The Diamond Valley Mitre 10 store in Diamond Creek, Victoria is an old-school success that is being managed for the digital retailing age. There are not many entrepreneurs like the store's founder, Norm Hastings any more but the business is being well managed by its current team that includes his children, Paige and Brock Hastings.

This issue features an in-depth profile of the store, and look at how it balances between being a member of a corporate group and maintaining its independence.

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As the group head of brand for Methven, Laura Keogh spoke about the importance to her of post-grad education, and her experiences working for a wide range of companies in her native US and Australia. We also caught up with David Banfield, Methven' CEO, who let us in on some of the secrets behind the company's diverse and innovative culture.

With the most recent season of "The Block" not managing to match the ratings for the previous season, the question mark over the "reality" renovation competition series is hovering once again. Is the franchise still really relevant to today's prospective renovators?

We also speak to Houzz country manager for Australia, Tony Been about the site and how it can benefit hardware retailers and suppliers.

Other companies featured in this edition include BGC, Stanley Black & Decker, CSR, SKIL and Portwest Workwear. There are also new product releases from Gerard Lighting, Kelso and Nylex.

The strategies and actions of big box hardware and home improvement retailers have an impact on independent store owners. This is a fact not always embraced by in the industry, at large.

In this edition, we take a deep dive into how the biggest home improvement big box on a global scale are disrupting themselves in order to continue to grow and develop. We illustrate the strategies from The Home Depot, Kingfisher, Bunnings and Lowe's Companies.

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Non-corporate independent group, Hardware & Building Traders (HBT) held its Business Workshop event in a new format. The group's CEO, Greg Benstead, discussed some of its developing strategy, and later saw members break up into smaller interest groups to discuss ongoing developments that were relevant to them.

Hong Kong-based Techtronic Industries continues to develop innovative technology and produce global sales growth. HNN presents its results for its power tool products. As part of this feature, there is a transcript of the transcription by the always interesting TTI CEO, Joe Galli.

Other stories in this edition include updates on corporate-owned independent, Mitre 10, Australian-based online homewares retailer Temple & Webster and Beacon Lighting.

There are also updates on suppliers such as Stanley Black & Decker, Boral Timber, James Hardie and Dulux. New product releases from Imex Lasers, Fiskars and Mr Fothergill's are featured in this issue.

The parent company of Bunnings, Wesfarmers, released its earnings for the FY2017/18 on 14 August 2018. The reported year has been both a difficult and a dynamic one for the company. Wesfarmers acquired a new managing director, Rob Scott, and a new chief financial officer (CFO), Anthony Gianotti, divested itself of its failing Bunnings United Kingdom & Ireland (BUKI) operations, divested its Curragh mining operations, and announced that it would split off its major revenue generator, Coles supermarkets, as a separate entity.

In what the market and most commentators greeted as a welcome change of direction, the company has recommitted to its Bunnings Australia & New Zealand (BANZ) home improvement retailer, and made a strong move into data analytics as a means of boosting its operations, especially the retail ones, which include Bunnings, Kmart, and Target.

According to the results announcement:

Following the demerger, Wesfarmers will have a portfolio of cash-generative businesses with good momentum and leading positions in growing markets. Continued earnings growth is expected across the Group's retail businesses. Growing addressable markets will remain a focus, along with ongoing improvements in merchandising and service, further enhancements to the customer experience both in-store and online, and investments in value supported by operational efficiencies.

BANZ saw its revenue break through the $12 billion mark, reaching $12,544 million for FY2017/18. This is a more than $1 billion increase over its FY2016/17 result, which came in at $11,514 million, and represents an 8.9% increase. EBIT also grew strong, coming in at $1504 million, up by 12.7% on the pcp.

Statements by the managing director of Bunnings, Michael Schneider, laid out be three main "themes" to upcoming changes to Australia's largest home improvement retailer. The first is the introduction and better use of certain core technologies, including data analytics. The second is a what could be a move away from the standard concept of "efficiencies" that Bunnings has successfully pursued for a long time, towards an approach to performance improvement through "lean" thinking (originally developed by Toyota in Japan in the 1960s and 1970s), which instead seeks to eliminate waste.

The third change could be a shift in the way Bunnings seeks to relate to its suppliers. There is a possibility in what Mr Schneider had to say, that Bunnings might be shifting to an approach that is more inline with the approach of US big box home improvement retailers The Home Depot and Lowe's Companies to their supply chains. This is a more active engagement in product development and design, somewhere between the advice and approval arrangement Bunnings currently has with many suppliers, and its closer ties to captive brands, such as Ozito power tools and Tactix tool storage.

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If you wanted to find a subtitle for the strategic content that HBT's CEO, Greg Benstead delivered at the conference, it might well be "How to avoid becoming collateral damage". What he has clearly understood - and this knowledge is surprising rare in the leadership of independent hardware retail groups - is that Bunnings (and other companies) are not, in any sense, out to "get" independents.

All that Bunnings cares about, in a strategic sense, is continuing and increasing growth, by finding new markets, and improving prices and efficiencies in existing markets. In the process of doing that, it can certainly harm independent retailers - but they are, to use a modern term, "collateral damage", not targeted victims.

As a consequence, what Mr Benstead understands and conveyed to HBT members in his opening address, was that what you need to do to survive one of Bunnings' periodic growth surges, is to make sure that you are, strategically and in your market orientation, not in "the wrong place at the wrong time".

Once you are clear that this is a good strategic goal, it's not really all that hard to do, as Mr Benstead showed by many of his comments about the market. You just have to get one of those conditions right - where you are at strategically, or the timing - to stay on the safe side of the market.

Probably the most laudatory part of what Mr Benstead and HBT's general manager, member services Mike LoRicco had to present is that they deftly avoided the trap that many small business groups fall into: they didn't press the "greed" button. It's always tempting to promise growth, to talk about profits, highlight canny deals and so on. The reality, though, for the solid, professional small retailers that make up most of HBT's membership, is that "security" will win out over "greed" anytime.

While that might seem like a cautious approach, the truth is that behind the scenes the new leadership at HBT has been anything but cautious. As Mr Benstead no doubt knows from his years of working for a large corporation, if you want to change things as a new CEO, the time to do that is right away, after you assume the position. While the temptation is just to stick with the expected practice of the past, and make changes in the second and third years, that just about never works.

As a result we've seen Mr Benstead moving to shake things up right from the beginning. One reason he's been able to move so fast is because Mr LoRicco has been his co-manager on many projects, acting like a personal database of the history of the past 25 years of the home improvement industry, and HBT in particular.

Recently those changes have meant shaking up the way HBT handles its buying, with three new buyers joining the group. But perhaps the most exciting news is that HBT is looking into launching its own tools brand. While HBT is not sharing many details on this, we can say that there was one session for ITT members that went on for a suspiciously very long time.

All we really know is what Mr Benstead had to say in his opening remarks:

Just as we launched H brands many years ago, it has been very successful rolling out, we also see an opportunity for the ITT Group to develop a tools brand as well, so we are going to show the look of that as well to the relevant members. We will be doing that a little later on today.

If they can bring this off, it will be not only significant for HBT, but also for hardware industry buying groups in Australia. Own-brand tools are one of the advantages that IHG enjoys, and is also a technique that Bunnings uses very effectively. This kind of partnership and sourcing for HBT could have very wide significance to the overall industry.

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If we had to place a label on the next five to six years of development for big-box retailers in the global home improvement sector, it would most likely read "the era of self-disruption".

The four big-box home improvement retailers whose recent results HNN has profiled in this issue - Bunnings, The Home Depot, Kingfisher and Lowe's Companies - are all companies currently undergoing a form of self-disruption. All four of them, we believe, have arrived at disruption after undergoing quite similar experiences, though at different times and under different circumstances.

Looking at the history of the four big-box home improvement retailers we are considering, it's possible to see some similarities in the patterns of their development. One constant is that all four have encountered an event, or a series of events, that have frustrated their plans for expansion, and led them to rethink their growth strategies.

The general pattern is that these companies find themselves close to maturity in certain markets under existing business models. Typically they are not in contraction, but growth rates have slowed, or they have become sensitive to certain fluctuations.

To grow and expand, they seek out additional markets. This could mean exporting their business model to new geographical markets, or applying the familiar model to additional categories in home markets.

These efforts fail, typically, because they are usually an attempt at a type of evasion. The existing business model is well-known, comforting, familiar, and not only has proven to be a good success in the past, it isn't really in trouble, yet. It's still producing revenue and EBIT, just not enough to justify ongoing capex investment.

It takes the rough shock of a real failure in new markets for these companies to fully understand that their only alternative to a slow drift downwards is to self-disrupt, change existing business models, and discover new sources of growth. Often the shock, and the need for sharp change is so strong that this move is accompanied by a change of senior management as well.

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The Home Depot is providing same-day and next-day local delivery; Stanley is bring out its new and revamped version of the Craftsman brand; Ace Hardware believes it is building an Amazon-proof business; Lowe's is using Pinterest to build customer intent; Reece-owned MORSCO HVAC Supply opens on the East Coast of America.

Same-day deliveries at Home Depot

Home Depot is meeting the needs of shoppers' "need it now" mentality and has begun express same-day and next-day local delivery to 35 major metropolitan areas across the US. This service is for online orders made before noon on more than 20,000 of its most popular items. Products include anything from Halloween decorations to power tools, that can arrive by van or car the same day, starting at a cost of USD8.99.

To use the service, customers simply choose "Express Delivery from Store" through the website homedepot.com or The Home Depot app, where available.

Mark Holifield, Home Depot's executive vice president of supply chain and product development, believes customers "want it cheap, but also want it to be quick". He adds:

We set an overarching goal for our supply chain to be the fastest, most efficient delivery in home improvement.

The big box retailer is partnering with start-up car and van providers, Roadie and Deliv to offer the new delivery options for smaller items and to quicken the shopping process. It is continuing to expand its supply chain network for faster shipments of large bulk deliveries.

Retailers are realising that to compete with Amazon they need to speed delivery of online orders, especially because web purchases are often the fastest-growing part of their business. Online revenue for Home Depot grew more than 20% in this year's first half.

Stores as delivery points

Many retailers are using stores to create an omnichannel network, because they are already closer to their customers than large distribution centres that tend to be on the outskirts of cities or in rural areas.

Using stores as distribution centres has created options that Amazon can't replicate, such as enabling customers to pick up online purchases at the closest location to avoid shipping fees. It has also given physical locations added value.

David Schick, director of research for Consumer Edge Research, told Bloomberg:

...This is the next iteration of giving consumers choice. If this decade proves anything, it's that consumers want control and choice.

But these kinds of deliveries can be inefficient and costly, with trucks not filled to capacity and taking longer in congested city streets. That's where start-up businesses like Roadie and Deliv come into play. They've created Uber-like online platforms that crowdsource delivery from drivers who are independent contractors.

While that helps reduce costs, Mr Holifield said the retail giant isn't passing all of the delivery expense to customers. Thanks to its size - USD100 billion in annual revenue and rising - the company can afford to subsidise some of it. He said:

Delivery can be expensive. What we look at is delivery helping us to make stronger customer relationships.

Supply chain

The expansion of its delivery offerings is part of the company's ongoing supply chain upgrade. This investment calls for additional direct fulfillment centres and more than 100 new distribution sites to further extend delivery speed and reach.

CEO Craig Menear recently said at the Goldman Sachs 25th Annual Global Retailing Conference:

About USD1.2 billion will go into our supply chain over the next five years that will allow us to essentially move to a same day, next day network for roughly 95% of the US population.

...the majority of that investment actually goes into the downstream network, which will move product from stores and distribution centres direct to customers' homes or job sites. And what we're building out is a direct fulfillment capability to handle all the variety of products that we sell in the project business in home improvement. That's everything from a small package that can be delivered in a car, for example, to a pallet of product that needs to be delivered on a flatbed...in a particular location on a job site.

Craftsman tool brand gets a reboot

The Craftsman brand has introduced 1,200 redesigned tools and products made by Stanley Black & Decker (Stanley). The latest range includes categories such as power tools, equipment and accessories, hand tools, storage and organisation solutions, lawn and garden power equipment, mechanic and automobile tools.

This line of products is the result of Stanley's purchase of Craftsman from Sears Holdings Corporation last year. When Stanley bought the Craftsman brand, the deal allowed both companies continue making and selling products under the Craftsman label. It also gave Stanley the right to sell Craftsman products outside of Sears.

That means a Craftsman cordless power drill or red metal toolbox can come from either Sears or Stanley, depending on where it's purchased. US consumers will continue to see Sears' version of Craftsman in Sears and Kmart stores, as well as Sears Hometown and Outlet.

Stanley's take on the brand are being sold through Lowe's and Ace Hardware stores. Metal storage products will go on sale on Amazon later this year, with more added in 2019.

Competing versions of a brand sounds like a recipe for customer confusion, but Stanley spokesman Tim Perra said the company isn't concerned.

Both companies have agreed to a set of brand standards and guidelines, Sears spokesman Larry Costello said.

Regardless of where the product was purchased, customers can expect that these tools meet the highest performance standards.

Under the deal, Sears will benefit from Craftsman tools sold by Stanley, which will pay royalties for 15 years.

In addition to the opportunity to expand Craftsman's reach, Stanley saw an opportunity to update the brand's look and feel, though the red colour scheme will remain, Mr Perra said.

Among the revamped products is a battery that can be removed from a drill and installed in a lawn mower, eliminating the pull start that makes it easier for users. The battery also can be used for other garden tools.

Other updated tools is a new Craftsman wrench, with its 27 tooth gear design increased to 120 teeth. And 30 Craftsman drills are smaller, lighter and feel better in the hand.

Stanley also wanted to make more Craftsman products in the US, though it wasn't a response to the Trump administration's protectionist trade policies or an effort to avoid tariffs, Mr Perra said.

In an interview with The Street.com, James Loree, Stanley chief executive officer said "one of the strategies behind rebooting Craftsman is to revitalise the products and make as many (of) them in America as possible".

We ended up simply buying the brand because the products had been left to devolve over time to the point where they weren't high-quality, respectable products they once were. They had migrated from made in America to virtually everything being made in China and Mexico.

Initially, 40% of the products will be made in America, with the share rising to 70% over the next few years, Mr Loree said.

Ace Hardware invests in supply chain, digital

The hardware retailer reported record second quarter revenues of USD1.59 billion, an increase of USD95.5 million, or 6.4%, from the second quarter of 2017. Net income was USD54.8 million for the second quarter of 2018, an increase of 7.2% from the second quarter of 2017. Same store sales were up 3.3%. President and CEO, John Venhuizen, said:

We continued to see revenue growth across all of our business units in the second quarter, with the strongest results coming from our local owners in the domestic business which increased almost 6%. And I'm delighted with our 7.2% net income growth despite the expense pressures from our material investments in both our wholesale infrastructure and our digital expansion. We successfully shipped our first order from our new 1.1 million square foot retail support centre...and launched our new hyper-localised Acehardware.com website...which was up 34% in the second quarter.

Mr Venhuizen told the Fox Business channel that the company is having success taking on Amazon. He said:

Don't misunderstand. We all know Amazon is the most disruptive company in human history. But there is a desire of ours to be owning the home preservation business - and a lot of that has to do with feel and touch. And we are sort of blessed that tends to be a little bit more insulated from the convenience of commoditised one-click ordering.

Ace Hardware currently operates 5,161 stores worldwide. It opened 39 new domestic stores in the second quarter and closed 34 stores. The company's total domestic store count was 4,423 for the second quarter, which was an increase of 66 stores from the second quarter of 2017. On a worldwide basis, Ace added 59 stores in the second quarter of 2018 and cancelled 35.

Ace "most helpful"

The Illinois-based hardware cooperative also topped a recent survey about US consumers' favourite home improvement chains.

In a new Market Force Information poll of more than 4,000 consumers, Ace earned a score of 68% on the composite loyalty index, far exceeding that of competitors Menards (57%), Lowe's (54%), Home Depot (53%) and Walmart (36%).

It ranked first in scores for many of the store attributes that matter most to consumers, including value for the price, store cleanliness, checkout speed, store layout and merchandise availability.

Respondents, with 64% identifying themselves as DIY enthusiasts and 68% saying they've watched a DIY tutorial video, especially love Ace's loyalty program, at 70%. And while Lowe's ranks second by that measure and has invested heavily in promoting MyLowes, its score was just 28%.

Brad Christian, chief customer officer for Market Force, highlighted what may cause a retailer like Ace to score markedly better than competitors in surveys:

Service is of the utmost importance in any retail situation, but particularly in the larger-format stores that are commonplace in home furnishings and home improvement. The customer experience relies on being able to find what you need and someone to help. Otherwise customers can quickly become frustrated and that can lead retailers to a missed sale.

The Market Force survey was conducted online in June 2018. The survey represented a cross-section of the four US Census regions and reflected a broad spectrum of income levels, with 55% reporting annual household incomes of more than USD50,000.

Lowe's suggests purchases on Pinterest

For the past five years, social media platform Pinterest has been helping Lowe's customers visualise home improvement projects by serving up products or collections that appeal to them based on their Pinterest profile interests.

Now the retailer will be adding transaction data to customer Pinterest profiles so it can suggest products as advertising, according to Digiday.

Transaction history will further personalise suggestions for customers based on data. For example, if the home improvement retailer knows a customer repeatedly purchases living room furniture, it can offer up pins that align with these interests.

The retailer wouldn't say if the test would be applied to all customers who are Pinterest users or a selected group of them, but Lowe's is growing Pinterest as a product discovery tool to learn more about customers' future intent - a way to target sponsored ads and content as it builds its relationships with customers and prospects. Shannon Versaggi, vive-president of targeted marketing at Lowe's, said:

One of the things we're exploring is the value of sharing our transactional data. We think there's an opportunity to better understand the customer journey using that combined data, to show interest and inspiration and when they pull the trigger to buy.

Lowe's plans to test the addition of transaction data with customer Pinterest profiles in 2019. It is also partnering with a location-based data provider to test the relationship between Pinterest interactions and traffic to physical stores.

Retailers that are selling or marketing home improvement projects to consumers are increasingly looking to Pinterest to assess and build customer intent to purchase products.

In June, Home Depot rolled out a feature called "Shop the Look" that lets customers peruse through curated Pinterest boards that suggest and pair products of interest to customers.

HNN covered this story earlier this year:

For Lowe's, Pinterest stands out among platforms because customers keep coming back to it as they plan their projects. According to Ms Versaggi, many customers who use Pinterest look at the boards months later - a strong signal of future intent.

Customers on Pinterest are also more likely to click through ads. For example, Lowe's said customers on Pinterest have a 20% higher click-through rate on shoppable pins compared to the average rate from Pinterest campaigns.

While customers searching on Amazon or Google likely already have an idea of what they're searching for, Pinterest lets customers get creative with design and conceive of ideas even though the purchase may take place months after the initial Pinterest exploration.

While customers don't directly convert from initial interactions on Pinterest, it's an early indicator of future intent that's measurable and where customer journeys can be mapped. Pinterest also has the added benefit of not presenting sponsored pins or ads in an obtrusive manner for the customer. Instead, it is just seen as part of the product discovery process.

Despite the brand lift with Pinterest, the challenge is to generate the level of interaction to ultimately build a noticeable bump in sales. Lowe's Pinterest page has more than three million followers and 10 million monthly viewers, according to the company.

East Coast expansion for MORSCO

US distributor of commercial and residential plumbing, waterworks and heating and cooling equipment (HVAC), MORSCO has acquired Ott Distributors, through its subsidiary MORSCO HVAC Supply. Texas-based MORSCO is owned by Australia's Reece Group.

In the transaction, all Ott Distributors staff and its location in South Carolina will operate under the Ott Distributors/MORSCO HVAC Supply brand. This will be the first MORSCO HVAC Supply branch on the East Coast.

Ott Distributors has been serving Charleston and the surrounding area with parts and equipment for more than 40 years.

MORSCO launched the MORSCO HVAC Supply brand in April 2018 to better focus its HVAC operations. Jim Mishler, president, MORSCO HVAC Supply, said:

The acquisition of Ott Distributors establishes our presence on the East Coast, where we see a large, attractive opportunity to expand and reach new customers.... We are excited to continue our growth strategy within our organic markets as well as expand into new markets via additional acquisitions and new locations.

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The Women in Hardware feature is about what companies in the hardware retail industry have done in terms of gender equality. The data we present shows that while most major companies have made some progress, there is still far to go. As part of this feature, we profile Jacinta Colley, national account manager at Simmonds Lumber.

In many ways her story is emblematic. It is not just about setbacks, and real difficulties overcome. It's also about a woman who developed a talent for taking advantage of any opportunity, no matter how small, that offered itself.

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In this issue, we write about how bricks-and-mortar retailers can gain in-depth insights to their customers through digital merchandising displays.

We also explore how "Home Automation" has been replaced by the idea of the "smarthome". At the centre of this new idea is an array of devices that combine decent speakers with great microphones linked into speech processing on the cloud.

The edition is also about how kitchens are just starting to move away from the wave of white that swept through over the past two years. That is being replaced by three leading trends: black kitchens, technical kitchens (for cooks), and smaller, open kitchens.

In addition to our regular update on Australian big box stores and independents, international retailers in this issue include Homebase, B&Q, Travis Perkins, Home Depot, Lowe's and Ace Hardware. Suppliers include Methven, Stanley Black & Decker, Sika, Hilti and Imex Lasers.

Kitchens are approaching a new inflection point in their development. As HNN has remarked in the past, it's quite common for a phase when all-white kitchen styling dominate the market to be followed by a period of innovation and change.

While that relates mostly to the interior design dynamics of Australian households, kitchens are also one place where wider social changes that affect families are going to show up in terms both of style and function. Kitchens are one of the most functional rooms in a house, and as families see their needs and requirements change, they begin to seek different kinds of solutions from their kitchens as well.

Future trends

Two of those social changes are the increase in workforce participation by women, and an increase in takeaway food consumption over the past five years -- though the latter varies widely by state and territory.

Chart 1 shows the increase in workforce participation by women, which has accelerated over the past three years. Chart 2 shows the gap in participation rates between men and women (ABS statistics, trend estimates), which came in at an average of 10.5% for FY2017/18 (men 70.8%, women 60.3%), versus 19% for FY1997/98 (men 72.5%, women 53.5%).

Chart 3 is an interesting chart produced by the Reserve Bank of Australia (RBA) which shows the participation rates for men and women in different age ranges. Its two surprises are the increased rate for middle-aged women, and that the participation rate for those under 25 years-old is nearly equal for men and women.

Chart 4 shows percentage change in expenditure on take-away food across Australia. Chart 5 shows the increase for New South Wales (NSW), and Chart 6 shows the increase for Victoria (VIC). Table 1 shows the rankings for per capita expenditure on take-away food for all states and territories. It's no surprise that NSW tops that table, but it is somewhat surprising that VIC is at the bottom.

It's worth noting that according to the 2016 Australian Census, the average Australian woman spends between five and 14 hours a week doing unpaid domestic housework, while men typically do less than five hours a week. Studies indicate that when married, time spent on housework by men declines, while that of women increases. This trend accelerates (on average) after children are added to a family.

This is particularly important as regards kitchens, as women continue to be viewed as "responsible" for the majority of food related tasks, including planning, shopping, preparation, cooking, serving and cleaning up. Families typically have 16 shared meals (a number which excludes weekday lunches). Of those 16, however, the five weekday evening meals carry a larger burden of importance, lack of time for preparation, and a higher stress level. Many families would agree that out of the 100% total effort for food during the week, each of those evening meals account for about 10%. Given this, having take-away food for family dinners six or seven times a month makes a lot of sense.

Just as important is that, globally, the kitchen (and dining-room) is ceasing to be the place where people regularly eat their meals. In a survey conducted by IKEA in 2017, it found that 54% of Berliners and 47% of Londoners do not eat in the kitchen or dining room during weekdays, with a global average of 36% - a trend that is growing in Australia as well.

This range of changes - more women working, more stress related to families getting household tasks done, reliance on outside services (such as take-away food) to solve that stress, and a de-emphasis on the kitchen as a place to eat - will have an impact on kitchens, in particular when it comes to renovation.

One of the first effects is likely to be a slowing down in terms of when kitchen renovations get done. The number of kitchens that are renovated in the range of 16 to 20 years of age will likely increase, while those renovated in the range of 11 to 15 years of age will decline. Figures from the Housing Industry Association (HIA) in Australia broadly support this shift.

In terms of the renovations that do take place, we're likely to see a series of slightly conflicting changes. Kitchens could grow smaller and more compact, consuming less of the overall space of the house. (This will be boosted by the ongoing reduction in overall dwelling size, with even multi-dwelling living spaces growing smaller, as well as the majority of detached housing.)

With changing household interactions, rather than the "kitchen as living-room" we will see the kitchen continue to move towards becoming part of the living area. This means kitchens which provide easy access to the refrigerator and coffee/tea making facilities, but less workspace. There will likely be a move towards smaller in-kitchen eating surfaces, along with the provision of larger eating surfaces (counters and tables) nearby, that can be re-tasked for other household purposes.

While those changes indicate less expensive kitchen renovations and a diminished market, the other big change is going in the other direction. That is the move towards more "technical" kitchens. These are kitchens that will make use of more advanced cooking technologies. For example, the top range oven models released by Miele in August 2017 use a range of combined cooking technologies: electromagnetic waves, radiant heat from the top and bottom of the oven, and a convection fan, to produce better results than conventional-only ovens in a fraction of the time.

One part of that trend will be the "smart-kitchen". In brief, kitchen appliance manufacturers are conflicted about whether they need to fit into the home intelligence systems offered by Google, Amazon and Apple, or if they should develop their own. Developing their own would enable them to promote network lock-in, where you want to buy a Samsung oven to go with your Samsung refrigerator, for example. However, this would preclude other forms of interconnection.

Immediate trends

White to black

White is still dominating kitchen renovations in Australia at the moment, but the good news is that it will very likely change as we move into calendar 2019. Partly as a reaction to white (perhaps), and as a means of better blending kitchens into all the living space, there is a stronger trend towards black kitchens emerging in Australia.

New surface technologies that make matte and textured finishes (in wood and other materials) more durable and easier to maintain are also helping to boost the popularity of black. While black will never be an easy colour to keep looking good, matte finishes do ease the task, as at least every individual fingerprint will not be highlighted against a gleaming reflective surface.

Texture

These new technologies are also seeing an increase in the use of darker and more textured woods used as panelling on basic black kitchens. This is a move away from the somewhat nordic kitchen lines of recent years, and a definite shift in how kitchens can relate to the rest of a house.

Conceal/reveal

One area that remains conflicted is how to present storage space. Along with the shift to black has come designs that hide and conceal the functional parts of the kitchen, such as refrigerators and even cooking surfaces. This has extended to the storage of implements such as pot and pans, as well as pantry supplies.

At the same time, however, many kitchens are innovating with forms of open shelf storage, including suspended open shelves over the work areas.

Birth of the blue

If there is one colour that is coming through the shades of white to influence the design of many kitchens, its is blue. Not a pastel blue, or a blue/grey either, but a deep rich blue. Associated with the blue style, is the use of many different shades of blue, so that, for instance, a rank of cabinet doors will go from dark blue to a lighter blue, and then back again.

The steel

The final trend that is of great interest is a move to make greater use of stainless steel surfaces in kitchens. This is the surface most often used in commercial kitchens, as it is easy to keep clean and sanitary, is highly durable, resists very high temperatures and is relatively difficult to mark. (It does wear over time, but many regard this as a positive attribute.)

If HNN's predictions are correct, and kitchens do evolve to smaller, alcove-like units, open to the home, with a focus on cooking technology that makes life easier, it's easy to see that stainless steel might become more popular.

The kitchen market

Changes from 2017 to 2018

The kitchen trends study from online home ideas website Houzz indicates kitchens for 2018 are not all that different from kitchens for 2017 - with a few important exceptions. The one that stands out the most is that the demand for kitchens priced at over $40,000 has declined, while the mid-range of kitchens, between $10,000 and $35,000, has grown, with an average spend in 2018 of between $15,000 and $20,000.

The other change relates to technology, with fully 12% of renovators adding colour touchscreen displays to their kitchens (with this trending higher, surprisingly, with older renovators). Built-in apps in appliances are used in 8% of kitchens, and wireless controls by 6%.

The areas that have changed only slightly include:

Market size

One pressing question to answer is how the kitchen market will develop in terms of size over the next two years. Tracking this down in terms of statistics has always been a little difficult. One good indicator to begin with are the figures the ABS uses to help calculate the national accounts (from which gross domestic product is derived), the catalogue series 5216.0. These include numbers for alterations and additions, which is the label given to renovations by the ABS.

There seems to be something of a misunderstanding among economists and statisticians who report on these matters as to how these numbers are derived. To quote directly from the ABS guidebook, "Australian System of National Accounts: Concepts, Sources and Methods" published in 2000:15.22

The value of alterations and additions to existing dwellings is estimated using data from regular surveys of building activity, and from the periodic Household Expenditure Survey. The Building Activity Survey provides estimates of the value of work done on alterations and additions with an approval value of $10,000 or more.

As a significant part of alterations and additions activity is not covered in the Building Activity Survey, estimates from the survey are used only as an indicator to move forward benchmark estimates of expenditure on alterations and additions obtained from the Household Expenditure Survey.

Hopefully this will clarify that these ABS numbers do include renovations which cost less than $10,000, as well as those that do not require building permits.

Charts 7 through 15 show the percentage change between the trailing 12 months to March from 2009 to 2018 for each state and territory, as well as the total expenditures. Chart 15 shows the same statistics for Australia as a whole.

One element this last chart shows is a high degree of concentration in terms of outcome for five of the eight states, all indicating a downwards trend in expenditure. The last time there was a similar grouping was in the 2011/12 year, which was followed by a steep drop in expenditure for 2012/13.

These groupings would indicate that there are nationwide forces at work which are independent of the conditions in each state and territory. At the present moment, the most obvious candidate for this is the continuing slow fall in house prices and clearance rates at auctions. These in turn have been caused by two factors. One is increasingly tight credit, as banks move to reduce the number of interest-only loans - though, as the Reserve Bank of Australia (RBA) has noted, the average mortgage rate in August 2018 is lower than that in August 2017. The other factor is the expectation that the RBA is likely to lift interest rates in the first calendar quarter of 2019.

If we were looking for some kind of predictive statistic for kitchens, one that could give some indication, would be the ABS statistic for the number of purchases of owner-occupied established homes for which finance has been provided. This statistic would be linked to both home-owners prepping a house for sale with a kitchen refresh, and purchasers redoing kitchens to suit their own needs.

The Australia-wide changes in those numbers are shown in Chart 14. If these numbers have something of a lag effect, this would indicate that spending on renovations, including kitchens for the remainder of 2018 and the first three quarters of 2019 is likely to be subdued, in a range somewhere between a 0.5% decline and a 1.0% increase.

Kaboodle

Kaboodle has made two strategic changes in association with Bunnings. The first has been the introduction and ongoing success of its kitchen consultancy. This echoes the service long provided by IKEA, and helps to walk customers through the process of designing their kitchens. The second change to service, which is the inclusion of custom-cut cabinetry. The two fit together nicely.

In terms of its marketing, Kaboodle has made some decent TV advertising, and is running this at a higher rotation than its past ads. This campaign seems to be part of a positioning push to make Kaboodle a mainstream choice for kitchens, rather than the kitchen you choose as a compromise.

[Continued]

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At the Hardware & Building Traders (HBT) annual conference in May 2018, Women in Hardware held an event, where Jacinta Colley was the main speaker. National account manager for the respected timber supplier Simmonds Lumber, Ms Colley told some of the story of her journey through the ranks to her present position.

It was, to most of us who attended, a really enrapturing experience. Both because it was quite a story, and also because Ms Colley was able to share some of the more extreme moments she had gone through.

It is a story that is not just about setbacks, and real difficulties overcome. It's also about a woman who developed a talent for taking advantage of any opportunity, no matter how small, that offered itself. Who conformed when it was necessary to go on, but who also blazed back when she could.

The following is the speech that Jacinta Colley gave. HNN has edited the original speech for the purposes of brevity and clarity.

In year 10 when I was doing work experience at a hairdresser's, sweeping the floor. I often wonder where I would be today if I had gone down that track. Because, I am here today in an amazing industry, full of amazing people.

When I was 20, I had moved in and out of my parents' home, and I was kind of annoying my folks a bit. They said to me, "What are you going to do Jacinta? Have you decided?" Well, I didn't know what I wanted to do.

My father was working for Carter Holt Harvey at the time. One day he came home and said, "There's a job going at Carter Holt as an internal sales representative and we think you should apply."

I'm like, "Are you kicking me out?" And he said, no no, you don't have the job yet.

I thought, okay cool. And he said, "You are going to move to Melbourne."

I said, "I don't have the job yet."

He said "You are going to do what I tell you. You are going to sell yourself and get that job."

In the end he won, and in two weeks I was gone.

Only now, in my late 30s, do I thank him - and then only after a couple of wines! Because I would never admit that to him.

Meyer Timber

After 18 months with Carter Holt Harvey, I was approached to work at Meyer Timber in Melbourne, which is a timber wholesaler. I got to work beside a man named Frank Assisi and he became a mentor to me. He was absolutely instrumental in me getting into the wholesale world. And really understanding the ins and outs of a house [timber company] because when I was at Carter Holt all I knew about was pine fascia and flooring. So he really helped me along. No question was ever too hard. He always gave me the time of day, and we are still very close to this day.

Brisbane: Carter Holt, then Simmonds

Carter Holt Harvey kept coming back to me and saying, "We want you to be a rep, we actually think you would do a pretty good job, but you have to move to Brisbane."

I thought, why not? I don't know anyone but I will meet people. So I did that. And if I hadn't taken a leap of faith, I certainly wouldn't be where I am today.

My time at Carter Holt actually turned out to be quite short. Roger Healy who was state manager for Simmonds Lumber at the time, said to me, "You need to come and work for us."

I said, "Why would I want to do that?" And he said, "We're fun and there is more for you to learn in the real world." So I decided to accept that invitation, and I moved over to Simmonds.

I would moved away from a corporate world of red tape, of being told what I can sell at what price and under restrictions. That move to Simmonds would be the best decision of my life.

The first day

I will never forget the first day I started Simmonds. I walked in wearing heels, and the whole bloody place was tiled. It was absolutely hilarious. I am click-clacking along, and one of the boys said, "Are you going to be wearing those every frigging day?"

I replied straight back: "Hell yes!" And when they all laughed, I knew I would fit right in.

I remember Roger taking me for a walk to the sheds and he pointed to different products. I asked him, can I sell anything in the shed? And he said, yes that is what you were employed to do.

So I asked, do I need to know the cost as well? He said, yes you have to make a margin. And I said, am I going to understand that?. He said, "Absolutely."

So these were very instrumental lessons for me.

The dumb email

Roger would also be, as it turns out, the first person I would tell that I would be taking maternity leave. He was thrilled, but my CEO at the time was not.

My then-CEO would send me an email in capital letters, in all RED TEXT and it said, "Jacinta, I have received your news that you are expecting. Do you know that company cars are not tp have car seats fitted to them? Do you know that this is why I was reluctant to hire a young female in sales?

He added that the next female he would hire would be over 50 years old.

I stayed at my desk for some time, and I really pondered over this email. I thought, "this could be fun!" But instead, I deleted it, and I moved on.

Now I'm sure that hasn't happened to all of you but maybe you have had similar experiences. That happened nine years ago and today I think I would be much stronger fighting back. But at the time, I didn't have the confidence that I have today. And I'm really fortunate now that where I work I have a bit more flexibility, and Simmonds are very family-supportive.

After Roger

About two and a half years ago, Roger made the decision to leave Simmonds Lumber. He had been a real advocate for me, supporting me in being a mum, and juggling work, which can be very tough. I was very pissed off at him for leaving because it was going to get harder.

But his decision to leave - and we are still very close to this day - would open the door for me to go beyond being a sales rep, and to step up and become a sales manager in Brisbane. And that meant having grown men in their 50s report to me.

After I had managed to do that, another door opened, and I was able to take the position of national account manager at Simmonds. This would be a first in Simmonds, having a female international role, reporting to the CEO. I was also the first female at Simmonds to take maternity leave. So I have experienced a lot of firsts at Simmonds Lumber.

There are some tough things that can happen in the wholesale game. There are some tough things you are confronted with in a very male dominated industry. What is quite unique about Women in Hardware is that there are a lot of you in hardware. There are not a lot of us in my part of the business [timber wholesale]. So I'm amazed at the turnout today [in Adelaide]. It is phenomenal.

Industry awards

I have worked very hard to gain respect in the timber and hardware industry, and that is something I have been recognised for.

After a year at Simmonds, I received my first Timber & Building Materials Association (Australia) (TABMA) award in 2005.

I remember when I had been nominated and someone at the time said, "Does she really have to attend?" The day of the award was Simmonds' annual golf day. But he was told it was important that I attend. It was hot that day and I had to hire a dress because I didn't have one. I was extremely sunburnt. I remember being so nervous that I almost fell off the stairs, it was absolutely hilarious.

In my ninth year at Simmonds, I was very fortunate to win sales representative of the year again.

This slide was in 2015 when I won the national representative of the year in my 10th year at Simmonds. So I am really honoured and proud people in my "game" respect me and feel confident that they can talk to me and ask questions.

I've also lucky that I have a multitude of people who I can look up to in our industry. There is Kirsten Gentle from TMA, Fiona Lucky who is based out of Brisbane, who is another woman who has defied odds and is right up there in the industry. And Tamika Smith, who I've recently just got to know, she is founding director of TSR Property Solutions and Aspiring Young Businesswoman of the Year in 2017 from the Women in Business Awards of Australia (Gold Coast).

I am also close to a group of women who are part of this amazing industry, Women in Forest and Timber Networks (WTFN). They comprise about 5% of the workforce. It is a forum for women to meet and exchange ideas, similar to Women in Hardware, and it was formed to ensure that our voices are heard. We aim to recognise contributions, we celebrate achievements and we support each other.

Looking back

I feel very fortunate to work in such an amazing industry. I don't have a university degree. I am pretty much self-taught by learning from people in my sector and believing in myself.

I was really nervous when I put my hand up and applied for the national role. Not because I didn't think I could do it, I knew I could but because I would be the first female in Simmonds in a national role in a very male dominated business. There are 89 staff at Simmonds nationally and I'm one of 11 women. There are two women in Brisbane.

So reporting to a male CEO, and every other senior manager is male, could that be scary? No. I actually think they are more scared of me, to be honest. In fact, I have a bit of a reputation in the office that if you want something done, then give it to Jacinta.

"Having it all"

Often people ask me how I balance it all - how do I "have it all" - wife, mum, big job, fitness etc. - how have I done it?

My reply is often "You need to know what you want and what you are willing to do for it."

And, of course, make sure you are aware that in our game there are gender differences, because there are. Make sure you're not talking too much - women tend to talk a lot, men less. Look for non-verbal clues, and don't fight everything. Sometimes it is best to pick your battles.

Also, be selfless, don't think about the next promotion or next job you are doing, think about what it is that you want to drive for the shareholder and the customer and your employee, rather than your self-interest.

I then back it up by saying - be authentic to yourself. Don't wear a mask, it is far too exhausting. I think that is the main thing, be authentic because that is what has got me this far and I'm not going to change now!

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One of the puzzles of retail in Australia is that, had Dick Smith Electronics (DSE) managed to survive up until the present day, it would likely be on the cusp of becoming a thriving business again.

As HNN has described in the past, the demise of DSE was largely down to most of its "natural" markets being eroded. After it had left its hobbyist origins behind, DSE's major product lines consisted of: telephones, music players, alarm clocks, laptops and accessories, still and video cameras, ebook readers, GPS navigation systems, calculators, and sundry electrical goods. Just about all of the main nine categories were upended from 2011 onwards by the advent of the popular smartphone.

Customers weren't spending $80 to $300 in each of those categories, they were spending $300 to $700 for a single smartphone that did all those things - often a lot better than the technologies it could replace.

However, dominant technologies such as the smartphone tend to go down an interesting path where, after a period of replacement, they give rise to new markets, or come to affect adjacent markets. Their inability to fully satisfy the demands of these additional markets can then lead to the creation of somewhat derivative but also new products.

For example, the modern zipper was invented in 1913 by Gideon Sundback, and it took until 1948 (and the advent of plastics) for George de Mestral to invent velcro. The two serve quite different purposes - with some overlap - but if the zipper had not established a market for one style of closure, it's unlikely that velcro would have developed in quite the same way.

In the case of the smartphone, one of the markets that it at first influenced, and now has changed dramatically, is home automation. Its influence is very clearly seen in the fact that today we've even moved away from the term "home automation", and have instead begun to refer to the "smarthome".

This new market is one that a retailer such as DSE could have served well. Where the smartphone initially narrowed much of the electronics market down to two categories - the smartphone itself and the accessories that went with it - it is now, via its influence on these overlapping markets, expanding other categories and creating new ones. Drones and smartwatches would be examples of these new categories.

Absent retailers such as DSE, the smarthome business does not really attach itself that easily to other retail categories. Companies such as Officeworks and JB HiFi are making efforts to enter the market, but these are half-hearted, and poorly directed. Bunnings has pointed out this market as one that is of high interest to it, but statements from the company indicate it has not really fully understood it as yet - and, in fact, views the smarthome with a degree of puzzlement.

The missing ingredient from all of these retailers - and something that DSE could have contributed - is providing knowledge and advice to consumers. For that reason alone, it seems likely that smarthome devices and accessories could end up being a good new market for independent hardware retailers, both inside groups such as Metcash's Independent Hardware Group (IHG), and non-corporate independents (NCIs).

Smarthome evolution

Prior to 2014 the vision most of the industry had for home automation involved using hubs. These hubs made use of new wireless communication protocols, mostly WiFi but Bluetooth as well, to hook into the internet, and enable forms of remote control and monitoring that had not been possible prior to 2000. The other half of the hub consisted of an array of legacy wireless communication protocols that pre-dated the internet, but were common to many home automation systems.

A major problem with these systems was how to control them. Early home automation typically gave users the option of either making settings work programatically, or using some kind of switching system, such as physical switches anchored to the wall, or sometimes a remote control. You flicked a switch or pressed a button, and the windows closed, the drapes were drawn, soft lighting came on, and music began to play.

As smartphones gained wider popularity around 2010, home automation began to make small steps to integrate these as a more sophisticated remote control. With hubs enabling internet connection you could, for example, lower or raise the garage door from your office at work, or possibly switch on the airconditioner before you turned into your driveway.

Enter the Echo

In 2014 the global online retailer Amazon launched its Echo device. This was a small cylindrical tower, about 180mm tall and 83mm in diameter, which was dominated by its speaker array. While the speaker system was good, the real magic to the Echo, however, was its array of seven microphones.

This microphone array, backed up by some powerful software, enabled it to "hear" human speech at low volumes and over relatively large distances, even over interfering noise. What it was listening for was its "wake word", which in this case was the name "Alexa" (though it could be easily changed to "Amazon" instead). When the Echo "heard" that wake word, it began listening for commands its online voice recognition system could understand.

Originally, these commands had mostly to do with enabling the speaker system to play music, which could originate from a number of online music services, including Amazon's own Music services. However, it could also answer basic questions that might be asked of it, such as how many grams were in a cup of flour, what the capital of Belarus was, and so forth.

While many reviewers mocked the device initially, it began to gain rapid acceptance by the public in the US. Amazon opened the system to developers, and, surprisingly, a large number of home automation tools began to appear. The device removed the awkwardness of having to find a remote, or pull out a smartphone in order to use home automation. Users could say "Alexa, turn on the living room lights", and it would just happen with surprising reliability.

Even what seemed at first to be small abilities came to assume an important place in households. For example, the original Echo enabled the user to easily set timers, by just saying "Alexa, set a timer for one minute and ten seconds". For a cook with his or her hands full, this was a great aid. It proved so popular that in mid-2017 Amazon added the ability to set named timers, meaning it was easier to keep track of multiple timers.

At home with Google

It didn't take that long for the Alphabet company Google to realise that the Echo posed something of a problem for it. Google seeks to "own" activities such as search as much as possible, and with the increasing success of the Echo, its share of that market could come under threat.

The Google Home was announced by the company in mid-2016, and released at the end of that year, in time for the Christmas market. While very similar to the Echo, the Google Home was somewhat more ambitious at its launch, with more features "baked into" the basic model, where the Echo relied more on third-party suppliers. The Echo was very reliable at what it did, while the Home did more, but would tend to fail more frequently.

Apple's Siri

Siri was arguably the first commonly available voice-based assistant to be made available on smartphones. It was originally launched as an app for the iPhone in 2010, developed by the SRI International Artificial Intelligence Center, which is a non-profit associated with Stanford University in northern California (and arguably home to the core developments for personal computing itself). The technology was rapidly acquired by Apple, and was included as a feature on the iPhone 4S when it was launched in 2011.

The abilities of Siri remain somewhat controversial, with many regarding the system as now being, as compared to the Amazon and Google systems, somewhat underdeveloped. Others see Siri as being a far more ambitious project, that is unfairly judged by comparison to much more limited systems.

What is certain is that not only did Apple not spot the potential of using its voice assistant independently of its smartphones, but also that it has continued to not understand how this market works.

Apple began getting into the smarthome market by introducing HomeKit in 2014. This provided a framework for home automation to work with Apple's mobile operating system, iOS. It was only with the release of iOS 10.0 in 2016, however, that Apple added an actual Home app to its smartphones, providing a single location from which all connected devices could be accessed.

What considerably hampered development of devices that could connect to HomeKit was Apple's insistence that anything that did connect needed to use a specific secure communications chipset. This meant that manufacturers would need to make a version specifically just for HomeKit, outside of versions that worked for Echo and Google Home. Few did so, and those that did typically made these devices very expensive, to compensate for the extra development work involved, and the very narrow market Apple offered.

The result has been, predictably, that there are very few HomeKit devices available - the online Apple store lists around 20, if you can find them after going through four layers of navigation.

In 2018 Apple has finally realised its errors, and, after four years of poor performance, has replaced its previous hardware security requirement with software requirement instead, which should see more devices become HomeKit compatible, hopefully at lower prices.

In general, however, this has been a real failure for the company, going from having a leading position in the field, to not even being considered much of a contender, in just six or seven years.

The future of the smarthome

There are big differences between the way that home automation developed prior to 2014, and the way the smarthome has been developing since then.

Home automation has always required a very high degree of integration for it to work properly. It has mostly relied on that integration through the fundamental controls, such as the actual in-wall powerpoints, light switches, custom security systems, and fixed cameras. These controls have mostly been relatively simple, "dumb" devices.

[Continued]

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Wesfarmers' recent Strategy Day signified a firm move towards data analytics. In this issue, we explore what this might mean for the large and small retailers in the hardware-home improvement industry.

At the same time, Bunnings managing director, Michael Schneider, outlined areas of growth for the big-box home improvement retailer. It will utilise data sources such as its PowerPass loyalty card to drive future progress.

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In this issue, we also detail the latest results from Metcash, parent company of Independent Hardware Group that includes Mitre 10 and Home Timber & Hardware.

Plumbing is likely to be a big focus for the rest of 2018. Reece Group has acquired US company MORSCO, and HI News speculates this may have something to do with the company expanding its data analytics capability. There are also rumours about Bunnings' plans to change its plumbing range while plumbing specialist, Samios has developed trade-oriented showrooms to boost its sales. Linkware International has also developed an advanced hang-sell and window box packaging system, which makes it easier for DIYers to self service in-store.

In our occasional series of profiling people from the industry, we speak to Steve Fatileh, group buying manager for Hardware & Building Traders group. He has done a lot of work to expand the H brand of stores.

The statistics section features trends in the home improvement and renovation markets, as indicated by Houzz.

International retailers in this issue include B&Q, Screwfix, Home Depot, Lowe's and Ace Hardware. Suppliers include Stanley Black & Decker, Reliance Worldwide, Reece, Fletcher Building Australia, Knauf and Briggs & Stratton.

The possibility of an Uber-like disruption to the power tools category is not a popular notion in the hardware industry but the time to discuss it is now. We explore renting tools as a future option for power tools in this issue.

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Included as part of the power tools feature is a transcript from Joe Galli, the CEO of Techtronic Industries, home to the Milwaukee and Ryobi brands. He talks about new product releases as he presents the company's 2017 results.

In other stories, we provide a preview of the 2018 HBT conference in Adelaide, and report on the latest numbers of entries and exits in hardware retail.

Bunnings' conversion of Homebase stores in the UK has stopped while Kingfisher experiences growth through digital and addresses the gender pay gap.

In the US, Lowe's Robert Niblock is stepping down as CEO and True Value makes a deal with private equity.

Companies featured in our regular Supplier Update include Fletcher Building, Knauf, Brickworks, Duluxgroup, Philips Lighting and Jeld-Wen, There are products from De-Walt, Worx and Crescent.

This edition also includes a profile of paint accessories maker, Oldfields.

At first sight, Grant Crowle could be viewed as an easy-going tradie on his way to the pub. But underneath that casual exterior is a sharp-minded, intense and ambitious hardware retailer. We regard him as an outlier in many ways, an activist willing to take on council planners and a corporation or two.

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The differences between the major buying groups are quite stark, but what is the economic, market basis for those differences? Using the work of economist Robert Steiner, HI News models what the groups are doing, and suggests where their current directions will eventually lead.

We take a deep dive into the results for the first half of FY 2017/18 for Wesfarmers/Bunnings, and what the demerger of the conglomerate's Coles operations might mean for the hardware-home improvement retail industry.

We also introduce our readers to the new CEO at the Hardware & Building Traders group, Greg Benstead.

In our regular look at statistics relevant to the hardware industry, the Australian Bureau of Statistics has released its numbers for renovations, based on household spending figures, not approvals.

This issue also includes stories on Adelaide Brighton, Boral, and James Hardie. We provide performance updates on Home Depot and Ace Hardware, as well as the job cuts at Kingfisher.

Products from Bosch, Hitachi, Crescent and Lufkin are featured.

Ian Corwell's Mitre 10 store in the Melbourne suburb of Doncaster represents some of the best ways one generation can pass on the business to the next generation. Mr Cornwell seems to have done a very effective job of re-inventing the business for his son, Matt. At Doncaster Mitre 10 hardware retailing is an appealing career choice for savvy, technology-focused millennial.

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We also take a closer look at Bunnings United Kingdom and Ireland's (BUKI) writedown of a projected $165 million in the first half of FY2017-18. At a presentation before investment analysts and mainstream media, Wesfarmers managing director, Rob Scott, announced a review. Anything, including closure, is on the table, according to Mr Scott.

Grocery, liquor and hardware wholesaler/retailer Metcash Limited released its

results for its first half FY 2017/18 (May to October) on 4 December 2017. These results include revenue and EBIT from Metcash's acquisition of the Home Timber &

Hardware Group (HTH). As Metcash has chosen to combine revenues from HTH with those of Mitre 10, it's not possible to provide a true comparative

measure.

The December 2017 retail figures available from the Australian Bureau of Statistics (ABS) show that retail sales have declined overall as compared to calendar 2016.

In other news, UK building materials supplier and retailer Travis Perkins benefits from its tools hire business. Acquisitions are also made by Stanley Black & Decker, Energizer and Briggs & Stratton.

The Honda Power Equipment and Victa brands are featured in this edition. There are also brand new products such as the Guardian water leak prevention system and the patent pending ZZem Screw.

Kitchens dominate the last issue for 2017. White kitchens had a major influence on the market this year but the trend will likely fade by the end of 2018. The new kitchen is more modest, less "kitchen-y", and closely integrates with the surrounding rooms. As part of our extensive analysis of this sector, we take a look at the types of surfaces that make kitchen benchtops.

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We also report on the largest corporate players in the Australian home improvement industry: DuluxGroup (Dulux) and Bunnings.

Bunnings in Australia continues to grow strongly and Bunnings in the UK

and Ireland is working hard to improve in 2018. Dulux experienced good

growth in its core paints business but the company faces challenges in the medium term.

Metcash's hardware entities, along with individual respondents, have filed defence statements in the pending court case brought by National Building Suppliers, alleging a data breach. We explore some of the general issues involved, and provide examples of the defence document contents.

In the statistics section, we present two views of the housing downturn: the building industry sees this as a medium-term downturn, and the real estate/home

owner market sees it as more short term. Factoring in RBA intervention, HNN

agrees with the building industry

In other news, Kingfisher posts its third quarter results along with US-based home improvement retailers, Ace Hardware, Home Depot, Lowe's and True Value.

Suppliers featured in this edition include Brighton Best, Hillman, James Hardie, Stanley Black & Decker, and Big River Group.

If you wanted a single metric on which you could judge what happened to kitchens in 2017, you could do worse than to look at that perennial source of overstated kitchen style, the television reality renovation show, "The Block".

In the most recent season 13, the "kitchen reveal" clocked in with 1.545 million viewers, in third place behind the "backyard reveal", and, the winner, "master suites reveal". The "interim" shows about the kitchen building process were also very low on the rankings. This is in sharp contrast to the previous two or three seasons, where kitchens were ranked first or second, and the interim shows attracted decent audiences as well.

Looking at the kitchens themselves, it's easy to see why. They are (mostly) functional and pleasant. However, in contrast with past seasons where some kitchens on "The Block" have been extravaganzas of vast counters, expensive appliances and high-end finishes, these kitchens were mild, bland, a little outer suburban. Appearing in the aftermath of the near operatic drama of the very large master bedroom suites from the previous week, they seemed almost negligible.

Design changes

The most recent "The Block" kitchens were also, universally, "off-trend". While they all clung to the standard accoutrements of what has come to be a "modern" kitchen -- bench seating for meals, textured benchtops, contrasting dark cabinet doors, displayed appliances -- much more pared-down kitchens began moving into prominence for the fashionable in late-2016.

As shown in such display showcases as the recent Australian Interior Design Awards, the leading-edge kitchen today is simplified, with the clean lines of a modern table replacing stools at a kitchen counter, near seamless and handle-less cabinetry the ornamental efforts of the past, with appliances either concealed or modestly displayed.

They are also, near universally, dominated by the colour white. "White", of course, is a way of referring to an entire design trend, which we might think of as being all about "simplicity", delivered in a spare, smooth style, that is not Scandinavian in origin, but heavily influenced by Scandinavian design. The overall colour pattern remains white, but this is accented by "blush" colours, including pink and grey. Another strong trend is white-and-timber, with light- and mid-brown timber used to accent a white kitchen, or white used to accent a predominately pale timber kitchen.

Why white?

The move to white in kitchens tends to be significant whenever it occurs. It is motivated by a number of different factors, some cultural, some commercial, and some oriented around a shift in the way consumers view and use their kitchens.

In terms of the commercial aspects, it pays to be aware that the kitchen area, which is one of the most profitable ones in home renovation, is highly competitive. There are four levels of competition: the "flatpack" kitchens; the mass-kitchen suppliers; builder/specialist custom kitchens; and high-end designer custom kitchens.

Group 1, the low-end, is dominated by Kaboodle and IKEA, though Freedom has launched its "Essentials" range in order to compete in this area, and Hafele is expanding its marketing to include more independent retailers.

Group 2, the mass-market area, does sell to DIYers, but it is more strongly focussed on tradies who install kitchens. One of its key players is Principal, which seems to have taken over the Mitre 10 business after being the main supplier for the Home Timber & Hardware Group (HTH), when these merged into the Independent Hardware Group (IHG).

Group 3, the builder/specialist segment, features some major chains, such as Freedom and The Good Guys, but also smaller, regional players.

Finally there is Group 4, the top-end designers, who are often associated with architectural firms, and whose renovations are usually part of a more comprehensive refit or refurbishment.

In terms of the costs of kitchens, there seems to have been some movement on this since mid-2016, with the amount most consumers are willing to spend steadily coming down. There is a general consensus among those HNN contacted that $18,000 would pretty much mark the middle of the market in terms of numbers.

Kitchens under $18,000 are clearly dominated by Group 1. Kitchens from $18,000 up to $27,000 are in the most competitive area of the current market, with Groups 1 to 3 competing. In the $27,000 to $48,000 region, Group 3 dominates, and over $48,000 is the territory of both Group 3 and Group 4.

The HIA pegs the average price of renovation kitchens at around $20,411. Chart 4 shows the spread of spending as determined by the Houzz Kitchen Trends Study - Australia for 2017. This is tilted a bit more towards the high end than the HIA figure would indicate, as it is based on the Houzz market, which would tend to be a little more "upmarket" than the general population.

While these are average figures, HNN's own research indicates there are some differences between the states. In particular, kitchens in NSW tend to be priced about 10% over the average. Surprisingly, over the past two years, that trend has been reversing in VIC, where kitchen costs are averaging down about 10% on the HIA number.

So, how does white play into these numbers? Well, for one thing the Houzz survey certainly supports the "rise of white": the top three colours for kitchen cabinetry are white at 61%, grey at 7% and black at 5%.

In terms of its commercial effects, however, white is very much a competitive strategy adopted by the more high-end kitchen installers and designers. One of the factors that have driven them to this strategy is the high level of success of both Kaboodle and IKEA in the lower-end market. IKEA's new Metod kitchen has proven to be very popular, especially as it reflects basic Scandinavian values, and Scandinavian design is growing in popularity. Kaboodle's colourful kitchens have brought a sense of play and engagement to what was once a very plain utility room.

The success of these kitchens has driven custom kitchen makers to find new ways to differentiate their offerings. Initially they did this through the use of more exotic benchtops, but both IKEA and Kaboodle devised strategies to match this. Eventually, though, they found the perfect weapon to hold back these competitors: white.

Nothing is quite so difficult to bring off as a really good, all-white kitchen. With the removal of colour, the kitchen is all about form and -- to some extent -- texture. Every seam, every knob, blemish in a benchtop, every slight jot of colour, is shown up and broadcast.

These kitchens virtually demand custom design. Without careful customisation and fitting to a space, they can end up being cold, clinical and formless -- in fact, simply "cheap looking".

Pared down to extreme simplicity, without the "breakfast counter" (actually designed in the US to mimic the counters found in most diners), relying instead on a matched and carefully chosen table, it is a look that really is beyond the reach of most DIY/flatpack kitchens.

While IKEA has not done too badly out of this shift -- with a semi-custom installation these kitchens can come close to matching this style -- Kaboodle seems to have fared less well. Even its in-store displays at Bunnings, which were really designed to showcase colourful kitchens, fare less well when white and very pale colours dominate. Added to this is that IKEA kitchens have given rise to a wide range of "hacks" that enhance and extend their utility, as people all over the world experiment with additions and variations, such as custom wood doors mounted on IKEA cupboard carcasses. Kaboodle has yet to really benefit from this kind of (partly social media driven) innovation.

The other side of white

While these commercial aspects are an important part of the story of white, there is much more to it. What is also going on is a restructuring of the kitchen, in the sense of the role it plays in the house. While the past four or five years have seen the rise of the "kitchen as living-room", the kitchen is instead now becoming more of an integrated part of the house, functioning as a conjunction to living, dining, and family rooms.

To get a glimpse of how this works, it is really worth reading a blog post by London-based designer and blogger Cate St Hill, on what she calls the "transformation" of her apartment through an IKEA kitchen makeover.

To continue reading the complete story, please download HI News (it's free, of course):

A large part of the current edition is about the retailer that has been taking up a lot of headlines recently: Amazon. We go through some of the background and research needed to understand what effect this new market entrant will have on Australian retail.

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

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

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

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

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

In addition to Oldfields' new paintbrushes, HIlti has a new set of smart tools, Knipex releases new gripping pliers and Kohler's Exhale showerhead is inspired by the dahlia flower.

An in-depth story on the Murphy's Mitre 10 store in Monbulk (VIC) and the woman who runs it, Julie Murphy dominates the pages of the latest edition of HI News. We also analyse the potential ramifications of Natbuild's accusations that Mitre 10 allegedly breached its data.

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

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

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

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

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

Black & Decker's GoPak battery, Cabot's latest deck coating system, the Festool Hybrid Sander and the cordless pruning saw and chainsaw from Worx all feature in the products section.

Home improvement corporates dominate the latest issue of HI News: Bunnings, Techtronic Industries and GWA Group. We analyse their latest financial results and strategies.

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

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

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

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

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

Backpacks and other soft-side storage products are taking over the traditional metal toolbox. Other products in this issue include Boral Timber's newest flooring and Cub Cadet's brushcutter.

Yarra Junction H Hardware has a starring role in the latest edition of HI News. It is a store run by smart, savvy and enterprising independent retailers.

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In other retailer news, Beaumont Tiles has launched two exclusive collections of Italian design and manufactured tiles.

Stanley Black & Decker reports its first half 2017 results that are focused on the sales of its FLEXvolt power tools. Hitachi Koki is also preparing for a buying spree with the help of US buyout firm and new majority owner, Kohlberg Kravis Roberts.

We take a look back on the last financial year of hardware retail statistics. In Europe, Bunnings UK & Ireland posts another loss as it opens more stores and Kingfisher's B&Q experiences a sales slump.

US-based hardware retail co-op True Value may be up for sale and its rivals, Ace Hardware and Do It Best have expressed their interest in buying it.

Back in Australia, renovations are taking on an increasing number of environmentally friendly features.

Lasers levels are moving beyond the traditional tradie market and into the DIY consumer market. Other products in this issue include Milwaukee's Packout modular tool storage system and Makita's new plunge cut saw.

The current issue of HI News is primarily about listed wholesaler and retailer, Metcash and its Independent Hardware Group (IHG) subsidiary.

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In addition to reporting its annual FY2016-17 results, Metcash confirmed to Fairfax Media that it rejected an offer from Reece to buy its Hardings Hardware group of stores.

Statistics in this edition takes a look at how "complementary" the Mitre 10 and Home Timber & Hardware store networks are within IHG.

There are more developments in Bunnings' UK business than in Australia as it doubles its pilot stores in the British market.

The Home Depot is acquiring rental company, Compact Power Equipment and Home Hardware in Canada is repositioning the brand through a new ad campaign.

The main product category we explore in this issue are trim routers. Other products featured include the Fiskars weed puller, Stihl's backpack battery, Cub Cadet's Z-Force mower, the newest multi-tool from Fein Power Tools, Swann's latest security system and the Worx Ai drill.

The latest edition of HI News focuses on the major corporates in Australian hardware/home improvement retailing: Bunnings and DuluxGroup.

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In terms of independent retailers, Tasmania-based Kemp & Denning (K&D) has sold its trade business to Clennett's Mitre 10 and Newcastle's Toolies store is closing down.

Our regular section on statistics takes a look at the entries and exits of Australian businesses to see how hardware retailers and general retail is faring.

Klein Tools has acquired General Machine Products and in other US news, Sears is suing another tool maker.

Also, US home improvement retailer Lowe's outsources some of its tech jobs to India while experimenting with exoskeleton suits for store staff; Ace Hardware wins again on customer satisfaction; and True Value delivers its first quarter results.

In the UK, Bunnings opens its third store, names more locations and appoints a COO.

Product news in this issue includes the launch of graphene paint in the UK; a roofing tool that has been developed in WA; and the Everdure range of BBQs winning a prestigious Australian design award.

Other products featured are the Worx BladeRunner X2 portable benchtop saw and Loctite RE-NEW adhesive.

This issue of HI News is mainly about Hardware & Building Traders (HBT) and its 20th anniversary gathering, held recently in Sydney. It is indirectly dedicated to Tim Starkey, its leader for many of those 20 years, and whose loss is still deeply felt.

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We also take a look at the bathroom category and its emerging trends: ageing in place, polarisation in the market and "design dissonance".

Bunnings is placing more of its stores on the market, both here and in New Zealand. Its website is the most visited Australian site.

Building material companies, CSR, Adelaide Brighton and James Hardie report on their quarterly results.

In other news, latest data seems to indicate that an increasing number of shoppers are using Amazon to buy home improvement products.

On the international retail front, Lowe's is seriously getting into the maintenance and repair market, and Home Depot is building brick-and-mortar stores again at a slower rate. Ace Hardware delivers a solid first quarter result despite a slight dip in same-store sales.

European big box retailer, Kingfisher has see also seen its like-for-like sales slow down in its first quarter.

Innovative products from the HBT show are included in this issue along with Fiskars PowerGear[tm] garden tool range and the on-trend Reflekta round mirror.

The latest edition of HI News takes a closer look at the innovation cycles at Stanley Black & Decker (SBD), and the power tools division of Bosch.

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As impressive as SBD has been with its recent product developments, it is really Bosch Power Tools that has begun to show it can take advantage of the very big potential the company has, both with its stand-alone expertise and history, and through its association with the larger Bosch company, and its ongoing research into sensors.

This issue also includes our regular, in-depth look at the kitchen category. Freedom Kitchens is launching a flatpack range, IKEA has stopped advertising, while Kaboodle has refined its digital marketing approach.

For the first time, we have put together a guide to the HBT Conference that started on May 10.

In terms of retailer news, Mackay-based independent hardware business, Porters has acquired four Woodman's Mitre 10 stores in Queensland. Managing director Gavan Porter Snr said the company purchased the stores located in Sarina, Marian, Proserpine and Cannonvale (QLD).

Big box retailer Bunnings United Kingdom & Ireland has revealed its fifth store location and B&Q has finally found success in China through e-commerce.

Outdoor power equipment maker, Husqvarna has begun a pilot project in Stockholm, Sweden, for homeowners to access pay-per-use power tools for the garden.

Featured products in this edition include sustainable wallboard from USG Boral, Krylon's new spray paint for outdoor decor, and Kwikset's Z-wave enable locks, to name a few.

This edition of HI News focuses on a major store in the Hardware & Building Traders (HBT) network that undergoes a re-brand to become an H Hardware store. We travel to the bucolic regional town of Inverell (NSW) to see how it came about.

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On the global stage, we take a deep dive into the 2016 results of Techtronic Industries (TTI) and provide a transcript of CEO Joe Galli's presentation to analysts and investors.

We also look at the latest reports from international home improvement retailers, Kingfisher in the UK and US-based Home Depot and Lowe's. Kingfisher's results will be in two parts.

Local big box retailer, Bunnings continues its expansion both in Australia and the UK.

Other news stories include Adelaide-based online business, Monsta selling paint direct to consumers; Briggs & Stratton's exclusive distribution of Billy Goat products in Australia; Tasmania's independent retailer K&D losing its CEO; and Ikea's foray into smart lighting.

A Melbourne-made bin caddy is just one of the products featured in this issue, along with the Mirka dust-free sanding system which is new to the Australian market.

The following is an extract from the transcript of an address the CEO of Techtronic Industries (TTI), Joe Galli, gave to investment analysts on the release of TTI's results for 2016.

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Transcript

We are delighted to share with you yet another record-breaking year. Sales are up 9.8% in a marketplace that is not going anywhere near that. We are totally outpacing our competitors in every geographic region. Sales of our power equipment business were up an amazing 13.3% [in local currency]. This is not just Milwaukee, this is our entire power equipment business. Our DIY business, our OEM business, our outdoor business. These results reflect just amazing performance in our local operations around the world.

Floorcare down 3.3%, but that is misleading when you consider that the future of our floorcare business [sales of cordless] was actually up 53% [in local currency]. So our overall floorcare business needs to be improved, we recognize that we are dedicated to that. But let us not lose sight of the progress our team has made launching a very exciting stream of cordless floorcare products.

You will see in a moment that we have an outstanding pipeline of new products in floorcare that will fuel the turnaround of the business and help it to catch up to the power tool progress that we've made. As Frank has pointed out, our sales are up double digits, gross margin up 50 basis points.

This is the eighth consecutive year of improvement in gross margin. The eighth consecutive year. Up 36.2%, and we were able to able to leverage our sales growth EBIT performance at 12.6% growth. Net profit is up 15%, which in the environment in which we are in, with the level of investment we're making we think is quite acceptable.

This is a chart we love to talk about. So for eight consecutive years we have driven gross margin up from a modest starting point of 30 .8% to a level now at 36.2%. As Horst pointed out at the start, we've basically doubled our output in China with the same headcount.

So think about that: we've doubled our output with the same head count. We are uniquely positioned to transition to any geographic region such as the USA, if the legal environment and the political environment creates an opportunity or a requirement to produce there, we can move at a very quick rate. And I'll show you that in a moment.

As Frank pointed out, working capital was better than last year at 16.4%, that's world-class, that still continues to be the best in the industry. And yet we do think there is room for improvement, in inventory as we go forward. But what we won't do is to compromise our service level to our customers.

If you were to look at Home Depot or Bunnings or any of our other major customers, what you would see is that we are routinely awarded vendor of the year recognition for outstanding service levels. We retain and exceed the levels of our competition and we are doing it with an acceptable level of inventory. While that may come down a bit as we go forward, but never at the expense of customer service. That is a hallmark of TTI.

Milwaukee

So, you know, look, the Milwaukee business is one of the growth engines of the company along with Ryobi. We were able to grow Milwaukee last year at 21%. Now think about that: 21% growth in the power tool industry. We are not in Silicon Valley here, we're talking about power tools, a GNP business for years and this significant part of the company is growing at 21%. As we have shared before, our plan is to grow at a 20% clip really for the next five years at Milwaukee as we continue to take market share and stimulate market growth with our cordless strategy. I'm going to share that with you here as we go.

The Milwaukee growth is extraordinary not only because it is at 21%, but because we are able to do it in every region that we are tracking around the world. So North America was really strong at 20.6%, but Europe was the star of the company last year with a 21% growth rate in Milwaukee.

As you know, the European theatre is in a state of contraction, there is all sorts of concern about the economic health of the region, and yet TTI was able to build Milwaukee at 21.3% growth. That is maybe the most exciting result we had last year. Of course, rest of world is paced by Australia and New Zealand, where we have become the number one pro supplier of power tools. But also we are beginning to focus on other countries in Asia, like Korea, like Taiwan, where we've had amazing success with their Milwaukee program. Not at a discounted level, we are going in with significant premium pricing, and we are finding users willing to pay up for the quality and the safety that we provide with Milwaukee.

Manufacturing in USA

Horst mentioned upfront and I think that it is important to point out now, that we have never put all your eggs in one basket when it comes to manufacturing. We have an outstanding manufacturing foundation in the US, this is not something that we reacted to, this has been in place for a long time. For a lot of reasons, we always felt we should have geographic diversity when it comes to manufacturing. We also have manufacturing in Europe by the way. These decisions are made based on a strategic plan that would allow TTI to flourish no matter what local laws are passed.

So if something happens in the US, and there's some sort of border tax, it is going to affect everyone equally, everybody manufacturers in Asia, it is not like we are the only company producing power tools in China. The great news is that we are positioned to ramp up fast in our manufacturing operations. We have two Milwaukee factories, we have a Ryobi operation, a floorcare operation, and a handtool operation. We have a lot of friendly [US state] governors that seem to be anxious to fund our decision to increase manufacturing.

So if you say what is going to happen to TTI if we do this? Well first of course the US has higher labour rates, but you save on freight. We have learned to automate our manufacturing and we have proven that over the last five years, and we have an amazing world-class manufacturing operation in China, that is a perfect operation to supply the rest of the world. The US is, everyone is speaking about today about the US, but we are growing like crazy in Canada and Europe and Australia and Korea, and Latin America, so we have China, China is ready to go to supply the rest of the world if the US focuses on production locally.

Again I think that you have to understand that the laws that may come across in the US will not discriminate, every manufacturer will be dealing with the same situation. It is just the winner will be the company that can move the most quickly, and I think that our execution track record speaks for itself.

Future leaders

Okay, so here's another interesting highlight of the company's success. We are continuing to be dedicated to hiring college graduates to provide manpower for our growth. So this year we will actually hire over 500 college graduates over 50 campuses in the US, and in another 12 countries around the world. This is a program that provides the future leadership for TTI.

It is an interesting group that we hire. These Millennials that we hire, they are 52% female they are 18% bi- or trilingual, we look at 100 resumes and we pick one, we do that 500 times and then the top 10% of those people are promoted into the company's opportunities or product management jobs etc. around the world.

There is no one in our industry that is remotely close to this kind of commitment to developing future leadership. It is one of the things about having so many Millennials around, the Millennials all want to save the world, but they also live on social media, and they think their iPhone should control everything. So you're going to see TTI blazing a trail when it comes to iPhone and Bluetooth capabilities on our products, whether it's in floorcare or power tools.

This is an enormous advantage that I think is underestimated. I think to have a group of 50-year-old executives sitting in a room trying to figure out how to turn the iPhone into a device on the jobsite might not be the best strategy. And I think that our campus recruiting program is going to bear fruit as we move forward.

Thinking about the market

I would like to introduce today, a way for you to think about our market over the next five years. Many people have said, what are you going to do next? Horst and I talk about this all the time. Milwaukee is growing like crazy, Ryobi is an amazing success story, what is going to happen next?

We wanted to share with you our vision about the marketplace over the next five years and to give you some confidence that we can continue to grow our company the way you have in the past and deliver outstanding financial results, in the businesses we serve today.

 And this growth we have will be fuelled by what one of the most prominent analysts of our company has coined the phrase "the growth drivers" to describe. We have Milwaukee, Ryobi are powerful growth drivers, soon to be joined by floorcare.

Let me show you how that growth will manifest itself in the market.

So first of all we we think in five years, we are talking about serving a market that could be USD35-USD36 billion plus. These are internal estimates, this relates to marketplace that we are in fact helping to create, and develop. So our vision is to stimulate and create a market, much in the way that Apple did with the iPhone and the iPad, and we want to be in a position to harvest the benefits of that creation.

We recognise that we are never going to control the whole market, and I think what people miss, none of our competitors have to lose for us to win. We have some very good competitors - Bosch, Mikita, Stanley, DeWalt - these are well-managed companies ,and they are very strong in many geographic regions. We intend to be real leaders in the market, particularly in cordless, where we already are exhibiting that leadership. What we create here will benefit everyone, and the key is that we want to be the Apple, we want to be in the vanguard, and to be the company that is creating the opportunity.

Network effects

The power tool market has changed dramatically. The reason this is so exciting, is because of what we call the network effect in cordless. In the old days power tools was called a "best of of breed" business. So you'd walk into a Home Depot and you would buy a Milwaukee Sawzall, a Bosch router, a Makita circular saw. And you were considered to be a smart user if you knew what brands to buy for what category. And there was no interconnectivity, so your truck looked like a rainbow of colours, and it did not have and it did not matter if one tool could talk to another, because there was no synergy, no connectivity.

That is all over now. The power tool market is going to go to cordless. In fact the whole power equipment market is going to go to cordless, including floorcare. And the opportunity for us is because we have the broadest network work the broadest range of products that work off the same battery platforms, we think that we can convince the user to buy our kits to start and lock them into our network over the long haul. And this is a way where you can build a much higher level of marketshare at a much higher level of growth than the old best-of-breed days.

Let's take a look at this cordless market potential. So the total power equipment market potential we think is USD36 billion.

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The first issue of HI News for 2017 focuses on what can be expected in 2017 from major retail groups, Mitre 10, Home Timber & Hardware (HTH) Group, Hardware Building Traders (HBT), and Bunnings.

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The latest data on hardware retail sales from the Australian Bureau of Statistics undergoes scrutiny. Although most mainstream media outlets have seen the closure of Masters Home Improvement as casting a shadow over hardware sales in December, it's likely the weather also had an effect.

Bunnings opens its first UK trial store in St Albans. In Australia, the big box retailer is moving into Devonport (TAS). It is taking over an ex-Masters site in Mount Gambier (SA) and undergoing negotiations for another former Masters location in Gregory Hills (NSW).

Tasmania-based independent retail group, Kemp & Denning announced that it is closing two of its warehouse stores.

We take a brief look at GUD Group's half yearly results, and AMES' purchase of the Hills Home Living brands that includes the iconic Hills Hoist. In other supplier developments, the Hitachi power tools unit has been sold to private equity and Stanley Black & Decker acquires Craftsman in the US.

This edition features updates on the Grafton Group, Screwfix and Travis Perkins in the UK, and as well as US retailers, The Home Depot and Lowe's Home Improvement.

Products from EGO outdoor equipment, Fiskars, Lufkin, Rover lawnmowers and Kwikset are also highlighted in this issue.

The final edition of HI News for the year is mainly about the next generation of DIYers. As baby-boomers age out of DIY, home improvement retailers and suppliers need to revise the kinds of products they sell to younger generations.

Technology remains very important for the millennial demographic when it comes to their homes.

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Also in this issue, we analyse the strategies that may have led to the demise of Masters and look back at some of its merchandising highlights.

We take a further look at Metcash-Mitre 10 results and reveal its independent hardware brand. Other company results include tool companies, Stanley Black & Decker, Hitachi Koki and Makita. US home improvement retailer also reports disappointing third quarter results.

The biggest news in the big box retail sector is the surprise resignation of Bunnings CEO John Gillam. We note some of the major achievements during his storied career at Wesfarmers.

In statistics, we discover another set of data on renovations that may be helpful.

Products featured in this issue include the latest range from Briggs & Stratton; a charging surface from Corian; the Danco toilet seal; and a Kickstarter-funded shovel.

As the last issue for the 2016 and to celebrate Christmas and the holiday season, we take the opportunity to thank our readers, advertisers and supporters.

The latest issue of HI News is about a lot of things. On the business side, we take a second look at the kitchen category this calendar year and highlight some of the marketing strategies from the industry's top retailers and suppliers.

There is also some analysis of Bunnings first quarter sales performance and DuluxGroup's full year results.

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On a more personal note, there is a brief tribute to Tim Starkey, long-time group manager of Hardware & Building Traders (HBT), and a friend to HNN (Hardware News Network), publisher of HI News and Industrial & Tools News.

Other major stories include the role of home brands in the hardware industry and our visit to the HBT state conference in Melbourne. In addition, we closely examine the ACCC's (Australian Competition and Consumer Commission) recent judgement against Dulux.

The most recent hardware retail data is featured in our Statistics section. In our regular update on big boxes, we draw attention to some of the main points in the presentation by Bunnings UK managing director, PJ Davis to members of the British Home Enhancement Trade Association.

In terms of suppliers, Hitachi is preparing to unload its power tools and semiconductor fabrication equipment businesses and sources indicate that Stanley Black & Decker is seeking buyers for its locks division.

New products include Makita's 18V LXT(r) Sub-Compact Brushless range; Caterpillar's entry into the outdoor power market; and Leatherman emergency tools.

This issue of HI News features the inside story of what went on between Woolies and Lowe's at Hydrox.

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Makita's "slow and steady" pace belies its high-risk, highly strategic global strategy. We take a closer look at the details.

Other features in this issue include a review of Trio's Patriot lock and Bunnings' social website for DIY enthusiasts called Workshop. There are also results from Boral, GWA Group, Fletcher Building and home improvement retailer Kingfisher.

In our regular section on Statisitics, we provide an update on the latest ratings for "The Block" before it goes into the finale auction episodes.

We also highlight the new executive team at Mitre 10.

There has been a lot of activity with suppliers with Hills Industries and Woolworths ending their deal early and Stanley Black & Decker taking on Newell's tools business. SawStop is also suing Robert Bosch in the USA.

New products in this edition include Uniden's updated DIY wireless surveillance system, Hitachi's Triple Hammer tool, Toro's latest zero-turn mowers, brushless power tools from Porter-Cable and DeWalt's outdoor bower.

This issue of HI News features the mapping of hardware retailers around Australia and what it means in terms of competitive strategy in the industry.

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In its first half results for 2016-17, Techtronic Industries reports good growth in its power tool segment, but contraction in its floor care segment. Makita's first quarter results shows a differentiated approach from the other "big five" power tool brands.

We also take a look at the latest available hardware retail statistics from July 2016 and see some significant macro influences emerging.

James Aylen, general manager of Home & Timber Hardware Group announces his departure in our indie store update. In addition, we provide an overview of big box retailers including Bunnings informing consumer affairs authorities that it will not be matching prices from the Masters inventory sale.

Looking at the European and US markets, we include stories on how Bunnings is evolving the Homebase stores in the UK and Ace Hardware president and CEO John Venhuizen discussing the relevance of local neighbourhood stores.

In supplier news, China-based Chervon buys the SKIL business from Bosch and we explore the impact of the Masters closing down sale on Dulux and Hills Industries.

New products in this edition include the Blossom smart irrigation system, tiles that produce a 3-D look, Makita's fast charging battery and high performance MDF panels from Gunnersen.

The latest issue of HI News is focused on how independents can regain some of the DIY market away from other retailers.

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We also pose the question as to whether the future of home improvement retailing will involve offering power tools as a service through leasing.

The main social media channels - Facebook, LinkedIn and Twitter - are analysed to see which platforms would work best for advertising for hardware retailers. We also describe the specific steps that can be taken to put together a simple and cost effective social media campaign. It could be better than using paper-based promotional flyers.

Bosch Power Tools delivers its 2015 results and emphasised its cordless outdoor power equipment range.

Our quarterly feature, Paintorama explores the latest results of major paint companies including PPG, Sherwin-Williams and AkzoNobel.

There is the usual updates on big boxes, indie stores, suppliers and a round up of home improvement news from the US and Asia.

New products include a fencing stapler. Lufkin measuring tapes, a digital level, natural pest control and Milwaukee's pre-release outdoor power equipment tools.

Another bumper issue of HI News, full of news, analysis and the impact of economics on the world of home improvement.

Just click on the following link to download this edition:

In this issue, we take a deep dive into the bathroom category and take a look at market shares, strategies, trends and product development.

The Australian Competition and Consumer Commission may allow the Mitre 10 and Hardware Timber & Hardware (HTH) merger to go ahead if Mitre 10 agrees to a number of undertakings. We take a look at what this means for the independent sector and suppliers.

This edition also includes a story about the challenges ahead for Bunnings Australia as the company rolls out its strategy in the United Kingdom. There is also an extensive feature on the economic outlook in Australia and its potential impact on the home improvement industry.

Regular updates on big boxes, indie stores, retailers, suppliers, European and US markets are part of this edition. Specific stories include Bunnings' new stores; its direct competition with supermarket maverick Aldi; speculation about Steinhoff International buying Masters sites and possibly Big W; and Woolworths extending discounts for HTH members.

HTH has also launched a competition to find Australia's most passionate tradie. Other local stories include The Good Guys potentially being pursued by an Indian retail group.

On the international front, Bosch is developing digital "experience zones" throughout Europe; Kohler has a content strategy; and Valspar votes on the Sherwin-Williams acquisition.

The Home Depot is re-thinking its approach to inventory; Sears is exploring brand extensions and Ace Hardware competes with big box retailers in five ways. In the UK, there are highlights of B&Q's new concept store, Homebase stores are being saved from closure and Dobbies Garden Centres have a new owner.

Back in Australia, Telstra unveils its smart home system and the popularity of "she-sheds" continues to grow.

New products in this issue include Methven's Aurajet shower; a roller frame from Dynamic Paintware; the Switchmate light switch and Rockler's BBQ kit.

The HNN e-newsletter can be accessed in one convenient PDF. Easy to read onscreen, or print it out. Just use the following link to download the PDF:

The HBT National Conference in Townsville (Queensland) was memorable for many reasons. The warm tropical climate always helps, especially for attendees from colder climates in Victoria and Tasmania. This time, HBT as a group, seemed to come of age with some of its new initiatives and steps toward a more digital approach. All the ideas presented at the conference are options for members, not dictates from head office.

We report on Stanley Black & Decker's first quarter results and speculate about the innovation it is set to release later this year. This edition also has the latest renovation, retail and housing statistics with a focus on Queensland, South Australia and Western Australia.

There are updates on big boxes, independent stores and suppliers. We include stories on Airco Fasteners acquiring Otter Group and local, online tradies marketplace Oneflare gaining a $15 million investment from Fairfax Media.

New products are featured from HPM Legrand, Mr Fothergill's, Fiskars and Smartstone. Job opportunities at Yates, Valspar and Haymes Paint are profiled in this issue.

The HNN e-newsletter can be accessed in one convenient PDF. Easy to read onscreen, or print it out. Just use the following link to download the PDF:

Home automation is the central theme of the current issue of HI News and includes a closer look at Ryobi's Ultra-Quiet Garage Door Opener. Other articles explore the ways home automation could change a large number of categories in home improvement, and the current three big industry players: Apple. Google and Amazon.

This edition also has a number of results presentations from home improvement giant, Kingfisher, builders merchant Travis Perkins and US retail co-op True Value. There are also financial and product overviews of tool companies, Hitachi-Koki and Makita.

The latest big box update features Bunnings' rollout of new stores, the mainstream commentary about its smaller format stores and the lead up to its European summer debut through Homebase. There is a summary on the Masters property portfolio and the deadline for parties making bids for the business.

In the independent sector, Stewart's Hardware has opened in Nowra (NSW) and Home Timber & Hardware wins a customer satisfaction award.

There are also new products from garden tool supplier, Ames; window furnishings company, Luxaflex; and lawn mower specialists, Rover and Gravely.

Companies highlighted in the job update include Home Timber & Hardware Group, DuluxGroup and AEG Power Tools.

The HNN e-newsletter can be accessed in one convenient PDF. Easy to read onscreen, or print it out. Just use the following link to download the PDF:

The latest issue centres on the latest results from TTI Industries and how the company with its major brands Milwaukee Tools, Ryobi and AEG will explore a digital future. It discusses other categories such as hand tools, lighting and floor care that the company is involved in. There is also a transcript of the presentation delivered by CEO Joseph (Joe) Galli.

In the "Paintorama" section, we take a look at the most recent results from paint companies Valspar, Sherwin-Williams, PPG Industries and AzkoNobel. The story on Sherwin-Williams' acquisition of Valspar is taken from the perspective of the Australian market and what it means for local hardware retailers.

Other stories include a list of the award winners from Home Timber & Hardware Group's conference and there is another extensive roundup on big box retail activities.

The tiny house trend is featured along with BIS Shrapnel's report on the apartment boom that seems destined to go bust. Australian company PlantMiner is disrupting the construction industry and Brickworks announces its first half results.

The regular update on job opportunities highlights roles at AEG Power Tools, PPG and Yates.

The HNN e-newsletter can be accessed in one convenient PDF. Easy to read onscreen, or print it out. Just use the following link to download the PDF:

In the latest edition, we provide additional analysis to the way Bunnings uses prices to reset markets and achieve an advantage over its competitors. This is an extended version of the original story.

We also examine how Boral is making use of the transition in the marketplace in its first half results. In other company news, ITW's annual results show its overall revenue has declined but there are positive trends in other key metrics. The increased performance in its construction products division in the Asia-Pacific region is led by Australia.

Sunlite Mitre 10 wins the retail group's best small store awards and there are profiles of two Queensland-based stores, one sells tools and industrial supplies and the other is a builders and DIY rental business.

In the big box sector, Masters managing director Matt Tyson resigns and Bunnings Warehouse Property (BWP) Trust looks at opportunities to take on Masters sites.

Other major retail stories include Lowe's takeover of Rona in Canada; Sainbury's purchase of Home Retail Group and how independent hardware retailers are faring in the UK.

Additional news features focus on houses that cost USD20k in the US and how Canadian company BuildDirect is attempting to be the "Amazon" of home improvement. Local vacuum specialist Godfreys makes a "green" acquisition and BBQ maker Weber takes on more app-enabled brands. ACDelco Tools also makes its entry into the Australian market.

Mr Fothergill's new seeds and bulbs are profiled along with the Guild power tool brand in new products, and another roundup of home improvement stories in hot links.