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.


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.


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.


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.


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.


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.


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.


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?


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.


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.


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.


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.


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.


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.


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.


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.


    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.


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


    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.


    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

    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.


    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.


    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.


    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.


    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.


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

    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.


    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.


    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.


    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.


    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

    Retail update: Tools

    Gympie to get a Sydney Tools store

    Richard Murray, former chief executive of JB Hi-Fi and Premier Investments, was announced as the new CEO of Total Tools

    Sydney Tools is planning to open a branch in Gympie (QLD).

    Bayswater Holdings lodged a development application (DA) with Gympie Regional Council to build the new showroom and warehouse on a vacant block, directly opposite the local Bunnings store. CoreLogic RP Data records show Bayswater Holdings bought the half-hectare block in December 2022 for $2.5 million, reports The Gympie Times.

    The proposed one-storey showroom would include 2927sqm of floor area and be split into two tenancies, one about 600sq m larger than the other. The DA said the larger shop would be leased to Sydney Tools.

    Fifty parking spaces would be included for customers and staff on site. This would be five less than the minimum number required for the development, but Bayswater Holdings argues in the application 50 spaces would still be "sufficient".

    Sydney Tools is already established in the Wide Bay Burnett, with a proposed outlet at Bundaberg getting the green light by the region's council in 2021.

    The council has not yet made any decision on the current application.


    Sydney Tools store proposed for Kensington, QLD - HNN Flash, June 2021

    Total Tools

    The appointment of Richard Murray in the top job at Total Tools comes at a time when Wesfarmers (Bunnings) is continuing its roll-out of Tool Kit Depot, according to The West Australian.

    In September, Mr Murray made a surprise departure from Premier - the company behind major clothing and retail brands Peter Alexander, Smiggle and Just Jeans - after just two years in the job. It was despite Premier sales growing to the point where it's now considering splitting Smiggle and Peter Alexander into separate businesses. The Australian Financial Review (AFR) reported at the time that Mr Murray was unhappy at being excluded from talks about owner Solomon Lew's plan to carve up his operations.

    Prior to this, Mr Murray led JB Hi-Fi for seven years to become one of the nation's largest retailers and one of the biggest retail stocks - fuelled by the 2016 acquisition of The Good Guys.

    Total Tools owner Metcash told the ASX that Mr Murray would replace Paul Dumbrell -who had already announced late last year he would step down. Mr Murray will report to Metcash CEO Doug Jones, joining his nine-person executive team. In a statement, Mr Jones said:

    Richard's deep retail experience and proven track record ideally positions him to play an integral role in the continued success of Total Tools as the number one player in the Australian professional tools market. He has a huge passion for the sector and Total Tools, both as a retailer and a serious tools and DIY enthusiast.

    In the AFR, E&P Capital's Phillip Kimber said Mr Murray was a "very experienced executive" and that he would be "well known to investors after having been CEO of large, listed companies". Metcash's entire market capitalisation is $3.5 billion, compared with Premier Investments' $4.3 billion and JB Hi-Fi's $5.8 billion.

    It is considered a big name hire for what is relatively a small business inside Metcash, an ASX-listed mid-cap and the sort of ASX company that flies below the radar.


    https://hnn.bz/articleID/2023-46-1700189320720}Metcash gets 100% of Total Tools - HNN Flash, November 2023

    DataRoom in The Australian has also reported that after making a number of acquisitions, Metcash is now looking at hardware stores to buy, including "online hardware business" HBT, which could expand its existing stable of stores trading under brands such as Mitre 10 and Total Tools.

  • Sources: The Gympie Times, The West Australian, The Australian Financial Review and The Australian
  • retailers

    Supplier update: Industrial, safety & tools

    Industrial supplier ATOM sold to private equity

    Techtronic Industries ordered to pay a record penalty for resale price maintenance conduct: ACCC

    Private equity firm Pacific Equity Partners (PEP) will compete directly with Wesfarmers in the industrial and safety supplies category, after buying distributor ATOM and seeking to double its earnings in coming years.

    PEP managing director Tony Duthie said the firm had agreed a deal to acquire an 80% stake in the company, reports The Australian Financial Review (AFR). It plans to grow ATOM's footprint, including via bolt-on acquisitions of smaller rivals.

    While Mr Duthie declined to comment on the purchase price, the deal is expected to value ATOM at a few hundred million dollars. He told the AFR:

    There's a strong organic growth story both in terms of natural tailwinds given the sectors and the heightened focus on safety. There's also an ability to scale the network nationally and increase it from the 11 sites there now as well as some strong M&A opportunity.

    He said PEP would work with ATOM's management team to identify bolt-on acquisitions.

    There are a number of family-owned small players that are specialists from the product space or geographic space, and they could in-fill our network nicely.

    ATOM sells safety equipment such as gloves, protective goggles and workwear, along with lubricants, tools, nuts and bolts, cleaning supplies and other industrial consumable products. Its customers include miners, infrastructure builders and owners, and defence contractors. Mark Bishop has owned the business for about a decade.

    The company turns over about $350 million of products a year and is the second largest player in the sector behind Blackwoods, which is owned by Wesfarmers.

    ATOM's chief executive, Jason Johnson - a significant shareholder - would remain with the business as an executive and investor under the new ownership structure, Mr Duthie said.


    Industrial and safety products distributor ATOM seeks buyer - HNN FLash, June 2023

    Techtronic Industries

    Power tool company Techtronic Industries has been ordered to pay penalties totalling $15 million after admitting it had engaged in resale price maintenance conduct in relation to Milwaukee branded products, including power tools, hand tools and accessories, according to the Australian Competition and Consumer Commission (ACCC).

    The total penalties, ordered by the Federal Court, are the highest imposed for resale price maintenance in Australia. Resale price maintenance (also known as RPM) occurs when a supplier of goods specifies a minimum price below which a reseller must not supply, offer to supply, advertise, or display those goods for sale. In a statement, ACCC deputy chair Mick Keogh said:

    The ACCC submitted to the Court that this level of penalty was appropriate given the seriousness, duration and extent of Techtronic's conduct. It sends a strong signal to deter others from engaging in RPM, and should serve as a warning for all other businesses.
    Resale price maintenance is illegal because it is harmful to price competition, which may mean consumers pay a higher price than they would in a truly competitive market.

    Techtronic admitted that, between January 2016 and July 2021, it entered into 97 agreements with retailers and dealers which restricted the sale of Milwaukee products below a specified minimum price.

    Techtronic also admitted it enforced the restrictive RPM provisions in its contracts 29 times between December 2016 and May 2020, for example by issuing warnings to dealers who offered to sell, or sold, Milwaukee branded products below the specified minimum price, or by withholding supply from two dealers.

    The Court also ordered Techtronic to post corrective notices on its website and to its dealers, implement a compliance program and pay part of the ACCC's costs. The Federal Court will publish its written reasons at a later date.

    Techtronic cooperated with the ACCC. The parties filed joint submissions, a statement of agreed facts, and joint proposed orders.

    The ACCC instituted proceedings against Techtronic in November 2021.


    TTI in court for alleged resale price maintenance over power tools - HNN Flash, December 2021
  • Sources: The Australian Financial Review and Australian Competition and Consumer Commission
  • companies

    Category update: Building materials

    BGC to be placed on the market

    Irish building materials giant CRH and the Barro family make a $2.1 billion buyout proposal for cement maker Adbri

    Daniel Cooper, chief executive of building materials and home-building group BGC recently told The Australian Financial Review (AFR) that it plans to relaunch the sale of the company. He said:

    We will reinitiate the sale in the near future.

    However the price was yet to be determined. The company was previously on the market for around $1 billion.

    The revival of a sale process follows the sale of BGC's plasterboard and fibre cement divisions to Belgium-based global building materials manufacturer Etex, announced late last year.

    Included in this deal is BGC's plasterboard plant in Western Australia, a 56,000sqm facility located in Perth, and a network of nine warehouses across Australia and New Zealand.

    Prior to the acquisition, Etex already had a significant presence in Australia with 14 sites and commercial brands such as Siniat plasterboards, Promat passive fire protection and high-temperature insulation, and EQUITONE fibre cement cladding panels.

    This sale is expected to close in February, which BGC said would solve its debt troubles. Mr Cooper said.

    The sale strengthens our position, leaves us with zero debt and many millions in the bank.

    The company added that it "has returned to normal trading in [this financial year], as home builds return to normalised levels and margins."

    BGC had abandoned previous attempts to sell the business due to economic headwinds.


    BGC Group suspends sale again - HNN Flash, September 2022


    Building materials giant CRH and Australian family-controlled business Barro Group have offered to buy concrete maker Adbri in a deal that values the company at around $2.1 billion.

    The joint bidders still require the approval of the remaining Adbri shareholders for any transaction to proceed. New York-listed CRH's proposal is indicative and non-binding, and Adbri has granted exclusive due diligence, according to the AFR.

    Formerly known as Adelaide Brighton until a name change in 2020, Adbri has set up an independent board committee. It told the ASX it had "entered into a process and exclusivity deed" with CRH and Barro Group until February 28, 2024 to progress a potential transaction.

    The Adbri board intends to recommend the deal unanimously, subject to a binding agreement and an independent expert's assessment, in the absence of a superior proposal. The CRH bid will also require the approval of the Foreign Investment Review Board.

    In The Australian, analysts are expecting the offer to succeed given the size of the offer price premium - 41% - and outlook for the building market.

    Adbri turned over $1.7 billion in 2022 for a net profit of $102.6 million, down on the $116.7 million achieved the previous year. It operates more than 200 plants and facilities across Australia.

    For CRH, the proposed deal marks the first big move by the company outside its core European and North American markets since it acquired businesses in the Philippines and Brazil eight years ago under the EUR6.5 billion takeover of an international portfolio of assets from Lafarge and Holcim.

  • Sources: The Australian Financial Review, Irish Independent and The Australian
  • companies

    ABS hardware retail stats: Sept 2023

    Surprising boost to sales in September

    In trailing 12-months to September terms, Australia is now in negative growth territory. Yet that decline is largely an east coast story, with the rest of Australia performing relatively well. Given the RBA's determination to slow consumer spending, calendar 2024 could see further market contraction.

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

    We can treat the trailing 12-month through to September as periods, which we denote with a "p" prefix. So p2022 refers to the period from October 2021 through to September 2022.

    The ABS data shows us two major points: on that trailing 12-month basis, turnover for Australia as a whole has now entered negative growth. This is by a small amount, but given underlying inflation, it is likely indicative of a larger market contraction.

    The second point, however, is that across Australia results for both August and September 2023 have been broadly positive. Up, as we all know, is good, in any circumstance.

    In terms of how much direct inflation there is in the hardware retail market, that remains difficult to determine. In our recent article on the ABS stats for the Producer Price Index (in this e-newsletter) as it relates to construction, we indicate that this is broadly flat. However, if you consider the categories listed, many of those that more directly relate to hardware retail have trended down. It is somewhat likely as a consequence that inflation for hardware retail is below the 5.4% consumer price index (CPI) increase for p2023 - but will still be significant.

    The overall numbers

    Australia overall saw sales of $25.46 billion for p2023, down $21 million from p2022, a decline of -0.08%. That contrasts with an increase of 7.54% for p2022 over p2021.

    In both percentage and dollar terms, Queensland (QLD) saw the steepest fall for p2023. Revenue was down $85 million, representing a decline of -1.58%. Both New South Wales (NSW) and Victoria (VIC) were close to that, with declines of $81 million/-1.05% and $72 million/1.08% respectively. Tasmania (TAS) also recorded a fall for p2023 over p2022 of 0.93% and $6 million.

    In both percentage and dollar terms, South Australia (SA) had the steepest increase, gaining 6.28% and $103.9 million. Western Australia (WA) was just slightly under that with $103.4 million, representing an increase of 3.88%. Northern Territory (NT) grew by 3.05%/$8 million, and Australian Capital Territory (ACT) went up by 1.35%/$7million.

    The chart below illustrates the specific revenue comparisons between the states:

    The chart below shows the shift in growth from the three major east coast states to the rest of Australia, in dollar and percentage terms.

    While the east coast dominates in terms of market size, the rest of Australia has been outgrowing it in percentage terms.

    New South Wales

    In the contrast between p2022 and p2023, the decline in revenue over April, May and June have dragged down performance in the most recent period. While August 2023 came in marginally below August 2022, September 2023 has seen revenue nudge past September 2021 to provide an all-time high for the month.

    The question that remains is whether revenues over the coming quarter will run high, following the December quarter over the two previous years, or if it will fall back to 2020 levels. Based on a range of factors, HNN expects the results for the three months of the quarter to be around the $1.9 billion to $2.0 billion mark, averaging just above December quarter 2020.

    To add some overall context to this result, it's worth noting that from p2019 to p2023 retail turnover in NSW increased by 33.1%.


    Of all the states, VIC has actually benefitted the least from the COVID bump to hardware retail. That's largely down to its subdued performance in p2021, when sales increased by only 0.1%, a period when both NSW and QLD boosted sales by over eight percent. The gain from p2019 to 2023 for VIC is the lowest for all states and territories, at just 17.1%.

    Given that, it's a little surprising that in a time where p2023 sales trailed those for p2022 consistently, the state outperformed p2023 throughout the September 2023 quarter. That was especially true for September itself, with sales up 8.9% over September 2022. That's not against a weak comparative either, as sales in both August and September 2022 were the highest to date, a feat obviously repeated in 2023.

    While this is encouraging, HNN still expects total retail turnover for the current December quarter to come in just below that of NSW, at $1.8 billion to $1.9 billion.


    QLD began p2023 by setting record highs in sales for October and November 2022, and just nudged a new record in February 2023. However, from June through to September 2023 the state has underperformed the previous period.

    Again, to provide some perspective, sales for p2023 were up over 30% on those for p2019, increasing by $1.3 billion.

    South Australia

    Every single month of p2023 has seen SA set a new record for hardware retail sales, with September's increase of 9.2% over September 2022 only the fourth highest percentage gain for the period.

    It's difficult to predict what December quarter of 2023 will bring, but it is likely to be over $500 million in total revenue. SA has been the state to most benefit in percentage terms from the COVID bump, with hardware sales up over 50% for p2023 against p2019.

    Western Australia

    Like SA, p2023 was a good year for WA hardware retail, with only April 2023 dipping below results for p2022, and every other month setting a new record for the state.

    The overall COVID bump from p2019 to p2023 has been 39.5%.

    Australian Capital Territory

    Through until April 2023 performance for p2023 closely followed that of p2022, but since May 2023 the territory has outperformed the previous period. That culminated in a 10.4% lift for September 2023 over September 2022.

    ACT saw a COVID bump of 45.7% from p2019 to p2023.


    As we've started to fully cycle out of the data blackout that happened for the state during the COVID years, we can present at least the two post-COVID years.

    As the chart indicates, p2023 followed p2022 very closely.

    Northern Territory

    NT also has enough data available to now present the two most recent periods.

    In part due to its size, NT tends to be volatile in its results, but these do indicate that p2023 outperformed p2022 until July 2023, and has underperformed p2022 for all of the September quarter. However, that is in part due to an exception p2022.


    The primary fact to understand about the current Australian economy is that it is the intent of the Reserve Bank of Australia (RBA) to create conditions where Australians will spend less, especially on housing.

    The overriding influence on the economy is a shortage of supply, which means that even moderately high demand can lead to inflation. As mentioned in our analysis of the ABS Producer Price Index numbers for construction, the ABS sees demand in construction for the September 2023 quarter as being split. While supplies used up until first fix have seen diminishing demand, and hence price reductions, second fix supplies continue to see high demand, and hence price increases. This would indicate that the RBA has started to achieve its goals.

    Where HNN sees real concern for hardware retailers is in how the more DIY market plays out over December 2023 and March 2024 quarters. As we mentioned in our analysis of the DIY market, we've grown used to both analysts and corporate CEOs relying on a model that sees DIY pick up when house sales slow. There has always been some truth to that, but it has become an increasingly simplistic analysis as other factors come into play. It might have been a leading market modality back in 2018, but in 2023 and 2024 it is just one factor among equals.

    One of those factors is that HNN is seeing increasing anecdotal evidence that DIY has become less popular. It seems to be moving to a more narrow focus. We do think one area that could see growth is in repair as opposed to improvement, with an increased willingness among homeowners to take on annual, seasonal tasks to ensure their homes stay in good shape.

    All that said, it is true that Australia's hardware retail industry has managed to stay surprisingly robust and resilient through some quite turbulent economic times, as the chart indicates.

    Even if revenues pull back to the levels of p2021, the industry will have retained much of the growth experienced during COVID. While that won't be good news for corporate hardware retailers, for independents there have been real gains in both market size and share. As we also expect to see the number of business exits from hardware retail increase through calendar 2024 (as owners seek to exit on a high), we see conditions continuing to improve for those independents.


    ABS Construction Price Index trends flat

    16 categories fell, 8 categories stable, 19 categories increased

    The ABS analysis is that decreased demand for new houses has seen products used up to first fix decline, while second fix products remain high. Both steel and timber frameworks are down, along with ceramic tiles, but plaster, pipes, sanitaryware and waterproofing supplies continued to rise.

    The Australian Bureau of Statistics (ABS) has released its stats for the Producer Price Index (PPI) through to the September quarter of 2023. The ABS has recorded a zero percentage gain, after four years (16 quarters) of continuous increases going back to December quarter 2019.

    Overall, the prices of "inputs" - such as construction materials - into house construction have flattened. However, this is something of a split situation, according to the ABS. With demand for new housing easing during the most recent quarter, prices have declines on materials used during the initial phase of construction, but those needed during second fix - such as paint - continue to trend high.

    On the other side, output from house construction, labour costs continue to rise, and are the main reason why house construction prices rose by 1.0% for the quarter. For the four quarters to September 2023, prices rose by a cumulative 3.9%.

    Category performance

    We can roughly classify the construction material categories into four groups: where there has been a substantial price index fall to a level going back more than 12 months: where there is some price decline in the most recent 12 months; and where there is a near-flat or only very small increase in price; and where there is a substantial increase.

    Overall, as the ABS states, there has been a near flat performance for September quarter 2023, as shown below:

    We've chosen to break the data into periods from December quarter to September quarter not because it is seasonal (as with retail sales and building approvals), but because the 12-month-on-12-month comparisons make it easier to understand what's going on.

    Substantial price falls

    To start with the good news first, there have been substantial price falls in six categories:

  • Ceramic Tiles
  • Other Electrical Equipment
  • Reinforcing Steel
  • Steel Beams and Sections
  • Steel Products
  • Structural Timber.
  • ABS PPI for construction: Ceramic Tiles

    Other Electrical Equipment

    Reinforcing Steel

    Steel Beams and Sections

    Steel Products

    Structural Timber

    Mild price falls

    Not quite as great, but still very encouraging, there are a further 10 categories which have undergone slight price falls and indicate in most cases a stabilising market. These categories are for:

  • Aluminium Windows & Doors
  • Carpet & Other Floor Coverings
  • Ceramic Sanitaryware
  • Electrical Cable & Conduit
  • Electrical Equipment
  • Fibrous Cement Products
  • Plywood & Board
  • Switches & Distribution Boards
  • Termite Barriers
  • Timber Board & Joinery
  • Aluminium Windows & Doors

    Carpet & Other Floor Coverings

    Ceramic Sanitaryware

    Electrical Cable & Conduit

    Electrical Equipment

    Fibrous Cement Products

    Plywood & Board

    Switches & Distribution Boards

    Termite Barriers

    Timber Board & Joinery

    Stable prices

    In this group are categories that were either flat, or had only mild deviations from flat, representing price stability. There are nine categories included:

    Copper Pipes & Fittings

    Cupboards & Built-in Furniture

    Metal Garage Doors

    Mirrors & Other Glass

    Other Metal Products

    Plumbing Products

    Shower Screens

    Timber Windows

    Increasing prices

    Then there are the 19 categories that did actually increase.


    Engineered quartz banned by big boxes

    Bunnings and IKEA just say "no" to EQS

    After Safe Work Australia released a paper suggesting EQS should be banned due to its role in causing silicosis, and unions accelerated their demands, both Bunnings and IKEA have announced plans to ban the benchtop granite alternative by the end of 2023.

    On 15 November 2023 both the Wesfarmers-owned Bunnings and Swedish furniture group IKEA announced they would no longer sell engineered quartz stone (EQS) products. This came in the wake of a report from Safe Work Australia which recommended a nation-wide ban on the product by early 2024. Unions have also been active in campaigning for such a ban.

    This relates specifically to kitchen benchtops, where EQS is used as an artificial manufactured alternative to natural granite (and other stone). It has many advantages, in that it is both less expensive and requires only minimum maintenance.

    The bans will be completely in place by the end of 2023, though it's likely the effective date will be earlier than that.

    However, working with EQS without safety precautions and with a degree of carelessness can result in stonemasons contracting silicosis. This has been known for some time, but efforts to reduce exposure have proven ineffective.

    While the debate over what to do with EQS had developed over more than the past two years, there remains a good deal of inaccurate information about both the product and its situation in Australia.

    Silica and the problem with EQS

    Perhaps one of the biggest problems with EQS is that the hunt for a more familiar analogue to the material and its problems have led people to compare it to asbestos - which it, pretty much, in no way really resembles. Equally, people seem very confused about what actually causes the danger with EQS.

    The main difference between EQS and asbestos-based products is that there are no circumstances under which EQS becomes friable, and a source of simple contamination. In some forms asbestos crumbles to dust, and contamination can occur by simply moving the product around, or cutting a board product with a handsaw.

    Where asbestos releases very fine fibres, the contamination by the silica in EQS is the result of very small particles. These particles are known as respirable crystalline silica (RCS). The only way of producing those particles is to work on the substance with some kind of power saw, drill or grinder. Having finished EQS benchtops in a house or commercial business produces zero risk in everyday use.

    What is not broadly understood in the tradie community is that RCS is not the dust you see, but particles so small they are all but invisible. These particles really cannot be seen without some form of vision magnification, as they are much smaller than the diameter of a human hair. So if you are controlling only for visible dust in your work practices, you have somewhat missed the point.

    In the realm of lung disease, the size of particles is measured in terms of the "Particle Matter" index (PMx). Larger particles in dust might have a PM of 100, and these are the ones that get stuck in your mouth and the top of your throat, and can be spat out. Particles with a PM of 10, will get down into your throat and the top of your lungs, and probably make you cough, until they are in your mouth and can also be spat out.

    The ones that are of concern are those with a PM of less that four. These can go down all the way into your lungs, and are too small to make you cough. It is also the case that not all particles of the same size will behave the same way. Heavier particles will tend to fall to the ground, and lighter ones to float on air currents.

    This is where the really bad news about RCS comes in: silica dioxide forms relatively low-density particles. Once they've been formed and released into the air, they are going to drift around for some time. If you want to read more details on this Microanalysis Australia - a commercial material analytics firm - has a very accessible guide at:

    Microanalysis Australia

    If you are looking for an analogy that works, you could think of RCS as being more like a poisonous, odourless gas that gets released whenever you work on tiles with a power tool. You're not going to see it, and it's not going to have an immediate effect, but cumulatively, over time, it could first disable you, then kill you. It really is that serious.

    In its simpler form, silicosis is caused by the lungs trying to wrap the particles up so that they are harmless to the body. When the particles are some kind of bacteria this works great, as the bacteria eventually dies and breaks down, the threat is eliminated, and the inflammation goes away. Unfortunately, as the RCS particles are somewhat "unnatural" and cannot break down, their ongoing presence triggers an over-response, somewhat like an auto-immune disease, and that wrapping up becomes so widespread that it eventually destroys the lung.

    In a more complex form, if the RCS particles are small enough, they can go deeper into the respiratory system and directly interfere with the way the lungs transfer oxygen to the blood. It is very, very unfortunate, but patients with this form of the disease literally suffocate.

    There are also additional bodily functions that can be impaired. This can lead to cardiovascular diseases, as well as pulmonary tuberculosis, additional autoimmune diseases and kidney disorders.

    It's also very unfortunately the case that once it gets started the process cannot be entirely reversed. That said, if silicosis is detected early enough, there are some treatments that can provide relief from silicosis symptoms. Whole lung lavage - effectively "washing out" the RCS particles from the lungs - was a treatment originally tried in China, and has now been further developed in Australia, with some apparent success (though longer-term benefits remain to be determined). More details of this are available at:

    MetroNorth Health QLD

    There has also been some success with various medications to help inhibit the inflammation.

    At the moment the only known treatment for end-stage silicosis is a double-lung transplant, which is itself a difficult operation to undergo. The three-year survival rate for the surgery is around 76%, and typically life is extended for a total of another six to seven years.

    Preventative measures

    Again, unlike working with asbestos, actually preventing the spread of RCS when working with EQS is not all that difficult. In general, silica is hydrophilic (water-absorbing), as its surface typically has silanol groups on its surface - though it can be made hydrophobic through the use of additives. This means that techniques such as wet-saw cutting are highly effective in all but eliminating the risk from RCS.

    In other words, it is possible to handle EQS safely, and the real failure has not been with the product itself, but rather with getting tradies to understand the risks and to alter their behaviour.

    That failure really comes down to three different parties: the tradies themselves, the various WorkSafe entities around Australia, and the manufacturers of EQS. In a better situation, all three of these would have come together to find a solution. Instead, we've seen comparative inaction.

    The real problem with this failure is that it indicates how broken safety systems in the construction industry really are. We don't know what new products and construction techniques will be developed over the next decade, but we do now know that the existing safety systems simply cannot cope with any complexity, and that links between manufacturers and safety organisations are precarious at best.

    The second risk: tiles

    One reason this systemic failure is so important is that there is a second front in the spread of silicosis through exposure to silica-rich products: tiles.

    One marker of just how pervasive silicosis is now thought to be in tilers comes from WorkSafe Victoria. The following chart illustrates the increase in rates tilers are required to pay for coverage.

    This chart shows the rates for tilers and stonemasons in the set of industry rates that are over 2.5%:

    Tilers now have the second highest rate in Victoria - second only to stonemasons. WorkSafe Victoria has admitted this is mostly down to an increase in silicosis among tilers.

    The big question with tilers is: why now? There has not been an introduction of a radical new product, such as EQS into the industry, so what has gone on?

    It's also evident that the actual work safety practices of tilers have not deteriorated over the past five years or so (in fact, they've improved). Also, there have not been any radical innovations in how tiles are handled (except more wet saws, which is a good thing).

    So we've been left with one central suspect for the increase in silicosis: the tiles themselves. Have the tiles in use in Australia somehow increased their concentration of silica to the point where the safety of tilers has been endangered?

    One factor that indicates this may be the source of the problem is the commonly listed of ranges for silica content in tiles. The figures most often quoted for ceramic tiles is between 5% and 45%. That's one heck of a range. It would be evident that tiles with 5% of silica would pose a minimal risk, and those with 45% could pose a substantial risk for RCS. Less alarming, but still indefinite, porcelain tiles are typically listed as having a silica content between 15% and 25%.

    If we wanted to get more definitive data on silica content, we would need the sales figures from at least Australia's top two tile retailers/wholesalers for each line of tiles, along with the silica content of each of those tile lines. We would need that data for 2010, 2015 and 2020. Then we could compare how what we might call the "tile demand silica loading" varied over time, and draw conclusions as to whether the exposure had shifted.

    Unfortunately, though that data exists, there is no way we will ever get access to it. So, absent the perfect, "definitive" data, we need to see if we can develop some kind of "indicative" data in its place.

    What we came up with was this: we started with the tile products listed by several of Australia's top tile retailers, and downloaded all of the available product data sheets (PDSs) from their websites for current products. Then we processed those PDFs to extract three pieces of data: the product name, country of origin and declared silica content (where listed).

    What that provides us with is what we might call the "tile supply silica loading". There are a lot of caveats that come with this. It's likely that, as several tile suppliers were used, that some product lines will be repeated, with the same product being listed under different names. That could lead to over-representation of some tile lines.

    The other glaring problem is that, without adequate weighting for the number of tiles actually sold and installed, we could uncover higher levels of silica in tiles that had low distribution, and were thus over-represented. That's a very real problem, but as it turns out the tiles with higher levels of silica fall into a group that is know to be widely popular.

    The chart below shows two graphs. The doughnut graph on the left shows the proportion of tiles on sale by country of origin. The doughnut graph on the right shows the same data, but only for tiles with over 37% of silica content.

    Not only is a substantial portion of the high-silica tiles sourced from China, but taking all the low-wage producing countries together, they account for 73% of all the high-silica tiles (Spain is also a major contributor).

    So, one of the most likely scenarios is that, as tile imports from China - and other low-wage nations - radically increased from 2015 onwards, the tiles most tilers used in their daily work ended up increasing in silica content. That has meant that the safety practices most tilers learnt as apprentices prior to 2015 are simply no longer adequate for the materials they now work with.


    What the silicosis situation has done is to, once again, illustrate that the current relationships between industry, government bodies and unions representing trades is not in a good place. There has been a great deal of dithering over the past three to four years - while more tradies became ill with a disease that is not only devastating to the patients, but to their families as well.

    The decision to ban EQS is being portrayed as being equivalent to banning asbestos, even though the two situations are widely different. The ban on EQS is very evidently about how dysfunctional the industry/government link has become. The real solution was to convince trades to follow basic safety precautions when working the EQS. That failed. That has left only the current draconian solution.

    If there is a pathway back to a more sane situation, it may emerge out of the tile industry. There is no way to ban tiles, though there might be additional restrictions placed on tiles with more than 35% silica content. But overall the only solution is to mount an effective campaign that gets trades to better follow safe practices.


    Metcash gets 100% of Total Tools

    Cost is set at $101.5 million

    Metcash has bought out the final 15% of Total Tools, bringing its stake to 100%. The current CEO of Total Tools, Paul Drumbrell, will be stepping down from the role in April 2024.

    On 13 November 2023 Australian retail conglomerate Metcash announced it would acquire a further 15% of Total Tools Holdings (TTH) later in the month, bringing its stake to 100% in the trade tool retail franchise. The price ticket runs to $101.5 million.

    This follows on from the initial acquisition of a 70% stake in December 2020 for $57 million, followed by an increase to 85% ownership near the start of FY2022/23 for $59.4 million.

    The ASX announcement trumpeted the success of the operation:

    The business has delivered remarkable growth with annual sales in the retail network almost doubling from $585m in FY20 to $1,085m in FY23. In addition to strong demand, the growth has been supported by an expansion of the retail store network from 81 to 112 stores, with plans to add around 10 stores a year for the foreseeable future.

    Associated with this, the current CEO of TTH, Paul Dumbrell announced he will be leaving that role, which he has served since 2018, effective some time in April 2024.


    The ongoing growth of TTH stands in stark contrast to the relatively slow growth of the Wesfarmers rival in the tradie tool market, Tool Kit Depot (TKD). This currently has only 16 stores nationwide, mostly in South Australia and Western Australia.

    An article on News.com.au by Rebecca Le May quoted Ben McIntosh, chief operating officer, commercial at Bunnings, as setting out somewhat more ambitious plans back in December 2021.

    Tool Kit Depot in 2021 - News.com.au

    Ms Le May reports that he laid out a plan to build a network of 75 stores around Australia. As TKD grew out of the acquisition of Adelaide Tools in 2019, 16 stores would seem to be a relatively slow pace of development.


    Perhaps the most amazing element of the competition for this market is that no competitor has thought to emulate the highly successful Kingfisher owned Screwfix, which originated in the UK. Screwfix began as a catalogue-based trade tool supplier, then moved online. It has expanded into physical retail stores, but some 60% of its orders still originate online.

    What differentiates Screwfix from the online offerings of companies such as Total Tools is that it has moved to ultra-fast delivery, managing one-hour delivery times across 45% of the UK. For busy tradies on a worksite, it solves the supply problem when a job needs to be completed rapidly.


    Big box update

    Bunnings loses bid to change access plans to new Wagga site

    Neighbouring properties in Wollongong (NSW) owned by Bunnings have been sold and the two largest Bunnings stores in New Zealand are on the market

    Wagga City councillors recently voted to reject Bunnings' proposed amendment to its $24.9 million development on the corner of the Sturt and Olympic Highways in Wagga Wagga (NSW), reports The Daily Advertiser.

    The current approved plans for the 18,000sqm site allow customers to enter the site from Pearson Street and the Olympic Highway. But while customers may exit onto the Olympic Highway, council ruled light vehicles could not exit from Pearson Street when the development application (DA) was approved, citing "road safety and efficiency reasons".

    Bunnings asked council to reconsider, to allow light vehicles to conduct left-turns only onto Pearson Street. It also called for an extension to the median strip along Pearson Street, which would inhibit drivers from turning right at the location. (See more at the link.)

    Bunnings development proposal back before Wagga Council - November 2023

    Councillors rejected that option seven to one.

    While councillors agreed more had to be done to fix looming traffic issues when the new Bunnings store is built, there was disagreement on the best way forward. Tabling an amendment to defer the decision, Cr Richard Foley sought to allow more time for consultation, but Cr Rod Kendall argued the request should be put to bed.

    The meeting heard the council had received correspondence from Bunnings raising the prospect that if councillors deferred the amendment, the company would be open to negotiations. However, general manager Peter Thompson argued councillors could reject rather than defer Bunnings' DA request, a point backed by Cr Kendall.

    Cr Kendall argued it was important "the traffic issues be addressed holistically once and for all before [the new Bunnings] is built". He said with traffic issues seemingly the "only sticking point", rejecting the request would clear the way for another solution to be found.

    In its resolution against Bunnings' request, councillors also called on Mr Thompson to contact Bunnings and request discussions between it, council and Traffic for NSW. Cr Georgie Davies, who supported deferring, was the only councillor to vote against the final motion.


    Sydney-based property development group, Level 33 has purchased adjoining sites in Wollongong (NSW) owned by Bunnings.

    Level 33 was the successful purchaser of the former site of the North Wollongong Bunnings store, located at 73-75 Gipps Street. That 2.73-hectare site was listed for sale earlier this year, and sold for $40 million.

    The Gipps Street site was sold by Perth-based company BWP Management Limited, the property trust which owns a number of Bunnings sites throughout Australia and is itself part owned by Bunnings' parent company Wesfarmers.

    The property was bought by the Trust in 2003 for $12 million. In mid-2022, Bunnings indicated they would be vacating the store when the lease expired in early 2023.

    Bunnings in North Wollongong to close - HNN Flash, September 2022

    BWP Management Limited managing director Mark Scatena said the Trust identified the best use for the site was high density residential redevelopment.

    More recently, the 5152sqm site at 60-72 and 74 Flinders Street was for sale via an Expressions of Interest campaign. Level 33 purchased this site for an undisclosed price. CoreLogic records show the site was owned by Bunnings Properties Pty Ltd, according to the Illawarra Mercury.

    Level 33 managing director Eddy Haddad told the Illawarra Mercury the plan had always been to purchase both sites. Mr Haddad said they had purchased the latest property to "connect it to our current site", in accordance with their plans for the Bunnings site, which were to create "a mixed use village".

    It will expand on what we've currently got there... To build off the community we're looking to build on Gipps Street.

    New Zealand

    Bunnings' biggest store in New Zealand, located in Westgate and seen as one of Auckland's fastest growing regions, is for sale. Bunnings' second-largest New Zealand store in New Lynn, is also for sale.


    Located at 21-33 Fred Taylor Drive, Westgate, the building has 16,001sqm of gross lettable area on a 20,724sqm freehold site. The main retail area spans 9278sqm, while there is a 1876sqm timber yard, 1093sqm building materials yard and a 1133sqm crop cover nursery. It is zoned Business-Mixed Use under the Auckland Unitary Plan.

    Surrounded by a host of national-brand tenants, the property is part of a prominent commercial development, which includes West Auckland's major retail and commercial hub and occupies a pivotal position in the heart of Westgate.

    As an emerging metropolitan centre, it is set to become the primary destination for the surrounding community.

    Next to the property, Universal Homes is actively developing 1400 homes with additional parks and walkways. Just 1km north a major development from the Hugh Green Group will cover approximately 256ha and include up to 8000 homes.

    Directly north, the Sonn Group is embarking on the development of their 27ha site, where they plan to construct 1800 terraced homes and apartments.

    New Lynn

    The Bunnings store in New Lynn is situated on a 2.2ha site. The property features a net lettable area of 10,722sqm made up of a large-format store and associated facilities including retail, timber yard, garden area, cafe, offices, canopies and inward goods area.

    The store services the high-growth catchment of New Lynn and was purpose-built for hardware retailer in 2014.

    Bunnings New Lynn is being offered via an international expressions of interest campaign, closing on December 6, unless sold prior.

  • Sources: The Daily Advertiser, Illawarra Mercury, Real Commercial, The New Zealand Herald (Colliers and JLL)
  • bigbox

    Retail update

    Mackenzies Home Timber and Hardware wins QLD award

    Dongara Mitre 10 is for sale after winning a WA award and K and B Timber and Hardware in Mt Gambier (SA) has opened its doors. PETstock also welcomes customers in Dubbo (NSW).

    Mackenzies Home Timber and Hardware (HTH) has taken out the Independent Hardware Group (IHG) QLD Trade Centre of the Year award for the second time in five years. There were 149 HTH and Mitre 10 stores across QLD that were judged for this year's award.

    Mackenzies general manager Cameron Quartermaine said the award is for the whole team. He told the Goondiwindi Argus:

    It is fantastic to be recognised for the hard work every member of our team puts in to keep our store at the highest standard. It is a great representation of our community and highlights the community support we receive, and it also helps put Goondiwindi on the map.

    This is the second time Mackenzies have won this award, winning it four years ago. It comes off the back on winning both the national Home Hardware Store of the Year and the Hardware Australia QLD Trade Store of the Year in 2022.


    The Dongara Mitre 10 business -not the land - is for sale. Trading as Dongara Building and Trade Supplies, it recently won IHG's best medium store in WA award for the second time in five years.

    Located in the historic Dongara region known for its fishing, farming and tourism industries, the store offers a diverse range of hardware, building products and general trade supplies. According to the agent, Elders Real Estate:

    Dongara Mitre 10 is a great opportunity to own an outstanding hardware business that provides a profitable return for its owners...The owners have operated the business for many years, and under their stewardship, it has flourished and shown increased profitability year-on-year.

    Mount Gambier

    Mitre 10's K and B Timber and Hardware store, located on the Jubilee Highway in Mount Gambier (SA), has opened its doors to customers.

    Regional operations manager for the K and B Timber and Hardware Group, Bob Jones said he was thrilled the store was ready to go, and the new space allowed them to expand their services. He told The Border Watch:

    We have a fantastic drive-through for builders, it's all undercover. [There's a] new outdoor area with our new stockists...
    We have a vastly bigger improved garden centre and large outdoor offering, and the actual hardware itself is a far greater range than we've ever seen before.

    The store is co-located with Total Tools, which has been open for several months.


    New location for Mitre 10 Mount Gambier and Total Tools - March 2023


    PETstock Country Dubbo is the latest to become part of the pet store group's 268-location portfolio. Husband and wife team Darren and Kristy Bayley are the managers behind the store.

    Ms Bayley said the store has a wider range of products than what people would usually find in city stores, including a selection of premium dog food, horse food, good quality hay and horse riding apparel. She told the Daily Liberal and Macquarie Advocate:

    It does have a little bit more of a country feel, we've got a lot more equine products and cattle product and feed out the back for the chooks and the sheep - a much larger range than the normal Petstock metro stores.
    We want to work with our customers too, if they have a specific budget we can steer them in the direction of the best quality food for that budget, we're not here to upsell, it's all about the pets.


    Pet supplies store to change hands - HNN Flash, November 2022
  • Sources: Goondiwindi Argus, Farm Weekly, The Border Watch, and Daily Liberal and Macquarie Advocate
  • retailers

    New product

    Fire-retardant paint at selected Bunnings stores

    The paint, branded as FSA FIRECOAT, is the result of a partnership between UNSW Sydney and Flame Security International

    A new fire-retardant paint, formulated by engineers at UNSW Sydney, has become the first to pass a rigorous Australian standard test that simulates a bushfire attack.

    It has achieved the Bushfire Attack Level (BAL) 40 standard which assesses the bushfire resistance of buildings and construction materials. BAL-40 indicates that a building or material has been tested and approved to withstand higher levels of radiant heat (up to 40kW/m²) and ember attack during a bushfire, and therefore provides increased protection against bushfires in areas prone to extreme fire conditions.

    To pass the BAL-40 test, an external windowed building facade was treated with the paint and exposed to the flame attack of a BAL-40 furnace for 10 minutes.

    The facade consisted of timber weatherboard, specifically radiata pine which is the most combustible and commonly used timber in Australia. FSA FIRECOAT paint was applied as a primer and undercoat paint, before a standard commercial Dulux topcoat was added.

    During the flame attack, the facade was monitored using thermocouples to test the internal and rear temperatures and to determine the ability of the UNSW-developed paint to protect the structural integrity of the building facade, as well as prevent the flames from spreading to the inside and rear of the facade over 60 minutes.

    The paint succeeded in passing all six of the stringent criteria, the first time any paint has achieved the BAL-40 rating.

    Professor Guan Yeoh, from UNSW's School of Mechanical and Manufacturing Engineering, led the team that spent nearly five years perfecting the formula to ensure the paint incorporates the best fire-retardant properties.

    The resulting product is a type of intumescent paint which means it is designed to expand as a result of heat exposure.

    The specific chemicals in the paint also produce a thick layer of char which offers an insulating barrier and effectively deflects the heat from the fire away. Prof. Yeoh is also director of the ARC Training Centre for Fire Retardant Materials and Safety Technologies at UNSW. He said:

    The special additives we include in the paint mix formula promote the growth of the char, which is the important insulating element. The char is what helps the substrate, that is your house or your building, stay protected from the fire.
    In the rigorous tests you can see this char being created, but at the end you can just wipe it away and the wood underneath has virtually no damage.

    One major challenge for the research team was to ensure the all-important char, once produced, would not simply fall off vertical surfaces such as external walls. The char needed to remain firmly in place to continue to work as a fire barrier. Prof. Yeoh explains:

    Forming a char on a horizontal surface is fine, but for this application we needed to include additives into the paint formula to ensure the char would also hold very well on vertical surfaces. Which is a challenge.
    If it just falls off, that defeats the whole purpose. The char - which is basically pockets of air and carbon - can be more than 50mm thick, so retaining it in place can be tricky.
    But it's so important because it's providing the insulation and preventing the penetration of the heat.

    One of the big advantages of the new paint is that it does not need any special equipment to apply it, meaning it can be brushed or sprayed onto a variety of surfaces - including existing render, timber, aluminium, steel, concrete, plasterboard and brick - in the same way as normal paint.

    The carbon ingredient means the FSA FIRECOAT product is only available in grey, but any standard coloured topcoat can be applied without affecting the fire-retardant properties.

    Prof. Yeoh said the new fire-retardant paint could help prevent bushfires from spreading over a wider area, given the fact it protects buildings from burning down.

    If a building is not protected in any way and it starts to burn then it can become a source of heat for the fire to continue, like a chain reaction. So we can say this paint assists in limiting the spread of bushfires because it prevents a building from igniting and therefore compounding the original fire.
    Many people are saying that we are currently experiencing a dry season. But when it is a dry season, that often means that bushfires are just around the corner.
    We wanted to push the boundary with this paint so we did tests on probably 200 different formulas in the first couple of years of research before we arrived at the best one.
    That was using very high-grade materials, which would have made the paint too expensive to produce, so we then tested again with more commercially available ingredients to ensure we got the same performance in a final product that people can afford.

    Tony Overstead from Flame Security International, which has secured an initial order from Bunnings to supply 80,000 litres of FSA FIRECOAT paint, said:

    The release of this fully accredited BAL-40 rated fire retardant paint, we believe, will better protect buildings and other assets from direct exposure to flames and extreme radiant heat. This will make a significant difference not only to the cost of building in affected areas, but also the potential risks to life and property.

    Flame Security International is pleased with the strong collaborative research partnership established and the safety products achieved through the support of the Cooperative Research Centre project (CRC-P) Round 5 grant with UNSW.

  • Sources: University of New South Wales and News.com.au
  • products

    The future renovation market

    ABS stats indicate uncertainty

    As the influence of COVID-19 wanes, and concerns about a house price bubble take over, where will the renovation market trend? HNN takes a deep dive into ABS stats to find some guidance.

    Forecasting in the post-COVID world remains difficult. Paradoxically, that's partly because the influence of COVID-19 itself is rapidly waning. What we've been left with is a confusing picture where the aftereffects of COVID intermingle with changed global dynamics for commerce.

    For example, it has become evident that the supply chains we knew pre-COVID are, for the most part, not coming back. 2023 was supposed to be the year we saw that return progress, but instead we've seen a range of new circumstances – including global unrest, notably in Russia/Ukraine and Israel/Gaza, but also in the economies of China and several south-east Asian countries. All that has been topped up with ongoing climate-driven disasters and stress, including the real threats of fire and flood in Australia.

    What has defined hardware retail throughout calendar 2023 (so far) has thus been what economists refer to as the supply-side, rather than signals originating in the demand-side.

    In the past, when supply chains were super-charged, the struggle was getting people to buy what could be supplied. Today, there are many willing customers, and the restraints are all about providing them with the goods. This does create price rises (as restraints on supply echo some of the effects of increased demand), but it also creates switching behaviours, not only between products, but between types of demand as well.

    The housing market is one area where we can clearly see these influences play out. Chart 1 shows data from the Australian Bureau of Statistics (ABS) Total Value of Dwellings report for Brisbane, Sydney and Melbourne. It maps median prices to number of transactions for established houses.

    As marked on the chart, the tipping point in terms of a decline in the number of transactions is March quarter 2022.

    Chart 2 shows the lending rates in Australia as provided by the Reserve Bank of Australia (RBA).

    Lending rates began to rise sharply in May 2022, up 21 basis points, followed by a rise of 45 basis points in June 2022, and ongoing increases thereafter.

    What stands out in these charts is that they show relative purchase price stability for houses, despite a very strong – indeed, historically unique – increase in the actual cost of home ownership through interest rates rises.

    Economists expected a sustained decline in prices. Instead what happened was that the number of transactions declined, but prices did not.

    As the housing website Domain commented in an article from 3 November 2023:

    The lift in auction listings is driven by prices close to new records and improved property market conditions, motivating sellers to list. However, the recent performance of [declining] clearance rates seem to indicate a more balanced market.
    Domain commentary

    The prices charted above are for established houses, rather than new builds. Part of what drives the evident market confidence, where house sellers are less inclined to reduce prices to secure sales, is the awareness that new house construction (the ultimate supply-side of the housing market) continues to struggle. Supply constraints continue, but more importantly the industry has demonstrated it lacks the capacity to grow in terms of scale and/or productivity.

    The renovation situation

    It has become something of an "old saw" of hardware retail that when the housing market goes into decline, sales for renovations – "alterations and additions" (alt-adds) in the ABS lexicon – pick up. Of course, no market is ever that perfect, but it's made a nice line for the CEOs of both Wesfarmers' Bunnings and Metcash's Independent Hardware Group to trot out for investment analysts – with some justification.

    Looking at the market situation described above, it is arguable that FY2022/23 should have produced stimulus in alt-adds. The drop in transactions coupled with the persistently high house prices and steadily increasing interest rates should have seen more families opt to improve, not move.

    The difficulty is that actually tracking alt-adds through stats is not an easy task. There is no single, fully reliable source of data on alt-adds available from the ABS (or anywhere) – but we can, by combining several, arrive at some kind of reasonable overview.

    One of the most useful sources is from the ABS national accounts data. This is where the government gets its numbers for gross domestic product (GDP), and a range of other fundamental measures as well. One part of this dataset is household consumption, and this includes data on alts-adds, which is gathered via a surveys.

    It's best to see the national accounts data in contrast with one of the most popular sources of alt-adds data, which is building approvals. The main advantage of the approvals data is that it is very accurate, as it relies on approvals that have been registered with state and territory governments. However, these approvals only capture alt-adds that take place above a set dollar value, which means that the large number of smaller alt-adds are missed.

    The national accounts data does capture alt-adds of all sizes – but is captured via survey data, that is then extrapolated, making it less accurate. That said, however, when dealing with an organisation as capable, professional and ethical as the ABS, while the numbers captured by the survey may not result in absolutely accurate data, they will be reliable in relative terms – in other words, they will accurately capture fluctuations.

    Next there is the lending data, which provide a view of the loans taken out by homeowners to finance alt-adds. Again, this captures only a proportion of all alt-adds, but understanding the propensity of homeowners to take out loans is useful.

    Finally we come to one of the more difficult statistics from the ABS, for building work done. The first two datasets to pay attention to are for work commenced and work completed. These both relate to the total cost for a project. When work commences, that total cost is recorded, and when work completes the total cost is again recorded. HNN adds its own simple, derived stat to this, which is just work commenced minus work completed, which gives a general sense of "loading".

    The third dataset is for actual work done during a quarter. This is very useful in judging how well the construction industry is faring at any particular moment, but it does also rely on survey data estimates, so, like the national accounts data, it might not always be definitively accurate, but it does reliably provide a sense of fluctuations.

    Taking all that data together, we can derive, state-by-state, a sense of what is happening with alt-adds. And that will, hopefully, give us some insight into the current state of the overall industry, and hence what we can expect in hardware retail.

    In this series, we will be looking at the five major states. We are developing a series specifically for Tasmania, the Australian Capital Territory and the Northern Territory. In assembling these stats we realised that, given their smaller size, and highly unique nature, we needed to provide additional statistics to really make sense of these smaller, but very important markets.

    New South Wales

    New South Wales (NSW) continues to be the state with one of the most robust markets for houses in Australia. However, we are likely to see that shift somewhat over the course of the current financial year.

    National Accounts

    To begin with the national accounts for current prices in alt-adds:

    This shows a familiar story: there is a stone increase in expenditure in December quarter 2020, and then this continues progressively through to March quarter 2023, with June quarter 2023 slightly below June quarter 2022.

    Building Approvals

    Next, it's helpful to look at the building approvals for alt-adds that do not result in a new dwelling being created:

    These are for the period from October to September, which we refer to with a "p" prefix, so p2021 would be the period from October 2020 to September 2021.

    This echoes the national accounts pattern, with increased levels of approvals from September 2020. The results for p2023 do show more volatility – generally towards the upside – than is p2021 and p2022, but the three periods are mostly in range.

    We're including the generally smaller category for alt-adds that create dwellings because we think this is something to watch over the coming years.

    The pattern here is a general low-level of activity, along with one or two anomalous spikes, usually relating to very large renovation projects on major buildings.


    The stats for lending directed at alt-adds projects show a slightly different pattern than that of approvals.

    The value of loans begins to increase in February through April of 2021, then increases dramatically in May and June 2021. From November 2021 through to August 2022 new highs are reached in value, but, except for October, all of p2023 underperforms p2022, albeit only marginally in three months.

    Looking at the number of loans, there is also interesting activity:

    The over-performance of p2022 is more marked. Also, while the value of loans for May through September almost converged for p2022 and p2023, in numbers p2023 had significantly fewer loans, indicating the loans that were taken out had a higher value in p2023 than p2022.

    Building Work Done

    With the building work done stats, the commenced data is some of the most important as it represents the uptake of projects. To outline these clearly, we provide chain values along with regular values.

    Chain values are a statistical measure, where the dollar amount does not directly relate to the cost of the projects, but is adjusted to provide a measure of the level of activity. They are adjusted to filter out most of the effects of movements in inflation and supply prices.

    This chart does show some interesting activity. There was an acceleration in activity starting in December quarter 2020, and continuing through to March quarter 2022, with a peak in June quarter 2021. However, from June quarter 2022 through to June quarter 2023 the trend has returned to that of the pre-pandemic years.

    This is something of a contrast for the non-chain values for building work commenced.

    Here we can see that FY2022/23 remains somewhat elevated above the pre-pandemic years, and much more in alignment with FY2021/22 in particular.

    Building work completed is also interesting.

    Here we see two almost mirror symmetrical lines for FY2021/22 and FY2022/23. FY2021/22 somewhat underperformed for its December and March quarters, while FY2022/23 over-performed for those same quarters.

    We can see the results of that in the chart for Work-Loading.

    The loading for FY2021/22 reaches a peak in the December quarter, and there is a low for this eight-year series in the March quarter of FY2022/23.

    Driving these numbers is the actual value of work done during each quarter.

    Starting with March quarter 2021, there is a substantial increase in the value of work done, right through to the end of FY2022/23.


    If there is a single clear sign that NSW is into its post-pandemic phase in construction, it's the high volume of completions for alt-adds, a consequence of the high value for quarterly work done.

    Coupled with that transition is likely a transition slightly away from alt-adds that are related to house sales – both the pre-sale and the post-sale bump – and a shift to a market more driven by "improve, not move".

    What needs to be figured into this, of course, are the continued increases in interest rates. While there has been speculation from the more "populist" writers on economics at some news organisations that these increases are "meaningless" – as they are aimed at reducing demand, when inflation is largely driven by supply at the moment – it is evident that they are targeted at preventing the current nascent house price bubble from getting worse.

    Also, while it is true that higher interest rates have a minimal impact on spending on "essentials" such as food, they do impact not only non-essential spending, but also encourage behavioural shifts. For example, petrol might be an essential purchase to some, but petrol usage, for many, is a choice. The lower rates of public transport post-pandemic indicate there is room for lower rates of consumption.

    As it seems highly likely rates will reach around the 4.9% level by the end of the current financial year, they will begin to affect spending on alt-adds as well as houses. That effect will be increased if house buyers are ultimately discouraged from their purchases, and/or switch to alternative markets (non-urban and multi-dwelling). In a market where house prices enter some decline, spending on alt-adds will likely fall.


    Overall, Victoria (VIC) stands in somewhat stark contrast to NSW. There is a range of circumstances that saw COVID-19 have a more severe impact on the state, and that impact has carried over to some extent to its post-COVID-19 economy as well.

    National Accounts

    The first half of FY2022/23 carried on some of the exuberance of the final quarter of FY2021/22, but this ended in the second half of FY2022/23, with alt-adds as measured in national accounts essentially tracking the previous year.

    That said, the rate of expenditure remains far above the pre-COVID and early-COVID rates.

    Building Approvals

    Building approvals not creating dwellings shows a slightly mixed aspect. While most of p2023 closely tracks p2022, there is a breakout at the end of the period for September 2023, posting a strong decline over both p2022 and p2021.

    For building approvals creating dwellings, there is some noticeable activity for p2023, but this is less than that for p2021 and p2022, even without the anomalous boost in May 2020.


    For the most part the value of lending for alt-adds in p2023 trails that of p2022 – the most notable exception being the final month of the period, September 2023.

    As with NSW, the number of loans in the latter half of p2023 declines more sharply than the value, indicating a shift to fewer loans of higher value.

    Unlike NSW, however, the decline in the number of loans is quite sharp, falling far below the level for p2021 in the final six months.

    Building Work Done

    Perhaps the most significant number for VIC is the result for building work commenced measured as chain values, which shows a very low result for June quarter 2023. Is is the lowest such number for the past eight financial years.

    The result for regular work commenced values at the end of FY2022/23 is not quite so dire, but it does reflect something of a slowdown, coming in below FY2020/21 and FY2021/22.

    As with NSW, the work completed values show a sharp upward arch through FY2022/23.

    That arch provides a work loading value that stayed in the negative region for the last three quarters of FY2022/23.

    A major contributor to the decrease of work loading is the high value of work done in the quarter, especially during the first two quarters of FY2022/23.


    It is fairly clear that, in contrast to NSW, VIC seems to be heading into a more uncertain time when it comes to alt-adds. That said, the overall levels appear to be higher than those before COVID-19.

    It's notable that VIC has seen a lower resurgence in house prices over the past year, though this does seem to be accelerating. To some extent that could mean the state will be less affected than NSW if interest rates do continue to rise through the financial year.

    However, there are distinctly fewer indications that the "improve, not move" effect is much in evidence.


    It is often tempting to approach Queensland (QLD) as something of a hybrid of NSW and VIC, but it's clear from these numbers this is really not the case.

    National Accounts

    In terms of national accounts, spending on alt-adds has been for the most part slightly elevated in FY2022/23 over FY2021/22. That's important, because FY2021/22 was considerably higher than FY2020/21.

    Building Approvals

    QLD is quite unique in terms of building approvals, with p2021 being the peak period, and p2022 underperforming that period for 10 of 12 months. P2023 manages to outperform p2022 for all but two months, and even outperforms p2021 during May and June 2023.

    QLD is also quite different from NSW and VIC when it comes to alt-add approvals that seek to create new dwelling. There is substantial activity in this sector through p2021, p2022 and p2023. P2023 was especially active from February 2023 through to September 2023.


    While the value of loans for alt-adds in QLD has declined for p2023 over p2022, overall this still remains at a high level, continuing to outperform p2021.

    Unlike NSW and VIC, there does not seem to be a shift to fewer higher value loans, with the number of loans closely tracking the value.

    Building Work Done

    As with the other states, the chain value for work commenced is somewhat interesting. For QLD this has retreated in FY2022/23 below the level for the previous two financial years, and close to the pre-COVID values.

    In regular value terms, there is a close convergence between FY2021/22 and FY2022/23, and only slight variance from FY2020/21.

    Work completed for alt-adds in QLD shows a steep rise in the second half of FY2022/23.

    That in turn has seen the work loading enter negative territory, after spending all of FY2020/21 and FY2021/22 in positive territory.

    That has been a result of the combination of a steady rate of work commenced, and the higher level of work done in the quarter.


    One difficulty in analysing QLD is its diverse geographical and demographic makeup. Where VIC is very much all about Melbourne, and NSW remains dominated by Sydney (though with growing regional centres), QLD has Brisbane, and then a large coastal region that mingles high-value and low-value areas.

    One aspect of the state's market might be ongoing growth in alt-adds that create dwellings, as it moves to increase density in some of its regional areas. That, along with a general move to improve existing dwellings, could continue to drive activity, even if rising interest rates cause house prices to stall.

    South Australia

    While we wouldn't describe the alt-adds situation in South Australia (SA) as "rosy", it certainly seems overall to be positive.

    National Accounts

    While the extent of growth has tapered slightly for June quarter 2023, the national accounts figures overall show steady and constant growth in alt-adds expenditure since March quarter 2021.

    Building Approvals

    Approvals alt-adds not creating dwellings for p2023 tended to follow the previous two years closely, but with reduced volatility, mostly on the downside.

    Interestingly, as with QLD, SA has shown higher levels of alt-adds creating dwellings, especially in p2023.


    Lending for alt-adds showed steady upward progression through p2021, and then became more volatile in p2022. It has been a little less volatile in p2023, tracking overall between the two previous periods.

    While there was a shift to higher average value loans at the end of p2022, that seems less the case for p2023.

    Building Work Done

    As with the other states, the chain values for building work commenced do signal a decline in real value for FY2022/23, especially in the final quarter.

    In simple value terms, there is also something of a decline for June quarter 2023, back to values for June quarter 2021. That said, the values remain well above those pre-COVID.

    Value of building work completed for SA remained at pre-pandemic levels through to September quarter 2021, and returned to those levels for March quarter 2022, before lifting again in the next quarter. However the levels have remained high throughout FY2022/23.

    That behaviour has seen the work loading fluctuate as well, though the definitive shift is far into negative territory for June quarter 2023.

    The work done per quarter values show that the alt-adds industry has been progressing to deliver an ever-increasing level of value.


    The sharpest brake on alt-adds spending for FY2023/24 is likely to be a slowing economy, as the post-pandemic stimulus wanes, and state-wide growth returns to levels closer to 1.0%. There are some early signs of that in the alt-adds stats, but it likely that growth will continue through to the end of March quarter 2024.

    That shift to slower growth could very well see a further shift in alt-adds, as spending moderates, but remains supported by the past years of growth.

    Western Australia

    One of the distinguishing characteristics of Western Australia (WA) is that it has experienced housing booms in the past, largely driven by mining development.

    National Accounts

    The national accounts figures for alt-adds shows that demand in FY2022/23 was generally above that for FY2021/22.

    Building Approvals

    Unlike in other states, alt-adds approvals for non dwelling creation have remained somewhat closer to past levels. There is also a great deal of volatility, especially for p2023.

    For p2023 the stats reflect five eight-year highs, mixed in with four three-year lows. As that indicates, the trend is more positive than negative, especially since May 2023, but it remains unclear.

    In approvals for alt-adds creating dwellings, WA – like SA and QLD – shows a surprising amount of activity, especially post June 2023.


    Lending represents a clearer picture, with the value of loans for alt-adds reaching six-year highs during p2022 and p2023. That is more evident in the second half of p2023.

    With the number of loans for p2023 going below those for p2022, even as value increases, it is clear WA also experienced a period of fewer loans be granted, but for higher amounts. The peak period for reduced value loans would have been March 2022.

    Building Work Done

    There is no other state which has quite the startling results for building work commenced chain values as WA.

    What is indicated here is that the chain value – the basic throughput – for commencements fell to a very low level during FY2022/23. It is substantially lower than in the two preceding financial years.

    The stats for standard values do not show quite that break, but they do show a substantial decline from FY2021/22 to FY2022/23.

    Work completed for alt-adds presents, however, somewhat the reverse picture, with FY2022/23 substantially outperforming the two prior financial years.

    That has contributed to a lower work loading, though this does remain historically high.

    Work done per quarter for FY2022/23 does outperform the two previous years.


    The situation for alt-adds in WA remains somewhat unclear. The very low value for chain values of building work commenced could indicate that this sector is under more stress than other stats indicate. Approvals for alt-adds seem good, but that depends if the optimism expressed post May 2023 is really justified.

    Of course what makes WA so unique is that its overall economy is directly dominated by the export of commodities, which fluctuates strongly. This is likely to be as much a determining feature for calendar 2024 as interest rate rises.

    Overall analysis

    The dominant sensibility running through most of these stats is that the alt-adds market is undergoing some kind of a change. The post-pandemic currents that have been driving it through FY2021/22 and FY2022/23 are fading out. Rising interest rates are likely to see the property market start to fade, and it is simply unclear whether that will translate into greater activity in alt-adds.

    HNN's current estimation is that we are likely to see some expansion of the alt-adds market as the housing market fades in calendar 2024. However, we expect that market growth to develop in certain very narrow areas. One such area we have identified (through the use of additional sources) is for decks.

    One reason for this is that we've identified some shifts that indicate a move towards in-home entertaining, especially outdoors. We think this shift will be boosted by features that make decks usable for something close to nine months of the year.

    We also see a move towards the installation of simplified security systems. These would fill the space between the doorbell-with-a-camera and walls bristling with CCTVs. The new systems will be small and discreet.

    While there are major economic shifts likely to occur throughout calendar 2024, the market will also be very responsive to what it sees as good value propositions which help homeowners to improve the quality of their experience of their homes. By the end of 2024, we think this trend will help to usher in the first real wave of integrated smarthome appliances, driven in part by better more integrative communication protocols.

    In short, it's understandable that over the past three years the hardware retail industry has seen real growth, but it has also lost something of its sense of direction. The externalities, including COVID-19 – as well as the societal and governmental reactions to it – have been overwhelming. But we are moving now into a period where shifts will be less deterministic, and where the market will change based as much on internal feedback.


    SequenceRokset: Opportunity to grow

    A paint accessories powerhouse

    Two Australian businesses with long established histories unite to make many top quality brands available

    Almost four years ago, Sequence and Rokset were brought together because they recognised the strong synergies they shared could be combined to better serve the market. As SequenceRokset Consolidated (SRC), the companies have moved successfully from being fierce rivals into one customer focused enterprise, with an emphasis on innovation.

    Both businesses have a rich history independent of each other, and as Rokset celebrates a century of expertise supplying, and Sequence nears its 50th anniversary, together they have been serving Australians for almost 150 years.

    Rokset is known for being at the forefront of paint brush technology on an international level. Sequence has been recognised for its customer service, having been awarded supplier of the year many times by different retail groups over the years.

    Kris Gammaldi from Victoria-based Inspirations Paint Moorabbin (and another store in Camberwell), has been stocking SequenceRokset products for 20 years. He told HNN:

    For us, one of the big benefits dealing with SequenceRokset is that they're actively involved in our business. They're not a big corporate so we have a great one-to-one relationship with them over the history of our reps and sales managers. We have interaction directly with Ian (Green) and Peter (Clausen) as well. [Ian Green and Peter Clausen are both SRC directors and Ian is also CEO.]
    They'll present opportunities rather than products. They're very good at identifying a product that would be an opportunity rather than just saying, 'Here's something else that you've already got'. They like innovating. So often we'll have conversations about thinking about getting this product in, and discussing how do you think that would go? And they're always looking for something new. Like I said, it is more about opportunity than just selling a product.
    They understand margins so when they present products as opportunities, they have done the analysis and believe these are the things that can do well in the market. Rather than saying, 'Here's this and it's the cheapest version of this'.

    Since coming together, SequenceRokset's product offering has grown substantially by incorporating the individual brands that were previously distributed separately.

    The main ranges now include Sequence (surface preparation and protection, tapes, PPE, and workwear), Rokset (brushes, rollers, and buckets), Red Devil (caulks and fillers), Klingspor (abrasives), OLFA (knives & blades), Shurtape (tapes and accessories), Mirka (sanders and polisher, dustless extractors, and abrasives), as well as a number of other smaller brands.

    Australian Made mission

    Rokset has never lost its passion for supporting Australian manufacturers and continued these ideals into the SequenceRokset merger.

    In October 2023, SequenceRokset officially launched its Made in Australia range. Wherever possible, products are sourced or manufactured locally, including the huge task of shipping SRC moulds back to Australia. This can also mean reduced lead times and no shipping delays.

    Furthermore, 100% recycled plastic is used for many of the products these moulds produce. For retailers, this commitment to Australian Made and being environmentally minded has enormous market benefits.

    According to new consumer research from Roy Morgan (February 2023), Aussies' preference for Australian-made goods hasn't wavered. Data collected by Roy Morgan found that more than four in five (86%) Australians say buying Australian-made products is important to them. Few people, only 2%, said buying Australian-made wasn't important to them.

    Most Australians (67%) stated in the latest survey that they "often" or "always" buy Australian-made products, citing supporting local jobs and the economy as their reason for doing so, followed by the quality or reliability of Australian-made products. Over one-third (35%) of Aussies also claimed to purchase more Australian-made products now than before the pandemic. The research also found that buying Aussie products made shoppers feel good.

    From a branding perspective, almost all (99%) Australians aged 18 and over are aware of the Australian Made logo, with the logo having the highest recognition of any certification mark in Australia. Trust in the Australian Made logo is also high. 93% of Australians are confident products displaying the mark are made or grown in Australia, according to Roy Morgan.

    SequenceRokset packaging features the green and yellow Made in Australia kangaroo in large size and an enhanced recycled materials logo.

    Inspirations Paint Moorabbin

    For Inspirations Paint Moorabbin, working with SequenceRokset has provided opportunities for growth. Mr Gammaldi also has a long history in the paint industry that gives him additional insights in terms of suppliers. He explains:

    I've been around paint my entire life even though it was unintentional. My dad worked for Dulux for 25, 26 years so I grew up around paint. I had a couple of part-time jobs working in Dulux stores and for a period of time after I finished uni, I was working in head office at Dulux, then worked as a rep before leaving to go do something totally different. I was doing some part-time working in stores when John, my business partner, and a mutual friend, and I decided to get together to do this. John had previously worked as the Berger brand manager back when Dulux first bought Berger Paint.

    Mr Gammaldi said the last six months have been more challenging after the highs of the COVID and post-COVID periods.

    There's been a lot more issues coming into the marketplace of labour. Obviously interest rate rises, they haven't helped at all because the reality of what we sell is it is very much discretionary spend. Nothing goes wrong if you don't paint.
    But the coming 12 months will be a bit different. I know there's a lot of major construction work that's going on in Melbourne and we supply a number of large contractors. [Both stores are 80-90% trade.]
    But retail, unfortunately we're going to have to wait until probably next year when we start getting a little bit of rate relief when people start feeling as though things are moving in a positive direction, and they start feeling more positive about their homes and their surrounds.
    During COVID, a lot of money was spent on homes and people got things done. Now I think people tend to spend money on themselves like the holiday that they haven't been able to go on for three years or a nice dinner. But that will also wane, and once people have done a lot of that, they'll start getting back to purchasing habits of the past.

    SequenceRokset's relationship with Inspirations Paint Moorabbin shows that it delivers genuine value to its retail customers. Retailers will be able to consolidate suppliers when dealing with SequenceRokset and partner with a business that has a long, established reputation for supporting Australian communities.

    Visit the SequenceRokset website for more information:

    SequenceRokset Consolidated
  • Additional Source: Roy Morgan
  • Four in five shoppers believe buying Australian-made is important - Roy Morgan

    Big box update

    Bunnings developments in Wagga and Noosa

    Roy Morgan reveals the 2022 winners for customer satisfaction and Bunnings wins Hardware Store of the Year

    Almost four years since it was first released, plans for a $24.9 million Bunnings development on a proposed new site on the corner of the Sturt and Olympic Highway in Wagga Wagga (NSW) has been back before Wagga Council.

    The current approved site plans for the 18,000sqm site allow customers to enter the site from Pearson Street and the Olympic Highway. But while customers may exit onto the Olympic Highway, council ruled light vehicles could not exit from Pearson Street when the development application (DA) was approved, citing "road safety and efficiency reasons."

    Bunnings is now asking council to reconsider, to allow light vehicles to conduct left-turns only onto Pearson Street. It is also calling for an extension to the median strip along Pearson Street, which would inhibit drivers from turning right at the location.

    Bunnings regional manager David Williams said the business recently submitted a "proposed modification" to the DA to allow customers to exit the store via Pearson Street. He told The Daily Advertiser:

    This change is about creating a convenient access point which is something we know is important for the community.

    However, in a recent council report, it recommended the council reject the request, arguing approval is "not in the public interest". It gave several reasons including the move would "result in increased and unacceptable traffic impacts on the road network ... in particular on the performance, efficiency and safety of the roundabout at the intersection of Pearson Street [and] Edward Street."

    The report found impacts on that intersection would "accelerate the need for a substantial upgrade to this intersection, which would be at considerable cost to the community, and may result in removal of U-turn opportunities at this point."

    It said the solution to those impacts would be replacing the roundabout with traffic lights, but found funding for those works has "not been clearly identified." Further, it said the "modification is not supported by Transport for NSW." In a statement, a Transport for NSW spokesperson said:

    On this occasion, Transport advised the council it did not support this modification as the application did not adequately address potential impacts to the existing roundabout at the intersection of the Sturt Highway, the Olympic Highway and Pearson Street.

    In December 2021, Wagga Council approved an application for a new Bunnings development just 500 metres from its existing store. It was approved with the condition one of the only exits to the 400-space car park would be through Saxon Street - a small road which connects to the south side of the plot.


    Modifications requested for planned Bunnings Wagga store - HNN Flash, September 2022


    Noosa Council staff has recommended giving the green light to Bunnings' proposal to build an adjoining trade centre alongside its current warehouse store in Noosaville, QLD -despite it not meeting shire height restrictions and a councillor questioning the colour scheme.

    The council only allows local businesses to colour their building's exterior in "muted tones". That clashes with the traditional paint job sported by Bunnings Trade stores, which is white with green lettering. The matter came up for discussion at Noosa Council's latest meeting of its planning and environment committee in early October.

    It was also found the proposed expansion would be two metres taller than council's 10 metre limit, which Bunnings said was needed for its stock, noting that the build site is lower in elevation than the existing building.

    Council documents showed the 1087sqm two-level building would have parking on the lower level and a trade area on the upper level, according to the Sunshine Coast Daily. The documents state:

    The applicant intends to provide timber and trade supplies primarily to professional builders and trades customers and is expected to operate independently of the existing Bunnings Warehouse with no changes proposed to this store.

    Noosa Council staff recommended approving the development, with conditions. Planning acting co-ordinator Nadine Gorton said the trades supplies store had different branding, a different colour scheme and provided access for people with trailers.

    Noosa Councillor Brian Stockwell asked why the council staff was recommending approval for the building with certain characteristics.

    I wonder why we're going down a path of approving an aesthetic that is over height and is inconsistent in terms of colours to allow a business to once again do what the signing policy and signing law tried to avoid.
    Commercial enterprises will want the corporate colours spread over their buildings. In Noosa, we don't, we want what our scheme says, which is muted tones, and I think they could do better.

    Roy Morgan winner

    Research firm Roy Morgan polled 60,000 shoppers from around the country to find out which brands they loved best, and Bunnings took home the trophy for Hardware Store of the Year. Australia's most popular retail brands for 2022 include the following (in alphabetical order):

  • Auto Store of the Year - Supercheap Auto
  • Coffee Shop of the Year - Muffin Break
  • Clothing Store of the Year - Suzanne Grae
  • Department Store of the Year - Myer
  • Discount Department Store of the Year - Costco
  • Discount Variety Store of the Year - The Reject Shop
  • Furniture/Electrical Store of the Year - JB Hi-Fi
  • Hardware Store of the Year - Bunnings Warehouse
  • Chemist/Pharmacy of the Year - Chemist Warehouse
  • Quick Service Restaurant of the Year - Zambrero
  • Major Quick Service Restaurant of the Year - Subway
  • Liquor Store of the Year - Dan Murphy's
  • Shoe Store of the Year - Skechers
  • Sports Store of the Year - Rebel
  • Supermarket of the Year - Aldi
  • Roy Morgan chief executive Michele Levine said brands at "the forefront" of the country's rising cost-of-living crisis scored well in the survey. She said:

    The newest class of award winners in the retail categories have been at the forefront of dealing with the issue of cost of living amid high inflation and rising interest rates over the last year.
    As the country emerged from the pandemic restrictions during 2022, Australians went on an unprecedented spending spree which drove record retail sales and record profits for many retailers but also led to new challenges as supply chains were tested like never before.
  • Sources: Sunshine Coast Daily, News.com.au and The Daily Advertiser
  • bigbox

    Retail update

    Sydney Tools store in Kalgoorlie-Boulder, WA

    Haymes Paint stores open in Devonport (TAS) and Rosebud (VIC), and Hollimans Mitre 10 owner looks to build housing

    Sydney Tools has opened a branch in Kalgoorlie-Boulder, a city in the Goldfields-Esperance region of WA, around 595km northeast of Perth. The outlet is the retailer's 83rd Australian store and its only WA location outside of Perth. Operations manager Anthony Elias told the Kalgoorlie Miner:

    We stock a range of products which will see the local tradies and the DIY person have a one-stop shop in town. What they won't have seen in Kalgoorlie before is the range that's actually carried in the store.
    We're hoping that we will have a trade with mining companies or construction companies ... that are looking for quality products and accessibility of those product pretty quickly.

    Mr Elias also said the Kalgoorlie-Boulder store experienced an "exceptional" response to their grand opening.

    Based on our initial opening, it suggests that the town's been hanging out for it because we've had very good (trade) over the first couple of days.

    HR business partner Christopher Huntington said the Kalgoorlie-Boulder outlet currently employs 10 local staff.

    We've been able to acquire some great talent from the local area of Kalgoorlie which is great. We've got established people who already know the market, we haven't brought in outsiders.

    The Sydney Tools can be found at Tenancy 2/141 Boulder Road, Kalgoorlie-Boulder (WA).

    Haymes Paint

    The network of Haymes Paint shops has expanded with store openings in Devonport (TAS) and Rosebud (VIC). Both stores marked the occasions with special promotions, free coffee and big breakfast BBQs for customers. Devonport store manager Lauren Phillips said:

    I'm really delighted to be leading the team in Devonport. I love the mix of trade and retail customers that visit the store - no one day is the same. I'm passionate about colour and I enjoy inspiring customers to work with bright bold colours. My own home features red, black and white!

    The Rosebud store became part of the Haymes Paint retail network earlier this year. While the local community may notice a name change to the shop, previous owner and manager Tracey O'Shanassy has remained. With over 30 years of experience and a fascination with colour, Tracey is dedicated to giving customers outstanding service and expert guidance. She said:

    The transition to Haymes Paint Shop has been very smooth. I am proud to work with such a dedicated and enthusiastic team.

    Rosebud store manager, Tim Nichols, said:

    Our store opening has been incredibly fulfilling. Overseeing our wonderful team here in Rosebud as we work to achieve the goals we've set is truly gratifying. We look forward to welcoming the Rosebud community to our grand opening events.
    Paint has been an integral part of my career thus far, so joining a business with proud family values like Haymes Paint makes a lot of sense. I love helping customers make the right colour and product decisions and it's fantastic when they come back and tell you it looks great!


    Charters Towers business Hollimans Group in regional Queensland has successfully sought approval from the Flinders Shire Council for residential blocks in nearby Hughenden.

    The company - which owns Hollimans Rural Mitre 10 and Hollimans Home Timber and Hardware - has formally expressed an interest in purchasing 22 blocks on which to place two and three-bedroom transportable houses.

    Hollimans managing director Ben North said the housing initiative was part of its strategy for business expansion in Hughenden and stable, good-quality housing was crucial to gaining and retaining staff.

    So far, Hollimans has identified 12 adjoining blocks of interest. However, purchasing blocks directly from a council and bypassing the auction and tender process requires ministerial approval.

    Flinders Shire councillors agreed to seek this ministerial approval at a council meeting in September. The council report noted:

    Employee housing is in short supply in Hughenden, but there is significant stock of vacant residential blocks. The provision of employee housing is crucial to the realisation of council's economic development plan.

    Councillors voted unanimously to seek a ministerial exemption for the direct sale of land to Hollimans. The sale will need to follow certain conditions, including the land being valued by an independent valuer to decide the sale price, and for council to retain a buyback provision in the event that residential development is not commenced within a time period "acceptable to council".

    Hollimans also owns Viper Water Solutions, Hollimans Transport (Weston's Transport), Wide Span Sheds, Pioneer Water Tanks and GoWild Outdoors (formerly Hollimans Gun Shop).

  • Additional sources: Kalgoorlie Miner and Townsville Bulletin
  • retailers

    Supplier update: Nippon Paint

    Melbourne-based Pental sells cleaning products to Nippon Paint

    The Japanese paint and chemicals giant continues to expand in China despite the country's property market slowdown

    A number of Australia's popular cleaning products including White King bleach, as well as laundry and cleaning brands Lux, Country Life and Velvet, will be owned by Nippon Paint after a deal to buy the portfolio from Pental. The paint company will also take over Pental's manufacturing plant in the regional town of Shepparton in Victoria, according to The Australian.

    Pental's other well known brands include Little Lucifer and Jiffy firelighters, and cleaning brands Martha's, Sunlight and Softly.

    Under the deal, Pental said it had agreed to sell the bulk of its consumer products business and the Shepparton plant to Selleys, a division of DuluxGroup, for $60 million. Nippon Paint bought the then listed Dulux for $3.8 billion in 2019. (See more at the link)

    The new face of DuluxGroup - HNN Flash, April 2021

    Pental will maintain control of its Duracell battery operations and its Bondi Soap brand, and will also keep its e-commerce hampers arm, Hampers with Bite. It intends to focus on online retail and consumer retail opportunities outside of its traditional household cleaning, disinfectant, laundry powders and soaps business.

    Following the sale, Pental is expected to have a healthy positive net cash position. In its announcement to the ASX, Pental boss Charlie McLeish said:

    What we are announcing ... creates a simplified and more focused business, while also realising value for shareholders.
    Selleys is a highly regarded business with significant capabilities within the consumer products space, including household cleaning. We believe they are well equipped to continue to enhance the reputation of our products, including our flagship brand White King, as well as provide great opportunities for our employees.
    Selleys is committed to retaining manufacturing in Shepparton, offering employment to all current employees and growing the Pental consumer products business over time.

    China market

    Nippon Paint is heavily exposed to China's faltering property market, but betting it can still make "good money" by rapidly expanding its market share even as the country's developers flirt with default. In the Financial Times, Nippon Paint's co-president Yuichiro Wakatsuki said he remains "cautiously optimistic" about China despite investor concerns about the impact of the slowdown for the Japanese group, which makes 35% of its revenues in the world's second-largest economy.

    By selling lower value paints to a growing DIY market and focusing on home renovations, Mr Wakatsuki wants to rapidly grow the company's market share in China. He said:

    You have to be very agile, you have to adapt to the market, you have to know what's going on. You have to know what our competitors are trying to attack.

    Mr Wakatsuki's goal is to expand the market share of various business lines from between eight and 24% to 40% "relatively quickly". He added there is potential for growth through acquisitions:

    If there's an opportunity to buy companies, I will buy China.

    As Chinese property developers started collapsing two years ago, Nippon Paint began shifting its business model away from large-scale projects, writing down its exposures to developers and demanding cash on delivery instead of extending credit.

  • Sources: The Australian and Financial Times
  • companies

    Property update

    Hardware supplier buys office-warehouse

    Investment and development company Pelligra Group has secured Mitre 10 for its West Melbourne location

    A privately held hardware products supplier has purchased a new freestanding office and warehouse in an industrial area of Dandenong South in Melbourne for $31.5 million, reports The Age.

    The 23,476sqm property, with a building area of 13,154sqm, sits among well-known brands in the industrial and logistics hub at 25 Glasscocks Road.

    Gordon Code, Colliers' joint head of the Victorian industrial business, said the buyer was interested in the site due to growing occupancy costs in NSW, which incentivised the group to focus on expanding its Victorian footprint. Mr Code told The Age:

    It decided to double its local manufacturing base in metro Melbourne.

    Colliers data show the average south-eastern prime grade rent was $130 a square metre in the second quarter of 2023, up from $100 a square metre in the first quarter of 2021. Colliers' national director James Stott said:

    Prime-grade assets are the most sought-after by tenants as the buildings offer greater environmental performance. Adherence to organisational ESG, such as energy efficiency and carbon footprint, have shifted occupational demands and companies are seeking newer and updated assets.

    Mitre 10

    Mitre 10 will expand its presence in Melbourne's west, leasing a Laverton North property 18kms from Melbourne's CBD, developed by Pelligra Group and Citinova, according to Real Estate Source.

    The hardware retailer has committed to the 3661sqm office/warehouse as part of a complex at 1-11 Little Boundary Road, for an initial 10 years. The site is spread across 8500sqm, close to the other properties the group occupies.

    Other businesses in the estate, include Clennett Hire, Sydney Tools and Totally Workwear.

    Traditional office, industrial and retail projects are family-run Pelligra's bread and butter, and is headed up by Ross Pelligra. Mr Pelligra also believes he can make money, or at least break even, in the notoriously difficult financial world of sports club ownership. He recently acquired the Adelaide Lightning women's basketball club and Adelaide Giants baseball franchise, and is also rumoured to be closing in on a deal to take over the Adelaide United soccer club.

  • Sources: The Age and Real Estate Source
  • companies

    Supplier update: Iplex

    Ongoing dispute that involves BGC Housing in WA

    Iplex owner Fletcher Building was forced to temporarily halt its shares from trading to brief investors, analysts and media after BGC went public with its claims that Iplex pro-fit pipes was to blame for leaks and the product should be recalled

    BGC Housing estimates the cost to fully re-pipe its impacted homes to be about AUD700 million, which extrapolated equals about AUD900 million and about AUD1.8 billion to refit all the homes in WA and around Australia, respectively. According to BGC's findings, released in October 2023, a change in resin and formulation led to Fletcher Building's Iplex pipes failing.

    However at its recent AGM, Fletcher Building chief executive Ross Taylor said the cost to repair affected houses in Western Australia, the only area impacted, would be more like AUD50 million to AUD100 million for a fault he blames on "shoddy" installation practices.

    Mr Taylor told shareholders that BGC's cost estimate was based on removing Iplex pipes from all houses across Australia but said that was "sensationalist" and "a little bit fanciful", given there were no abnormal leak rates with the 15,000 houses on the East Coast, and only 10.9% of the 17,000 homes in Perth in Western Australia known to be affected.

    To date, the repairs had cost an average AUD4000 each, and were caused by issues such as over-bending pipes, he said.

    Wherever there's been a leak, there's been an installation failure. What that does is it puts extra stress on the pipe and it just takes time then for that to manifest itself in a leak.

    Mr Taylor said the issues were concentrated to two plumbers and one builder.


    BGC's independent experts say the problem is the pipe itself, and not its installation as Fletcher continues to claim.

    The average BGC house build will have about 90 metres of the Iplex Pro-fit pipe in it, carrying hot and cold water through the home. It estimates on average 6.7 of these Iplex pipes are bursting each day and it is peaking on homes built in 2019.

    Through its remediation programme, BGC has re-piped six homes completely, which took more than six months and cost on average AUD60,000, of which 25% came from relocating residents. Based on this, it claims the cost alone of repairing BGC housing stock is AUD709 million.

    It also claims it discovered problems with Iplex pipes in Victoria, suggesting it's not just a Perth issue.

    BGC is warning there are not enough workers to fix all the pipes and it claims what's been discovered so far is the tip of the iceberg. The company also said it wants the product safety regulator to issue a recall.

    Our advice is that litigation at this time will result in the regulators stepping away, so we encourage affected parties to let the recall process play out rather than engage in a three-to-seven-year litigation process.

    Fletcher maintains there is no valid basis for a recall.

    BGC's experts found the failure of the pipe was due to "environmental stress cracking" and the cause of that was the resin used to make the pipe. BGC told BusinessDesk:

    Its particular physical properties meant that it is not able to cope with reasonable bending stresses, or stresses expected for a pipe of this type. Essentially instead of a flexible, bending pipe we've got something that is behaving more like glass, particularly when it gets cold.

    BGC's experts hypothesise the problem started in 2017 when Iplex started using a different supplier of resin.

    Fletcher said BGC's report, supporting the allegations of a manufacturing defect, lacked credibility and relied on flawed methodologies and so could not be relied on for causation. According to Fletcher:

    To date we have also collected evidence from 270 individual inspections of homes in Perth constructed by 12 different builders and plumbers. This has conclusively identified significant installation failures, in breach of Australian Standards, the Plumbing Code and installation guidelines.
    Those failures are the type that generate the plumbing failures that have been experienced by homeowners.
    Despite being offered access to the AUD15 million fund that Iplex established to assist builders and their homeowners to fix plumbing failures that occur and in turn help to establish the root cause of the failures which have occurred in Perth, BGC has refused to access the fund and refused to facilitate Iplex's technical teams access to homes that they have constructed.

    Fletcher said its fund was planned to support repairs for one year and to date it has done 383 homes and used around 20% of the fund.


    In April, Fletcher Building set aside AUD15 million in a fund to help establish the cause of the leaks and appropriate fixes, and help Perth builders and plumbers complete repairs.

    Iplex is under investigation in WA for leaky water pipes - HNN Flash, April 2023
  • Sources: The Press (NZ), The Australian and BusinessDesk (Wanganui Chronicle)
  • companies

    Supplier update: Brilliant Lighting

    The company admits to engaging in resale price maintenance

    It has committed to sending corrective notices to all affected retailers and distributors as well as establishing a compliance program

    In late September 2022, Brilliant Lighting wrote to 42 retailers and distributors attaching a price list for 116 Brilliant Lighting products. The company informed them that they should not display headline prices on their websites below certain prices. It told retailers and distributors the right to distribute its products was based on adhering to these prices.

    Under Australian competition law, it is illegal for suppliers to prevent, or attempt to prevent, resellers from advertising or selling goods or services below a specified minimum price. This conduct is known as resale price maintenance. Australian Competition & Consumer Commission (ACCC) acting chair Mick Keogh said:

    Resale price maintenance is illegal because it can stop retailers from competing on price, which means consumers pay more for goods and services. This is particularly problematic at a time when many Australians are facing increased cost of living pressures.
    Businesses need to be aware that the ACCC takes resale price maintenance very seriously. Suppliers cannot maintain price premiums by setting minimum prices. Nor should they bow to pressure from resellers to impose minimum prices on competing resellers, particularly, those with lower-cost online business models.

    In the court enforceable undertaking accepted by the ACCC, Brilliant Lighting has committed to sending corrective notices to all affected retailers and distributors, establishing a compliance program, and not to enforce minimum resale prices.

    As a wholesale supplier of fans, lighting, and electrical products, it sells these products to a network of at least 1,439 retailers and distributors.

    Resale price maintenance is strictly prohibited by Australia's competition laws. It occurs when suppliers:

  • make it known they will not supply goods or services unless a reseller agrees to advertise or sell at a price below a specified minimum price;
  • induce, or attempt to induce, resellers not to advertise or sell below a specified minimum price;
  • enter into agreements, or offer to enter into agreements, for the supply of goods or services on terms including that the reseller must not advertise or sell below a specified minimum price;
  • withhold supply of goods or services because a reseller, or a purchaser from the reseller, has not agreed to not advertise or sell below a specified minimum price, or has advertised or sold (or is likely to sell) at a price below a specified minimum price;
  • use, in relation to goods or services supplied or that may be supplied, a statement as to price which is likely to be understood as the price below which the goods or services are not to be sold.
  • Source: Australian Competition & Consumer Commission
  • companies

    USA update

    Ace Hardware experiences cyberattack

    The cyberattack crippled the hardware retail group's internal systems, resulting in shipment delays, and suspended online orders

    Ace Hardware's IT systems including 196 servers and more than 1,000 network devices have been directly affected by a cyberattack. More than half of those affected servers have been restored and are being certified by Ace's IT department.

    Describing the attack as a "fast-moving, dynamic situation" with details "changing rapidly", Ace CEO and president John Venhuizen sent an email to its more than 5,800 retailers to explain the systemwide outage. It said:

    ...We detected a cybersecurity incident that is impacting the majority of our IT systems. As a result of this incident, many of our key operating systems, including ACENET, our Warehouse Management Systems, the Ace Retailer Mobile Assistant (ARMA), Hot Sheets, Invoices, Ace Rewards, and the Care Center's phone system have been interrupted or suspended...

    In another update on the same day, the company urged stores to stay open, as point-of-sale systems, credit card processing, and Ace Hardware bankcard programs were unaffected.

    Leading up to the holiday season, scheduled deliveries are adversely impacted and customers unable to place online orders. There have also been multiple incidents of store owners experiencing follow-on phishing (fraud emails and texts) attacks.

    A cautionary notice reportedly warned Ace Hardware retailers of two different scams attackers are perpetrating, possibly with the information gathered from their initial breach. The notice said:

    Specifically, one involves a criminal sending a spoof email asking the retailer to send electronic payments meant for Ace Hardware Corporation to an alternate bank while we work to restore our systems. The email looks legitimate and appears to be coming from someone in the Ace Finance Department.
    The second instance ... involves a cyber criminal calling an Ace store posing as an Epicor employee asking for permission to gain access to the stores [sic] computer system through passwords, password resets and other remote means.

    Epicor Software Corporation is a Texas-based business software company focused on retail, manufacturing, and distribution - and presumably, an Ace contractor.

    Darren Guccione, CEO and co-founder at Keeper Security told the Dark Reading website:

    Breaches like this must serve as a wake-up call for organisations large and small to implement a zero-trust architecture, enable MFA [Multi Factor Authentication], and use strong and unique passwords.

    In addition, employees should be trained to identify suspicious phishing emails or smishing text messages.


    Ransomware - Is your POS safe?: HI News, August 2019
  • Sources: Dark Reading, Bleeping Computer and Cyber News
  • retailers