestone from Cultured Stone is the first of its kind in Australia, according to PGH Bricks & Pavers. Capturing the beauty of natural stone while being easier, cleaner and faster to install, it is a practical way for architects to achieve unique ledgestone looks inside and out.

    Saving installation time and effort, the primary building blocks of Pro-Fit Modera feature groups of small stones bundled together to form modular components of equal height.

    Available in three modern colours, including dark grey Carbon, sandy Vellum and chocolate Intaglio, Pro-Fit Modera provides a contemporary neutral palette for homeowners to decorate with colour using furnishings and accessories, or when landscaping.

    Cultured Stone is distributed by PGH Bricks & Pavers.
    Editorial
    Yarra Junction H Hardware
    Yarra Junction H Hardware, as it is today
    HNN Sources
    Chris and Anthea Moorfoot, owners of the store
    Store owner Chris Moorfoot and HBT's Steve Fatileh at the main entrance
    Give to Amnesty International
    The store that would become the Yarra Junction H Hardware did not present itself, back in 2008, as a sterling opportunity in a high growth area. Instead, it was a rundown, poorly performing store that was one of two being sold by brothers who had decided to get out of hardware retail.

    It's not so surprising, however, that Chris Moorfoot had developed a bit of a retail sixth sense, and could see some potential in the failing business. Much of his life has been spent in industries associated with home improvement retail. That began with his first job as a casual sales assistant at McEwan's in 1984, before he turned 18 years-old. While working there he added a job as an automotive spray-painter, working for his father's business.

    All that came to something of an abrupt halt in 1990. After getting engaged, and spending eight weeks on a trip overseas, he returned to find much of Victoria's economy seemingly upended. The Pyramid Building Society had collapsed, John Cain stepped down as state premier to be replaced by Joan Kirner, and Mr Moorfoot's father was basically out of business - so much for his plans to eventually take over the family enterprise. In Melbourne and Victoria the event famously described by the then-Treasurer, Paul Keating, as "the recession we had to have", cut deeply, as asset prices declined, leading to defaulted loans and financial collapses. The AUD was at one stage worth USD0.51, despite expensive intervention by the Reserve Bank of Australia.

    Mr Moorfoot's experience in the paint department at McEwan's proved invaluable, as he found a job working for DuluxGroup, where he stayed for eight years. At the end of those eight years he began a working journey through many of the key players in the hardware industry, such as Danks and Kincrome. Mr Moorfoot describes this time of his life like this:
    I have to say that my motivations for leaving were always good, and I suppose also, you apply to a place, and you hear how good it is going to be. I was always thinking "well we're going to change this, it all can be fantastic." Then two years later, it's as though nothing has happened.
    Any business that has been around for a while is a little like a big lumbering bus, and you get new passengers on board that say "yeah were going to take it off in this direction." But it turns out that the bus is really hard to turn!
    Finding a business

    After 18 years of that kind of effort and disappointment, and after a particularly bad experience with one employer, Mr Moorfoot decided he would try a different direction.
    I had a lot of exciting opportunities that turned out to be disappointing. I think I was also probably a bit anxious and ambitious to try to make things happen. So I ended up saying, "Well, you know what? This is getting too hard."

    While he had experience working in many different businesses, Mr Moorfoot had yet to run a business himself. After looking at several opportunities, such as franchises, and an aborted consideration of taking over the Post Office in Warrandyte - which was, he says, incredibly expensive for its declared earnings - he began to consider hardware stores. He passed over one located in the eastern Melbourne suburb of Templestowe, as he wasn't happy with a location that was too urban.

    Then he came across the hardware store located in Yarra Junction.
    I thought, "Hello, I know exactly where that is." As a rep, I used to call out here [Yarra Junction]. At that stage we were channelised reps, so I was doing Mitre 10 stores only. But I was driving past the store all the time. It always seemed to be busy. It was a Thrifty-Link at the time, and I knew the rep who was dealing with the store. He said the place was amazing and that they would sell a lot goods there.

    His first consideration was the same one that most people getting into hardware have: Bunnings. However, he could see that Yarra Junction was an unlikely destination for a big box store, with both Lilydale and Healesville more likely to attract their business.

    Next stop was to start looking through the books for the store. That's when he discovered that the store in Yarra Junction was paired with the store in Templestowe. He also found out that both stores were in a lot of financial trouble.
    So we started to go through the process. I don't think we ever really thought we would complete the purchase. We thought we would go through all the financials, through all the legal requirements and then something would happen, and we would think, "Well that was a real experience." But everything, rather than becoming a roadblock, became a hurdle that we managed to jump over. So we ended up taking over the store in July 2008.

    Taking over and starting to run the business, Mr Moorfoot found himself facing some unpleasant realities.
    It was a shell of a business. There was no core range, there is no goodwill. The computers were held together with Band-Aids. It was really shocking. Even though we didn't pay a huge amount, we still overpaid, both for the stock and for the business. But then we were green. We simply didn't know.

    A lot of it came down to what the previous owners had done to the business.
    It did come with a few accounts, but they were all really quite shocking. For the most part [the previous owners] had transferred their business over to their other store in Templestowe, which was a larger enterprise. They did a number of other things as well. In my opinion, they basically raped and pillaged this business.

    Surprisingly, though, all these troubles did not really put Mr Moorfoot off the business - quite the contrary, in fact.
    Thankfully there was still some life in the old girl yet, and it turned into a labour of love, because when you're passionate about an industry and you enjoy it, you keep going.

    That said, it was still pretty tough.
    I remember going home each night. At that stage my wife, Anthea, was not in the business as yet. I remember the numbers were quite woeful: $1500 one day, $1200 the next. We spent our first three months apologising to customers for not having stock. Because the store had such a bad credit history that we couldn't get any stock.

    Just as icing on the cake, Mr Moorfoot discovered that some of their problems had to do with their staff. The most serious one had to do with the person handling their accounts.
    We found out that one person who was running the administration side of our business was a thief! This person knew the system better than any of us, and it was only when my wife Anthea came on board, and became more familiar with things, that we found that person out.
    We had blocks of invoice numbers that were missing, and we couldn't work out why that was happening. This person was actually reversing cash sales out. Then the person would pocket the cash. !Since that employee left, all of our invoices are back to being sequential. Previously, we had thought there was a fault in the system.
    We would caution anyone who is buying a business that comes with an employee who has been running accounts receivable, payments and paying bills for a long period of time, that they should audit the entire business.
    So we had some real challenges with staff, some serious. There were psychological issues, whatever. It has taken us some time to get staff that are here because they want to be here. They understand this will never be a business that will make them a fortune, but they are five minutes from home, and that means a lot to them.

    All of the original staff are now gone, except for one, Ken, who is definitely a "keeper".
    Ken who works here, we worked out that between the pair of us, we have close to 90 years of experience! He has just turned 65 ,and I think he started in Wales at the iron mongers, when he was a wee lad. He has probably forgotten more about hardware than I know.
    Developing the business

    In getting the business going, Mr Moorfoot faced a major problem in simply stocking the shelves and displays. Few suppliers were willing to extend any credit. Having chosen to go it alone without any partner, the business did not have a lot of cash to spread around. That meant the store had to become proficient at stocking the bare minimum needed to keep functioning.
    The challenge that we had back in the day, was the that as our business was so damaged we couldn't buy a lot of stuff, because we did not have a lot of money. So one of the things that was prohibitive was the matter of minimum orders.

    To continue reading this story, please download the HI News pdf at:
    HI News Vol.3 No.9: Yarra Junction H Hardware

    Until next time,

    Betty

    You can contact me directly via email betty@hnn.bz or Twitter @HNN_Australia

    To receive a daily dose of HNN, download the free HNNBrowser app from the Apple store:
    HNN iPad App
    Statistics
    ABS Hardware Retail Revenue
    Hardware retail sales june 2017 and comparison of the last 10 years
    HNN Sources
    Proportional contribution to annual retail sales by each state/territory
    Percentage change in revenue
    Click to visit the HBT website for more information
    With the June 2017 retail revenue statistics now available from the Australian Bureau of Statistics (ABS), it's possible to look back over the 2016/17 financial year, and to contrast this with previous financial years.

    As the chart below illustrates, the proportion of revenue earned by each state has been relatively stable. More recently, NSW has gained ground, while VIC has lost ground. SA, after relatively lean times in 2012/13 and 2013/14, has recovered, as has Western Australia (WA) after its lean years in 2009/10 and 2010/11.
    Hardware retail sales

    The following chart provides a closer look at the proportional contributions of the states for 2016/17, the previous year, 2015/16, and the pre-GFC year, 2006/07.
    Proportional contribution to annual retail sales by each state/territory

    In the two most recent years, virtually the only change has been that Victoria (VIC) has lost 1%, and New South Wales (NSW) has gained 1%. For 2006/07, the contributions by South Australia (SA), Western Australia (WA) and Tasmania (TAS) were much higher that those of recent years, reducing the proportional contributions of VIC and NSW. So, in recent years, there has been an increasing centralisation of revenues to both VIC and NSW.

    Using the original data provided by the ABS (rather than trend data), Australia overall reported its most subdued growth for the past seven years, with the national hardware retail industry growing by just 3.14%. The states that were the least subdued were the Australian Capital Territory (ACT), with growth of 16.09%, SA with growth of 6.64%, and NSW with growth of 6.06%. Both Queensland (QLD) and VIC reported quite low growth, of 1.09% and 0.96% respectively. Only the Northern Territory (NT) reported negative growth, with revenues falling by 8.18%.

    The next chart, which looks at growth, provides some further insights into these changes. The top five states have continued to consolidate their position in a growth range between 0% and 7%, while the two smallest (by total hardware revenue) territories have broken out of this, with the ACT gaining, and the NT losing.
    Percentage change in revenue
    Real estate and hardware revenue

    If we accept that growth in the housing industry, driven by ever-higher real estate prices, has had a big influence on hardware retail expenditure, then we could think that these increasingly restrained growth rates reflect something that is happening in real estate, which in turn is driving changes in the housing market.

    One possibility is that the real estate markets are not so much in a "downturn", or that the "real estate bubble has burst", but rather that we are seeing a market finally reach a state close to equilibrium. To understand such an equilibrium, it's necessary to first consider what disrupted the market in the first place.

    The next two charts indicate what might be the disrupter. The chart below shows the number of persons employed full-time in manufacturing, FIS and IMT.
    Employment by industry

    The next chart shows the trend for what is known as "Gross Value Added" (GVA) for manufacturing, construction, information media and telecommunications (IMT), and financial and insurance services (FIS). GVA is essentially the contribution of an industry to Australia's gross domestic product (GDP).
    Gross Value Added by select industries

    The employment chart shows the steep decline in manufacturing employment. While employment for IMT remains flat, and FIS shows moderate gains, both of these also produce substantial "halo" employment opportunities.

    As can be seen in the chart for GVA, growth in manufacturing moderated to almost nothing in 2004, then entered a decline in 2013. Meanwhile, FIS has, since 2003, entered into a period of high growth. IMT has not grown as strongly, but it has produced consistent growth, despite a flat period from 2010 to 2013.

    Construction has largely kept pace with the growth in FIS.

    In short, what has been happening over the past 12 or 14 years is that a big part of the Australian economy has transitioned from being manufacturing based to being services based. This has exerted two influences on population distribution.

    The first influence is that by its very nature, manufacturing is decentralising. You don't open a factory in the middle of a city, or even in its immediate suburbs. Instead, you choose an area some distance from the city, on a major transportation hub. People who work in the factory naturally choose to live close by to reduce their commuting time.

    Thus significant population centres outside of the main city grow.

    As manufacturing first reduced its total employment due to increasing automation, and then further reduced employment as businesses shrank or ceased entirely, the attraction of these remote centres was reduced. This was combined with the second influence, the increase of employment in FIS. FIS, of course, will exert pressure to create urban centralisation.

    The service industry relies on multiple, internal and external layers of services. The providers and facilitators of these layers need some degree of co-location, as this helps with both service reliability and the ongoing development of those services.

    What has happened, then, over the past 12 years or so, has been a revaluation of urban land. It held one value in a city economy where manufacturing played a major role, and another value where manufacturing played only a minor role, and FIS played a major role.

    The signals that are currently coming from the real estate market indicate that this process of revaluation is entering its "infill" stage in Sydney and Melbourne, and elsewhere in Australia. In this stage, revaluation is largely completed, while there remain some areas - formerly neglected - that will continue to be re-valued.
    Forecasting

    How will this affect future revenues for the Australian hardware/home improvement retail industry? It is quite likely that the kind of constrained growth that the industry has seen over the past two to three years will continue for another three to four years, with annual growth rates for the states with higher revenue levels delivering between 3% and 6% annual growth. The states and territories of NT, ACT and TAS will vary outside of this range, subject to local influences.

    By the end of that time, it's likely that cities will be entering into the final stage of the manufacturing to service economy transition They will begin to develop significant centres of decentralisation - effectively semi-urban clusters that specialise in particular service areas. These will, in turn, open up new areas for real estate development, and new housing projects, driving annual growth rates over the 6% mark.
    Bigbox
    Big box update
    Tradies are allegedly operating in the black economy by fraudulently quoting Bunnings' ABN on invoices
    HNN Sources
    Bunnings is opening a new store at 9 Watts Lane, Russell Vale (NSW) in the Illawarra
    The proposed Bunnings development in Kingaroy (QLD)
    Click to visit the HBT website for more information
    The black economy gets a boost from tradies quoting Bunnings' ABN; go-ahead for Bunnings Warwick store; two new Bunnings stores set for the Illawarra (NSW); plans to build a distribution centre instead of a store in Glynde (SA); approval for Kingaroy (QLD) store may not be granted until mid-2018; Bunnings waiting on decision for Landsdale (WA) site; Panorama (SA) store "too big"; and smaller-format Bunnings Colac sold to Melbourne-based investors.
    Tradies tax scam targets Bunnings

    Tradies have been fraudulently quoting Bunnings' ABN (Australian Business Number) as their own on invoices, according to report in The Australian. This allows them to allegedly operate in the black economy, as part of a scam that is undermining the tax system.

    Bunnings now has one of the most quoted ABNs in the country.

    Treasury's black economy taskforce chairman, Michael Andrew, admitted that the

    ABN system - introduced at the same time as the GST 17 years ago to ensure people did not escape the tax system - was "not working".

    Much of the ABN fraud has had two unwitting victims: Bunnings and the taxpayer. Abuse of the Bunnings ABN has been rife, particularly in some parts of the country, potentially costing the government hundreds of millions of dollars. Mr Andrew told The Australian:
    We found out that more than 40% of ABNs quoted in the Northern Territory were Bunnings. Of course, every tradesman goes to Bunnings. They get an invoice - the ABN's up top.

    Mr Andrew said the Bunnings ABN scam occurred when businesses or individuals employing the services of tradesmen and other service providers asked for an invoice. The document is provided containing the bogus ABN. He explains:
    People ask for an invoice or valid receipt and they get the name of the company, but they then get an ABN of someone else such as Bunnings: the result of which (is) you can't trace then where the money really went.

    Federal Revenue and Financial Services Minister Kelly O'Dwyer said the government commissioned the black economy taskforce to clamp down on situations such as the Bunnings ABN fraud. She told The Australian:
    We know there is a big problem here, and we know it is costing the economy a huge amount.

    Ms O'Dwyer has also released a set of 54 "policy ideas" from the black economy taskforce, ahead of its final report to government in October. Several of these ideas focus heavily on ABN reform. She said she wanted to fully consider the final report before taking formal action on possible reforms, such as real-time ABN recognition: "It will require a properly calibrated response."

    There is no suggestion that Bunnings has done anything wrong.
    Flood concerns continue over Warwick Bunnings

    A legal objection to the $16 million Bunnings development in Warwick (QLD) has been dropped but neighbouring businesses say their concerns have not receded.

    Construction of the 8000sqm development at the corner of Canning and Condamine Streets is expected to begin in the next few months. It should be completed by mid-2018.

    The project, approved by Southern Downs Regional Council in January, was appealed by a group of concerned local business people and residents on the basis the warehouse was to be built in a known flood zone, an area understood to be "off limits" to new developments.

    Bunnings general manager - property Andrew Marks said the company was satisfied with the outcome of court proceedings and was excited to start building a store in Warwick.

    On the question of lessening a flooding impact on local businesses, Mr Marks said Bunnings had worked with local authorities and technical experts throughout the development application process. He told the Warwick Daily News:
    The development application took into account the findings and recommendations of the Jacobs Consulting report, which was commissioned by the council, which concluded that the development would have no significant effect on flooding.

    Olsen's Home Timber and Hardware owner Alan Olsen said it was not Bunnings people were objecting to.
    It's never been about competition for me. It wouldn't matter who was being allowed to build there. Anyone who has had to deal with our major floods will know that anything that might worsen the impact is a bad idea.

    The original flood impact statement reported there would be minor changes in water depth at around 25-50mm and some changes in the energy of the water at the north-west, north-east and south-east corners of the site.

    Related:
    Big box update: Warwick local fights Bunnings' plans - HNN
    Bunnings boosts presence in the Illawarra

    Bunnings will open a new store at 9 Watts Lane, Russell Vale (NSW) and staff at its Shellharbour location is set to move into the former Masters Albion Park site.

    Andrew Marks, general manager property at Bunnings confirmed it received development approval to make the necessary conversions of the former Masters site. He told the Illawarra Mercury:
    Following the reformatting works, our intention is to relocate our existing Shellharbour warehouse including all current team members. The conversion of the site is pending the Home Consortium agreement with Woolworths Limited which is subject to the consent of Lowe's Companies, Inc.

    The 13,000sqm Albion Park Masters closed its doors last December, having been open for a little over a year.

    The big box retailer lodged a development application with Shellharbour City Council last November, seeking to modify the Masters consent. Instead of being a classed as a "home improvement centre", Bunnings sought to create a "hardware and buildings supplies" store.

    Meanwhile, Mr Marks said construction works are currently under way and progressing as planned at the Bunnings Warehouse Bellambi/Russell Vale site.

    The Bunnings Bellambi store is expected to open late 2017.
    Distribution centre plans for Glynde

    Bunnings wants to build a distribution centre in Glynde (SA) after its plans for a $26 million store at the same site were knocked back. The big box retailer has lodged an application with Norwood Payneham & St Peters Council for a site on the corner of Penna Avenue and Glynburn Road.

    Bulk materials would be brought to the distribution centre, repackaged and then transported to other shops for sale. It would not include a retail outlet. Bunnings general manager - property Andrew Marks did not say how much the development would cost.

    In May, the Development Application Panel rejected Bunnings' application for a retail store, saying it would generate heavy traffic in surrounding streets. Approximately 1000 small-business owners and residents signed a petition last year opposing the original plan because of traffic concerns.

    The council could not say when the new application would be assessed.

    Related:
    Big box update: Bunnings planning SA store - HNN
    Plans for Kingaroy revealed

    Bunnings' plans to build a new store in Kingaroy may not get final approval until mid-2018.

    According to the development application tendered to South Burnett Regional Council, the total retail space of the Kingaroy store will be about 7597sqm. Of this about 3893sqm with be the main retail warehouse. The outdoor nursery, soil and stone sale area will be about 1523sqm. A timber trade sale area will be about 1399sqm while the landscaping yard will be 730sqm.

    Bunnings has also planned 203 parking spaces, four disabled spots and four trailer bays.

    While the council has received a draft of the building application, more information is needed.

    It is unlikely the final plans for the project will proceed to community consultation before early 2018. This pushes the estimated date of the council approving the project to mid-2018.

    The timeline could shorten if the state government approves the council's new planning scheme soon. In this case, the land currently under development would be rezoned to allow for this scale of construction.

    Related:
    Big box update: Bunnings lodges DA for Kingaroy - HNN
    Uncertainty over Landsdale site

    Bunnings is waiting on negotiations between stakeholders of the former Landsdale Masters site in Western Australia before it can announce an opening date for its takeover of the warehouse.

    The outlet will give Bunnings a presence at all compass points in Perth's far north, adding to Whitfords (south), Mindarie (north) and Joondalup (west) stores.

    The big box retailer secured development approval for the Hartman Drive-Gnangara Road premises more than five months ago. But Bunnings property general manager Andrew Marks explained they could not proceed in Landsdale until matters were finalised with Woolworths and Lowe's, former joint venture partners in Masters.

    Bunnings will be dealing with property group Home Consortium when given the go-ahead to develop the Landsdale site.

    Home Consortium agreed to take control of all Masters buildings in Australia when Woolworths shut down its home improvement chain last year.

    David Di Pilla from Home Consortium told The Australian in December there would be a staggered opening of the former Masters sites. The former Joondalup Masters building has been approved for conversion to a multi-tenancy large retail format.
    Proposed Panorama store considered "too big"

    The fate of a $42 million Bunnings store in Panorama (SA) will remain unknown until at least October following almost three years of objectors trying to stop it from opening. A Mitcham Council report shows that a conciliation conference between Bunnings, Panorama resident Neil Baron and Mitcham Council has been adjourned.

    It comes after the big box retailer lodged plans for a $45 million store in Edwardstown, 2km from the Panorama site, in May.

    Bunnings general manager - property, Andrew Marks declined to comment about whether the case had been adjourned until the Development Assessment Commission looked at the Edwardstown application. The state government did not say when that would occur.

    Mitcham Council's Development Assessment Panel rejected Bunnings's first application for the TAFE site on Goodwood Road in Panorama a year ago. It argued the store was too big for the area and would create traffic issues.

    Bunnings submitted an amended plan in December - which was also rejected.

    Panorama resident Neil Baron has appealed the decision in the Environment, Resources and Development Court because he thinks the store is well designed and will create jobs.

    Related:
    BIg box update: Bunnings Panorama back on the agenda - HNN
    Melbourne-based investors buy Bunnings Colac

    A smaller format Bunnings warehouse in Colac in regional Victoria has been sold to a Melbourne family for $7.8 million, on a yield of 6.1%.

    The 6500sqm retail property on Bromfield Street in the centre of Colac was sold with an eight-year lease in place to the big box retailer,

    The sale of the Bunnings in Colac was negotiated by Mark Wizel, Joseph Du Rieu, Justin Dowers and Kevin Tong of CBRE. DBR Property's David Ryan represented the buyer. Mr Wizel said:
    Whilst the price point created a far higher level of accessibility for a wide range of investors, the smaller format store did present a hurdle for many investors as we have seen Bunnings continue to move toward large format sites in recent times.

    Other recent sales include Bunnings in Warragul selling for $6.43 million last September with a six-year lease, on a 6.6% yield

    Bunnings Warehouse in Yarrawonga sold for $11.6 million last August on a 10-year lease, and on a 4.9% yield.

    A Bunnings in Osborne Park (WA) with a new 12-year lease sold for $7.05 million on a 4.65% yield in June last year to a Perth investor.
    Companies
    Supplier update
    Hitachi Koki is gearing up for a buying spree
    HNN Sources
    Brickworks' multi-purpose corporate retail environment in Sydney's CBD
    The Classe 300 is Legrand's connected video door entry system
    Subscribe to HNN weekly e-newsletter
    Hitachi Koki is aiming to be in the top three global power tool companies through acquisitions; Legrand launches Eliot, its IoT product range, in Australia; Brickworks expects annual profit to double; GUD posts $7.3m loss; Loscam opens pallet repair facility in Brisbane; Victa rates highly in lawn mower reviews; and Swann celebrated its 30th anniversary.
    Acquisitions on the agenda for Hitachi Koki

    Japanese power tool maker Hitachi Koki will spend up to about 50 billion yen (AUD573.5 million) on acquisitions with the help of US buyout firm and new majority owner, Kohlberg Kravis Roberts (KKR). The company is aiming to become one of the top three players in the industry worldwide.

    The Tokyo-based company's sales totalled 178.7 billion yen (AUD2 billion) in the fiscal year ended in March 2017. This places it among manufacturers roughly tied for fourth in the global power tools market. It is looking to add to its lineup of high-end professional-grade tools by offering mass-market versions via acquisitions. Company president Osami Maehara told Nikkei Asian Review:
    We will grow sales 70% to around 300 billion yen in fiscal 2021.

    Hitachi Koki plans to expand its network of sales outlets in Japan from 39 to between 50 and 60 within three years. This will ease its dependence on dealerships under the umbrella of former parent Hitachi, which account for half of its domestic sales. Industrial conglomerate Hitachi sold its power tools business to KKR in March as part of a wider restructure.

    Hitachi Koki is also looking to change its name but Mr Maehara did not provide a time frame for the move. He said:
    Apart from [Japan] and other markets where the Hitachi brand is strong, we will quickly build up a new brand.

    Related:
    Hitachi to sell power tool unit - HNN
    Legrand targets Australian building market with IoT

    The growing demand for connected devices is creating new opportunities for the building sector. France-based electrical equipment manufacturer, Legrand believes the expansion of the "Internet of Things" (IoT) will lead to an increase in "smart" solutions for end-users. Legrand has created the Eliot range of IoT products for this market.

    Legrand's Eliot program was unveiled at Sydney's Museum of Contemporary Art recently.

    Connected products with the Eliot brand can simplify usage, facilitate maintenance and customise products based on users' needs. The range includes the Classe 300, Arteor with Netatmo, Smarther and Nuvo.

    The Classe 300 is Legrand's connected video door entry system, and allows the user to interact with the caller by voice and image, locally or remotely, on their mobile device. Made easy to install thanks to the Door Entry app, Classe 300 also enables controls for lighting or automated sprinklers.

    Arteor with Netatmo provides controls for lighting or shutters in the home. Legrand developed this range with Netatmo, a French company specialising in connected objects.

    The Smarther connected thermostat can be controlled remotely via a smartphone app. A Wi-Fi connection lets users program, control and adjust the temperature, anytime, anywhere.

    The Nuvo music distribution system enables music from a single digital source to be played in multiple rooms.

    At the Australian launch the company highlighted a number of other IoT products including:
  • Legrand eco-meter that can be used to measure and display electricity consumption directly and on web pages.
  • My Home system for controlling and monitoring electrical functions, and setting predefined scenarios for of heating, blinds and lighting.

  • In the future, all Legrand products with connectivity capabilities sold in Australia will carry the Eliot label.
    Legrand in Australia

    Legrand acquired electrical supplier HPM in 2007 and today sells some 15,000 products in Australia and New Zealand through a network of more than 5,000 electrical wholesalers, hardware retailers and mass merchants under the HPM, Legrand, BTicino, Cablofil and CP Electronics brands.
    Brickworks upgrades net profit guidance

    Brickworks has forecast its net profit this financial year will be about double that of the prior year, as a result of continued strength in its land and development portfolio. Underlying earnings are expected to be up about 25% on the prior year, it said.

    But the company also said earnings before interest and tax (EBIT) for its building products arm was likely to be lower due to difficult market conditions and restructuring in Western Australia, plus the impact of wet weather on its east-coast operations that reduced product deliveries in the wake of Cyclone Debbie in late March.

    All Queensland operations were closed for a period after Cyclone Debbie, and brick plants in NSW were affected when they were taken off line for long overdue maintenance.

    Still, earnings from its building products business on Australia's east coast would be higher than in the previous fiscal year, because of strong performance from the Austral Bricks unit. Brickworks said the order book across businesses in the region remains buoyant. Any delays caused by wet weather have simply resulted in extensions to the pipeline of work.

    Brickworks said it had sold its former brick making site at Malaga in Western Australia for $19.2 million, part of an ongoing restructuring of the company's brick, roof tile and timber operations in the state. Production from the Malaga plant has been transferred to the upgraded Cardup plant.

    Brickworks is scheduled to release results for the year through to July on September 21.
    Restructuring leads to $7.3 loss for GUD

    GUD Holdings, owner of the Oates cleaning brand, made a loss of $7.3 million in FY2016-17. It follows a net loss after tax of $43 million in fiscal year 2016. The consumer and industrial products supplier said the results were largely due to the sale of its Sunbeam, Lock Focus and Dexion businesses.

    Company revenue for FY2016-17 was $426.3 million, which is an increase of 4% from the previous year. GUD's EBITDA for the period was $87.7 million, which is a 3% rise from last year.

    GUD said underlying profit from the three key businesses it continues to operate was $51.5 million in the year to June 30, up 45% from the prior year.

    The company's automotive parts business includes the Ryco and Wesfil filter brands and Narva accessories. It also owns the Davey pumps and pool products business in addition to Oates.

    The sale of storage and logistics business Dexion and lock manufacturer Lock Focus contributed the majority of a $58.9 million loss.

    GUD said its automotive interests remain the key source of revenue and earnings. Earnings in automotive climbed 11% to $74 million, contributing almost 90% of GUD's total earnings.

    However work remains to be done with Davey and Oates. Earnings declined 15% in the Oates business due lower sales caused by the collapse of Masters Home Improvement stores and the withdrawal of Oates products from Woolworths supermarkets.

    A new chief executive at Oates is refocusing the business on opportunities in commercial markets and performance improvements, according to GUD.

    Davey's earnings dropped 24% as demand was impacted by poor weather conditions. GUD said the dependence of Davey on seasonality is being addressed through new products, including pumps and connections linked to real-time weather data.

    Related:
    GUD Group FY 2016/17 first half results - HI News 3.1, page 26
    Loscam opens repair facility

    Pallet equipment pooling company Loscam has opened its new Brisbane pallet repair facility, located in the new Richlands industrial park in Queensland.

    Over 120 dignitaries, customers, suppliers, executive team members and staff from Australia and New Zealand gathered for the ribbon-cutting ceremony. The launch of the facility coincided with the company's 75th anniversary. Daniel Bunnett, executive vice president for Australia and New Zealand, said:
    There is an enormous amount of work which goes into driving a Greenfield site development. The effort from the local team in driving the market share gain and then leading this development has been first rate. I would also like to acknowledge our parent company in China Merchants Group who continues to invest in the long-term, strategic future for the region.

    The Richlands facility is expected to deliver significant expansion of repair and storage capacity for the state and is complemented with brand new machinery.

    Linda Tsui, executive vice president - finance, Loscam, delivered a speech on behalf of Zhao Huxiang, Loscam chairman and vice chairman, CMG. She said that its should help the company to better serve its customers and "offer a new experience".

    Guests were given a tour of the repair line as well as its automation and safety initiatives.
    Victa satisfies customers: Canstar Blue

    Canstar Blue has awarded Victa five out of five stars for overall customer satisfaction in its latest 2017 lawn mower reviews.

    With the core purpose of helping consumers make better purchase decisions with its unbiased assessments, Canstar Blue's reviews are an effective way for consumers to find out more about a product, brand and service. Canstar Blue editor, Simon Downes, said:
    Our aim is to help Aussie consumers make more informed purchase decisions every day. Whether it's lawn mowers, home appliances, internet providers or new vehicles - our reviews and ratings are based on real world experiences across more than 100 consumer categories.

    For Victa, the review rating showcases its history and quality of the company's range of lawn mowers. Victa marketing manager, Laura Clarke said:
    We focus on customer insights and design and produce lawn mowers that appeal to the Australian market. Our team continually aims to innovate and deliver products that satisfy customer needs, and that is why we are Australia's number one choice in lawn mowers.

    Assessing reliability and performance; ease of use; value for money; grass cut quality; maintenance; and servicing, the Canstar Blue review describes Victa's range of lawn mowers as authentic as any other Australian staple. According to the review:
    Victa has expanded to offer a large range of lawn mowers that are known the world over for the enduring quality and top-notch craftsmanship, designed and assembled in Australia.
    Swann reaches 30-year milestone

    DIY security monitoring company, Swann recently celebrated its 30th anniversary.

    From starting out in the basement of David Swann's family home in Melbourne in 1987, the business started out with making modems. It moved into security in 1999 with a "spy cam" that pioneered the DIY security category at retail stores.

    Now it has offices in Australia, USA, Canada, UK, Italy, Hong Kong and China with approximately 120 staff. Swann has also expanded its presence to over 40 countries and sells its products through retailers including Bunnings, JB Hi-Fi, Harvey Norman, Costco, and Officeworks. Jeremy Stewart, vice president - global marketing at Swann, said:
    Swann ... has seen at least 10% growth year on year, for the last 10 years. This growth is a testament to our unique selling proposition and reflects the demand we're experiencing from home and business owners, who want control of their safety and security.

    The Swann range includes DIY wired and wireless security systems with new developments that include state-of-the-art professional-quality super HD (such as 3, 4 and 5 Megapixels) and ultra HD 4K recording systems and cameras.

    The Swann family retired from the business in late 2014 and it is now part of the Infinova Group.
    Products
    Consumer laser levels
    The Stanley Cubix laser
    HNN Sources
    Bosch PLL 1 P Laser spirit level
    The Stanley Cross90 laser
    Click to visit the HBT website for more information
    If you spend any time at all working on construction, whether professionally or as a DIY project, you eventually will become haunted by that one, single question: Is it level? Just about everything begins and ends with that question, because it establishes a key part of structural integrity, as well as a primary aesthetic requirement.

    As a result, not that long ago, if you stopped to watch tradies working on a construction project, you would see them taking up their bubble levels and consulting them with a frequency pretty close to that of teenagers checking their phones for text messages. All that started to change about 20 years ago, when laser-based levels began to become more affordable, a trend that has accelerated over the past ten years. Over the past two to three years, the laser level has passed an inflection point in its development, and has become truly affordable for even occasional DIY use around the home.
    History

    Lasers were themselves initially developed in 1960. It didn't take too long for inventors to see how useful they could be in construction, and the first construction laser was launched in 1968 by Spectra Physics. This consisted of a simple laser that had to be levelled by the use of the traditional bubble level. The plasma tube, which contained the helium and neon gasses which were "lased" to produce the laser would last for up to 300 hours of operation. The rig cost USD8,000 - equivalent in today's US dollars to over USD56,000.

    The first development Spectra made was to add a motor to rotate the laser beam, which meant the level standard could be available to multiple workers building the interior fittings to a room. Next, the first self-levelling laser was developed, again by Spectra, in 1973. By the late 1970s there was general acknowledgement of just how useful the lasers were, with some sources stating they increased productivity by 30% to 40%.

    The next big thing to happen to the industry was the commercial development of the diode laser in the mid-1990s. These used semiconductor materials similar to those used in light emitting diodes (the familiar LED lights). Much less expensive to produce than gas-based lasers, and offering a much longer operating period, these began to fundamentally change the laser level industry. The effect was to produce lasers that lasted for 30,000 hours of operation instead of 300, and cost half the price of gas-based lasers.

    Over the past 10 years, as production in China and other low-cost labour countries has taken off, the prices of laser levels have plunged even further. Once used only on high-value construction sites, then by professional tradies, laser levels are today easily within reach of DIY consumers, as a convenience around the home.
    Types of consumer levels

    There are basically two types of laser levels for consumer use, with a third, in-between type emerging as well. The simplest type is basically a bubble level with a laser attached. These are typically fixed to a wall or other surface, levelled-up with the bubble level, and then project a reliable level laser line across the surface. These can be purchased for less than $45.

    The second, more complex type is the self-levelling laser level. These can sit on the floor, or, more commonly, be placed in a more elevated position, either by fixing to a tripod, to a special attachment fixed to a wall, or, using a universal attachment, to some other "holder" such as a ladder, plumbing, or even a chair back, bed frame - anything. Most consumer levels use a pendulum system to provide levelling.

    The third, emerging type is something of a hybrid of the other two. This makes use of a smartphone with an accelerometer. Connected to the phone via the headphone or connectivity port (Apple's Lightning port, micro-USB or USB-C), the connected device mainly produces the required laser line, while the phone provides the technology to sense when it is level.
    Market development

    Pioneered by companies such as Bosch, laser levels are becoming a more common consumer purchase. At the moment, there are not that many levels in the consumer price range produced by the major manufacturers.

    However, if we accept that these consumer products need a price point under $120, there are already a range of reliable trade offerings between $180 and $240. It won't be long before we see more of these these reach down to the $80 to $130 market, and begin to become attractive to consumers.

    Of course, what will cause that to happen will be a higher adoption rate of laser levels among consumers, driving better volume, and leading to manufacturing and distribution cost reductions. The question then becomes, how big is the potential market? Which leads us to an underlying question, just how useful is a laser level to the average DIYer?

    The answer, HNN believes, is "very useful". That is in part because we need to remember that the average DIYer today probably has fewer skills than the DIYer of 20 years ago. It might seem like a bit of a joke to suggest that using the traditional beam bubble level is difficult, but if you only ever put it to use a couple of times a year, it is tricky. Many DIYers confidently get out the level, draw a pencil line, put up a shelf or cabinet - only to find that things have drifted out, and the bubble in the level is now distinctly out of the middle-zone.

    In contrast, the laser level is a constant reminder to check the level, and offers an easy way to check and correct the seemingly inevitable drift. Spending $80 for what might amount to two hours of use over a three year period might seem excessive.

    However, while cost-saving is great motivator for DIY, once undertaken the main motivator is making sure that you don't make mistakes. The shelf that is out of level by enough that it needs to be shifted 2mm or 3mm creates all kinds of problems. How do you drill mounting holes for the brackets that are so close to the existing holes, for example. Correcting mistakes is particularly difficult if you are inexperienced, and don't know some of the tricks professionals can use.
    The levels
    Bubble/laser levels

    There are surprisingly few tools offered in this area by major manufacturers. This is likely due to increasing commodification. Doing a search for this type of tool on Alibaba, for example, returns a wide range of tools.
    Bosch PLL 1 P Laser spirit level

    With a length of 270mm and a width of 120mm, this is a simple, portable Bosch green tool that effectively boosts the functionality of a standard, small bubble level. One end of the level can emit a laser line, which has an effective range of around five metres. The other end can emit a single laser dot, which has a claimed range of 20 metres.
    Bosch PLL 1 P Laser spirit level

    The level is attached to the wall using a mounting bracket. The bracket itself is attached to the wall using nails, pins, screws, or adhesive tape. The level then attaches to the bracket magnetically. The same mount can also be used to attach the level to a tripod with a 1/4 inch mounting thread. Once mounted, the level can be adjusted to an angle, for use in construction of items such as stairs.

    The laser is a class II, and accuracy is stated as around 0.5mm per metre.
    IKEA Fixa Level
    Ryobi AirGrip Laser Level

    The AirGrip dates back to the time when Ryobi tools were darker blue/green and not their current colour, though a revised model in the current colour has been released. It's a device based on a unique idea. One of the main difficulties in using this kind of laser level is how to position it safely on a wall or other vertical surface. The AirGrip solves this problem by incorporating a small, battery powered suction pump in the design, which maintains enough of a vacuum, even when faced with some slightly porous surface, to keep the device in place.
    Ryobi AirGrip Laser Level
    IKEA Fixa Laser spirit level

    We're including this to give some idea of the market. This is a very simple device, which provides means of attaching to surfaces magnetically, but in no other way, unless the user drives in a couple of nails to hold it in place. The laser has a limited range of three metres, and accuracy, at 1.4mm per metre, is not great.
    IKEA Fixa Level

    On the other hand, it retails for $20, and is designed for light tasks, such as hanging pictures.
    Ryobi Phone Works Laser Level Device & App

    This is one of eight Phone Works products that Ryobi produces, including an inspection scope, an infrared thermometer, and active noise suppression earphones.

    Rather than relying on a bubble level to adjust the system, it instead relies on the inbuilt accelerometer in many smartphones. The advantage of the system is that it offers additional features, such as photos of the level line which can be shared. The disadvantage is that the accelerometers in many smartphones are notoriously unreliable.

    Often it is necessary to first calibrate the phone using a standard bubble level. Additionally, as smartphone design is quite variable, getting the laser attachment to line up with the phone display can be difficult.
    Ryobi Phone Works Laser Level Device & App

    Considering that this approach costs more than many self-levelling laser levels, it's best to regard this as a developing area for special uses.
    Self-levelling laser levels
    Stanley Cubix

    The Cubix is perhaps the most interesting of all the self-levellers that would be suitable for consumers. While it is at the very top of the consumer price range, with an average price of around $105 on eBay and other places, it has a good range of features, and, importantly for smaller retailers who might only stock one item of this type, it is certified for trade use as well. About the only issue is that its accuracy is rated at 0.8mm per metre, with the laser line visible for up to eight metres.
    Stanley Cubix

    It has most of the features needed, including the generation of cross-line for alignment, and the inclusion of a handy grip that slots into the body of the tool, making it easy to attach it to anything from a ladder to a vertical stud. It also includes a 1/4 inch socket for a tripod.
    Stanley Cross90 Self Levelling Laser Level

    The Cross90 is really pushing the upper end of the consumer price range, but it does deliver for the extra cost. It features a class I laser, and provides accuracy of 0.5mm per metre. Like the Cubix, it uses Stanley's mounting system.
    Stanley Cross90

    Its unique feature in a device at this price point, is that it offers a second laser at an angle of 90 degrees to the main laser, making it easy to set up the Cross90 in reference to a secondary point.
    Bosch Quigo

    When you think self-levelling laser levels for consumers, the Quigo is one of the first devices that comes to mind. Bosch virtually pioneered the category with the Quigo, and now into its third generation, it remains a strong performer. It is a very compact design, which comes with a handy mounting grip included (the MM2 universal clamp), making it easy to set up on ladders, chairs and so forth.
    Bosch Quigo

    Accuracy is rated at 0.8mm per metre, and the line is visible on surfaces up to 10 metres away.

    It is a Bosch "green" tool, but it does come with a two-year warranty, which is automatically extended to three years when the tool is registered.
    Conclusions

    What HNN hasn't mentioned so far is that, outside of these major manufacturers, there is actually a very wide range of laser levels of all kinds available from a range of manufacturers in China.

    In fact, it's possible that the laser level market of today presages what much of the power tool market in general may eventually look like, in another 10 years or so. Log onto the Chinese online wholesale marketplace Alibaba and search for laser levels, and you will see over a hundred variations on every kind of laser level imaginable, ranging from $20 up to $1000. Even if you go to a website such as Chinese online retailer Banggood - which, in electronics, largely gives you an idea of what are the more reliable offerings on Alibaba, for an additional cost - there are still dozens of choices.

    This leaves Australian retailers in something of a tricky (and very interesting) situation. Some of those unfamiliar brands coming out of China will prove to be reliable, and offer customers a good deal - but which ones? While there are several Australian brands that have taken on the task of getting reliable laser levels manufactured in China - Imex, Redback and Spot-on, to name a few - these companies concentrate on trade-level devices. Except for the simplest levels, those used for tile-laying, they don't really cater to the consumer market.

    One way through that morass is, of course, for retailers to establish a relationship with a reliable Chinese supplier, and effectively "own brand" the product. That is what Sydney Tools has done, for example, with its CPI line of self-levelling laser levels. The CPI X-Line sells currently for $49, and the CPI Cube sells for $99.
    News
    HI News V3 No. 8: Metcash reports
    Download the latest issue of HI News Vol. 3, issue no. 8
    HI News
    Trim routers have become a more common tool
    Metcash has said no to an offer to buy Hardings Hardware
    Click to visit the HBT website for more information
    The current issue of HI News is primarily about listed wholesaler and retailer, Metcash and its Independent Hardware Group (IHG) subsidiary.

    Simply click on the following link to download this edition:
    HI News V3 No. 8: Metcash reports

    In addition to reporting its annual FY2016-17 results, Metcash confirmed to Fairfax Media that it rejected an offer from Reece to buy its Hardings Hardware group of stores.

    Statistics in this edition takes a look at how "complementary" the Mitre 10 and Home Timber & Hardware store networks are within IHG.

    There are more developments in Bunnings' UK business than in Australia as it doubles its pilot stores in the British market.

    The Home Depot is acquiring rental company, Compact Power Equipment and Home Hardware in Canada is repositioning the brand through a new ad campaign.

    The main product category we explore in this issue are trim routers. Other products featured include the Fiskars weed puller, Stihl's backpack battery, Cub Cadet's Z-Force mower, the newest multi-tool from Fein Power Tools, Swann's latest security system and the Worx Ai drill.
    Retailers
    Metcash full-year results FY2016-17
    Metcash results for FY2016/17
    Metcash
    Metcash 52-week year results by half
    Jeff Adams, incoming CEO of Metcash
    Click to visit the HBT website for more information
    Metcash has released its results for its full-year FY2016/17. Once the results are fully interpreted, it looks like the company had something between a mildly positive and a flat year. However, given the circumstances of its core industry, wholesale distribution of food products to independent grocers and supermarkets, the company has done well.

    Its home improvement retail operations, Independent Hardware Group (IHG), did well in particular. Earnings improved during a turbulent time, as the company acquired Home Timber & Hardware Group (HTH), and coped with the mass discounts dumped into the market during the busiest months of the year, as Masters exited the industry.
    Metcash results for FY2016/17

    The headline results as reported by Metcash were an increase in overall sales revenue by 5.4% on the previous corresponding period (pcp), which was FY2015/16, to $14.12 billion; reported net profit after tax (NPAT) was $171.9 million, down by 20.6% on the pcp; and earnings before interest and taxation (EBIT) rose by 7.7% on the pcp to reach $298.7 million. Metcash also reported what it termed "group underlying profit after tax" (UPAT), which it claimed rose by 9.3% to reach $194.8 million.

    Making allowances for this being a 53-week accounting year rather than a 52-week accounting year decreases some of these gains. However, it is also true that the NPAT decline is largely due both to profit from the sale of its automotive operations, which added close to $40 million to the pcp NPAT, and ongoing costs from the acquisition of HTH, which decreased NPAT in the current period.

    In its hardware operations, the company showed strong gains in EBIT, especially for the Mitre 10 portion of its operations, as well as substantial contribution from the HTH operations Metcash acquired in October 2016. During the second half of FY2016/17, the Mitre 10 operations managed to boost overall EBIT margin to an excellent 4.26%, largely through efficiencies gained.

    Metcash CEO Ian Morrice was balanced in his remarks on the result release, in contrast to early, enthusiastic press reports. In the press release announcing the results he stated:
    Our initiatives focused on supporting Independent Retailers be [sic] "The Best Store in Town", together with our Working Smarter program aimed at simplifying the way we operate and reducing costs, have helped mitigate the impact of difficult trading conditions.
    Significant progress has been made on the integration of Home Timber & Hardware, and we remain excited about the opportunities this acquisition presents.
    The strength of our financial position has us well placed for future investment, and the Board was pleased to announce it is bringing forward the recommencement of dividends for shareholders.

    He was equally measured in his statements at the conference with investment analysts to introduce the results. He said in part:
    I think we've got some results to present this morning that from our perspective really highlight and underpin continued progress against our purpose and vision ... the components of our vision being best store in town, partner of choice, passion for independents and thriving communities.

    Reassessing the results by excluding the additional EBIT from HTH, and adjusting for this year being a 53-week accounting year, growth in operational EBIT from the company's food, liquor and hardware operations essentially kept pace with general inflation at around 1.5%.

    However, the results did show substantial gains from Metcash's Working Smarter efficiency program, and the HTH acquisition promises to be a good source of future growth.

    As a result, the stock market broadly welcomed the results, especially as they were accompanied by a reinstatement of a regular dividend of $0.045 per share for the reported financial year. This led to the share price going up from $2.19 prior to the release, to $2.41 a week later, an increase of 9.1%.
    New CEO

    Prior to the results announcement, Metcash indicated that Mr Morrice would be stepping down from his role as CEO in 2018. Metcash announced on 11 July 2017 that it will replace him with a former executive from the UK-based supermarket chain, Tesco, Jeff Adams. The announcement read, in part:
    Mr Adams will join Metcash in September and, following a comprehensive orientation of the business, will work with Mr Morrice to ensure a smooth transition into the role. He will succeed Mr Morrice as Group Chief Executive Officer following completion of the transition in December. Mr Morrice will then act as an adviser to Mr Adams and the Board through to June 2018.

    Mr Adams has something of a mixed background. He was successful at growing the Tesco business in Thailand, but was one of several executives who struck out when trying to get the company's expansion into the US past first base.

    Mr Adams is slated to begin his role on 4 September 2017, on a four-year contract, with a total employment cost of $1.8 million per year. Additional short-term and long-term incentives also apply.
    End of the transformation plan

    The Transformation Plan, launched initially as a one-year project in March 2014, expanded in June 2015 into into a three-year project, and for a brief time in 2016 apparently a four- or five-year project, has seemingly come to an end, as a three-year project, with these FY2016/17 results. Where it would normally appear as an item under "Strategic objectives" in the report documents, it is absent this year, while the company's ongoing efficiency drive, "Working Smarter", continues.

    It is difficult to say how successful the plan was in reaching its goals, but it is fair to acknowledge that it was successful in parts. The appointment of some key personnel at Metcash in mid-July 2015, including Steven Cain as CEO Supermarkets, and Mark Hewlett as executive general manager of new channels, arguably came out of the transformation plan.

    Equally, though, the way the company managed a major divestment and a major acquisition - the sale of Metcash's automotive division to Burson Auto Parts, and its acquisition of the HTH from the Woolworths controlled Hydrox Holdings - were key to the company holding its own in an increasingly difficult marketplace.
    Results

    Analysis of the results has been complicated by several factors, including the acquisition of HTH from Woolworths, and Metcash's sale of its automotive operations to Burson's in FY2015/16. Additionally, for accounting purposes, Metcash's FY2016/17 consists of 53 weeks instead of the usual 52.
    Metcash Group

    Metcash has been called to task for what a few analysts see as an unusual treatment of some results, especially the number it produced for UPAT. This matter is covered in some depth in our Comment section for this issue.

    To try to make these performance numbers more accessible, HNN has put together some different comparisons. Table 1 presents the results represented in the company's accounting, as well as an estimation of the sales and EBIT to represent an equivalent 52-week year, with the contribution of the HTH acquisition omitted.

    In overall terms, Metcash's food operations, which include its IGA independent grocer brand, had sales of $9.18 billion, up by 0.6% on the pcp. Sales at supermarkets rose by 1.3% while sales at convenience outlets fell by 2.7%.

    Excluding the 53rd week, sales at supermarkets fell by 0.6%, and convenience outlet sales fell by 4.5%. Like-for-like (comp) sales at Metcash grocery banner IGA lifted by 0.1%.

    EBIT was virtually flat at $180 million, though would have declined when accounting for the 53 week year. Poor economic conditions in Western Australia, and stronger competition in that state and South Australia brought the number down, while eastern seaboard states performed more strongly.

    Metcash's liquor operations' sales rose by 3.5% to $3,333 million, and by 1.8% when adjusting for the 53 weeks. EBIT for the unadjusted year increased by 7.9% on the pcp, to reach $67 million.
    Independent Hardware Group

    Mr Morrice made direct reference to the IHG result in his opening remarks at the presentation of the results to analysts:
    So [total Metcash] sales are up 5.4% and EBIT is up 8%. However, both of those numbers include a 53rd trading week and also the acquisition of Home Timber & Hardware. So when you flow that through into Hardware's EBIT increase there, yes, there's an element from HTH, but the good news underneath that is that the continued strong performance of Mitre 10 was also a big feature. This is all given the amount of disruption with the closure of Masters during the course of the year. So I'm very pleased with that hardware result.

    Mr Morrice returned to this theme later in his remarks, in the section specifically devoted to IHG:
    So sales obviously increased significantly without acquisitions. So some of you will want to also focus on how Mitre 10's going. And as you can see, up 2.9%, 1.4% on a 52-week like-for-like basis. And given all that happened in the market, we're pretty pleased with that. And earnings, we've pulled out the $12 million that we've seen from HTH to the second half. So as you back solve that, you will see an increased earnings rate from Mitre 10 due to both sales volumes and cost efficiencies.

    Table 2 sets out the performance figures for IHG, broken down into Mitre 10 and HTH, with estimated accounting for the 53rd week.
    Metcash results for IHG division

    This shows that, on a 52-week basis, Mitre 10 grew its revenue by 1.39%, but increased EBIT by over 9%. This resulted in an EBIT margin for the year of 3.34%. Metcash notes that its EBIT margin on wholesale retail activities was 2.4%, which means that around 0.9% or around 37% of total EBIT came from other sources, amounting to over $13 million. Other sources would include the retail portion of company-owned store revenue, and income from sources such as the 2017 Tradeshow/Expo (which is rumoured to have earned over $1 million for the company).

    HTH EBIT margin was lower at 2.37%, and overall EBIT margin was 3.03%.

    Table 3 sets out the performance of IHG on a half-by-half basis, using estimated 52-week year numbers.
    Metcash 52-week year results by half

    Mitre 10 sales revenue slipped a bit in the first half, but increased by over 2.9% in the second. EBIT, however showed a healthy gain in both halves, rising by 7.8% in the first half, and 13.7% in the second half. First half EBIT margin for Mitre 10 was 2.36% in the first half, and a very hefty 4.26% in the second half, up by 0.4% on the second half of FY2015/16.

    HTH estimated EBIT margin was much lower than Mitre 10's, at 2.68% in the second half. HTH is estimated to have returned $12.2 million in EBIT, which means that, if store numbers remain stable, it is on track to earn mid-range in Metcash's $15 million to $20 million estimation for FY2017/18 EBIT.

    There are some apparent anomalies in these numbers, in particular a higher than expected EBIT margin for Mitre 10, and a lower than expected EBIT margin for HTH. At a best guess what may be happening is that IHG has obtained very favourable rates from suppliers based on future volume of sales, but these suppliers are more broadly featured in Mitre 10 stores than HTH stores. As the numbers show, sales at Mitre 10 were basically flat.

    Another possibility is that, with the changes brought through the Working Smarter program providing real benefits, the HTH stores may not be "best practice" at the moment, in IHG terms. Hard won efficiencies in the supply chain may be boosting the margin for Mitre 10 operations.

    This conclusion is partially backed-up by a statement from Metcash CFO, Brad Soller:
    In relation to FY2017, there's about $4 million of synergies that have been realised in the results. Some of them, importantly, have been realised within Mitre 10 itself and not in all HTH. Some of the savings are in Mitre 10.

    Chart 1 shows the general progression of Mitre 10's EBIT margin for the past seven years. No mention was made this year of like-for-like (comp) sales, which have been provided in past years.
    Store numbers

    In terms of store numbers, Metcash has chosen to report these as consisting of 305 Mitre 10 stores, down from 310 in the pcp, and 67 True Value Hardware stores, down from 68 in the pcp. It provides a single number for all HTH stores, including Home Timber and Thrifty-Link banners, of 368, without a comparative number.

    The IHG Investor Day briefing from 23 March 2017 lists 246 Home branded stores, and 126 Thrifty-Link stores, for a total of 372.

    One of the concerns that have been voiced is the extent to which there will be competition between the Mitre 10 and HTH stores. Mr Laidlaw has stated that the networks are very complementary, in that there is only limited competition. HNN has delved further into this matter in our Statistics section for this issue, where we use Google Maps to determine driving time between stores as a proxy to network concentration.

    This is summary of the main article. To read the main article, please download our pdf publication, HI News, from the following link:
    hnn.bz/HI News Vol.3 No.8: Metcash reports
    Products
    Trim routers
    The Makita RT0770C trimmer features a tilt base
    HNN Sources
    The Makita DRT50Z uses the same accessories as RT0770C
    The MT Series Makita routers offer great value for money
    Click to visit the HBT website for more information
    As recently as six or seven years ago, just about any kind of router was deemed to be the sort of tool only a carpenter or dedicated woodworker would own. However, as prices have decreased, and quality at the lower end of the price range has increased, routers have become a more common tool.

    In particular, the smallest kind of router, usually called a "laminate trimmer", has grown in popularity over the past several years. That is in part because it is small - typically less than 250mm tall, and around 2kg at most - which makes it easy to use, as it can be operated one-handed.

    Most importantly, the laminate trimmer (or trim router as it sometimes called) solves the kind of basic problems that any tradesperson, and quite few DIYers, are likely to encounter. In fact, far from being an "expert only" tool, it's the kind of gadget that can help the less expert look a lot more expert.

    If you are not familiar with the laminate trimmer, the best place to start in understanding them is with the trimming bit itself. Image 1 is an enlarged photograph of such a bit. The laminate trimmer attaches to the top, smooth shaft. Below that is the cutting part of the bit itself, and at the base is the guide, which is a ring of smooth metal that runs on ball-bearings.

    Imagine that you are facing the fairly typical woodworking task of doing something like fitting a new top to a bedside cabinet. It might be plywood that will be painted, or a piece of 12mm pine wood you intend to stain. To make the job look really good, you are going to have to get all four edges of the top flush with the supporting frame underneath.

    If you are (like the editors of HNN) a bit of a duffer with a saw, it can seem like there is almost no way of doing this easily. Measure as you will, even with a good mitre saw it just seems inevitable that the end result will be a one or two millimetres out, spoiling the whole look. You end up filing, sanding, and so forth - and then you have to worry about keeping the edge perpendicular, and not rounding it out.

    With the laminate trimmer, you don't worry about cutting the wooden top precisely. Instead you cut it oversize by 10 to 15mm or so, then fix it to the cabinet frame, making sure there is overlap on all four edges. Using the laminate trimmer, using the flush trimming bit, you then simply run around the edges of the frame. The ball bearing runs on the frame itself, and the cutting portion of the bit removes all the excess wood. The end result is the the most perfectly flush finish you can imagine.

    There are only two "gotchas" to worry about. The first is to remember to move the trimmer in a counter-clockwise direction (push in and forward with your right hand), as, with the trimmer turning clockwise, this enables the bit to do its work. (If you are trimming inside out, such as when making the hole for a sink or tap in a counter, you move clockwise instead, for the same reason.) The second "gotcha" is to always start trimming wood on an endgrain edge. About half the time, at the end of the endgrain you will push off a chip from the grain edge - but it won't matter, because that's the very edge you will be trimming next.

    Once you've done this a few times, you will be tempted to move to the next stage, which is using a slightly different bit to produce a fancier edge. It's very easy, for example to put a nice 30-degree bevel on the edge (though you do have to think through how you want the corners to look).

    Beyond this specific task of trimming, it's also possible to use the the laminate trimmer as a kind of "light" router as well. A typical task where they are very useful is when installing a new door. With a proper router bit, they make mortising the space for hinges very simple (though you do have to dig out the corners with a chisel still).

    Even better they handle the surprisingly tricky task of cutting the recess for the latch plate on the lock, which goes on the edge of the door. These can be surprisingly tricky to do well, especially if the chisel is anything but your friend. Both of these tasks are best accomplished by using templates, which make it a matter of just guiding the laminate trimmer.

    As a trade sale, it really comes down to the choice of brand and size, as most professionals are well-acquainted with how useful the laminate trimmer can be.

    As a DIY sale, however, it can be one of the more difficult items to sell outside of people with some real interest in woodworking. The problem is that the laminate trimmer is, indeed, a specialised tool, and does not get used nearly as often as a hammer drill, or even an impact driver.

    The selling point is that it takes a task that can really consume a surprising amount of time, or end with a compromised result, and makes it easy to produce something that looks great. It's actually an ideal tool to sell through a short demonstration course - as long as the course sticks to the basics outlined above: doors and tops/bottoms to things. Most DIY courses that feature any kind of router seemingly cannot resist deep into the world of complex routing, and simple DIYers, who are seeking to solve problems more than to experience a craft, are simply not interested.
    The role of Makita: RT0770C trimmer

    While HNN does not have any statistical proof for this, only some anecdotal evidence, we do think it is likely the real spark to the growing popularity of the laminate trimmer was Makita's RT0770C trim router.

    Introduced in 2012, and revised since, the 770 was one of those classic tools that managed to combine two things: it hit an exact sweet spot in terms of size and capabilities, and it was very thoughtfully designed. Plus, as we often have said, it just had that Makita quality of having things in balance.

    In terms of the sweet spot, the 770 is a corded tool with a rated power of 710 watts. With most laminate trimmers ranging from 300 watts to 600 watts, that gives it just that little bit of extra power. At the same time the motor is small enough, when combined with an aluminium chassis, to keep the weight down to just 1.9kg - easy enough to handle one-handed.

    The great design mainly expresses itself in the set of three accessories available with the tool. It comes standard with a trimmer base, which is all you need if you are going to do the kind of trimming jobs described above. An option set of accessories includes two other bases, a plunge base and a tilt base. The plunge base converts the 770 into a lightweight plunge router, complete with soft-grip handles, and a rotating turntable of three depth stops, for different stages of a complex job.

    The tilt base is quite a unique accessory. It enables the trimmer to be rotated from plus 30 degrees out to minus 45 degrees. This has an interesting effect on custom router bits. For example, the flush trim bit can be used to make a bevel.
    The Makita RT0770C trimmer features a tilt base

    In addition to these three bases, there is another, fourth base, sold individually, which converts the 770 into an offset router. Daughter gears transfer the drive to the edge of the base, meaning it can work as close as 18mm to a wall or other barrier.

    Where the excellence of design really shows itself is that the parts of the various bases are interchangeable.

    For example, the trimmer base has a round base plate, and the tilt base has a square base plate. Undo a few screws, and you can put the square plate on the trimmer base, which means you can use a straight edge clamped to the work piece to guide the trimmer for special uses. The soft-grip handles from the plunge base can be fitted to the offset base, for better control in tight situations. And so on.

    Then there are the other typical Makita touches. There is an integral shaft lock, so it takes just one wrench to change bits. The motor base is flat, and the power cord comes out from the side of the motor, so the unit sits flat when upside down. It has soft-start, making it easy to pause and begin again in the middle of trim. Just a great tool.
    Makita DRT50Z

    This new, cordless trimmer launched in Australia in early 2017. It is, basically, the 770 in cordless form. It even uses the exact same accessories. Without battery, it weighs just 1.4kg.

    The really exciting news about this trim router is the price. It retails for $249, just $60 or so more than the corded version. That doesn't include the battery or the range of accessories, but for tradies who already have Makita batteries and the 770, it's a great buy.
    The Makita DRT50Z uses same accessories as RT0770C
    Makita 3709X and 3710

    Makita does also offer a simpler laminate trimmer, the 3709X. This is a corded tool, with a 530 watt motor, weighing 1.5kg, just 199mm tall. It is generally sold with an aluminium carry case. The Makita 3710 is basically the same trimmer with a tilt base.
    Makita MT Series M3700G

    In terms of sheer value, next to the RT0770C is this recent offering from Makita's MT Series, which replaced its previous value brand Maktec. This is essentially a slightly older version of the 3709X, but it sells for close to half the price of the pure Makita version. It features a 550 watt motor, and weighs 1.4kg.
    The MT Series Makita routers offer great value for money
    Other brands

    To be frank, most of the other brands available in Australia really do not match up to Makita, with the exception of Festool, which makes very high end router products. In fact, these are such a speciality item (and typically cost over $700) that HNN simply does not have the technical knowledge to effectively provide a guide or review of them.

    DeWalt, for example, sells just one, corded model in Australia, the DWE6005, which typically costs more than the Makita RT0770C, and has specs that are not quite as good.

    Bosch sells a blue router, the GMR 1, with, again, similar specs to the RT0770C, but for, typically, a higher cost.
    Bunnings

    Ryobi offers two laminate trimmer. The corded version has a 400 watt motor, weighs 1.67kg, and retails for a price close to that of the Makita MT Series M3700G. It's not a very impressive offering.

    The other laminate trimmer from Ryobi, however, is a real competitor. Newly designed, this One+ cordless trimmer (R18TR-0) is styled as a "palm" tool, with special attention paid in its design to permit easy one-handed use.

    Finally, there is the Ozito laminate trimmer. While this is the least powerful of all those covered here at just 350 watt, and it lacks basic features such as a spindle lock (which means changing bits requires two spanners), it really should not be dismissed. At $65 it will attract consumers who have very infrequent need for the tool, or even just one main period of use, when installing a new kitchen, for example.
    Other products

    While Makita seems to be the outstanding brand in this sector for Australia, that is much less the case overseas. In the US, for example, a Bosch router typically wins this category, with offerings from Techtronic Industries Home Depot-only brand Ridgid and Hitachi highly ranked as well.
    Careers
    Seeking opportunities
    A NSW-based territory sales manager is required for Toro and Pope brands
    HNN Sources
    A GM role at Australian Outdoor Living
    An opportunity to develop digital marketing strategies at PGH Bricks
    Visit the Mecca Website
    Toro Australia seeks an "ambitious self-starter" for a sales role; a general management role with Australian Outdoor Living is on offer; and CSR's PGH Bricks has an opportunity for a digital marketing specialist.

    Click on the logos to find out more about each role.
    Optimising product sales

    Reporting to the state sales manager (NSW/ ACT/ VIC/ TAS), the territory manager will develop market opportunities for the Pope and Toro branded products in the north/west Sydney and Northern Beaches region, within the hardware retail channel. This position is also responsible for leading a small team of part-time sales merchandisers.
    A territory sales manager is required for Toro and Pope brands
    GM for outdoor products

    A general manager is required to head up the Victorian operations of home improvement company, Australian Outdoor Living. The successful candidate will oversee a team of design sales consultants tasked with introducing a range of Australian-made outdoor blinds, pergolas, verandas, decking and artificial lawn. The role will eventually involve product expansion.
    A GM role at Australian Outdoor Living
    Promoting bricks on digital platforms

    PGH Bricks, a business unit within the CSR Group, is looking for a digital marketer to join its marketing team. Based at North Ryde (NSW), the digital marketing specialist will assist in the execution and management of online projects and deliverables across owned, earned and paid digital channels. Key duties will include management of digital programs and multi-channel online communications.
    An opportunity to develop digital marketing strategies at PGH Bricks
    Bigbox
    Big box update
    The Bunnings North Toowoomba store should open later this year, in 2017
    HNN Sources
    The former K&D site in Devonport is turning into a Bunnings store
    Bunnings has not confirmed whether the Panoroma (SA) store on Goodwood Road will go ahead yet
    Click to visit the HBT website for more information
    Bunnings said the North Toowoomba (QLD) store is expected to create 180 team member jobs and over 100 jobs in Devonport (TAS) once they open; and Mitcham Council is trying to find out whether a Bunnings outlet will open in Panorama (SA).
    Bunnings developments on schedule

    Construction work on the $43 million Bunnings Warehouse development in North Toowoomba (QLD) is progressing as planned. Bunnings general manager - property Andrew Marks said the new store is expected to open in late 2017.

    The warehouse is located on the corner of Ruthven and Bridge Streets and is the second Bunnings for Toowoomba, the other being on Anzac Ave in Harristown. Once completed, the latest store will have a total area of more than 17,000sqm.

    It will include the main store, indoor timber trade sales area, building materials and landscape supplies yard and outdoor nursery. The development will also include an indoor playground, cafe and parking for more than 370 cars on the site of the former Toowoomba foundry.
    Devonport location

    The old K&D Warehouse building in Devonport (TAS) has also been painted the signature green of Bunnings Warehouse as preparations continue for the store's opening.

    The new Bunnings is located at the Devonport Homemaker Centre and is expected to open in late 2017. Mr Marks told The Advocate:
    The erection of structural steel is complete and the pre-cast concrete wall panels and the roofing works are well underway.
    Panorama store not confirmed

    Bunnings has not said whether it will continue with plans for a $42 million outlet at the former TAFE site in Panorama (SA) after almost three years of fighting with objectors.

    Bunnings general manager - property Andrew Marks would not say if the hardware giant would lodge a third application to Mitcham Council to build the warehouse on Goodwood Road.

    Mitcham mayor Glenn Spear said he had been "left in the dark" about the future of the development. He wanted it approved so the old TAFE buildings, now dilapidated and vandalised, could be demolished.

    Bunnings has previously lodged plans for a $45 million store in Edwardstown, 2km from the Panorama site. Mr Marks did not confirm what that proposal meant for the Panorama plans.

    Mitcham Council's development assessment panel knocked back Bunnings' first application for the TAFE site in August 2016 at a meeting that attracted at least 80 people. The big box retailer submitted an amended plan in December, which was also rejected.

    Panorama resident Neil Baron appealed that decision in the Environment, Resources and Development Court. The matter is still before the courts.
    Bigbox
    Europe update
    Bunnings United Kingdom & Ireland is accelerating its store expansion plans
    HNN Sources
    Andrew Livingston (second to the right) is leaving his position as Screwfix CEO
    Travis Perkins is looking at new technology to boost its business
    Click to visit the HBT website for more information
    Bunnings United Kingdom and Ireland (BUKI) is doubling down on its expansion plans and has opened its fourth store; Kingfisher-owned Screwfix gets a new boss; and technology startups will soon influence the way Travis Perkins does business.
    BUKI increases pilot store program

    Bunnings United Kingdom and Ireland (BUKI) said it plans to double the number of stores launched in 2017 from 10 to 20 after a "positive response" from customers to pilot outlets in St Albans and Hemel Hempstead. BUKI managing director Peter "PJ" Davis said:
    Increasing the number of pilot stores to 20 will give us the opportunity to test the concept in new geographies, with different demographics, across a range of store sizes.
    We are determined to combine the best of Bunnings Warehouse with what UK consumers want. The success of the pilots still remains a precursor to additional investment.

    The retailer is trialling its Bunnings Warehouse concept to "road test" demand in Britain before rebranding all its Homebase stores.

    Mr Davis admitted that the expansion came during a tough time in the retail sector as shoppers face an increasing squeeze on their spending power from rising inflation.

    However, he said the firm had seen "very little inflation" in its own prices after the pound regained some ground from the lows seen in the immediate aftermath of the Brexit vote.

    Over 1,000 jobs are expected to be created from opening the additional stores, according to the big box retailer. International Trade Minister Mark Garnier said:
    This is a significant and welcome investment by Bunnings ... The Department for International Trade works with companies around the world to promote the strengths of the UK and this investment from Bunnings is yet another endorsement of the UK's attractiveness to overseas investors.

    At Wesfarmers' investor day in early June, Wesfarmers warned that the Bunnings UK business would lose money in the first half of 2018 as well as in the 2017 June half. It blamed the losses on a combination of restructuring costs, bad weather and the repositioning of Homebase's bathroom and kitchen offer.
    Milton Keynes and more

    The announcement to double its pilot store program was made as Bunnings opened its fourth store in Milton Keynes, Buckinghamshire, a large town located about 72 km north-west of London.

    This store is the second one in the area and the largest in the UK and Ireland, at more than 90,000sq ft.

    It stocks more than 35,000 different home improvement and garden products, including a mix of international and British brands from Purdy's paintbrushes, never before available to non-professionals, to Ryobi and DeWalt tools. Paint mixing services from Johnstone's Trade, Crown and Dulux are also available in-store.

    To celebrate the opening, Australian racing driver Mark Webber, a nine-time Grand Prix winner, hosted a welcome breakfast for team members. The store's complex manager, Kevin Dale, said:
    It is great to finally open our doors to customers. Our team members have worked really hard to get the store ready for opening. Collectively we've already completed more than 1,500 training hours to make sure we have the expertise to help with home or garden projects.

    BUKI also has plans in place for a fifth pilot outlet in Folkestone, before overhauling Homebase stores in Thanet, Sittingbourne and Basildon Vange.

    Related:
    Europe update - HNN
    Executive moves at Kingfisher

    The CEO of Kingfisher-owned DIY retailer Screwfix is leaving to become chief executive of British kitchen supplier, Howden Joinery.

    Andrew Livingston has headed up Screwfix since 2013, joining the company as commercial and ecommerce director in 2009. This followed stints as chief operating officer of Wyevale Garden Centres and as commercial director of kitchens and bathrooms at B&Q.

    Screwfix, with over 500 stores, has recently been a major driving force at Kingfisher, last year growing sales 23% to GBP1.3 billion thanks to strong growth from the specialist trade desks, digital growth and the opening of 70 outlets in the UK and Germany.

    Mr Livingston will be succeeded by Screwfix's operations and property director Graham Bell, who has held roles within the Kingfisher group for 18 years.

    At Howden Joinery, Mr Livingstone will replace its founder and chief executive Matthew Ingle, who will retire in the first half of next year after 22 years at the helm.

    Kingfisher's head of sales & operations head has also exited the company after less than a year. Jean-Paul Constant's departure follows soon after B&Q retail director Damian McGloughlin leaving to go to Bunnings UK and Ireland.
    Travis Perkins seeks new tech to lift trade

    Builders' merchant and home improvement retailer, Travis Perkins has initiated an accelerator program called BreakThru as a way to benefit from tech start-up businesses.

    BreakThru is part of a company-wide initiative to embrace digital methods that could future-proof business operations and enhance customer experience across Travis Perkins' 22 brands.

    Led by chief digital officer Cheryl Millington, the program has been launched to expose the group, which operates over 2,000 branches, to entrepreneurial thinking and new products.

    BreakThru, in collaboration with innovation specialist L-Marks, will allow successful start-ups to validate their business ideas over the course of an 11-week partnership program.

    Up to GBP200,000 each is available for those digital entrepreneurs coming up with the most viable solutions.

    Travis Perkins said it is exploring ways to streamline customer service, improve health and safety, and create fleet and workforce efficiencies. It also hopes to find start-ups that can create a seamless digital customer experience, including technologies to create real-time inventory visibility and management. Chief executive John Carter said:
    Our goal is to provide a seamless customer experience through harnessing the latest innovations and ideas brought by start-ups.
    We hope the start-ups who join us can challenge us internally, while we also hope to provide them with the expertise and support to take their product or solution to the next level.
    Retailers
    Indie store update
    Metcash resists pressure to sell hardware stores, according to Fairfax Media
    HNN Sources
    Sam's Hardware in Blacktown (NSW) has decided to shut up shop
    Total Tools opens a new branch in Cairns (QLD)
    Click to visit the HBT website for more information
    Metcash has said no to an offer to buy Hardings Hardware, according to Fairfax Media; a hardware store in Blacktown (NSW) has shut its doors for the last time; Cairns has got a new Total Tools store; Reece is planning an outlet for Toowoomba; and a PlastaMasta branch has opened in Ipswich (QLD).
    Metcash rejects offer to sell hardware stores

    Fairfax Media reports that Metcash has knocked back a $25 million offer from plumbing supplies retailer Reece for Hardings Hardware. It has also ruled out selling its company-owned hardware stores.

    Metcash acquired Hardings Hardware last year as part of its purchase of Home Timber & Hardware from Woolworths. Woolworths' Danks division had bought the former privately owned group of stores in 2013 to strengthen its hardware wholesaling operations.

    It is understood that Reece offered about $25 million for Hardings, which has six outlets in Victoria, Queensland and South Australia and sells bathroom, kitchen and building products to the trade sector.

    Metcash chief executive Ian Morrice and Mitre 10 boss Mark Laidlaw turned down the unsolicited offer, telling Reece the price was too low and it was not ready to sell.

    Analysts said the sale of Hardings would have dented Metcash sales and earnings, because the stores turn over about $100 million a year and are said to be profitable.

    Metcash declined to confirm if it had received an offer for Hardings, but doused hopes that it would at some stage sell company-owned hardware stores. A spokesman told Fairfax:
    We have consistently said we are not looking to sell our company-owned stores in hardware. We have made it clear when asked and in investor meetings that Hardings provides significant growth opportunities for the Independent Hardware Group going forward.

    The report goes on to day Metcash is under pressure from Mitre 10 and HTH store owners to sell company-owned stores to avoid competing directly with independent retailers. A source said:
    They're wholesalers and don't really like to own their own stores. They're not good at running stores.
    Blacktown hardware store closes after 23 years

    The Lebanon-born Jabbour brothers closed the doors at their Sam's Hardware store in Blacktown (NSW) for the last time recently.

    Owner Sam Jabbour opened the store in 1994, after deciding he was "too old to keep driving trucks". He was inspired by his older brother, who had a hardware store in Lidcombe in western Sydney. That store closed down six years ago after losing business to a nearby Bunnings.

    Mr Jabbour said he would miss talking to the locals and helping people. He told the Blacktown Sun:
    Most of the customers are friends. They're part of the furniture over the years.

    With five children and now three grandchildren, Mr Jabbour said he was looking forward to taking a break and reclaiming his weekends. He and his wife are about to embark on an eight-week European holiday gifted by their children.

    Mr Jabbour was visited by Boral sales representatives Jason Townsend and Peter Lindsay on the final day, who brought pizza to farewell their loyal client. Mr Townsend said Sam's Hardware was his first account when he moved into sales in 1994.
    Total Tools store opens in Cairns

    Darwin man Damien Gorton has opened a Cairns branch of Total Tools in the suburb of Portsmith (QLD). He told the Cairns Post the response has been fantastic so far.

    There had been franchise availability in Cairns for some time, but finding a site to accommodate the size of the store had been difficult.

    Mr Gorton said he had been the nominated Cairns franchisee for about 16 months before the Aumuller Sreet site was settled and Total Tools Cairns opened.
    It's the perfect location. That southern corridor down to Gordonvale is going to be a huge growth area. Being at the southern end of Cairns close to Comport Road poses well for us...

    He said his store offers between 60,000 and 70,000 items on the shelves with availability to many more.

    Mr Gorton's background includes being the manager at Port of Darwin and prior to that, he had been an oil and gas engineer. He said:
    I love tools and I'm very into buying tools. I had been looking for something like this for a long time ... We're here for local tradesmen and women.
    Reece gains approval for Toowoomba suburb

    Toowoomba Regional Council has granted approval for Reece to build a hardware and plumbing supplies warehouse for trade customers in the suburb of Wilsonton (QLD).

    The company's new branch will provide a wide range of products to support the water, gas, sewer, fire service and telecommunication sectors. It will supply bulk items and designate large areas of the site for storing outdoor items.

    Reece will predominately store supplies for delivery but this outlet will also include a small counter for pick-ups ordered by trade account customers.

    There will be no display or showroom component in the single-storey warehouse and no walk-in retail sales to the general public.

    Reece has more than 450 stores across the country and employs about 4000 staff.

    The site at 198-200 McDougall Street is in the medium impact industry zone as defined by the Toowoomba Regional Council.
    Building supplies outlet opens in Ipswich

    A PlastaMasta branch officially launched in Ipswich (QLD) in early July to serve local tradies and home handymen. Manager Wayne Knight told the Queensland Times:
    PlastaMasta Brisbane West is the next logical addition to our stores around the Greater Brisbane area.

    PlastaMasta has operated in Underwood, Toowoomba, Brisbane's northside, and the Gold Coast for 25 years. Mr Knight explains:
    PlastaMasta was established as a franchise; we own all of the stores. We are distributors of Knauf products and have an exclusive partnership with them.

    The business offers products such as wall and ceiling linings, using Knauf plasterboard, acoustic linings, cornice, compounds and plaster, metal profile, primer, sealants and a range of accessories.

    PlastaMasta works closely with builders and construction firms. It recently supplied products for the new state government building in William Street, Brisbane. Mr Knight said:
    There is a massive growth in the western corridor. Having a store in Ipswich makes sense, so that the product is close by. We have supplied product to local builders for years so this adds convenience for them.
    Companies
    Supplier update
    Gerard Lighting gets an investment boost
    HNN Sources
    Tap maker Sussex is a Melbourne-made success story
    JELD-WEN has acquired a Finnish manufacturer of interior doors and door frames
    Subscribe to HNN weekly e-newsletter
    A major boost for Gerard Lighting from two investment companies; tap manufacturer Sussex produces its inventory from its Melbourne sites; and Finland-based Mattiovi Oy is now owned by JELD-WEN.
    Restructure deal for Gerard Lighting

    Private equity-owned Gerard Lighting is set to see a recovery after key lenders agreed to a deal that will alleviate its debt burden.

    According to a report in the Financial Review, the company has entered into a restructuring agreement with Bain Capital Credit and Investec. This deal will see the two firms assume control of Gerard, which is the largest lighting distribution and partnership network in Australasia.

    The deal means Bain Capital Credit and Investec will invest $15 million in new equity, with representatives from both firms expected to assume board seats in the company.

    The Street Talk column in the Financial Review first reported that Bain Capital Credit increased its exposure to Gerard's debt stack, taking a $30 million loan from the leveraged finance arm of industrials giant Siemens.

    Bain Capital Credit's initial exposure to Gerard came when it bought GE Capital's Australian and New Zealand commercial finance business in 2015.
    Brief history

    Gerard Lighting is best known for brands such as Crompton, Sylvania, Pierlite and Moonlighting. The company operates in a competitive industry subject to intense pricing and margin pressures as imported products jostle for extra sales.

    It was founded by Alfred Gerard in 1920s when it was then known as electrical accessories business Clipsal. It listed on the Australian Securities Exchange in 2010 before private equity firm CHAMP successfully embarked on a $186 million takeover in 2012.
    Melbourne tap maker defies manufacturing trend

    Vanessa Katsanevakis heads up her family owned firm, custom tapware manufacturer Sussex, and first met Alan Wilson, founder and chairman of Reece, a decade ago. She told The Australian in an interview:
    My dad was still alive. Alan came out and visited us at our Somerton facility and got a factory tour. He wanted to see how we were still manufacturing in Australia.

    That was ten years ago. Sussex is best known for its classic Scala collection, and is quietly delivering double-digit revenue growth from three sites in Melbourne's north.

    In an era when Australian manufacturing is seen to be in crisis, Sussex continues to make all its products in Melbourne and is the only Australian tapware manufacturer operating its own foundry. Every step of the manufacturing process is performed by local workers.

    Celebrating 20 years in business this year, Sussex is now looking at exporting to Britain, Canada, Asia and the United Arab Emirates after recently launching sales into New Zealand. The move would see it double staff numbers to over 120.

    Ms Katsanevakis runs the company with her husband George. She said:
    Our growth has been in excess of 17% per annum now since the GFC. It will increase over the next few years. We currently have the capacity to double, if not triple, production.

    Ms Katsanevakis' father, Dutchman Nicolaas Johannes van Putten, a watchmaker by trade, moved to Australia from The Netherlands in 1960. He originally founded Sussex as a jewellery company but the business expanded to tapware in the 1990s. His mantra was to have a fully integrated business from foundry to end product, allowing Sussex to compete with Reece and a bunch of importers.

    For 10 years before the global financial crisis, the group had between 20% and 25% year-on-year revenue growth. But sales fell 30% during the GFC, just as Ms Katsanevakis was being encouraged by her father to take the reins of the business.

    Her brother (and only sibling) was not interested in taking on the role, so she was groomed to take over the company by her ailing father.
    My dad got prostate cancer, he took a step back and the business did plateau for a few years.

    Her father lost his battle with cancer in 2010 when his daughter was 28.
    It was such a tough time. My firstborn was seven weeks old when my father passed away. My husband had been in management at a steel fabrication plant. My dad gave him his blessing; he wanted us to take the business to a new level.
    My dad ran it like a hobby, he was brilliant at engineering and vision but he wasn't strategic in his approach.
    It was no option for us to take it over, we knew we had a special product and there was room to improve in the business. We cut our overheads and manufacturing costs by 15%.
    With time we saw the niche for customisation and we were able to offer that even further, with the 30 different finishes we now offer.

    Some of Sussex's main customers are women aged 35 to 50, a demographic Ms Katsanevakis can empathise with. She said:
    Customisation is our focus, and focusing on our niche. With the finishes we offer, imports can't offer that. We are local, we take each order as it comes and customise it. Gone are the days of plastic chrome tap products. Now it is brush gold, rose gold, black spouts, etc.
    Quality first is what has carried us through. Our focus is mid- to high-end because we can't compete at that lower end.

    Ms Katsanevakis said the focus of tap buyers has also changed in recent years. !Australian-made is back in fashion. It has done a full cycle. People care about that crafted and bespoke item that is handmade.

    While she worries about the next downturn, following the experience of the GFC, she sees no slowdown on the horizon.
    We are experiencing so much growth, and all the builders that we know say it is booming.

    And as she moves to take the company into new offshore markets, her father's legacy remains paramount.
    I will not let all the work my dad has done go to waste. My husband and I are passionate about taking this business to the next level.
    JELD-WEN makes another European buy

    Window and door maker JELD-WEN Holding has acquired a Finnish manufacturer of interior doors and door frames. The company did not disclose what it paid for Mattiovi Oy, which is privately held. JELD-WEN president and CEO, Mark Beck, said in a statement:
    The acquisition of Mattiovi strengthens our market position in the Nordic region and enhances our unique pan-European strategy.

    The company has actively expanded its global footprint in the last two years. Mattiovi is JELD-WEN's seventh acquisition and the second in Europe during the period. Europe is one of the company's largest markets, generating revenue of USD242.3 million in the first quarter, more than a quarter of its total revenue, according to the company's financial statement released on May 9, 2017.

    Based in Charlotte, North Carolina, JELD-WEN is one of the world's largest door and window manufacturers. It operates 115 manufacturing facilities in 19 countries.

    In January, JELD-WEN went public and priced its initial public offering at USD23 per share for a total of USD575 million.

    The company expects the acquisition will be accretive to its earnings this year. Previously, it estimated 2017 EBITDA would range from USD440 million to USD460 million.
    Bigbox
    USA update
    The Home Depot buys Compact Power Equipment
    HNN Sources
    eBay's divisional merchandise manager - home and garden for eBay will present at the eRetailer Summit
    Canada's Home Hardware embarks on a new project
    Click to visit the HBT website for more information
    Home Depot agrees to purchase Compact Power Equipment which is set to improve its customer experience for professionals; the Home Improvement eRetailer Summit will be held in September 2017; and Canada's Home Hardware emphasises projects in its new advertising campaign.
    Home Depot buying tool rental company

    The Home Depot is acquiring Compact Power Equipment, a provider of construction and landscape equipment rental and maintenance services, in a USD265 million cash deal.

    The deal bolsters Home Depot's position in the market for equipment rental to both professional and do-it-yourself customers. Home Depot CEO Craig Menear said in a statement:
    The acquisition allows us to further improve the customer experience - in particular for pros - through enhanced equipment and tool rental offerings. It also allows us to grow Compact Power's best-in-class building services capabilities.

    Compact Power Equipment has been a business partner of Home Depot's since 2008. The companies' partnership began with three pilot equipment centres at the retailer's Charlotte, North Carolina stores. By 2015 it had grown to 1,000 Home Depot stores across the US and Canada.

    Home Depot said the cash acquisition would close in the company's fiscal second quarter.

    Revenue for the U.S. equipment rental industry was expected to increase by 3.4% to USD49 billion in 2017, based on an American Rental Association report conducted with IHS Markit. Tool rentals are expected to grow by 4.3% annually from 2016 through 2020, according to the projection.

    The deal is Home Depot's first big acquisition since August 2015, when it acquired Interline Brands Inc. for USD1.7 billion to establish a platform in the maintenance, repair and operations (MRO) market where it primarily serves institutional customers (such as educational and health-care institutions), hospitality businesses, and national apartment complexes.

    Also in 2015, Home Depot acquired HD Supply Hardware Solutions, known as Crown Bolt, a leading supplier of fasteners and builders hardware to retailers in the US. And in January 2014, Home Depot acquired Blinds.com, an online seller of window coverings.

    Compact Power is majority-owned by Canadian private equity firm Kilmer Capital Partners.

    Related:
    Home Depot buys Interline Brands - HNN
    Home Improvement eRetailer Summit expands focus

    Accelerating online sales in the home improvement retail space is the mandate of the second annual Home Improvement eRetailer Summit. This event, being held September 13 to 15, 2017, at the Rosen Shingle Creek in Orlando, Florida (USA) will feature a conference and networking opportunities for vendors and e-commerce retailers.

    The purpose is simple: to help the hardware and tools, home decor, paint, housewares, lawn and garden, outdoor living, and flooring sectors develop winning e-commerce strategies. This year's event will also include housewares and kitchenware, furniture, and large appliances.

    The highlight of this year's eRetailer Summit is an "e-commerce boot camp" to learn best practices from leaders in the online selling marketplace. The conference will be capped by a presentation by Alyssa Steele, divisional merchandise manager - home and garden for eBay.

    A logistics Q&A will examine the demands being put on the delivery aspect of online sales. Event founder, Sonya Ruff Jarvis from Jarvis Consultants said:
    Online housewares sales are hot, and large home goods have historically been considered too large or unwieldy to sell online. We want to make sure retailers and vendors alike are on top of the trends affecting all these important categories.

    Retailers looking to understand the e-commerce space and vendors who wish to make real connections with leading e-retail decision makers will find this forum a way to meet, share ideas, and develop concrete strategies for growing online sales.

    About the Home Improvement eRetailer Summit.

    If you are interested, please contact Sonya Ruff Jarvis: sonya@eretailersummit.com.
    Home Hardware's "Here's How" campaign

    As part of its latest brand positioning, Canada's Home Hardware has launched a new campaign that shows a couple stepping into their new home and discovering all the projects they have ahead of them to fix the place up. They are able to tackle them, though, thanks to the supplies and advice they get from their local Home Hardware store.

    The retailer recently debuted its "Here's How" positioning, replacing the "Homeowners helping homeowners with expert advice" tagline it had used for nearly eight years.

    The core of the old brand positioning was that Home Hardware stores were a place would-be DIYers could get friendly, helpful advice from people living and working in their communities. The new campaign keeps that element of the brand's positioning, albeit in a more subtle way, with the spot ending with the tagline "Do it yourself doesn't mean do it alone." Rick McNabb, VP of marketing and sales at Home Hardware, said:
    The old positioning has been around for a while and it's served the company well, but it's a mouthful. What got us here is a higher level of customer care and going the extra mile. It's less about 'expert advice' and being more grounded in the experience our staff has and how helpful they'll be. 'Here's How' is not a radical departure from that, because that's our differentiation.

    Mr McNabb adds that "customer care" differentiation is important to maintain as a competitive advantage in a crowded category that also includes The Home Depot, Lowe's and Canadian Tire.

    The advertising agency, John St. has also created a series of short videos focusing on products exclusive to Home Hardware stores. That was a major part of Home Hardware's previous marketing efforts, and Mr McNabb said those efforts were successful in drawing traffic into stores.
    It's a traffic driver and differentiator, and the hope is we can get you excited about the other stuff in the store once you're there. But along the way, it can get you away from the notion of home improvement and you run the risk of becoming known as an 'exclusive item' brand.

    That's part of the reason why the newest campaign focuses on projects, as it allows the brand to show off every category it plays in and how it can serve any home improvement need someone might have. It's also applicable across the company's three retail banners: the typical, small-format Home Hardware, the larger Home Hardware building centres for contractors and large-scale projects and hybrid locations that tend to be located in more suburban locations. Mr McNabb said:
    We wanted a campaign that would be an overarching Home Hardware campaign that could speak to all of our banners and the different needs we serve.

    He adds it is also looking to speak a bit more directly to younger consumers, as Home Hardware's previous marketing has skewed older to a demographic that grew up with the brand and already has a high affinity for it.

    Products
    Cub Cadet expands Z-Force range
    A review of Cub Cadet's Z-Force SX 54 zero-turn manoeuvrability
    HNN Sources
    The LX 48 model has a 48" triple-blade cutting system
    Visit the Cub Cadet Australia website for more information on its lawn equipment products
    Click to visit the HBT website for more information
    Cub Cadet's Z-Force SX 54 is equipped with a 24 HP professional grade Kawasaki FR Series V-Twin engine. A 54" triple blade cutting system provides a wide cut, while its heavy duty welded steel frame gives the SX 54 a long life.

    The SX 54 features a steering wheel with patented Synchro Steer technology, providing 4-wheel control to create genuine zero-turn manoeuvrability and a PTO clutch, utilising electronic fingertip engagement. It also has a high-back elasticity vibration control suspension seat with armrests, which minimises fatigue and reduces the likelihood of back pain after sustained use.

    Similar to the SX 54, the LX 48 operates on a 24 HP professional grade Kawasaki FR Series V-Twin engine. A slightly smaller 48" deck allows users to navigate narrower terrain, while zero-turn capabilities maintain the same level of agility as the SX 54.

    Operated via a lap bar, the LX 48 is constructed from the same heavy duty steel frame as the SX 54.
    Products
    Meeting weeding needs
    The Fiskars Xact Weed Puller is featured on the Bunnings website
    HNN Sources
    A video of Xact Weed Puller is also on Fiskars' YouTube channel
    Specifications for the Xact Weed Puller on the Australian website
    Click to visit the HBT website for more information
    The Fiskars Xact Weed Puller means it could be time to ditch the potentially harmful chemicals in herbicides to eradicate weeds. The tool can help alleviate the effects of digging, bending, and backaches.

    Engineered to facilitate easy removal of root weeds, the Xact Weed Puller is ergonomically designed, and allows users to tackle weeding jobs of any size. A 1m reach means users don't need to be on their hands and knees in the garden, while the stainless steel prongs will penetrate the earth, grip the root firmly, and remove the weed.

    An innovative weed ejection system means end-users never have to bend over to remove the weed from the tool. Specifications include:
  • Dimensions - Height 1000mm
  • Weight - 950g
  • Material - Aluminium shaft/stainless steel
  • Warranty - 25 years
  • Products
    Drill uses advanced intelligence
    A video of the Worx Ai Drill
    PR Web: Worx
    The ToolGuyd website reviews the Ai Drill
    Worx said its Ai Drill is almost intuitive
    Click to visit the HBT website for more information
    Worx senior product manager, Jeanne White, said advanced intelligence can be defined as the capability of a machine to imitate intelligent human behaviour. This is just what the company's engineers had in mind when they created the Ai Drill. She said:
    The Ai drill is almost intuitive. It's so easy to use that first time users and do-it-yourselfers will breeze through home and craft projects.

    The Ai Drill has three drive modes including drill, SafeDrive and PulseAssist, which are activated by touch sensitive keypads on the top of the drill.

    BitLock is another key feature of the Ai Drill. Load a drill or driver bit into the tool's chuck, and its motorised jaws tightens and self-centres the bit, and does it with 30% more torque than hand tightening, according to Worx. The motorised jaws also run in reverse to release the bit when it's time to swap bits or for storage. To engage BitLock, users simply turn and hold the collar ring until the chuck's jaws have tightened or loosened the bit.

    The Ai Drill has no clutch settings. It relies entirely on the tool's internal electronics to safely drill holes, drive and remove screws, regardless of the work material.

    When SafeDrive is selected, it delivers just the right amount of torque necessary to drive the screw and then backs off once the screw head is flush with the surface.

    With PulseAssist, the Ai Drill applies enough bit rotation to drive the screw snug to the surface without over-tightening or stripping the screw head. This feature also works in reverse to back out stubborn screws without damaging the screw head. The drill moves at a slow, optimal speed so it doesn't strip screws.

    The 3.1lb or 1.4kg (with battery) Ai Drill is powered by a 20V MAX 1.5 Ah battery. The battery is compatible with other Worx 20V MAX batteries used in WORX DIY and lawn and garden tools. It is also part of Worx 20V PowerShare program.

    The MAX battery recharges to full capacity in approximately five hours. The drill has a low battery capacity indicator. When the battery's power runs low, the drill's LED light flashes.

    The single-speed (0-800, no-load) drill has a 3/8 inch chuck. It is capable of handling a variety of drilling and driving jobs with 180 in./lbs. of torque. An integrated LED light illuminates the work area and is activated by pressing the trigger. The tool's drilling capacity is 1-inch in wood and 3/8 inch in mild steel.
    News
    HI News V3 No. 7: Bunnings Strategy Day
    Download the latest issue of HI News Vol. 3, issue no. 7
    HI News
    http://hnn.bz/bunnings-99-chainsaw.jpg
    Graph of historical data for DuluxGroup's paint segment
    Click to visit the HBT website for more information
    The latest edition of HI News focuses on the major corporates in Australian hardware/home improvement retailing: Bunnings and DuluxGroup.

    Simply click on the following link to download this edition:
    HI News V3 No. 7: Bunnings Strategy Day

    In terms of independent retailers, Tasmania-based Kemp & Denning (K&D) has sold its trade business to Clennett's Mitre 10 and Newcastle's Toolies store is closing down.

    Our regular section on statistics takes a look at the entries and exits of Australian businesses to see how hardware retailers and general retail is faring.

    Klein Tools has acquired General Machine Products and in other US news, Sears is suing another tool maker.

    Also, US home improvement retailer Lowe's outsources some of its tech jobs to India while experimenting with exoskeleton suits for store staff; Ace Hardware wins again on customer satisfaction; and True Value delivers its first quarter results.

    In the UK, Bunnings opens its third store, names more locations and appoints a COO.

    Product news in this issue includes the launch of graphene paint in the UK; a roofing tool that has been developed in WA; and the Everdure range of BBQs winning a prestigious Australian design award.

    Other products featured are the Worx BladeRunner X2 portable benchtop saw and Loctite RE-NEW adhesive.
    Editorial
    Wesfarmers-Bunnings Strategy Day
    Michael Schneider, CEO Bunnings
    Wesfarmers
    Bunnings display of special order products. These can be ordered online
    Bunnings has introduced a $99 electric chainsaw
    Give to Amnesty International
    Each annual Wesfarmers' Strategy Day, from the perspective of reporting on Bunnings, tends to fall into one of three categories. Type A is when Australia's largest home improvement retailer is making an investment in something controversial - such as when it radically expanded its store network in response to the challenge from Masters Home Improvement - and needs to both announce this and defend it under questioning from investment analysts.

    Type B is when Bunnings is doing something a little controversial, but not very obvious, so the company can get it past the analysts by either not emphasising it, or by making it seem as though something else is being referenced. Type C is when some other event has occurred outside of Wesfarmers that has captured the analysts' attention, and coloured their attitudes and questions.

    This year's Strategy Day, held on 7 June 2017, was mostly type C, with a dash of type B added. The exterior event that captured the attention of the analysts was the imminent arrival of the world's largest online retailer, Amazon, to the Australian market. Analysts came close to suggesting that some of Wesfarmers' divisions, in particular its still-failing mid-range department store Target, were unlikely to survive the arrival of Amazon in the Australian retail market.

    Bunnings did not come in for that level of questioning, but analysts did push to understand what the retailer's online strategy would be over the next two to three years.

    All this is to say that it's always a good idea to keep in mind that "Strategy Day" goes both ways when it comes to Wesfarmers, and particularly Bunnings. Analysts do get an opportunity to ask more questions, the company does present more of the fundamentals of its plans for the next year or two years. However, Wesfarmers has always been adept at concealing elements of its strategy from competitors. It's not uncommon to find that a little less has been said than at first seemed to be revealed. And on occasion, what seems to have been said is not quite what was really said.

    That's one side of the Strategy Days. The other side is that, especially for Bunnings, the top executives do deliver some of the most dense, and at times the most profound, statements about the basics of how these businesses intend to operate. They can often be a kind of very modest, but nonetheless ambitious, operational manifesto.

    For Bunnings, these manifesto-like statements reference what is perhaps the deepest part of its DNA. Bunnings' most closely held belief, as nourished by its former CEO, John Gillam, is that "nothing is deserved, everything must be earned". The Strategy Day introductory statements are, at their heart, a reiteration of this belief, and a careful listing of the ways in which, in the coming financial year, the retailer intends to (again) earn the trust, loyalty and engagement of its customers, its staff and its suppliers, as well as acceptance by the communities in which it operates.

    The manifesto delivered this year by Michael Schneider, who has replaced John Gillam as both managing director of Bunnings Australian and New Zealand (BANZ), as well as overall CEO of Bunnings, including Bunnings UK and Ireland (BUKI), was particularly dense, and deserves close parsing and interpretation. In HNN's view it presages some more difficult times to come for not only Bunnings, but also for home improvement retail in general.
    Smaller stores

    Before getting into this deeper view, it is best to start with something on the lighter side of the Bunnings presentation. As remarked above, while this Strategy Day was largely a type C affair, there was a dash of the type B, which in this case is all about a little bit of "misdirection" by understatement.

    We saw something of this in the response to what was a good question from respected analyst David Errington, Bank of America Merrill Lynch, Research Division - Head of Consumer Research for Australia and Asia. Mr Errington asked:
    The one area that I've really been interested to watch in the last five years is the flexibility in your format. I mean, John [Gillam] always used to say, and you used to say, you're not a cookie cutter, but you're taking that to new dimensions like the Collingwood store. With the carparks all around the place, it didn't seem to be a typical Bunnings, but you seem to be a lot more flexible now in where you're putting stores. You can put car parks on the roofs. You can put them underground. You can do anything you like.
    What's the sales density of these new type of formats? Are they comparable to a typical 15,000 to 20,000 square metre one out in the sticks or - and do they - what sort of return metrics are they? And going forward, what sort of proportion are we going to see with these new type formats that are outside of the norm of what we expect the Bunnings Warehouse to be?

    Mr Schneider replied:
    The Bunnings stores we open - so Bunnings Warehouse will always be the big box, big stock, big box, stores that you know. And the Bunnings stores are our small format.
    For a long time, we had formed a view that the future was only warehouses. We revised that in the last probably six or seven years, to say the small formats play an important role. They play a role in going into a market to get the communities to having a Bunnings store in the area before you migrate to a warehouse. We've done that a few times where we have them, with the feeling 'well, we couldn't get anything else in Collingwood.' So we took the old credit building and turned it into a Bunnings store.
    So from a format point of view, I'm pretty agnostic. I think if we can get the numbers to sort of work, and Richard [Goyder] and Terry [Bowen] touched on some of the sort of modelling that we do, then we can get in and get going. It's great, and some of them are good infill, particularly as traffic in major cities gets worse on weekends, and they're very convenient during the week for charities to drop in and get the things that they need. In terms of productivity, they perform really well. Some will be better than others and some of our warehouses also have high stock turn.

    Well, there is nothing wrong with that response. However, the underlying reality is that Bunnings is engaging in some really experimental new formats, such as the store it has proposed for the inner-Sydney suburb of Rozelle.

    Where the Collingwood store does a good job of compressing the content of a Bunnings Warehouse to a "pocket edition" that covers most of the needs for that area, the proposed Rozelle store would seem, based on its plans, to offer lower stock density and more amenity in an urban environment. It even includes a turntable in the delivery area, to reduce the problem of turning trucks in urban traffic:
    Service vehicles (up to 12.5m long) will be provided with a turntable to turn within the site enabling them to enter and depart in a forward direction and these vehicles will approach along Parsons Street from Crescent Street and depart along Parsons Street to Mullens Street.

    It is a quite radical, and very interesting idea.

    Any other retailer - just about - in Australia, given this question would have gone on about these new formats, what the company plans to do with them, their potential, other plans under development.

    But not Bunnings. Not Bunnings, because the retailer simply does not see any real advantage in doing so. All it would be doing, we expect the Bunnings' view would be, is to increase expectations, telegraph strategy to competitors, and possibly increase local resistance to the development application.

    In the end, if the store gets approval (the first version was rejected), the store will be built, and it will be judged on how it justifies that investment and satisfies the needs of its customers.

    The next bit of this conversation with Mr Errington is just as masterful. He asks another very good question:
    But going forward, say if your next 100 [stores], which arguably ... could be the rolled out in, say, five or seven years, how many of those would be warehouses compared to how many would be these infill type stores?

    That question is fielded by Justin Williams, the incoming chief financial officer for Wesfarmers (replacing Terry Bowen):
    Majority is still warehouses. It's still the preferred format, but where there's opportunities, where there's markets, as I said, where it's rightsized, then we take advantage of that flexibility.

    The majority. If 100 are built over the next seven years, that's...well, it's 51, isn't it? Once again, the company answers, but it doesn't advertise its strategy, or limit its future options by much.
    The manifesto

    After carefully reading the introductory comments that Mr Schneider made at the Strategy Day, HNN has reached the conclusion that the Bunnings strategy for FY2017/18 - and possibly beyond that - is based on expectations of a flat to slightly reduced market for home improvement goods and services.

    This does not mean that Bunnings is suggesting or forecasting a reduction in either revenue growth or earnings before interest and taxation (EBIT) growth. It does mean that the company will likely be making some changes to strategy and its approach to ensure it does deliver its expected good growth results.

    Probably the most significant data point which could suggest this is Mr Schneider's careful description of the opportunity he sees for Bunnings arising from the exit of Masters:
    In the last 12 months, we've seen some fairly significant change in the market with one large competitor closing down.
    Accounting for range overlap, the differential in average pricing and the role of competitive marketplace on those dynamics, we see some opportunity for growth, but at a much more modest level than some analysis has suggested.

    In fact, the number that Wesfarmers has suggested is 20%. The company is stating that Bunnings will pick up only 20% of the revenue that was going to Masters while it operated.

    This gave rise to some questions from analysts. Bryan Raymond from the Research Division of Citigroup asked:
    On the residual sales you expect to pick up from Masters' closure, I'm just interested in your workings how you got to 20%? It seems, given the crossover that amounts to 70% to 75% of the overall range, it seems like a relatively low number. I would be keen on [understanding] ... how you got to your 20%.

    Mr Schneider handed over to Mr Williams to respond.
    Yes, 20%, consistent, obviously, with our market share, and it sort of really reflects the competitiveness of the industry. As Mike's slide showed, there's a myriad of competitors out there.
    So, the sales were built up. They came from a large number of competitors, and it make sense that they would be shared back between that similar suite of competitors. We don't expect to pick up large numbers of those sales. The industry is much more competitive than that. That's the reality of the industry, it's highly competitive.

    Mr Schneider then picked up on this answer:
    And probably on a unit basis, we - if you thought about gain on a unit basis, it might be a bit higher, but we've also invested significantly in price and we also recognise that there was a price differential between us and that business.
    So if you normalise some of that, if you - how many hammers you're selling, as an example, it might be more than 20%. But in dollar terms, that's sort of where we see it planning.

    He is suggesting that a Masters' customer might spend $199 on a cordless power tool, but an equivalent power tool might cost only $189 at Bunnings, so a 5% reduction in revenue would be built in.

    It fell to Richard Barwick, an analyst with CLSA's Research Division to ask a key follow-up question:
    I think your comment, Mike... was it "lower than some analysis that's out there"? Is that code for "the market's expecting too high sales in Bunnings over the next 12 months"?

    Mr Schneider clearly denied this:
    I don't think that we'd sort of suggest that for a second, I think it's really just about trying to make sure that we can give all of you and everyone listening in sort of a good sense of the mechanics and how we've worked out our numbers.

    Without the kind of modelling Bunnings can do on its own business, but thinking through typical customer interactions and the dynamics of the market, it is just really hard to get to the 20% number for the transfer of sales from Masters to Bunnings.

    The narrative that Mr Williams and Mr Schneider are suggesting is that a customer back in 2014 stops going to his or her local Thrifty-Link for drill bits, sandpaper, paint, nails, hammers and mitre saws, and switches to a nearby Masters. Two years later, after Masters closes, he or she then says "Righto!" and shows up back at the Thrifty-Link.

    In support of this, there are, of course, some people who just do not like Bunnings, and will not shop there. But so strong a preference is quite rare. It seems that, in general, a more likely narrative is that customers who have previously sought out a big-box experience by shopping at Masters will, when Masters closes, transfer their purchases to the only other big-box in the market, Bunnings. This is especially the case given that some Masters stores are within 100 metres of a Bunnings, and most others tend to be less than a five-minute drive away.

    Again, though, allowing for a two-month aftereffect of the Masters liquidation sale on the market, Bunnings does have modelling not only for March of the previous quarter, but probably for April and May as well. That is "low season" modelling, but it would still be telling.

    HNN's prediction, in line with other analysts, was around a 60% pickup for Bunnings of Masters customers. We could assume that is too high, and 50% is more likely. Given that, the only way that HNN can make sense of this prediction is to suggest that what is going on is that the Masters market (which was tilted towards more affluent consumers) will itself see a contraction, of around 35% over the FY2015/16 demand. Combined with a (to be generous) 10% price difference, that would mean overall potential demand was 90% of Masters demand, further reduced to 58.5% by a decline, with Bunnings then picking up, overall, around a 29% gain.

    Of course, all this eventually just becomes a game of numbers and assumptions. If we are lucky, five or more years from now we'll be able to look back and have some clarity about the shape of the market.

    What is very clear, however, is that the outlook is essentially pessimistic. Neither Mr Williams nor Mr Schneider is saying "Well, there was an 8% differential in price between Masters and Bunnings, but that will be wiped out through increased demand".
    Competition

    The exchange reported above also brings up another feature of Bunnings' presentation at the Strategy Day. The reason why Bunnings will get less share of Masters' revenue is, Mr Williams tells us, the competitors in the market.

    Mr Schneider made repeated references to competition in his prepared remarks. A standard slide Bunnings uses in its presentations showing the logos of its competitors has swelled considerably to include about 200, where in the past it listed a more modest 60 or so.

    He began by stating:
    ...as competition increases and the broader addressable market is further explored, we must ensure we're listening closely to what our customers are asking for as well as evolving our offer to reflect the changing landscape of our industry.

    His fullest statement about competition came mid-way his remarks:
    In stark contrast to what many people talk about, we see and experience a market that's incredibly competitive. It has a wider range of specialists, mass merchants and category killers. Whilst many have a strong physical offer, many others have a strong online presence, and increasingly, we're seeing both. By focusing on ensuring we have a winning offer and drive our real focus on having the lowest prices, we continue to work really hard to ensure we have the products, the prices and the service that allows us to compete effectively regardless of format.

    Later he stated:
    We take no competitor, and I mean no competitor, local or global, physical or digital for granted. We are never complacent. If we ought to be successful, we must continue to give great value and fantastic experiences to our customers, and in doing so, be chosen by them.

    These remarks are, on face value, quite true. Competition has increased in the home improvement market. The main independent hardware groups, chiefly Metcash's Independent Hardware Group (IHG), and the smaller Hardware & Building Traders (HBT) as well, have realised that whatever other advantages they offer, they need to start by having the best supply chain possible. Beacon Lighting has optimised its business, Reece continues to dominate some sectors in bathrooms, and retailers such as Sydney Tools offer low power tool prices online, and are expanding their physical presence.

    However, it should be noted that the main reason why Bunnings has so many competitors in so many markets is that it keeps entering new markets, and taking considerable market share away from the incumbents. A business will certainly gain competitors through that strategy, but it is not as if it is beset by competitors popping up out of nowhere.

    It is possible that both in these remarks, and in its remarks about gains from Masters, Bunnings is dealing with a concern that the Australian Competition and Consumer Commission (ACCC), which has been active recently in the home improvement sector, might be wary of how much market share the retailer has now gained. Even a simple suggestion by the ACCC that Bunnings should limit its future expansion could be damaging.
    Leaner times

    While concerns about some kind of regulatory intervention may have shaped a narrative that sees Bunnings depicting itself as a little less strong than it really is, HNN does still believe that underlying this is a genuine concern about a weakening home improvement market.

    Bunnings would not be alone in this. The Housing Industry Association (HIA) is forecasting (as of 8 March 2017) volume growth in renovations of 2.0% in 2017/18, and 2.7% in 2018/19. The Reserve Bank of Australia (RBA) has also suggested that the "interest rates and equity windfalls" may be balanced by increased concern over the future. Writing in its "Statement on Monetary Policy" for May 2017, the RBA noted:
    A substantially weaker housing market could have broader implications, including slower growth in consumption and dwelling investment than expected.

    The way in which the company looks at gains from Masters' exit wasn't the only indicator of a Bunnings strategy geared to delivering ongoing growth in a down market. In the opening part of his prepared statement, Mr Schneider made reference to delivering:
    ...strong and sustainable returns across a variety of economic conditions. Working to stay nimble and responsive to what our customers are looking for is evident in the consistent track record of performance that Bunnings has continued to deliver.

    In addition to this slightly unusual comment, there are three areas of focus that come up which indicate Bunnings may be gearing up for tougher times.

    The first is an increased focus on existing customers, over gaining new ones. This isn't to say that Bunnings is not also seeking new customers and new markets, but where in the past that was a primary focus, the focus seems to have shifted to engaging more with customers the retailer already has.

    The strongest statement about this Mr Schneider made was this:
    Unsurprisingly, our strategic agenda remains the same. A deep and strong focus on the lowest prices, the widest range and the very best of service. In doing this, we ensure we remain absolutely focused on creating value for our customers over the long-term, and supporting these with physical and digital experiences that create inspiration and confidence to take on many types of DIY projects and do them in ways that create real values for the customers who do them. If we do these things, as I said, we get to be chosen more often, hoping to not only expand the market, but the degree to which we get to participate.

    This is a well-known strategy for dealing with flat or declining markets. Gaining new customers in new markets carries upfront development costs, which can take a year or two to recapture. Convincing existing customers to buy more or from a wider variety carries lower costs.

    The second element is what Mr Schneider has termed "better use of capital".
    Bigger products and the changing technologies, store formats and the ability to use our capital more effectively to create better, even more convenient store offers or being more productive to invest in more value for customers.

    Later he states:
    Supporting this, we'll continue to improve operating efficiencies, lowering both our operating and capital spend on a per-project basis, meaning we can drive our growth agenda even more efficiently.

    Referring to new stores and the rollout of new store formats, he said:
    Trials across the last year on using capital more effectively and efficiently in these sorts of projects has been really pleasing to us and will form part of their model going forward, which enable us to do even more work with less capital.

    In a down market, conserving capital is very important to providing good performance numbers. This is especially the case with Bunnings, which as a service/retailer, judges its performance using return on capital (RoC), rather than, say, return on net assets (RONA), which is more common in manufacturing.

    Finally, there is Mr Schneider's focus on efficiency. This is an area where he has long been acknowledged as an expert. The recent shift in Bunnings Warehouses to combine the kitchen ordering, special orders and information desk into a single staffed in-store unit is typical of the clarity he and his team bring to this task.

    Mr Schneider is also an enthusiastic supporter of using technology to improve both efficiencies and customer experience:
    We're finding even more ways of using our tech platforms to improve efficiencies in the business from HR to supply chain to in-store tools to make our business even easier to run.

    And:
    Simplifying processes, using apps and other technology, such as mobile point-of-sale will ensure even faster and more enjoyable experiences in store.

    It goes almost without saying that pursuing efficiencies is a really key strategic move in a down market. It is a fundamental to ensuring growth continues.
    Community

    Not associated with market conditions, this was perhaps the most surprising feature of Mr Schneider's address: he re-emphasised the need for Bunnings to be more engaged with the communities in which its stores operate. The word crops up no fewer than six times in what he had to say.
    By working hard to be trusted by our team, our customers, suppliers community and of course, the wider market, we continue to ensure that the sincere and genuine way we participate in both the broader market and local communities is maintained. And the customers are willing to choose to shop with us because they understand and they appreciate it.

    Later he said:
    And our plan reflects this. It focuses on even better experiences for both our commercial and consumer customers and in the communities, which our stores are and our teams live.

    As well as:
    Speaking about stores, the unique environment of our stores is something that we know our customers really enjoy. And doing more to bring our stores to life and participate even more in the community in which we operate will be core to the engagement we want to continue to build with our customers.

    HNN is sure that Mr Schneider and his team, like all good retailers, has a strong and genuine desire to engage with the communities where he does business, in a way which reaches beyond the store itself. It could be equally true, however, that the campaigns run by small retailers of all types is having some effect on customers' attitude to shopping at larger, corporate-owned stores.
    Product lines

    In terms of hints as to what new product developments can be expected from Bunnings, the slide presentation did call out a new outdoor power equipment offering from Honda. It also suggested that Bunnings would be continuing to market smarthome, LED lighting, and assisted living items for ageing Australians.

    Perhaps one of the more interesting hints at what is coming is a couple of references Mr Schneider makes to "big products":
    We'll continue to expand our reach through rolling out an online offer that supports and grows our already substantial special orders offer, enabling customers to buy large products in areas, such as playgrounds, sheds, outdoor structures, mature trees, bulk landscape, all of these in an online platform.

    This is only part of this article. To read the remainder, please click on the link:
    HI News Vol. 3 No. 7: Bunnings Strategy Day

    Until next time,

    Betty

    You can contact me directly via email betty@hnn.bz or Twitter @HNN_Australia

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    HNN iPad App
    Companies
    DuluxGroup results FY2016-17 H1
    Results for DuluxGroup first half 2016/17
    HNN Sources
    Graph of historical data for paint segment
    Dulux gets star billing at Fagg's Mitre 10
    Subscribe to HNN weekly e-newsletter
    Australia's DuluxGroup Limited (Dulux) has announced its results for its FY2016/17 first half, which ended 31 March 2017. (DuluxGroup is not associated with AkzoNobel which markets the Dulux brand in Europe, nor with PPG, which markets the brand in the US.)

    Overall sales revenue was $881.2 million, up by 3.54% on the previous corresponding period (pcp) which was the first half of FY2016/17. Earnings before interest and taxation (EBIT) also grew, climbing by 7.83% on the pcp, to reach $106.0 million.

    (In fact, as Dulux chose to list its payment of $540,000 to the Australian Competition and Consumer Commission in November 2016 under expenses, it's arguable that the company's true performance EBIT should be $106.5 million.)

    Nominal net profit after taxation (NPAT) was $72.7 million, up 14.13% on the pcp. However, this number includes the writeback of an outstanding tax provision worth $3.1 million. Setting aside the writeback, NPAT would be $69.6 million, a 9.26% increase on the pcp.

    Dulux's paints and coatings segment reported sales revenue of $473.7 million (including inter-segment sales). This was an increase of 4.69% on the pcp. EBIT for this segment was $88.5 million, up 7.14% on the pcp.

    In the media release that accompanied the results announcement, Dulux's CEO, Patrick Houlihan, was reported as saying:
    This is a high quality result, driven by strong profit growth across all of our Australian and New Zealand businesses. The strong Dulux ANZ result reflects strategic decisions we made a few years ago to align with key retail channel partners, consumer-driven preference for our premium branded products and our longer term strategy to broaden our coatings portfolio.
    We have an excellent portfolio of businesses that have a track record of providing our shareholders with resilient growth. Looking forward, we see multiple streams of growth both domestically and offshore.
    Results overview

    The Dulux results were fairly positive for a paint and coatings company at this particular stage of its development cycle. Sales revenue growth was positive but low, reflecting environmental factors and internal strategies, while EBIT growth was much stronger.

    The external factors included the discounted sell-off of competing products during the company's first quarter, as Masters Home Improvement exited the market, and wetter than normal weather during the prime exterior painting season during spring 2016.

    The internal strategic factor was the decision to raise prices as the company released a range of new products in the second half of calendar 2016. This contributed to better profitability, reflected in both EBIT and NPAT, but may have inhibited sales growth.

    Despite the positive results, the investor presentation saw investment analysts somewhat more assertive in tone during the Q&A session. One reason for this is possibly that, with a slow-down in residential construction likely for the second half of calendar 2017 and all of calendar 2018, analysts were exploring if Dulux will be, as the company suggests, largely immune to this change in the market, due to its low dependence on new construction.

    While it is often the case that renovation activity increases when new house construction and sales decrease, it is also possible that the housing market reset Australia seems headed for may alter homeowners' relation to their dwellings. This could see reduced overall spending on housing, with some of this going instead to other discretionary categories, such as travel and entertainment. This is not delayed spending, it is revenue exiting the sector.

    Additionally, with the a strong move to consolidation in the global paint industry, as Sherwin-Williams completes its acquisition of Valspar, and PPG continues to pursue AkzoNobel, Dulux itself could become a takeover target within the next two years.

    HNN will return to these matters at the conclusion of this report. We begin with an overview of the company's four main segments, before looking at some macro aspects of the overall business, and Dulux's predictions for the next half and beyond.
    Paints and Coatings ANZ (Dulux)
    Overview

    This segment includes: Dulux decorative paints, woodcare, texture, protective, powder and industrial coatings in Australia and New Zealand for both consumer and professional trade markets.

    For this segment, retail paint sales make up 36.8% of revenue (21% all revenue), trade paint sales make up 38.5% of revenue (22% all revenue), and specialty coatings make up 24.7% (14% all revenue).

    In market terms, 65% is paint for maintenance and home improvement; 15% is related to new housing; 15% is for commercial and infrastructure construction; and 5% is for industrial use.

    Dulux states that is has approximately 46% to 47% of the "measured" paint market overall in Australia. The company states that decorative paint makes up 60% of what it sells, and the other 40% consists of speciality coatings, such as Dulux Metalshield, Dulux PRECISION, and Dulux Protective Coatings. (HNN assumes these are volume figures.)

    Dulux stated that the renovation and repaint market declined by 1.5% during the reporting period. (This decline was in the "sell in" market, from supplier to retailer.) This was due to wet weather and the effects of Masters' stock liquidation. New housing, which represents 20% of the paint market volume, grew by 5%, while commercial construction, which represents 5% of market volume, grew by 4%.
    Results

    Setting aside inter-segment (same company) transactions, revenue for this segment for the reported period was $472.3 million, an increase of 4.8% on the pcp. Including inter-segment transactions, the revenue was $473.7 million, up by 4.7% on the pcp. The segment revenue amounts to just over 53% of the overall Dulux sales revenue.

    EBIT for the segment in the period was $88.5 million, up by 7.14% on the pcp. The EBIT margin was 18.68%, up by 0.43% on the pcp. Dulux stated that net input costs were flat. An increase in the cost of titanium dioxide (TiO2) was offset by reductions in other costs, it said.

    Dulux breaks down its 4.7% increase in revenue for this segment as coming from four different sources. Overall market share grew by 2.0%, with all of that growth coming from the retail channels. The price increase delivered another 2%, with the increase around 5.7% on premium products.

    Additionally, New Zealand provided 0.2% of the increase, as its revenue grew by 10%. Finally, around 0.5% came from the growth of the overall market. Mr Houlihan commented that he estimated another 0.5% of market growth was wiped out by the liquidation sales at Masters Home Improvement.

    While Dulux's trade sales were only stable in overall market share terms, the company pointed out that paint supplied for the new housing market continued to grow sharply during the reported period. Dulux has only a 25% exposure to that market. So to maintain a stable trade share, this has to mean the company's net share of the trade-based renovation market would have increased.
    Commentary

    Introducing the results for this segment, Mr Houlihan stated:
    The modest market growth outcome reflected the last of the Masters liquidation activities, which adversely impacted sales-in activity into the retail channels in the half. Excluding this, we saw solid growth in other markets such as the do-it-for-me or trade part of the renovation market, new housing and commercial. We note also that sales-out demand through retail channels has remained solid. ["Sales out" refers to store to customer, rather than "sales in" stock purchases.]

    In terms of the ongoing effect of Masters on market size, Mr Houlihan pointed out that, as there was no longer a sell-in market into Masters, the apparent growth of the paint market might seem artificially reduced during Dulux's second half FY2016/17, as there would be less stock being held overall.

    A theme Mr Houlihan repeated several times in the presentation was that Dulux owed much of its growth to a good choice of retail channel partners.
    The positive share outcomes in Australia resulted from the decisions we made to align ourselves with the eventual winners in these segments, specifically Bunnings, Mitre 10 and Inspirations Paint Specialists.

    He added later, in response to an analyst's question:
    In terms of though the half just gone, all of the share growth came through the retail sector. So that decision to align with Bunnings, that decision to align with Mitre 10 and we've been for many years now aligned with Inspirations in the paint specialist channel, by backing those three market leaders who back us in those channels because our share in those is higher than our weighted-average share ... that's the fundamental thing driving the weighted average up. And at the same time, we've got the bias towards Dulux premium-branded products helping ultimately drive that consumption but adding to the price componentry as it goes, as well.

    Mr Houlihan also noted that the company's New Zealand operations were completing a realignment after being de-ranged from that country's Mitre 10 stores (which operate independently of the Metcash brand of the same name).
    We've... seen that business realign itself in the Paints business with Bunnings versus Mitre 10 in New Zealand, which is a separate identity to the Metcash-owned Mitre 10 here, it's now trending its way back towards similar EBIT margins to the overall Dulux ANZ segment. So certainly, it's providing profitable revenue growth, if I could describe it that way, and the fundamentals are very good there. But that's all we can comment on.

    Mr Houlihan later expanded further on the New Zealand operations:
    In terms of the exit out of Mitre 10 New Zealand, we're now in the half where we're clean in terms of comping half-on-half. So really, what you're seeing in this sort of new environment for us with what we've done there.
    On the retail side of the business, we are aligned with two key partners. We're aligned with Bunnings in big-box hardware, and we're aligned with Guthrie Bowron who are our key paint specialist partner, in the same way Inspirations is here in Australia. And as they are both growing, we've been able to drive growth through that customer alignment. Obviously, we have launched our products into New Zealand so we're getting that marketing innovation-led growth as well.
    But the trade market in New Zealand is an area where we have really, over the last 24 months, stepped up the investment. We have increased the number of trade centres we've got in New Zealand, we've refurbished some other ones and we relocated some. So I think we've taken our number of trade centres from in the order of low 20s now to high 20s. So that revitalisation of our trade network has also been one of the other levers we've been pulling, as well.
    Consumer and Construction Products ANZ (Selleys and Parchem ANZ)
    Overview

    This segment includes: Selleys adhesives, sealants and other household repair and maintenance products for the consumer and professional trade markets; and Parchem construction chemicals, decorative concrete solutions and related equipment in Australia and New Zealand.

    The market for this segment is 60% maintenance and home improvement, 30% commercial and infrastructure, and 10% new housing. Selleys delivers 60% of revenues for the segment (9% for all Dulux), and Parchem the remaining 40% (6% for all Dulux).

    While the demand fundamentals for Selleys remain strong, Parchem's engineering construction markets continue to decline, though Dulux suggests they have have reached bottom during the company's second quarter.
    Results

    Setting aside inter-segment (same company) transactions, this segment delivered $121.0 million in revenue, a decline of around 0.6% on the pcp. Including inter-segment transactions, the revenue was $125.8 million, up by $0.1 million on the pcp. Selleys alone achieved revenue growth of 4.4%, according to Dulux.

    EBIT for the segment in the period was $13.7 million, up by 10.2% on the pcp. The EBIT margin was 10.89%, up by 1.1% on the pcp. While Parchem suffered a loss in revenue, Mr Houlihan stated that it did grow in EBIT, due to a combination of cost reductions, and improved margins.
    Commentary

    Selleys continues to grow as a product line, according to Mr Houlihan.
    Selleys achieved good revenue growth of 4.4%, with particular strength in our key retail partners. We were particularly pleased with the performance of a number of our recent premium new products, including Selleys Storm, which has become a strong SKU for us.

    (Storm is a waterproofing sealant product that can be applied even under wet conditions.)

    Mr Houlihan pointed to several reasons why Parchem has continued to perform poorly:
    The top line for Parchem was adversely impacted by two factors: firstly, we have continued to fine-tune this business by exiting low-margin commodity products, such as concrete reinforcing mesh. This contributed about half of the revenue decline. Secondly, whilst engineering construction markets have continued to decline at double-digit rates, our core Fosroc construction chemicals business mitigated much of the decline through share gains.

    He clarified this statement later:
    Parchem has been progressively exiting low-margin businesses and increasing its focus on the core, profitable Fosroc construction chemicals business. Parchem is increasingly becoming a logical product extension to Dulux and Selleys in a similar vein, the Dulux Acratex or Dulux Protective Coatings businesses. We have recently migrated Parchem onto the Dulux ERP [enterprise resource planning] system to enable it to more effectively leverage our broader Dulux trade capabilities.

    This is an introduction to this article. To read the full article, please click on the link below to download the PDF edition of our magazine, HI News:
    HI News Vol. 3 No. 7: Bunnings Strategy Day
    Bigbox
    Big box update
    Bunnings will build a store across the road from Home Timber & Hardware in Katoomba (NSW)
    HNN Sources
    Development application for a Bunnings store has been lodged in Kingaroy (QLD)
    Lesso Home in Greenacre is located close to the Bunnings store but is only open to trade customers
    Click to visit the HBT website for more information
    Home store in Katoomba (NSW) will face direct competition from a new Bunnings; Kingaroy (QLD) is another location for Bunnings; Lesso Home is open to trade customers in Greenacre (NSW); Bunnings Colac is up for sales; and Shepparton store officially opens.
    Blue Mountains store close to Home

    Bunnings is building a store across the road from the existing Hudson Home Timber & Hardware store located in Wilson Street, Katoomba (NSW).

    The new Bunnings store has led to some concerns about whether the market in the Blue Mountains can sustain two large hardware outlets at all, let alone within metres of each other.

    Bunnings general manager - property, Andrew Marks, said the new store will be a "small format" model. He told the Blue Mountains Gazette:
    We generally find that there is ample room in the market for both larger and specialty providers. Almost everywhere we operate we have successful competitors located close by to our stores.

    Mr Marks also referred to environmental concerns which had been raised about the site, part of the Leura Falls Creek catchment. He promised that "measures have been put in place to ensure receiving waters of Leura Falls Creek are maintained at the highest standard". He said:
    We will continue to work with the builder to ensure there is no environmental impact from construction works in and around the site.

    The Bunnings store is expected in early 2018.
    Bunnings lodges DA for Kingaroy

    Bunnings is planning a $15 million store in Kingaroy (QLD), and has lodged a development application with the South Burnett Regional Council (SBRC) for the highway frontage site on the D'Aguilar Highway (Walter Road).

    If Bunnings' development application is approved by the SBRC, the development would go ahead within sight of the Sunshine Mitre 10 store in Rogers Drive.

    According to recent editorial in southburnett.com.au, the announcement that Bunnings has lodged a development application to build a new store in Kingaroy has provoked a mixed response.

    On the one hand, some residents welcome the news that Bunnings would like to open up a South Burnett outlet. They feel the chain will offer them better hardware prices, and see the announcement as a sign the region is moving forward again after several years in the doldrums.

    Against this, some other residents feel the arrival of Bunnings could spell the end of several other "home grown" small businesses that compete in the same market, and lead to an increase in unemployment.

    The last two big retail chains to open up in the South Burnett were Harvey Norman in late 2008, and Aldi in 2009. At the time both these stores opened, the population of Kingaroy's town area was about 9154; but by the end of last year it was 10,125, or about 10.6% bigger.

    A statistical snapshot based on data available shows the first three years after Harvey Norman and Aldi were both up and running, the South Burnett's unemployment rate was fairly stable at between 6.5 and 7.5%. This was despite the 2011 floods, the 2012 drought and the flow-on effects of the 2008 Global Financial Crisis.

    The editorial goes on to say that while it is likely the arrival of both these large retail chains did lead to the closure of some other businesses, the net effect of these closures on overall unemployment was negligible.

    In other words, any jobs that were lost in the businesses that closed down were made up for by the jobs the new retail entrants created.

    The arrival of these businesses also seems to have had no negative effect on the region's long term growth rate.

    If anything, their arrival could be a sign that the South Burnett is a market worth investing in for the future, and people willing to back that belief with bricks and mortar.

    It would be ideal if a large retail chain that didn't compete with any existing businesses, according to the editorial That would create new jobs that really were new, and add to the local retail mix that people currently have to travel outside the region for.
    Lesso Home Greenacre welcomes the trade

    Lesso Home has opened its first overseas complex in Greenacre (NSW). It is located in a 30,000sqm building in Mayvic Street, and is what the company calls a "one stop global building materials, home furnishings and hardware trade hub". It is just blocks from a Bunnings outlet.

    The Chinese firm is part of China Lesso Group Holdings Ltd which has more than 50 subsidiaries and 22 production bases in China, North America, Asia and Africa. It manufactures more than 10,000 different products and the Greenacre display space brings some of them together in one location, the company said.

    The Australian reported last year that Lesso is expanding into the Australian market after warning of challenging conditions in China. Victor Lin, vice-president of China Lesso Group, told the newspaper:
    Our offering in Sydney is a trade-focused outlet, rather than a consumer-focused outlet, that brings more choice to Australian businesses. China Lesso Group products are already widely available in Australia from a number of outlets and Lesso Home is bringing all these products under one roof.

    The Express had a preview of the centre before it officially opened. It said the complex has a large number of displays featuring most components needed to build or renovate, including bathrooms, kitchens, mirrors, furniture, flooring, lighting, windows and doors, shower screens, beds, furniture and electrical appliances.

    Unlike other retailers, Lesso Home Greenacre is only be open to customers with an ABN and for people who join up with a free membership.

    A spokesman for Lesso Home Greenacre told The Express the centre was designed for online to offline sales and the location was chosen because it was close to both logistics and the building industry. He said:
    So many people go to China to purchase and bring here but we've tried to bring the supply here. We want to work with local people and we want to support the local retail industry and bring some new products and building ideas into the market.

    The company said over 60 tenants are currently renting spaces within the centre.
    Home designers can bring their clients here and see what's on offer. It's something very different to what the Australian market has been doing.

    The group is planning to open another outlet in Australia in early 2018, focused on lighting and furnishings, and has plans for other home building offerings in the future.

    In 2016, China Lesso bought the St Hilliers Estate in the western suburb of Auburn and a major block of land in the outer suburb of Huntingwood East, which will serve as a longer-term distribution hub. Dr Lin said the group is "currently working on plans" for its Auburn site. Melbourne is also "high on the list" for further locations in Australia.

    The company's move into Australia could be driven by hopes of diversifying from manufacturing into e-commerce, after it set up the Lesso Mall platform in China in 2015.

    If the Lesso Greenacre centre pays off, it would be a blueprint for sites in other major cities in Australia and the USA, the Middle East and Asia.

    Related:
    Big box update: Another "threat" to Bunnings? - HNN
    Bunnings Colac store hits the market

    The sale of the Bunnings Warehouse in Colac (VIC) is expected to generate additional interest from international investors.

    The 6500sqm property at 130-138 Bromfield Street is located in the commercial centre of the Colac township and has a 10-year lease to Bunnings which has been operating from the site for the past two years.

    The 3912sqm Bunnings site nets $475,090 in rent and it will be sold with fixed annual rental increases of 2.75%, with options up to 2035. CBRE Melbourne agent Joseph Du Rieu said:
    We've seen first-hand over the last six to twelve months, the influx of Chinese investors into the retail investment markets ... it would suit a private investor or business owner looking for something they can put in the bottom drawer and not worry about for eight years.
    This is only the second Bunnings to sell in Victoria this year. The first one was in Bendigo for $14.5 million to a private, Melbourne-based family.
    The location is very strategic - directly opposite the new Colac Plaza - that's ultimately going to underpin the investment for years to come.
    Open for business in Shepparton

    In a few days since its opening, the new Bunnings store in Shepparton (VIC) has already had a few thousand people through its doors, according to complex manager Paul Connaughton.

    The $53 million warehouse store, is the second biggest in Victoria, and has an increase in range as well as depth of stock compared to its old location. He told the Shepparton News:
    People really have to come down and see the 18 kitchen displays and four bathroom displays, and take the time to walk through the six aisles of timber. The nursery is also the second biggest in the Victorian network with thousands of plants.

    Mr Connaughton said staff were proud to be able to offer the store to the people of Shepparton.
    We really look forward to servicing the Greater Shepparton area for many years to come.
    Retailers
    Indie store update
    K&D's trade stores are now owned by Clennett's Mitre 10
    HNN Sources
    Earlier this year, K&D announced store closures
    Toolies Tool Specialists in Newcastle (NSW) is closing down
    Click to visit the HBT website for more information
    Kemp & Denning's trade stores are now owned by Clennett's Mitre 10 in Tasmania and Newcastle's oldest tools and hardware store is closing down.
    K&D trade sold to Clennett's Mitre 10

    Clennett's Mitre 10 has bought the trade division of Kemp & Denning (K&D) Limited, expanding its trade store network in southern Tasmania.

    It leaves K&D with retail sites in Hobart and Cambridge. In recent months the company has closed its warehouse in Devonport and sold its Glenorchy site to developer Errol Stewart.

    Clennett's will take over three of the K&D trade sites - in Glenorchy, Cambridge and Kingston - and continue to serve all K&D trade account holders.

    The hardware retailer, which has sold timber and building supplies since 1885, presently operates at Mornington, Kingston and Huonville.

    The K&D operation at Kingston will be closed with the Clennett's site in Kingston being retained as the centre of operations for the region.

    A number of K&D employees will transfer with the businesses, adding to the Clennett's Mitre 10 trade teams.

    Clennett's Mitre 10 general manager Will Clennett said the venture would deliver benefits to customers and fitted with the company's vision to expand its trade business. He said:
    Relationships form a large part of our business and our absolute priority is to ensure we continue to service our existing and new customers to the same high standards that we're known for. We are also committed to working together with K&D management to recognise the significant contribution of the current K&D employees.

    K&D chairman, Greg Goodman added: "This opportunity follows a strategic review by K&D management to consolidate our business. Clennett's is a successful service-oriented business and has become synonymous with trade excellence. The team has built a remarkable reputation in servicing the trade and we're thrilled to come to this agreement and ensure continuity of supply for our trade customers. I'm excited for the ongoing opportunities for many of our employees to join a thriving trade business."

    Related:
    K&D loses CEO amid ongoing changes - HI News, page 14
    Indie store update: K&D store closures - HNN
    Newcastle's Toolies closes down

    Toolies Tool Specialists is the oldest independent hardware store in Newcastle (NSW), operating for 44 years. However owner Rob Chambers has made the difficult decision to close the business in the face of tough economic conditions.

    The store has been at its current site for 30 years, after Mr Chambers rescued it from liquidation in 2013.

    At the time, he was its general manager and couldn't bear to see it close, so he made the decision to buy it. He told SmartCompany:
    The process has been long and arduous - you can understand, as a business goes into liquidation or receivership there's not much left in it. But I had to try to rescue it, it really is an iconic business in Newcastle.

    The decision bought Toolies another four years serving the region's locals and customers from around the country who've made purchases from the Toolies online store.

    Mr Chambers said one of the big most important differences between independent hardware retailers and big box stores is that businesses like Toolies are focused on actually solving a customer's problem, rather than selling them a solution. He explains:
    I sent a guy home the other day with a way of solving his problem that didn't involve us selling him anything.

    Toolies is in the process of selling off stock before a June 30 exit date and Newcastle locals have been popping in to reminisce about the characters who have been involved with the business since it started in 1973.

    The business has faced a number of hurdles over the past decade, including being hit hard by the global financial crisis and a sliding coal price, which had a big impact on the region. In the years leading up to 2012, the business had annual turnover of more than $8 million and 15,000 "loyalty customers" on the books.

    Mr Chambers said a key lesson he's learned through the process of trying to save Toolies is that you need a significant amount of [money] try to turn around a business.
    The owner prior to me just didn't have the capacity to weather the storm when it came, because of the level of debt that was being carried. You can't have a business that just relies on the good times. You need to come into something like this with a lot of capital.

    While Mr Chambers says this has been a "very painful experience", he believes he has bought the business more time and continued to help customers in a way that no other hardware competitor will now be able to achieve.
    None of the others ... seem to do that. This is a problem, with the rush to sale [from big players] and all that sort of thing.
    Bigbox
    Europe update
    Bunnings opens its third store in Hemel Hempstead
    HNN Sources
    Bunnings has poached B&Q's retail director
    More BUKI store locations are revealed
    Click to visit the HBT website for more information
    Bunnings United Kingdom & Ireland (BUKI) has a chief operating officer; an overview of the new BUKI store in Hemel Hempstead; and 10 stores to be up and running by the end of calendar 2017.
    BUKI appoints retail executive from B&Q

    B&Q's retail director for UK and Ireland, Damian McGloughlin will become chief operating officer at Bunnings UK and Ireland (BUKI). He will report directly to BUKI managing director PJ Davis.

    According to a number of reports, Mr McGloughlin has spent 32 years at B&Q after joining at the age of 16.

    He has been placed on gardening leave until he starts his new role. This means Mr McGloughlin will stay away from work during the notice period, while still remaining on the payroll.

    A B&Q spokeswoman confirmed McGloughlin's exit and added: "We wish Damian all the best."

    Industry publication Retail Week writes that Mr McGloughlin's move to Bunnings makes him the latest in a steadily growing list of UK DIY experts to join the business.

    Bunnings owner, Wesfarmers axed Homebase's entire board - with knowledge of the UK market and replacing them with existing Bunnings staff - shortly after buying the home improvement retailer from Home Retail Group for GBP340m in February 2016. Since then, it has added many with British DIY experience to its management ranks.

    Matt Tyson, former Masters Home Improvement managing director and also ex-Kingfisher, has been advising BUKI and is understood to have been pivotal in convincing McGloughlin to switch allegiances.

    "Matt would have been instrumental in bringing Damian to Bunnings," a former B&Q colleague of Mr McGloughlin's told Retail Week. He said:
    When they were at B&Q together, Damian was a divisional director and Matt was operations director at the time. Matt was his mentor, his father figure if you like, so he would no doubt have been telling Bunnings how talented Damian is and urging Damian to come on board.

    But another former B&Q colleague believes it is one skill in particular that Bunnings will benefit from most. He said:
    Damian is really well liked by the B&Q team. His departure will be a big blow for them. He's very much a man of the people - people in stores like and respect him. They enjoy working for him and they want to work for him.
    ...
    On a broader note, he knows the sector really, really well, so he's a great acquisition for Bunnings. Their warehouses are similar in size to B&Q's Supercentres, which Damian knows inside out, so he will bring a great deal of knowledge to that format for Bunnings.
    B&Q will be smarting, without a doubt. Their loss is very much Bunnings gain.
    Bunnings Hemel launches

    The third Bunnings Warehouse in the UK has opened. It is a conversion of a Homebase store located at in Hemel Hempstead, Buckinghamshire. The Insight DIY team led by managing director Steve Collinge made a visit to the location.

    They believe "a few tweaks" may be starting to appear in some of Bunnings' in-store ranges. The hand/power tool category in the Hemel Hempstead store is "dominant", and the paint offer and gardening range are "impressive". However the same can't be said of its kitchen and bathroom products, according to Mr Collinge. He writes:
    Once again, there's a poorly represented kitchen and bathroom offer, although having spent time with PJ ... I'm beginning to understand why kitchens and bathrooms are a lower priority. However, with the increasing focus on the performance of the remaining 252 Homebase stores, I still don't quite understand why they have effectively handed all their kitchen business to Wickes on a plate.

    However Mr Collinge believes the store in Milton Keynes (scheduled to open in the first week of July), will be the "acid test".
    With 100,000sqft of space available, there are only so many BBQs the size of small family cars and hot tubs that can accommodate a family of twelve in comfort that you need to offer. We'd therefore expect a more credible offer of K&B than we've seen in any of the three Bunnings stores to date.

    In the paint category, the repackaged and refreshed Craig & Rose 1829 range takes centre stage.

    (The Craig & Rose brand is owned by DuluxGroup. To read more about its acquisition, go to /http://hnn.bz/fullView?articleIndex=4432242937940}DuluxGroup FY results 2015-16 - HNN)

    Insight DIY believes this is an "important move" for Bunnings as it provides an exclusive, premium range to deliver a key point of difference to its decorative offer. B&Q stocks the Farrow & Ball paint line. Mr Collinge writes:
    The core chalky emulsion range looks great, is well positioned on price and has developed its colour offer to reflect the whites and greys now popular in the UK. The small Artisan Decorative Effects range offers some interesting products, but at GBP49.95 and GBP69.95 for a 2.5L can, we'll be updating you on the depth of dust gathering on these tins over the next few months.

    According to DIY Insight, the other brands to get significant exposure in the Hemel Hempstead store include Monarch and Paint Partner (painting ccessories), Selleys, Ozito power tools, Kaboodle kitchens, Aqua garden watering, Matador BBQs, Trojan hand tools, Marquee garden furniture and Flexi storage.

    Insight DIY also said it has been tracking Bunnings pricing since the day the first store opened in St. Albans. According to Mr Collinge:
    The most recent audit completed on 6th June 2017, showed Bunnings was 10% lower than Wilko, 17% below B&Q and 27% lower than Wickes ... in identical or directly comparable lines. In the garden, Bunnings is 19% below Wickes, 21% below B&Q and a massive 34% below Wyevale.
    Of course, you wouldn't expect the bigger players to price match a competitor with only three stores and no transactional website, but this is clearly going to have to happen at some point.

    To read more about Insight DIY's impressions of the Bunnings Hemel Hempstead store, go to:
    Bunnings tweaks offer in Hemel - Insight DIY
    Store specifics

    The Hemel Hempstead store is on the site of the former Homebase at Apsley Mills Retail Park. At 64,000sqft, it is slightly smaller than the 67,000sqft store in St. Albans that opened at the beginning of February and much larger than the 40,000sqft Hatfield Road store that opened in April.

    In total, the Hemel store stocks over 27,000 products, all of which the team were encouraged to get to grips with during a 10-day supplier expo, where 93 of the largest brands delivered "in the aisle" interactive product knowledge training.

    To celebrate the opening, Olympic gymnast champion and Hemel local Max Whitlock MBE hosted a welcome breakfast for team members.
    Other stores

    Wesfarmers recently confirmed there will be ten Bunnings stores operating by the end of 2017, in locations that include Broadstairs and Basildon Vange.

    A Homebase store located in Sittingbourne will be the sixth to be converted to a Bunnings Warehouse. Sittingbourne is an industrial town situated in the Swale district of Kent in south east England. Insight DIY said:
    With Folkestone and Sittingbourne being only 42 miles apart, as expected the next tranche of openings by Bunnings are likely to be part of a Kent Cluster enabling them to invest heavily in local advertising to build awareness of their brand, which is unknown to UK home improvement customers.

    Related:
    Europe update: Bunnings reveals its fifth UK store location
    Careers
    Seeking opportunities
    A Victorian-based account manager is required for Austech's SP Tools brand
    HNN Sources
    Nubco in Tasmania is seeking a category manager for tools
    A retail manager is wanted for Southern Innovations in Fyshwick, ACT
    Visit the Mecca Website
    Austech Industries is expanding its Victorian-based sales team and looking for an account manager; Nubco in Tasmania has an opportunity for a category manager in tools; and Southern Plumbing requires a retail manager for its ACT-based showroom.

    Click on the logos to find out more about each role.
    Professional tool sales

    The account manager at Austech will apply their experience in wholesale and/or retail sales, and be responsible for proactively driving the retention and growth of business customers. An understanding of the tool industry is desirable to sell Austech's SP Tools and SP Air brands.
    A Victorian-based account manager is required for SP Tools brand
    Procuring tools

    Tasmanian-based Nubco has a role for an experienced power tool and hand tool category manager in its Devonport head office. Key responsibilities include establishing and maintaining effective relationships with new and existing suppliers; monitoring marketplace pricing; and reviewing product ranges.
    Nubco in Tasmania is seeking a category manager for tools
    Bathroom and kitchen showcase

    Southern Innovations is seeking a highly qualified retail manager to grow the sales of top international brands such as Villeroy & Boch, Hansgrohe, Catalano, SieMatic kitchens, Bette, Smeg and Asko in its Fyshwick (ACT) showroom. The job involves leveraging these brands to achieve the best possible sales results.
    A retail manager is wanted for Southern Innovations in Fyshwick, ACT
    Retailers
    USA update
    Lowe's experiments with exoskeletons
    HNN Sources
    Weather has a negative impact on True Value's Q1 performance
    Sears sues another Craftsman vendor
    Click to visit the HBT website for more information
    Lowe's outsources some tech jobs to India; unfavourable weather affects True Value's Q1 results; Ace Hardware customers are highly satisfied; Sears files another lawsuit; Danik Hook product voted most innovative by independent retailers; MiTek's award winning merchandising for building products; TreeHouse opens another location in Dallas; Houzz attracts additional funds; and Kohler launches new retail concept in New York.
    Lowe's moves some tech jobs to India

    As a way to improve its profitability, Lowe's has laid off about 125 tech workers, primarily at its headquarters in Mooresville, North Carolina.

    Many of the affected information technology job functions are being sent to Bangalore, India, where Lowe's employs approximately 1,000 people in information and technology and analytics.

    The layoffs are the latest in several rounds of reductions over the last year.

    Lowe's eliminated 96 tech jobs in October, then in January cut another 2,400 full-time jobs, mostly at store level. In February, it followed with more than 500 corporate layoffs, including 430 at its headquarters and 70 support staffers.

    In a memo to IT workers, chief information officer Paul Ramsay said the staffing reductions are part of planning effort that began "several years ago" to build a more diverse, global team to respond better "in this highly competitive 24/7 retail environment" and more quickly to "evolving consumer needs."

    Mr Ramsay added that the company will be providing a competitive severance package and outplacement services, including a job fair with local IT employers.
    Wearing exoskeletons

    Other Lowe's employees have been wearing exoskeletons to work. Lowe's is testing exoskeletons on four employees at a Christiansburg, Virginia, store to make it easier to lift objects and stock shelves. Some Lowe's employees spend 90% of their time moving and lifting everything from bags of cement to huge buckets of paint.

    Wearing the exoskeleton is somewhat similar to putting on a rock climbing harness and a backpack. The suit also includes attached carbon-fibre shafts that run down a person's back and thighs. The shafts flex and store energy as a person bends over to pick something up.

    When the employee stands, the rods straighten and the energy releases, making the task easier. The process is similar to how a bow releases energy when an arrow is launched.

    Lowe's developed the exoskeleton in partnership with Virginia Tech engineering professor Alan Asbeck. For years, engineers have tinkered with exoskeletons as a way to augment human abilities with extra mechanical powers.

    Kyle Nel, executive director of Lowe's Innovation Labs, describes the suits as a way to better recruit potential employees and make their workdays easier.
    Weather impacts True Value Q1 results

    True Value pointed to bad weather as a key factor for a sales decline in its first quarter.

    The retailer reported gross billings of USD502 million for the first quarter ending April 1, down 1.6% from the same period a year ago. Revenue was USD347.6 million, a decrease of 2.6%. Relative to the prior year, net margin remained essentially flat.

    Retail comparable store sales were down 1.9% for the same period. Unfavourable weather patterns across the US led to a decline in retail traffic and drove lower volume resulting in decreased warehouse replenishment, the company said.

    However True Value's international business continued to see strong growth with gross billings up 13% and handled sales up 18%.

    The company's top three performing categories for the quarter were hand and power tools, hardware, timber, building supplies as well as plumbing and heating products.

    Although weather trends affected quarterly sales, True Value asserted that it made progress in the execution of its multi-year strategic plan. John Hartmann, president and CEO, said:
    We continue to put the independent hardware dealer at the centre of everything we do. Coming off a year of record growth including new stores and remodels, stores that have implemented the Destination True Value (DTV) format consistently see increased returns, experiencing comp store sales 200 basis points greater than overall retail comp.

    During the first quarter, the company added 534,930 square feet of relevant retail space through the DTV format.

    True Value is based in Chicago and has about 4,400 independently owned and operated retail stores in its network throughout the world.
    Customers satisfied with Ace Hardware, again

    The J.D. Power 2017 U.S. Home Improvement Retailer Satisfaction Study has ranked Ace Hardware "Highest in Customer Satisfaction among Home Improvement Retail Stores" for the eleventh year in a row. Ace has been awarded this ranking by J.D. Power every year since the inception of the survey in 2006.

    The 2017 J.D. Power study is based on responses from 2,751 consumers who purchased home improvement products or services over the past 12 months. Ace ranked highest among major retailers with an overall satisfaction index score of 835 on a 1,000-point scale.

    According to surveyed consumers, Ace performs particularly well in the categories of staff and service, as well as store facility.

    This year's score is based on overall performance in the following five areas: merchandise, price, sales and promotion, staff and service, and store facility. Ace Hardware president and CEO, John Venhuizen said:
    We are truly honoured and humbled to receive this prestigious award for the eleventh consecutive year. We could have never done it without the loyalty of our neighbours, the entrepreneurialism of our local owners and servant hearts of the 100,000 red-vested heroes upon whose back these awards stand.
    Sears sues second Craftsman vendor

    Sears has filed its second lawsuit in less than a month against one of its Craftsman hand tools suppliers, alleging that the vendor is abruptly ending its relationship and agreeing to resume it only on terms "onerous" to the struggling retailer.

    It also announced that it has settled its dispute with the first supplier, One World Technologies, which it sued in Cook County Circuit Court in May. Sears will continue its relationship with One World, which makes power tools under the Craftsman brand.

    For more than 50 years, Western Forge supplied Craftsman tools for Sears to sell in its bricks-and-mortar stores and online. In 2010, Western Forge was acquired by Ideal Industries, and since July 2011, the relationship continued - until now, according to the latest lawsuit.

    Up until the end of April - when the agreement was set to expire - Ideal and Sears discussed extending the deal, the lawsuit says.

    But "after several weeks of assurances by Ideal intended to lull Sears into the belief that Ideal would agree to extend the agreement, Ideal abruptly informed Sears that it will not agree to extend the contract beyond its term," according to the lawsuit.

    Sears said in its suit that it told Ideal in late February that it wanted to extend the deal another year.

    "Despite giving Sears numerous written and verbal assurances over the ensuing eight weeks that an extension was forthcoming, Ideal waited until April 28 to tell Sears that it wouldn't extend the contract, Sears alleges.

    Ideal, under a "transition" period in the contract, however, is supposed to continue to supply products for six months, through the end of October, but Ideal did so for only one month, Sears alleges.

    Sears wants the court to force Ideal to continue providing the products through the end of October. The retailer said in court documents that it has been seeking a new supplier.

    "Ideal now refuses to provide Sears with transition assistance and has informed Sears that it will not fulfill any existing purchase orders," Sears said in its lawsuit. !Furthermore, Ideal has informed Sears that it will fulfill Sears' orders only if Sears agrees to onerous payment terms that were not part of the agreement and that were unilaterally imposed by Ideal.

    Ideal's refusal "has left Sears without the ability to sell certain of its Craftsman brand tools without supply interruption and constitutes a material breach of the agreement," the lawsuit argues.

    Sears spokesman Howard Riefs said the company "will take the steps necessary to hold vendors to honour our agreements." Sears also wants to recover damages, though no dollar figure was given in the lawsuit over what the company characterizes as a breach of contract.
    Retailers choose Danik Hook

    Independent retailers from around the US have selected the Danik Hook as the 2017 winner of the National Hardware Show's Retailers' Choice Award.

    The Danik Hook is tool that can be used to quickly tie-down anything. It was selected from approximately 500 new products as one of the most innovative at this year's event. The award means the Retailers' Choice selection panel believes the Danik Hook is unique and has the potential to be a home improvement industry best seller.

    Talks are underway with retailers from six countries, said national sales manager Greg Spangler.
    The response at the National Hardware Show tells us the Danik Hook is something different, something special. We're not just another screwdriver.

    Inventor, Daniel Austin is an avid boater and water skier, and originally created the Danik Hook to quickly and easily secure anchor or boat lines without ever having to tie a cumbersome knot. It soon became apparent, however, the Danik Hook could be used any time something needed to be tied-down.

    Customers use the Danik Hook to tie-down a tarp on the truck or trailer or to secure an awning. Outdoors enthusiasts find the Danik Hook makes it fast and easy to tie-off a tent or hammock. If a rope or bungee cord is needed to tie-down something, it can make the task easy.

    The quick release lever is the heart of all Danik Hooks. The Danik Hook Mini accepts Paracord, bungee cord or rope ranging from 5/32 to 3/8 inch diameter. The integrated ring makes securing a second line effortless. It is made of a non-corrosive, glass-filled thermoplastic which can lift and hold up to 300lbs (136kgs) under laboratory conditions.

    For bigger jobs, the stainless steel Danik Hook can attach any 3/8 to 5/8 inch diameter anchor rope line to secure any size boat or anything else up to 8000lbs (3629kgs).

    The slightly smaller composite, non-scratching Danik Hook can handle any 3/8 to 7/16 inch diameter line for items up to 500lbs (227kgs).
    MiTek reworks building products display

    MiTek USA said its award-winning "retail sets" (newly designed aisle signage, product bins, and colour-coded packaging) have recently been installed at Roadside Lumber and Hardware in Agoura Hills, California.

    The new retail sets are part of a national effort by MiTek to redefine in-store displays of building products. The company's displays and packaging recently won three awards from the North American Retail Hardware Association (NRHA). MiTek won a gold award for its bin display, a silver for carton display, and an honourable mention for packaging.

    At Roadside Lumber and Hardware, MiTek's retail sets showcase 650 products including fasteners, hangers, connectors, embedments, epoxies, and more. In addition to the aisle signage, product bins, and packaging, the retail sets also include end-cap graphic displays and colour-coded header boards, all designed to enhance and simplify the retail buying experience. Owen Nostrant, Roadside's general manager, said:
    Effective display of 650 products, many of which must be correlated to specific code requirements in the field, is no small task. MiTek's new retail sets not only help buyers sort through their choices using colour-coded shelving systems, its displays are uniquely eye-catching.
    Eco-friendly retailer practices what it preaches

    TreeHouse, which specialises in supplies and services that promote healthy and sustainable spaces, has expanded beyond its Austin, Texas home base, and opened in Dallas. Its new 35,000sqft outpost is billed as the nation's first energy-positive (ie. it will generate more energy than it uses) big box store. Co-founder and CEO, Jason Ballard, said:
    This building sets a completely new standard for ecological and human health and is an embodiment of what our company hopes to accomplish for homes as well. This store is a signpost to what the future will be like for both homes and retail.

    TreeHouse, dubbed the "Whole Foods of home improvement," offers shoppers a curated selection of green products, materials and technologies - some of which are not available elsewhere. It also offers turn-key services and programs, including kitchen and bath design. solar energy kits, home insulation and "smart" home installation.

    San Antonio-based architectural firm Lake/Flato used TreeHouse's approach to products and materials selection, in combination with sustainable design practices, to create the store. Mr Ballard said:
    For so long, net-zero energy was this magical aspirational goal. This building is beyond net-zero...completely new territory.

    The architecture of the store is crucial to its energy efficiency. It boasts saw-tooth roofs that are positioned to maximize the effectiveness of its giant, ultra high-efficiency SunPower solar rooftop solar array. (This feature solved the need for extra space for solar panels). The standing-seam metal roof collects rainwater and reflects heat.

    In addition, the north facing clerestory windows allow for indirect sunlight to effectively illuminate the interior without the impact of direct heat. This allows for a cooler baseline temperature in the store and minimising the use of electricity.

    A Tesla Powerpack (a rechargeable battery storage system for utility and commercial applications) is located at the centre of the store. It stores the power produced by the rooftop solar array, deploying it for evening use and allowing the building to return excess renewable energy to the city's grid.

    TreeHouse Dallas is the anchor tenant in The Hill, a North Dallas shopping centre.

    Related:
    TreeHouse, green home improvement retailer - HNN
    Houzz goes fund raising

    Home improvement online platform Houzz continues is in the process of raising another round of funding. The company confirms that it is raising USD400 million in new financing, at a valuation that multiple reports peg at around USD4 billion.

    Founded in 2009, Houzz provides a platform to help users renovate and remodel their homes, as well as providing tools for finding furniture and fixtures they might want to purchase. The company operates in markets that include the US, UK, Australia, France, Germany, Russia, Japan, Italy, Spain, Sweden and Denmark.

    It makes money mostly through paid listings for local home professionals and service providers. But it has been delving more deeply into direct commerce through the augmented reality (AR) products it has added to its website and mobile apps.

    Houzz has introduced a deep learning tool that analyses home photos added to the site and enables users to search for and purchase comparable products directly from the page. It has added an AR feature to its mobile app that allows users to preview what new pieces of furniture might look like in a certain place in their home.
    Trade program

    The Houzz Trade Program has also been launched to provide industry professionals with discounts.

    All professionals working in the home improvement industry with a valid business - including designers, architects and contractors - can apply for the program.

    Program benefits include trade-only discounts up to 50% on products, access to a support staff and free shipping on most orders of more than USD49.

    Vendors providing discounts include Baldwin, Emerson, Feiss, Flos, Kraus, Missoni Home, Safavieh and Swarovski.

    Related:
    Houzz satisfies Australians' digital needs - HNN
    Kohler debuts experiential retail concept

    The first-ever Kohler Experience Centre (KEC), located in Manhattan, New York (USA) houses fully-functioning displays of Kohler's product line - including showers, tubs, sinks and "intelligent" toilets - in what is a first for the brand. The centre is open to trade design professionals and the general public.

    The 10,000sqft. store has more than 20 kitchen and bath vignettes. It includes a private "bathing space" in which customers can experience Kohler products such as its digital showering system and showerheads.

    The centre offers a new Kohler global specification service, which allows architects and designers to have instant, hands-on access to all products across the company's entire product portfolio. A Kohler team of experts will be stationed on-site to help source and resolve plumbing projects both in the United States and around the world.

    Kohler plans to open nine KECs over the next year, with London to open soon. Additional locations include Los Angeles, Singapore, Shanghai, Hong Kong, Bangkok, New Delhi and Taipei.

    Related:
    Supplier update: Kohler's digital content strategy - HNN
    Companies
    Supplier update
    Klein Tools buys General Machine Products
    HNN Sources
    Klein Tools entered the Australian market through a distribution deal with Mumme's Tools
    Caterpillar takes on Yard Club
    Subscribe to HNN weekly e-newsletter
    Klein Tools gets bigger through its purchase of General Machine Products and Caterpillar diversifies by acquiring online start up Yard Club.
    Klein Tools buys General Machine Products

    General Machine Products (GMP) has been acquired by Klein Tools, a maker of tools for the construction, electronics and mining industries.

    The deal also includes General Machine's subsidiary, CBS Products, in the United Kingdom.

    GMP is a supplier of specialty cable tools and equipment, and will continue to operate in Pennsylvania, with the same management team, said Thomas R. Klein, Sr, chairman of Klein Tools.
    The brands GMP and CBS represent a long history of high-quality, innovative tools to a professional user base, consistent with the Klein Tools brand. Following the acquisition, we anticipate continued investment and development to grow the brands with new product introductions.

    Founded by engineer George M. Pfundt in 1936, GMP is a third-generation business and recognised as a major supplier of specialty cable placement tools and equipment. The company is primarily known for its premium quality cable lashing machines, cable blowing equipment and other specially designed tools for the utility, data and telecommunications markets. Mr Klein adds:
    GMP is very appealing to Klein Tools as we continue to expand our US manufacturing presence. GMP and Klein Tools have much in common, including loyal customers, go-to-market strategies and reputations for high-quality products. We believe our combined resources will present additional growth opportunities...

    General Machine has about 130 employees. With those additional employees, Klein now has a total workforce of about 1,200.
    Caterpillar gets into construction rental

    Yard Club, a startup that makes more efficient use of construction and other heavy equipment, has been acquired by Caterpillar.

    The deal came about almost exactly two years after Caterpillar announced a strategic investment in Yard Club. As part of that investment, Yard Club began working with the dealers (retailers) in the Caterpillar network and helping them to rent as well as sell equipment to contractors and construction crews.

    Since then, Yard Club has continued to grow its rental business, while also adding features for users. According to the company's website, Yard Club processed USD120 million in transactions across 2,500 contractors and rental companies in 2016.

    The company also moved from a transactional business based on taking a cut of rentals made on its platform to one that provides a SaaS platform to help customers manage all the pieces of equipment they own or rent. That includes tools for dispatch, scheduling and fleet visibility, as well as inspection and maintenance management.

    Competitors in the space include startups such as EquipmentShare and Getable. But compared to those companies, Yard Club has received a relatively modest amount of venture investment. Altogether, the company had raised USD5.1 million from investors that include Caterpillar, Andreessen Horowitz and Harrison Metal, to name a few.

    Now that it is a Caterpillar company, the hope is that Yard Club will be able to bring more technology to an industry that has sorely been lacking in technology.

    As part of the deal, Yard Club's 13 employees have joined Caterpillar and will act as the equipment maker's digital presence in San Francisco.
    Products
    Lightweight benchtop saw
    A review of the Worx BladeRunner X2
    PR Web: Worx
    The BladeRunner X2's features and specifications
    The Worx BladeRunner X2 on Facebook
    Click to visit the HBT website for more information
    The Worx BladeRunner(r) X2 is a portable benchtop saw that does the work of multiple saws by making fast and accurate rip, crosscut, scroll, inside and mitre cuts using standard T-shank jigsaw blades. Sharon Blackwell, Worx product manager, said:
    What's nice about this benchtop saw is that it's not limited to only cutting wood. Oftentimes, homeowners need to cut aluminium, PVC, copper pipe or ceramic tile, and BladeRunner X2 handles all those materials by simply changing blades.

    BladeRunner X2's compact size makes a small footprint of 17 inches wide by 15 3/4 inches deep. The saw weighs 14.7 pounds (6.67kgs) and is 6 3/4 nches high, which makes for a comfortable work height when mounted to a workbench.

    An advantage of BladeRunnerX2 versus conventional benchtop saws is the ease of changing blades. There's no need for wrenches; just slide the blade release lever on the left of the tabletop to seat or release the blade. Once the blade is in position, guide rollers ensure accurate 90 degree cutting at all times.

    BladeRunner X2's adjustable hold-down arm matches the thickness of the work piece, and incorporates a splitter to help keep straight cuts on track. It holds the work piece against the table to minimise vibration, and flips out of the way when making interior cuts.

    The BladeRunner X2 fence has two adjustment knobs to align work pieces for straight and accurate rip cutting. Fence channels at both the front and rear of the tabletop have measurement scales for precise alignment. A mitre gauge also is provided for making angle cuts.

    This benchtop saw is powered by a 5.5-amp motor that delivers 3,000 strokes per minute. Its cutting capacity is 1 1/2 inch in wood, 1 1/4 inch in PVC, 3/8 inch in aluminium and ceramic tile, and 1/8 inch in mild steel. The blade stroke is 3/4 inch.

    The durable base is impact resistant and supported by four, non-marring rubber feet. Built-in storage is provided for the fence and mitre gauge. Other features include an on/off paddle switch with safety key to prevent unauthorised use, 6-foot power cord and built-in carrying handle.
    Products
    Shovel mounting bracket
    Rhino-Rack's Shovel Mounting Bracket is suitable for road trips
    HNN Sources
    Users will be able to mount a shovel onto a vehicle with multiple configuration options
    Rhino-Rack has a range of shovel holders
    Click to visit the HBT website for more information
    The Shovel Mounting Bracket is the ideal accessory to keep a shovel at the ready when needed to dig snow, sand, mud or any other type of terrain, according to its maker Rhino-Rack.

    It mounts directly onto the Rhino-Rack Vortex crossbars or Rhino-Rack Pioneer systems. Rhino-Rack's Pioneer systems are designed to maximise load capability while freeing up space inside a vehicle.

    With easy installation and removal, users will be able to mount a shovel onto a vehicle with multiple configuration options. The brackets can be inverted to position the shovel above or below the tray and the hinged design allows mounting of a wide variety of handles as well. The safe and secure roof system holds tools to prevent any cabin damage from occurring.

    Constructed from steel with a high quality powder coated finish, this mount bracket is built to last and to hold a shovel in place for rough roads. It is backed by a 3-year warranty.


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