ABS hardware retail turnover

March 2024 numbers from Australian Bureau of Statistics

Hardware retail turnover for March 2024 mostly came in slightly below March 2023 and slightly ahead of March 2022. There appears to be a shift of revenue from March to the preceding February.

The Australian Bureau of Statistics (ABS) has released retail turnover for hardware stores through to March 2024. We will review the data in terms of trailing 12-month periods, from April to March. So p2022 will refer to the time span from April 2021 to March 2022.

Growth in the most recent period was subdued overall. The highest percentage growth was from Western Australia (WA), with 2.4%, an increase of $64.5 million to $2.806 billion. The highest value growth was in Victoria (VIC), with a gain of $94.0 million, representing a lift of 1.4%, to $6.618 billion.

South Australia (SA) was not far behind WA, with an increase of 2.1% or $36.9 million to $1.767 billion for p2024. Australian Capital Territory (ACT) grew by 1.9% to $0.539 billion, a gain of $9.9 million. Tasmania (TAS) was close to flat, lifting 0.1% to 0.606 billion, up by just $700,000.

The largest percentage loss was from the Northern Territory (NT), which was down 7.2% or $20.1 million to $0.260 billion. In value terms, New South Wales (NSW) lost the most, down by $260.8 million or 3.4% to $7.527 billion. Queensland (QLD) fell by 1.3% to $5.304 billion, down $71.5 million.

New South Wales

The NSW chart for hardware retail sales shows that while p2024 did manage to set two all-time highs - for September 2023 and (curiously) January 2024 - it did trail significantly behind p2023.

While the March 2024 result is below those for both 2022 and 2023, it is still above that for 2021.

Victoria

While p2024 was not quite as good as p2022, it did improve on p2023.

The sales for March 2024 were nearly identical to those for both 2021 and 2023, but well below those for 2022 - as well as 2020, the initial COVID-19 spike.

Queensland

For QLD, the March 2024 result came in below March 2022 but above March 2023.

The lift from February to March 2024 was smaller than in the two previous years, but February 2024 sales set an all-time record in sales as well.

South Australia

As with QLD, the lift from February 2024 to March 2024 was subdued in SA, while February 2024 set a new sales record for that month.

Up until February, except for the peak in December, p2024 closely followed p2023.

Western Australia

WA's performance for p2024 is somewhat unique. With the exception of April 2023, it set new eight-year local records for every month.

Tasmania

Since October 2021, TAS has seen sales for each period closely follow a narrow track. While p2024 was substantially down on the two preceding years for December, it managed to set a new high for February 2024, and finished up on p2023 in March.

Northern Territory

Overall, p2024 was down from p2023, but slightly improved over p2022.

The March 2024 sales, however, were closer to the pre-COVID-19 results.

Australian Capital Territory

As with TAS, the ACT has established a fairly narrow post-COVID-19 track, and p2024 closely followed this.

Analysis

The chart for hardware retail sales across Australia provides a good reference point.

For p2024 hardware retail turnover Australia-wide fell by 0.6% to $25.425 billion, a drop of $146.3 million. It's a result that is safely between the results for p2022 and p2023. In terms of general trends p2024 does seem a further advance on a slightly reduced seasonality, with an increase in both January and February sales resulting in less of a lift in March. Similarly, the end-of-year surge is drifting out early to September. Of course, weather patterns also play a part in these shifts, but some of these weather patterns may become more permanent.

Somewhat revealing is the chart for percentage change in hardware retail over the past six years.

Glancing over this chart, it's evident that the unusual state/territory is actually VIC. It's the only region where the yellow bar, marking p2023, shows negative, and the only actual state where the light blue bar, marking p2022, is negative (as it is for both NT and ACT as well).

statistics

Big box update

Bunnings Ashfield store set for rebuild

A Bunnings Trade Centre has been approved for a site at Noosaville (QLD) adjacent to the existing Bunnings Warehouse

The Bunnings store in Ashfield, an inner west suburb of Sydney will close for a major redevelopment that will cost an estimated $60.6 million. Plans have been lodged with Inner West Council and are currently under assessment.

Development plans show that almost all sections of the Ashfield Bunnings store could be demolished as part of a rebuild that will involve almost doubling the amount of retail space, reports the Inner West Courier.

The redeveloped store would span 17,518sqm, a 96% increase on the 8896sqm size of the current warehouse. It would span three levels including two underground carparking areas with 431 spaces - almost 169 more than the current 262 spaces. The third main level retail area would include a cafe, playground, garden centre, back of house facilities and amenities.

The expansion would be accommodated by moving the existing ground level carparking spaces, located at the rear of the store, to underground carparking areas.

Plans also indicate the distinctive clock tower on the corner of Parramatta Road and Frederick Street would escape the wrecking ball. The tower - which records show was built sometime between the mid-1940s and 1950s - would be incorporated into the new development.

In the plans, Bunnings stated the development would address the ageing state of the current warehouse which it described as "functionally sub-optimal" with a "collection of disparate components which results in inefficiencies" and a "diminished customer experience".

According to the plans, the redevelopment would also negate the need to permanently close the store and relocate to another site. It will replace the outdated facility with a contemporary style warehouse with significantly more efficient functionality and improved energy efficiency.

Bunnings has consulted with Transport for NSW to discuss traffic impacts from the redevelopment and there was a "general agreement" that the proposal could be supported.

Noosaville

Known as the Noosa Trade Centre in Noosaville, the new Bunnings Trade Centre will be located on the same block as Bunnings Warehouse on Eumundi-Noosa Road, on a currently vacant portion of the site. It will have separate driveway access to the existing Bunnings Warehouse, via Gateway Drive, and include its own car park, reports Sunshine Coast News.

The development was initially approved by Noosa Council last year, with amended conditions carried unanimously at a recent Planning and Environment Committee meeting.

A report presented at this meeting recommended that a negotiated decision be issued based off the conditions. In Sunshine Coast News, the report stated:

An application for a hardware and trade supplies store was approved by council at its Ordinary Meeting on October 26, 2023, subject to conditions, including required plan amendments regarding the northern exit driveway design, the proposed building's height and provision of an awning to the front facade.
The applicant suspended the appeal period and made representations on December 4, 2023, to the development approval conditions.
Following discussions with the applicant, further plans were subsequently provided to council on March 4, 2024, with the time frame for a negotiated decision extended to enable the application to be reported back to council.

The councillors unanimously agreed upon the amended conditions, which included reducing the building height from 12.14 metres to 10.94 metres. The report stated:

While the proposed building still exceeds the code's acceptable outcome for building height of 10m, the proposed height of 10.94m to the roof pitch is compatible with the height of buildings in the area and will not visually impact on the streetscape.
Some minor amendments are however recommended to the conditions regarding external colours, performance bond, street trees and acid sulphate soils.

There is currently only one other Bunnings Trade store on the Sunshine Coast, located at Kunda Park.

Related

Bunnings development in Noosa - HNN Flash, November 2023
  • Sources: Inner West Courier and Sunshine Coast News
  • bigbox

    Retail update

    Envy Lawn Garden Legend

    Positioned as a premium lawn and garden care retailer, the North Queensland store recently opened to cater for "grass fanatics"

    Envy is a concept store, owned and operated by Zac Holm, a Townsville-based golf course greenkeeper turned store manager who has extensive expertise and passion for outdoor spaces. He is supported by an agronomist (lawn scientist) and a groundskeeper for Queensland Country Bank Stadium.

    Mr Holm said the store caters for "lawn fanatics", along with those wanting to take lawn care more seriously, often inspired by a neighbour's lawn. He told the Townsville Bulletin:

    [We offer] products and services where people can come see, touch, feel the different varieties of grass, and also use the equipment that we've got for sale, and see the different fertilisers that we have.
    It's a premium store for lawn and garden care, at the other end of the spectrum from Bunnings.

    The business's own-label fertiliser has been popular in preparation for the cooler months. Mr Holm said:

    {We have} a lot of knowledge, paired with commercial grade products (and equipment) aimed at the retail market.

    The Envy store is one of the first tenants in a newly constructed shed featuring an industrial exterior and retail interior. RWC Townsville leasing agent Troy Townsend was excited about the new addition to Townsville's retail landscape. He said:

    Envy brings a unique offering to our community, filling a gap for premium lawn and garden care needs.

    Ray White Commercial (RWC) Townsville director Stacie Stockham said Envy Lawn purchased 336-342 Ingham Road, Garbutt in October 2022 before local builder Paul Raiteri of Raiteri Constructions carried out extensive upgrades. It has signed a five-year lease.

  • Source: Townsville Bulletin
  • retailers

    New product: WallWeb

    Developed in Toowoomba, QLD

    A DIY repair kit - currently available in Mitre 10 stores - is about to be launched on a global scale

    The WallWeb product braces the wall from the inside and provides a flat surface to place putty over. It was created by Toowoomba-based Arron French. He said the product came about when he had to fix a doorknob-sized hole in the wall of the investment property he was selling at the time. He told The Chronicle:

    It was a nightmare (to patch the hole) - I didn't know how to backbrace it, it kept falling in on the inside and it kept drying and cracking and falling inwards.
    We initially thought we'd have it for the DIY market, but tradies use it because it's always a solid repair. Not only are you getting a speedy fix, it's a strong and durable repair.
    I can do it within 30 seconds - get the device out of the box, adjust it, lock it in, put the putty in and let it dry overnight.

    Mr French said the product was not just designed in Toowoomba, but Toowoomba was also the first place it was sold through stores.

    I took this to America with Lowe's and it won a medal for innovation, but the first store to take this on was the local Mitre 10 hardware store...Rodney Bird (of Mitre 10 Toowoomba) was the first person to look at this and realise what we had, and it just morphed from there.
    It's just started spreading across Australia - we've sold 10,000 units so far and there was a big order that just came in with Mitre 10 for 6000.
    They get made in China. We kept everything else in Australia, the artwork, all the attorneys have been Australian, the pack-and-sends have been Australian. We've been using as many local people to keep it as Aussie as we can.

    Mr French said Amazon US had made a second order of WallWebs after the first run sold out, and the company has just secured a European distributor. He explains:

    We've sold 500 in six weeks on Amazon, and that's pretty unheard of - it usually takes months for the first sale.
    We've got a European distributor on board that's going to take on that whole continent. In larger cities, everyone is in their own world, but in smaller communities, people rely on each other to keep their businesses afloat.
    You would never get the same level of help and vision outside of a city like this, everyone we've spoken to in Toowoomba has been excited and want to be a part of it.
    products

    USA update: Costello's Ace Hardware

    Generational leadership

    The family-owned hardware retail business has grown from a single hardware store to a network of 48 locations across five states: New York, New Jersey, Maryland, Pennsylvania, and Virginia

    The company's success began with the sheer determination and passion of founder, Vincent Costello. Having been forced to close his air conditioning business during the oil price recession in the 1970s, Vincent was presented with an opportunity to take over ownership of a small, fledgling hardware store in Deer Park, a suburb on Long Island in New York. With ten children to provide for, he took the risk, despite the challenges of the economy and having no previous retail experience. Michael Costello, Vincent's son, and current CEO, told Store Merchandiser magazine:

    It was his strong values and hard work that guided him through the years that followed. Over the course of five years, he transformed that 2300-square-foot store from dismal sales to a thriving location that offered extraordinary customer service. He was a genuine problem solver and 'people person', always advocating for the customer and helping them in whatever ways he thought best. There was an era of consistency about my dad. He was great at building strong and trusting relationships, which led to an incredible alignment between him, customers, vendors, local businesses, and the community.
    Dad was driven by the idea of growth, both personally and for the business. He was compelled to make himself smarter every day by taking risks and learning from mistakes, as he knew that growing the business relied on the personal growth of himself and his employees. He built a rapport with his landlord, who then acquired another commercial building and offered him the chance to open another location.
    By refinancing his home, he opened the second store, a 5000-square-foot industrial space, in 1982. The same thing happened for our third and fourth stores too, as the landlord developed shopping centres in the little-known town of Nesconset, and then Farmingdale. We were not well-funded back then. Success came through hard work, patience, and doing more with less. Eventually it paid off, which fuelled further growth into larger outlets.
    Aside from stores, a major turning point in our history occurred when we became Ace Hardware (Ace) retailers, which was in the early 1980s as we were opening the second store. The partnership had multiple benefits, as being associated with a successful brand gave us instant credibility, lower cost of goods, and freed my dad from the heavy demands of product sourcing, which freed up time for him to do what he enjoyed - helping customers. Also, while Ace was well-known in other parts of the country, ours was only one of two stores on Long Island at the time, so our partnership had opportunities for mutual growth.

    Michael has learned first-hand from his father. He said:

    I was just ten years old when my dad took over the first store, so although I was too young to work, I hung around - probably causing a nuisance - and helped out where I could with cleaning and putting away stock. I spent a good chunk of my childhood like this, which looking back, gave me an opportunity to learn from scratch and has shaped how I lead the business today.
    I have nine siblings in total, with six of us currently involved in the business. My three older siblings had already established their careers or were at college by the time our dad had taken over the first store, so they didn't have the same opportunity to get involved as some of us younger siblings did. With our dad's support and guidance, myself and my siblings, Michael, Jaime, Tim, Dan, Joey, and Bobby, became owners in 2001, opening a 24,000-square-foot home centre, our largest store to date. We have maintained our leadership structure since his passing almost eight years ago.
    We are all equal owners and are all active in the day-to-day operations of the business. My sister is our president, my brothers occupy the roles of marketing director, merchandising specialist, district operations director, and IT director. We also have some from the next generation involved too, not in leadership roles just yet, but learning the ropes from their parents as we did from ours.

    New growth

    While Michael, Jaime, Tim, Dan, Joey, and Bobby have retained their father's hunger for growth, they have changed the company's approach to opening new stores.

    Our early growth has historically been ground-up stores, or in other words, leasing an empty building and building a team from nothing. This was fuelled by population growth and changes in competition, which led to the demise of many regional home centre brands.
    However, there aren't nearly as many open markets in the areas we operate, so we have shifted our focus over the past ten years more towards acquisitions of existing stores. Growth through acquisition serves us in two ways. Firstly, it decreases risk. We are not starting from the ground, we have a team, a customer base, and history, as in many cases we are acquiring businesses that have been around longer than we have.
    Secondly, we get to provide a succession plan for a business that doesn't yet have one, which provides our business with a strong social purpose. We are passionate about helping fellow small business owners in our industry, and we want to continue the legacy they have worked so hard to create, supporting the local community and economy.
    We recently acquired Smith's Ace Hardware (Smith's), which saw us take on an additional five Ace stores in New Jersey and Pennsylvania. This was our largest acquisition to date, but it was a successful transition. As Smith's already operated Ace stores, we had many similarities like using the same computer platform and technology, which allowed for seamless integration...

    The conversation turns to the current activities of Costello's Ace and how Michael is planning to take the business to further heights of success. He said:

    We're currently in the process of relocating one of our stores, as well as building a new site from the ground up in New Jersey. There are a lot of moving parts and we're also preparing to announce another New Jersey acquisition, which is super exciting.
    Our growth has historically been one step at a time, so there are always ongoing conversations about growth, whether through additional stores or acquisitions. We have ambitious plans to double the business over the next five years and grow our family to more than 75 stores by 2030 while developing a world-class team and maintaining the high level of customer care we have become known for.

    Visit the website here:

    Costello's Ace
  • Source: Retail Merchandiser
  • retailers

    USA update: Loud Mouth Barbeque

    Ace Hardware home brand

    The hardware retail co-op has launched a line of BBQ sauces and seasonings as part of its aim to be the "BBQ destination in all neighbourhoods"

    Ace Hardware's range of private label Loud Mouth[tm] BBQ sauces and rubs is designed to give the hardware retail group's members a proprietary assortment that enhances their product mix in this category.

    They were developed exclusively for Ace retailers and takes its private label product development efforts in a new direction. Brian Wiborg, senior vice president of merchandising for Ace Hardware, said:

    [We're] not just introducing a new product - we're igniting a flavour revolution in the world of BBQ ... Our decision to develop Loud Mouth Barbeque was reinforced by the desire for bold, high-quality BBQ products at an affordable price point.

    The assortment includes Boom Shaka-Laka - Apple Habanero BBQ Sauce, Kaa-Blamo! - Hot n' Spicy BBQ Sauce, That's Poppin' - Savory Blend Rub, Mmmm Baby! - All Purpose Rub, Whoa There! - Smokey Sweet Rub, Uhh-Huh! - Hot n' Sweet Rub, and Zowie! - Hot n' Spicy Rub.

    Melanie Hill, director of advanced concepts and retail innovation at Ace Hardware spoke with Store Brands about the development the range.

    Ms Hill said that the job of her team is to think ways of amplifying the Ace brand to build demand and loyalty among consumers. Knowing that Ace is established as a destination for barbecue products, the retailer already carries a lot of top brands but the team were aware that its lineup was ready for something new and "fun". It is always looking for new ways in which Ace can create differentiated and exclusive products.

    Ms Hill explained it was a collaborative effort across the company. She said:

    Legal helped us with trademarking, our IP and creative teams worked to create the brand, and our marketing team has put together a really awesome launch plan. We took great care to make sure that we included consumer insights by doing taste tests and 'shop alongs' with customers. We partnered with Old World Spice as our vendor that created the product line. They worked with us to make sure the flavour profiles and the formulations would be products everyone would enjoy.

    In terms of coming up with the name "Loud Mouth", Ms Hill said Ace wanted a brand that expressed the idea that barbecue is fun and associated being loud with it. The name tapped into the insight that good food can make you want to get loud, and it wanted the brand to have a little bit of attitude and excitement. She adds:

    That's what barbecue is all about. You're grilling for family and friends, you're outdoors having a great time.

    The Loud Mouth products will be carried in the Ace Hardware warehouse so retailers can select what they need as they need it.

    In-store, Ace has created eye-catching point of sale signage that allows consumers to see and experience something new and see what's different about Loud Mouth. It is also doing email marketing, social media, digital marketing and direct-mail pieces to our customers. There will also be demonstrating and grilling with the products as part of Ace's 100th anniversary block party celebration.

  • Sources: Ace Hardware and Store Brands
  • retailers

    ABS Building Activity - Commenced stats

    Residential commencements fall through 2023

    If the stats from the ABS indicate anything, it is that the number of residential construction commencements in 2023 continued to fall, while the value of work yet to be done mostly rose.

    The Australian Bureau of Statistics (ABS) has released its Building Activity stats through to the end of December quarter 2023.

    As the big question for hardware retail is exactly where the residential construction industry is headed in 2024, the numbers of most interest are those for building activity commenced and building activity not yet commenced.

    The first - commenced - gives some clue as to how much housing activity actually got going during the most recent quarter. The second - not yet commenced - indicates how much work is in the pipeline.

    The data is presented in calendar years.

    New South Wales

    The first chart for New South Wales (NSW) paints a fairly clear picture of a slowdown.

    In the first two quarters of 2023, the number of commencements remain above only the initial COVID-19 year of 2020, then dive still lower in the third and fourth quarters, to set a seven-year local low record.

    Turning to commencements for other residential, the picture is slightly better, but not all that encouraging.

    While June quarter 2023 shows an encouraging upwards spike, this is followed by a sharp decline to September and only a mild recovery in December quarter.

    Building activity not yet commenced is a more complex measure to understand.

    While the continuing gain seems encouraging, given the context of work commenced, it probably is not. Given the low level of commencements, this is less likely to be due to overload of the construction industry resources, and more due to delays from other sources.

    Victoria

    As with NSW, houses commenced for Victoria (VIC) shows a clear slow-down, setting three local seven-year lows for 2023.

    For other residential commencements are more nuanced. While a seven-year local low is reached in June quarter 2023 follow more of the trajectory of 2021, lifting above the numbers reported for 2022.

    While there is a degree of seasonality to the increase in the value for not yet commenced building for VIC, it's also likely we are seeing some of the same non-construction factors at play in the increase through the September and December quarters.

    Queensland

    While Queensland (QLD) shows a counter-seasonal lift in the number of commencements for June quarter 2023, this quickly slides down to seven-year local lows for both the September and December quarters.

    Other residential might look to be in similar dire straits, but that's not really the case.

    The number of commencements for 2023 is around only a 100 less than for 2022, showing ongoing demand.

    Again, for not yet commenced there is an increase.

    In this case, the full year of 2023 sets a local seven-year high for every quarter

    South Australia

    While the commenced houses for South Australia (SA) numbers could not be described as "optimistic", they certainly tell a better story than those for the east-coast states.

    More or less 2023 is basically a return to pre-COVID-19 levels of commencements.

    The story is a little less sanguine for other residential commencements. While the sharp spike for September quarter 2023 is impressive - and shows a degree of resilience in the market - in fact the overall level of commencements is nearly equal to those for 2020 (the green line).

    We see the same pattern - even exaggerated a little - for net yet commenced value during 2023 for SA: a set of new local seven-year highs.

    Western Australia

    For Western Australia (WA) the best description of the number of houses commenced stats might be that it has not only fallen back to pre-COVID-19 numbers, but low pre-COVID-19 numbers.

    That's less the case for the number of other residential commencements, which are hitting local seven-year lows in the second half of 2023.

    Not yet commenced values are again slightly contradictory, increasing despite the drop in actual commencements during preceding quarters.

    Tasmania

    For number of house commencements, the most noticeable number for Tasmania (TAS) is the drop to a new seven-year local low in December 2023 quarter. That runs counter to seasonality, as well.

    For other residential commencements, TAS really hit back to pre-COVID-19 numbers in 2022. In 2023, it has further dropped below that.

    And yes, again, the steep rise in the value of not yet commenced work.

    Northern Territory

    Interpreting residential construction stats from the Northern Territory (NT) is always difficult, as its economy is highly affected by local factors. However, we can see that numbers of houses commenced has fallen sharply in the second half of 2023.

    Likewise, numbers of other residential dwellings commenced have equalled all-time lows - inasmuch as zero is about as low as you can go.

    Value of not yet commenced work spiked for December quarter 2023.

    Australian Capital Territory

    While the Australian Capital Territory (ACT), like the NT, has something of a partially insulated economy, it still does respond more to national influences. That is certainly the case with number of houses commenced.

    That's a very definite low for 2023.

    Numbers of other residential is really quite interesting. It's low, but just how low is it?

    As it turns out, the annual total for 2023 is lower than the other six years displayed - though not that much higher than 2019.

    Value of not yet commenced again shows a new set of highs for 2023.

    Analysis

    Has the overall economic analysis of the housing industry really been complete? Not really. There is one key element that seems to be consistently missing.

    It's fairly evident from these charts that 2023 has seen a reduction in the number of building starts for both houses and non-houses, well the value building work not yet commenced has increased. As a helpful summary, we can review the charts for house builds commenced on an annual basis across the six states.

    New South Wales

    Victoria

    Queensland

    South Australia

    Western Australia

    Tasmania

    With the exception of SA, the states show that 2023 comes in below the numbers for five years previously, in 2018. That would indicate that there is a real slowdown underway, and not just a more relative reduction.

    The other interesting factor is that, despite the high interest rates and growing price of houses, the market is indicating that there has not been much a shift to non-house dwellings. That's partly a cultural bias, but it also has to do with the construction industry itself: unlike in the US and much of Europe (including the UK), Australian architects and builders are not adept at building higher-end apartments.

    But there is something more going on here. In the US, for example, the last couple of years has seen a big surge in the construction of apartment blocks, to such an extent that rents in 2025 are expected not just to stabilise, but to be reduced as well (especially as "move-in" incentives are offered).

    Beyond cultural pressures there is another key factor at work here: The US economy is quietly booming. Even with high interest rates, there is a lot of money washing through the economy looking for tax effective investments. The economy grew at a rate of 3.3% in the last quarter of 2023, even as inflation diminished.

    The reason for that, more than anything, is the role of "post-industrial" industry such as technology. While technology firms contributed something like 10% of gross domestic product (GDP), the are also though largely responsible for the unexpected high growth in US productivity - which reached 4.7% in the September quarter of 2023.

    While we can certainly point to inflation-busting high interest rates, poor city planning, Australians' rampant "NIMBYism" and high levels of migration to city centres as all contributing causes to a confined housing market, the really major, underlying reason is that the Australian economy is not doing well.

    statistics

    Supplier update: Plumbing

    Reliance Worldwide acquires Holman Industries

    The acquisition will give the company a bigger footprint in Australia, and provides an opportunity for its products to gain a presence in Bunnings

    In February 2024, Reliance Worldwide Corporation Limited (ASX: RWC) announced it entered into an agreement to acquire the Holman Industries business (Holman) for AUD160 million.

    As a leading independent manufacturer and distributor of branded plumbing and watering products sold through retail and wholesale channels in Australia, approximately half of Holman's revenues are generated from sales of "water-out" plumbing products focused on drain, waste and vent (DWV) solutions, stormwater fittings, and PVC pressure fittings.

    The remaining revenues are generated by sales of watering products including a range of hose systems, fittings, timers, and garden products in retail and hardware. RWC's announcement also said:

    Holman is a long-term supplier to this segment with strong retail fulfilment execution expertise.
    Holman's PVC plumbing products for DWV solutions are manufactured at its plants in Western Australia and Queensland. Other products are sourced from trusted international suppliers. Holman has a network of seven distribution centres across Australia to service its channel partners.
    Holman recorded net sales of AUD192 million and Adjusted EBITDA of AUD22.9 million in the 12 months ended 31 December 2023. The acquisition of Holman is expected to double RWC's annual net external sales in its Asia Pacific (APAC) region to approximately AUD360 million.
    RWC expects the acquisition of Holman will be EPS (earnings per share) accretive from the first full year of ownership, and the return on capital employed (ROCE) to exceed RWC's current level.
    RWC estimates that APAC segment net sales for the current financial year ending 30 June 2024 will increase by approximately AUD50 million reflecting a part period contribution from Holman. Holman's trading pattern has a higher seasonality than RWC's existing APAC business, with around 75% of operating earnings occurring in the period from 1 July to 31 December.

    ...

    Holman's founder Wally Edwards has agreed to remain with the business for two years following completion of the acquisition.
    RWC believes the acquisition of Holman will provide additional sales growth opportunities from an expanded product portfolio coupled with a much broader retail channel partner distribution footprint in Australia. In addition to revenue synergies, RWC also expects to achieve cost savings of approximately AUD5 million p.a. on a run rate basis by the end of Year 3 through distribution footprint rationalisation and optimisation.
    RWC chief executive officer, Heath Sharp said the acquisition of Holman aligns with RWC's growth strategy and will enhance its market position in Australia.
    "Product innovation coupled with high levels of customer service have been instrumental in driving Holman's growth. This is strongly aligned with RWC's approach to growing its business.
    "The acquisition of Holman provides RWC with immediate and substantial access to the Australian water-out segment, allowing us to strengthen our overall offering and be an even better partner to our core plumbing wholesalers in Australia. Entering the water-out market is a strategic priority in each of our three regions. While we have looked at other opportunities globally, Holman marks our first foray into this end market. We expect it will help lead and catalyse our approach in other markets globally.
    "Holman also gives RWC significantly expanded access to the retail channel in Australia. This will provide us with the opportunity to grow our legacy RWC products within retail while also putting more scale and manufacturing capability behind Holman. We believe Holman's success is linked to its genuinely world class execution capabilities into retail and hardware.
    "This acquisition will allow us to utilise Holman's retail operational capabilities in other parts of the world, while also enabling us to look for opportunities to bring our US retail market expertise to Australia.
    ...

    RWC is a maker of water heater pressure values and the SharkBite push-to-connect plumbing supplies operates in the US, Europe and Australia. It delivered a 23.4% fall in net profit to USD51 million for the six months to December compared to the previous corresponding period, but the result was better than expected, and its adjusted net profit was flat.

    In The Australian, Mr Sharp said across the US, Britain, Europe and Australia customers were putting off projects, which was especially acute in the UK and Europe, where homeowners were deciding not to install underfloor heating in backyard conservatories and offices were opting against installing beverage dispensers in office kitchenettes.

    This was having a flow on effect to demand for RWC's portfolio of plumbing products, from pipes and connectors that carry water and heat, to plastic outlets that deliver water, air and gas. Mr Sharp said:

    We plan that there is no recovery for the whole calendar year.

    But he believed "we must be getting pretty close to that point" where those repair jobs to plumbing infrastructure would be vital, at which time RWC, which had restructured parts of its business in light of lower volumes, would be ready to "rock and roll".

    Related

    Reliance grows with EZ-FLO International - HNN Flash, March 2022
  • Sources: RWC and The Australian
  • companies

    Retail update

    Hammonds Paints reaches major milestone

    It was established when the population numbered just a few thousand in Warrnambool (VIC), then a fledgling settlement and still nine years from being officially proclaimed a town

    This year, Warrnambool-based Hammonds Paints, marks 150 years of continuous trading by a family now in its fifth generation. Managing director Nick Rule is justifiably proud of the business founded by his great-great grandfather Joseph Charles Hammond in 1874.

    It held a function in early April at Warrnambool racecourse for hundreds of former and present staff and their families to celebrate its long-standing success, according to The Warrnambool Standard. Mr Rule has overseen the business for nearly 30 years, taking over in 1995 from his father John Rule whose own tenure spanned 44 years. He said:

    We really wanted to acknowledge the achievement with all our staff. It's rare that we all get together.

    There are approximately 50 employees and contractors working across Hammonds Paints' five branches located in Warrnambool, Portland, Hamilton, Ballarat and Colac, in regional Victoria. Mr Rule said:

    All businesses are reliant on their staff and staff are reliant on businesses for their livelihood. You put a lot of trust into your staff and they respond. It's a two-way street and it works. I really care about our staff and in return they care about our business. We have had so many people who've worked for us for 30 to 40 years.

    The resulting wealth of knowledge and experience after so many years has been the linchpin of Hammonds' well-known marketing slogan: "Should've gone to Hammonds".

    Coined by advertising creative Marcus Tarrant in 1998 as part of a rebranding, it's a simple message, said Mr Rule, but one that encapsulates the Hammonds' point of difference. He explains:

    All of our marketing is centred on the fact that we are an independent paint specialist, as opposed to a mass merchant. We trade on having the right staff and expertise, not on a price point. We haven't waivered from it, we haven't altered the message. It gives the business an identity.

    It has also helped the business to survive in a dramatically changed retail landscape, he said, referring to the advent of big box retailer Bunnings. Mr Rule said:

    When I first started in Warrnambool there were 11 or 12 paint outlets in town. Bunnings has had a massive impact. We are now the only dedicated paint store in town.

    These days, Hammonds' market is split 60:40 between decorating (trade and DIY shoppers), automotive and industrial.

    Catering to the home building market, it is also the district's biggest painting contractor of large commercial works such as schools, factories, offices, hospitals, theatres and law courts. He said:

    Warrnambool has been pretty lucky over the last 30 years. We have a strong economy and there have always been some reasonable-sized construction jobs on the go.

    Mr Rule also stressed that a healthy automotive sector is vital to underpinning the business.

    History

    In 1874, the business was known as Hammond & Sons, providing signwriting, painting and decorating services. Thomas Samuel Hammond was the next in line, taking the reins after founder Joseph's death in 1932, before third generation Frank stepped up in 1945 for the post-war period.

    With Frank's health failing, the call went out to his 19-year-old nephew John Rule who was then in Melbourne studying accounting and doing an internship with Dunlop. Frank's sister, John's mother Grace and a cousin took over book-keeping duties.

    Returning to Warrnambool to take on the role in 1951, John came into a business that was primarily a paint contractor. In the pre-DIY days, retail trade was minimal. Now 92, John recalls the shop back then as "basic". He told The Warrnambool Standard:

    Dirt floors and lined with bales and bales of wallpaper and lining paper. There were also gallons of Rickshaw Red roof paint, made in Scotland, it was the best roof paint you could get then.

    Glazing and picture framing were also services provided by the business, both of which were later sold off.

    Paint was made from white lead, with colour choices limited to "PWD brown which was used on all the public works department buildings, a dark green, a white and a black. That was it," said John Rule.

    When Hammonds secured the distribution rights for a plastic paint called Spread Satin a few years later, it became a game-changer for the business and the start of a booming retail trade. John Rule recalls:

    Because it was cleaner and easier to use, this really unleashed the DIY sector. Soon after they launched rollercoaters, another boon for the DIY sector and Hammonds were early adopters.

    Expansion followed with stores opening in Portland in 1974 and Hamilton in 1988. When John's son Nick and wife Fiona took over the business in 1995, Hammond & Sons became Hammonds Paints and technology was rapidly changing the way the business operated.

    The business widened its reach with the addition of stores in Swan Hill, which has since been sold, Ballarat in 2014, and most recently, the Rules' son Jeremy has joined his father in a Haymes Paints franchise in Colac.

    While he's happy to have his son on board, Nick Rule said there's no pressure on any of his three children to continue the Hammonds family dynasty. And he is not planning on stepping away from the business just yet.

    The business is solid and from a management perspective, I'm happy to continue on. I love coming to work.
  • Source: The Warrnambool Standard
  • retailers

    Supplier update: OPE

    EGO outdoor power equipment and power tools

    Outdoor power equipment (OPE) and power tools from EGO is being made available in John Deere dealerships, as part of a partnership with parent company Chervon

    The EGO range of products including its line of battery-operated gardening equipment is being distributed through John Deere dealerships in Australia and New Zealand. The move follows an initial partnership launched in the US in June last year. Chervon ANZ general manager Barry Crowhurst said:

    Exciting times as we establish a partnership with John Deere to deliver our best-in-class battery platform to their foundation of customers.
    This partnership will propel our businesses forward, delivering industry leading execution to a rapidly evolving market that places increasing value on environmental sustainability to meet the needs and expectations of both industry and consumers, without compromise.

    EGO is known for its innovations in lithium battery technology with its Arc Lithium 56V. Its advantages over other traditional batteries used in OPE include a shock-resistant design, an exclusive power management system, and a phase-change material that keeps cells running cooler in its batteries.

    The Arc Lithium 56V's battery cells are also designed in an arc - as its name suggests - which helps it to cool down faster. This design innovation allows users to swap out and charge batteries faster without having to wait as long for them to cool down. They come in various amp hours (Ah), from 2.5Ah up to 12Ah, and have a built-in fuel gauge.

    EGO batteries are portable and can be used across more than 70 compatible products, so customers can complete multiple projects using several products with the same battery system.

    In an announcement made earlier this year, John Deere Australia and NZ production systems manager Stephanie Gersekowski said the partnership was another step forward in providing quality products for the company's residential customers.

    Partnering with a leading electric solution brand, like EGO, to provide top-quality battery-powered equipment will place us in the best-possible position to meet the needs of our customers.
    We know our residential and lifestyle customers are seeking sustainable solutions to their gardening efforts, and this broad range of tools will help simplify landscape management with a battery ecosystem that can be used across a variety of property care solutions.

    EGO's parent company Chervon was established in Nanjing, China in 1993. The company also owns FLEX and Skil/Skilsaw. Unlike those brands - which were acquired from German and American companies - EGO is wholly owned by Chervon and acts as the company's main outdoor power tool brand marketed in Australia.

  • Sources: Stock and Land and Slashgear
  • companies

    ABS: Hardware retail revenue to Feb 2024

    Most states follow seasonal path

    While there were still winners and losers in revenues for the 12 months ending in February, most states saw average revenues in the most recent period.

    The Australian Bureau of Statistics (ABS) has released stats for hardware retail revenue through to February 2024.

    In assessing this data, we will rely on periods of 12 months from March to February. Thus p2022 will refer to a period from March 2021 to February 2022.

    Overview

    Contrasting p2024 with p2023, revenue in Australia overall fell by 0.7% to $25.5 billion, a decrease of $168 million.

    In percentage terms, the steepest fall came from the Northern Territory (NT), which was down 5.7% to $263 million, a dip of $16.0 million. In dollar terms, New South Wales (NSW) was the biggest loser, down $239.9 million to $7548.3 million, a drop of 3.1%.

    The largest growth in percentage terms came from South Australia (SA), which rose by 2.7% to $1771.1 million, a gain of $46.0 million. Western Australia (WA) was the largest gainer in dollar terms, lifting by $68.3 million to $2803.3 million for p2024.

    Victoria (VIC) also performed well, gaining an extra $63.9 million to hit $6618.4 million, an increase of just under 1.0%. Australian Capital Territory (ACT) also grew, gaining $11.0 million, an increase of 2.1% to reach $540.0 million. Queensland (QLD) experienced a loss of 1.8%, or $99.2 million, leaving it with$5298.4 million.

    New South Wales

    As the chart indicates, revenue for February 2024 was only slightly elevated over previous years. In the usual peak period from August through to December 2023, revenue flattened out as compared to the two prior years.

    Victoria

    For VIC, p2024 has proven to be surprisingly good period. While the results in both January and February 2024 were in line with recent results, the state managed to set new revenue records during August, September and October 2023.

    Queensland

    For most of p2024 QLD has mostly "split the difference" between a weaker p2022 and a stronger p2023, though it equalled the prior years for December 2023 and January 2024, and bettered them both for February 2024.

    South Australia

    SA saw p2024 win out over p2023 for all but two months - December 2023 and January 2024.

    Western Australia

    Most of p2024 for WA was a close - but slightly improved - copy of p2023. The highlight was a new peak for October 2023, and strong finish in February 2024.

    Tasmania

    Similar to WA, the TAS numbers for p2024 were close to those for p2023, falling below them for December 2023, and getting above them for February 2024.

    Northern Territory

    After a very good p2023, p2024 came in somewhat lower for the NT. March to June 2023 were strong, but after that revenue slowly declined through to February 2024.

    Analysis

    The chart below shows the extent of growth in NSW, VIC and QLD as compared to the rest of Australia.

    One influence of the pandemic has been to shift some growth out of the east coast states and towards the rest of the nation - in particular to WA and SA.

    Just as a reminder of how much things have changed, here's a chart for hardware revenues by state in p2019 versus those for p2024.

    statistics

    ABS: Renovation market stats

    Is the market splitting?

    Australia's renovation market is unique to each state and territory. However one trend that seems to be emerging is fewer but more expensive renovations. Is this the first sign of a split in this market?

    As HNN has commented in the past, tracking renovations (alterations and additions) is always a little tricky. For example, the Australian Bureau of Statistics (ABS) limits all Building Approval data to projects costing more than $10,000, which excludes a large number of actual renovations.

    In general, there is always going to be some doubt about absolute numbers, but what we can track relatively accurately are trends. If there are errors in data collection, they tend to be consistent errors, so if the numbers go up or down, they likely reflect the same movements in the underlying markets.

    Unfortunately, this group of statistics is not really suited for managing the smaller regions in Australia, notably Tasmania, the Northern Territory and the Australian Capital Territory. To adequately manage those we need access to chain volume statistics, which will be out for the March quarter 2024 in the near future. When we have access to those, we'll do a deeper analysis of those regions.

    So what we're attempting to achieve here is not to be definitive, but rather indicative. The statistics we've chosen to use are as follows:

  • Building Approvals for alterations and additions (alts & adds) including conversions
  • Loans for alts & adds
  • National Accounts final household demand for alts & adds
  • Combining all those stats, we should be able to see some trends in each state.

    It's worth delving into these data somewhat comprehensively, because the alts & adds market has become very complex going into calendar 2024. We've seen a slight cooling in the housing market (though not in all areas and all sectors). This is combined with ongoing high interest rates (which, as HNN has suggested in the past, are unlikely to fall through 2024). These contribute to overall increases in the cost of living, driven both by inflation, and opportunistic price increases in Australia's semi-monopoly markets.

    Thus there is retardation in the overall market, as Australia's economy staggers under both inflation and the cure for inflation. Yet there is also stimulus in the alts & adds market, as increased house prices and concerns about market stability reduce the willingness of home owners to sell, and increase the attractiveness of "fixing up" a current abode.

    HNN also commented earlier that it seemed unlikely to us that the "standard" market analysis would work in 2024. This suggests that when the housing market falls, spending shifts to alts & adds. The scenario that gets omitted in that analysis is what happens when strong exterior influences affect the total market. In that case, you could see falls in both renovations and housing, or increases in both. It's not clear that this is entirely the case for 2024, but it is certainly a year for external influences to play a part in all markets, it would seem.

    The monthly data is presented in 12-month periods, which run from March to February. So p2022 refers to a period running from March 2021 through to February 2022, for example. Quarterly data is presented in calendar years for this data series.

    New South Wales

    Building Approvals

    It's interesting to contrast the two sets of stats we have for building approvals: the number of approvals and the total costs of approvals.

    The chart clearly shows that p2024 trails p2023.

    The value chart shows a different picture, grouping together p2022, p2023 and p2024 apart from the previous four years. That is further born out when we consolidate the monthly data into 12-month periods.

    This indicates that while the value spent on alts & adds has remained relatively steady, the number declined sharply for p2024.

    Lending

    The lending stats from the ABS follow a different pattern.

    We can start to unravel this by looking at the numbers for p2023 (the red line), which begins with very high numbers from March 2022 through to August 2022, then drops from September 2022 through to February 2023 to a level that either matches p2022 or is below it. Following that, p2024 underperforms on p2023, but broadly matches p2022.

    Both p2022 and p2023 show a high degree of volatility, especially for p2023. It is difficult, on a monthly basis, to really discern any patterns - there is very little seasonality, for example. The only real pattern is the four-month decline from November 2022 through to February 2023 (shown in the red line for p2023).

    Some patterns can be seen in the 12-month consolidation for these data. The transitions from p2021 through to p2023 follow an expected pattern - an increase in the number of loans corresponding to an increase in the total value of those loans. That pattern is altered for p2024, where the number of loans decreases significantly, but the value decreases less proportionate to that.

    National Accounts

    As quarterly results, the survey for household spending on alts & adds does not reflect any data for 2024, but gives a "grounded" indication of what is going on in the market. It clarifies, for instance, just how extreme the growth has been in alts & adds since the beginning of the COVID-19 pandemic.

    This also presents a simple illustration of what many have intuitively supposed was happening in the alts & adds market: increased demand in the first quarter of 2023 as compared to 2022, parallel demand to 2022 in the middle quarters, and decreased demand in the final quarter.

    Analysis

    Numbers of building approvals decreasing while overall spending remains static indicates that a split has developed in the NSW renovation market. We can combine that with the lending numbers, which show a decline, but a much less significant one. For example, a similar number of loans for p2022 show a much lower value than for p2024. This would indicate that the decline in largely in self-financed renovations. The two possible scenarios is that those renovations were of relatively low value, as did not affect the overall number as much, or that as some renovators dropped out of the market, those that did remain have increased their spending.

    Victoria

    Building Approvals

    One aspect of building approvals for Victoria that must be mentioned is the overall decline in alts & adds as reported by the ABS. The chart below illustrates the number of alts & adds reported by the ABS for financial years.

    As this shows, in terms of what the ABS considers alts & adds, there has been an ongoing decline since 2018.

    Moving on to the monthly numbers as reported by the ABS, what is most notable in comparison with the NSW data is the lack of volatility.

    What volatility there is, such as the spike for February 2023 (the red line) is caused by the addition of data for conversions along with pure alts & adds (which is necessary as the value data for approvals is only provided with the two combined). The most recent volatility is for p2021 (the green line), which, running from March 2020 to February 2021, would have been at the start of the pandemic period. While p2022 shows some increased activity, both p2023 and p2024 are more subdued.

    The values for alts & adds shows something quite different.

    What is interesting here is just how similar the most recent three periods are. There is some additional volatility to p 2022, but there is a strong seasonal pattern running from November through to February in all three periods.

    What is happening is more clearly outlined in the chart that totals these 12-month periods.

    This shows an immediate shift, starting with p2022, where the value reaches a local high, and maintains that through three periods. This seems to exist almost independent of the actual numbers, which is especially noticeable for p2024, with numbers reaching a new local low.

    Lending

    It is evident that the number of loans has fallen substantially for p2024.

    The most substantial declines are for April 2023 and December 2023.

    The story for the value of loans, however, is quite different.

    As we saw with NSW, even as numbers fall, values increase. The exception to this would be for April 2023, where a strong fall coincides with the fall in number of loans. But that is contradicted by the February 2024 loan values, which climb steeply, while loan numbers increase more modestly.

    Looking at the 12-month totals for the lending stats, we can see a trend somewhat similar to that for NSW.

    Again for p2024 there is a reduction in the number of loans, but an increase in the total value for those loans.

    National Accounts

    As with NSW, the alts & adds reflected in National Accounts show a somewhat more stable pattern.

    This shows alts & adds for 2023 tracking slightly above those for 2022 at the start of the year, following below, then tracking considerably higher for the September quarter. The end of 2023 shows a near match on 2022.

    Analysis

    Similar to NSW, we're likely seeing a split in the market. Fewer loans for a larger amount, a trend that is echoed for building approvals.

    Queensland

    Building Approvals

    The numbers of approvals for alts & adds, leaving aside the spike for December 2022 from conversions, have remained remarkably stable.

    The only real spike has been for June 2023.

    Surprisingly, the values have also remained stable.

    The dominant driver remains seasonality.

    The 12-month overview shows some differences to those for NSW and VIC.

    While the part of this pattern that is familiar is the value of approvals remaining nearly constant for p2022 through to p2024, what is different is that the number of approvals goes both up and down.

    Lending

    In contrast to approvals, lending remains quite volatile.

    Overall, however, there is an evident reduction in numbers for p2024 as contrasted with p2023.

    Not surprisingly, there has been more stability in the value of loans.

    The most interesting feature of this chart is the increase between February 2022 and March 2023, which is something like a pandemic "before and after", with values subsequent to March 2023 entering a new region of consistent highs.

    The 12-month summary for lending also seems familiar.

    The pattern of a reduced number of loans but a constant overall value is repeated.

    National Accounts

    The estimation of household spending on alts & adds from the National Accounts does show a difference from NSW and VIC.

    Spending for 2023 does rise above that for 2022 in the June quarter, but there is a sharp drop for the December quarter.

    Analysis

    While there are some broad similarities with NSW and VIC, QLD Is also unique. The pattern for spending reflecting in approvals is for a high spend per approval in p2022, followed by a reduced spend in p2023, and a return to a moderately high spend in p2024. The lending data reflects that, though in a diminished way.

    South Australia

    Building Approvals

    After the east coast states, stats for SA seem quite unique.

    There is a degree of volatility for p2022, followed by a less volatile p2023, then a somewhat volatile p2024.

    In terms of value of approvals, these show a more constrained range of movement, with a strong peak in November 2023.

    While some of this chart looks familiar, it is telling a very different story to the east coast states. There is a steady increase in 12-month total values of approvals from p2020 onwards, while the numbers fluctuate. For p2023 there is a reduction in number of approvals, while value continues to grow. However this is followed by a strong increase in numbers for p2024 without a commensurate increase in value.

    Lending

    The lending numbers are volatile for p2022 and p2024, but more stable for p2023.

    There is a similar volatility for the value of loans.

    The strongest pattern is an increase for p2024 from the low in September 2023 through to the high in January 2024 - though this is followed by a steep fall in February 2024.

    The 12-month view on lending reflects the results from approvals.

    In something of a reversal from the east coast states, we see in p2023 an increase in the number of loans, with only a small lift in their total value. This reverses in p2024, with the number of loans decreasing while the value rises.

    National Accounts

    The pattern here is to see 2023 outperforming 2022, which is itself far above 2021.

    Analysis

    It would seem that p2023 would have been something of a consolidating period in market, with activity centred on slightly lower-value expenditure on more alt & adds activity.

    Western Australia

    Building Approvals

    Unfortunately, with the low level of approvals reported by the ABS, the chart of stats becomes less clear. What can be discerned is that the level of activity for p2024 is above that for both p2022 and p2023.

    In terms of values, we can see that p2024 is clearly boosted above the two preceding years. While seasonality continues to play something of a role, October and November 2023 have been boosted considerably, as has February 2024.

    WA shows something of an individual pattern. In p2022 there is a sharp shift in the value of approvals, with numbers reducing while value increases. However, something of that new ratio hold true for the two subsequent periods, with the numbers corresponding more or less with the value.

    Lending

    Perhaps the most interesting feature of this chart is that while there is some seasonality in p2021, p2023 and p2024, p2022 seems to break away from this, starting in April 2021.

    The value of loans seems to follow a similar pattern, with p2023 something of a break-away. So p2024 follows much of p2022, with the exception of a kick upwards for December 2023, January 2024 and February 2024 at the end.

    The 12-month values show a real "normality" in lending. The value of loans steadily increases from p2022 onwards, and so does the number of loans issued.

    National Accounts

    The results for household spending on alts & adds in the National Accounts show a more optimistic picture. 2023 shows considerable gains over both 2021 and 2022.

    Analysis

    WA escaped much of the early consequences of the COVID-19 pandemic (due largely to sane and smart management, as well as some isolation). But was influenced post COVID-19 by economic changes. It seems likely the state is also going to escape some of the more dire forces at work in the other states, especially as regards poor planning for housing demand.

    Overall analysis

    It should be clear from considering these stats that we're really not looking at a "regular" period for alts & adds. Universally, there has been an increase on expenditure in this area since the pandemic, and nothing in these numbers suggests that is going to end abruptly.

    What we are seeing, however, are different growth patterns. One possibility is that the market is beginning to split in the east coast states somewhat into "have" and "have not" strata. That is, we could see already expensive housing migrating through renovation and extension to be even more expensive, while the stratum below that seeks to remain in the realm of "achievable" purchase.

    statistics

    Big box update: Growers and supermarket code

    Plant lobby accuses Bunnings of "stranglehold" on greenlife category

    Woolworths and GIA have formed an unlikely alliance in calling for Bunnings to come under the supermarket code

    Bunnings managing director Mike Schneider has rejected claims made by the chief executive of plant industry lobby group Greenlife Industry Australia (GIA), Joanna Cave that the hardware/home improvement retailer has 70 per cent market share of greenlife products.

    He recently told The Australian Financial Review (AFR) the retail horticulture sections of the 310 Bunnings outlets in Australia selling seedlings, native grasses, flowers and shrubs had an overall market share of about 25 per cent.

    In GIA's submission to the Senate Select Committee's Inquiry into Supermarket Prices, Ms Cave said its figures came from extensive surveys with growers, carried out over the past five years.

    We think the growers are best placed to know. We're very confident that we're right.

    However, Mr Schneider said there were between 1000 and 1100 growers of seedlings and plants around Australia with diverse avenues to market, and Bunnings only dealt with about 250 of those.

    GIA

    The commercial gardening and nursery sector has publicly expressed - for the first time through GIA - its concerns about Bunnings' market power and how it treats growers.

    The nursery industry has been valued at over $2 billion at the retail level and GIA represents businesses that grow seedlings, plants and trees that are sold to gardeners. It employs more than 25,000 people. GIA said by volume of units sold in Bunnings' stores, plants were second only to tins of paint.

    In its submission, GIA said Bunnings' massive market share allowed it to dictate prices and supply of plants. The submission said:

    Whilst growers of nursery products do supply plants to many supermarkets, our bigger concern is with the supply of plants to what are commonly described as big box stores.
    Bunnings is by far the biggest of these, maintaining a national market share of 70 per cent, rising to over 80 per cent in some regions and towns.

    Ms Cave said:

    We've got lots of examples where we feel Bunnings is abusing their dominance of the marketplace. Growers have shared their stories with us in complete confidence because they are genuinely scared of retribution.

    Ms Cave said she had spoken to at least 200 growers in the lead up to the inquiry, and some were being encouraged to plant up to 10,000 seedlings but given a contract for only a single plant.

    And they might ask several of the growers in the region to also plant 10,000. But they're under no obligation to take any from anybody. Of course, that's a perfect example of asymmetry of information, because the big-box retailer has all the information on who is growing, the numbers they've been encouraged to grow and the prices that they're requesting. They can pick and choose. They can take 8000 or 5000 or none. It's up to them.

    Ms Cave said grower appeals for price increases were routinely rejected after lengthy reviews while retailers would raise costs of nursery products overnight. She also said fear of retribution or being punished for raising complaints against Bunnings was "the biggest issue" growers expressed to her.

    It's been the No. 1 preoccupation for growers.

    Growers

    Tasmania-based Brocklands Nursery owner Karen Brock supplied native trees, grafted and standard roses, herbs and perennial plants to Bunnings from 2003 to 2016.

    Appearing before the senate inquiry, she said the relationship worked "incredibly well", until increased demand to supply plants for merchandise stands in store "with no contract or even an indication of what numbers they were looking at" placed her business under pressure. In The Weekly Times, she said:

    When you've got merchandise space, you've got this Holy Grail of space, it gives you confidence to put stock on the ground, but not off an order. We were growing (plants) two years out, this is a long-term investment you're spending now to get a sale out of in two years. You get the confidence, and you get sucked in, you start investing and borrowing money because you have to put all this stock down.

    She said there was no supply contact, and was subjected to intimidation when complaints were raised with Bunnings, citing one example where an entire range of plants were cancelled.

    They would not give decent orders, they would not confirm orders, they would not give us any forward planning.

    When Ms Brock raised concerns with Bunnings, she said the barcode for her product was cancelled. She said Bunnings' practices resulted in low prices for her business and order sizes in some years collapsing without any warning, as the retailer switched between its various suppliers in an apparent "divide and conquer" strategy.

    Ms Brock said troubles with the giant retailer escalated in 2014-2015, when Bunnings opened new stores in Burnie, Launceston and Glenorchy. She told the senate committee:

    Because we're growing stock two or three years in advance, we needed to know what were their plans so that we could grow stock.

    Bunnings refused to sign trading terms or contracts detailing the number of plants they would buy from her over time. It also refused to adhere to minimum plant order sizes, forcing her to incur losses delivering small orders to Bunnings stores state wide. Ms Brock said:

    We were travelling to Hobart and back ... for a $78 order, or a $48 order. We tried to bring in a $300 minimum order but that was rejected.

    Ms Brock said the unfair lack of transparency on its ordering schedule was rife in Bunnings.

    We had these huge pressures put on suppliers, they promised the world, and then those promises weren't delivered.

    Her business was left with mountains of unsold stock as a result. She said:

    I don't think there's anything worse than seeing your work of two to three years sitting on the tip. I felt that we were slaves, we were slaves to Bunnings.
    We were a mouse running around the hamster wheel and no matter how fast you spun that wheel, you could not ever achieve the goal of making somebody happy in that environment.

    Nick Powell is a nursery grower near Stanmore in Queensland. He is aged in his 70s and faced health issues, including a battle with leukaemia. He has vented his frustrations at dealing with Bunnings Warehouse in the past.

    Growing a mixture of indoor foliage plants and landscaping plants, Mr Powell said he felt he was a very good supplier to Bunnings, but grew increasingly frustrated with a lack of certainty around orders. Bunnings was its largest customer, with other minor customers. In the Weekly Times, he said:

    The issue was we'd try and get allocations for stock we knew would be ready at a certain time, that was the hard part.

    He said there were no supply contracts at all between his nursery and Bunnings. In order to work with the uncertainty, Mr Powell would invest in bigger pots to replant stock in "to keep growing it, and hope to sell it as larger stock items".

    That was one of the only ways we could cope with not being able to get our stock into store.

    Tim Drewitt is a nursery plant grower, selling to Bunnings through his Silvan-based farm, Drewitt's Bulbs, in Victoria. He said he has supplied product to Bunnings since late 2018, and has had a positive relationship with the company, contrary to some stories being told by other suppliers. In The Weekly Times he said:

    We're purely a Mum and Dad business, I have a young family. I'm a little frustrated with GIA. I have reached out to them a couple of times asking for support in various avenues, and they tend not to respond.
    I'm sure there are suppliers who have had issues, but I have not experienced that. We employ up to 30 employees, and especially during COVID, the support and patience shown by Bunnings was very accommodating.

    Bunnings' response

    Mr Schneider said he was "concerned" to hear the accounts from some of his former suppliers. In the Examiner, he said:

    Some of the claims made were new to us, some quite historical, and others are not aligned to the information we have to hand. They're absolutely at odds with the way we believe we do business and we look forward to responding to these more formally in due course.
    Assertions that we do not have contracts or that our team refused to make commitments or agree to price increases are simply not true. We're confident the two accounts don't reflect the views of the vast majority of our around 220 greenlife suppliers. However, we know we don't always get it right and if we let a supplier down, we act as quickly as we can to remedy it.

    He said he invited suppliers who were unhappy with their dealings with Bunnings to reach out and meet him, with GIA as an intermediary if they wished. In the Sydney Morning Herald, Mr Schneider said:

    I'm always going to be sad to hear about situations where people say we haven't done the right thing. Me personally, I want to put it right.
    If someone's done the wrong thing in my team, we've got very strong internal processes in our own code of conduct that we hold our team accountable to. I'm not saying we're perfect, I'm not saying 'nothing to see here, move on'. There could be truth in what [they] said.

    An independent whistleblower resource managed through Deloitte is also available to suppliers, Mr Schneider said.

    We have previously asked the GIA for their assistance in connecting growers with us if there are concerns so we can assist and support them.
    We have reached out to all current greenlife suppliers and encourage anyone that has feedback or an issue they'd like to discuss to contact us directly so we can investigate.

    Mr Schneider said the business worked hard "to build longstanding, win-win partnerships" with plant suppliers. He told the ABC:

    We have robust processes in place, including as part of our trading agreements, to ensure those relationships are fair and transparent.
    Many of our supplier relationships span a number of decades and generations, and over the years they have engaged our team on ways to partner, grow and collaborate to support their businesses.

    Most recently, Bunnings category manager Belinda Raskers told the parliamentary inquiry it was in the best interest of the company to maintain its relationships with producers and she was shocked at previous evidence from plant suppliers. She said:

    We rely purely on our suppliers over supply, and having not really strong relationships with our suppliers is of no commercial benefit for us. We have to have really long-term, viable supplier relations here.

    Supermarket code

    Coles and Woolworths have signed on to plans to make the supermarket code of conduct mandatory, following a review led by economist and former Labor trade minister Dr Craig Emerson. The interim report - which is being released for feedback - recommends the code "be made mandatory and apply to all supermarkets with annual revenues exceeding $5 billion, which at present are Coles, Woolworths and Aldi and [the] wholesaler Metcash".

    The report calls for the code to be strengthened to better protect suppliers, including by outlining new protections against retribution for complaints.

    Woolworths and GIA have both called for Bunnings to come under the code, with the supermarket arguing that the hardware retailer is now a competitor in certain grocery categories and the association accusing Bunnings of abusing its market power in the plant retail sector.

    However, Mr Schneider said broadening out the code would mean it becomes a "catch-all" that is "not going to service everyone".

    It's a supermarket code ... Bunnings is just not a supermarket. We are simply not a grocery retailer or a food retailer.

    Mr Schneider said that the code should be assessed through an "industry lens" rather than by product, pointing out that supermarkets might, from time to time, sell power tools.

    Businesses will dabble in adjacent categories, either periodically or build those out, but that doesn't make us a supermarket, and that's a fundamental difference.

    The Food and Grocery Code of Conduct regulates how supermarkets and their suppliers do business. While it includes plants and flowers in its definition of groceries, the voluntary code is only signed by the major supermarkets.

    Ms Cave said growers who supplied Bunnings and other stores like Mitre 10 and IKEA need to be protected from unfair trading practices. She said that could be achieved if the government included them in the Food and Grocery Code of Conduct and made the code mandatory.

    Growers really feel that Bunnings has all the power in the relationship. [Bunnings] sets the price, control supply, there is an absence of proper legally enforceable contracts - all kinds of practices that would be in breach of the code, were Bunnings covered by it.
    If everything they are doing is above board they have nothing to fear - but it will certainly be a reassuring gesture to their suppliers, who are on their knees.

    Ms Cave argued that the big box retailer had more in common with major supermarkets than local garden centres.

    It seems ludicrous that Bunnings would sit outside the code and not be subject to any of the rules.

    In the AFR, Mr Schneider referred to the vast products purchased by shoppers from Bunnings as "discretionary spend" meaning they wanted to buy them, not because they were a staple of life like in food sold by supermarkets.

    As a result, it would seem unfair to try to apply a "universal" code of conduct on retail businesses which had vastly different characteristics. He said:

    There's more differences than there are commonalities.

    The Senate Select Committee on Supermarket Prices will hand down its report in May, and the Australian Competition and Consumer Commission is conducting a separate inquiry into supermarket pricing, due to report in February 2025.

  • Sources: Australian Financial Review, Australian Broadcasting Corporation, The Australian, The Guardian, Canberra Times, The Examiner, Weekly Times and Sydney Morning Herald
  • bigbox

    Hardware retail update

    EW Bulte under new ownership

    Sunshine Mitre 10 in Maleny (QLD) court case win and a Home Hardware store is closing for the final time

    Long-established hardware business EW Bulte located in Ararat, in south-west Victoria, has changed hands after 112 years. Owner Peter Walker has been a familiar face at the hardware store EW Bulte for 38 years. But in March, he handed over the keys to new owner Niles Patel. Mr Walker told the Wimmera Mail - Times:

    Deciding to sell wasn't easy but it was time. I want to do other things, and it seems right.

    After making his decision, Mr Walker's first thought was to thank the customers loyal to the company ever since his great-grandfather Ernest William Bulte founded it as a building company in 1912. He said:

    The locals have been good to us over the years.

    EW Bulte employs four staff members, and he credits them as a significant part of the company's success.

    Without good staff, you can't do it.

    Initially, Mr Walker had a building career in his sights when he was at school, and owning the hardware store was a side of the building industry that fitted with that. A four-year stint in the bank in Melbourne before joining the company was a bonus managing the finances, and he loved that side of the business. He said:

    I always wanted to join the company, but when I left school, there were no vacancies! Dad thought I should work for someone else before joining the family business, and he was right. I learned what an employer expects from you.
    My wife Karen and I took over in 2000 after I'd worked with Dad for 15 years.

    EW Bulte has survived and thrived despite two world wars, a depression, the black plague, and COVID-19. Some noticeable changes over the generations have been in how business is built. Mr Walker said:

    I go to the bank when I want to expand, but the generations before me would save up to develop or increase stock. The use of cash has also diminished, although quite a few of our customers still prefer cash.

    He doesn't think the introduction of mega-stores has impacted EW Bulte's business.

    Some of my customers came here as children with their parents, and that's what customer service can do for your business. I suppose you could say some of our customers are generational.

    In his opinion, customer service is essential to any business.

    You could spend the same amount of time with a person who needed a washer for a tap as you could with a much bigger order, but they were all equally important.

    New owner, Mr Patel, wanted to purchase a family business, and EW Bulte fit that description. He intends to maintain the same customer service, and the EW Bulte name will stay, too.

    Mr Patel and his wife, Puri, own and operate a service station near Ballarat. He'll initially divide his time between the two businesses but hopes to eventually work full-time at the hardware store.

    Sunshine Mitre 10

    A Sunshine Coast Mitre 10 store in Maleny (QLD) that was accused of violating human rights and discriminating against a man who refused to wear a face mask during the Covid-19 pandemic has had a win in court. According to the Sunshine Coast Daily:

    Andrew Kos claimed the Mitre 10 store ... which is operated by Deltapath Pty Ltd, indirectly discriminated against him when they refused him entry for not wearing a face mask on July 14, 2021, despite his impairment.
    The public health order for the Sunshine Coast region at the time was that everyone aged more than 12 years old was to wear a face mask in indoor spaces and the Mitre 10 Maleny store chose to enforce a blanket ban in order to properly comply and protect their staff.

    The court documents stated Mr Kos was "challenged very quickly" when he entered the store and denied entry, with the staff offered to bring Mr Kos products he was interested in outside.

    Mr Kos initially took his complaint to the Queensland Human Rights Commission before it ended up at the Queensland Civil and Administrative Tribunal, where the decision was delivered on March 13.

    The court documents from the decision stated it was accepted Mr Kos did suffer from an impairment when he refused to wear the mask.

    Some people will suffer from chronic anxiety and agoraphobia to such an extent that it impairs their thought processes, emotions or judgment or that results in disturbed behaviour, but some will not.
    Mr Kos explained when giving evidence the difficulties that the conditions caused him, and I am satisfied that they amounted to an impairment on 14 July 2021 as defined in the ADA (anti-discrimination act).

    Member Jeremy Gordon said Mr Kos had not proved he had difficulty wearing a mask at the time of the incident due to his impairment and he was most likely incorrect when he said his doctor told him he would suffer mental and physical harm if he had. Mr Gordon said:

    I think what the doctor said was what Mr Kos explained when giving evidence in the hearing, that he had been advised that it was not sensible to wear a mask if he was having a panic attack. This can be readily accepted.

    Mr Gordon said Mr Kos was not having a panic attack at Mitre 10. He also said the store's blanket ban on people coming inside without masks on was not unreasonable for the safety of staff, especially given it was a criminal offence at the time for a business not to comply with the public health order.

    He was aware that a number of his staff had underlying medical conditions such as coronary heart disease, hypertension, asthma, Asperger's syndrome, and post traumatic stress syndrome and he was sure that many customers would also have health issues.

    Ultimately, Mr Gordon ordered the complaint be dismissed.

    Khouri's Trading Co.

    In the Sutherland Shire in NSW, Khouri's Trading Co store that also trades as Home Hardware Miranda, is closing after more than 60 years.

    The Khouri family ran it for many years before business partners Pat Albanese and Marty Vukovic bought the business 26 years ago and retained the name Khouri's Trading Co, according to a report in the St. George and Sutherland Shire Leader.

    Khouri's was the shire's only remaining small hardware shop after the closure of Glen's Mitre 10 at Sutherland in 2010 after 57 years, and Hocking & Rose at Kirrawee, Mitre 10 Engadine and Illawong Hardware in 2012. Mr Vukovic announced the closure of Khouri's in a social media post.

    It is with a heavy hear that we share some bittersweet news with you all. After 26 years of trading, Khouris Trading Co will be closing its doors for good. This decision was not made lightly, however we believe it is the decision for us.
    Our final days of operation will be towards the end of April ... We want to express our deepest gratitude to each and everyone of you who has supported us over the years. To show our appreciation we will be offering discounts across our entire range as we clear out our remaining stock.
    Your support has meant everything to us, and we hope to see you in the coming weeks as we bid farewell.
    With gratitude, Marty, Pat and Gabriella.
  • Sources: Wimmera Mail - Times, Sunshine Coast Daily and St. George and Sutherland Shire Leader
  • retailers

    Big box update

    Lithgow store plans

    A contractor wins payout, Bunnings beats out Woolworths as "Most Trusted Brand" based on Roy Morgan consumer research and staff retention for staff

    The intended location for the Bunnings store in Lithgow (NSW) is still in the process of mining the old Lithgow Valley Colliery coal seam, leaving a substantial hole in the terrain that will need to be filled in before construction starts. So there is no official timeline for when the store is likely to open.

    Regional manager for Bunnings, Simon O'Grady, told the Lithgow Mercury the new store will be a $13 million investment in Lithgow spread over 6000sqm, and 25 per cent bigger than the existing western Main Street complex.

    The improved layout will incorporate the trade requirements, timber yard, nursery and a wider range of home and lifestyle products.

    Mr O'Grady said Bunnings is looking forward to bringing the new store to Lithgow and is eager for construction to get under way.

    Related

    Lithgow in development - HNN Flash, March 2023

    Contractor

    Bunnings recently made a payout to a contractor worker who was seriously injured on the job.

    Back in 2018, Sarah Jane was working as a merchandiser for Neutrog at the Seven Hills Bunnings store in Western Sydney. At the time, she severely injured her back when she knelt down to lift and drag forward a bucket of fertiliser to the front of a pallet. Each bucket weighed between 10.8 and 11.2 kilograms.

    Ms Jane's case has gone before the NSW Supreme Court, with Bunnings agreeing to a settlement of $750,000 plus legal costs, which are reportedly about $500,000 but are yet to be determined. Neutrog, who Ms Jane was employed through, has been ordered to contribute to the costs.

    Bunnings said they "knew or ought to have known" the foreseeable risk when they failed to train Ms Jane to use a pallet jack, which could have prevented her injury. Ms Jane received training through a Bunnings module but was not told pallet jacks were available to help her move stock forward.

    These jacks are regularly used by Bunnings' own workers, however, court documents note Bunnings "did not apply the same rigour or adopt the same precautions for the merchandisers, who were nonetheless subject to Bunnings control and oversight".

    Ms Jane said she continues to suffer from the back injury and it has affected her ability to parent her kids. She told news.com.au:

    It's a win but it doesn't really feel like a win. Not just everything that they've put me through, but just the injury itself, and how much it's changed my life and how much I've missed out on with my kids when they were young.

    Staff retention

    In its survey of best places to work around the country, The Australian found that "many organisations show enormous innovation, drive, resourcefulness and talent to push forward even as the economic landscape within the nation and in the rest of the world is changing at a fast pace".

    According to Bunnings, it has a high retention rate of more than 80 per cent permanent staff, and has more than 2800 team members who have been with the company for 20-plus years. Damian Zahra, Bunnings' chief people officer, told The Australian:

    A phrase you'll often hear around Bunnings is 'we live here too', which is in reference to the fact that many of our team live, work and raise families in the roughly 400 communities where we operate.
    Many of our team members feel a real sense of pride and connection by working in their own local communities, which we find naturally helps them stay engaged, productive and happy. We're really fortunate to be in this position and we certainly don't take it for granted.
    We're also proud of the collective attitude of our support centre team who work hard each day to help set our stores up for success. They all really embrace the diverse and fast-paced nature of the retail industry and enjoy the cross-collaboration between the many different functions that support the business.
    Culture and attitude mean everything at Bunnings. For our store teams in particular, we always look for people who love working in a team and providing customers with great service, as we know these attributes help us deliver strong results and make Bunnings a great place to work.
    One of our core HR philosophies is ensuring we maintain a multi-generational workforce. Age is not a barrier at Bunnings and we have really strong team cohorts across all age demographics - from young people still in school to mature-aged team members, some even into their 90s.

    Caleb Whitaker, a supervisor at Bunnings Maitland said he has worked at more than 10 Bunnings stores across Australia.

    Each one of them has a friendly, welcoming and supportive team. The culture that Bunnings has built really stands out and is something customers often appreciate.
    I've really valued the flexibility that's come from working at Bunnings. This is my 10th year at the business and during this time I've been able to work after school, during uni and even while I travelled. The business allows you to work around your life schedule, which has been great.
    As part of Bunnings' Travelling Team Member program I was able to continue working while touring around Australia with my wife for 14 months - which was honestly one of the best experience of our lives.
    We travelled over 40,000km in total, and during that time I worked shifts at eight Bunnings stores across six different states. I don't think many other workplaces could've facilitated something like that - it was amazing.

    Top brand

    Bunnings has been crowned the most trusted brand in the 12 months to December 2023, based on results from the 2023 Roy Morgan Risk Monitor survey. It has returned to the top spot after three-and-a-half years, dethroning Woolworths.

    Bunnings lost its title as Australia's most trusted brand to Woolworths in May 2020. However, since October 2022, Bunnings has shown a strong recovery, achieving the largest improvement in trust among all trusted brands. Roy Morgan chief executive Michele Levine said:

    Bunnings is a brand with a vast reservoir of goodwill and reputational strength fed by dramatically more trust than distrust... its trust has been climbing steadily over the past year while its minimal distrust remains fairly stable.

    In its research, Roy Morgan found that Australians' distrust in companies has grown in the last year, with reasons including corporate greed, poor customer service, unaffordable prices, dishonesty, unethical practices, and poor privacy practices. Bunnings has managed to buck the trend against an economic environment where trust has eroded. Ms Levine explains:

    Bunnings has harnessed many of the foundational pillars of a trusted brand including great customer service, communicating what it stands for and delivering, being an active part of the community, solving customer's problems and expertise and product knowledge.

    The Roy Morgan Risk Monitor canvasses about 2000 Australians every month on 1000 brands across 26 industries.

  • Sources: Lithgow Mercury, Australian Financial Review, Yahoo News, Roy Morgan Research and The Australian
  • news

    Hardware retail: Delivery partnerships

    Bowens partners with Uber

    In the US, online ordering platform DoorDash has added Lowe's as first home improvement retail partner

    In another profile in The Australian, Bowens said it has a commercial agreement with Uber's Australian arm for timber and hardware product. It guarantees 90-minute deliveries via the rideshare and delivery app of up to eight boxes weighing up to 20kg to building sites within a 15km radius from a store.

    So far, average delivery times for the service, which charges a $10 flat fee, are less than 60 minutes. Bownes chief investment officer Andy Bowen told The Australian:

    The reason we invested in digital in the first place was to focus on the next generation of builder coming through. We were concerned that we were not engaging enough with that generation.
    It has been a difficult period for builders. So we are trying to do everything we can to make life easier for them.
    We hear time and time again that they are starved of time. It is disruptive for them to leave the building site. For us to be able to offer Uber is a huge advantage.
    It is to the point now where some of the builders are actually mandating with their teams to use the Uber service, rather than getting in the car and losing an hour off site.

    John Bowen has been CEO of Bowens since 2005. He said:

    Tradies and builders are growing up in a world where they are getting their deodorant and shaving cream in two hours from Amazon. This is the world that we are in. We can't continue to suggest that timber and building supplies sits outside of that.

    In the past 12 months, Andy Bowen has established an in-house e-commerce and marketing team focused on same-day delivery of the large and often fragile products needed by builders on work sites from Bowens' 20 stores across Victoria.

    We effectively are a logistics company in many ways. We have our own vehicles, some contract vehicles, and are able to get product to site very quickly.
    When you are selling a commodity that you can buy across the road, you have to be really good at finding new products and being innovative. By making sure we deliver on time in full and deliver really quickly, we will differentiate ourselves even further from the competition.

    Seventeen per cent of deliveries from the Bowens store network are currently same day, and it wants to double that number by the end of the calendar year.

    Since early 2022, the firm has added about 15,000 products to its online offering, which now totals about 55,000. Its ultimate aim is to have every product that it sells online.

    In the 2024 financial year Bowens said it will sell more than $600 million of timber, building materials, hardware and prefabrication products, which is up from $460 million in 2022. Four stores have been opened since March 2022, at Warragul, Melton, Cheltenham and Belmont, while two stores, at Hastings and Epping, are being extended. John Bowen said:

    We've never opened up that many stores so quickly. It would be unlikely for us to do that again.

    He said the company is "definitely" open to the idea of expanding the Bowens brand outside of its home state, but also said "we are not going to fall over ourselves trying".

    It is also a tough economic environment for the timber and building product supplies market. In 2024, for the first time in several years, annual turnover at some of Bowens' stores will be in line with, or below, the previous year. Prices for pine framing and engineered wood products have been under pressure. John Bowen said:

    It is a bit slower in the back half of the year than it was at the start. Except for our truss plant in Brisbane. It's all about Victoria. Victorian builders in the volume space are not selling enough homes. So we are feeling that.
    We look at a crucial number every month, which is those builders who are no longer in business that we were trading with a year ago. It is still a pretty significant number, even if the number of those in trouble has slowed.

    Bowens has always been self-funded and has never taken on a dollar of external capital. Andy Bowen said:

    I worry when I look at the rest of the market and the industry, that the fabric of the business would be lost to capital investment that is external. We continue to reinvest as a family and that is the best thing for our business network.
    We are growing at our own pace. To double in size in the next five years is not in our best interests. We are meeting the needs of our customers and our builders, and we are listening to them. That is the right pace for us and that does not require external investment.

    Related

    Bowens has an ecommerce plan - HNN Flash, August 2021

    DoorDash and Lowe's

    DoorDash recently announced new partnership with Lowe's Home Improvement in the US to offer on-demand delivery from over 1,700 stores nationwide. Neelima Sharma, senior vice president, digital commerce and technology at Lowe's, said:

    As Lowe's continues its omnichannel journey, expanding same-day delivery options helps us meet our customers where they are. Our collaboration with DoorDash unlocks an opportunity for us to reach new DIY customers who are shopping directly on the DoorDash app...

    Lowe's products can now be purchased directly on the DoorDash app, helping consumers easily shop for everyday items they need delivered same-day. All participating Lowe's stores will also be available on DashPass, DoorDash's membership program that offers members a $0 delivery fee and reduced service fee on eligible orders from thousands of restaurants, grocery, and convenience stores across the US.

    (DashPass benefits apply only to eligible orders that meet the minimum subtotal requirement listed on DoorDash for each participating merchant. Other fees including service fee, taxes, and gratuity still apply. After signing up for DashPass, users will be charged the then-current renewal price plus applicable taxes automatically on a recurring basis until it is cancelled.)

    Fuad Hannon, vice president of new verticals, at DoorDash, said:

    ...Our partnership enables consumers with quick access to must-have tools and last-minute materials to complete projects of all sizes.
    retailers

    New product: uLock

    Safe mixing for powder products

    The uLock mixing system is a genuinely innovative 23-litre pail, platform and lid that supports the safe mixing of all powder products. Its patented locking system, locks into the uLock platform and secures the pail in place while mixing.

    Throughout his career, Jason Milani has worked in marketing roles for a number of different companies that supply the tile industry. In that time, his exposure to product development processes has given him a sense of how products are created from start to finish. Now he is using his experience and expertise to bring uLock to market. As he told HNN:

    While speaking to my mate in the trades, we spoke of a common issue we had when it came to mixing products.
    The issue we both had was the bucket constantly moving due to the pressure of the mixing tool. There were a number of close calls with the bucket slipping from the grip between our knees. I wanted to think of a safer way to mix products and that's how I developed the idea of uLock.
    In my mind, uLock is going to provide users with a safer option to mix products and reduce the risk of absorbing airborne crystalised silica [RCS]. It's going to save professional tradespeople time and physical effort when it comes to mixing and reduced the chance of injuries.
    With my contacts and my design mindset, I was able to leverage some suppliers and get things moving with uLock.

    The product

    Ulock is designed to tackle a number of worksite issues, related to safety, ergonomics and efficiency. It's not uncommon to see workers from various trades struggling with the (apparently) "simple" task of mixing a powder product with water in a bucket. It's a little funny when a bloke finds instead of mixing, he has the bucket spinning at a high rate of rotation between his work boots - but it's not really funny, because it could result in poorly mixed product, an expensive spill, or worst case, a leg injury.

    In short, power mixers have solved a lot of problems, and added in extra efficiency, but they've also created a few problems of their own. Ulock is the accessory that can help tradies really unlock the full potential of those powerful mixers, making the job both safer, faster and with a great result.

    A really important addition to that is protection from accidentally inhaling respirable crystalline silica (RCS) particles. While there have been real advances in reducing the amount of RCS in adhesives and other tiling products, it still remains a major concern. Much of that exposure comes in the early stages of mixing, when the dry powder is added to the small amount of water in the bucker, creating a "bloom" of fine powder dust - most often inhaled by the tradie. Ulock is a really well thought-out solution to radically reducing that risk.

    The basics of the product are this: There is a platform made from moulded plastic, 520mm deep by 660mm wide. The 23-litre uLock bucket locks directly into that platform; it simply cannot rotate at all. The user stands on the platform, so he/she is perfectly positioned over the bucket.

    The lid of the bucket folds back so that water and mixture can be added in a controlled way. The mixer can be inserted and the lid locked down, so that the mixing takes place under the lid of the bucket. A vacuum hose can also be attached to further reduce the risk of dust escaping.

    It's a sensible, safe solution.

    Feedback

    When Jason originally came up with the design of uLock, it didn't make it past the initial phase because of engineering complications. He learnt from that experience to work more closely with the engineers to understand why his design was not suitable. After a few more drafts, he was able to translate the requirements of uLock into a manufactured design.

    There has also been some real-world testing of the product. So far, Jason has organised a demonstration day at Kerakoll in Melbourne and apprentices from Holmesglen TAFE have also used it under teacher Frank Vanzella's supervision.

    A number of comments from end-users came out of the demonstration days. One comment related to the size of the bucket and whether it could be made bigger so that two bags of adhesives (or another product) can be boxed in together. Jason said:

    The answer is 'no' purely because then it becomes a 55kg bucket. It's not about the volume, it's about the weight of lifting up 55kg.
    The market states that bags should be between 16 to 20kg. If you remember that years ago cement bags were 25kg. So they've gotten lighter. Anything more than 20kg, they would prefer a two-man lift. Two men can't be lifting a bag of cement! At least, I hope not.

    Another comment related to the lid being clear. As Jason explains:

    Unfortunately it can't be done because having a clear lid means it has to be an acrylic and then you can't fold it. It will snap.
    And the only one that picked it up on the spot was actually Vvo, (Ian Middleton from Australian Tile Geeks). He said once you've put your vacuum in your powder, after 30 seconds of mixing, then you take your lid off and finish your mix.
    So the initial thoughts were that you had to fully mix with the lid on. But no, it's only to stop the dust for that whole 25 seconds. Then you take your lid off and you mix as you would normally require.

    One positive outcome from the demonstration at Holmesglen TAFE with 18 apprentices is that the uLock will be the only bucket it uses, and Melbourne Polytechnic had similar feedback. An upcoming generation of tilers and tradies will be mixing products differently and more safely.

    Patents

    According to Jason, there is currently nothing like the uLock available in the market. He said:

    The only similar product is in America where someone has made a ring with two little steps on it. And you would try and put your bucket in and that way, you'd put it like a flap, but it doesn't work because every single bucket around the world is different size.
    It's not good in practice. So technically no, there is no such thing as a platform. And that's why I was able to have a patent on it. I have patented in 177 countries.
    And it's been a year and a half with no contestants, and no one said this product is similar to mine.

    In creating the uLock, Jason has also invested a lot of time putting together displays and signage for stores that will eventually stock it. As he puts it, "Visual merchandising is what I specialise in.

    The way I've designed it, a store would potentially have a row of buckets. Then there would be a packet for the platform. And then on the top of those platforms, there would be a little shelf for the lids.
    To display it, I've designed exactly the actual platform as a sticker that retailers can stick on their concrete floors in front of their trade counter.
    So they [tradies] physically step on a piece of sticker - remember the ones during COVID? 'Please stay at a safe distance'. Mine are exactly the same. So they will be right in front of the trade counter and as soon as they step on it, it turns around and says, 'Have you got your safe mixing system?'
    So it takes up no space. To a degree, it's like a little map. Not even, it's just a sticker on their floor.

    In addition to the retail channel, Jason hopes to be able to partner with a number of well-known suppliers in the market.

    For more information, contact Jason directly on 0407 332 811 or email:

    jason@ulock.com.au
    products

    Retail update

    Hastings Co-op store closures

    Tool Kit Depot is building its first Tasmanian store and Tradelink up for sale

    Hastings Co-op in the mid north coast of NSW has closed three of its stores: Mitre 10 & CRT Wauchope, Kew Rural Store and Comboyne Rural Store.

    Its general department store in Wauchope will close in August. Co-op chief executive Nick De Groot said keeping the stores open would have cost more than $5 million over the next five years. He told ABC News:

    It's a very difficult business climate at the moment. The three years of COVID, significant inflation, and then the interest rates movements have created a flat and fallen retail environment.

    Mr De Groot said he could have ended up struggling with payment defaults if he did not close the three stores.

    In Port Macquarie News, Mr Groot said that while he appreciated the announcement would affect staff, members and the wider community the Co-op's short and medium-term financial position demands immediate action.

    A number of our businesses are under performing and, with the cost of doing business constantly increasing, and unavoidable unfunded capital expenditure in excess of $5 million over the next five years, we will not be in a position to continue operating without substantial structural reform.

    Mr de Groot said the Co-op has begun consultation and offered transitioning support to affected staff.

    Late last year, the Co-op was exploring options to tackle its financial challenges with one of those options being the sale of the Cedar Service Station and sale and leaseback of Wauchope IGA + Liquor. The future of the service station is still being considered but no immediate sale is planned.

    Mr de Groot has previously spoken on the financial challenges when he first took on the CEO role in June 2023.

    Related

    Hastings Co-op has a new CEO - HNN Flash, April 2023

    Tool Kit Depot

    A new Tool Kit Depot (TKD) store will be part of a retail complex that is already home to Bunnings, JB Hi-Fi, Officeworks and Petstock, in Launceston (TAS). It is expected to open by the end of 2024.

    The Bunnings owned store will stock up to 10,000 products spanning tools, equipment, safety and workwear from brands such as Milwaukee, Makita, Husqvarna and Hard Yakka. It will also offer tool servicing and a repairs workshop. TKD general manager Trent Emmins said:

    We're excited to confirm construction is underway for a new Tool Kit Depot store in Launceston.
    It'll span over 1500sqm and create around 15 new jobs for Launceston locals who'll be on hand to help customers with expert advice. We know Launceston is home to many tradies who want the highest quality tools and work equipment at great value, and who are often fiercely loyal to their favourite brands.

    Mr Emmins said TKD was excited to be adding to its 14 stores across Victoria, Queensland, South Australia and Western Australia.

    We look forward to sharing more details with the community as construction progresses.

    Tradelink

    Speculation surrounds the possibility of Metcash acquiring bathroom and plumbing supplies business Tradelink after telling investors at its Investor Day that it saw significant growth opportunities in hardware, with complementary businesses and adjacent markets, and was focused on strategic growth opportunities for Mitre 10 and Total Tools.

    According to a report in The Australian, it "stopped short of saying it was interested in buying Tradelink, but the plumbing supplies business ticks a lot of boxes for Metcash". It goes on to say:

    The question, as always, is price, and whether it can succeed against industry heavyweight Reece. It is understood that industry groups Reece and GWA have already passed on the Tradelink opportunity, after being sounded out.

    Background

    Fletcher Building announced in February it would explore a sale of its plumbing supplies business Tradelink after telling the market that it had written down Tradelink's carrying value by NZD122 million (AUD114 million). At the time, it said further ownership of the business was not in line with objectives.

    Tradelink competes with much larger rival Reece in the plumbing category and sells products such as vanities, bathrooms, toilet fixtures and fittings for bathrooms, kitchen and laundries. It remains the second-largest player in the market.

    The business is valued by Fletcher at about NZD150 million (AUD141 million) and some industry analysts have suggested it could achieve a price of about AUD200-AUD300 million.

    Fletcher inherited Tradelink as part of its acquisition of its Crane Group in 2010 for AUD740 million. Banking sources told The Australian that Tradelink being sold off comes after the company has made unofficial efforts to sell Tradelink in past years.

    Related

    Tradelink put on notice by Fletcher? - HI News, November 2016
  • Sources: Port Macquarie News, The Examiner and The Australian
  • retailers

    USA update

    Home Depot's latest acquisition targets tradies

    Texas-based SRS Distribution serves parts of the home renovation market that include roofers, landscapers and companies that install pools. It will open up a new customer segment for the home improvement retailer.

    At a conference call to announce the acquisition, Ted Decker, Home Depot's chair, president and chief executive officer, said the deal will both complement the company's current business and add "new pathways" for sales.

    We can expose their catalogue to our customers and we can improve the convenience to their customer. We are building our capacity to get more share of wallet for the complex project.

    The company believes that the purchase of SRS adds USD50 billion to Home Depot's "addressable market" - ie. the amount of yearly spending it can go after. That potential business is now nearly USD1 trillion, the company said.

    The acquisition continues Home Depot's foray into the vast and fragmented US market for the contractors (tradies) who do projects for homeowners and builders. Mr Decker said the combination of the companies' networks and Home Depot's diverse product line "provides the residential pro customer with more fulfillment and service options than ever before..."

    The strategy is a complex calculation that depends on the housing market. Demand for materials and services has splintered, and Home Depot is trying to exploit the market's new directions.

    US home prices have decelerated recently, but over the past several years, values are up dramatically. As a result, US homes are now worth more than USD45 trillion, Mr Decker said.

    Yet current homeowners have often been reluctant to sell, since their existing mortgage rates are so much lower than what they would have to pay if they buy another home. That "locked-in" effect means many owners are spending money on maintenance, improvements and renovation.

    Meanwhile, experts say there is a massive shortage of homes, thanks to the aftermath of the Great Recession, in which construction was minimal. So homebuilders are trying to catch up, and while building is nowhere near pre-recession levels, it is up. And that means demand for materials and services, but a different sort, and different scale, than with either DIYers or the contractors who do repairs.

    Home Depot has more than 2,300 retail stores across all 50 US states. Meanwhile, SRS has roughly 760 locations in 47 US states and a fleet of over 4,000 trucks.

    SRS has more than 2,500 sales team members, a fleet of more than 4,000 trucks and 760 locations in the US.

    SRS is owned by private investors, and its purchase is more than twice the price of Home Depot's purchase of HD Supply four years ago. (Read more at the link.)

    Home Depot buys HD Supply Holdings (again) - HNN Flash, November 2020

    New DCs

    The company has pushed hard into e-commerce and has opened four distribution centres with dedicated sites handling bulky construction materials - timber, insulation and roofing shingles, for instance - that contractors need.

    Chip Devine, senior vice president of outside sales, told the Wall Street Journal that Home Depot is grouping together similar products in its warehouses so it can handle them in bulk, which cuts costs and speeds up fulfillment. Sales to the professional market account for about 48% of Home Depot's sales.

    The company is looking to handle bulky items more efficiently so it can offer lower prices to its professional customers, Mr Devine said.

    Home Depot estimates the market for bulky, big-ticket orders going to professionals is about USD200 billion. To win more business from those customers, Home Depot is adding features such as the ability to reserve products, have products delivered to job sites and to pay when items are delivered rather than paying after each order like retail customers.

    Its four new warehouses, planned for Detroit, San Antonio, Los Angeles and Toronto, will add to an existing network of 14 so-called flatbed distribution centres that the retailer uses to stow bulky merchandise. Home Depot also fulfills retail shoppers' orders for those items from those warehouses.

    For these flatbed distribution centres, Home Depot seeks bigger yards, compared with its standard distribution sites, that back up to railroad lines so the company can get building materials directly from suppliers.

    The retailer used to fulfill orders for items such as trusses, drywall and shingles out of its stores, which clogged up aisles and tied up store associates who could otherwise be attending to retail shoppers. With the flatbed sites the company has been adding, Home Depot is putting "the focus on these core products that we never really could move very easily," Mr Devine said.

    IDG acquisition

    The home improvement retailer sees construction and remodelling professionals as a strong growth market in an uncertain economy. Professionals spend an estimated USD475 billion a year, Home Depot said.

    In late 2023, Home Depot purchased International Design Group, a supplier of slab, tile, appliances and specialty products for kitchens and baths in a deal meant to help it will increase its business with contractors. The deal was made with IDG's owner, Mill Point Capital, a New York-based private equity firm.

    IDG, created by Mill Point last year together with other acquisitions, has about 1,000 employees. It owns Construction Resources, a distributor of products for flooring, walls, countertops, decking and fireplaces with 39 showrooms. In a statement, Home Depot said:

    The acquisition combines Construction Resources' expertise in complex, cross-category professional projects with the Home Depot's scale, product authority and distribution expertise.
  • Sources: The Atlanta Journal-Constitution, Quartz and Wall Street Journal
  • bigbox

    ABS hardware retail stats to Dec 2023

    East coast states struggle, overall results close to flat

    While 2023 did not deliver the growth seen over the three previous years, revenue declined only slightly Australia-wide. Both South Australia and Western Australia did well, though New South Wales slipped noticeably.

    The Australian Bureau of Statistics (ABS) has released stats hardware retail turnover through to December 2023.

    Comparing calendar 2023 with calendar 2022, South Australia (SA) once again showed the strongest growth in percentage terms, while Western Australia (WA) showed the biggest gain in actual turnover. SA was up by $57 million to $1766 million, an increase of 3.3%. WA grew by $71 million to $2783, up 2.61%. The Australian Capital Territory (ACT) was the only other region to show a net gain for the year, up 1.68% and $9 million to $540 million.

    In percentage terms, Northern Territory (NT) was down the most, losing -4.24%, or $11.7 million to $265 million. New South Wales (NSW) lost the most in pure dollar terms, down by $224 million for the year to $7547 million, or -2.9%. Queensland (QLD) was down -2.3% or $123 million to $5274 million, and Tasmania (TAS) lost $4 million or -0.7% for annual turnover of $603 million. Victoria (VIC) managed a nearly flat result at a loss of 0.2% or $12 million, to close the year with $6582 million in turnover.

    For Australia as a whole, total revenue was $25.36 billion for calendar 2023. That was down by $238 million on calendar 2022, a decline of -0.9%.

    To add some perspective on what we can call the end of the COVID-19 era, comparing revenues from 2019 with 2023, SA grew by 50%, ACT by 45%, TAS increased by 43%, NSW and QLD both by 31%, and NT by 17%. VIC had the lowest growth rate, at 16%. Australia overall grew by 30%.

    In dollar terms the top four were NSW, which gained $1796 million, followed by QLD at $1240 million, VIC at $896 million, and WA at $792 million. Australia overall saw revenue from 2019 to 2023 increase by $5.70 billion.

    New South Wales

    December 2023 was not as good as the month for the two prior years in terms of turnover, but remained well above the result for 2020. The first three months of the year saw it equal or exceed 2022, which it did again in September, but overall its performance was down.

    Victoria

    Surprisingly, 2023 was not a bad a year. While it trailed behind 2022 for seven months, it also reached new highs in three months: August, September and October. It did, however, finish on something of a down note, along with several other states, with December showing the lowest level since the start of the COVID-19 pandemic.

    Queensland

    For QLD, 2022 was such a good year that it's not surprising that 2023 saw the state lose some of the lustre on its sales results. While 2023 handily outperformed 2021, except for December, it just couldn't reach any new highs.

    South Australia

    In contrast to QLD, SA saw 2023 beat 2022 every single month except December, setting new highs over the other eleven months.

    Western Australia

    WA saw a somewhat similar performance to SA in terms of highs, though 2023 and 2022 were very closely matched. The only month where 2023 for the state lagged 2022 was April. It finished the year by narrowly beating the 2022 sales figure in December 2023.

    Tasmania

    Since October 2021, the results across the years for TAS have been virtually welded together. For the state 2023 was just barely under 2022.

    Northern Territory

    The NT is influenced by different economic conditions to the rest of Australia, so it's not surprising to find that its 2023 were well below those for 2022 and 2020, but somewhat matched up to those of 2021. The year began well, with sales exceeding those of 2022 for the first half, but they trailed significantly in the second half.

    Australian Capital Territory

    Leaving aside the volatility of 2021, for much of 2020 as well as 2022 and 2023 there had been a distinct pattern to hardware sales in the ACT. For 2023 new records were set for seven months, though December did finish down on both 2021 and 2022.

    Analysis

    Looking at the above graphs and the graph for Australia overall, one conclusion is that, at least in Australia, the summary of the nation's stats really doesn't reflect the conditions in the nation overall.

    The graph shows that 2023 closely followed 2022, lifting above it for only three months, and going under 2021 for only one month, the conclusion of the year in December.

    Yet while the national graph doesn't show everything that happened in the various states and territories, it does reflect a year that would have been a "wash" on 2022, were it not for inflation. Yet even there, hardware retail was unusual in that 2023 saw the industry under the influence of directly deflationary pricing in areas such as timber.

    The generally agreed forecast is that home building will slow in March 2024, and that the strong building cycle along the major east coast states from August to December will be a little weaker than over the previous three years. Much of that is going to depend on when the multi-unit dwelling builds lift, which is a function of culture as much as anything. But it seems likely that there will be a jump in multi-unit starts by October 2024.

    The one note of warning that HNN would sound is that we do believe many economists are far too certain as regards the inevitability of only interest rate cuts from the Reserve Bank of Australia (RBA) through 2024. We see there being a 50% chance that the forecast of flat rates with a chance of a 0.25% cut will be enough to stimulate the real estate market post June 2024. If that happens, it will not be surprising if the RBA steps in with a rate rise.

    news

    Metcash goes big on acquisitions

    Metcash seeks $300 million in outside investment to acquire three companies

    Metcash has made its first significant post-COVID move, seeking to acquire a food services business, a chain of construction hardware stores headquartered in South Australia, and a significant frame and truss manufacturer in Victoria.

    On 5 February 2024 Metcash announced that it was seeking financing through an equity raise comprising a $300 million fully underwritten institutional placement, along with $278 million from Metcash's own existing cash and debt facilities, to purchase three entities.

    The first entity to be acquired is SFG Group Holdings Pty Ltd, known as Superior Food, which is a leading Australian foodservice distribution business, servicing clients such as aged care homes and canteens. The company has 23 branches around Australia, with a high concentration on the east coast, especially in Queensland. It employs around 1300 people.

    The other two entities relate to the hardware industry. Bianco Construction Supplies Pty Ltd is a construction and industrial supplies business servicing the South Australian and Northern Territory trade market. Established for 40 years, it specialises in building materials, and its core customer base consists of builders, concreters, bricklayers and landscapers. It has ten sites, with nine in South Australia and one in Darwin, Northern Territory. Those sites include one frame and truss operation in Adelaide.

    Alpine Truss Pty Ltd is one of the largest frame and truss constructors in Australia, located in Wangaratta, Victoria, and servicing both central/northern Victoria and southern New South Wales (as well as the Australian Capital Territory). Its core site is a 35,000 square metre (3.5 hectare) facility.

    From the perspective of Metcash's food business, the acquisition of Superior Foods does signal a considerable change in the company. Superior Foods is evidently meant to form part of the Metcash food business, an expansion into an area that is somewhat outside the shadow cast by the dominant duopoly in Australia's food business sector.

    Perhaps most importantly, it's a move by Metcash into an area where logistics relate less to supplying retailers, who then form a relationship with a customer base, and more a move into logistics that directly interface with the end customer. It's Metcash enhancing a portion of its business that is highly services based.

    While the Superior Foods acquisition represents a genuine expansion in business categories, the acquisition of Bianco and Alpine Truss seems more like a "supersized" version of the background acquisitions that Metcash undertakes on a regular basis. It's a well-established feature of most of Metcash's contracts with its Mitre 10 members that Metcash is offered the final right of purchase on some store sales. As it seeks to expand its footprint in corporate-owned and corporate-controlled stores, there has been a steady flow of this type of acquisition.

    Yet, as you read through the presentation to analysts for the hardware investment, and the accompanying materials, it becomes evident that Metcash CEO Doug Jones does see something of an equivalence between the investments in these two different sectors of the Metcash business. It's tempting to see this investment presentation as being almost a "mini" investor day outing, outlining not just how the acquisitions fit into strategy, but the details of that strategy itself.

    In fact, part of what Mr Jones seems to really be doing here, through these investments and their presentation, is more clearly establishing the direction Metcash will take in the post-COVID-19 era, as inflation fades and some of the urgency leaves the overall housing market. The overall lift in hardware retail revenues across Australia has been welcome. However, it seems clear that FY2023 likely represents "peak hardware" - which raises the question of where corporates such as Metcash will find ongoing growth.

    The hardware investment

    The introduction to the Bianco and Alpine Truss acquisitions follows the pattern we're familiar with in regards to Metcash. The core strategy for the company - which has been somewhat replicated by Bunnings - as regards trade is referred to as "whole of house". It's the idea that the goal of its main hardware operation, the Independent Hardware Group (IHG) is to capture as much of the value of any house build that it supplies.

    Added to that is an overall expansion opportunity, as Mr Jones describes it:

    The addition of the Bianca and Alpine to the IHG network brings a broader range of products for our existing members to offer their customers and closes out a few gaps in our offering to the independent builder customers.

    Not overtly mentioned anywhere as far as HNN can determine, is also that Bianco provides a decent slice of business in the South Australian market. Australian Bureau of Statistics (ABS) hardware retail revenue numbers indicate that the SA market, though relatively small, continues to grow at a higher rate than that of the larger east coast states.

    Where we begin to see something of a departure, though, from a standard investment pitch on the part of Metcash is where Mr Jones shifts to speaking about what he sees as the recent "transformation" of Metcash:

    You've heard me talk about the transformation of Metcash, and I just want to talk about that a little bit more. Explain what I mean. So in recent years, Metcash has been transforming itself from primarily what you would call an old fashioned food and wholesale liquor wholesaler to an integrated wholesaler, banner operator and retailer with sustainable business models, materially improved operations and transformed retail networks with healthy market positions.

    He goes on to talk about what this transformation has meant for the food business of Metcash, then shifts to hardware:

    In hardware, the addition first of Home Timber and Hardware and then Total Tools together with IHG's organic growth and continued consolidation of the fragmented market has underpinned the growth in the hardware pillar and the transition in the group.

    Later he expands on this by describing more of the growth and transition.

    When we bought Home Timber and Hardware, we committed to targeted synergies of $15 million and delivered more than $30 million, and of course, with Total Tools where we've committed to $5 million of synergies, we delivered $7.5 million. But much more importantly from a growth and EBIT returns basis, which was made possible from within Metcash and IHG through the structure of their operational support, sensible governance and healthy capital deployments.

    After describing more of the details of the new acquisitions, and how they fit into the existing Metcash structures, he returns to outlining where he sees Metcash to be today in terms of its hardware strategy.

    Turning now to the hardware acquisitions. You've heard me speaking often about the IHG whole of house strategy, and that's been at the core of our growth agenda for a number of years now. As I've said, when you establish a relationship with a builder at the frame and truss stage, it allows you to engage and serve that builder more meaningfully and expand the proportion of their total project needs - in other words, to allow us to win a greater share of their spend.
    Bianco and Alpine support this in their respective markets and they both accelerate our expansion. They expand IHGs operational and financial scale and they fill obvious gaps in the network both geographically and in the case of Bianco through range.
    ...
    IHG has got a great and strong track record of creating value through consolidation in this way. I'd say this is a well-trodden path of governance, operational support, sensible integration, and cross-selling to one another's customers. We see opportunities for over $5 million of synergies on a run rate basis by the end of year two, and we've got high conviction in those numbers ...
    So Bianco Construction Supplies is well known and it's highly regarded in the market. The brand is strong and we will be maintaining it. It serves the South Australia and Northern Territory markets and has done so for more than 40 years from 10 locations. Included in those 10 locations is a frame and truss plant in Adelaide. As you know, we like frame and truss plants both strategically and financially.
    Bianco specialises in the sale and distribution of building materials to builders, concreters, bricklayers and landscapers. What's noteworthy is the addition to the IHG range of new categories like reinforcing mesh, concrete slab hardware, structural steel and sand and soil ...
    We turn to Alpine. This is a Victoria-based frame and truss operation, one of the country's largest. It's a 35,000 square meter facility in Wangaratta Victoria, and from there it serves the Victorian and Southern New South Wales building trade from small to large volume builders ... As you know, frame and truss is a key strategy for us and these two transactions expand our frame and truss total numbers to 24 in the network, 12 of which are co-owned or owned by us. In Alpine, we expect $2.7 million of synergies on a run rate basis by the end of year two.
    Both hardware acquisitions, as I've said repeatedly, are in line with our current strategy and as I think I've said, we've got a great track record here. These are just larger in scale and impact. My own assessment is that the hardware acquisitions are about as aligned to proven strategy as it's possible to be. We're genuinely delighted to bring these into the fold and we are very confident with buying high quality assets at extremely attractive multiples.

    Analysis

    CEOs are forever rewriting the history of their companies to make the present-day situation seem like the natural outcome of longer-term planning. The current image of Metcash that is being presented is as an enterprise that is - to coin a phrase - post-conglomerate in its strategy.

    This contrasts with the "pure" conglomerate activity which saw Metcash acquire automotive assets between 2012 and 2014, then on-sell these (as Metcash Automotive) to Bursons Auto Group in mid-2015. The investments that Mr Jones is seeking in 2024 have a much more distant investment horizon.

    That's always been the case with IHG, formed through the acquisition of HTH. At the time of the acquisition of HTH, HNN and other analysts in the market predicted this would lead to the gradual "corporatisation" of not only HTH but Mitre 10 as well - which was somewhat dismissed by Metcash.

    It has only been in the past two years or so that Metcash has been more open about these intentions. It now seems possible the network will eventually be over 70% owned and joint-venture stores. In other words, it's likely there will be broad similarities between the ownership structure for Total Tools and IHG store networks.

    The overt reason for this was that, in fact, the acquisition of HTH brought some synergies, but not all that had been hoped for. It has been noted by several commentators that Metcash had expected to acquire a wider share of the independent market, attracting non-affiliated independents. That didn't happen, as independents found alternative means to acquire better contracts with suppliers, through fully independent groups such as the HBT National Buying Group.

    As a result, the returns from hardware did not grow as much as hoped. To compensate, Metcash seems to have turned to the direct acquisition of retail operations, adding direct retail margins to its existing wholesale margins. As hardware was, overall, in a gentle growth phase even before COVID-19 hit, this helped to improve results. With the massive growth brought about by COVID-19, it turned out to be a brilliant strategy.

    While there has been - and still continues to be - some pushback from IHG members regarding the ongoing corporatisation of the retail operations, this has, paradoxically, become more acceptable to store owners in the IHG networks precisely because the existential threat posed by Bunnings has decreased. It's paradoxical because Mark Laidlaw, the former CEO of Mitre 10 and then IHG, sold store owners on joining the Metcash network based on what he believed was the active threat Bunnings posed to independent store owners in general.

    Defragmentation

    Moving beyond that, and looking at the Metcash hardware strategy as it is today, there is one element of its strategy that seems something of a hangover from conglomerate thinking. That's the references to one of the main activities of both the hardware and food divisions as being the "defragmentation" of the market.

    This is, of course, something of a logistics argument. The thinking goes that by consolidating the supplychain into a single source of supply, which negotiates with suppliers and then warehouses product for eventual dispatch to retailers, cost savings are made that outweigh the cost of the required infrastructure and services. For this to work successfully, of course, it's also necessary that the retailers themselves become less individuated, and more controlled by the consolidated source of supply.

    One is reminded by this scenario of a famous statement well-known in the tech business community; that "there's only two ways I know of to make money: bundling and unbundling". Those words were uttered by Jim Barksdale, at the time working alongside Marc Andreessen - the two of them making up the principal driving force behind the early development of the first commercial web browser, Netscape. (Read more at the link below.)

    Harvard Business Review

    While there is a bit of a tug there towards the speculative benefits of any kind of volatility, what it really points to is that money typically gets made when goods and services move back and forth between being commodified and then de-commodified. It is the cycle between innovation in the development of new products (unbundling) and innovation in the production of products (bundling) that generates exceptional growth.

    If we look at Metcash's current IHG strategy, it is classic value creation through bundling - that's what is at the core of "whole of house". The drive to obtain frame and truss facilities is to ensure that the bundle provides complete end-to-end coverage. Yet it is, by its very nature, an extremely conservative strategy, that admits to little if any real innovation.

    Lacking fundamental innovation, the only way to find growth is to rely on the "economies" of scale. Hence, of course, the great emphasis Mr Jones places in his presentation on the "synergies" he sees being created by these acquisitions. In terms of scale acquisitions, it is from such synergies that the corporate equivalent of something like what economists term "spillover effects" originate.

    The difficulty is, however, that the benefits of these synergies, unlike those of innovation, tend to be finite and confined. They are effectively a discount on acquisition costs, but tend to deliver only fading benefits over time.

    That said, there is little doubt that these are "good" acquisitions, and that Metcash has followed a cautious and carefully planned path in seeking investment. It is just that at the end of the day, analysts and others could not be blamed for asking whether this is all that Metcash has to offer. Is this the very best use of well over half a billion dollars in the 2024 market, with its current opportunities?

    companies

    ABS building approvals: houses

    House approvals data may surprise

    The narrative of high demand for houses throughout the pandemic period is not really supported by the numbers. The pattern is closer - for most states - to very high demand at the end of calendar 2020 and into the first calendar half of 2021, followed by moderately high demand in 2022, and then a return to normal levels for 2023. It's the backlog, not the ongoing demand, which drove scarcity in the house market.

    The Australian Bureau of Statistics (ABS) has released stats for building approvals through to December 2023. For much of the hardware retail industry, seeking to forecast what happens in the first half of calendar 2024, approvals for private detached houses are one of the most important indicators. Much of the building supplies purchased through retailers goes through builders building in this market.

    To start with the approval data for private detached houses across Australia, it's interesting to note that while there is a common narrative that approval levels were high throughout the COVID-19 pandemic years, that's not really the case.

    As the graph indicates, the major surge began in September 2020, and continued through to November 2021. Some months were elevated during 2022, notably March and August, but by 2023 approval numbers were back in a very normal range.

    New South Wales

    For NSW, even during the peak year of 2021, the number of approvals remained in range of the most recent previous "boom" year, 2018. That said, the overall elevated levels of approvals did persist through 2022 as well. For 2023 approvals were slightly below the historical average.

    Victoria

    In VIC the pattern of approvals closely matches that for Australia overall, with a big surge in February 2021 that continued through until November. For the rest, however, approval numbers are within a more normal level, with 2023 at the lower end of the expected range.

    Queensland

    The pattern repeats with QLD: a big surge in approvals for the final quarter of 2020, then a record-setting surge for February through June 2021, followed by a return to more normal levels for 2022, and a slightly sub-par 2023.

    South Australia

    SA follows a different pattern from the east coast states. There is the same lift in approvals at the end of 2020, then a surge in approvals beginning in February 2021 that continues through to August. After that, both 2022 and 2023 are positive on historical averages, though 2023 is below 2022.

    Western Australia

    The boom in WA gets started a little earlier, arguably in September 2020, and it really persists, in a milder form, through to the end of 2021. Approvals for 2022 are above average, and those for 2023 are close to average, but on the positive side.

    Tasmania

    The effects of the COVID-19 "boom" were somewhat muted for TAS. While a surge did begin in September 2020, and continued through until June 2021 (with a brief resurgence in November 2022), overall there was a smaller surge in demand than other states. For 2023, approval numbers were somewhat volatile, but on the low side through to July, then entered a pattern of general decline.

    Northern Territory

    Given the small size of the housing market in the NT, the numbers are somewhat volatile. There is a surge beginning in September 2020 that goes through to December, the restarts for February through to April 2021. There is then a second surge from July through to November 2022. For 2023 there is a brief peak in March, then a general reduction in approvals through to the end of the year.

    Australian Capital Territory

    It is little surprise that the ACT has its own unique patterns for private detached house approvals, given the unique nature of this market. As can be seen in the graph, the COVID-19 surge for 2021 is somewhat U-shaped, peaking in March, declining to August, then reaching a new, higher peak in November and December.

    Likewise, 2022 actually outperforms 2021 for June, July and August. Then 2023 remains low through to September, before peaking in November.

    Analysis

    What we really run into in analysing what is going on in the private house market is the actual structure of this part of the industry. It is a quite low productivity, low capacity sector, that has difficulty attracting investment capital due to a lack of medium-level consolidation - there tends to be individual building operations, and very large builders, with little in-between.

    As such, when high demand levels hit, as they did in 2021, the industry response is not growth, but an increasing backlog of work to be done. Given the additional constraints on building supplies through the pandemic years, what has happened in the industry is that it has taken until the end of first half calendar 2023 to work off much of that backlog.

    That is perhaps a major reason why there is a forecast of a kind of "collapse" in the detached housing market post March 2024. It seems what we will see in the second calendar quarter of 2024 (April through June) is fairly average demand represented by approval numbers slightly below the average. But given the absence of the backlog, how well builders do will depend on how quickly they are willing to adjust prices down on items such as significant renovations.

    At the same time, it's likely that there will be a boost in multi-unit dwellings, especially apartment blocks of nine and more storeys. So builders could switch from constructing private houses to being subcontractors on significantly large builds. As those larger builds bypass both retailers and smaller wholesalers, this could contribute to a decline in the hardware retail market.

    That said, there is significant retail "runway" in the renovation area, if retailers are ready to innovate. All-electric kitchens, better insulation for energy conservation, and integrated smarthome services are all growth areas. The difficultly we see with retailers taking advantage of these opportunities is really in the current culture of hardware retail. It's necessary to sell today's products to today's generation of homeowners.

    statistics

    Metcash/IHG/Total Tools results FY2024 H1

    The hangover after the boom?

    Results for Metcash as a whole were subdued, and trended lower for its hardware division, which includes IHG and Total Tools. Sales for hardware overall were up 2.95%, driven by acquisitions, especially in Total Tools, but underlying EBIT declined by over 5%.

    Metcash (MTS) released its results for its FY2024 H1 in early December 2023. These cover the six months from 1 May 2023 through to 31 October 2023. While the company portrayed the results as being relatively positive in the face of mildly adverse market conditions, the share price for MTS immediately subsequent to the results release fell to its lowest level since May 2021 - though remaining well above the pre-COVID-19 range.

    For Metcash overall, total sales revenue rose by 1.3% to $7837.7 million. Meanwhile, "underlying" earnings before interest and taxation (EBIT) fell by 3.4% to $246.5 million.

    For Metcash hardware overall - including Total Tools Holdings (TTH) and the Independent Hardware Group (IHG) - revenue increased by 2.9% to $1783.5 million, and underlying EBIT fell by 5.1% to $110.6 million.

    Total Tools Holdings

    For TTH total sales grew by 18.2% to $350.9 million, as the store network grew. The actual network sales were $589.7 million, up by 4.1%, but down 2.1% on a like-for-like basis. For the joint-venture stores, overall sales were up 27.8%, but down 1.5% on a like-for-like basis.

    Total sales outside of acquisitions fell by 1.1%. In response to an analyst's question, Metcash CEO Doug Jones stated that like-for-like sales in TTH had fallen "in the low single digits". He also stated in response to another question that store margins for TTH had "compressed slightly in the last year, primarily in the last six months". He went on to suggest the causes for this:

    There's three key reasons for that: slowing volumes and increased cost of doing business pressures similar, but not as dramatic as in IHG, and competitive and promotional pressures, as you've described. As you would expect, in any market like this, as volumes slow competitors are going to work harder for their customers' business. I think it's as simple as that.

    EBIT for TTH went up by 5.3% to $49.3 million. However, outside of acquisitions, EBIT fell by 8.1%.

    Independent Hardware Group

    For IHG overall sales fell by 0.2% to $1.43 billion. Scan sales - taken from a subset of stores - rose by 0.7%, with DIY up 1.4% and trade up 0.3%. Like-for-like sales, however, were reported as "flat", with DIY up 0.8% and trade down 0.4%. Overall, DIY transactions were down 0.6%, while basket value (per transaction total) rose by 0.7%.

    EBIT for IHG fell by 12.2% to $61.3 million.

    It is somewhat difficult, given these numbers, to fully understand what Mr Jones has meant when he suggested Metcash hardware is tracking the overall market. For the period in question - 1 May to 31 October - total hardware retail sales across Australia, contrasting 2023 with 2022, fell by 0.13%. Moderate falls in Victoria were countered by gains in New South Wales.

    Ben Gilbert, an analyst with Jarden Australia, asked a question about future trends for hardware:

    There seems to be a bit of a view out there in the market with this that ... the forward order book comes off in a rational way around March, post-March. Just interested in how your customers are telling you they're seeing the forward order book. And then the pricing versus volume dynamic in hardware as well ... which you obviously called out.

    IHG CEO Annette Welsh responded:

    I think spot on in terms of how the forward order book looks. And I think it also depends by state. Certainly Metro Melbourne, and New South Wales Metro would be in a more challenging environment than those of our other states. Plus also, remember that we are number one to the small and medium builder who have generally a better line of sight and a more positive outcome on the future.
    The other part to that being, you asked a question around the price versus volume. I would say, we have seen deflation - and we called it out in the pack - significant deflation in that timber market in the first half. That's really now come to a balanced position. We don't see too much more deflation coming through, but we also don't see too much inflation at the same time. So volumes, I think from that perspective in our view holding well.

    Mr Jones continued the answer:

    And last thing I'd add is that the position that Annette described of serving those small and medium homebuilders means two important things. One, we have really good relationships at our store level, whether they're owned stores or independent stores. And so we have good visibility to how they're feeling and how they're trading.
    And secondly, they're telling us that in the main, they've worked through any of those fixed price contracts that were causing the network so much trouble. So by nature, they have less exposure to it. But that they're feeling much better about their pricing going forward.

    Hardware performance

    It's worth noting that the only reference to online business that we could find in relation to hardware was a note that online sales for TTH fell by a further 7.2% during the half, and now represent 5.1% of "non-account sales".

    One reason given by Metcash for the drop in performance by hardware had to do with additional charges, as Mr Jones explained:

    Firstly, approximately $4 million in regulatory occupancy costs and labor related costs, particularly in Victoria. And it's higher than other pillars because we're domiciled in Victoria. And we have a higher retail store base, which the other pillars don't have, which has a high exposure to CPI-linked occupancy cost, state land tax, and employee related Fair Work increases.

    This point was taken up near the end of the results presentation, when analyst David Errington of Bank of America asked a key question about Metcash's hardware business:

    So is it right to come out with the view that maybe there's some more opportunity to hold and maybe grow your margin a little bit in food, but going forward in hardware, as you say, as you're going into retail, you're going to have a bit more costs and the costs there seem to be more sticky in terms of Victoria, et cetera, et cetera, seem to be the cost of doing business with this regulatory stuff, labor costs going up. It seems that the cost lever in hardware is a little bit less available. Is that a fair approach to consider?

    Mr Jones responded:

    In hardware you're right to point out that particularly as a result of some of the Victorian specific increases FairWork, taxes, state land-based costs, those were significant hits. And we've spoken about that, and we did for one of them in our year-end results. That said, there is no shortage of efforts in the retail network, both in our own stores and those of our partners to manage those costs. It's very difficult to take out a big cost hit like that and manage a slowing in volume growth at the same time.
    What happens in retail, of course, and again, we've spoken about this before, is that a retailer's EBIT margins are more exposed to volume ups and downs than a wholesalers. And in hardware and tools, which is more cyclical and less defensive, you have that aspect as well. As I've said a few times now, that will continue to improve as the long-term demand and the long-term market position that we have in IHG and Total Tools manifests in what we believe is an environment where more building is required.

    Analysis

    It's interesting to speculate whether without TTH, IHG might have returned more positive growth. In noting the categories that each saw growth opportunities emerge, Metcash lists paint, garden, kitchen, bathroom and laundry categories as growing at over 8% during the half for IHG. For TTH, Metcash lists cordless power tools, outdoor power equipment, accessories and hand tools as the key growth categories. Did some of TTH's growth take expansion away from IHG?

    There are a range of different, interesting factors at work in these results and their presentation. It's worth noting, as Mr Jones did in response to a question by Lisa Deng of Goldman Sachs, that the current performance of Metcash hardware in relation to its pre-COVID-19 and pre-TTH days remains elevated.

    The one thing that I do just want to point out, when you look at our hardware retail business, while the margins are down for reasons that I think we've discussed at length today, they actually remain above the long-term average. In fact, not just the long-term average, they're higher than they ever were pre-COVID. So while we would like them to be as high as they were in the peaks of the last two years certainly and we're working hard to bring them back up, it's a material indicator of the health.

    HNN has pointed out clearly over the past five years that as Metcash has shifted from being mostly a hardware wholesaler to more of a hardware retailer that it is much more exposed to market risk. One way of viewing its current situation is that after the successful hardware retail party that happened over the COVID-19 years, it now faces the subsequent hangover as demand dips down again.

    But that would be overly simplistic. The additional levels of revenue brought about by societal changes during the COVID years have changed something of the culture of hardware retail in Australia. There is, for example, more acceptance of the gradual corporatisation of Mitre 10 stores, largely because this is seen as less threatening to stores that choose to remain 100% independent, now that overall revenues are elevated.

    Here we really need to circle back to Mr Jones' statement that the market position of TTH and IHG

    ...will continue to improve as the long-term demand and the long-term market position that we have in IHG and Total Tools manifests in what we believe is an environment where more building is required.

    One difficulty with this view is that even the Housing Industry Association (HIA) doubts that a resurgence in building after the decline during FY2024 will see a radical increase in the number of detached housing starts. According to its November 2023 document "HIA State and National Outlooks: The home building rollercoaster":

    Multi-unit starts will also continue to recover slowly from their decade lows through the pandemic, as investors respond to low rental vacancy rates ... [P]rivate sector investors will continue to return to the apartment market as the effects of the pandemic wane. This should see a sustained recovery in multi-unit starts, through to at least the end of the decade. There is also variance in the forecasts for each region and across buyer types. It is anticipated that New South Wales and Victoria will see the most significant slowdown in detached starts, and the most significant growth in unit commencements.

    Given the housing crisis, those multi-unit dwellings are likely to be six-storeys and above - not the sort of jobs that the smaller builders IHG relies on will really take on. This means the medium-term markets might shift significantly away from those Metcash can readily access.

    Yet what is slightly dangerous in what Mr Jones has to say from a purely corporate perspective is that corporations, unlike individually-owned retail businesses, must always find growth. We can admire the fact that Metcash has managed to squeeze out more growth from aspects of its business such as IGA and food, despite heavy competition from a dominant duopoly, and a range of additional discount chains. Likewise, its hardware operations remain in the shadow of what some might consider a "functional monopoly" instituted by Bunnings.

    The question is, with the Australian economy arguably beginning to shift in the same direction as the far more successful US economy, towards what we might call the "post-industrial", do the existing hardware and food businesses really represent the best growth opportunities, from a corporate perspective?

    Taken further, this could go in two directions. One direction might be to change strategy with hardware, from strong growth - Ms Welsh has the declared intent for IHG to be the number one supplier to trade builders - to a lean operation with a focus on lower sales but stronger return on capital (RoC).

    The other, potentially parallel direction would be to see IHG as a platform with a specific retail presence in a wide range of communities. The "sideways" opportunities this enables might include, for example, converting Mitre 10 into a retail brand that also offers electric vehicle charging.

    FY2025 is really going to be the first truly post-pandemic year. But that doesn't mean a return to the FY2019 economy. It's more going to be an economy suddenly slammed by developments that have already taken hold overseas, but been delayed in Australis due to the exigencies of pandemic recovery.

    The ultimate question is, which hardware operations will be agile enough to take advantage of new opportunities, and which will remain trapped in a self-definition that has more to do with the 1990s than the 2020s.

    companies

    Big box update

    Noarlunga in SA gets bigger, revamped Bunnings

    Six Bunnings stores in Australia and one in New Zealand have been rebranded to Hammerbarn, inspired by the popular Bluey series. Also Belmont Bunnings site for sale and the retailer is taken to court over an alleged workplace injury

    A new Bunnings outlet has replaced an old store in Noarlunga, in the southern suburbs of Adelaide (SA). It features 1400sqm more retail space and 60 extra carparks, representing a $37 million investment by the company. The additional space expands the old store on the same site. Complex manager Sonny Papst told the Messenger-Eastern Courier:

    Our team has been working tirelessly over the past few months getting everything ready to open the doors to our brand-new warehouse.

    The brand new 12,500sqm site will have a five-lane drive-through trade and timber yard, dedicated special orders desk, kitchen design centre, kids playground, cafe, and more.

    Bunnings said this store will include LED lighting, energy efficient heating and cooling, on-site water reuse, and solar panels to reduce its environmental impact despite it being larger.

    The previous store had been in the Noarlunga community for over 24 years. Mr Papst said:

    We know locals are really excited about the bigger and better store and we can't wait to welcome them inside and show them what we have to offer.

    Part of the store opening celebrations have seen the Bunnings Noarlunga team deployed for "hands on support" for community groups in gardening, landscaping, and painting projects at the Noarlunga Hospital Emergency Department, the Trevor Parry Community Rehabilitation Centre, and the local "Transition to Home" NDIS centre.

    Bunnings becomes "Hammerbarn"

    During the month of February, six stores in Australia - and one in New Zealand - will be rebranded to "Hammerbarn" as seen in the popular Bluey children's series. In Australia, they are located in Keperra (QLD), Munno Para (SA), Cannington (WA), Glenorchy (TAS), Blacktown (NSW), and Carrum Downs (VIC). In New Zealand, the Hamerbarn store is in the Auckland suburb of Glenfield.

    Exterior signage of the participating stores has changed and there is exclusive Hammerbarn merchandise including garden gnomes, Bluey themed DIY workshops as well as branded aprons and trolleys for kids to use in-store. Life-size Bluey and Bingo mascots have also entertained families.

    The collaboration between Bunnings and Brisbane-based Ludo Studios, who created the Emmy-award winning series, pays homage to a Bluey episode where the cartoon blue heelers visit a Hammerbarn store.

    Hammerbarn's resemblance to Bunnings is no coincidence, with the episode taking inspiration from the real-life Bunnings Keperra store. In the episode, the characters visit their local hardware store to buy a pizza oven, with Bingo and Bluey getting a trolley full of their own items to use to build mini-homes - complete with garden gnome "husbands". Ludo Studios said:

    The design of Hammerbarn draws inspiration from the Bunnings Keperra store in Brisbane, the home of Bluey, which adds an extra layer of significance.

    Kate O'Connor, director of brands and licensing (Australia and New Zealand) at BBC Studios - international distributor for the Bluey series - said going to Bunnings was a "quintessential" experience of growing up in Australia.

    That's why we couldn't be more excited to see this iconic Bluey and Bunnings collaboration come together - and on such a grand scale - giving Kiwi and Aussie fans the world-first chance to experience Hammerbarn for real life, including exclusive and very collectable merch like Bluey and Bingo's much-loved garden gnomes that feature in the episode.

    Reflecting on how the campaign came about Ms O'Connor, told Mediaweek:

    I reached out to Bunnings' managing director Mike Schneider, and explained a little bit about the brand, the episode, and the reach of the episode. I wasn't really sure how much he would know about Bluey, but he got back to me pretty much straightaway and was really enthusiastic about a collaboration together. He mentioned that his wife had bought him the Hammerbarn book for Christmas!
    Once Mike was on board, it started filtering down through both of the organisations at once, and we all started brainstorming - we got to the point where the scale really exceeded our wildest expectations. Bunnings has never done anything like this before, but despite that, they really matched us in terms of innovation and drive...
    Bluey is one of the most-watched television shows in the world at the moment, which is just amazing. We don't take that for granted. It's in more than 60 countries, 30 languages, it was the second most streamed show in the US last year, and definitely the most streamed show in Australia.
    Being able to do something like this with Bunnings - which is ultimately a store for adults - goes to show the versatility and appeal of Bluey across various demographics.

    In Mediaweek, Tess Connery writes that it is a bold move to remove the name of a brand during a campaign but that's exactly what has happened when a number of Bunnings stores became Hammerbarn. It is a move that Ms O'Connor said reflects the strength of both the brands involved. She said:

    ...The campaign doesn't say Bluey or Bunnings anywhere, but because there's this knowledge and love of these two icons, just having the word Hammerbarn means something to audiences and consumers of both."

    Ms O'Connor said the goals of the campaign came down to bringing Bluey to more Aussies than ever before.

    One of the key objectives is to really weave Bluey deeper into the cultural fabric and keep Bluey front and centre in the zeitgeist, to really maintain that momentum. We know that Hammerbarn is a fan-favourite episode, and we also know that many Aussie families have referred to Bunnings as Hammerbarn since the episode aired in season two. So we knew that this was something that could make a huge impact.

    Belmont Bunnings

    The former site of Bunnings Warehouse in Belmont, a suburb in the City of Lake Macquarie (NSW), is on the market. It is listed for sale with James Wilson and Ben Wilkinson of Colliers on behalf of the owners, Bunnings Property Management Ltd.

    The site is on the market for the first time since the hardware retailer closed its doors in early 2021 to relocate to new premises at the Bennetts Green shopping centre, according to the Newcastle Herald.

    The single level 12,820sqm warehouse occupies a 4.038-hectare site at 393 Pacific Highway. Mr Wilkinson said the expansive land holding provided "excellent repositioning opportunities for industrial, retail or mixed-use usages" for developers or owner-occupiers.

    Mr Wilson has overseen the sale of several Bunnings Warehouse properties across NSW including Eastgardens in Sydney which fetched $75 million along with Port Macquarie ($44.65 million), Coffs Harbour ($30.6 million) and Albury ($30.4 million).

    During COVID-19 restrictions, Belmont Bunnings was leased to the NSW government for use as the state's first regional mass COVID-19 vaccination hub in July 2021 until August 2022. It took just over a month to renovate the former Bunnings site into a medical facility with the capacity to administer up to 20,000 COVID-19 vaccines a week.

    Expressions of interest close on March 6.

    Court case

    Bunnings employee Nicole Moldenhaue has lodged a claim against Bunnings for more than $500,000 after she said she sustained a back injury moving heavy products onto shelving at the retailer's Maroochydore store. In an exclusive report in The Australian:

    According to the claim lodged in the Brisbane District Court, Bunnings had a policy of discouraging staff from lodging WorkCover claims and of attempting to manage work-related injuries internally.
    According to court documents, the policies meant Ms Moldenhauer delayed seeing her own doctor until three months after the alleged injury.

    Ms Moldenhauer was told in December 2018 by a duty manager that after six sessions of physiotherapy paid for by Bunnings, it would not pay for any further treatments and enquired whether she wished to lodge a workers' compensation claim. In The Australian, the claim states:

    The manager reminded her that if she did so all staff in the Maroochydore store would lose their bonuses. Ms Moldenhauer did not then appreciate that her right upper limb symptoms were in fact related to a disc injury in her cervical spine.

    Ms Moldenhauer alleges the injury occurred while she replenished stock items as heavy as 20kg on the top shelf of a racking system. In order to complete the restocking, Ms Moldenhauer had to stretch her arms and manually handle items from an electronically operated raised platform. The claim states:

    To perform the work, it was necessary for her on occasions to reach forward, fully extend her upper limbs, bending at the waist and bearing her weight on tippy toes to reach and take a hold of the stock.

    Ms Moldenhauer claims Bunnings failed to take reasonable steps to eliminate manual handling risks and to properly instruct her on using the platform safely. Symptoms of her injury included numbness and soreness.

    According to the claim, Ms Moldenhauer did not pursue her own investigations into her symptoms because of Bunnings' policy of discouraging staff from lodging WorkCover claims as well as attempting to manage work-related injuries internally and not report them to WorkCover Queensland.

    Ms Moldenhauer did not see her general practitioner until February 20 2019, more than three months after the injury.

    In a defence lodged with the court, Bunnings denied Ms Moldenhauer was required to lift products as heavy as 20kg onto shelving and "anything above that weight would need to be handled by two persons".

    Bunnings said the injury was not reported contemporaneously to the company and Ms Moldenhauer had expressed uncertainty as to whether the injury was "work related given her activities at home with three children".

    Bunnings said it "remains uncertain as to the truth or falsity" of the other ­allegations.

    Ms Moldenhauer's lawyer, Travis Schultz of Travis Schultz and Partners, said it would not be appropriate to comment on the specifics of the case, but under Queensland law, employers were obliged to report to their workers compensation insurer any work-related injuries they became aware of. Mr Schultz told The Australian:

    While employers have an interest in managing their statistics regarding workplace injuries, the legislation imposes a duty on employers to complete a report in the approved form, and give it to their insurer if a worker sustains an injury for which compensation may be payable.
  • Sources: Messenger-Eastern Courier, SmartCompany, 9News, Mumbrella, Waikato Times (NZ), The West Australian, The Courier-Mail, Mediaweek (UK), Newcastle Herald and The Australian
  • bigbox

    Retail update

    Beaumonts opens in new locations

    Design 10 studio at Dubbo Mitre 10 and Adelaide's Bianco Construction & Industrial Supplies has been sold to Metcash in a $82.2 million deal

    Bunnings-owned Beaumont Tiles has opened its first NSW clearance outlet located in Smithfield.

    The tile retailer also launched its fourth store in Western Australia within the City of Melville which sits on the shore of the Swan River in Perth. It has a diverse and multicultural community which enjoys a rich built and natural heritage.

    The Beaumont Tiles clearance outlet in Smithfield (NSW) has a 1,000sqm storefront with a large parking facility.

    Beaumonts said this one-stop shop in Sydney's western suburbs offers "cash and go" for bargain hunters and renovators who are looking for last-minute renovation needs. Selected items are discounted up to 60% off the retail price.

    The significant range of stock it offers will suit professional builders and tilers, DIYers and home decor enthusiasts. Jerry Lloyde, retail manager at Beaumont Tiles said the store's proposition is built around the needs of the area, where bargain hunting is a characteristic of its consumers.

    Previously the stunning tiles on offer were only available in our retail stores at retail pricing, however with the evolution of our store network, we have now opened an exclusive channel to market to clear stock and give consumers the advantage of buying high-quality products at clearance pricing.
    The clearance outlet in Smithfield gives consumers the luxury of first-grade tiles at their fingertips starting from $29.95m2, with bathroomware and hard flooring also available, along with trade tools and accessories, providing everything you need for your renovation under one massive roof.

    Beaumont Tiles' clearance outlet is located at 3/18-20 Sturt Street, Smithfield NSW 2164.

    Myaree, WA

    The opening of the Beaumonts' Myaree store in Melville should help many renovators who live in quality-built 80s and 90s properties in the area.

    The store has a showroom with over 700sqm of displays, tiles, bathroomware and hard flooring.

    Beaumonts said it provides expert guidance and exclusive technology designed to simplify the renovating process from concept to completion for DIYers and professionals.

    Its What's My Style quiz and BeVisual Live visualisation tool are designed to help local renovators identify their style of choice and show them what their hard flooring and tile choices will look like in real time.

    The store's location is Tenancy 1, 80 Norma Road, Myaree, WA 6154.

    The expansion of its Beaumont Tiles outlets into WA has been underway since the tile retailer was purchased by Bunnings in 2021. At the time, Bunnings managing director Mike Schneider said Beaumonts offered specialised products and services that were not able to be offered through the Bunnings warehouse format. He told The Australian Financial Review:

    Beaumont Tiles has a strong management team in place and operates in a large, competitive category that has the opportunity for strong growth.
    The acquisition represents an opportunity to build on the success of the Beaumont Tiles business and invest in its future growth.

    Related

    Beaumonts joins Bunnings, consolidates the tile industry further - Tile Today, September 2021

    Mitre 10

    Petrie's Mitre 10 in Dubbo (NSW) now has an in-house Design 10 studio as part of its retail store. It is the third to be opened in NSW, after Coffs Harbour and Orange, according to Dubbo Photo News. Petrie's Mitre 10 marketing manager Lucy Mcdonald said:

    Basically, Design 10 is our answer to a high-tech showroom... helping you decide on your kitchen, bathroom, laundry, the flooring, the cladding: it's about picking the pretty bits of your home.
    It's a fully-integrated working display, our team have huge screens to walk you through your plans to see how they will look, before you make your final decision.

    It showcases kitchen, bathroom, and laundry products such as appliances, sinks and tapware, toilets, bathroom accessories, heating and cooling, outdoor living products, engineered and solid timber flooring solutions, and cladding.

    It is holding a grand opening event on 29 February.

    Related

    Petrie's Mitre 10 officially opened its new drive through trade centre - HNN Flash, September 2022

    Bianco

    Bianco Construction was established by Italian immigrant Nick Bianco who left school aged 14 to begin a bricklaying apprenticeship. In 1970 and in his early 20s, he started his one-man bricklaying business. Seven years later, he established the hardware and hiring business.

    By the 1990s, he employed 250 staff. Over time his Bianco Group of Companies expanded operations to include a structural steel business and construction and safety division with a workforce of more than 400.

    In 2006, he took sole ownership of Adelaide United Football Club and a year later was awarded a Medal of the Order of Australia for his contribution to the construction industry and his philanthropy.

    In 2009, he relinquished control to the Football Federation of Australia amid suggestions his company was in financial difficulty.

    Bianco Construction Supplies went into receivership in June 2011 with debts of $60 million as it could not service loans taken out on its new steel fabrication facility at Gepps Cross.

    In the same year, the company was rescued by Mr Bianco's son Russell and a consortium of staff and building industry companies who acquired the business from the receivers.

    Most recently, Metcash said Bianco generated $144 million in sales and a $13.9 million profit in the 12 months to 31 October 2023.

    The food, liquor and hardware wholesaler also purchased Wangaratta-based Alpine Truss for $64 million. See more about Metcash's acquisitions in this edition of HNN Flash #141.

  • Sources: Dubbo Photo News, The Australian, Adelaide Advertiser and InDaily
  • retailers

    Supplier update: ARDEX Australia

    Green star regional headquarters

    The $140 million site in Kemps Creek, west of Sydney, helps to position the company as an Industry 4.0 building materials maker in Oceania

    ARDEX Australia is nearing completion of its manufacturing regional headquarters in NSW. It is the single largest infrastructure investment - $140 million - that the privately-owned, global company has funded in its 70 years of operation.

    Oceania regional managing director, Fabian Morgan, said the move underscores the company's future-focussed sustainable vision.

    We are passionate people who are driven by innovation, responsibility, integrity and belonging. The site's 50-year design life and targeting 6-star green rating are testament to our vision, values and plans for reinvestment back into our people, profitability and planet.

    The site's customised advanced design includes a world-class 35-metre high powder manufacturing tower used to vertically mix raw materials efficiently. The new liquids manufacturing plant is an industry-first for its orientation and size, and has a 20-metre silo tower for storage and transfer of raw materials to the multi-level mixing plant. Mr Morgan said:

    Our commitment to local manufacturing and Australian-made supply brings certainty and stability to customers.

    Other Industry 4.0 elements include automation, electric vehicles and forklifts, solar panel system spanning 17,000sqm, rainwater tanks, and energy efficient lighting - targeting the site a 6 Star Green Star Design As-Built v1.3 rating and a serious contender for awards.

    The ARDEX Oceania HQ site doubles the size of the company's current research and training facilities. It is part of The YARDS industrial estate, developed by joint-venture partners Frasers Property Industrial and Aware Real Estate. It is the first in Australia to achieve a 6 Star Green Star Communities v1.1 rating from the Green Building Council of Australia. It includes solar installations, water harvesting and recycling, and full electrification to facilitate a seamless transition to fossil fuel-free energy sources in the future.

    The location is strategic for an optimal national logistics network for the warehouse. It is nearby the 24/7 Western Sydney International Airport and future Southern Link Road in the Western Sydney Aerotropolis, close to the M4 and M7, and within Greater Western Sydney's sought-after industrial zone, alongside Microsoft and Amazon.

    Bunnings is ARDEX Australia's largest customer and Mr Morgan told CEO Magazine the partnership has inspired more innovation within the company. He said:

    We've launched an ARDEX-brand range of bespoke hand tools, which re designed from the ground up specifically for the consumables we sell.

    For the first time, ARDEX will merge its manufacturing, warehousing and support office along with DTA Australia, Nexus Adhesives and WEDI, in April 2024.

    The site also complements the other nine manufacturing and 14 distribution centres around Australia and New Zealand.

    companies

    Company update: Big River Group

    New look, confirmed values

    Big River Group said its strategic initiative is aimed at fortifying its market position by unifying the company's diverse portfolio of brands to foster synergies across its business operations

    CEO of Big River Group, John Lorente, said the rebranding is a proactive step to streamline operations, create unity across the business and unlock new opportunities for growth.

    By aligning our local service excellence with our national scale, we aim to enhance our operational efficiencies while driving excellence and innovation in our solutions to better serve our customers, suppliers, and shareholders.

    With a legacy spanning over 120 years, Big River Group believes it is positioned for future growth while remaining committed to stakeholders. Mr Lorente said:

    We understand the importance of clarity and consistency in how we represent ourselves to the market. Our rebranding effort signifies more than just a visual transformation; it leverages our extensive experience and service autonomy across the group, empowering the company to adapt swiftly to evolving market dynamics while maintaining a steadfast focus on customer satisfaction.
    By consolidating our resources and expertise under a cohesive brand identity, Big River Group is poised to capitalise on synergies and drive sustained growth in the years to come.
    There is a need to be representing ourselves as one Big River team showcasing our capability for our customers and suppliers.
    Our mission, 'Committed to doing good business with good people to build better projects' serves as a testament to our commitment to operating as one team, delivering exceptional value and product solutions to the market.

    The phased roll-out of the rebranding initiative will commence with the introduction of the new logo, followed by subsequent brand assets throughout the year.

    Key highlights of the initiative include:

  • Big River Group's brand structure will adopt a hybrid approach featuring five key brands: Big River Group as the Masterbrand, with Big River Commercial and Big River Trade Centre as sub-brands, and Timberwood Panels and Plytech Panels as endorsed brands.
  • The rebranding initiative will align all Big River Group brands under shared common values, ensuring consistency in delivering exceptional products and services.
  • The rebrand means a new logo, website design, and name changes to existing brands, maintaining visual coherence to the Masterbrand, while reflecting the company's renewed focus on synergy and cohesiveness.
  • Related

    Big River Industries acquires Epping Timber Joinery & Hardware - HNN Flash, November 2022
    companies

    ABS hardware retail stats

    Slight declines, but overall steady

    Once again, the east coast states have offered mostly lacklustre results, while other states and territories have shown growth - and Victoria did manage to post 4% growth for 2023 over 2022 in the months of August to November

    The results for hardware retail sales to November 2023 do not show anything like a sharp slowdown. What they show, for the most part, is relatively flat performance, with a general trend downwards.

    While that is better news than many expected, it's worth remembering that, unlike four years ago, the Australian economy has gone through an inflationary period, which would indicate that the slight decline might show a market that is more significantly on the downside from the status quo.

    The stats are divided into 12-month periods ending in November. We reference these with a "p" prefix, so p2022 refers to the period from December 2021 to November 2022.

    Once again, most of the growth that was present in the market occurred outside the three major east coast states, comparing p2023 with p2022. In percentage terms, South Australia (SA) grew the most at, 4.8%, and, at $80.9 million additional revenue, was close the winner for overall growth in dollar terms, which was Western Australia (WA) with $82.5 million, the result of 3.1% growth. While these are decent numbers, they are significantly down on the p2022 to p2021 comparison, where SA grew by close to 20%, and WA grew by 9.5%.

    Queensland (QLD) and New South Wales (NSW) led in terms of losses. QLD was down 2.71%, dropping $147.0 million in revenues. NSW fell by 2.16%, losing the largest amount for the comparison, at $167.1 million.

    Both Victoria (VIC) and Australian Capital Territory (ACT) saw revenues increase by around $11 million, with the ACT up 2.1%, and VIC up 0.2%. Tasmania (TAS) and Northern Territory (NT) showed mild declines. TAS was down 0.8% and $4.8 million, while NT was down 1.9% and $5.2 million.

    For Australia overall, there was a mild decline of 0.5%, and $138.6 less total revenue. Perhaps the most interesting way to look at that situation is to compare the total revenues collect for August through to November. This shows a broadly very flat result, as show in Chart 2:

    The biggest surprise is perhaps that hardware retail grew by over 4% and $100 million for VIC.

    New South Wales

    As Chart 2 indicates, in 2023 NSW did not experience a surge in sales for either October or November.

    Instead, sales remained relatively stable from August to November.

    Victoria

    VIC shows the same kind of moderation as NSW for November 2023, but differs elsewhere.

    While the revenue trails near the bottom of post-COVID-19 results for March through June 2023, from July through to September 2023 it manages to record three record-setting months.

    Queensland

    It's clear from the graph that p2023 is simply the second-best period QLD has ever had. It consistently trails p2022, but not by much.

    The only drift away from this has come in November 2023, so the figures for December 2023 will prove crucial.

    South Australia

    In almost the inverse to QLD, 2023 has been the best period ever for the SA. While it has closely followed p2022, it has out performed that period in every month.

    Western Australia

    Like SA, WA had its best ever period in p2023, though it did track p2022 closely - until October and November 2023.

    Tasmania

    As a note, the ABS did not collect stats for TAS from January 2020 through to October 2021. HNN has estimated the revenues for those months.

    It's very clear that TAS for p2023 has very closely followed p2022, though it has also underperformed by a little as well.

    Northern Territory

    While the NT did well through to June 2023, it has subsequently underperformed p2022, as well as previous periods.

    Analysis

    Averaged out for Australia, we see the results in the final chart:

    While there has not been a lot of growth - in contrast to a year previously, there is certainly a degree of strength in managing to repeat the performance of p2022 - as well as posting an overall record for September.

    While there are OK results and nothing to be overly concerned about, low growth in an inflationary landscape is not a good sign.

    Related

    ABS hardware retail stats: Sept 2023 - HNN Flash, November 2023
    statistics

    Hardware retail update

    Penhalluriack's up for sale

    A move for Ingram's Home Hardware; Astley's Plumbing and Hardware relocates; Emerald Mitre 10 expansion; and Pontings Mitre 10 marked its centenary

    As Melbourne hardware store owner Frank Penhalluriack prepares to sell his eponymous shop, he looked back on his historical fight to extend weekend trading hours that saw him face government fury, cop huge fines and spend 19 days in jail. He told the ABC:

    I would have liked things to be different, but I wouldn't do anything differently.

    Mr Penhalluriack didn't set out to change weekend trade at a time when shops would grind to a halt by 1pm on Saturdays. He just wanted to sell things. He said:

    I had no idea at all ... I'd been to America, and I'd experienced some of the big hardware stores, big chains, making lots of money selling things on a DIY basis.

    Along a friend who worked as a draftsman, they opened a tiny shop. It was open seven days a week. He said:

    And it must have been at least 12 months before anybody said boo.

    At the time, laws allowing trade on a weekend in Victoria were a mix of conflict and confusion. Mr Penhalluriack said:

    Like most laws, I suppose, it's full of loopholes.

    Certain kinds of shops could open but what they could and couldn't sell wasn't defined clearly.

    Traders like Mr Penhalluriack and Bob Wolstenholme of Werribee Hardware stayed open in spite of the laws - and received substantial fines. When Mr Penhalluriack refused to pay a $4,000 fine in January 1982 (equivalent to around $17,000 today), police seized goods from the store. But it didn't end up as they'd expected.

    The driveway of the local police station was the site of what the ABC reporter on the scene called "the craziest auction seen in Melbourne for many years".

    Someone paid $100 for sandwich plates worth only $17, as friends and supporters spent up so that most of the stock could be returned to the store. A jigsaw drill attachment worth only $19.99 was sold for $1,000, as supporters made their point to police.

    Not that they weren't mischievous themselves: one tried to pay for a $100 purchase with 20-cent coins. Most of the goods were returned to the store.

    But the fines kept coming. Mr Penhalluriack and other traders kept receiving summonses - essentially notices to pay fines - for all the days they were illegally open.

    Mr Penhalluriack said he received so many, he used the A4 notices to spell out "OPEN WEEKENDS" across the glass windows at the front of the store.

    The dispute escalated until the amount set to be paid topped more than half a million dollars (around $1.7 million in today's money) and he was asked to surrender himself to police in April 1984. Given one last chance, Mr Penhalluriack told the arresting officer:

    I won't pay a cent.

    He spent 19 days in custody, some of it at Pentridge Prison, which has been home to some of Victoria's most violent criminals including Mark "Chopper" Read. Released on May 6, 1984 to the cheers of a crowd, he expressed his thanks.

    The dispute ground through court for another two years until a decisive victory set aside the $500,000 fine. By then, community sentiment changed, and the liberalisation of trading hours was being implemented across Victoria and leading to other states changing their rules. Mr Penhalluriack said when he was victorious at the hearing in 1988:

    Any law that comes between you as a customer, and me as a shopkeeper, is an ass of a law.

    Since then, he has gone on to run in state government elections and successfully join his local council. Mr Penhalluriack still works at the shop for a few hours, several times a week and he's given his staff plenty of notice about the impending sale.

    He also isn't worried about what he'll do when the shop has been sold, and pays tribute to his wife's support. He said:

    Oh, I'll be kept very busy! I'm not a person for backing down. I have a mind of my own and I think that it's important you exercise your mind, even at the age I am.

    Ingram's Home Hardware

    Owners of Ingram's Home Hardware stores will build a hardware retail centre on the outskirts of Kingscote, on Kangaroo Island (SA), reports Messenger-Hills News.

    Plans reveal a 1500sqm hardware and garden supplies store about 900 metres from the town centre, on about 13ha of farming land on the intersection of Karatta Terrace and Playford Highway.

    An existing trade and building supplies shed is already on the site and would be linked to the new outlet.

    Matt Ingram said the 71-year-old family business had grown out of its central store and needed a larger hub to relocate its other retail offerings. He told Messenger-Hills News:

    We'd expanded into a new site already, now we're building a new premises to move the retail side. We started in a little 200sqm shed in the main street, then we did a 950sqm shed behind the original shop - and got busier and outgrew it.

    The business plans to bring its other shopfronts under one roof, maintaining the one in Kingscote. Mr Ingram said:

    We were running four sites - the driveway was a shambles, it was a one-lane highway, stuff was everywhere, so we committed to coming out here. We've got nowhere else to go and you can't rent anything, can't buy anything. This way I'll never have to shift again, that's my plan.

    The centre will include a paint shop, tile shop, housewares and gardening suppliers, to supplement the existing trade, building and plumbing supply shed. Nearly 100 additional car parks form part of the proposal. It will remove the need for large trucks delivering bulky building and hardware supplies heading through the main street.

    Plans also indicate Ingram's will continue to run the store in Kingscote's main street, selling homewares, fishing bait and tackle and camping equipment.

    Related

    Ingram's Home Hardware uses Tesla Powerwalls and builds large shed - HNN Flash, May 2022

    Astley's Plumbing and Hardware

    Astley's Plumbing and Hardware is relocating from its current location on Coborra Road, Dubbo (NSW), and moving into one of the hangars at the former Dubbo RAAF Base.

    The hangar will be transformed into a service and trade centre, including a showroom, space for supplier showcases and consult rooms. At the back of the site will also be a drive-through, according to the Daily Liberal.

    Astley's operations manager Shane Fuller said it was an "exciting move for Astley's".

    Our new facility will allow us to introduce more suppliers and products that support local trades, as well as expand our retail offering and showroom to DIY enthusiasts while maintaining our high level of customer service and care.

    The heritage-listed site was used as the Royal Australian Air Force training facility and storage site during World War II. The existing structure will be maintained as part of the fit out and any upgrades that need to be made to the structure will be done in accordance with the heritage management plan. It is currently being developed by Maas Group Holdings.

    A Maas spokesperson acknowledged the heritage aspects and cultural significance made the site significant for Dubbo. They told the Daily Liberal:

    We recognise the site has been under-utilised for some time and are proud that we are able to facilitate local, century-old businesses like Astley's to grow and expand on the site.

    Emerald Mitre 10

    Chief executive Justin Benjamin of Emerald Cooperative Society (Emerald Mitre 10) said its $3.9 million expansion - now almost complete - was prompted by a simple explanation. He told CQ Today:

    We have run out of room ... We are conscious that modern retailing is always changing, and consumers always demand more.
    The current number of SKUs in the store is approximately 26,000. We estimate the extension will allow us to take our inventory to about 32,000 SKUs, offering the people of Emerald more choice.
    The world has moved on. It is no longer acceptable to have unsealed carparking that causes dust issues.
    The extension will provide an additional 1200sqm of sealed parking at the front of the building as well as fully concreted rear access from Sullivan Street, allowing very large vehicles and delivery vehicles to load and unload away from retail traffic in all weathers.

    Mr Benjamin said the Co-op had fully self-funded the extension and all involved with the project, except the steelworks supplier, were local companies and contractors.

    He said that over the past five years, the Co-op had injected nearly $!0 million into the Emerald economy through rebates to shareholders and had donated $720,000 via a community donations program started in 2008. In the last financial year, it donated $110,000 to community groups.

    Long before Bunnings invented their 'sausage sizzle', the Emerald Co-operative Society was providing space at our store for community fundraisers.
    This became even more important when some 15 years ago, the owners of all Emerald shopping centres decided to ban such fundraising or to charge a site fee, which would have to come out of monies raised.
    Community groups rely on Emerald Mitre 10 to fulfil this function, which the board is pleased to do.

    Pontings Mitre 10

    The store celebrated a century of trade in late 2023, reports The Warrnambool Standard.

    As one of Warrnambool's longest-serving family businesses, it was founded by siblings Walter and Len Ponting, who purchased Dawkins and Sons Ironmonger, renaming it Ponting Brothers, supplying products to builders and farmers in the region. Walter's three sons Alex, Jim and Walter junior took it on in the 1940s.

    Today the business is owned and operated by directors Walter "John" Ponting and Pam Madner and Michael Miller. It employs more than 60 people, including the third-generation family members.

    Mr Ponting told The Warrnambool Standard that 35 years ago he would never have imagined he would be running the business recalling how his dad "dragged" him out of the surf to work in his sawmill.

    Mr Ponting said after the sawmill's closure he came to work at Pontings with his two uncles, sister, cousins, a brother-in-law and his former wife Raelene, with his children Leah, Emma and Harry later doing stints in the business.

    Mr Ponting likened being in a family business to being on a roller coaster ride with "lots of different opinions to be considered and lots of personal highs and lows".

    As part of the store's centenary, an honour board listing the names of more than 620 of its past and current employees was created. It now stands proudly inside on the wall near the Lava Street entrance.

    In 2019 Pontings became a Mitre 10 store. Ms Madner said the transformation of the next-door site, a former petrol station on Raglan Parade which it purchased in 2021, into a purpose-built timber storage shed and truck unloading bay in the trade yard had improved customer and staff safety and accessibility.

    It has been a much-needed space to grow our business.

    Related

    Pontings Mitre 10 to expand - HNN Flash, April 2021
  • Sources: Australian Broadcasting Corporation, Messenger-Hills News, Daily Liberal and Macquarie Advocate, CQ Today and The Warrnambool Standard
  • retailers

    Big box update

    Bunnings in Cairns

    Stores in South Australia, expanded cleaning products offer, Woolworths' pets acquisition, and property merger

    Approval is being sought to expand the Bunnings store in Cairns, Far North Queensland.

    A development application (DA) was recently submitted to Cairns Regional Council to expand the existing Portsmith Bunnings store to an adjacent landholding that would include an additional 2000sqm bulk trade area and 1000sqm staging area. According to the DA, a completed expansion would represent an overall investment of $31 million. In The Cairns Post, the report states:

    The proposal involves the expansion of the existing Bunnings Warehouse Store, to facilitate an increase in the range of goods sold and to improve the operational efficiency of the existing facility.
    Based on traffic impact assessment, (planners) do not anticipate any adverse impacts to result from the proposed expansion and, therefore, no mitigation works or upgrades are required.

    Patrick Siegel, co-director of NQ Building and Construction, said the increased supply of bulk materials the Bunnings' expansion could bring would be beneficial for the city's construction sector. He told The Cairns Post:

    It's good to get more competition in town. We need more bulk supply for trades. Supply has been an issue. Hopefully this brings a better range to choose from.

    Mr Siegel said customer service at other stores could be better, so he hoped Bunnings' standard of customer service would be high at the expanded store.

    At the moment some stores have poor service. But you just have to take it. It's no good.

    Port Augusta

    A Bunnings store is expected to be built in Port Augusta (SA). Bunnings general manager - store operations Jess Hitchin said the start of the build would begin soon. She told The Transcontinental:

    We're pleased to confirm positive progress has been made and we're now hopeful construction of the new Bunnings store can begin in a few months.

    The bricks-and-mortar store is located on the corner of Daw Street and the Stuart Highway near the Eyre Highway turnoff.

    The DA had been delayed by minor changes, including the lowering of the roof by 15cm and further resealing works of Daw Street.

    The store should retain the usual Bunnings layout while the application stated there would be 142 car parks.

    Related

    Proposed Bunnings store for Port Augusta - HHN Flash, July 2021

    Adelaide Hills

    Initial construction has begun on the new $40 million Bunnings store in Totness, in the Adelaide Hills (SA). The 16,300sqm site is double the size of the existing Bunnings that is close by.

    However, the store would be moved nearer to the freeway under planning changes, reports Messenger-Eastern Courier.

    Originally proposed as a two-level building with undercroft parking and a nursery, the changes mean the new Bunnings would now be one level with an uncovered 350-space carpark, requiring a shift west.

    It has been moved to incorporate land that would have still been home to other bulky goods outlets, and the changes allow trucks easier access to loading docks.

    Developers must also provide a 20-metre buffer of trees or landscaping between roads and buildings. Consultation is taking place with the Department of Infrastructure and Transport (DIT) to grow screening on its land along the Mount Barker freeway entry ramp. Planning consultant Emma Barnes told Messenger-Eastern Courier:

    For the streetscaping along the freeway, it will mean that a portion of that landscaping is on DIT land, but it will remain 20-metre in width. There could well have been other bulky goods on that corner, which will now be dedicated to landscaping, which is a good outcome. There would have otherwise been other buildings there.

    The project is being led by developer Totness Commercial.

    Cleaning category

    At the Wesfarmers Strategy Day in mid-2023, Bunnings said it would include more leading brands in its cleaning range, while also widening the variety of products available. During his presentation, Bunnings managing director Mike Schneider said:

    Cleaning is another area where we have strengthened our range of authority in response to the elevated and sustained customer demand we saw emerge during the pandemic. We've introduced more market leading brands that consistently attract higher frequency purchases.

    See page 22 here:

    Wesfarmers Strategy Day - HI News 7.2

    Since then, Mr Schneider said he believes a move into the home cleaning market - valued at $5 billion - will see the hardware chain gain a significant slice of the category.

    It will be in direct competition with the main supermarkets as well as bulk goods specialist Costco, and targeting consumers, tradies and small businesses that often buy cleaning products such as liquid handwash paper towels in bulk.

    Bunnings has a strong focus on bulk packages at better prices for a range of leading popular cleaning brands such as OMO, Finish, Dettol, Sukin, Cold Power, Sard and Hoover.

    In-store, the layout varies depending on the size of the store, with the largest outlets having up to four dedicated aisles. To make space for cleaning, Bunnings will tighten its range of window furnishings and curtains which Mr Schneider believes can generate better margins.

    As the cleaning products were being launched into stores, Mr Schneider said after 13 interest rate hikes consumers were hunting for value. He told The Australian:

    Consumers are incredibly focused on value, probably more than I have really ever seen in any other point of time ...
    ...What we learned from pets was that really strong value and bulk products are things that are really important for consumers because I think in categories like cleaning, consumers have a really acute eye for the value of a bulk product, right down to the unit of measure.
    So consumers are very quick to work out what that equates to 'X dollars' a litre or per 100ml or whatever it is, and by bringing a bulk offering into the market, we are increasing our range by over 200 products ... consumers are really being blown away by the value offering that's there. And we've established some real credibility and trust in another consumable category like pets and translating that into a cleaning range has been really well received.

    By the end of 2023, Mr Schneider said:

    The recent launch of our expanded cleaning range is all about delivering customers everyday value and an even wider range of necessity products with bigger quantities and better prices. While it is still early days, we're hearing really positive feedback from customers and our data is indicating the range is boosting visitation and cleaning basket size.

    Mr Schneider also told The Australian that Bunnings is increasingly focused on home improvement - not just hardware - and the moves into pets and cleaning reflected that repositioning of a brand which has been evolving for many years.

    I don't think we have called ourselves a hardware store now probably almost since when I joined in 2005. And the way we talk about our merchandising focus is anything "from the front gate to the back fence". That gives you a fairly strong licence ... Cleaning is a form of home maintenance. Keeping your home clean is as relevant as changing your light bulb or putting mulch in your garden.

    Woolworths and Petstock

    The Australian Competition and Consumer Commission (ACCC) has given the green light for Woolworths to move ahead with acquiring a controlling stake in speciality pet retailer PETstock.

    The deal was initially announced in December 2022 and will see Woolworths buying a 55% stake in Petspiration Group, which trades as PETstock.

    The purchase price for the 55% stake is now expected to be $438 million, reduced from $586 million. The adjusted enterprise value is about $1.46 billion, Woolworths said.

    ACCC chairwoman Gina Cass-Gottlieb said the regulator had significant concerns that PETstock's previously completed acquisitions (between 2017 and 2022) of the Best Friends Pets, Pet City, and Animal Tuckerbox chains and the Pet & Aquarium Warehouse store in Eltham, Victoria, might have contravened the Competition and Consumer Act.

    In response to the ACCC's' concern, the Woolworths and PETstock offered to provide court-enforceable undertakings.

    PETstock will sell 41 specialty pet retail stores, 25 co-located veterinary hospitals, four brands and two online retail stores.

    As part of its undertakings, PETstock must ensure the sale of the businesses to be divested will result in a standalone, independent and long-term competitor nationally and in local markets, and that the buyer can compete with PETstock in pet specialty retail. It must also keep those businesses in question competitive and economically viable until they are divested.

    The ACCC has accepted the undertakings and will not oppose the proposed acquisition.

    The COVID-19 pet boom spurred Woolworths to invest in the $10 billion specialty pet sector last December, according to the Australian Financial Review (AFR).

    PETstock is the second-biggest player in the sector behind TPG Capital's Greencross. PETstock continued to grow over the past year with underlying sales increasing by 10% to $892 million in the 12 months to October and underlying EBITDA relatively stable at $125 million, Woolworths said.

    Related

    Woolworths takes majority stake in PETstock - HNN Flash, December 2022

    Property deal

    The country's largest owner of Bunnings warehouses, BWP Trust is striking a deal to take over smaller landlord Newmark Property REIT - whose tenants include Bunnings, Officeworks and Kmart. BWP Trust is the owner of 75 mostly Bunnings Warehouses.

    Under the bid, BWP - which has a market capitalisation of $2.2 billion - would buy all shares in Newmark in an off-market takeover comprising 0.4 BWP shares for every one Newmark share owned.

    The Newmark board supports the proposal, which values NPR shares at a 43% premium. Newmark has a market capitalisation of nearly $181 million.

    According to The Australian, the deal is billed as an opportunity to combine two complementary portfolios of quality assets and similar tenant profiles. It creates a combined portfolio of $3.5 billion and sets up the Bunnings-owning trust for long-term capital growth.

    The combined portfolio will remain heavily exposed to Wesfarmers' businesses, reports the AFR. That would make it harder for the landlord to negotiate higher rents, Jarden analyst Lou Pirenc said in the AFR.

    It's hard to push Wesfarmers to increase rents when in most locations it's not as if you can kick them out and replace them with a non-Bunnings. Most sites will be fairly specific for Bunnings.

    In The West Australian, UBS analyst Tom Bodor maintained his "sell" rating on BWP, based on "challenged earnings growth given low returns on development spend, unfavourable new leases with Bunnings, higher debt costs and inflation normalising".

  • Sources: The Transcontinental, Messenger-Eastern Courier, The Cairns Post, The Australian, Retail Insight Network, The West Australian and The Australian Financial Review
  • bigbox