Bondi Junction Timber & Hardware

Small store, great strategies

Smaller hardware stores all too often become jumbles of different products that require a map and a compass to find just what you want. Bondi Junction is instead a thoroughly modern, neat, organised and clean store, that features great merchandising.

The Bondi Junction Timber & Hardware Store (Bondi Junction Hardware) has been operating in one form or another at its Oxford Street location for well over 60 years. Its modern, most recent incarnation really dates back to 2009, when one of its employees, Neil Houlton, decided he would take over the store, as something he could do through his "retirement" years. As part of that deal, he took on his daughter, Kerry Renshaw, as a silent partner.

Most unfortunately, Mr Houlton passed away in April 2015. That left Kerry as the sole director of the business - which was a little difficult, as she was living in the US at that time with her young family. For the next two years, the business continued with some of the established managers, such as Ken Dunlop, at the store helping to make it work. Kerry eventually found her way back to Sydney, and started being more hands-on in managing the store as well.

In mid-2017, with the current managers looking to move on, Bondi Hardware found itself looking for a new manager. And that is where Adrian Blythe entered the picture. As Adrian tells it:

I knew one of the guys that was retiring. I knew both [managers] from my wholesaling days as well, so I've had a relationship with both of them for a while. And it just came up in a general conversation. Because when I left the last retail store, I went back into wholesaling for a while.
So I was coming into the store to sell product and that. And then I got talking and Ken was saying, "Oh I'm retiring." And then the next time I came in he said, "I know now I'm going to retire soon." So I'm saying, "What are they doing, who are they going to replace you with?" He says, "I don't know." And then the last time I came in he says, "I'm now retiring in a month."
I said, "Well, I might be interested, maybe." I was like, you know what? It's a nice small shop, I've got a bit of an intimate knowledge, after being a wholesaler for six years servicing this store. Dealing with them for six years as another of my retailers, so always kept in touch.
And it just sort of went from there.

While Adrian is responsible for much of what goes on inside the hardware store side of the business, Alan Grinham handles the very active timber yard. He's been in hardware since the late 1990s, and has worked at Mitre 10 and what he terms "the other one" (Bunnings). Alan claims that working at "the other one" was just an accident, during a transition.

As Adrian describes their comfortable working arrangement:

Alan focuses on the outside, the lengths of timber, the sheet material, the cement that I'm cutting, that sort of stuff. And then we help each other out when it comes to special orders, customer orders, various things like that.

One change for both of them was working at a store that was part of the Hardware & Building Traders (HBT) buying group. Bondi Junction Hardware has been a member for well over 10 years. For a small, very active store, what HBT has to offer has proved ideal. As Adrian explains it:

This is the first HBT store that I've worked for, but I have noticed that they do put a big emphasis on not trying to tell you how to run your store. With HBT they mainly help you out with rebates. So you get to a certain spend you get rebates, or just whether there's certain deals going and stuff like that.
But they will let you run your business how you want to run your business. As opposed to [Independent Hardware Group (IHG)], who want more of a say. You have to have the products, you have to be in catalogues, and so forth.
We use predominately HBT suppliers. Because they look after us, so we tend to help out by sticking to those ones.

Store strategy

What's really interesting about Bondi Junction Hardware is that Adrian has built the small store to work as a well-stocked, orderly and effective retail experience.

Since I've come on board, I've re-laid the whole shop. And not just in terms of moving stuff around. Before the idea was that "our tradies don't care, they just want stock".

In some ways, that's part of a generational shift. But it's a particular generational shift, and Adrian outlines the root causes.

You need to have a layout. You need to have a proper format. Maybe once upon a time, let's say pre-Bunnings, they were probably like that, it didn't really matter to tradies much. But Bunnings has forced a lot of the smaller shops like this I suppose, to run a proper, actual format. If you can make it easier for the guys to find what they want, that increases overall sales.

That statement is important because it remains difficult for many hardware retailers to admit just how much influence Bunnings has had on the market. That influence really grew during the time the big-box retailer was competing with Woolworths' failed Masters Home Improvement. And there is also the background influence of IHG's Sapphire store program.

While it is possible to go to extremes that are really not all that useful to the tradie market, expectations have shifted. In particular tradies are very time-conscious. As Adrian says, it is simply vital to have a store that presents as clean, well-organised and consistent.

A good example of the kinds of changes that Adrian made were with drill bits, which saw him move to stock more from Sutton Tools.

One of the first areas was all our drill bits. We had all these really old, beaten up racks that were all different sizes, and they were all bent, and stock was just anywhere. It cost us nothing, it cost nothing from the suppliers, they'll supply the racks. So I got the company to come in, put some new racks in. We looked at the range, they were able to expand on the range of what we sold.
A lot of the times you've just got to use your suppliers. So people like Sutton, they came out and brought out the new racks. And the rep spent a day here pulling all the stock down, re-laying it.


Adrian also benefitted from some suppliers finding alternative ways to handle packaging changes, especially when it comes to changing packaging over.

One particular paintbrush we had never sold. There was almost no sales history on it whatsoever. Then the company rep came in one day and said, "Oh look, we're actually rebranding, doing new labels." So he offered to send out all the new labelling. So we had to pull off all the old cards and repackage. And the new packaging was much better, a nice green. Just like that, all of a sudden, those brushes started selling. Purely due to the packaging change.

There is a lot to that brief story. First of all the recognition that the problem wasn't the product, but the packaging. Secondly, getting a really good package redesign. Then, in a way that preserved costs for the supplier, was very environmentally friendly, and resulted in rapid change, simply shipping out the new display cards for the retailer. The retailer, of course, is highly motivated to sell the stock, and this process is actually easier than, say, destocking then restocking the product.

Expansion points

Adrian is also alert to some of the high-margin incidentals that can help make a store both more amenable to customers, and polish up its numbers a bit. One change Bondi Junction Hardware made was to go from a vending machine selling soft drinks, to an in-store fridge.

We bought a fridge, and you get those really hot days, a couple days we've been cleaned out of Gatorades or Powerades. Because they've got all the guys onsite and it's a 40-plus degree day.
That replaced a drinks machine, but no one really thought it was ours. It was costing lots in terms of electricity. When we moved to having the in-store fridge, we started selling lots more.


While Adrian has been hard at work making the store itself into a well-functioning retail system, Alan has also been working hard on the timber yard of the store - which is a big driver of revenue and profit. Of course, many of the problems that Adrian faces inside the store, Alan faces outside the store, only magnified a couple of times across a more narrow range. The store's space, given its location, has to be compact, and timber, of course, is anything but compact.

There is a really defined market for timber from Bondi Junction Hardware. First of all, given the high level of traffic congestion in Sydney from 7am to 7pm, being able to get timber without leaving the city is a big advantage. As Alan describes the situation:

So I suppose you could say in the heart of eastern suburbs where we are, we're the only timber supplier. The nearest one to here, you'd have to go over the East Gardens [a 20 to 40 minute drive]. So if someone asks for something we haven't got, and we say "Look, I haven't got any, but they'll probably have it over there near East Gardens, "they'll almost always say "I'm not going that far."


One very good metric to judge the success of a smaller store in an active environment is ticket size. With limited, niche trade traffic, how much is spent on each transaction is a vital measure of success.

According to Adrian, the average transaction size is a healthy $100-plus. That compares favourably to the smaller average transaction size of $30 to $40 many stores have. Of course, equally, given its position and the predominance of trade customers, there are fewer transaction. Around 500 a day may be a comparable average for stores elsewhere, while Bondi Junction Hardware typically does fewer than 200. That said, for a smaller store, the combination of high ticket sales and fewer transactions is much better than mid-range tickets and mid-range transactions numbers.

That is in a store where the total area is 750 square metres, and of that only 105 square metres are for the store area itself (the rest is the timber yard).

Working for an owner who is an accountant, it is also important to make sure that the gross profit numbers are heading in the right direction. As Adrian tells us, he and Alan have managed to make that happen. Like most good retailers, this has not been as simple as just bumping up the prices.

The owner keeps a close eye on the figures. Since I've come on board I've been able to reduce the spending, I've been able to increase the sales. Which has meant we're making about 10 points more, on the gross profit.
It's not through raising prices. A lot of it was through decreasing some of the prices. But when you decrease, you start to sell more, unit price drops. So you might directly seem to lose a bit of gross profit, but then with the volume you sell, it tends to make up for it. It was a matter of looking at stuff like that.

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ABS Stats: Where next?

Retail revenue, building proposals and work done

The pandemic has boosted hardware revenue from April to July 2020 by $1.9 million over the corresponding period. That's welcome, but how long will it last?

At the moment, what every business owner - and especially every retailer - wants to know in Australia is: what happens next? What does Stage II (and Stage III) of the pandemic look like?

A series of emergency measures - JobSeeker, JobKeeper, interest rates below 1%, mortgage repayment "holidays" - have kept Australia away from the kind of financial panic which, combined with the pandemic, could have been catastrophic. But, as Australians wait for the delayed Federal Budget to be delivered in October, the signs that are coming from the government seem to be more about uncertainty than anything else.

The fact is that while there are nations that have handled the pandemic better than Australia - though Australia has, by global standards, done pretty well - the number that have successfully reopened their economies after the pandemic shutdown in March and April is very low. In early May we heard the Australian Prime Minister, Scott Morrison, harangue Australians to "get out from under the doona". Since infections ballooned in Victoria, very little more has been said on the subject.

For retailers, as we learn more about the Sars-CoV-2 virus, it has become increasingly evident that the classic retail shop (as well as bars and restaurants) represents an almost perfect venue for transmission to occur. Most retail is indoors, crowded, with poor external ventilation, people constantly touching surfaces, and so forth.

The difficulty, as we've seen in Victoria, is that even if numbers have been brought to a very low level, if they start to grow quickly, the available resources, such as testing and contact tracing, are quickly overwhelmed. What that means in practical terms is that until there is an actual vaccine available, the fight is not about bringing a booming economy back, but creating essentially a subsistence economy, based on very controlled risks, with the likelihood that there will be some three to four week periods when harsher restrictions come back into play.

Hardware retail

The Australian Bureau of Statistics (ABS) has released retail statistics for July 2020, though these do not include the most recent numbers for the Northern Territory and Tasmania, so we (unfortunately) have to exclude these. Looking at the first chart for the 12 months to July 2020, we can see an expected pattern.

Sales during 2020 have been accelerated, resulting in considerable overall gains. The Australian Capital Territory (ACT) is the winner in terms of percentage gain, at 17.28%, but Victoria (VIC) gained 14.42%, increasing revenue by $805 million. New South Wales (NSW) saw a gain of 10.22% and $586 million, while Queensland gained $448 million, an increase of 11.09%. Western Australia and South Australia had growth of 13% and 14% respectively. Australia overall saw hardware retail revenue increase by 12.25% to $21.9 billion.

The second chart shows the percentage increase for comparative 12 months to July. As you would expect there is a sharp clustering of growth, as the pandemic and the subsequent increase in hardware sales is a nationally defining factor.

Chart 3 shows a month-on-month comparison between August 2019 to July 2020, and August 2018 to July 2019. While the other two graphs are good for getting an overall context, this graph is perhaps the most interesting in terms of seeing what the pandemic is doing monthly. The peak month for every state except VIC is May. VIC peaks in June, and then declines less than the others moving into July.

We can predict a high likelihood that we'll see VIC decline fairly sharply for August and September, when those numbers come out, as DIY consumer retail will be shut down. What will be really interesting is to see how much states such as NSW, QLD and WA decline. Will the trendline go down steeply, or will some of the home improvement spending prove to be more "sticky"?

Building industry

In terms of looking further into the future, with most independents relying heavily on trade sales, the stats from the building industry are of particular importance. It is always difficult to forecast accurately based on building proposals. Chart 5 shows the number of building proposals for the trailing 12 months to July, and Chart 6 shows the percentage change when comparing those 12-month periods.

The major feature of these is to outline that the fall for the prior year was much more significant than the fall in the most recent year. It's likely that is a function of lowered interest rates as much as anything else. Builders likely expect there will be lag between when the economy recovers and interest rates rise again, especially as the RBA had indicated it is willing to tolerate a higher rate of interest (we would guess up to 3%) than it has in the past.

Chart 6 compiles the value of work done for the year ending in the June quarter. As it shows, after rapid growth through to 2016, driven primarily by work on multi-unit dwellings, growth slowed in 2018 and 2019, before showing decline in 2020.

Alteration & additions (in this case, those that required permits) showed slight but steady growth.

Chart 7 shows the comparative growth rates for these periods. 2019 shows a consolidation around slightly negative to slightly positive growth rates, followed by a slide down to decreased activity, with alterations & additions falling the least, and multi-unit dwellings falling the most.

Chart 8 shows a quarter-on-quarter comparison from the September 2016 quarter through to the June 2020 quarter. Alterations & additions show slowing decline in the December 2019 quarter, followed by a lift into actual growth in the March 2020 quarter, and then a return to slight decline in the June 2020 quarter. New houses also saw a reduced decline in the March 2020 quarter, before returning to its December 2019 quarter rate of decline in the June 2020 quarter.

From this we can determine that while the June 2020 quarter has not been good for the work done numbers, there was already a pattern of decline present. Alterations and additions did get a boost in the March 2020 quarter, but this was surprisingly short-lived.


Putting this all together, what is the picture that is revealed? First of all, most people would agree that the current recession is likely to be finite, in that it has not been caused by anything structural in Australia or internationally. Longer term effects will include both a reduction in overseas immigration to Australia, as well as reduced birth rates (which affects, for example, people upsizing their dwellings). However, both of those are, to some extent, reversible. We could see increased migration in 2023, for example, and birth rates might catch up as well.

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Retail as audience

How the pandemic will accelerate change in retail

While the pandemic has created problems of its own, it has also more clearly outlined tensions between past and possible future ways of doing retail

Sars-CoV-2 and the disease it causes, COVID-19, has had a very direct and immediate effect on retail, causing stores to close and customers to stay away. But could it also have a longer-lasting and more fundamental effect, as science and new technical capabilities assume a prominent place in social and economic life?

The whole catastrophe

It's worth considering, for a moment, exactly what a catastrophe, such as the pandemic, really is. "Catastrophe" has two main meanings: the result of a disaster, and - curiously - the denouement, the final, climatic development of a classical tragedy (such as Macduff killing Macbeth in Shakespeare's play). The latter was its original meaning, and it began to be used for the former in the mid-18th Century.

So there is a commingled sense that catastrophes are at once surprising and yet often seem to have been predictable after the event: the volcano that erupts, the earthquake along a known faultline - or, indeed, a pandemic taking a shape foreshadowed by both scientists and science fiction writers for decades.

Given those warnings, it's not really possible to put these events down to "bad luck". What they really are, typically, is what Americans would term "a wake-up call". What catastrophes really do is to point out the significant gap that has developed between the accepted and expected view of things, and the actual, underlying reality.

The problem, of course, arises in determining where that gap really exists. After the sinking of the Titanic, for example, it might have been tempting to undertake an extensive study of icebergs. The reality, though, was that the shipwreck revealed Edwardian England did not know as much as it thought it did about both metallurgy and ship design.

It is just so with the pandemic, as well. For example, there has been a persistent desire to see its lesson as being, in one way or another, that "China is bad" (because it was the origin point of the Sars-CoV-2 virus). China, in this case, is just the iceberg. Of course it has all the attractions of the "blame the iceberg" approach: no one is really to blame (except China), and the world can be said to have been behaving perfectly (except China).

But blaming China is not, self-evidently, going to stop the next pandemic - nor will it help nations of the world recover from this one. Which raises the question: what will help stop another pandemic, and possibly hasten recovery from this one?

One clue might be to look at the practices of those nations that have been successful in stemming the effects of the pandemic, often securing better economic outcomes as well. The approach to the pandemic in nations such as Australia, the US, and the UK, as well as much of the EU (except Germany) has been to see it as a matter of people interacting with a virus. This has resulted in an emphasis on moving people with some probability of having contracted the virus into some form of medical detention. (HNN notes that the word"quarantine" is frequently used incorrectly. You cannot, technically, quarantine someone who is known to have a target disease. It's purely a preventative measure - and originally lasted 40 days, which is the origin of the word.)

Other countries such as South Korea, Taiwan and Germany, have taken an information approach instead. Their emphasis has been on contact tracing combined with extensive, early testing. One reason why all three have adopted that approach is due to the legacy of their prior experience with other diseases in recent times. Mistakes they made then taught them the benefits of contact tracing. South Korea fought off Middle Eastern respiratory syndrome (MERS) in 2015, and Taiwan was hard-hit by severe acute respiratory syndrome (SARS) in 2003. Germany suffered a major outbreak of e. coli in 2011 - 3,950 people were affected, 53 died, and 800 suffered hemolytic uremic syndrome, which can lead to kidney failure.

It is also the case that many of these early, successful approaches have run into trouble at a later stage. The record for countries being able to control the pandemic when restrictions are lifted, no matter how good their contact tracing may be, is poor. Most have attempted to balance economic activity against pandemic spread, and most have, unfortunately, not found that balance.


Restated, the problem of Sars-CoV-2 virus and the pandemic it has caused really has to do with the way in which linked global societies have managed only a partial transition to an information-driven environment. Manufacturing, finance and product development have been globalised, but not disease detection, prevention, and treatment.

It's helpful to look at this situation in terms of a historical change that is underway. The best label we can come up with for this change is "post-manufacturing".

Post-manufacturing does not, of course, refer to an an economy which has stopped making objects, such as cars. What it does refer to is an economy where the growth in value has shifted from the manufacturing processes themselves, to the ability of the products produced to successfully interact with software.

Of course, this is not the first time that the economy has taken this kind of turn. From around 1890 to 1930, the same thing could have been said about electricity, where engagement with this technology became central to economic growth. Electricity was joined by the internal combustion engine from 1910 to 1940, plastics from 1920 to 1970, and, post-war, from the mid-1950s to the early 1980s, transistors.

That said, software is emphatically different from all these other economy-boosters. It is not produced by industrial means, but rather results from the practical application and distillation of knowledge itself. It responds to issues of scale, economically, but does not require scale to be produced, opening up the potential for different methods of development, production and distribution, such as open source.

Those characteristics means its capacity to add value is both astonishing, and yet uncertain. A prime example is provided by Tesla, the most successful global maker of electric cars. Founded in 2003, the company completed its initial funding round in 2006, and launched its first vehicle in 2008. The Roadster was a Lotus sportscar powered by electric batteries. When Tesla launched its Model S four years later, the automobile as software was finally achieved.

The Model S isn't just about electric motors, it's also about near-autonomous driving, which has the capacity, when developed into fully-autonomous driving, to help change national economies. What we're talking about, basically, is a single-purpose robot as car.

Despite the evident success of early post-manufacturing businesses, it's easy to understand why making the necessary shift is so hard. Manufacturing, in its more modern sense, has been with us now for over 200 years, dating back to the late 18th Century. Mass production took off, firstly in the US, in the 1850s, and was, indirectly, a contributing cause to the American Civil War. In the early 20th Century, it came to reshape the US and other economies, helped by electrification of factories and better techniques in steel production.

During World War II manufacturing developed further techniques of scale, and this helped to fuel the post-war boom of the 1950s and 1960s. It hit historic highs as the chemical industry developed new materials, in particular polymer-based plastics.

Beside boosting economies, manufacturing also influenced the way things were done everywhere in society, along with a responsiveness to the organisational principles of the military, to which most working people had been exposed during the war years. Schools, hospitals, restaurants, police and even governments all shaped themselves around manufacturing principles. It has become, especially for the past 75 years, simply the way things get done.

Yet while many decry the shift of manufacturing to China and other low labour cost countries as an economic problem, a more accurate view is that what has been transferred are those activities that have the lowest future growth potential. The problem comes down to localities which have lived through three successive generations where most families were supported by a vibrant manufacturing base, and who now find themselves struggling to adapt to change.

So it is not an economic problem. It's a social problem. One indicator of this is that, while countries such as the US, the UK and Australia worry about the shift of manufacturing jobs to China, countries in Latin America are also confronting what they overtly refer to as post-manufacturing. Their problem isn't China, however, it's the increasing automation in developed countries, which means those countries are now shifting less manufacturing to places such as Mexico and Brazil.

Post-manufacturing retail

What does this mean for retail, and specifically home improvement retail?

Most of the debate about how retail might change concentrates on how much revenue comes in through online sources, and how much originates from physical stores. That narrative cites some changing numbers for online purchases during the pandemic which could prove "sticky" into the future.

It is no surprise, of course, for retailers to discover that online retail has jumped significantly. In the UK, this has seen online sales climb from a 20% share to a 30% share, while in the USA online has lifted from 17% of overall retail sales to 22%. (These figures are net of car and car part sales, as well as restaurant and bar/pub sales.) In Australia, the growth in online sales has surged by 49%, to reach close to 12% of overall retail.

Some individual stores did well out of online. The department store Myer, for example, sold $422.5 million online for its FY2019/20. This amounted to 17% of overall sales, and represented a 61.1% increase on the previous financial year.

But if we are thinking in terms of post-manufacturing, it is debatable whether the split between physical and online sales/distribution matters as much as the industry currently believes. If the metric of post-manufacturing is all about how much engagement with software it enables, online offers itself as a ready place for that. Yet most customers today, and for some substantial time, are unlikely to shift from physical stores. Evidently, then, the real move for retail over the next five years is to increase software engagement in physical stores, while boosting engagement online as well.

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Store buildout in Australia and New Zealand

Wollongong gets new Bunnings Warehouse

Different merchandising in recently opened branches at Kembla Grange and Palmerston

Construction has begun on a Bunnings warehouse in the Lockyer Valley (QLD); the Bunnings Kembla Grange store has replaced the Warrawong warehouse in NSW; Palmerston's $58 million Bunnings store in NT is three times the size of its previous site; Bunnings said it has outgrown its current location in Inverell (NSW) and there are plans to build a new store; there has been a lot of activity on the site in Wangaratta (VIC) where the Bunnings store is being built; the Bunnings development at Plainland (QLD) is going ahead; and site clearance work has begun for a store in Queenstown, New Zealand; and a five-level Bunnings Warehouse is tipped for Frenchs Forest (NSW) after a development application was submitted to Northern Beaches Council in June.


Bunnings Kembla Grange is a $62 million development that measures 17,000sqm, approximately 5000sqm larger than the old Warrawong store it replaced. There is a seven-lane timber drive-through which is more than double the size of the previous store, and there is under-cover parking for 400 cars.

Complex manager Liz Politis told the Illawarra Mercury there were many new merchandising concepts in the store including different wardrobe and bathroom, as well as a kitchen design centre. There is also an extended artificial plant range, and garage storage displays.


After more than a year of construction, Bunnings Palmerston has welcomed customers. As part of the opening, the store has donated equipment, materials and PPE to several local and greater Northern Territory organisations such as the Jabiru Men's Shed, Helping People Achieve, and the Arnhem Land Progress Aboriginal Corporation.

Complex manager Clayton Leeder told The Northern Territory News the store has an additional 20,000 lines, a seven-line drive-through and a bigger nursery offering with undercover landscape. There are 450 car spaces underneath and 19 at the front of the store. Inside the store, there are 12 brand new kitchen concepts alongside a wide range of bathroom displays.

Well-known local landmark, dinosaur Big Kev is next to the nursery.


Bunnings has indicated that it is looking to build a new store on a different site from its current premises in Inverell (NSW).

The preferred site on Jardine Road would require rezoning by the Inverell Shire Council for a large format store development. Although Bunnings has made no formal re-zoning application yet, Inverell Shire councillors requested an information report be put together regarding the Inverell Local Environmental Plan 2012, according to a report in The Inverell Times.

This was presented and discussed by councillors during a Civil and Environmental Services Committee meeting.

The committee's resolution was to request additional information regarding the number of vacant residential blocks and approved residential subdivisions within one kilometre of the B5 Business Development Land Using Zoning on the corner of Jardine Road and Gwydir Highway.

However, the proposed rezoning has received support from the Inverell Chamber of Commerce. Chamber president, Nicky Lavender said:

This development would secure approximately 45 new jobs and go close to doubling the size of [the current] Bunnings store. In a period of time where large national companies are pulling out of smaller regional communities, we have one that wants to invest in Inverell.


Bunnings is expected to open its doors to the new Wangaratta store in mid-November. This outlet will have a 4300sqm retail warehouse, a drive through timber sales area and an outdoor nursery.

Bunnings regional property development manager, Andrew O'Neil, said the project was running on schedule. He told the Wangaratta Chronicle in July:

The site will undergo a transformation over the next month. This is because the structural steel for the store is scheduled to be erected.


The $19 million Bunnings store that is being be built at Plainland in the Lockyer Valley is expected to open next year. It is being developed by De Luca Corporation. Founder and managing director Nic De Luca said the Plainland site was a strategic acquisition for the business, following its Kingaroy and Lawnton Bunnings developments. He told The Courier Mail:

We're extremely excited and proud to be delivering new Bunnings stores in Queensland, particularly, during these challenging economic times. It is testament to our longstanding relationship with Bunnings.

De Luca is also building other Bunnings Queensland stores in Pimpama and Yeppoon. The store in Plainland is part of a master planned community. Plainland Crossing Estate manager Joe Gorman said:

With businesses such as Bunnings, ALDI, Bridgestone, Woolworths and McDonalds complementing the local businesses at Plainland, Plainland is now firmly established as an important hub for business and community activity in the Lockyer Valley.

The Bunnings facility will be built at Plainland Crossing, on 5.123ha of vacant land bordering Endeavour Way, Burdekin Street, Gehrke Road and the Warrego Highway. The development plans detail 182 parking spaces, 80 of which are for staff, 10 motorbike spaces and four spaces designed for vehicles with trailers.

Queenstown (NZ)

Bunnings New Zealand is proceeding with work on a new hardware store in Frankton, a suburb of Queenstown. A spokeswoman told the Otago Daily Times the new store was expected to be opened in mid-2021.

The Frankton store, which will provide competition for nearby Mitre 10 Mega and Placemakers stores, will consist of an 8100sqm warehouse and outdoor areas for a garden centre, timber and building materials yard, and parking for 134 vehicles.

The company applied for resource consent for the Frankton site three years ago. Independent commissioners rejected the application in 2018, with a major bone of contention being that the use of the site would contribute to a future shortage of industrial land in the area.

Bunnings appealed the decision to the Environment Court, which ruled in its favour 13 months ago. It responded to Queenstown Lakes District Council concerns by making changes to the design of the building's exterior, site layout and landscaping.


Bunnings NZ rejected for Queenstown store - HI News, page 18
  • Sources: Herald Sun, The Courier-Mail, Illawarra Mercury, The Northern Territory News, The Inverell Times, Wangaratta Chronicle, The Chronicle and Otago Daily Times
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    TradeTools positioned for current growth

    Hiring spree during COVID-19 restrictions

    Owner Greg Ford is all about sharing wealth with employees and not interested in selling out

    Founder of Queensland-based retailer TradeTools, Greg Ford is not afraid to share the wealth. He has over 50 shareholders and most of them are his employees.

    Mr Ford started TradeTools in 1987 to create jobs for himself and his father. In 2020, there is a workforce of 240 people across 18 stores located across the state from Tweed Heads to Cairns. There is also an outlet in Vanuatu and another Queensland store in Browns Plains due to open later this year.

    The global pandemic has accelerated growth for the retailer and has employed almost 30 new staff to cater for the unprecedented increase. About 10-12% of sales came from online. Mr Ford told the The Courier Mail:

    We're a little bit reluctant to admit it but we have had a massive increase in turnover ... We had one quiet week when COVID hit and then it went whoosh and it has never stopped. It's nuts.
    Every store has gone up and our figures are currently 60% above what they were this time last year ... I think we just drained all the money out of tourism ... because no one is going anywhere.
    If we manage to average our current turnover through the rest of the year, we are going to be looking at $160 million, $170 million turnover.

    Mr Ford said sales could have been even higher if there was more stock to sell. The company was expecting 76 containers to be delivered at its head office in Stapylton on the Gold Coast in July.

    Profit sharing

    Having enough trained workers and keeping stock on the shelves have been the two biggest challenges the company has faced in recent months.

    It will take a couple of years to fully train new workers but Mr Ford does not anticipate any problem retaining them. TradeTools paid a weekly commission based on turnover and provides the opportunity for staff to become shareholders after 10 years of service.

    Mr Ford credits this profit-sharing initiative with helping the business to thrive before and during the coronavirus crisis. With an average staff retention rate of eight years, TradeTools staff are experts in their craft - a point of difference that he believes any competitor would be hard-pressed to replicate.

    While the remuneration of workers across the country has come under pressure amid the COVID-19 pandemic, many of Mr Ford's staff are benefitting from the surge in demand. He told SmartCompany in a separate interview:

    I don't pay myself a multimillion-dollar salary, I don't need it. The big corporates have never been able to get into the specialised end of the tool industry [due to a] lack of expertise.

    (HNN readers are already aware that Bunnings and Metcash have acquired once-independent brands Adelaide Tools and Total Tools.)

    The business owner said anyone asking to buy his company gets the same answer: "Not on your life."

    Mr Ford is British born, grew up in Europe and has lived in the United States. He has seen what happens when independent companies fold in the face of large businesses en masse and believes it's not pretty. He said:

    I've seen what happens when you basically let corporations run the country. That's what we see in the States and Europe.
    Companies like TradeTools can be privately owned and have a strong, engaged workforce. I want to see that philosophy continue to expand.
    I don't want Bunnings to be the only hardware company in Australia ... it's the whole point of TradeTools.

    But beyond this, Mr Ford wants more independent business owners to adopt profit-sharing initiatives with their workers, saying there is a range of benefits to sharing, whether that's aligning incentives to promote success or just being able to sleep soundly at night. He said:

    We spread the wealth around and everyone benefits. I cannot understand why others, especially in the higher echelons of business in Australia, just can't see that.
    It allows you to sleep at night knowing your employees aren't continually looking for a new job, and it allows you to be more trusting of the people who work for you because they're taking part in the profitability of the business.

    Mr Ford also sees a need to expand local manufacturing. TradeTools stocks its own range of locally made private-label tools called Renegade Industrial. He said:

    I've always thought we should produce more of our own products here. When I came to Australia 47 years ago many things were made in Australia, I've been sorry to see that so many things are now made overseas.
  • Sourced from SmartCompany and The Courier Mail
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    Ozito leases new warehouse

    Located in south-east Melbourne

    Ozito, whose biggest client is Bunnings, will be part of the Rubix Connect warehouse, factory and industrial estate

    Power tools and gardening equipment supplier Ozito is the first tenant in the 41.3-hectare Rubix Connect estate in Dandenong South (VIC). It will lease an 18,000sqm warehouse and 1815sqm two-level office at the site developed by Frasers Property Industrial (FPI).

    Situated at 875 Taylors Road, it is one of the last undeveloped tracts in the suburb, considered Melbourne's most valuable for industrial property outside of the inner city.

    FPI general manager - southern region, Anthony Maugeri, said the company is witnessing a strong flow of enquiry from e-commerce related businesses requiring more warehouse space. He told Real Estate Source:

    The DIY home market is also very active which is reflected in Ozito expanding and consolidating its warehouse footprint in Melbourne to meet customer demand. The south east region is Melbourne's most established core industrial market.
    It is close to a very large population base and has a limited supply of prime rezoned industrial land. This diminished land supply combined with strong tenant demand is leading to increasing land values and rents and decreasing vacancy rates.

    The Ozito factory will be developed at Rubix Connect's entrance, specifically a site at the north west corner of Taylors Road and Fox Drive. It will have two crossovers from each street.

  • Sourced from The Australian Financial Review and Real Estate Source
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    Reece signs up with LatitudePay

    Access to more home improvement customers

    It has recently taken out warehouse space at an industrial park that is part of Melbourne Airport

    Latitude Financial has confirmed it has added ASX-listed plumbing and bathroom supplier Reece to its interest-free "buy now, pay later" (BNPL) platform, LatitudePay, for people who are completing home renovations in a COVID-19 economy.

    Reece has benefited from the increased spending in the home, which is set to be bolstered further as the federal government starts paying its $25,000 homebuilder grants.

    LatitidePay is also used by retailers such as Harvey Norman and Forty Winks as well as tech giants Apple and Samsung. The company said LatitudePay was close to signing up 350,000 customers across Australia and New Zealand since its launch in September 2019.

    Latitude CEO Ahmed Fahour said the company was focusing on the home improvement space to capitalise on people spending more money on their homes during lockdowns as a result of the coronavirus. He told The Australian:

    Reece is an example of a business doing incredibly well with the growth of the home economy. Everything is geared towards the home economy for our business.

    The plumbing and bathroom group recently announced that its net profit increased 13.3% to $229 million The result was driven by a 10% increase in sales to $6 billion during in its 100th year of operations. In Australia and New Zealand, sales revenue grew by 0.8% to $2.88 billion.

    Reece managing director, Peter Wilson said the company's ventures arm, Superseed, has also launched an online job management platform for its customers in Australia and America. He said there were other innovations to come in new fields. He told The Australian:

    Our vision is to be a digital leader for the trades. We know we are a really important part of the way the trades operate. Increasingly as we pivot to a much more digital world, we want to be connected into their digital ecosystems.

    Reece followed its $1.9 billion acquisition of US-based MORSCO in 2018 with a $221 million purchase for Californian plumbing wholesaler Todd Pipe in 2019.

    More recently, the company has taken out a 10-year lease on a new warehouse it will move into next year, located at Melbourne Airport. Reece will consolidate a number of brands in the one site and service suppliers and customers from the purpose-built 11,670sqm facility in August next year. This follows Amazon's commitment to take space in the same industrial business park for its gig-economy Amazon Flex drivers to service its the city's northern and western suburbs. (See "Amazon's first robotic warehouse in Australia" story in this issue.)

    Capital raising

    In April, Reece raised $647 million to boost its balance sheet so it could capitalise on greater investment on plumbing and sanitation by customers arising from the pandemic.

    The company also said the funds would be used to support the business during the period of global economic uncertainty, increase liquidity, reduce net debt and potentially position it for acquisitions.


    Reece sees future beyond ANZ market - HI News, page 31

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    Kingfisher online: the need for speed

    Focus on the customer, not group structure

    The home improvement group has hastened its ecommerce plans since the onset of COVID-19 but stores will be at the centre of this digitised strategy

    Just as chief executive Thierry Garnier was getting ready to reveal his strategy for European DIY group Kingfisher, he was interrupted by a global pandemic. The crisis hit when he was only six months into his job. He gave an interview to The Times where he said:

    They were classed as essential retail, but we needed to make them safe. We had to do it, but it was still very painful to have 85% of our stores closed for four weeks.

    Yet in hindsight the coronavirus outbreak may be seen as having helped his cause, giving Mr Garnier licence to be bolder than he might have been and stepping up his plans to revamp the business by focusing on online shoppers.

    To cater for the acceleration in online sales, managers dedicated excess space at the back of its stores to fulfilling online orders.

    The sprawling nature of Kingfisher's operations was an extra advantage. The home improvement chain has 982 stores in the UK, split between its B&Q and Screwfix brands, 221 French Castorama and Brico Depot shops and a further 165 stores in Romania, Spain, Poland and Russia. Mr Garnier explains:

    France was initially quite relaxed about customers using cash, but we saw that Spanish and British consumers were worried about the virus being on notes and coins, so we pushed them to bring in contactless payments.

    As stores started to shut in Britain, Kingfisher launched a new system of picking online orders straight from B&Q shop shelves and rolled out hundreds of click & collect sites. As a result, online sales have jumped fourfold since the start of the pandemic. According to its figures, online sales across Kingfisher grew by 202.1% in May and 225.2% in June, driven by a massive up-tick in click & collect.

    Even when stores began to reopen, online sales continued to soar, helping Kingfisher to deliver group like-for-like sales rose 19.5% in its second quarter to July 31, and are up 16.6% in the third quarter so far. E-commerce sales soared 164% in the first half and now represent 19% of total sales versus 7% in the same period last year.

    China experience

    Mr Garnier's strategy to drive online growth at Kingfisher relies heavily on his stint in China, where he spent eight years running Asian operations at supermarket chain Carrefour. In this role, he became used to seeing shoppers using messaging apps to make purchases, and to organising hundreds of motorbikes to deliver groceries from supermarkets at three-minute intervals.

    He believes that speed is the key to achieving success in online retailing in future. He said:

    I think fast home deliveries will be the way forward. You already have thirty minutes in China or one hour in the United States. There is a way for us to compete in this and if you believe that speed is the trend, using our store network is a very big advantage.

    Critics of Mr Garnier's strategy argue that most DIY customers know well in advance if they are taking on a home improvement project and therefore are more relaxed about waiting a few days for deliveries. However, anyone who has had the hassle of being halfway up a ladder before realising that there isn't much paint left in a tin might appreciate a faster service.

    Reacting quickly to customers' needs is an issue that has been a challenge for Kingfisher for some time. Mr Garnier's predecessor, Veronique Laury, attempted to unify Kingfisher's international operations into one group structure. However in the new CEO's view, Ms Laury's "One Kingfisher" determination to simplify sourcing meant that B&Q's managers had no freedom to add a single product to the chain's ranges without bureaucratic, sluggish approval from head office.

    As a result, this strategy is no longer being pursued and has attracted a lot of criticism. Mr Garnier said, " is more a question of how we can do things together versus us all being the same."

    He is also nonplussed about Kingfisher's boast that 63% of its product ranges are the same across the group. He said:

    I am not interested in that figure at all. I do not care, because it is of no interest to the consumer. Our strategy should be focused on the customer, not the group structure.

    The French chief executive said that his "Powered by Kingfisher" strategy, to prioritise online growth and individual own brands, would encourage a more agile culture.

    He said that there were different customer tastes and shopping habits between the group's regions, so "being under one banner is not the right direction for the company". Analysts at Investec called the shift a "U-turn".

    Screwfix openings

    Kingfisher also enjoyed a return to the FTSE 100 as the country's fervour for DIY helped sales soar. The retail group was relegated from the blue-chip index in March but returned in June.

    The boom in demand for home renovations during the lockdown has encouraged Kingfisher to open 40 new Screwfix stores this year, mainly in Ireland. There are 680 Screwfix outlets in the UK and it has a long-term target of 800.

    The trade-focused retailer kept its stores open throughout lockdown, offering a contactless service. Online sales also have been higher at Screwfix than in the rest of Kingfisher's businesses.

    Digital strategy

    JJ Van Oosten, who joined Kingfisher at the start of the year as chief customer & digital officer, has set about building his team and growing ecommerce as a percentage of total sales, said DIY projects "will always be more than just a financial transaction on a website or mobile phone".

    In a statement on the group's website, he said the coronavirus crisis prompted a shift in thinking for the retail chain.

    Whilst our ecommerce activity grew exponentially, far from rendering physical stores obsolete, we have seen first-hand how our stores have become more integral to our business, not less.
    As the seriousness of the pandemic grew and moved swiftly towards Europe, I remember having conversations at Kingfisher about our future ecommerce plans and whether our stores were going to be assets or liabilities to them.
    For me, they are 100% assets: located close to our customers, they are in the right places to serve them either physically, or digitally - as picking, collecting and delivery hubs - no matter where the financial transaction takes place.

    Mr Van Oosten added that the COVID-19 landscape became an "unexpected testbed" for future plans, enabling the business to roll out initiatives before they were "perfect".

    Its shops became micro-fulfilment centres or "dark stores" from which online orders were picked for click & collect and home deliveries. The company sold bedding plants online for the first time, too.

  • Sources: Reuters, The Times, Internet Retailing, Evening Standard and Essential Retail
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    Home Depot in the delivery economy

    Three new distribution centres

    The pandemic has underscored the importance of a flexible supply chain as customers gravitate more to online shopping and curb side pickup, according to the retailer

    The Home Depot will open three distribution centres over the next 18 months to keep up with customers' demands for speed and convenience. Since 2018, Home Depot has been investing USD1.2 billion to open about 150 supply chain facilities over five years. It is building different kinds of distribution centres to handle its wide range of products, from small drill bits to bulky items like pallets of timber. Stephanie Smith, senior vice president of supply chain development and delivery, told CNBC:

    We like to say that retail has changed more in the past four years than in our 40-year history. Covid has even brought this more to light. Customers expect to shop whenever, wherever, however they want whether they're buying a hammer or a pallet of pavers,
    We're investing to meet the changing delivery needs of our DIY and pro customers, whether they're at home, at their job sites or picking up in the store.

    Home Depot wants to offer same-day and next-day delivery to 90% of the U.S. population. At the company's analyst conference in December, it said about 50% of the US population had one-day delivery options.

    Nearly half of its sales - about 45% - comes from professionals, even though they make up less than 5% of its customer base. Those electricians, contractors, plumbers and other pros are one of the reasons why Home Depot is focused on working out ways to quickly move unwieldy or heavy items like cabinet doors or concrete. Ms Smith said:

    It's a very strategic, important customer where we see a lot of growth coming from. And generally, in our history as a company, if we develop something for our contractor or pro customers and get it right, then it works really well for our DIY customer as well.

    One of Home Depot's new facilities will be a 657,600-square-foot distribution centre that will open by end of year. It will help with rapid replenishment of stores in the south east of the country, so the products that customers want are more likely to be in stock.

    Another new facility is geared toward products carried by box trucks, such as local deliveries of vanities, cabinets and appliances.

    The third is a flatbed delivery centre, which will open next year. It will help fulfill same-day and next-day delivery for oversized building materials like roofing, fencing or drywall. Some deliveries will go to stores and others will go directly to the job sites of home professionals or DIY customers.

    Home Depot opened the first flatbed delivery centre in Dallas earlier this year. It has since opened another in Baltimore and has plans for about 30 to 35 in major US markets, Ms Smith said. The large buildings can fit flatbed trucks or rail cars.

    All three new distribution centres will be built in Georgia, the state where Home Depot is headquartered.

    The distribution centres were in the works long before the pandemic caused a surge in online commerce. Ms Smith said:

    I don't think [the pandemic] has changed our strategy very much - we want to go where our customers are telling us to go. I would say it's been amplified during Covid.

    Home Depot's online sales doubled in the quarter ended August 2, representing more than 14% of the approximately USD38.1 billion of net sales, a spokesman for the company said. That proportion was up from about 9% in the same period last year. Total sales growth in the quarter - 23% - was the company's strongest in nearly 20 years, it said.

  • Sources: Wall Street Journal, CNBC, Atlanta Journal Constitution and HomeWorld Business
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    Imex laser series updated

    Webinar series

    The leading construction laser now comes with a spare lithium battery as standard and first web-based laser level training

    The 2020 model iSeries rotary lasers from Imex have improved their serviceability and efficiency. A spare lithium battery now comes with every model, which increases productivity and adds extra value to the kit.

    A new battery cover clip makes it easier to open and close the battery compartment and the USB charging port in the front of the laser has been removed to provide better moisture protection.

    The lighthouse cover has also been given a makeover with slightly more height and ribbing for extra shock proofing integrity.

    This range features five models and has become a favourite with Australia's tradies, with the standard mm reading detector, lithium long run power sourcing, high accuracy and 5-year warranty.

    Online training

    With COVID-19 restrictions currently enforced in major areas of the country, the Imex team has developed new ways of conducting sales and product training for its customers. Its webinars are designed to help store staff and their customers know which laser to use for which task, and the functions and features of Imex products.

    The series of six weekly webinars conducted in June have now been made available on the Imex website and via its YouTube channel. They feature general laser level tips, informative answers to frequently asked questions as well as more in-depth information on individual models.

    Each webinar averages 15 minutes, is easy to listen to and conducted by Imex laser level experts who have years of industry experience.

    For more information, go to:

    Imex laser training webinars

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    Troubles in tool-land ahead?

    The ACCC watches over some big changes

    With the proposed Total Tools takeover, the acquisition of Adelaide Tools and Milwaukee tools in IHG stores, the power tool industry is set for some changes. But do those changes go far enough?

    Over the past nine months, there has been quite a bit of interest stirred up in the area of power tools here in Australia. Just back in October 2019, the Wesfarmers' owned Bunnings moved to acquire Adelaide Tools. Around about the same time, Stanley Black & Decker (SBD) Australia approached the Australian Competition & Consumer Commission (ACCC) with a request to make a minimum pricing requirement, but with a twist: retailers could sell DeWalt power tools below the recommended retail price (RRP), but they could not advertise them below that price. And finally, in June 2020, it turned out that Metcash has plans to go ahead and acquire the Australian power tools franchise Total Tools.

    All three of those moves had an intersection point with the ACCC. The ACCC in June gave the official "go ahead" to the Bunnings acquisition of Adelaide Tools. In the same month, they also completely nixed the SBD plan. And they have, as expected, launched an investigation into the not-quite-an-acquisition-yet of Total Tools.

    So many changes in such a short space of time would generally indicate that there are changes occurring that go beyond just one or two companies. Generally speaking, it means that something has shifted in terms of the underlying technology, markets and/or end-user distribution.

    In this case, it's likely that distribution is the primary driver. The real question the power tool industry has to respond to, is how much of the business will continue to be transacted in physical stores, and how much will become purely online. The tool industry is one of those areas of retail where there has been considerable movement in both directions. Sydney Tools, for example, expanded largely through its online business, then decided to expand into physical stores as well. However, it is arguable that many tool businesses will, in the future, see an increased amount of business done online.

    In terms of the Bunnings acquisition of Adelaide Tools, that business was one of the smaller, geographically marketed tool businesses that had a very competent and wide-ranging online tool offer. Though we have no direct knowledge of Bunnings' plans, if a company were looking for a company that could be expanded into a more extensive online offering of trade and professional tools (including Milwaukee), then Adelaide Tools would be a good place to start.

    It is also probable that SBD's efforts to get minimum price restrictions on advertised prices also relates directly to the internet. Competition online is so strong that companies can easily lose a sale on the basis of a few dollars in pricing. But, as HNN wrote at the time, it is also the internet that renders that kind of effort unworkable. Outside of direct advertising, it is not hard for retailers to get the word out about whatever their prices really are.

    With Total Tools, the two questions to ask are why the original founding members are willing to sell, and a why is Metcash/IHG willing to buy? At a guess, HNN would say that, strategically, the core or founding members decided Total Tools was close to its maximum value, and that it was vulnerable to online competitors. Meanwhile, IHG has a strong investment in physical stores, and sees itself as being able to resist online competition.

    Which way?

    From HNN's perspective, we would suggest that the power tool industry is somewhat overdue for disruption, but that it is unlikely this will come from anything as expected as online versus physical store retailing. In an age where technology has started moving so fast that consumers have almost become blase about the latest advances, power tools have continued to develop, but at nowhere near the pace of other technologies. There hasn't been a power tool equivalent of the modern smartphone, or the self-driving (almost) electric car.

    One reason for this is that the market remains largely driven by the business-oriented, trade and construction sector. We've seen most power tool manufacturers respond to that sector of the market by developing bigger, more powerful tools. These have grown so powerful that now they are replacing not only main-voltage, generator-driven tools, but also tools that have long relied on petrol engines. The trend started by SBD's FLEXVolt line, has been taken still further by Techtronic Industries (TTI) Milwaukee MX FUEL range.

    That's been partly driven by the adoption of new battery standards, specifically a move from the old 18650 format to the newer 21700/20700 format. The latter specifies a cylindrical battery that has a 21mm or 20mm radius and a 70mm length. Developed largely by Tesla, those battery dimensions make sense when it comes to battery physics, while the 18650 format was really just a convention, with inbuilt limitations and inefficiencies. The new dimensions, along with tweaks to anode and cathode composition materials, have enabled both smaller, more powerful battery packs, as well as higher capacity top-of-the-line batteries.

    We've also seen certain technologies, such as brushless motors, gradually make their way down from the premium level, to the mid-range. Today brushless has reached the premium budget range, where DIYers with an investment in a budget rechargeable battery system can "buy up" to something a little better. We're probably three years away from brushless becoming the "standard" tool.

    What is noticeable about these innovations is that they've been driven, indirectly, by pre-existing innovations in other areas of technology. Without the push to radically improve battery performance for smartphones, battery technology would never have reached the point it has today. And at some point, that technology was taken up by the electric car industry, which pushed it still further. Now, the next accelerator in that area is actually the aviation industry. There are already quite a few airplane prototypes that work just fine under battery power. However, few are commercially viable, due to weight versus power yield issues.

    The power tool industry has benefited from some advances made at the consumer end of technology, but it has applied these (mostly) to its commercial business. More importantly, power tool companies have tended to devalue developments that do originate in the consumer end of their businesses.

    There are likely a number of reasons that combine to create that situation. From the consumer side, it's difficult for people with little or no experience to commit to buying an "unusual" tool - they start out feeling uncertain, and anything perceived as being non-standard just increases that anxiety. There is also (for the most part) an inverse relation between how much DIY experience someone has and how powerful a tool they buy. More experienced DIYers, for example, might buy a cheap, corded hammer drill that will last 10+ years for drilling in masonry, and a lightweight 12-volt drill/driver for everything else. Inexperienced DIYers will tend to buy an 18-volt "do everything" cordless hammer drill - even if they end up using it for only two hours in total a year.

    The other factor at work is that consumers are quite happy to buy an inexpensive DIY tool, or sometimes a more expensive, "trade quality" tool. They are less inclined to buy an expensive DIY tool, especially one that is expensive because it has been designed to be easier and safer for them to use.

    The one company whose development is an exception to this has been Bosch. Bosch has been steadily producing tools really crafted for the DIY market since 2016. At the top of the list would have to be the EasyCut and AdvancedCut "micro chainsaw" tools. These use a small, flat blade that has the equivalent of a 1.5mm chainsaw to cut through a range of materials.

    HNN has been extensively testing these tools over the past year, and we remain impressed with them. While they do certainly have some drawbacks - the nanoblade remains expensive, at around $45 replacement cost, each - that is really made up for by the versatility and ease of use of these tools.

    One aspect of the nanoblade that seldom gets mentioned is that, as compared to both circular saws and standard jigsaws, they are relatively quiet. For the homeowner working away in their garage, that might not be terribly significant, but for the growing numbers of Australians living in multi-unit dwellings, keeping the DIY noise down has become a critical concern.

    Added to that are a range of Bosch drills, sanders, and grinders that are designed to match power and capability to DIY needs, while also enhancing ease of use. However, as good as these tools are, and as intelligently suited to DIY tasks as they are designed to be, sales have not really rewarded these innovations. For example, while Bunnings continues to supply nanoblades for the AdvancedCut and EasyCut, they no longer stock the actual tools.

    While there may be something of a marketing failure here, there is also the question of what kind of person typically sells power tools. Largely, these are not people who are amateur DIYers. Most have either a professional background, or are not overly involved with tools at all. The number of retailers and retail staff who are interested in the technological development of tools for DIY is quite limited - and not just in Australia.

    The new workshop

    It is very likely that the next real advances in power tools will originate in the consumer area. Probably those advances are not going to be anything the traditional tool companies acknowledge or take seriously (at first). The two most promising areas at the moment are 3D printing and computer numerically controlled (CNC) routing.

    One reason why HNN is pretty confident this is going to be an area of major interest is that the hardware needed to perform this kind of "making" has sharply reduced in price over the past two years. For example, in the 3D printing world, we've seen printers such as the Creality Ender 5 Pro emerge. This is a relatively large volume printer that moves good 3D printing just within the reach of the average DIYer, costing around $650.

    Moving up from that, to the more serious, high-quality work that a semi-pro could use, there is the Peopoly Phenom. The Phenom is a resin-based printer. Filament printers like the Ender 5 use a spool of filament to apply a thin layer of plastic, point by point, to build up a finished result. Resin-based printers use a vat of epoxy-based polymer resin into which they shine ultraviolet light, either through a laser or LCD array. The light causes the resin to fuse, creating the required shape.

    The resin printer offers faster printing speeds and higher resolution (more accurate printing). It's been held back largely by the cost, but the Phenom is one of the first $3000 printers to offer quality and reliability. While $3000 is a lot for DIY, it's likely to come down to around $1500 over the next two years, bringing it within reach of the serious DIYer.

    DIY what?

    From the point of view of conventional tool companies, and conventional retailers, the questions they have are: What will DIYers be doing with this technology, and why don't they just stick with wood and woodworking tools, or even a bit of welding?

    It's important to consider is just how successful some areas of retail outside of hardware have been. One of the traditional woodworking tasks, for example, was to build bookshelves. Leaving aside the fact that serious readers today are likely to have at least half their library in online ebooks, there are also just so many alternatives for inexpensive bookcases. The Billy bookcase from IKEA - all 2m x 0.8m of it - costs less than $80, and takes about 12 minutes to put together. The same relationship holds true for a whole range of other household furniture and fittings. Yes, there are some practical DIY things that remain viable - fitting a new door, fixing the roof gutters, painting, fencing and so forth - but the core range of activities is smaller, and continuing to diminish. What's left, for many, are just the relatively "big jobs": installing a new laminate floor, building a deck, fitting a kitchen.

    What can you do with 3D printing? Well, how about printing your own camera accessories - in fact, even entire film cameras?

    Goodman products are for anyone who has access to a 3D printer

    (Yeah, mate, best of luck with the lami trimmer, the jigsaw, and a bit of ply. I don't think so. I mean, good on you, but no, mate. Just no.)

    Looking for those special tiles, but not having much luck? Well, you can 3D print them, of course.

    How to 3D Print Portuguese Azulejo Tiles

    On the simpler end, what about a refrigerator storage box.

    Refrigerator Storage Box Fresh Spacer - Cults 3D

    Or a wallet:

    Sliding 3D printed wallet by b03tz - Thingiverse

    And something we could all use, a self-watering planter:

    3D printer model Self-Watering Planter - Cults 3D

    In terms of a CNC router, why go small, when you can build yourself an entire Le Corbusier LC-4 chaise longue out of plywood?

    CNC plans for LC4 lounge armchair by Le Corbusier - Etsy

    But what is really interesting in this field is the potential for more wide-spread use in the future. Consider, for example, spectacle (glasses) frames. Given a developed, standard lens size system, it would be possible print a wide range of frames that fitted the maker's face exactly. They would not be as durable as commercial frames, but they wouldn't need to be.

    In today's world, these are often the sorts of things that people want to make for themselves. And just as woodworkers of old relied on what they learned in workshop at school, and through working with their parents, these tools rely on what people know about design, computers, and a bit of trigonometry. It's the DIY of the service industries, not the factories.


    As we've said above, there really does not seem much of an alternative to a strong disruption of the DIY hardware industry at some stage over the next 10 years - though HNN would bank on this happening within the next five to six years. The threat to the hardware industry isn't that its markets are going to collapse - people always need a place to live, and the importance of that place has been growing over the past 30 years. The threat is that hardware suppliers and retailers will find themselves displaced in the market. At the moment, it is simply difficult to imagine buying a Ryobi CNC router, or a Stanley Black & Decker 3D printer.

    What we will likely find instead happening is that startups will begin to take over significant portions of the market - like Tesla - integrating with others in their area, such as smartphone makers, and eventually shouldering many tool companies out of the home market.

    Strategically, due to the complexity of this market, this isn't the case of waiting for the right moment to "catch the wave". That moment was yesterday, or some time ago. But, as always, businesses (especially in hardware) tend to look at their current circumstances as an indicator of the future, when in fact where we are today has more to do with the past.


    ABS stats show pandemic effect

    ABS has released stats for retail sales and building approvals in May 2020

    The latest statistical release from the ABS provides a more complete overview of the most critical four months (so far) of the Sars-Cov-2 pandemic

    The Australian Bureau of Statistics has released statistics for retail sales through to May 2020, as well as building approvals through to May 2020.

    Revenue Statistics

    Chart 1 shows the sales for hardware retail in the trailing 12 months to May for each year. (Note that the ABS has not been able to obtain data for some states and territories, so these have been omitted.) The results for hardware retail sales are much in line with expectations, with growth increasing sharply for most states. Overall growth for Australia was 7.81%. The ACT recorded growth of 11.52% with VIC at 9.90% and WA at 9.30%. SA grew by just over 8%, and NSW recorded growth of 6.16%.

    Chart 2 shows the growth in sales for the same trailing 12-month period. This shows that even though the growth rates for the year period were high, they are not exceptional.

    Chart 3 shows a different data picture. This charts the revenue between the months of February and May, and it shows a marked, sharp increase in the revenues during 2020.

    Chart 4 shows how that revenue was distributed through the peak months of March, April and May. While there was only a minor boost in March, April 2020 as contrasted to April 2019 lifted by 5.3%, and May 2020 was up by a considerable 8.8%.

    Chart 5 shows the share of the revenues across the same interval, for 2019 and 2020. It's evident that, while the revenues have increased, the proportion between the states has stayed the same.

    Building Approvals

    While retail shows an increase as the pandemic takes hold, building approvals - which indicate the future of the construction industry - did fall in May 2020 as compared to May 2019, with most of those falls for multi-unit dwellings. Approvals for detached houses held steady.

    Chart 6 shows the approvals for major metropolitan regions across the states. Sydney, which is the market where multi-dwelling and single dwellings are the most integrated, showed an ongoing steep fall in multi-dwellings, while house approvals stabilised. Melbourne - surprisingly - showed mild increases for both multi-dwellings and houses. Brisbane and Perth showed relatively stable numbers in house approvals, and a decline in multi-dwelling. Adelaide, like Melbourne, showed a mild improvement in both houses and multi-dwelling, though the multi-dwelling improvement followed a steep decline in 2019.

    Chart 7 shows how the approvals were distributed across the four pandemic months Australia-wide. Approvals were already in decline through the first half of 2019, and this was continued into 2020. March shows the sharpest decline, but this is compensated for by a more optimistic April. However, May then reverted to caution.


    The concern that many hardware retailers have expressed is that while the early months of the pandemic might have seen sales surge, the future could see a recession - or even a depression - take hold of Australia, resulting in a slide in sales. The May figures are heartening, but it will likely be the figures for August and September that will have the most significance.

    With Victoria finding itself impelled back into "lockdown" as the never-contained virus surges again, the prospects of there being no recovery until a vaccine is found, and/or rapid treatment of COVID-19 is developed, seem high.

    It is evident that at the moment the property development and construction industries are banking on conditions being somewhat unchanged from those of 2019. (The largest recent impact was the slowdown that happened in 2018.) This is likely due to the balance of circumstances: economic prospects have declined, but interest rates are currently at a historic low, and are likely to continue at that low for at least another two years. Of course, being able to take advantage of those rates will depend on an economic recovery, and there are some real question marks over when, or even if (in the medium term) we will have such a recovery.

    We're approaching a stage, in fact, where Australia may have to choose between a severe recession, if it follows the guidance to lockdown, socially distance and protect the health of everyone, or, should it choose to try to restart the economy anytime during 2020, plunge into a full-blown depression, where deflation takes hold.

    In the end however, if Australia does begin to emerge from the pandemic in the second half of 2021, the economy is likely to have very different characteristics.


    Bunnings drops VicForests wood products

    The retailer will stop selling timber logged by VicForests

    The timber company was found to have broken environmental laws by cutting down trees in endangered possum habitats

    Bunnings said it will no longer sell timber logged by VicForests in the light of a federal court ruling that it had breached laws protecting threatened species including the greater glider and the Leadbeater's possum. Bunnings' director of merchandise, Phil Bishop, said in a statement to The Guardian:

    Bunnings has a zero-tolerance approach to illegally logged timber that dates back two decades and our commitment is to only source timber products from legal and well managed forest operations.

    Bunnings said it will only source legal timber from sustainable operations as it ends its timber supply contract with the state-owned logging agency.

    VicForests was found to have broken the law in May, when the court found in favour of a community environment group - Friends of Leadbeater's Possum - that argued the agency breached the law by failing to protect the endangered Leadbeater's possum when it logged 66 sites designated for logging in the Central Highlands. It found that because VicForests had breached the code of practice, its exemption from national environment laws did not apply. Mr Bishop said:

    We will be discontinuing all sourcing of timber from VicForests and will no longer be accepting raw material input into our supply chain from VicForests as of 30 June.
    Ultimately, we believe that customers and team members have the right to expect that the timber they purchase is sourced from responsible and lawful forestry operations.

    Bunnings said it sold only a small portion of VicForests' harvest but it would work with affected suppliers on a transition plan. That would include buying any timber already processed by the affected suppliers and discussing whether those suppliers could obtain timber from alternative sources.

    Sources of timber

    The decision by Bunnings to not stock VicForest timber products due to illegal logging would seem to point to a significant change in the industry. There has been a shift from supporting timber operations in remote locations, to preserving forests for future generations (climate change, etc). HNN spoke to Jacinta Colley, national sales director at VIDA Wood Australia to comment on the following questions.

    Q1. This shift indicates that consumers, both private and corporate, are becoming less concerned about country-of-origin (ie, Australian-produced), and more concerned about the ethics and sustainability of the timber supply. How does Vida Wood Australian ensure its timber supply is ethically sourced, and what are some of the advantages this offers to your customers?

    Sustainability, tractility and the carbon footprint have become the most important topics in our industry. Australia quite rightly introduced a system where suppliers, depending on the country of origin, need to full fill certain criteria when entering Australia with their timber products.
    Our countries of operation are Sweden and Canada, known for its political and juridical stability and their long history of well managed forests - all our operations are PEFC and FSC certified.

    Q2. In terms of supply, how has the current pandemic affected your sourcing of timber, and the logistics of getting it to Australia?

    Given the magnitude of this pandemic, our operations and logistics have managed to supply our customers all over the globe with only minor interruptions. At this stage, we do not foresee any bigger problems either, however some challenges remain.

    Q3. What do you see happening in terms of timber demand over the next two years? Do you think that, in net terms, there will be a reduction in demand, or more a redistribution of demand, with FY2020/21 lagging but FY2021/22 compensating?

    Globally, without COVID-19, demand would have outstripped supply already in March this year. Timber is now finally recognised as a main contributor to reduce the CO2 footprint in new constructions. New building solutions like CLT, other engineered wood products and pre-manufactured trusses and wall elements are experiencing strong growth especially in Europe but also starting to grow in North America.
    The huge advantages of timber over other building materials are finally reaching all corners of the European, North American and Australian building industry - multi-storage buildings and wooden sky scrapers are becoming a common sight - this in return will boost our industry further.
    The long-term trend is crystal clear - more timber will be used and we believe in a further growth in demand over the next two years globally - but as always it will never be a straight line and will vary from country to country.
    The current increase in demand for timber products in North America and Western Europe is a very good example. Only two months ago we thought "the world had come to an end" and we had to temporarily close a couple of mills, just to see today that all our mills are in full swing (total capacity of 11 million CBM output per year) and are sold out until August and parts of September. [These are] interesting, unprecedent and uncharted times.


    VicForests labelled Bunnings' move as "extraordinary" and warned Victorian communities that relied on timber work for jobs and income would be devastated. A spokesman for VicForests told The Guardian:

    VicForests has already advised our customers that we will be appealing the Friends of the Leadbeater's Possum court decision, once final orders are made by the court.
    We regrow all harvested coupes with their original species, all timber harvesting and regeneration operations are conducted to conform with Victoria's strict environmental regulations."

    Gippsland East MP Tim Bull also condemned Bunnings management, saying the decision would cost jobs and that it pre-empted VicForests' court challenge. He told The Age:

    This woeful decision from Bunnings could not have come at a worse time. Our communities have been impacted by drought, fire and now COVID-19 and the local economy is really struggling.
    For Bunnings management to come in on the back of that and make this announcement shows no understanding of our plight. I want to stress this is not about the staff on the ground in local stores. I have several friends who work at Bunnings in Bairnsdale; this is purely a criticism of management.

    Victoria plans to end native forest logging by 2030, but Amelia Young from the Wilderness Society believes support for workers needs to be made available now. She told ABC News:

    The market is clearly rejecting products supplied by VicForests so the state government needs to work with VicForests and workers in the industry to make sure that workers facing inevitable change are supported through this transition.

    While Bunnings is not a major retailer of VicForests products, it is a symbolic blow for the industry due to the company's high profile. Mr Bishop confirmed Bunnings would continue to source native timber from Tasmania, NSW, Queensland and Western Australia, all of which he said met Bunnings' policy requirement of legal, well-managed and responsible operations.

    He also said Bunnings would "remain open to sourcing from VicForests in the future", should they attain Forest Stewardship Council Certification and avoid breaching the code.

    Sourced from The Guardian Australia, ABC News and The Age


    Mitre 10 store planned for Hobart CBD

    Clennett's Mitre 10 has signed a lease agreement

    The company said the development would fill the void left by the demise of K&D, which closed its final store earlier this year

    A new inner-city hardware store located in Hobart (TAS) is expected to open in 2021.

    The Mercury reports that Clennett's Mitre 10 has earmarked a site for a development which will cater for both retail and trade customers. Managing director William Clennett said he signed a heads-of-agreement with the landlord and hoped to have lease negotiations finalised by the end of July.

    The new site is 3900sqm with 1000sqm of retail space, a 2000sqm trade centre and off-street parking for 40 cars. The initial investment will be $2 million, with a further $4 million expected to be spent in the next 10 years.

    The development still needs to gain council approval, but he is hopeful the store will open on April 1 next year. The new store would operate in addition to Mr Clennett's stores in Kingston, Huonville, Glenorchy and Mornington.

    Bunnings has stores at Kingston, Glenorchy and Mornington. Mr Clennett told The Mercury:

    The Clennett's business is set up to really dominate within the building products market, but we have also targeted retail categories where we believe we can offer a more specialised service such as power tools, paint, garden and bathroom goods.
    We've also deliberately tried to partner with big brands such as Wattyl paints, Milwaukee, Stihl and Webber, all brands which Bunnings don't supply. We are really focused on supplying quality products, and I think customers are trending back that way.
    I think the market is changing, and people are becoming more socially and environmentally conscious, and I think buying local is a natural extension of that.

    He also believes the CBD store would add a new level of convenience for shoppers living and working in Hobart, while a free home delivery service can also give Mitre 10 a point of difference.

    Meanwhile, Mr Clennett's Kingston business is undergoing an $800,000 expansion, with a new sand and soil yard being developed on the former Kingston Landscape Centre site in Mertonvale Circuit. It is approximately 500 metres from the existing hardware store in Huntingfield Drive.

    Mr Clennett has taken ownership of the landscape centre and signed a 20-year lease on the site, which is closed for four to eight weeks while existing buildings and amenities are demolished. The expansion aims to ease traffic congestion and provide more space for shoppers.

    Mr Clennett also hopes to redevelop a corner of the existing Mitre 10 site in the next couple of years to incorporate bulky goods tenants, which could include automotive, lighting or other specialist offerings to complement services already provided by the retail business.

    Sourced from The Mercury


    Bunnings expands categories through MarketLink

    Rattan furniture collection and indoor plant

    The popular air fryer appliance is also being sold by Bunnings, following stockouts at Aldi and Coles

    Home cooking in the era of COVID-19 lockdowns has helped fuel the popularity of the air fryer and Bunnings has quickly responded to this trend by stocking the appliance through its MarketLink channel. Prior to this, Coles and Aldi released their own versions but sold out quickly, frustrating customers. It has also been reported that Kmart is struggling to keep them in stock.

    For many people, the product first appeared en masse as part of Aldi's Special Buys that led to their increasing demand. Soon after, Coles added the appliance to its Best Buys range.

    Unlike the supermarkets, Bunnings is offering a range of air fryers from known brands like Philips and Tefal.

    Scandi-style designs

    Earlier this year, Bunnings released a rattan furniture and homewares range that includes a lounge set, dining table, chairs, bar stools, foot stools, coffee table, chairs and other pieces.

    Social media influencers such as @thediydecorator and @addicted_to_bargains have shared and created awareness of the collection with their combined 300K+ followers.

    The range of chairs are supplied by Home Bazar. The brand began stocking its sustainably sourced products at Bunnings in April 2020.

    Fiddle leaf plants

    A post on a Facebook group dedicated to indoor plants - Crazy Indoor Plant People Australia - has also helped increase sales of the Fiddle-Leaf Fig plant after a user mentioned it was being sold through Bunnings at the budget-friendly price of less than $4.

    Fiddle leaf figs are a current favourite with gardening fans around Australia, and generally retails for $19.98 but can go up to $200 depending on its size.

    The Facebook post quickly generated over 100 comments, with many members saying they would be heading to a Bunnings store to buy the plant.

    Recent research commissioned by Bunnings found 64% of people surveyed were tackling DIY once a month and two in five were planning on sprucing up their gardens. Bunnings national greenlife buyer Alex Newman told News Limited newspapers:

    We've seen an increase in popularity across all plant types over the past few months. Our customers are tackling everything in the garden from growing their own food to updating their garden landscapes, as well as adding greenery inside their homes with indoor plants.

    Related: Bunnings has increased its selection of furniture and homewares over the past few years. And in a relentlessly competitive retail environment, the homewares category is popular among shoppers.

    Homewares, the next retail battleground? - HI News, page 32

    The COVID-19 economic climate has also led Bunnings to offer products such as treadmills and exercise bikes.

    Pandemic opens up new and different markets - HI News, page 22

    Sourced from The Daily Mail, and Seven News


    Brennan's rebadged as Petries Mitre 10 Dubbo

    Changing of the guard

    After more than 40 years in operation in Dubbo, Brennan's Mitre 10 has been sold to Mudgee-based Petrie Group

    The new owners of Brennan's Mitre 10 have relaunched the store as Petrie's Mitre 10 in its Dubbo (NSW) location with a member of the Petrie family at the helm. The Petrie Group has taken ownership of the store after an initial delay as a result of the COVID-19 pandemic from the original March 30 timeframe.

    Brad Petrie, son of managing director Phillip Petrie, is excited to be the manager of the store after three years' experience at the group's Port Macquarie store. He told the Daily Liberal:

    [I was] service replenishment manager at Port Macquarie, and looked after a team of 12 to 14 people. So this is still a step up.

    He said Port Macquarie was a "trade-predominant store" whereas Dubbo was "predominantly retail".

    Since the sale was announced in March, the Petrie Group has consistently said its approach would be "business as usual", including retaining the Brennan's staff of about 40 people.

    Not surprisingly, the final days of ownership of the Brennan's managing director Michael Brennan and his family were emotional. However he told the Daily Liberal it was the "right time for Brennan's to pass it on to Petries".

    The two families have known each other for decades, and Mr Brennan said they both had the ideology of "service and being local and regional and a major part of the group we're in". He said:

    So I feel very proud to hand it over to them, I really do.

    The Petrie Group now has nine stores in its network with the inclusion of the Brennan's store in Dubbo. Mudgee-based Petrie Group managing director Phillip Petrie said the family business was looking forward to being part of Dubbo. He told the Daily Liberal:

    The challenge is to follow in the footsteps and maintain the standards that the Brennan family have kept here for a long time, and they're held in high regard.
    We want to make sure we continue to be held in the same regard, and to run the business to the standards, and look for ways that we can even improve the offer over time. But yes, I suppose continuation and consistency is the most important thing for us.

    Mr Petrie also said a major challenge is combatting the quantity of scale from big box retailers by ensuring customers get personal and informed service.

    For starters you need a lot of energy and you need great people and our business has built itself on building long term relationships with our staff, our customers and our suppliers. When we build those relationships, it makes it a really strong business and people come back to us again and again...

    He praised the Brennan's model which placed a priority on staff who are friendly, who want to help and who know what they're talking about. He said:

    Long term staff, they know their product, they know their customers and they genuinely want to help people solve their problems, it's not just a number coming through the door, they'll know your name, they'll find a solution for you - they'll be part of your solution for the problems you're trying to solve.

    Petrie's Mitre 10 was established in 1986 as a result of the sale of Lonergan's - a well-known local business - to Malcolm and Carmel Petrie. Current directors, Phillip and Annette Petrie and Mike and Annette Fergus took the reins in 2009.

    Michael Brennan looks back

    Mr Brennan spoke extensively to Dubbo Photo News about managing the retail business and his family history in Dubbo. Here are some of his most interesting quotes and responses to its questions.

    He regards his father Frank as one of the pioneers of "big box" retailing and believes he has "learnt and inherited much of his tenacity and thinking". When discussing the emphasis he placed on friendly and informed service, he said:

    There is one thing about small, local business being that you work beside your team each and every day, you share each other's dreams, desires and lives in the same community. 'Big business' cannot do this. We have always had long-serving, caring, involved staff. The reason would be that certain people click with our style and share what we believe in. We live each other's lives each and every day, we want to treat people as we would want to be treated.

    When referring to some of his biggest challenges, Mr Brennan said:

    Honestly, the single stand out item would be the regulation that come from governments. A business of this size and smaller has an inordinate amount of pressure put on it, it becomes cost restrictive and they're so time wasting. An example would be the single touch payroll and superannuation reporting that each employer has to undertake now.
    The second that comes to mind would be the reduction in prices of products due to Chinese manufacturing. So much more effort has to be undertaken to sell a product that 20 years ago in some instances, was double the price. Yes, we sell more, but the cost to serve is greater.
    I recall selling cheap electric drills, such as the Skill brand back in the eighties for $99, nowadays a cheap drill can be around the $20 to $30 mark.
    The third challenge has been seven-day a week trading. I'll speak my personal mind here. The world expects retailing to be open 24/7 but at the same time do not want to pay for it, it expects retail staff to give up their lives to provide a service to Monday to Friday workers yet they do not want to pay any more for the increased costs of staff working those weekend hours.
    I feel for the employees and do believe they are entitled to increased rates on weekends, I understand why consumers want seven-day trading, but I know from being a retailer that it is incredibly unfair to them due to the cost to serve. An offshoot of that is buying on the internet which forces retail to maintain seven-days a week trading.

    When asked about why the family decided it was time to sell the store, he said:

    There is no single answer to this question, it is merely the right time. I have a list of probably 20 key points that lead to the decision. Time of life both me, my parents and five sisters, no family succession due to having no children myself and sisters all out of Dubbo. A business this size is difficult to sell, and the timing was right for the purchases by the Petries. Profitability for this style of business is tough, desire to have freedom from a lifelong career in order to try something different, government and statutory regulation is becoming overbearing, and the list goes on.

    Mr Brennan remains very optimistic about the future. He said:

    We continue to own the buildings of Mitre 10 in Dubbo plus the building of an about to be announced new retail business. We won't be front-line, but we are still a major part of the main street of the city.
    Bev and Frank will continue their retirement with much time spent on the golf course and involved with different groups. My wife and I will increase our effort in our couple of properties and at some point I'll probably look for some supplementary income but what that looks like is too early to speculate.

    Related: The sale of Brennan's Mitre 10 was initially postponed amid the coronavirus outbreak.

    Brennan's ownership change is delayed - HI News, page 32

    Sourced from the Daily Liberal and Macquarie Advocate and Dubbo Photo News


    Regional communities gain $150K from paint charity

    Taubmans collaborated with online charity GIVIT

    The "In It Together" campaign delivered more than its set goal of $120,000 for communities in need

    Taubmans paint brand - owned by PPG Industries - worked with national online charity GIVIT to help raise $150,000 from DIYers in isolation and professional painters to support regional communities in need after recent bushfires, prolonged drought, floods and now COVID-19.

    GIVIT CEO, Sarah Tennant, said the funds will allow GIVIT to purchase many more essential items to best support people in need, from parched outback farms to bushfire-affected East Gippsland. She told The Tenterfield Star:

    Whether it's hardware items and water tanks for a drought-stricken farming community, or supermarket and clothing vouchers for rural families in need, we will put the donated funds to work to make an immediate and positive difference.
    We also buy locally, wherever possible, to help stimulate the recovery of regional economies, ensuring the impact from every single generous donor is widespread.

    Anne Neeson, Taubmans general manager, PPG architectural coatings - AUS and NZ, thanked all the DIYers and professional painters who supported the donation by choosing to paint with Taubmans.

    And thank you to Bunnings, Bristol and our independent retail partners who came on board, despite the challenging economic climate. Your support for the program will make a difference to the lives of many in our regional and rural communities.

    GIVIT works with more than 3400 charity partners on the ground throughout Australia to match the donation of goods with the individual and specific needs of recipients.

    The "In It Together" campaign follows PPG's $98,437 donation in February to the Australian Red Cross Disaster Relief and Recovery fund, which included employee donations matched dollar for dollar by the company.

    Related: The campaign ended on 20 June.

    Paint charity benefits regions - HNN

    Sourced from The Tenterfield Star


    Global trade shows cancel 2020 events

    spoga+gafa announces new date

    National Hardware Show(r) calls off re-scheduled September event with a virtual show to be announced later in the year

    The next spoga+gafa (garden) trade fair in Cologne, Germany will be held from 30 May to 1 June 2021. Organiser, Koelnmesse responded to requests from the industry, and moved the event to next year.

    Registrations for the September 2020 event increasingly came to reflect the ongoing concerns regarding COVID-19 especially the uncertainty of international travel. Despite the precautions being implemented, a majority of exhibitors and visitors decided not to attend spoga+gafa.

    For these main reasons, Koelnmesse rescheduled the 2020 spoga+gafa. Chief operating officer, Oliver Frese said:

    The aim of our conversations with the industry is to work together to give a strong trade fair a chance to gain even more strength and market relevance. The focus here is on the ordering [purchasing] behaviour seen in many parts of the industry, which has evolved over the years.

    NHS moves to 2021

    Over the last few months, the US-based National Hardware Show (NHS) has been closely monitoring the COVID-19 pandemic and its impact on members of the hardware and home improvement community. Originally slated to open its doors in May, the event was postponed to September. However, as it continues to make the safety of people its top concern, it has made the difficult decision to cancel the 2020 event.

    Instead of an in-person experience, NHS plans to host a virtual trade show dedicated to providing education and support that recognises and addresses the needs of the hardware industry. Randy Field, group vice president, Reed Exhibitions, said:

    The hardware industry has been greatly impacted by the global pandemic and hundreds of our international exhibitors have been forced to cancel their plans to participate in NHS due to market conditions and continued travel restrictions.
    At the NHS we pride ourselves on being the leading industry gathering place and while we recognise and appreciate how important the show is to the community, we believe it is the right decision to transition it to a virtual experience for 2020.
    Following the May postponement, we prioritised making NHS Connects the place for the hardware and home improvement community to come together to source information. It will soon be where connections, direct appointment setting, and virtual product showcases will debut.
    We will also be adding a virtual tradeshow component to this digital platform that enables networking and we look forward to utilising that platform to allow business to continue. We seek to encourage attendees, exhibitors and all of the NHS community to explore the platform and utilise it until we meet again in person in 2021.

    Rich Russo, industry vice president, NHS said:

    We are re-imagining the entire physical trade show, so look forward to new initiatives, new pavilions ... and a complete transformation of NHS for 2021.

    Effects of COVID-19 on Australian business

    ABS releases June 5676.0.55 series

    Retail shows it has been strongly affected, while construction sees future supply prices increasing. The pandemic is also affecting how customers pay, with a move away from cash.

    The Australian Bureau of Statistics (ABS) continues to detail the plight of Australian business in its 5706 series. According to the ABS summary for the release:

    The collection was conducted through a telephone survey between 10 June and 17 June 2020, with a sample size of 2,000 businesses. The final response rate was 72% (1,431 responding businesses).

    Chart 1 shows the operating status of businesses. As it illustrates, retail has one of the higher rates of modification for its business processes, at 88%, while construction has been less affected at under 60%.

    Chart 2 details what some of those modifications have been. For these three industries, retail has exceeded the other two industries, except in areas relating to staff, reporting fewer changes to staff roles, and fewer general workplace changes than the wholesale industry.

    The three areas where retail is far ahead of the others is in a change in the types of products sold, change in operating hours, and, especially, a change in the way payments are accepted.

    Chart 3 shows the change in revenue for the reported period compared to the previous period. In these three industries, retail leads for both the number of businesses reporting a decrease, and the number reporting an increase in revenue, which indicates how volatile the industry has become.

    Chart 4 shows just how severe those decreases in revenue have been. Retail leads the decline in both the under 25% level and the 50% to 75% level. Wholesale, however, has sustained significant losses in the 25% to 50% level.

    Chart 5 shows the estimates businesses make for how long they can survive in their current cash situation. Both construction and retail indicate some fragility, with close to a third of businesses not able to survive beyond three months under current conditions.

    Wholesalers seem to be more confident, with nearly half confident of surviving beyond six months, versus around a third in both construction and retail. It is worth noting also that 22% of construction businesses remain uncertain about their future, while only 8% of retail businesses say they don't know what will happen.

    Chart 6 shows the current conditions as compared to expected future conditions for retail, construction and wholesale. The top chart shows that the main expected change for retailers is an increase in supply costs accompanied with a decrease in supply levels.

    In the middle chart, for construction, that is echoed with both increased supply costs and decreased supply levels a problem. Added to that is an expected increase in staff shortages. Interestingly, however, local demand for construction is expected to continue at its current level.

    In the bottom chart, for wholesalers, there is an expectation that more businesses will be affected, and that staff shortages will also create difficulties.


    For hardware retailers looking at these numbers, it is pretty evident that businesses do not expect that much change to happen over the next six months. With 60% of retail businesses expecting to fail before September 2020, it is a very glum picture. Most retailers, especially in hardware, are strategising to just make it through to the end of the year, with the hope that either a vaccine or effective treatment will have emerged by then.

    One aspect of this data that is worth going into somewhat is the high level of changed payment types the retail industry has seen arise. This change has not escaped the attention of the Reserve Bank of Australia (RBA). Speaking at a 3 June online event hosted by stock analysts Morgan Stanley, the RBA's assistant governor (financial system) Michele Bullock sketched out what is happening with payments, and the effect the pandemic has had.

    In her opening remarks, Ms Bullock noted:

    Today I want to address the potential implications of COVID-19 for the payments system. While we have until now been thinking about disruption to the payments system mostly in terms of the entry of new technologically enabled service providers, the abrupt changes in payment preferences induced by the health crisis could be a similarly disruptive force. The extent to which it is will depend on whether the changes in behaviour are temporary or permanent.

    She noted that up until recently, disruption was expected to originate with fintech and "big tech" companies. Though, as she illustrated with Chart 7, while awareness of alternative payment methods is relatively high, take up and usage lags significantly. She also commented that cash remained an important means of payment:

    Our most recent consumer payments survey conducted late last year showed that there were still around 25 per cent of consumer payments undertaken using cash, accounting for around 10 per cent of the value of transactions. And while a third of survey respondents did not use cash for any payments, around 10 per cent used cash for all their payments. Cash users tended to be older or people on lower incomes.

    However, Ms Bullock confirmed, the pandemic has changed altered the cash/alternative balance. Many retailers all but ceased accepting cash, aided by a majority of consumers who also saw physical money as a potential vector of infection – filthy lucre, indeed. As she stated:

    As a result of these changes, ATM withdrawals in April were down 30% from the month before and over 40% lower than twelve months earlier.

    The shift was aided by payment vendors lifting the limit on contactless payments from $100 to $200. And there has also been, of course, a shift to online shopping.

    One of the most interesting points that Ms Bullock made was the threat to merchants from the continued move away from cash, as cash provided a form of competitive pressure on the payments market.

    While cash is not costless for merchants to accept, it does provide some competitive pressure on the cost of payments more broadly. So as cash use declines, it is even more important than ever that we ensure competitive pressure remains on the costs of electronic payments to merchants.

    However, she also sees there being additional forces to keep the competitive pressure on payment providers. One is the use of surcharging, which though merchants may not necessarily implement, remains a potent threat. The other major force is, of course, the use of least-cost routing. As she explained:

    Least-cost routing puts some power into the hands of merchants by providing them the ability to route a dual-network debit card transaction through the network that costs them the least to accept. In Australia, for many merchants, this is the eftpos network.
    The evidence is that the growing availability of least-cost routing has increased competition among card schemes through reductions in interchange fees, and this has resulted in a lower cost of acceptance for card payments for some merchants.

    One of the concerns that emerges from an increased reliance on payment systems is how fragile these may be. The RBA in association with the Australian Prudential Regulatory Authority (APRA) is making changes to help ensure stable operations in the future.

    The Bank has already been working with the industry and APRA to develop a set of standard operational performance statistics to be disclosed by individual institutions. The proposed disclosures are intended to focus the minds of banks' executives and directors and ensure that appropriate attention is paid to the reliability of their retail payment services. They will also provide customers with transparency about the operational performance of different institutions. While this work is being delayed a bit by the competing operational priorities created by the current circumstances, it has become even more important.

    For the hardware retail industry, the decline of cash transactions might have far-reaching consequences. While merchants are generally happy to not have to directly handle cash, due both to the need to closely monitor new staff and the general risks associated with cash (including physical loss, robbery, and forgery), cash has long played a particular role in hardware.

    Most hardware merchants are aware that the "black economy" is alive and well, and that some tradies seek to have their income paid in cash. As electronic payments grow, there could be an increase in enforcement, and cash transactions might be more closely monitored by the Australian Taxation Office.

    Equally, however, with electronic money gaining in popularity, consumers might become more open to the use of more exotic forms of payment, in particular Ethereum. Like Bitcoin, Ethereum is a self-regulating currency, but unlike Bitcoin, its aim is not to be a speculative system of exchange, but a kind of "active" money that enables users to formulate simple, effective contracts, with Ethereum acting as a kind of escrow account to help enforce requirements.


    Increasingly when we look at what is happening in the economy and in the hardware retail industry as a response to the pandemic, there will be a pattern of businesses that attempt to resist change failing, and those that embrace change at least finding some way to survive.

    The changing use of currency is a great example of this. The kinds of changes we expected in another five or six years - the decline of branch services, reduction in the number of ATMs, and a shift to online banking - is happening right now. That will have unexpected, far reaching consequences for all types of retailers. For example, some retailers may be unwittingly reliant on customer foot traffic generated by a nearby bank. When that stops, and the bank relocates to a cheaper location, will they then work out how to leverage the interest in that bank's website to drive traffic to their own website?


    Gunna-Do Hardware on the market

    Business is for sale after 37 years

    It marks the end of an era as the store's owners, the Murphy family put it up for sale

    Queensland-based Gunna-Do Hardware located in Allenstown, a suburb of Rockhampton, will have new owners after Pat and Judy Murphy and their daughters, Natasha Murphy and Nikki McCaul put the business up for sale. The family have owned it for almost four decades.

    The business under its ownership will come to an end as Pat and Judy look to retire permanently and Natasha and Nikki move in different directions. As the family representative, Natasha said they would like to see another family take on the store. She told The Morning Bulletin:

    I know times are tough but it has been an amazing journey for our family and we are hoping another family might be interested.

    After 37 years, Natasha said it would be sad to finish up and say goodbye to customers, many of whom they have gotten to closely know over the years. Reflecting on how the store has developed over the years, Natasha said technology had come a long way. She said:

    The transition of going from pen and paper to add up stock and going to computerised. The accounting system's gone from doing little paper things at the end of the month, now it's just emailed out.

    She also believes the perception of females in the hardware industry has also changed. Natasha and Nikki would often find that customers would see them but ask to speak to their Dad. Most of the time, Pat would still get his daughters to serve the them anyway because they knew what the customer was after. He said:

    The attitude of males has evolved. Women themselves are doing a lot more these days, they are not hesitant to swing a hammer, they are in there earning themselves.

    Part of the store's survival can also be attributed to the loyal and competent staff they have had over the years. Natasha paid particular mention to current staff members Pete, Joe and Lachlan. She said:

    They are the backbone of our success for being here so long. We have had many staff that have gone on to bigger and better things, apprenticeships, navy men, army men, architects, teachers, and they all started as weekend juniors.

    Sourced from The Morning Bulletin


    Grant boost for small town nursery

    Primary producer designation

    Perseverance and recent warm weather have helped the owners to increase production

    Parkland Nursery, based in Tinonee, near Taree on the mid-north coast of New South Wales, is a state-wide supplier for Bunnings.

    Owners Leah and Bernard Hunt have experienced firsthand the brutal impacts of Mother Nature in the past year through drought and a devastating bushfire in November 2019 that destroyed infrastructure and some plants.

    Now more than six months later, the business is well on the road to recovery. To get them back on their feet, the Hunts purchased a new potting machine with a $75,000 state government grant.

    Bernard Hunt told The Manning River Times the installation of the machine "was the turning point". He said:

    We still have a lot to outlay but that gives you the starting block to go. It's amazing having the backing of the state and federal representatives.
    They've been ringing up and backing us right through saying, 'You've got to keep going'. It was a springboard to go 'Okay they're backing us so we're going'.

    Leah Hunt said the grant ensured they could stay in business. She adds:

    When we were looking at it, we thought do we take out loans to replace the machinery? At our age we thought we wouldn't do it. With that grant, it was enough to say, yes we can still do this.

    Member for Myall Lakes Stephen Bromhead said he was happy to help arrange the grant despite some initial issues.

    Parkland Nursery wasn't entitled to it initially, some people said nurseries aren't primary producers but we were able to convince them they are. It means 10 full time jobs, they're able to stay open, compete with other nurseries and provide fantastic products.
    I take my hat off to these guys, the nursery was devastated by bushfires, they lost their stock sheds and machinery, but through that grant they've been able to keep going.

    About 20,000 pot plants are currently produced weekly through the machine. Mr Hunt said:

    Production had been stopped for months because of the drought. We were limping along for a year before the fire. We were smashed, all our infrastructure was burnt out but we only lost about 30% of our plants.
    We lost most of our machinery except for three machines and a sun sail. We just had to start again.

    The business managed to stay afloat and keep the team together by selling the unaffected stock. Working their way through drought, the Hunts thought they were prepared for any fire threat. Leah Hunt said:

    We were in the midst of one of the worst droughts we've ever had. There was no water in the dam and we had to close down some areas (of the nursery) because there was no water.
    We knew it was going to be a really severe fire season, you could see there was so much fuel around and so dry with a lack of water. We did a lot of work to get the property up to what we thought was fire proof but no it wasn't."

    With decent rainfall this year, the dam is back to capacity.

    Leah and Bernard have grown the nursery for more than 25 years.

    Sourced from The Manning River Times


    Lawn supplier gains Smart Approved WaterMark

    TifTuf Hybrid Bermuda turf

    Consumers can ensure their lawn is waterwise with the official recognition of the Smart Approved WaterMark

    Lawn Solutions Australia said it has become the first and only company in the world to have one of its turf grasses receive the Smart Approved WaterMark. It gained recognition for its TifTuf Hybrid Bermuda turf, which the company has been developing over the past six years. Scientific studies have proven TifTuf uses 38% less water than similar varieties.

    The Smart Approved WaterMark is a water-conscious certification provided to products so consumers can identify and access the most water-efficient products available on the market. It was established by the Water Services Association of Australia (WSAA), Irrigation Australia, the Nursery and Garden Industry Association and the Australian Water Association.

    Managing director Gavin Rogers told the South Coast Register how the business achieved the WaterMark accreditation. He explains:

    Five years ago we started applying for it, but it was 'no you don't have enough data'...We've invested more money in turf research than anyone else in the southern hemisphere - a huge private investment - we've imported 90 varieties of grass, testing what would be best suited to the Australian conditions...We've had more Australia data done over four years and it has finally gained the seal of approval...

    The team has put every variety of turf grass in that category under two shelters - one is a total rain out shelter (no rainfall can get in and the moisture is controlled), the other is a total rainout shelter with 70% shade cloth to show what grasses can do in shade. Mr Rogers said:

    Every seven to 10 days we run a wear machine over them, which simulates things like rugby rucks, kids playing, dogs walking etc. We want to dry hell out of it - there is no point having a drought tolerant grass that can't handle wear and tear.
    All these things are considered and at the end of the trial period we can see what grass would survive with minimal input including chemicals and fertilisers. We've even allowed the grasses in the trials to get diseases to see if they can recover.

    The data was compiled independently by the Sports Turf Research Institute (STRI), based in England. Mr Rogers said:

    We also had trials running simultaneously with the University of Georgia, the largest turfgrass research university in the world.

    And after all that data was compiled and submitted, TifTuf was awarded the Smart Approved WaterMark. TifTuf requires less inputs (fertilisers and water) and has a dense sward that enables it to handle high wear situations, while remaining soft and visually "superior" to other turf varieties. Mr Rogers said:

    We set up a criteria for the grasses we want, the universities give us 20 or 30 varieties that might meet what we want and test and trial them for our conditions...We do our due diligence on the grasses which can tackle up to six years. We trial them here at our main facility at Jaspers Brush (NSW) but we also have other members around the country trialling them to get a greater array of climate.
    We won't release a grass in Australia unless we know it will work in Broome, Melbourne, Cairns, Perth and everywhere in between - it has to be Australia wide.

    About Lawn Solutions

    The Lawn Solutions business began in 2000 with Sir Walter turf, with the Lawn Solutions Australia group officially forming in 2013. It now has 43 member farms around the country. The group produces 14 million square metres of turf grass per year - around 55% of all turf grass produced in Australia.

    Although restrictions surrounding COVID-19 has affected many businesses, Mr Rogers says it has achieved record sales in recent months. He said:

    Covid has been really good for the reestablishment of the Aussie backyard. We've started to work out spending time with the kids and family in the backyard is pretty good.
    We've lost the backyard over the past 20 years - you usually don't get one in the new blocks, but we've seen a huge shift back to the Aussie backyard and with people being forced to work from home, the do it yourself market has been incredibly strong.
    Christmas is traditionally the busiest time for the turf industry but a lot of us are having weeks that are better than Christmas weeks.
    One of our biggest competitors in the turf industry is the winnebagos and overseas travel. The baby boomers retire and they either spend money on their homes or take off overseas. We are going to see a return to spending locally which is good.

    The group supplies Bunnings Australia wide and is in every single market that turf grass is sold in Australia.

    At its Jaspers Brush base, it employs 15 staff in a variety of roles including research and development, marketing, agricultural scientists, greenkeepers and has a small team dedicated to social media.

    Along with its TurfCo operations the company employs more people across its four sites that has around 250 acres under turf farming. In addition to grass, there are fertilisers, pesticides and other turf products.

    Mr Rogers said the business is very family orientated, with his wife Sue also working with the company as do three of his children, Joe, Marcus, who is the general manager of TurfCo and Sasha who runs turf procurement and logistics, along with other family members.

    Sourced from South Coast Register


    Closing the gap in fencing

    Australian owned manufacturing in China

    The family business produces a range of fencing, stockyards and livestock handling equipment

    Clipex founder Ashley Olsson started the company in 2007 after he came up with an idea for a steel fence post with clips to quickly attach wire and netting while managing the family farm at Goulburn on the NSW Southern Tablelands.

    He has lived in China for over a decade where he owns a factory which produces the Clipex range. Its head office is based in Brisbane (QLD). A spokesperson recently told The Land newspaper:

    We are employing our own staff and distributing on a global level to Clipex Australia, Clipex South America, Clipex Ireland and others. Some other companies may have a joint venture manufacturing facility overseas, which means they do not wholly own the manufacturing facility but essentially share it. Others simply source their product from a dedicated overseas supplier.
    Clipex Australia is passionate about supporting Australians and Aussie jobs and is proud to be one of the few Australian owned family companies that is completely vertically integrated, employing over 65 staff across the country in more than eight store locations.

    Clipex said it also sponsors more than 50 local initiatives throughout regional communities every year and bring work to transport, printing, communication, marketing, IT, development and engineering businesses in these areas. The company uses its own store network and in-house installation teams. The spokesperson said:

    We believe there has been a serious lack of innovation in the fencing industry, in part because companies have been afraid to implement technology and therefore do not expand and grow in innovation.
    We innovated, developed and grew with the technology, giving us products like the Clipex fence posts, what are now being copied with an inferior 'paperclip post' which have now plagued the Australian market. We believe businesses should remain in Australia and be Australian owned.

    Sourced from The Land


    Paint tech leads to direct-to-consumer sales

    Challenging traditional paint processes

    The company's supply chain is secured with local Australian manufacturing of its paint, and is not dependent on international suppliers

    Tint is an online-only paint retail business selling direct-to-consumers and offers contactless paint delivery to customers' doors. A Melbourne-based start-up, it has been experiencing a major boost in sales as a result of social distancing measures that have been implemented as a result of the coronavirus. Co-founder Djordje (DJ) Dikic told Internet Retailing:

    We looked at how customers buy paint today...Somehow painting and decorating has become a chore for most people, and that's because so many aspects of buying paint today are not user-friendly. There are too many colours, too many products with confusing names, too many trips back and forth from the shop, largely without any guidance...
    That's what Tint is - we're making painting fun by creating a seamless and super simple way to shop for premium paint and accessories online.

    The main idea behind Tint is to take the "pain" out of paint selection. Mr Dikic explains:

    Colour confusion is the number one reason people don't paint, so we've spent a lot of time developing solutions to make it easier for Tint customers to feel confident when shopping for paint.
    Firstly, we've developed super-size colour stickers you can stick up and peel off all around your house (they're reusable and don't damage surfaces either). We offer sample stickers across our entire collection ... and they make it really easy to see how a colour will look in your space without any of the mess of sample pots.

    It officially launched in December 2019 with a range of 70 colours including its first collaboration with Pantone, best known for its colour matching system used by many industries. Mr Dikic said Tint's paints are vegan and 99% VOC free.

    Tint allows customers to capture any colour in any environment, view it live on their walls using AR (augmented reality) in the app, and then order online. They can also order Tint's colour capture tool, Pico, to customise paint to their desired shade.

    Mr Dikic believes its supply chain is helping them to support its customers. He said:

    It's a critical piece of the puzzle for online retailers. For now, we're able to dispatch our goods via courier and offer contactless delivery. For businesses looking to transition online, it's key to really think through the logistics of fulfilment, as they can actually be quite intricate, and distribution is often challenging.
    The logistics of supply will also include packaging, order management, tracking parcels and how you share delivery communications with your customer. It can be hard to turn these aspects of a business on overnight, so it's worth making preparations in advance.

    The business is also moving forward with plans to provide same-day paint delivery across Australia and expand on its product offering.

    About Palette

    The concept for Tint came about from a colour recognition business started by Mr Dikic and his co-founders back in 2013 called Palette that sells colour measurement devices to major paint brands. Mr Dikic explains:

    We have approximately 100,000 colours scanned around the world each month by our users around the world. The data behind each colour scan gives us amazing insights into the colours people are actually interested in and what the trends are.
    Looking at the data it was obvious that users wanted to scan a colour and then tap a 'shop' button to order paint for home delivery. No one was offering a compelling way to shop for paint online, and no one had made picking a colour easy, so we launched Tint to be the one-stop shop for paint and accessories.

    It has sold more than 50,000 colour sampling devices in 66 countries. This allows the company to analyse over 1 million colours captured by Palette users and see colour trends in real time as they emerge, and to identify colour preferences based on locations as well as seasonal changes. Mr Dikic also told The Sydney Morning Herald (SMH):

    Everything we develop with Palette leads straight into Tint and vice versa.

    Palette's aim was to digitise colour and enable users to measure, match and visualise colour everywhere. Its hardware device, Cube was designed to scan and sample colours.

    However the co-founders had been disappointed by the lack of uptake from paint companies in using Cube, and found their reluctance to use technology frustrating. So they took the idea for Tint to Palette's board and decided to start the business from there. Mr Dikic said:

    After years of collecting colour data with Palette, we realised there was a huge opportunity to transform the paint industry, because only 1% of global paint sales are online.
    After we released a world-first piece of tech that lets you walk up to a colour and record it instantly, we had made choosing colour a hell of a lot easier. But we noticed a big barrier in the way of what should be a smooth process. Customers still had to go to a store to buy their paint ... As a tech-first company, we wanted to make the process even simpler and move it all online.
    We initially took our technology to incumbents in the paint industry, but were frustrated when they were reluctant to move their paint sales online for fear of disrupting their existing businesses.
    So we took our idea to our board and decided to create our own direct to consumer paint brand - which became Tint.
    We see a clear path forward to create a better experience for home renovations, professional painters, architects, interior designers and specifiers. By focusing on the customer, we've been able to redesign virtually every step in how people shop for paint.

    Tint investment

    Palette was born out of a university project and its co-founders came through the Melbourne Accelerator Program.

    Mr Dikic said it has raised a total of $3 million to launch Tint from investors including Palette chairman Adam Lewis and Aconex co-founders Rob Phillpott and Leigh Jasper. The capital will primarily be used for expansion and marketing. Mr Lewis told the SMH:

    What I have tried to do is back technology and people that try to disrupt existing industries...With Palette, all these industries that rely on colour could have their productivity fundamentally changed through this technology.

    Mr Lewis believes the challenge is to get paint companies to adopt a new way of working, as there was a lot of money invested in colour cards and proprietary colour libraries. He said:

    We look at Tint really as a proof of concept that people do want to buy paint online and they will find the interaction with digital colour fundamentally better. Tint is proving to every paint company around the world that customers want to interact with paint in this way."

    Sourced from Internet Retailing, Dynamic Business and the Sydney Morning Herald


    Lowe's launches accelerator program in India

    Reimagining home improvement retail

    The US-based retailer is betting big on the Indian startup ecosystem. Participants in the program will have the opportunity to showcase their solutions.

    Lowe's Innovation Labs, established by US home improvement retailer Lowe's, has launched its first accelerator programme for startups named CONSTRUCT.

    (It has been reported that Bunnings is setting up a dedicated technology development centre in Bengaluru, India, known for being a major international software hub.)

    Seven startups from across India, representing a diverse range of interests including merchandising, AI (artificial intelligence) trend forecasting, automated content generation, talent acquisition, and AI-driven sustainable home construction technology were selected after a five-city roadshow.

    The retailer wants to work with startups that bring diverse, global perspectives. Ankur Mittal, vice-president of technology and managing director of Lowe's India, said the focus has always been to use deep technologies such as AI, analytics and robotics to "power tomorrow's retail".

    Our vision at Lowe's India is to transform home improvement retail by building world-class experiences for our customers with the right products and technology.

    According to the company, CONSTRUCT is designed to be a flexible alternative to traditional corporate accelerators. In keeping with Lowe's Innovation Labs' mission to use exponential technology to "accelerate experiences that customers expect today and to deliver tomorrow's breakthrough capabilities", the program is open to companies of all sizes and at all stages.

    Lowe's start-up partners receive personalised attention from senior executives at Lowe's, as well as external mentors from venture capitalist firms and other supporting companies. Current participants include:


    Provides product insights through its AI-powered consumer-driven, demand-sensing technology engine.


    Strong computer vision capabilities and AI platforms, helping brands and retailers in measuring, monitoring and improving processes such as product distribution, placement and sales.


    An NCR-based startup with an end-to-end video marketing platform that enables brands and retailers to convert their e-commerce product catalogues into videos at a fraction of the standard time and cost.


    Powered by AI and behavioural science to help talent acquisition teams function faster with deep talent analytics.

    Emphasis on using AI to craft actionable insights from the vast, unstructured resources of the open web to help lifestyle brands and retailers personalise product decisions.

    Builds generative AI tools to make professional automated human-like videos with applications involving "hyper real" AI.


    Utilises nanotechnology, producing graphene and nano composites with applications in building next-generation homes, defence tech and energy storage.

    The virtual launch event was held in mid-June 2020 with over 5000 participants and speakers from around the world discussing the future of home improvement retail. Abhay Tandon, director - innovation and head of Lowe's Innovation Labs India, said:

    India is home to a wide network of innovators developing solutions to global issues. We have set up CONSTRUCT as a way to partner with the brightest minds to reinvent home improvement retail. It provides startups with an opportunity to apply their solutions in a highly conducive environment.

    Lowe's India is the retail technology and analytics centre for Lowe's Companies, Inc. With more than 2,500 staff, Lowe's India focuses on technology, analytics and shared services.

    Lowe's Innovation Labs also plans to work with academic institutions and is looking to partner with International Institute of Information Technology (IIIT) in Hyderabad to access their research to develop solutions for the company.

    Related: Bunnings' move to Bangalore, India to set up a technology centre comes as it continues to execute its omnichannel strategy. Read more in the following link.

    Bunnings sets up IT in India - HI News. page 26

    Sourced from The Times of India and Telangana Today


    IHG sales decline as new CEO takes over

    In midst of decline, Total Tools acquisition bid confirmed

    Sales fell by 1.3% for IHG, despite a Q4 surge in sales, as the pandemic hit. EBIT came in flat for IHG, boosted by increased higher margin DIY sales in Q4. Annette Welsh is now officially CEO, though she has acted in that capacity since February. Metcash announced its offer for Total Tools, which values the company at $140 million.

    Metcash released its results for FY2019/20 on 22 June 2020. Overall, the company has reported an increase of 2.9% in sales to $13.0 billion. However, earnings before interest and taxation (EBIT) were $324.2 million, a fall of 1.8% on the previous corresponding period (pcp), which was FY2018/19. The company's food division lost a major customer in South Australia, and the finalisation of supply to the 7-Eleven convenience store chain will see future reductions.

    For the company's hardware division, which consists primarily of the Independent Hardware Group (IHG), the year represented a mixture of declining sales, and a fourth quarter sales boost due to an increase in both consumer/DIY sales and trade sales.

    Pre-pandemic sales, during the 10 months to February 2020, fell by 2.8% as compared to the same period during FY2019/19. However, the uplift in sales during March and April, as consumers bought more supplies from hardware stores, raised hardware's second half performance by 1.8% over the second half of FY2018/19.

    The company also completed two acquisitions, of G. Gay & Co. in Victoria, and Keith Timber in South Australia, which helped to boost sales.

    Total sales for the year came in at $2.08 billion, a decline of 1.3% on the pcp. Retail like-for-like (comp) sales increased 1.6% in the second half, after falling by 3.2% in the first half. The result for the full year was a decline of 0.7% in these comp sales.

    For wholesale sales in IHG to the banner group, these held flat in the second half, after a decline of 2.6% in the first half, delivering a decline of 1.1% for the full financial year.

    Metcash also reports that in terms of comp "scan sales" (relating only to a subset of stores, those which report scan sale data to Metcash) there was an increase of 11.6% for March and April 2020, as compared to the same period in 2019.

    Online sales are reported to have grown by 40%, with the company now featuring 14,000 stock-keeping units (SKUs) up from 3000 in FY2018/19 listed on its website. Metcash also notes that the average ticket size online is around $200, which is four times higher than the average in-store purchase ticket.

    EBIT for hardware for the year was $81.2 million, equal to that for the pcp. EBIT was propped up by an increase in the proportion of DIY sales from 35% to 37%, Metcash claims, with DIY delivering broader margins.

    (For this financial year, HNN is relying on pre-AASB16 accounting figures for comparative purposes.)

    Commenting on the performance of hardware during the early stages of the pandemic, Metcash CEO Jeff Adams said:

    [T]here [were] changes in consumer behavior, with the most significant being the uplifts in DIY sales. As I mentioned, along with our hardware retailers seeing many new first-time customers in their stores. Some of those customers commenting, they have passed up our competitors because the car parks were too busy or they had queues outside of their stores, and were visiting the local Mitre 10 or Home Timber & Hardware store for the first time. The hardware team and the retailers are now focused on how to retain those new customers after the crisis who have now had a good shopping experience in their local store.

    Mr Adams also welcomed the new CEO of hardware, Annette Welsh, as:

    [O]ur new CEO of Hardware, Annette Welsh, who has taken over for Mark Laidlaw when he retired at the end of February.

    As the original ASX announcement indicated she would assume that position on 1 May 2020, evidently the process was speeded up.

    Store network

    Metcash has continued its expansion of corporate-owned stores in the bannered Mitre 10 network. Hardware acquired a further six operations with a total of 17 sites during the reported year. Asked by Bryan Raymond of Citigroup to clarify the earnings contribution of the additional stores, Mr Adams responded:

    So those would have been phased in at different times throughout the year, Bryan. And in fact, the one lease one came in right at the very end of the financial year, but I think it was around $3 million or something in the year.

    The company states that the corporate stores now account for 15% of all stores, and contribute 40% of the sales attributable to IHG. There is also a reference on one slide to "Cost resets in company-owned retail network most exposed to slowdown in construction activity", which could indicate a fall in investment for the coming financial year.

    This is also the first report since the acquisition of Home Timber & Hardware (Danks) where there has been no mention of ongoing integration.

    The company has continued with its Sapphire upgrade program, claiming this now stands at 90 stores, up from 60 at the close of the previous financial year. The number of trade-only stores has also increased, reaching 19 for the year, up from 11 a year ago. Metcash confirmed the target of reaching 40 of these stores by 2022 still stands.


    Looking to the future of the company, Mr Adams provided this overview:

    In the Hardware pillar, sales for the first seven weeks of FY2020/21 have increased 9.4%, underpinned by continued strong demand in DIY categories. Weak indicators of future residential construction suggest further weakness in the trade sector is likely from the second half of FY '21. However, the government recently announced a stimulus package to boost residential construction and renovation activity is expected to help mitigate this weakness.

    Total Tools acquisition

    The surprise announcement of the results is that Metcash has decided to go ahead with the acquisition of Australian power tool and hand tool retail franchise Total Tools. The franchiser has 80 franchise stores, and one corporate store, with each franchise owning a portion of the company. Total Tools generated revenue of over $550 million for calendar 2019. Its EBIT is estimated to be around $25 million a year.

    While negotiations are underway, and clearance from the Australian Competition & Consumer Commission is required, the end cost is expected to be around $57 million for a 70% share of the company.

    As part of that deal Metcash is also providing a debt facility of $35 million, which – as financial analysts have pointed out – really forms part of the purchase price. That would mean that Total Tools in its entirety is being valued at around $140 million.

    At the end of 2019, when Total Tools was first said to be on the market, the estimate was that it would sell for 10 times earnings, or around $250 million. If that is true, then this move by Metcash could see it acquire the business at a significant discount of less than six times earnings.

    In his remarks at the presentation, Metcash's chief financial officer Brad Soller presented the rationale behind the acquisition:

    The acquisition is in line with our hardware strategy, which is to focus on trade customers. Total Tools has a differentiated offering, which is focused on tradies, who require high-quality tools for commercial use. Total Tools has been operating for 30 years and offers a broad range of products, which, as I said, are focused on tradesmen themselves. This is different to Mitre 10, which tends to be more focused on the actual builders.
    Total Tools not only supplies the leading tool brands but also has a highly valued and growing own-brand offering, and its stores pride themselves on offering a broad range and high-quality customer service.
    There's a strong strategic rationale for the acquisition. The acquisition aligns with Metcash strategy to be the leading supplier to independents in each of its three pillars. It enhances Metcash's position in the Australian hardware market, which will benefit the independent retailers in both Total Tools and the independent hardware group. It increases the Hardware pillar's exposure to trade customers. It strengthens both Metcash and Total Tools existing independent networks and will provide Metcash with a more balanced mix of earnings across its operating pillars and will deliver significant value creation opportunities and synergies.

    Responding to a question from David Errington of Bank of America Merrill Lynch, Mr Soller also clarified the strategy Metcash will take with Total Tools:

    The other component in terms of the loan facility we intend to provide them is, we do want to acquire some of their franchisee stores and take our ownership interest. It's a very similar strategy to what we've successfully done in the hardware pillar at the moment through a combination of independent and company-owned stores. So we will look to actually acquire those stores going forward in that [debt] facility specifically for that purpose.

    In response to a question from Bryan Raymond of Citigroup, Mr Adams clarified how Total Tools would fit with Metcash's hardware division:

    We don't have a very strong presence in the tools category, so we won't get huge merchandising synergies. And it is intended that we actually run the front part of those operations [Total Tools] as an independent business. So Paul Dumbrell, he currently is the CEO of that business, will continue to actually drive the sales and drive the relationship with the franchisees.


    Mark Laidlaw will no doubt be missed as one of the people who has left a strong imprint on the Australian hardware retail industry. It's difficult to remember exactly how tough things were when Mr Laidlaw first took over Mitre 10 in 2010, with the CEO who preceded him working directly for the then-opposition, HTH. The kind of size and influence he gave the hardware division at Metcash was something Mitre 10 members could only have dreamed about those 10 years ago.

    His departure will mark a new phase in the development of what is today IHG. The really big question the hardware division of Metcash faces is whether it intends to pursue its branding and strategy as the only retailer able to "take it to " Bunnings in the marketplace, or if it will instead move to a somewhat more balanced approach, which focuses on consolidation rather than competition.

    One reason IHG might consider changing direction is that, as the results for this financial year indicate, its current strategy is not exactly a runaway success. It's facing off against a company that is massive, and looks like turning in 11% sales growth during a period when IHG itself saw sales fall. It's even arguable that IHG is lagging behind not only Bunnings, but also the market at large, with its sales figures not even tracking the general increase in the overall hardware retail market.

    In fact, at the moment, it is just difficult to track where aspects of its strategy are leading. The company continues to acquire new properties, many of these stores that would otherwise have shut down, or been sold by the original Mitre 10 owners. Metcash's claim is that by acquiring more corporate stores, which make up more of its overall revenues, it is helping to strengthen existing independents in its network. Given the sales figures, however, it is really difficult to see how and where that is working out.

    The Total Tools acquisition only further makes strategy difficult to determine. Again, Metcash is claiming that this will help to strengthen the independents in its network. It's hard to see, on the face of it, how investing in a dedicated tool supplier, and helping it to grow and expand, and therefore compete more for the tool market, will help independents.

    Though there are some scenarios where that could happen. For example, Total Tools could move to a store-within-store model with retailers in the IHG network. In that case, instead of having to manage their own line of power tools, which typically return low margins, they could effectively rent space to Total Tools. Which could work, until you get into the business of power tool accessories, where independent retailers do make good margins.

    The other aspect of the Total Tools acquisition is that Metcash might not have paid as much as was asked during the first round of the sale, but that discount has come because of increased risks. Just exactly how bad the economic fallout will be in Australia, no one really knows. One reason for that uncertainty is that it is at least partially reliant on overseas markets. Will trade matters settle down between the US and China? Will Australia's insistence that China has to lose face internationally over the COVID-19 pandemic continue to damage Sino-Australian relations?

    In short, Ms Welsh, as the new CEO of IHG, has a lot of challenges to face up to over the next two years. There is little doubt that IHG could prosper, and that it could contribute to independent hardware in Australia. But there is also little doubt that the way forward is going to start by recognising the underlying problems and contradictions in the business, and the need to not simply repeat past strategies.


    Bunnings gets 19% lift for March to May

    While costs increase, revenue grows

    Bunnings provided a "retail trading update" in May 2020, which indicated strong growth in the second half of FY2019/20

    Strategy days have been cancelled for just about every ASX listed company, including Wesfarmers. That means that for this year (at least) we will not receive any insights into the strategy settings for Bunnings - which should make for an interesting full year results release in August.

    In the meantime, what has been provided is a "Retail trading update" for the first five months of the company's second half. To put it bluntly, after a moderately successful first half, in the second half Bunnings produced a very good result. Bunnings saw total sales grow by 19.2% over that period, which, combined with its first half sales growth of 5.8%, means the company is on track to close out its FY2019/2020 with growth of around 11%.

    That growth comes with two caveats, however. Firstly, the growth has come at some cost, as Bunnings moves to make its facilities safe for both its employees and customers. As the update states:

    While disciplined cost control remains a focus, Bunnings has invested approximately $20 million in additional cleaning, security and protective equipment to respond to COVID-19 over the last three months. In addition, Bunnings will incur costs of approximately $70 million in the 2020 financial year associated with trading restrictions in New Zealand, the permanent closure of seven small-format stores during the half, and the accelerated roll-out of its online offering, including the write-off of legacy e-commerce platform assets.

    Secondly, the company is also aware that current market conditions are unlikely to continue in any predictable way.

    Significant demand growth has continued in Bunnings and Officeworks as customers continue to spend more time working, learning and relaxing at home. As a result, sales growth in the calendar year to date has increased significantly relative to the levels achieved in the first half of the financial year. Given the significant changes to the usual customer shopping patterns and expected future changes to government measures, it is uncertain whether the higher levels of sales growth will continue for the remainder of the calendar year.

    Speaking to The Australian Financial Review's (AFR) "Chanticleer" column, Bunnings managing director Michael Schneider is reported as saying:

    For the foreseeable future ...that cost base [is going to be] baked in .... We're just not going to compromise on safety for our customers and our team members. I think there's a "new normal" for all businesses on hygiene, health and safety. It's going to be a really slow road back.

    As testament to just how strong the demand has been, and how much it has stretched Bunnings' supply chain, the company experienced such low stock levels on some of its most popular power tools that it removed these from its website, not even listing them as stock-outs. Perhaps most prominent among these were lower-end cordless circular saws from the retailer's Ozito Power X-Change (PXC) sub-brand.

    HNN spoke to Bunnings' media people about the stock situation, and they were kind enough to provide a quote from Phil Bishop, who is director of merchandising.

    Overall, we've been well supported by suppliers over the lockdown period, and we have good availability of products in store. We source products from thousands of different suppliers, from all parts of the world and have options to source from elsewhere should supply from one of those areas be affected.
    We've seen really strong demand for Ozito cordless circular saws over the past couple of months and demand has exceeded supply for some models at a number of our stores. For this reason, we've temporarily taken two of these products down off our website.

    Bunnings also pointed out that these products would be back in stock before the end of June. According to some sources, the stockouts are due to high demand and the same slightly slower logistics in Australia that have affected most retailers. They are not a result of manufacturing or logistical problems overseas.

    Whatever Bunnings is doing, it seems to be working. According to Roy Morgan, Bunnings is once again Australia's most trusted brand in 2020 - with ALDI at number two.

    The many facets of Michael Schneider

    Perhaps partially in response to the lack of a strategy day, Mr Schneider would seem to have something of an increased presence in the press these days. It has been interesting to see how each press outlet has come up with a slightly different version of who he is.

    Like HNN, all respect his talents and capabilities, but the way this gets expressed varies.

    Mike the Teddy Bear

    Australia's CEO magazine is known for its softer portraits of Australian business leaders, but its portrait of Mr Schneider seemed somewhat extraordinary. Written by Wendy Kay, the profile conjures up a cosy image, one which might be not entirely familiar to, for example, some of Bunnings' suppliers.

    Ms Kay begins: "A chat with Michael Schneider is a bit like having a yarn around an Aussie barbie," and continues:

    [T]he first thing that strikes you about Michael is his warmth - the same easy going nature of the Bunnings "reds", the men and women dressed in their natty [sic] red shirts framed by forest green aprons who serve us in one of Bunnings' 380-plus warehouses, stores or trade centres.
    There's no pretence, no spin; what you see is exactly what you get. And what you get is a glimpse of the 15-year-old casual who fell in love with retail while working his first job at Target in Sydney's north.

    OK. Very well then.

    Definitely looking forward to the movie. Guy Pierce, do you think? Hugo Weaving for Mr Gillam, of course - and Erik Bana for Grant O'Brien?

    Are their aprons really forest green? (As Bogart might have said.)

    AFR Mike

    While HNN has long been an admirer of AFR's "Chanticleer" column, it is also true that it's the one place in the business tabloid that really does love a good narrative - even if it takes a bit of creativity to get there.

    As its report begins:

    The inside story of how Bunnings balanced surging sales with the need to adjust its business to a radically different trading environment - and how it will now try to get back to something like a new normal - already has the makings of a great case study.

    Fortunately, facing into the threat the COVID-19 virus posed, Bunnings had Mr Schneider to rely on - bold, intrepid, determined:

    Schneider's challenge went beyond keeping the shelves stocked - something he praises his suppliers for. His biggest task was keeping staff and customers safe.

    Beyond that, though, he also had to keep the digital end of the business running:

    Schneider and his team also had to put the foot down on a digital offering that the chain had been too slow to develop under the previous management. "We've innovated the daylights out of our offer," he says.

    And these frantic, last minute efforts bore fruit:

    Ten weeks later, Bunnings' e-commerce offering is transformed.

    Well, there is a fair bit there that could be picked apart, but really - "the previous management"? Mr Schneider has been managing director since March 2016.

    Facebook Mike

    Facebook Mike appeared in the press in July 2019, after Bunnings adopted the Facebook Workplace platform to drive staff communication and engagement. Mr Schneider spoke at a Facebook event to help popularise the platform, and this boosted him into the media spotlight.

    As a consequence, he was featured in the article every business leader dreads: the "Six leadership tips from a CEO", this time for Inside Retail. His tips were (in order):

  • Create a community
  • Keep it small
  • Communication is key
  • Empower your staff to become leaders
  • Use technology to keep it real with staff
  • Create a culture around authenticity
  • Mr Schneider actually did really well for such a setup piece, despite some poor editing. His last point is:

    There's a real humility in Bunnings and I think that stands through, not just in the organisation, but the leaders that build successful careers there. They're very down-to-earth people, we don't stand on ceremony. There's always going to be hierarchy, bureaucracy and politics in big organisations, but compared to other organisations I've worked in, it's a very free-flowing, down-to-earth, real organisation, and humility is a really important part.

    Will the real Mr Schneider please stand up?

    For those who have been following Bunnings' (and Wesfarmers') leadership for some time, the story of who Mr Schneider is, and specifically who he is to the company, is more complex. One view with some currency is that Mr Schneider was potentially at his happiest when he worked as the company's IC2 under the leadership of John Gillam. There was an incident where, lured onto the stage at the results presentation one year, Mr Gillam turned part of the announcement over to Mr Schneider - with a very audible vocal protest from the latter.

    Which is to say, what makes some of these versions of Mr Schneider really amusing is that he is very much a modest and self-contained man. However, the leadership Catch-22 of retail is, of course, that it's often the person who doesn't quite want the top job that is the best candidate.

    Also, you really cannot fault anyone for having some doubts about following in the footsteps of a manager like Mr Gillam - who remains, in HNN's view, Australia's greatest retailer of the past 20 years. Though it is certainly worth noting that Mr Gillam himself evidently had few if any doubts about the capabilities of Mr Schneider, and his suitability to lead Bunnings - an intuition that has proved to be correct.

    What the various views of Mr Schneider offered by the non-specialist press miss about him is that he combines two characteristics that are rarely found together in top management. Firstly, Mr Schneider is really, truly a very tough guy. He's tough in a way where he applies this toughness to himself first, it's true. But he's also well known for acerbic, deflating comments, often at the very end of a meeting, that are very effective.

    Secondly - and unusually - he does not seem at all egotistical. A word that Mr Schneider uses a lot is "authentic". He's interested in things that have meaning, that are about doing more than saying, and that reflect genuine values, or at least an effort to get to genuine values.

    That said, if "spin" is what is required in a particular situation, Mr Schneider is certainly capable of that. In fact, he's developed his own version of spin, which works by understatement instead of overstatement. Answering a tough question, or one he simply doesn't want to face up to (for strategic reasons), he has a way of making a distracting, undercutting, "adjacent" statement in response. He's a fighter, but it is never about brute force, just weaving slightly out of the way, and staying at least a half-step ahead.

    The weaknesses that Mr Schneider does have are those you would expect from someone who hasn't just come up through the ranks in traditional retail, but who has genuinely really liked that sort of business.

    Despite what the AFR has to say on the matter, Bunnings was at least one year, and probably two years, late in moving to a transactional digital platform. In terms of the pandemic, it only just made it across the line. And the truth of that is, Bunnings wouldn't have moved so fast over the past 18 months if it had not been for the leadership of Wesfarmers managing director Rob Scott.

    It's easy to see how that happens. For traditional retailers, the online proposition just did not make much sense. Traditional retailers really liked the whole thing where customers came to a store, bought stuff off the shelves, and took it home with them. Digital commerce seemed to require a massive investment in an unfamiliar type of infrastructure and personnel, in order to sell goods online at a reduced profit - due both to competition, and the need for final kilometre delivery logistics.

    Almost unwittingly, the path Bunnings had started down, after it closed the door on Woolworths' efforts to enter hardware through Masters, was to take as much profit as it could from a declining part of retail. It was a slow decline, and the profit was pretty good, but the problem was that committing to that path meant the resources to go down the higher growth path, with its high upfront costs and more limited profits, were not being developed - and would cost exponentially more to develop the further down the familiar path they progressed.

    What Rob Scott brought to Wesfarmers was the confidence and vision to not go down the pathway of trying to solve problems by developing solutions, but to instead concentrate on building capacity - in data analysis in particular. This drove further developments by offering both easier solutions and available growth paths to the various siloed businesses in the conglomerate.

    While that is a great advance, and Mr Schnieder was able to comprehend what Mr Scott had in mind, and execute on it, this is only just a start - something the current pandemic has brought sharply into focus. The "new normal" Mr Schneider mentioned to the AFR brings with a number of pressing questions. How does Bunnings grow and develop over the next five to seven years? How will it cope with a changed environment?

    One reason these questions are so difficult to answer is that Bunnings has found itself in something of a development paradox. For example, it has become increasingly apparent that the basic Bunnings warehouse, while it continues to perform acceptably, is beginning to age itself out of the market.

    Bunnings has made efforts to improve the format, but this has not been generalised across the existing fleet. That is likely because the improvements the retailer has tried out have been relatively incremental. While that makes them "safe" - unlikely to fail in any spectacular manner - it also tends to make then less than significant.

    The paradox is that incremental improvements are likely to succeed at least to some extent, but the improvements offered will not be enough to drive change. On the other side, more extreme improvements will be more likely to fail, and increase risk, even though they could provide the kind of advantage needed to justify investment in change.

    How do you achieve high-delta value, through a process that quantifies and reduces risk?

    An oft-cited example of a solution to this quandary (first publicly identified in these terms by the computer scientist Alan Kay) is how the first truly successful human-powered flight vehicle was developed. Paul MacCready, an American aviation designer and crack sailplane pilot, took up the challenge in 1972, and solved it six months later - a problem that others had spent decades trying to solve. In the process he won a GBP50,000 prize.

    His first insight was that the problem was so difficult that it was important to start by working out why others had failed to solve the problem. He noticed two aspects to the failures. The first was that the other contestants spent a year or more building an aircraft, flew it, crashed it, and then went back to the drawing board. Incremental development through a test/fail process was almost non-existent.

    The second insight was that the others were designing airplanes. The problem, as Dr MacCready saw it, wasn't to build an airplane, but to solve human-powered flight - and they weren't the same problem.

    Dr MacCready solved the problem by building a lightweight device out of thin plastic tarps and aluminium struts. When it crashed - which it did frequently - it would end up in pieces, but those pieces were easy to put back together or refabricate. His plan called for crashing at least 12 times a day.

    He solved the problem of streamlined aerodynamics - which was why the other aircraft were so elaborate - by just ignoring it. His device aimed for a top speed of 16kmh, and at those speeds, aerodynamic drag was not much of a factor.

    Alan Kay - Normal Considered Harmful, from YouTube 2012 Gossamer Albatross: Flight of Imagination, from YouTube 2019

    Alan Kay summarises the task of understanding the problem as being one of finding "the minimum thing you can do that is qualitatively better". That might seem like a particularly "big ask" for a retailer, but it's worth remembering that the Bunnings Warehouse concept - driven by then-Wesfarmers CEO, and now current Wesfarmers chairman, Michael Chaney - was really the result of a similar process. The "qualitatively better" was selling to consumers at trade prices, and the "minimum thing" was using a retail offer that offered low amenity.

    If HNN were to venture a guess at where the fruitful opportunities for Bunnings might be in the future, we can see two possibilities. In terms of its commercial and trade business, we believe that Bunnings could succeed by becoming a strong sponsor of modularity and pre-fabrication in everything related to building. Bunnings needs to understand, that the more modularity and pre-fabrication influence the market, the more the retailer will succeed.

    For example, take the electrical wiring in a house. It's 2020, and we are still wiring buildings by sticking bit of conductive wiring coated in plastic down plastic pipes, and then manually twisting that conductive wire into plugs and sockets. Modular wiring systems have been developed, but these have encountered industry resistance.

    For the trade organisations involved, rationalising the way wiring is installed - even though it would increase safety and ultimately decrease overall costs - would see fewer jobs and less income for "sparkies".

    There are two reasons why systems such as these would boost businesses like Bunnings. Firstly, developing margin on products such as plastic pipes and rolls of wire is very difficult to achieve, as these are basic commodities. Modular wiring systems, however, are manufactured, and more complex.

    Further, a truly effective modular wiring system should make it easy for homeowners to safely DIY the installation of elements such as more power outlets. A correctly designed system would require little more than some plaster work, and plugging the new outlet into the electrical bus.

    The issue here is that, just as the Bunnings warehouse initially entered the market in such a way that it fundamentally changed that market to better suit its business model, today's Bunnings can equally not afford just to be reactive and passive. It has the capacity to become actively involved in areas such as standards, and to create change that will be a positive both for the company and its customers.

    The real opportunity in the area of DIY, however, may come from a better embrace of what has come to be known as "maker culture". Makers today are what advanced DIYers were 20 years ago. The people who back in 2000 would have built bookshelves in the garage are today hooking up actuators to Arduino processors with a Bluetooth shield so that their toaster oven can "magically" lift out of a kitchen bench at the push of a button.

    Again, though, we return to the need to establish a high delta through understandable risks, to do the minimum thing that is qualitatively better. All too often projects such as these are undertaken by retailers, tested out, do not return sufficient results, and are then discarded. Like the earlier efforts at human-powered flight, they have little incremental development.


    That oft-repeated statement that "retail is detail" may still apply to current markets and businesses, but over the past decade or so it has been joined by a less-positive (and less assonant) truism: "retail is delay". The chief strategy for many major retailers has been to put off the need to truly change their business models to adapt to changed markets, necessary infrastructure, and new ways of engaging customers.

    As we are seeing from both local and international experience, the idea that economies can somehow "snap back" to 2019 is unlikely to hold true. Without a vaccine for the COVID-19 virus, even when infections are brought down to a low level, the virus is so transmissable that it will flare rapidly back up to concerning levels. That means it is likely the economic slowdown will remain in place through to June 2021 at least.

    What this means is that the time for delay in retail is now over. The very reason that major companies have had to cancel their strategy days is that pre-existing strategies make little or no sense. As we move into FY2020/21, companies that continue to pursue a delay in formulating new strategies will be punished not only by the stock markets, but by customers as well.

    The highly positive article from the AFR referenced above begins by outlining a bold move by Mr Schneider to employ someone to record the history of how Bunnings has coped with the first stages of the pandemic. There is certainly something welcome about that, as it improves the ability of the company to learn from experience.

    But one has to wonder if there is an equal - and as essential - team at work planning for a different future. That's the real question that will need to be answered by Wesfarmers and Bunnings at their annual results presentation in August 2020.


    DuluxGroup MD calls for Oz manufacturing support

    Company gains from lockdown sales

    DuluxGroup sold more paint as a result of DIY projects and smaller renovations during self-isolation

    DuluxGroup (Dulux) managing director, Patrick Houlihan told a columnist from The Australian that COVID-19 has been a wake-up call about the benefits of local manufacturing, highlighting the advantages of reliable supply to customers.

    Dulux is owned by Japanese giant Nippon Paints, which bought the Australian company for $3.8 billion in mid-2019 as part of a regional expansion. Nippon Paints alluded to the robust sales of the Dulux operations in a market update in mid-May, according to The Australian Financial Review (AFR): The company said:

    In Australia, DIY paints demand increased due to outing restrictions.

    It now earns 75% of its profits and 60% of sales from paint. The remainder comes from its other brands including Selleys, Yates and other products that are growing in Asia.

    Around 35% of its goods (not including nursery) are made in Australia and the rest is imported, which has been maintained through the lockdown.

    Mr Houlihan believes the value of local production was shown through the lockdown and he wants the government to ensure value-added production is boosted. This means proposed changes to the R&D rules should be scrapped because they are based on the percentage of operating costs, which favours companies with overseas production. Columnist John Durie writes:

    If your costs are $100 and you compete with someone with just $50 in costs and you both spend $10 on R&D, then the competitor will be more R&D intensive and hence get better tax benefits.
    The present system is more volume-based at 8.5 per cent of investment or a bit over half the 15 per cent on offer in New Zealand.

    With 100 chemists and 140 scientists, Mr Houlihan believes he is doing his bit for the R&D effort and local manufacturers should be supported.

    In-store sales

    Bunnings accounts for around 25% of Dulux paint sales, according to The Australian, and is the largest brand stocked by big box retailer.

    Bunnings managing director Mike Schneider said there had been robust demand among paint buyers as more people spent extended time at home in the coronavirus pandemic. He told the AFR:

    During this period we've seen strong demand for DIY paints, especially transformation paints, for kitchen benchtops and cupboards.

    There had also been a rush for "design and effect paints that can be used for upcycling furniture or on an interior feature like a concrete wall", he said.

    Spray paints, for DIY touch up jobs and craft projects, plus interior and exterior paints have also been popular.

    Strong sales for brands such as Porter's Paint, acquired by Dulux in 2015, has been noted at the more premium end of the market.

    As people slowly move out of lockdown, they will find other things and experiences to spend their money on, so companies such as Dulux and Bunnings will face more competition. This will lead to a slowdown in sales unless consumers have fundamentally changed their shopping habits.

    Sourced from The Australian and Australian Financial Review

    Related: HNN has provided extensive coverage of Nippon Paint in Australia. To read more, please visit the following links.

    PAINTORAMA: Nippon Paint - HI News, page 123 Nippon Paint gains foothold in Australia - HI News, page 27

    Elders grows its customer base

    It is looking to "bolt-on" acquisitions for future growth

    The AIRR wholesale business integration into Elders was going well, according to managing director Mark Allison

    ASX-listed agribusiness giant Elders said it has lured about 260 new farmer customers and 18 staff from competitor Nutrien Ag Solutions.

    Managing director Mark Allison estimated at least another 200 customers had indicated they were likely to jump ship to Elders this year, while eight wholesale businesses have also broken away from the Nutrien-Combined Rural Traders (CRT) business model to join the Elders-Australian Independent Rural Retailers (AIRR) network.

    Elders took official ownership of AIRR in November which it acquired for $187 million in July 2019.

    Mr Allison was speaking after Elders released strong first-half results. Statutory net profit jumped 90% on the first half of last year to $52 million for the six months ended March 31, up from $27.4 million a year ago. The company's underlying profit after tax was $47.6 million.

    Recent drought-breaking rains in eastern Australia have lifted farmer confidence, generating extra demand for fertilisers, chemicals and other Elders products and services.

    The AIRR acquisition helped lift revenues to $925 million, from $733 million a year earlier, an increase of 26.2%. AIRR also contributed $8.6 million to EBIT.

    AIRR is the wholesale supplier of about 6000 products to 240 independent rural merchandise retailers and about 100 Tuckers Pet and Produce stores. With eight warehouses and five of its own retail locations, AIRR should benefit from increased margins from consolidated buying across the Elders group.

    Elders expects full-year net profit to be between the broad range of analysts' forecasts of $85.8 million to $102.9 million.

    "Distressed assets"

    Mr Allison has also flagged Elders' interest in potential acquisition opportunities of distressed businesses as the economic fallout from COVID-19 causes some industry players to stumble, especially after restrictions are lifted. He told the Australian Financial Review:

    We're actively assessing distressed assets and we're actively assessing the economic fallout and the opportunities that will bring.

    He said Elders was in a strong position even though there was uncertainty in some parts of the business, with rural property sales expected to be softer because of the impact of COVID-19, and wool prices weakening further as demand from fashion houses in Europe and North America drops.

    The company would remain highly disciplined and only pursue acquisitions that added value and were earnings per share accretive, but there would be more to choose from as some industry players hit hard times because they had too much debt.

    Acquisitions in the past few years have been strictly focused on the core agricultural sector including the TitanAg agricultural chemicals business, and Livestock in Transit insurance.

    Elders recently announced the purchase of Dalby (QLD) independent stock and property agency, Eastern Rural. It is smaller, compatible business to the Elders group.

    The acquisition will see the residential real estate side of the business integrate into Elders, retaining all staff and offering residential and commercial sales in addition to property management through the Elders Real Estate brand.

    The livestock agency, rural real estate and clearing sales will continue to be operated through the Eastern Rural brand.

    Sourced from the Sydney Morning Herald, The Australian Financial Review, Stock Journal, Beef Central and Queensland Country Life

    Related: Taking on Australian Independent Rural Retailers allows Elders to have a presence in the wholesale market. Read HNN's previous article here.

    Elders moves into wholesale - HNN

    Could Bunnings stores get smaller?

    Modbury store on the market

    New store being planned at Tarneit and development application withdrawn in Narrabri

    Retail services director Zelman Ainsworth from commercial real estate company CBRE predicts that retailers like Bunnings were looking for "less bricks and mortar" to reduce operating costs in the future. Mr Ainsworth said:

    Larger retailers in the inner city are looking for smaller format metro stores ... There's a real push from tenants to lease spaces which already have existing fit-outs, so there's less costs involved.

    However, a Bunnings spokeswoman told the Sunday Herald Sun there were no plans to relocate any stores or open up boutique shopping outlets. Bunnings' acting general manager of property Garry James previously told Leader Newspapers:

    We are always looking at opportunities to innovate the design of our stores and we have a number of different formats that cater for the local markets where we operate.

    Full Circle Property Buyers director Rob German said customers of all ages would opt to shop online even after the pandemic, which would encourage businesses to downsize shop space.

    He believes there would be a shift of retailers moving to smaller shops in the same suburb they already operate. But there would still be a place for warehouses and factory spaces in the future because they are "places that online shops can hold their stock". Mr German said:

    People also want to buy more Australian-made products, which could help manufacturers and add demand to warehouses too.

    Tarneit hub

    A 16,5000sqm Bunnings store will be part of the Tarneit Park Hub in a western suburb of Melbourne (VIC).

    Ranfurlie Asset Management, the retail and commercial division of the Dennis Family, is overseeing the Tarneit Park Hub development which will spread over 46,000sqm when complete. In March, chief executive Mark Wilson said the new Bunnings store anchors stage one of the project. He said:

    We are excited to have secured Bunnings. It cements Tarneit Park Hub as a key retail and lifestyle asset for the region...

    It is expected to open at the end of this year and should be open for trade in the first quarter of 2021.

    Leasing agent Tom Perkins, of Leedwell Property, said establishing a Bunnings Warehouse in Tarneit would help to draw business into the area.

    The ability to generate footfall seven days a week and its brand recognition in a community is unparalleled. We have recently completed leasing on a number of new developments anchored by a Bunnings [Warehouse] and they have proven to attract quality, national retailers around them.

    Located within the City of Wyndham, the nation's third-fastest growing municipality, the population of Tarneit and the surrounding suburbs are booming. Mr Wilson said:

    Tarneit Park Hub answers the demand from the community for greater amenity, with great access, proximity to public transport and adjoining Tarneit Central [shopping centre]. It sets an excellent foundation to further enhance the precinct and build on what is already a thriving centre.

    Mr Perkins said Tarneit Central ALDI recently had a major store upgrade as a result of growth in the precinct.

    Narrabri withdrawal

    Earlier this year, Narrabri Shire Council confirmed that the development application (DA) for a proposed Bunnings store at Narrabri (QLD) has been withdrawn.

    A site on the Newell Highway on the northern outskirts of Narrabri had been nominated for the project. However, issues arose which precluded the site from being developed for the store. Narrabri Shire Council executive manager - planning and environment, Daniel Boyce told The Narrabri Courier:

    The NSW Government Roads and Maritime Services lodged an objection to Bunnings Narrabri in January 2018 and council understands that since that time Bunnings has been unable to reach agreement with the adjoining landowner for a shared Newell Highway access...

    In a statement to The Courier, sent in January, Bunnings' acting property general manager, Garry James, said:

    Narrabri remains an area of interest for Bunnings and we look forward to working with council when another suitable site has been identified.

    The proposed Bunnings' development gained both support with some in the community seeing it as an endorsement of the town's potential, while others very concerned it would seriously impact on existing similar businesses.

    The Bunnings DA had identified a total retail area of 5,075sqm for the proposed store.

    Related: In a DA lodged last year, Bunnings had proposed a "smaller format" store for Narrabri. See the link to the previous story here.

    Smaller format store rollout - HI News, page 18

    Modbury store

    A Bunnings store in Adelaide's north-east was offered for sale to real estate investors earlier this year, in the midst of the coronavirus.

    The site at 933-945 North East Road, Modbury is leased to Bunnings and generates a net passing income of approximately $1,432,000 per annum. The 8,055sqm store currently has a 12-year lease in place with 3% annual increases. It occupies a site spanning more than 14,000sqm.

    Major developments in the area include the Modbury Triangle Shopping Centre anchored by a Foodland supermarket and Westfield Tea Tree Plaza Shopping Centre that has a variety of department and supermarket stores attached.

    Sourced from The Herald Sun, Star Weekly, Narrabri Courier and Shopping Centre News


    Paint store proposal to expand

    Inspirations Paint North Rockhampton

    A development application has been lodged for the overhaul of the exterior of the business

    An Inspirations Paint store located in High Street, Berserker (QLD) has submitted plans to extend its shopfront. The development application (DA) submitted to Rockhampton Regional Council is for a material change of use for extensions to existing paint shop.

    Specifically, the application relates to 63, 65, 67 and 69 High Street and 64 and 66 Seigle Street for Lesdel Pty Ltd, the owners of the site.

    The company owns another paint store on the southside and is looking to reduce its overheads by operating from the one main paint store. The southside store is mostly used for storage and before they can close it, they need to extend the northside store to accommodate for the extra required space.

    It is noted the shop extension is a 296.6sqm gross floor area and includes the use of the existing buildings on the premises. The DA also notes the site is located near a state-controlled road and intersection.

    The concept plans drawn by Rufus Design Group indicated further works to be submitted for approval at a later date. The current proposed plans include a new paint store extension of 144.5sqm, along with other storerooms and a covered trade entry, measuring 8x15m.

    The existing retail paint shop will remain in its current location and is to be expanded to the rear.

    The existing dangerous goods paint store will be converted to a regular paint store, with a new dangerous goods paint store extension at the rear.

    An extension of the existing trade drive-through will allow space for a small internal workshop hire room. Behind that will be a new sandblasting grit store.

    To the east of the existing shop, a new covered drive-through entry is to be provided which will have space for four painters' vehicles for temporary set down and loading. Recently, the two existing rental houses owned by the company were demolished to make way for an extended concrete driveway area to accommodate 17 additional car parks, a dedicated delivery truck bay, and relocation of the existing shipping containers that are rented out to local painting contractors.

    A retail shop extension has been planned for a future stage but is not part of this application. This area will be seven temporary carparks until the company is in a financial position to proceed with the construction of the additional shop.

    Sourced from The Morning Bulletin


    Court ruling favours Boral in cement price battle

    Wagners will make less money from selling cement to Boral

    A judgment has been decided on a long-running dispute between Wagners and Boral over the cost of cement

    The Queensland Supreme Court has ruled that building materials and services supplier, Wagners must meet lower prices offered by a competitor in the market when selling cement to Boral.

    Justice John Bond found that a notice sent by Boral to Wagners in October 2019, showing that the company had been able to buy cement from a rival supplier, Cement Australia, at a lower price per tonne than what it was being charged by Wagners, was "a valid and effective notice".

    While Justice Bond found that the prices quoted by Boral in October 2019 to buy cement were valid, he found the earlier March quote was not valid. The March quote was deemed not to be a "current" market price because it did not start until May when market conditions could be different.

    Under the terms of its take or pay agreement, Boral was allowed to stop buying cement from Wagners for six months if it found cement at a cheaper "market price" elsewhere. It could also ask Wagners to match the lower price.

    Boral resumed buying cement from Wagners on October 22, 2019, but at lower prices than previously, which will hurt Wagners' future earnings.

    Wagners chairman Denis Wagner said the company would continue to hold Boral to the terms of its supply agreement until its end date in 2031, reflecting lower rates from competition in the market. He told The Australian Financial Review (AFR):

    Whilst the outcome is not totally in our favour, there were a number of points determined that support our position and therefore provide clarity on the strength of the supply contract.

    In a statement, Wagners also said:

    The court's findings provide some certainty for the parties moving forward around Boral's ability to issue and rely on a pricing notice. This is important given the long-term nature of the cement supply agreement which remains binding on the parties until December 2031 and requires Boral to purchase a predetermined volume of cement from Wagners on an annual basis.

    Boral referred to an earlier statement welcoming the judgment. Boral Australia chief executive Wayne Manners said:

    Boral welcomes the judgment by the Queensland Supreme Court and we are pleased with the long-term impacts of this result under our cement supply agreement with Wagners.
    The result fulfils our objective to exercise our contractual rights to ensure that we can source cement at competitive rates. Boral has pursued this objective in the best commercial interests of our business and our shareholders.

    Boral extended a separate contract with Cement Australia in October 2019, reducing the amount of cement it needs to buy from its own cement joint venture with Adelaide Brighton, Sunstate Cement.

    Before court action

    Boral competes with Wagners in making cement. But after Boral bought the Queensland group's construction materials business in 2011, it signed a "take or pay" requiring it to keep buying minimum amounts of cement from Wagners' Pinkenba plant in Brisbane.

    The prices paid by Boral for the cement (which were redacted from the court judgment) are adjusted in line with inflation, with a review by an independent expert every three years. In March 2019, Boral sent Wagners a quote showing it could buy cement at lower prices from Cement Australia.

    After Boral issued a pricing notice, Wagners accused the company of trying to force down contract prices and disputed whether the lower price was "bona fide", arguing it was for a future period between May and December 2019 and not a current quote.

    Wagners, which previously supplied 26 truckloads of cement daily to Boral, suspended its cement supplies to the company for six months at a cost of $20 million while the matter was before the courts.

    Boral is Wagners' biggest cement customer and takes about 40% of its cement.

    Sourced from The Australian Financial Review and The Australian

    Related: In 2019, Wagners filed a statement of claim in the Supreme Court of Queensland against Boral after the two parties failed to settle their cement supply pricing dispute. HNN featured the story in a previous edition here:

    Court next stop for cement supply dispute - HI News, page 28

    BGC offers property assets for sale

    This follows the divestment of BGC Contracting

    There is speculation that the WA-based building materials group may be sold off in parcels

    The company founded by the late billionaire Len Buckeridge, BGC (Buckeridge Group of Companies) has appointed commercial real estate agent, CBRE to sell 47 industrial, office and residential property assets around the country, according to the Australian Financial Review.

    The office and residential components of the portfolio are located around Perth (WA) including affordable housing apartment blocks that Mr Buckeridge built in the 1960s and 1970s. The portfolio also includes industrial properties in Brisbane, Adelaide and Altona in Melbourne, which service the construction side of the business. There are 18 industrial sites in total.

    The industrial and office properties would likely be sold with leaseback arrangements in place. The sale of the property assets is expected to reap hundreds of millions of dollars for the company.

    The intention to sell its assets was revealed by the AFR last year and coincided with the group's planned divestment of its large mining contracting and civil construction business, BGC Contracting.

    Sell down?

    Sources have told The Australian that BGC is now believed to be looking to sell down only part of the building materials group. However, this is likely to occur in the months ahead once COVID-19 restrictions are lifted.

    The sources speculate that a private equity fund could initially own a stake in the business, then buy out the remainder once the performance of the operation improves.

    Last year it was thought BGC had an annual turnover of at least $3 billion, but this included its contracting arm.

    The business is now involved with producing construction and building materials and offering residential and commercial construction services, industrial maintenance and fabrication services, and property ownership and management.

    It owns quarries and a cement grinding plant. Family members have been involved with running the business, but some believe they could be taking more of a backward step in future. It is thought that the group's divisions are all interrelated and are largely reliant on each other for profitability.

    The opportunity for a buyer to acquire the numerous operations as one group would provide the new owner with an instant construction materials platform in Australia, according to The Australian.

    Sourced from the Australian Financial Review and The Australian

    Related: In previous editions, HNN reported that the building materials assets of BGC were expected to attract the buying interest of companies such as CSR and Wagners as well as private equity firms. To read more, visit the following links:

    BGC building materials draws interest - HNN Flash #11 BGC Group potential sale - HI News, page 29

    Knauf exploring sale of Australian plasterboard assets

    It is also a JV partner with Boral

    Knauf acquired USG Corporation last year, and inherited USG's stake in a regional plasterboard joint venture with Boral, but these assets are not on the block

    German, family-owned global manufacturer Knauf is understood to be making its Australian plasterboard assets available for sale, based on report in the Data Room column in The Australian.

    On offer are believed to be the assets that Knauf owned before it gained an interest in plasterboard assets that Amercian group USG jointly owned with building materials supplier Boral.

    Knauf is seen the No 3 player in the Australian plasterboard market, which is led by CSR. Its Australian operations includes four manufacturing plants in Victoria, NSW and Queensland. It also has plasterboard manufacturing sites at Altona (VIC), Matraville (NSW) and Bundaberg (QLD), and it makes metal profile lines in Beenleigh (QLD).

    These assets are thought to be worth somewhere between $100 million and $200 million. Annual revenue generated from the assets for sale is understood to be about $200 million.

    In 2019. Knauf closed a deal to buy Chicago-based USG for USD7 billion. This gave it ownership of USG's plasterboard joint venture with Boral across Asia and Australia and New Zealand. These assets are not offered for sale.

    The Australian Financial Review (AFR) described the situation as Knauf considering options including a merger or sale. According to the AFR, it is understood that Knauf requested a number of Australian investment bankers to assess options for its assets which includes insulation, plasterboard and ceilings. It is understood Knauf is asking for ideas on where its own assets could fit into the wider industry and what they may be worth.

    Sources have told the AFR they believe Knauf could be a seller at the right price or be involved in consolidation in another capacity, although the review of options is said to be at its early stages.

    Knauf's review is expected to consider the company's relationship with Boral and whether it's time, effort and capital may be better spent in other parts of the world.

    There are also some concerns about a decline in plasterboard sales in the months ahead with predictions that fewer apartments will be built. This is due to recession fears linked to the global COVID-19 pandemic.


    Knauf and USG-Boral were competitors in the local plasterboard and suspended ceilings markets, and Knauf's USG takeover paved the way for Boral to buy back the Australian joint venture.

    After months of talks, Boral agreed a deal to take full ownership of USG Boral Australia and New Zealand, and tip some of its assets into an expanded 50/50 joint venture with Knauf in Asia.

    However, Boral reneged recently after deciding the Australian Competition & Consumer Commission was unlikely to approve the Australia/New Zealand component. Boral and Knauf are back in talks, according to the AFR.

    Competition concerns exist with Knauf jointly owning other plasterboard assets in Australia with Boral. While Knauf also owns the joint venture assets with Boral here, it has to have an arms-length involvement to appease the competition regulator.

    By selling its existing assets, it can then have an operational involvement in the other assets it jointly owns with Boral.

    Sourced from The Australian and The Australian Financial Review

    Related: HNN included the story of Knauf's acquisition of USG in a previous edition. Click on the link here.

    Knauf's deal to buy USG for USD7b - HI News, page 27

    Contemporary facade design

    Mixed cladding trend

    EasyTex by James Hardie can help builders reduce costs, increase efficiencies and still deliver high quality homes

    The "modern" home aesthetic is very popular, accounting for 61% of detached houses in Australia, according to research by BIS Oxford called, "Building Materials in New Dwellings, 2018". This trend is being driven by the "mixed cladding" look, which combines a range of materials from weatherboard and cladding profiles, to render.

    Combining a number of building products on one facade is not only aesthetically challenging, but can impact on budgets and timelines, as it can require multiple trades. As a replacement of those masonry elements, James Hardie's EasyTexTM fibre cement panels offer an embedded render-look finish, to achieve the style without the need for wet trades or expensive render texture coatings. Ronnie Nunez, product & strategy manager, James Hardie Australia, said:

    EasyTex provides a solution that is up to 50% quicker to install than rendered brick and Autoclaved Cellular Concrete (ACC). This results in an on-the-wall cost that is also up to 45% less than rendered brick and ACC.

    (Note: This is based on James Hardie internal data and engagement with qualified third parties. numbers and figures are indicative only.)

    EasyTex comes pre-primed and can be finished simply with two coats of paint. It can provide a more uniform look than traditional render. It is less prone to dirt build up and doesn't suffer from cracking or lime staining.

    It is suitable for use as an external wall cladding in residential detached and medium density buildings. In addition, it can be renovation solution for upper storey additions and ground floor extensions.

    EasyTex can also provide up to 11.27sqm of additional floor space over traditional masonry. (Note: This is based on James Hardie internal data and engagement with qualified third parties. numbers and figures are indicative only.)

    Craig Milson, managing director of Orbit Homes has used the product on a range of medium density and detached home projects. He said:

    EasyTex is easy to use, achieves the look I want and is faster and more cost-efficient to install than traditional materials. I can also use it in non-combustible applications, and being lightweight means I can use it on second levels where masonry would be too heavy. It's my go to for any modern home.

    EasyTex is available in an 8.5mm thickness and a range of panel sizes (2440 x 1200, 3000 x 1200, 3600 x 1200 and 3000 x 1350).