At its 2023 Conference the HBT National Buying Group (HBT) introduced "Member Highlights". These enable HBT to highlight those stores that have made significant changes, and helped to introduce new retail ideas.
The four stores to receive the first Member Highlights were, for the most part, highly innovative, and had undergone significant transitions during 2022 and early 2023. Presenting these stores, HBT provided a short, high-quality video introducing the store, followed by a question and answer session with the store owners, including questions generated by the attending HBT members.
K&K Steel
K&K Steel is located in Hastings, Victoria, which is 70km south of the Melbourne CBD (about an hour's drive), on the eastern side of the Mornington Peninsula. One of the owners of the store, Bill Heyblom spoke with HBT's Andrew Graham, one of HBT's managers of member services, about the recent deep-reaching changes to the store.
Those changes really arose from an understanding that in order to grow, the store needed to change its focus so as to attract more customers. As Bill told Andrew:
When we bought the business, it did a little bit more in the job lots and that sort of thing, house lots ... but we're not set up to actually move heavy material. We also lost a few of our tradesmen [customers]. They retired and we had to sit down and decide what we wanted to do.
We've got a really great fabricator who is very artistic and very creative and he loves the challenge. So we've found that we are getting people in that will ask for a weird job. They've gone to other places and said, no, we can't do that. That's not in our capabilities. So we embrace the difficult, we go down and we grab our fabricator, we have a chat with the customer and say, this is what you want, is this how you want it done?
Bill provided an example of the kind of work they moved to doing, to the delight of their customers:
We had one lady come in [whose] grandfather used to race speed cars. She had the tail section of his speedway car and wanted to make a TV table out of it. They didn't know how to do it, so they brought us a photo of what his speed car looked like. With a bit of thought, the fabricator managed to fabricate it so that it looked like the bump bar on the back of the speed car. When they left, they were just ecstatic. The father came in after that, he just said 'amazing'. Couldn't believe that this could be done.
While that goes to the substance of how K&K changed its business model, much of the substantial change has been about how the store has changed its appearance in terms of product display and placement. One of the major changes was reducing the height of shelving. K&K wanted a clear line of sight across the store. However, they found it difficult to source the kind of shelving they wanted - so they built it themselves., developing mobile shelving on wheels.
We had a need to be able to display a lot of things in a small area while keeping with this height limit. We had to think about how we did it. So we designed the shelving ourselves. The beauty of using them is that we can change the store around in half an hour. We now have the ability, if we want, we can shuffle things around. We can move one item, we can move rows of items so that the store doesn't get stale, so that people don't come in and walk right past things they might need because they know where the other thing is.
One result of these changes is that Bill has noticed a shift in the customer base.
We found that we are actually getting more female customers come in now. It used to be that they only came in if their husband sent them in for something, but now we're getting the females that come in and go, oh, can you help me with this and do that? I need something like this. So it's all tied into making [the store] more inviting for people to come into.
Such a transition needs lots of help, of course. K&K benefitted from the support of many of its major suppliers.
We spoke with our major suppliers, Bordo, Klingspor. They jumped on board straightaway, said, yeah, what do we want from us? How can we help you? ITM were another one that said, great, let's do it. We're also Metabo dealers. And they jumped in and said, alright, we can do something for you there. Most of the people that we consider our main suppliers jumped in. They jumped on board and gave us extra bits and pieces. We got in with Allstate Trailer Parts and they were great.
At the core of the changes, however, was K&K's relationship with HBT. In fact the initial impetus for change came from Bill's business partner overhearing a remark at an HBT Conference that if you hadn't changed your store much over the past five years, you likely needed to make changes as a priority.
I've been working at the business for 20 years and the previous owner was reluctant to do anything. We talked about we needed to change things, but he didn't want to put the effort in.
HBT has, from day one, opened doors for us that we couldn't get to otherwise. It's been a good asset to get ideas from. We've been able to approach people and say, what can we do here? We're in discussions at the moment on how we can improve the outside of the building. The outside is tired and we need to do something there. And Andrew and I, and Roger and Jane, we've working out what steps to take next. So it's been great in helping us to look for ways forward to change the product range, and to expand on what we are doing.
One question that came from the floor was about what K&K did to retain staff - a common theme at the 2023 Conference. Bill admitted he didn't have any real solutions, especially as much of the longer-term staff had reached retirement age.
We've had nothing but trouble getting staff. We were down to one fabricator and I get a phone call on a Saturday morning when I wasn't working, from Roger saying, just had a guy drop off a resume. I said, did you let him out the door? So we quickly rang him up and got him back in, and by 11:30 he had a job. He's turned out to be the best person we've employed. He's just so creative. He's incredible.
Earlier in the conference in a keynote speech by Bernie Brookes, former CEO of Myer, the concept of "Uber" staff, who want to work retail as almost part of the gig economy had come up, and Bill confessed that much of his current staff followed that model.
Talking about the Uber personnel. We've actually gone basically to that by default, where you've got four staff members and none of them are full-time. They all wanted to just do casual or part-time work.
Cooma H Hardware
The town of Cooma is located about 115km due south of Canberra (about a 90-minute drive). It's also located close to the Snowy River 2.0 project, which has become a major driver of the Cooma economy, and of sales at Cooma H Hardware.
Two of the owners of the hardware store, Jannene Rixon and David Van der Plaat, spoke with HBT's Jason McElligott. Jannene began by explaining how important customer service is to the store:
A lot of people say they come back because of our customer service. I had a girl in probably about two weeks ago, she'd been down to Mitre 10. They didn't have the screws she needed. She was trying to put her kids' bunks together. She couldn't do it that night. They were devastated. She came and got the screws from me. I saw her in Woolies that afternoon, and she said, 'Oh thank you. The service out there was so good. The bed got together, the kids were so happy!' So that's what we like to do and in a small community you get the feedback.
While Cooma has benefitted substantially from the Snowy River 2.0 project, David does point out there are some downsides, especially when it comes to hiring staff.
It's a double-edged sword. It's created something like a mining boom. Property prices went up, things got really busy, but it's created major issues with staffing and stuff as well because they've come in and they're paying money. So they've got guys out there, out of school, they are earning $3000 a week in the factory, for an 18 year-old. Made it really hard to retain staff.
According to David, they've given up trying to directly supply the main contractor on Snowy, Future Generation. Instead they service the contractors working for Future Generation.
What we've found a really growth area for us is servicing the contractors because you're dealing with people who know we're talking about and we're doing very well with that.
Jannene also points to growth in their core building sales as well.
At the moment, our trade business is sort of growing. A while ago we had a change in staff and one of our guys stepped up and has started doing a lot of our quoting and is getting back to our builders in a really timely manner. So we are sort of growing the trade section because we're getting back to builders. Up in the Jimenbuen area, there's a fair bit of building work happening. So we're getting a lot of work up there that we weren't getting before, as the person in the role previously wasn't getting back to people quick enough.
Recently HBT helped Cooma move to the H Hardware livery for their hardware store. Much of the inspiration for the redesign came from David.
With the new building, I designed it all myself. I love looking around hardware stores. So when I travel around, I find a hardware store to walk into. I've been doing it for years, so I sort of knew what I wanted. I just sat in with a piece of paper and drew a box and started from there, sort of thing. And then we sent our plans to HBT, they did the H Hardware, logos and that design all that up the outside.
Fix & Fasten
Fix & Fasten is a fastener specialist retailer, with stores in Sunshine West to the west of the Melbourne CBD, and another in Campbellfield, to Melbourne's north. Andrew Graham spoke with the retailer's two principals, Jason Filia and David Sevrakov. F&F is part of the Industrial Tools & Trades (ITT) division of HBT, and both Jason and David participate in HBT's steering committee.
One of the most interesting aspects of F&F is that the retailer utilised the Toyota-inspired "kanban". Taiichi Ohno, an industrial engineer at Toyota, was essential to its development during the 1950s. The system originated with Toyota emulating some of the stocking practices of supermarket systems.
At the most basic level, kanban helps to aligns inventory levels with actual consumption. When the manufacturing area has consumed its stock of a part, a signal is sent to its local inventory for replenishment. The inventory sends a signal to the external supplier, and it is restocked.
While that seems almost obvious, many inventory systems still work through bulk orders, which are replenished on a schedule, rather than through demand signals, often resulting in either overstocking or understocking.
The insight that F&F brought to the market is that by interlocking with customers via kanban, they create a system that provides a strong barrier to entry for competing suppliers - it's not enough to just have a screw or bolt that is fractionally cheaper, an entire system would need to be replicated. As David describes it:
Our kanban system is a supply solution that we've developed into the market. It allows us to manage our major accounts in a controlled fashion, taking the urgency out of what's always urgent, which is workshop consumables. You know, a $5 thing can stop a whole workshop. So what we've developed is the kanban, which is a bin rotation system.
The cost savings that has not only through our customer but through our own business is amazing. Procurement, the old fashioned walk around with pen and paper to take in the weekly order that they would do is eliminated. To be honest, sometimes we almost make some positions redundant because it just looks after itself. It allows us in our business to actually control the purchasing, allows us to buy better, we know what's coming and yeah, it's a really good system the customers love, and it locks the customer for forever.
HBT has been one of the core pathways to success for F&F. As Jason explains:
The HBT supplier base being so large and various has provided us with product ranges that traditionally we haven't had any exposure to. That broad buying range has allowed us to be competitive, and, with our service offering, our customers are actually potentially forcing us to take on extra product range because of that service and the way in which we're delivering the product.
David was especially full of praise for HBT's online portal that links suppliers and members.
The online portal that's been developed over the years, especially now, is a great asset to our business. Even just to search products, to search suppliers. We've got our own signings from our sales teams, our purchasing officers, so they can really just jump on and work through the portal and find out what they're after and that sort of stuff. Accurate pricing, notifications and communication through the portal is second to none.
While F&F faces the same problems with staff as other retailers in hardware, the company has developed a more active approach to managing the situation, according to David:
Something else we've taken care of is, I suppose with our staff, we've sort of thought outside the box and instead of getting traditional fastener staff, we sort of look for specialists. So currently we've got a hydraulic specialist within our business. We've got a sealant specialist that we've gathered from outside our traditional industry and rely on them to help us build that category. So we've built this, I suppose, structure of specialists within our own business through the sales team that we can lean on when we get a certain, I suppose, lead into silicone we'll take that account manager with us and help us.
The other thing we've identified is obviously [the current staff] are not going to be around forever, so we've got to bring the new generation through. So we started a skill-invest type scenario for succession. We're bringing teenagers through the business. They do a 12-month course, they get a certificate at the end of it and then, if they're up scratch, we retain them as a full-time employee And we've had some great success with that. We've got some young kids within our business that I suppose have got the "want" to move through the business. The old-school heads have got all the knowledge, but bringing those young ones through means they can feed off that knowledge for the next generation.
Hoadley's Hardware
Definitely one of the strong crowd favourites at the Conference was the presentation of the Hoadley's, who are a delightful young couple who decided to open a hardware store in Blayney, a town in New South Wales, west of Sydney, between Bathurst and Orange.
It seems to have been a long time since younger people could just open such a store, with little knowledge about how the retail end of thing works, and go on to enjoy some success. But Tayla and Blake Hoadley, with their two young children, have managed to do exactly that.
One key to this was the amount of help the couple received from HBT's general manager - member services, Mike LoRicco. Blake is frankly honest about is lack of experience when he describes the process of getting going:
I was going to start a hardware shop. I knew there were buying groups, but I didn't know where to start. So I was ringing Bremick or Macsim or anyone. I rang directly and said, "I'm starting a hardware shop will you, supply me?" And they all said, oh yeah, we should be able to.
So I was ringing all these people going, well how am I going to work all this? Anyway, long story short, I was scrolling the internet trying to find a buying group, and found one, which was IHG actually. I got in contact and that worked, I had my hopes up, but then I started getting suppliers in and got talking about HBT. So I looked HBT up on the website, sent an email and, funnily enough, the next day, Mike actually rang me. Yeah, we got talking and then Mike came out to see me.
It's all started from there really. It's been good.
As a native son of Blayney, and a tradesman (plumber), Blake was aware that there was a real need for another hardware store.
It was hard to get materials if you needed them. And then because the [existing] shop that was there was never, well they had stock, but they didn't always have the right amount. If you needed 10 fittings, it might've only had four. So I'd find myself going to Orange or Bathurst to get materials to do my jobs. Every tradesman you talk to in Blayney would say that and they just get someone to deliver it from Orange or Bathurst, which is half an hour away. So I talked to dad about it early on, probably two years before we actually did it, and said we should do a hardware shop in Blayney, but we never sort of did it. And then here we are, we're doing it.
Even though Blake has an "in" with the trades, the store still balances more towards DIY.
Well, we're sort of probably 40% trades, 60% DIY at the moment. So we don't have heaps of trades and we've got a lot of up and coming tradesmen similar to my age that are coming through. All the older tradesmen haven't been to my shop because they don't like change. They're stuck in their ways and where they shop. But all the younger ones, I'm starting to get along with them really well, making friendships coming in. It's been great.
Not only has HBT helped out, but so have the suppliers.
Suppliers been really helpful actually. Setting up core ranges or top sellers because I'm new to this game, I didn't know where to start. When I first thought I was just starting a few screws, different varieties, but we got 10 bays of screws, all different screws and I didn't think I'd have to have that many screws, but it's surprising it's your bread and butter stuff, that turns over really quick, but you've got to have the screws to be able to sell the screws so you if you are going to have only a small range, probably going to lose some of the customers, we'll lose some sales.
While Blake is busy building relations with the suppliers, his wife, Tayla, helps to make the store friendlier.
I pride myself more on the customer service side. We are very family orientated and Blayney's such a small community, tight knit, everyone loves that sort of feel. So I'm in there to be bright and bubbly to say hello to everyone to stop Amelia, our daughter, running down the aisle past someone and knocking them over or something. So yeah, Blake's the guy with all the answers to all the questions and I'm the one to just be there for everyone and greet them and make them feel welcome. And as Blake said, I feel like that's why people come back is that we try hard to help everyone where we can, we can order things in or at least try our best to. But it's just that nice small community feel and we feel that that's what everyone loves and that's what I sort of stick to.
That said, Tayla has definite plans for a more involved future.
We have a seven month old baby. I'm technically on maternity leave still. But once he's in day care and that sort of thing, I'd love to get into the shop and really dive into that side of the shop. But until then, I definitely have lots to learn. Lots to learn, but we complement each other in that way. Blake has such a background in the industry and I'm there to be bright and bubbly. So yeah, we complement each other.
Blake, like any good hardware retailer also has his eyes fixed on the future, and it's no surprise what he most wants: more space.
Bigger shop, big area because we're only in probably a thousand square meter area, including the outside yard. So we're limited to the room and we'd love a bigger shop to do more things. Such as pet stuff or nursery, maybe going to the mower side of things as well. When ee took over, it was a mower shop and there's very much demand for that in Blayney. Time will tell. If we run into a heap of money, it'd be good. See what happens.
