Big box update

Bunnings store development

Lithgow in development, Caboolture opens, North Wollongong closure and no definitive dates for Cowra store expansion

Lithgow, in the Central Tablelands of NSW, will have a larger Bunnings store after the approval of a Development Application (DA) by Lithgow City Council.

The current Bunnings is located on the Bathurst end of Lithgow's Main Street, and the new store is proposed for Pottery Plaza in Lithgow's south. Councillor Almudena Bryce told the Lithgow Mercury:

This is a great DA proposal for Lithgow and Bunnings. It's taking it away from the Main Street, where it's dangerous. It's absolute mayhem.
I'm looking forward to a bigger Bunnings, one that we don't have to leave town to go and buy parts. This is going to be a great asset to our area.

The topic was the subject of heated debate as both residents and councillors expressed their concerns about the significant impact the new site would have on traffic flow.

Councillor Stephen Lesslie asked questions relating to his concerns about the impact of road access to residents in Silcock and Hill Street. They were addressed by Lithgow City Council general manager Craig Butler, who advised he couldn't provide specifics as the director of planning was absent due to illness.

Councillor Lesslie proposed a motion to defer the development application vote, but it was lost.

The development application motion was eventually passed, and mayor Maree Statham thanked the councillors.


Application for bigger Bunnings Lithgow store - HNN Flash #104, July 2022

Caboolture store opens

The new Bunnings store, behind Big Fish Junction at 459 Pumicestone Road, Caboolture (QLD) has a main warehouse retail space, outdoor nursery, timber trade sales area, special orders desk, hire shop, cafe and more. The 13,000sqm centre, which cost $32 million, has over 400 car parks.

The new warehouse is part of the huge $80 million Big Fish Business Park which has already seen a Coles, Chemist Warehouse and KFC open.

Complex manager, Emily Sweet, said she was very excited to see an investment of this scale come to the growing Caboolture and Elimbah area. She told the Caboolture Shire Herald:

...The layout of the warehouse is slightly different to others to make it more convenient for the customers. The size of the landscape and nursery area is quite considerable as well as the timber yard - we really have invested considerably in those areas.
We have a great positioning from the highway. For any trade customer driving from the Sunshine Coast through to Brisbane or anywhere else in between, this location is handy for them to pop in.

The store has a range of sustainability initiatives to reduce its environmental impact including LED lighting, on-site water reuse and solar energy.

The developers of the Big Fish Business Park hoped the new store would service the planned Caboolture West satellite city, expected to be home to 70,000 people.


Bunnings Caboolture expected to open at the start of 2023 - HNN Flash #112, September 2022

North Wollongong

Following the closure of the North Wollongong Bunnings store in NSW earlier this year, complex manager Kirstin Beveridge said staff will be redeployed to surrounding stores and thanked customers for their support over the past 25 years. She told the Illawarra Mercury:

We also thank our store team members, past and present, for their commitment to the community and for always providing friendly and helpful service.

Bunnings opened the North Wollongong site in 1997 and closed the store ahead of the lease expiring in March. It is one of its oldest stores in the state. The site is owned by Perth-based BWP Trust, which owns a number of Bunnings sites around Australia and is itself part owned by Bunnings' parent company Wesfarmers.


Bunnings in North Wollongong to close - HNN Flash #109, September 2022


The Cowra Guardian recently asked Bunnings about its plans for its Cowra store in the Central West region of NSW, nearly 12 months after Cowra Shire Council approved a $10 million expansion.

Bunnings regional operations manager Debbie Perano told the Cowra Guardian the retailer is "going through the usual steps ahead of any potential construction".

But at this stage no timelines have been confirmed. We were really pleased with Cowra Shire Council's decision to grant a development approval for a new Bunnings store last year.

Ms Perano said Bunnings will "continue to keep the community updated with any developments".

The approved DA sought the consent for the redevelopment of the existing Bunnings warehouse site in the following manner:

The demolition of existing buildings; construction of a hardware and building supplies centre including a warehouse, covered outdoor nursery, bagged goods store, timber trade sales area, office, amenities and loading areas; seven wall signs and one pylon sign; a main carpark accessed from Redfern Street containing 91 car parking spaces; a secondary carpark accessed from Mulyan Street containing 15 car parking spaces; tree removal and new landscaping works; ancillary civil engineering works including earthworks, stormwater works and road and access works including directional signage and line marking to facilitate vehicular access; and consolidation of allotments.


Bunnings plans store development in Cowra, NSW - HNN Flash #86, March 2022
  • Sources: Lithgow Mercury, Western Advocate, Caboolture Shire Herald, Illawarra Mercury and Cowra Guardian
  • bigbox

    Bunnings results FY2023 H1

    Growth slows, partially due to weather

    Bunnings began to resume some of its growth patterns from the past, including entering new categories and experimenting with store merchandising

    The Wesfarmers-owned big box hardware retailer Bunnings announced its results for the first half of FY2023 (July to December 2022) on 15 February 2023.

    Wesfarmers itself reported revenue for the half of $22,558 million. This represents an increase of 27.0% over the previous corresponding period (pcp), which was the first half of FY2022. Earnings before interest and taxation (EBIT) increased by 13.4% on the pcp to $2160 million, while net profit after tax (NPAT) came in at $1384 million, up by 14.1%.

    For Bunnings, revenue increased by 6.3% over the pcp to reach $9792 million, while EBIT came in at $1334 million, an increase of 1.4%. Total store sales growth was 5.1%, up from 1.0% in the pcp.

    Store-on-store (comp) sales growth was 2.8% - though a footnote indicates "Store-on-store sales growth excludes stores in months that were impacted by extended periods of temporary closure in New South Wales, Australian Capital Territory, Victoria and New Zealand".

    On Tool Kit Depot, the results had this to say:

    Tool Kit Depot expanded into the east coast of Australia with the launch of its first Queensland store, complementing its existing network in Western Australia and South Australia and its growing national online presence.

    As regards Beaumont Tiles, the company states:

    Beaumont Tiles traded positively during the half, supporting Bunnings' 'Whole of Build' offer.

    The company also outlined some experimentation in its stores:

    To improve ease of shop, new store-in-store concepts in power tools and power garden were trialled during the half, with these initiatives well received by customers and Bunnings' supplier partners.

    However, online penetration fell, retreating to 1.8%, where the pcp was at 4.3%. According to a statement in the results:

    Online penetration declined during the half as retail customers increasingly returned to physical stores. This was partially offset by continued strong online growth from commercial customers.

    In his introduction to overall Wesfarmers' performance, the company's managing director Rob Scott commented:

    Bunnings delivered another strong performance, highlighting the strength and resilience of its operating model. Bunnings further strengthened its consumer offer during the half through refresh and expansion of product ranges and the trial of new store-in-store formats in some categories.

    Analyst questions

    The one slightly surprising element in the results was the slight decline in EBIT margin, which prompted a question from Shawn Cousins of Citi about whether margin growth was suppressed to secure market share gains. Bunnings' managing director, Mike Schneider replied in part:

    The change in margin from last year is really price investment as you know from what I've said in the past, it does vary significantly category to category. We've got inflation in some categories, deflation in others and movement in COGS that sort of goes up and down. So we are very, very focused on that value proposition. So I think when you sort of think about going forward, where we're positioned, we want to continue to invest for long-term growth. That's very much at the heart of what we do.

    Grant Saligari from Credit Suisse asked all the retail divisional MDs to provide an insight into shopping behaviour - "shopping frequency, value trends, basket size trends", and Mr Schneider responded by stating:

    I think from a Bunnings point of view, if you look at the commercial side, that's really helpful for us because we can see more into the pipeline, the nature of the contracts and things like that suggests to us that there is a good pipeline.
    If you look at the numbers that have been called out on housing starts, they drop a little bit, but it's not material and you then see a reversion to what we've seen over a number of different housing cycles, which is moving to alteration and addition, you then sort of look at the sort of demand for trades and the shortage of trade and the shortage of apprentices.
    That pushes people to DIY things themselves. And I think they will - my guess is you'll hear a bit about movement to value from my colleagues. But for us, when we sort of see this sort of market and you're not going out and doing things, you're not travelling as much because things are a bit tighter. You're spending more time at home and I think for a business like Bunnings, with the assortment and the price/mix and the value proposition that positions us well to participate strongly in the consumer market and the commercial market.


    With a comp sales number of 2.8%, and - according to Australian Bureau of Statistics (ABS) figures - a background sales rate of 4.46%, it's possible that Bunnings lost market share, or more likely held steady, given the total store sales growth number of 5.1%.

    As Metcash's Independent Hardware Group also showed a decline against its background number, it's likely that in the current market independent hardware retailers outside of Metcash are gaining some ground in the market.


    Big box update: Store development

    Bunnings lodges DA in Tasmania

    A preview of the new Bunnings store in Hervey Bay (QLD). The site will replace the existing store and trade centre in the area.

    A development application (DA) has been lodged by the Bunnings store in North Launceston (TAS) to use part of its land to create a commercial building for bulky goods sales.

    The proposal for the site at 80 Lindsay Street, Invermay, is being advertised by the City of Launceston, according to The Mercury.

    Under the proposal, the new building would be at the front of the site. The main retail space in the new building - the future tenant of which is yet to be chosen - would be about 1520sqm, with space for back of house, an office and workshop.

    The maximum building height would be 7.5 metres. There will be 25 new parking spaces. In a report, building surveyors and engineers Pitt & Sherry said:

    One loading bay will be provided on the western side of the site and will be accessed by a new vehicular crossing from Lindsay Street. This area will be surrounded by a 2.7-metre high transparent mesh fence. Landscaping is proposed along the Lindsay Street frontage.
    As the future operator of the new building is unknown, the applicants estimate there will be approximately six members of staff onsite.

    Hervey Bay

    The new store in Pialba, a suburb of Hervey Bay, will provide the community with access to a six-lane drive-through timber yard, a bigger paint department, tool shop, nursery, landscaping and bagged goods and more than 430 carparks.

    The precinct will also include a new kitchen design centre, which is a first for the Fraser Coast.

    Bunnings Hervey Bay complex manager Jackie Roberts said all hands were now on deck. She told the Fraser Coast Chronicle:

    The team has been working tirelessly to ensure the store is ready for customers when we open the doors to the new Hervey Bay warehouse for the first time.

    As part of the store opening celebrations, the team has provided some hands-on support to local community groups. Ms Roberts said:

    The team really enjoyed working alongside the Hervey Bay Spinners, Weavers and Fibre Artists to refurbish the historic Old Schoolhouse and meet some passionate local residents. We helped landscape the surrounding garden and freshen up the deck, entrance stairs and ramp, making the entrance safer...

    The new store will also have a range of sustainability initiatives that will reduce its environmental impact including LED lighting, on-site water reuse and solar energy.


    Pre-Christmas opening for Bunnings Hervey Bay store - HNN Flash #118, November 2022
  • Sources: The Mercury and Fraser Coast Chronicle
  • bigbox

    Big box update

    Bunnings' chief operating officer exits after one year in the role

    Bunnings managing director believes Australians will still be spending up big on DIY projects during long summer days, and into 2023

    The departure of the hardware retail group's chief operating officer Simon McDowell has created an opportunity for Bunnings to restructure its senior management, according to an exclusive report in The Australian.

    It has promoted Ryan Baker to chief customer officer and Ben Camire to head of store operations across Australia and New Zealand. Mr Baker and Mr Camire have essentially split the former role of chief operating officer between them. Bunnings managing director Michael Schneider said in response to questions from The Australian:

    We're pleased to confirm Ryan Baker was appointed to the role of chief customer officer a few months ago. Ryan has been with the Bunnings business for over 20 years and brings an enormous amount of experience and success as a retail leader into this role.

    Mr McDowell joined Bunnings in 2021 as COO, and no official reasons have been given for his exit. The COO role was the second most important position in the organisation, with Mr McDowell often running Bunnings when Mr Schneider was overseas.

    Related: It has recently been reported that Bunnings may have begun a round of redundancies at its head office and support centres that will eliminate about 140 roles, revised down from an estimated 300 roles.

    Bunnings planning staff cuts: report - HNN Flash #121, November 2022

    "DIY summer": Bunnings MD

    Mr Schneider provided The Age with some comments relating to the Christmas holiday spending period that continues into early 2023.

    Despite customers facing intense cost-of-living pressures, rising interest rates and speculation about a slowdown in the nation's housing market, he believes Australians will still be spending up big on DIY projects during long summer days, and into 2023.

    With our DIY customers, if housing churn slows - and there's no clear evidence it has at this point, customers go from spending money on their homes to get ready for sale or spending money on their homes because they've just bought it and are personalising their space.

    He is confident customers will be out in force for gardening projects into next year, with the group's shopper surveys suggesting families have been sprucing up their spaces in the lead-up to Christmas.

    One in four customers was working on a project for outdoor entertainment in November - which means the maintenance of those things will carry through into the summer period.
    When we start to see those long hot summer days, in late January and early February, when the tennis is getting going, I think you'll find a lot of people are out in their gardens, out around their decks, and doing things to stay active to make the most of the sunshine.

    Mr Schneider said as households absorb higher interest rates, the company's pledge to have the lowest prices on items in the market remains Bunnings' edge over its competitors.

    Customers are very much focused on value for money ... Bunnings positions itself very well in that space.

    He also highlighted the power of Bunnings' broad ranges.

    Whether it's paint rollers or potting mix, you have an array of products at different price points - so that customers have choice. Also, if the first product they were looking for isn't available or isn't available at the quantity they want to buy, we're able to offer them an alternative.

    Australians have kept the spending momentum up going into the festive season, but the market is anticipating households will moderate their interest in home goods and furnishings in 2023 as the pandemic-fuelled spending splurge of the past two years ends. Mastercard Spending Pulse data for November 2022 showed a 5% increase in overall spending for the month compared with same period in 2021 but home furnishings saw the biggest drop, down 4.1%.

    Mr Schneider said the more cautious spending environment is a reminder of the importance of getting the basics of retail right, including staffing.

    That is, a well-presented store, a team that is really friendly ... we've got people with years and years of experience on the tools, whether as builders or electricians, and we've got people who have built really fantastic careers over decades.


    Investment firm UBS has raised concerns over slowing sales at Bunnings - HNN Flash #122, December 2022
  • Sources: The Australian and The Age
  • bigbox

    USA update

    Lowe's sets goal to reach net-zero emissions across by 2050

    The Home Depot is taking a significant step toward its 100% renewable electricity goal by increasing its use of solar power

    Lowe's has announced its goal to reach net-zero emissions across the company's scope 1, 2 and 3 greenhouse gas emissions by 2050, in accordance with guidelines from the Science Based Targets initiative (SBTi), the global body enabling businesses to set emissions reduction targets in line with climate science.

    To meet interim SBTi targets, Lowe's has also committed to decreasing its scope 1 and scope 2 emissions by 40% and reducing scope 3 emissions by 22.5% below 2021 levels by 2030.

    To reach net-zero emissions by 2050, Lowe's reduction strategy includes:

  • Increasing operational efficiency and working to reduce emissions within Lowe's footprint: Lowe's is making further investments in energy efficiency and renewable energy within the company's operations, while exploring emerging technologies to reduce emissions associated with its vehicle fleet and facilities.
  • Continuing to expand sustainable products and services offered to customers: Lowe's continues to encourage the transition of gas-powered products to battery and electric, while also promoting energy-efficient products, such as those certified by ENERGY STAR(r). In 2021 alone, the company helped customers save 34.6 million metric tons in greenhouse gas emissions from the sale of ENERGY STAR certified products over their lifetime.
  • Partnering with suppliers to help reduce upstream emissions: Lowe's is working closely with suppliers to increase their operational efficiency and reduce their emissions through the use of renewable energy and low-carbon innovations.
  • Chris Cassell, Lowe's vice president of corporate sustainability, said:

    This new target marks a significant expansion of our previous climate commitments. Through strong collaboration, this challenging but critical work will drive meaningful improvements across our full value chain, from our suppliers to Pros' worksites, to our customers' homes and our communities.


    Kingfisher sets stronger zero-net targets - HNN Flash #101, July 2022

    The Home Depot solar

    The Home Depot has pledged to produce or procure 100% renewable electricity equivalent to the electricity needs for all of its facilities by 2030. It has also joined the SBTi to reduce global emissions, committing to set goals for Scope 1, 2 and 3 emissions by 2023.

    The big box retailer is purchasing 100 megawatts (MW) of solar energy from National Grid Renewables at its Noble solar and storage project in Denton County, Texas (known as Noble). This purchase will generate the approximate equivalent of nearly 8% of The Home Depot's total electricity usage.

    Since 2010, The Home Depot has reduced electricity consumption in its US stores by 50% and currently operates rooftop solar farms on more than 80 stores and electricity-generating fuel cells in more than 200 stores.

    The Home Depot currently purchases solar power from a 75 MW facility and is under contract for another 50 MW of solar capacity. The company also purchases energy from a 50 MW wind facility.

    The retailer expects the combined annual renewable energy generation from these agreements would be enough to power more than 500 stores. Ron Jarvis, chief sustainability officer for The Home Depot, said:

    Solar energy is the most abundant energy resource on earth. With this purchase, we are getting a step closer to our goal to produce or procure 100% renewable electricity equivalent to the needs of our facilities. We anticipate about three-quarters of our alternative and renewable energy capacity will come from solar energy by the end of 2023.

    Noble is a 275 MW solar and 125-megawatt hour (MWh) energy storage project located in the Electric Reliability Council of Texas (ERCOT). It is projected to avoid 450,000 metric tons of carbon dioxide emissions annually during operation.

  • Sources: Lowe's Companies, PR Newswire, Chain Store Age and Renewable Energy magazine
  • bigbox

    Big box update: Store development

    Bunnings store in Dubbo is set to expand

    A plan for a new $9.5 million Bunnings store in Portland has been approved by Glenelg Shire Council

    In Dubbo (NSW) Bunnings' development application for an expansion of its current site has progressed with Dubbo Regional Council.

    The expansion with an estimated value of $11.5 million will include a main warehouse, outdoor nursery, bagged goods canopy, trade sales area, building materials landscape yard, bulk trade yard, new internally relocated cafe and playground, an additional trolley bay and 33 standard and one accessible carpark spaces.

    Bunnings property development manager, Tim Wilkinson, told the Daily Liberal and Macquarie Advocate:

    If approved it will create one of the top 10 Bunnings in terms of size, and certainly bigger than any of the regional Bunnings in this vicinity.

    Mr Wilkinson said the expanded store will give them more opportunities to recruit even more people from the local community. That's in addition to the construction jobs that will take place during the building phase, which is expected to take around a year to complete. He said:

    Furthermore, there's a safety impact that's worth mentioning; being able to have the trucks ingress and egress through the proposed design along the rear boundary of the site and ensuring there is no trucks mixing with consumer cars will be really beneficial.
    In addition to a second goods area where the smaller trucks that are both dropping off and picking up bulk loads can do the same through the rear boundary, we think that's a real beneficial point.

    The extension will mean council has to relocate the sewer line and access easements. Councillor Richard Ivey said it was a "win-win" situation for the business to add to their existing infrastructure with further infrastructure that will complement what it already has. He said:

    It's so much better than moving to another site and therefore having to do something with the old site. Being able to expand what's there and end up with something that's much, much better than what's there now is win-win, it's great.


    A majority of councillors on Glenelg Shire Council has granted a proposed planning application for a new Bunnings store at the end of 68 Richardson Street in Portland (VIC) to go ahead.

    The store will have a total retail floor area of 5382.62 sqm and include an enclosed covered main warehouse building measuring approximately 2113.45sqm, a fully enclosed timber trade sales areas of 1685.29sqm, and 127 car parking spaces.

    According to the planning application, the Portland community will be able to generate jobs, develop its economy, and reinforce its role as a shopping and employment destination. Mayor Scott Martin The Warrnambool News:

    It's fantastic having Bunnings invest into the Glenelg Shire, so it's showing faith that we are very much a high growing area.
    We do have Bunnings stores out in the country but we've obviously got a lot of industry, and I guess like most places around Victoria at the moment it can be very hard to get a builder, so that's a bit of Bunnings' niche there, they supply a lot of timber and tools, so they see an area where they can do business.

    Roadworks will be required to be undertaken once the development of the site commences when the development process commencement is yet to be announced.

    Mr Martin said the parties hoped the development to begin in 2023.

  • Sources: Daily Liberal and Macquarie Advocate and The Warrnambool News
  • bigbox

    Bunnings' slowing sales flagged by UBS

    Outdoor furniture, gardening and BBQ sales affected by wet weather conditions

    The hardware retailer is also facing higher warehouse costs for pre-ordered stock for the busy Christmas season now negatively impacted by bad weather events in parts of Australia

    UBS has become the first investment firm to raise concerns over a slowing sales momentum at Bunnings as wet weather conditions constrict some seasonal sales for some categories throughout spring and summer.

    In The Australian, analyst Shaun Cousins increased his earnings guidance for Bunnings owner Wesfarmers in 2023 and 2024 driven by its Kmart and its chemicals arm. However, it will be somewhat offset by moderating growth at Bunnings and Officeworks.

    Mr Cousins revised his sales and earnings outlook for Bunnings, and has reduced his 2023 sales target by 2.1% and his pre-tax earnings target for the hardware chain in 2023 by 0.9% to around $2.17 billion

    Mr Cousins has highlighted a growing concern that poor weather conditions on the east coast of Australia is having a detrimental effect on Bunnings' key outdoor categories. He said in his report:

    Reduced Bunnings sales and earnings before tax due to lower revenue per Bunnings store ... due to lower DIY revenue - wet weather delaying, and overall reducing, spring sales, plus a more conservative outlook - albeit still above pre-COVID due to a better network.

    While some categories are growing at a double-digit pace, key categories sensitive to weather conditions - such as outdoor furniture, gardening, barbeques and air-conditioning - have slowed. However, this has not been a material impact on Bunnings' profitability at this stage, and recent improvements in weather conditions have seen customers return to these categories.

    He also noted that Bunnings was gaining share in a larger addressable market, and greater category participation by consumers.

    Mr Cousins said Bunnings should benefit from strong housing demand and more sales to trade and professional customers. In his report, he said:

    Looking forward, the Australian consumer is facing significant headwinds from the rising cost of living across energy, food, fuel and housing costs, with house prices falling.
    These headwinds have yet to weigh on spending with the strong labour market (low unemployment and rising wages despite falling purchasing power) and elevated recent household savings key supports as the consumer returns to traditional spending patterns and engages in catch-up spend after difficult years with COVID.
    For Wesfarmers, the company is comparatively well positioned for a slower consumer environment, especially in its larger retail businesses Bunnings and Kmart. Each holds a strong value proposition for consumers with a track record of lowering prices/holding back prices in the face of cost inflation.


    Bunnings is facing higher warehousing costs for stock it pre-ordered to support expected strong sales over spring and Christmas, only to see a downturn in demand because of poor weather across much of the country.

    According to The Australian, Bunnings has been forced to pay higher than usual rates for third-party warehouse spaces. In some instances, the hardware retailer has had to book warehouse locations that are less than ideal as it faces heavy competition from other retailers that need similar space.

    As a result, Bunnings has had to actively explore options to secure more of its own warehouse space rather than relying too heavily on third party providers, including the possible construction of a warehouse in South Australia. Bunnings Group managing director Mike Schneider told The Australian

    As we do every year, we use warehouse space to support seasonal stock, and over time we have grown warehouse capacity in line with business growth. Given the cooler and wetter conditions in some markets, sales in outdoor-related categories have been softer, which means some of our additional warehouse capacity may be maintained. Like all retailers, we will continue to manage our stock position to ensure our customers can access the products they need.

    To manage uncertainties relating to the continued supply chain disruptions from China, closed ports and other dislocations along its global supply chain links, Bunnings ordered more stock to fill shelves for spring and summer, which are normally bumper months. Bunnings managers have also been building inventory over the past year back to pre-COVID levels.

    But now conditions are changing. Weakening consumer demand leaving many retail chains such as Bunnings with bloated inventory levels with more stock on hand than expected. It is now alleviating the problem by taking on more warehouse space from third-party landlords.

    Bunnings has always operated a hybrid supply chain model, with its own warehouses and third-party facilities. To support peak trading and seasonal stock, Bunnings has typically used outside storage facilities for its short-term needs.

    However, its need for warehouse space - and therefore warehouse costs - has increased in line with its business and sales growth trajectory.

    In the current environment, where industrial land is scarce, third-party warehouse costs are hundreds of thousands of dollars a month higher than usual.

  • Source: The Australian
  • bigbox

    Big box update: Property

    Bunnings building in Brunswick (VIC) for sale

    The Bunnings building and property in Hawkes Bay (New Zealand) is on the market

    The owner of the site that houses Bunnings and Australia Post in the Melbourne inner suburb of Brunswick is flipping the property.

    The 3700sqm site at 409-419 Sydney Road sold quickly in 2020, according to The Age. At the time, Bunnings was planning a larger store on nearby Glenlyon Road, but locals objected, and the proposed new outlet was quashed at VCAT (Victorian Civil and Administrative Tribunal).

    Records seen by The Age show the purchase settled in March 2022, with Sydney property developer Sam Ballas paying $13.82 million to a syndicate of northern suburbs investors. It was a well-timed sale for the vendors because the latest quote looks similar to the old price, $13 million-plus.

    Melbourne Acquisitions agent James Latos and Dom Gibson, who are selling it again, said it is one of only three sites on the strip larger than 3500sqm not in planning or under construction.

    The frontage to Sydney Road includes five double-storey Victorian terrace facades. The rear includes a modern warehouse. Tenants pay about $415,000 a year in rent for the site, which has 58 car parks at the rear.

    Bunnings' 10-year lease runs until 2025, plus it has two five-year options.


    Bunnings proposed development in Brunswick (VIC) has officially been rejected - HNN Flash #90, April 2022

    New Zealand

    Bunnings still has a lease on the property in central Hastings (Hawkes Bay, NZ) that is for sale, for another four years. It has an option to continue leasing the site for a further five years after that.

    The site is known as 207 and 301 Market Street North and includes an area of about 9000sqm.

    The owner of the property has decided to sell, and the site is being marketed by Colliers. Colliers Hawke's Bay director Danny Blair said it was a great investment opportunity. He told Hawkes Bay Today:

    Bunnings is one of the most recognisable brands across the New Zealand retail landscape and are long-term occupants at the site.
    With future rental growth locked in through the current lease, this represents an outstanding offering for buyers who have the opportunity to secure a top-quality asset with an established occupant.

    In addition to the Bunnings building, there are about 100 car parks on the site.

    Colliers says the annual rental income from the current lease agreement with Bunnings is NZD521,551 plus GST.

  • Sources: The Age and Hawkes Bay Today
  • bigbox

    Big box update

    Bunnings planning staff cuts: report

    It has also been recognised in a number of brand-related listings including YouGov and the Neilsen Brand Sustainability Ranking

    Bunnings is expecting to make several office-based roles redundant as it looks to manage a different economic environment, post-COVID. Economists have indicated that consumers cut back their shopping from January as higher interest rates, bills and everyday item costs continue to drain household budgets.

    Sources have told The Australian that the hardware retailer will be restructuring its head office and support centre teams. Bunnings hopes to minimise any impact on current team members through redeployment and it expects the proportion of its team leaving the business to be low.

    A management review of the company's back-office workforce is to be carried out and expected to find that "some support office roles" around Australia "will no longer be required" now that the COVID-19 period of disruption and lockdowns seem to be over. In the Daily Mail Australia, the review reportedly said:

    Now that we're on the other side of the most disruptive part of the pandemic we're reviewing our support centre resourcing to ensure we're set up for the future. We periodically review our team resourcing to make sure we have the right skills and capabilities to support our growth strategy.

    Bunnings has not confirmed exactly how many positions will be made redundant but the overall loss is estimated to be around 300. Sources said there will be some job losses through attrition. But the job cuts will also take into account jobs currently unfilled, so not every lost position means a lost job.

    Bunnings overhauled its development teams during the COVID lockdowns and added to its staff numbers, but this timely review will focus on it support centre resourcing to ensure it is set up for the challenges facing the Australian economy.

    It has already been shifting its training, human resources and skill development programs to an online format.

    Brand recognition

    Bunnings has topped YouGov's Best Brand Rankings, retaining a dominant position among Australian consumers with a score of 48.4.

    Consumers were asked about their views on brands across various markets, which allows YouGov to build a picture of how these brands are perceived by the general public.

    The rankings are based on YouGov BrandIndex's Index score that is a measure of overall brand health calculated by taking the average of Impression, Quality, Value, Satisfaction, Recommend and Reputation.

    The rankings show the brands with the highest average Index score between 28 September 2021 - 27 September 2022 compared to 28 September 2020 to 27 September 2021. The scores are representative of the general population of adults aged over 18 (and some are online representatives).


    As part of its inaugural Brand Sustainability Report, data and market measurement firm Nielsen has revealed its 2022 Brand Sustainability Rankings, with Bunnings rating highly in consumer sustainability perceptions.

    Neilsen surveyed 8,430 Australians consumers to determine the perceived sustainability credentials of 247 core brands across 18 categories.

    Each of the 18 categories was assigned a "social ranking", "environmental ranking" and an "overall ranking", with the latter being a combination of the social and environmental rankings. As opposed to focusing on how brands are positioning their sustainability practices in the marketplace, the findings reveal how consumer perceive companies across key sustainability metrics.

    Amongst home goods retailers, Bunnings had the top performance across all three metrics.

    In Mumbrella, Andrew Palmer, Nielsen head of media analytics in Australia, said:

    Consumer expectations of the sustainability efforts of brands are changing rapidly. Increasingly, they want to know that their environmental and social claims can be substantiated and aren't just 'greenwashing'.

    Each of the categories used in the rankings were selected based on their relevance to the Australian consumer market, in terms of market share, prominence, and additional data from Neilsen. No company was involved in the selection process, and none had the option of being excluded.

  • Sources: The Australian, Daily Mail Australia and Mumbrella
  • bigbox

    Lowe's Q3 2022 results

    Canadian sale hits profits

    While Lowe's has chosen to bow out from its Canadian operations, the company's CEO, Marvin Ellison, sees strong prospects for ongoing growth in the future.

    US-based big-box home improvement retailer Lowe's Companies has announced its results for Q3 of its FY2022. One highlight was Lowe's sale of its Canada-based operations, including the Rona store chain. This follows years of not being able to make the more northern operations match the US-based stores in terms of profit and performance. The sale was made to US-based private equity firm Sycamore Partners for USD400 million, plus unspecified performance benefits. Previously Lowe's had acquired the Rona store chain for USD2.4 billion in May 2016.

    The result of this sale was that selling, general and administrative (SG&A) costs took a heavy hit. Sales for the reporting quarter were USD23.48 billion, down by 2.45% on the previous corresponding period (pcp), which was the third quarter of FY2021. SG&A came in at USD6.44 billion, up by 47.34% on the pcp. Consequently, operation income was USD924 million, down 66.87%, while net earnings were USD154 million, compared to USD1896 million in the pcp.

    For the nine months year-to-date, sales were USD74.61 billion, down slightly on the number for the pcp, which was USD74.91 billion.

    In the press release from Lowe's, the company's CEO, Marvin Ellison is quoted as saying that the company's store-on-store (comp) sales rose by 3.0% in the US, driven by a 19% uplift in Pro/trade sales, and continued strength in DIY sales.

    Analysts' presentation

    Mr Ellison opened the presentation with some comments about how Lowe's sees the market in the US developing. While he acknowledges the impact of high interest rates, and the US Federal Reserve Bank's commitment to slowing the economy to ward off continued inflation, he remains optimistic that the fundamentals of the home improvement market will continue to support strong sales through 2023.

    You've heard me talk about this before, but demand drivers for home improvement are distinctly different from those that drive home building, so it's important not to confuse the two. And as a reminder, at Lowe's, the three highest correlating factors of home improvement demand are home price appreciation, age of housing stock, and disposable personal income.
    So, let's start with home price appreciation. Even if there is a broad-based decline in home prices, homeowners currently have a record amount of equity in their homes, nearly $330,000 on average, which remains supportive of home improvement investment.
    Second, the average age of homes in the US is over 40 years old and roughly three million more homes built during the housing boom in the mid-2000s, will be entering prime remodelling years by 2025, which is a key inflection point for big-ticket repairs. This is one of the key reasons why two-thirds of home improvement spend is non-discretionary on repair or maintenance projects that cannot be delayed.
    Third, consumer savings are near record highs, while disposable personal income remains strong. And more than 90% of homeowners either own or home or are locked into a low fixed mortgage insulating them from rising rates. On top of these three factors, there is a persistent $1.5 million to $2 million undersupply of homes, and 250,000 first-time millennial homebuyers are expected per year through 2025.
    This unique combination of factors is causing homeowners to trade up in place, preferring to invest in repairs and renovations, to make their current homes meet their families evolving needs rather than buying a new home.
    And this is why we're so confident about the outlook for the home improvement industry even in a period of high inflation and rising interest rates because the key drivers of our business remain supportive.

    What Mr Ellison terms "trading-up in-place" is, in fact, a central part of Lowe's strategic overview, as the CEO made clear in his response to one analyst's question.

    We talked about trading up in place, and that is a phenomenon that we're seeing because the 1.5 million to 2 million shortages of homes and the high-interest rate environment is just incentivising homeowners to keep their low fixed rate and modify their existing home. And so, because of that, you're seeing a combination of older homes getting the maintenance and repair that falls in that two-thirds. But then you see the other one-third that simply upgrading and improving the environment, a new kitchen, finishing the basement, a new bathroom, etc. And so, we're seeing a combination of all of those things.

    One of the areas that Lowe's highlighted as being a growth area was its paint business. This was described by Bill Boltz, the executive vice president for merchandising.

    Paint delivered strong positive comps this quarter across both Pro and DIY. Many of our Pros, especially those who focus on repair and remodel work, paint as part of their larger jobs. In other words, these are Pros who paint rather than professional painters.
    And these Pros are starting to see the value of our new MVPs Pro Paint Rewards program paired with our expanded job site delivery for paint. These enhanced benefits and capabilities are making it more convenient and cost-effective for Pros to purchase their paint directly from Lowe's, earning us more of their business.
    In our continued partnership with Sherwin-Williams, we are also upgrading our paint departments across the US, including a new colour wall that converts all HGTV colours to Sherwin-Williams colours, which resonates with both DIY and Pro customers ... We are also resetting some categories to pull relevant, higher-margin, and more frequently purchased products closer to the front of the department, making it easier for customers to get everything they need for their paint project in one trip.


    With a major investor conference planned for early December 2022, the analysis offered by Lowe's at these results was somewhat muted. However it is interesting to explore this particular strategic view. It is fairly common for commentators on the US home improvement market to see underlying growth primarily driven by increases in household formation. The view suggested here is that a relatively static number of households, with reduced building and sales of new homes, will continue to produce growth through maintenance and in-place upgrading of residences.

    While this certainly has some relevance, there is a contrary theory that sees the possibility of home improvement spending reaching a saturation point. That could be driven by the past two years representing something of a "pull forward" in overall demand for home improvement, and also the possibility that the current fad for living better through better homes will fade to be replaced by more externally oriented expenditure.

    Two factors that need to be taken into account are the lingering effects of COVID-19 and the influence of climate change. If infection rates from COVID-19 continue to be contained through the northern hemisphere winter, it's likely that economies will shift into a new phase, with more expansionary spending.

    Climate change has been incidentally mentioned in the results for both Lowe's and Home Depot. It is simply a fact of the industry that no matter how appalled we may all be at floods, hurricanes, tornadoes and fires, these end up contributing to the home improvement sales. However, at some point, if these continue to increase, we could see this motivate a lessening investment in homes, due to perceived risks.


    Lowe's divests Canadian business - HNN Flash #119, November 2022

    Retail update

    IKEA Australia launches Sustainable Living Shops

    The home improvement chain is offering a store-within-a-store setup that is about helping customers make eco-friendly choices

    IKEA's Sustainable Living Shops have started to open around Australia, including at its Rhodes, Marsden Park, Canberra, Springvale and Perth locations. The retail concept will also be rolled out at its Adelaide, Tempe and Logan stores in December, to be followed by Richmond and North Lakes in early 2023.

    In-store, shoppers can find products designed to assist with reducing their climate footprint at home by using less energy and creating less waste. IKEA is also positioning the shops to manage higher cost-of-living expenses.

    Many products in the Sustainable Living Shops are designed to bring about savings, such as not having to buy lightbulbs as often, or batteries, or run heating and cooling systems.

    For example, LED lightbulbs that last 25,000 hours, energy-saving light control systems, rechargeable batteries, blinds that trap heat, cooling pads, and mattress protectors that help control the temperature while sleeping. There are also energy-efficient induction cooktops, home solar systems and water-saving showerheads.

    Despite some of the cost saving benefits associated with habits such as energy saving lightbulbs, or reducing food waste, a recent survey conducted by IKEA Australia revealed over half of Aussies (52%) believe living sustainably would increase their cost of living.

    The research also revealed that 60% of Aussies think they should adopt more sustainable practices in their home, however over a third are holding back from making their home more sustainable due to cost.

    In the survey, Aussies said they would have to see an average return on investment of $55 per week to consider being more sustainable.

    The survey was conducted as part of IKEA Australia's annual Sustainability Report that outlines IKEA Australia's sustainability initiatives and achievements from the past 12 months, as well as goals for the future. Mellisa Hamilton, country sustainability manager - IKEA Australia said:

    Right now, the cost of living, energy and food are all rapidly increasing and we understand the challenges consumers face when it comes to living sustainably at home. There's still a perception that introducing sustainable products or habits in the home will cost too much, but it's quite the opposite. There's never been a better time to help Aussies to reduce their climate footprint at home with affordable products and low-cost solutions from IKEA which can also save them money longer term.
  • About the research: This study was commissioned by IKEA Australia conducted online between the 22nd - 29th September 2022 by Decibel. The sample comprised of a nationally representative sample of 1,000 Australians aged 18 years and older. Decibel designed the questionnaire. Following the completion of interviewing, the data was weighted by age, gender and region to reflect the latest Australian Bureau of Statistics population estimates.
  • Related

    IKEA Australia using electric tuk-tuk vehicles for delivery - HNN Flash #119, November 2022
  • Sources: Concrete Playground and IKEA
  • bigbox

    Home Depot and business cycles

    Q3 2022 results show ongoing growth

    While Home Depot continues to show growth, the company sees trading conditions as hardening. Areas of ongoing growth include innovative products and the medium to large Pro/trade customers.

    US big-box home improvement retailer The Home Depot has released its results for the third quarter of its FY2022. Sales came in at USD38,872 million, up by 5.6% on the previous corresponding period (pcp), which was the third quarter of FY2021. Operating income was USD6148 million, up by 6.1% on the pcp. Net earnings for the quarter were USD4339 million, up 5.1%.

    Home Depot had 409.8 million transactions during the quarter, down 4.3% on the pcp. However, average transaction (ticket) spend did increase, from USD82.38 in the pcp to USD89.67 in the reported quarter, a rise of 8.8%. Sales per square foot also increased, by 5.3% to USD618.50. (This equates to USD6711 per square metre, roughly $10066.) The company reports that inflation accounted for roughly 200 basis points (2%) in ticket growth. Sales over USD1000 increased by 10% compared to the pcp.

    Business cycles

    Home Depot has not altered its forecast for net sales growth of only 3.0% for its FY2022 - which means that as year-to-date growth is around 5.1%, that the company expects to have lower sales for Q4 2022 than in Q4 2021. The CEO of Home Depot, Ted Decker, confirmed this in response to an analyst:

    Our transactions have been stronger than initially thought with this inflation. I mean, that's why we have raised guidance throughout the year, is that the price sensitivity wasn't as strong as we thought it would be. However, our guidance implies that fourth quarter comps will be the lowest for the year, albeit positive and we have tougher comps from Q4 last year.

    As Mr Decker, pointed out in his remarks and responses to analysts' questions, you can take two views on that. One is to see this as a lacklustre result, with lower growth prospects ahead. The other is to see this as a real "victory", as not only have past gains been retained, but growth - however slow - continues.

    Here's how Mr Decker summed up the situation in response to an analyst's question:

    When you go back now, what are we, we're 11 quarters into this pandemic. And the first five, six, we had tremendous transaction growth, right? We all know the story of what happened. Not necessarily a lot of cost inflation at that point.
    And then the last six quarters, we start to lap that tremendous activity. But also saw for all the reasons we know, supply chain, commodities, global cost pressures, we saw significant cost in our business, and comps were driven as they were this past quarter with ticket over transactions.
    What we see now as we step back approaching three years is our transaction run rate, our sort of three-year CAGR [compounded annual growth rate] at this point, is more or less pre-pandemic rates. And you could look at that at one hand and say, wow, here's the slowdown.
    On the other hand, Richard [McPhail, chief financial officer] used the term "holding serve". You can look and say, oh my gosh, this industry erupted with demand for a year and a half. Then it cycled significant cost increases. The customer hung in there and was resilient. And your net over this three-year period up in transactions and units despite, what we believe, you'll hold on to these price levels.
    I think that all goes back to my opening comments of what is the dynamic of this overall industry and the health and the engagement level of this customer. And if we normalise from here, gosh, more than great.

    Mr McPhail summed up the current trading conditions very succinctly in his prepared remarks:

    We find ourselves in a unique environment with many cross currents. We are operating in a broad-based inflationary environment not seen in four decades while managing through constrained global supply chain conditions, all against a backdrop of monetary policy shifts intended to moderate demand.

    To put those together, these are the four sets of conditions that the hardware retail industry, both in the US and Australia, has had to work through:

    March 2020

    High demand, both trade/Pro and DIY, under COVID-19 retail constraints. House prices at first decline, then begin to accelerate.

    March 2021

    With high demand and constrained supply, prices of core construction materials such as timber begin to spike higher. Demand in DIY begins to moderate, but trade/Pro demand continues to grow. House prices continue to rise.

    May 2022

    Central banks in the US and Australia sharply raise interest rates as inflation beings to surge out of control. Prices of some construction materials decline, but the construction industry faces a backlog of residential construction work that will take until the end of calendar 2023 to resolve. House prices reach a peak in mid-2021.

    November 2022

    Increasing interest rates begin to have some effect on markets, including a decline in building approvals. Building supplies continue price declines, but remain above historical price levels. Complicating factors, such as extreme weather events and an increase in fuel prices due to Russia's invasion of Ukraine, support ongoing inflation. House prices decline, but not steeply.

    How should hardware retailers respond in circumstances such as these? It's evident from Mr Decker's response to analysts that his strategy is to find out where the areas of ongoing growth are, then to concentrate resources there. To do that requires a kind of constant questioning, as illustrated by this partial response to an analyst asking about forecasting:

    We did see some deceleration in certain products and categories. And again, that's difficult to get at the root cause. Is it a consumer pulling back in general? Is there a reaction to price inflation? Do we have some pull forward in certain categories that people bought so much of certain categories during the pandemic? Or are they moving on to other projects?

    Remaining aware of the price sensitivities of different product categories is vital, as Mr Decker explains:

    On certain commodities, lumber, copper wire, where we're pricing to market weekly, you see a much more classic reaction to price and unit productivity. With other categories, and I hate to bring up grills again, but there's some classic price points on some plastic grills. And when we saw those grills get up over USD600, we saw a more dramatic drop off in engagement. And when Jeff [Kinnaird, executive vice president of merchandising] and the team work those prices down even to the low USD400s and - or high USD400s, low USD500s, you saw a response with unit productivity.

    The real positive, however, at least in the consumer market, is that product innovation continues to be a driving factor.

    Across the board, though, there has been - and Jeff mentioned this, there has been so much innovation across our categories. If you think of the dramatic shift of outdoor power equipment in power tools, in appliances and what the features and benefits of these products are, the technology embedded in these products.
    I'm not sure it's quite an iPhone, but we're getting close to power tools being in that genre. And people love the newness and the innovation and they're, albeit higher prices, but people are responding in buying. So I think it's a mix, Brian, across the categories, and that's what Jeff and our merchant teams do such a great job managing every day.

    That innovation is also something of a protection against customers choosing to "trade down" to less expensive products, Mr Decker explains:

    We are not seeing a trade down. If you take my grill or appliance example, it's not that people ultimately bought and they traded down. I think it's that people have already purchased in the past few years. And when people do purchase, again, they're buying innovation. Our Traeger business, for example, is incredibly strong, and as they bring out innovation, customers respond.

    The trade business

    While the consumer business is important to Home Depot, they are also experiencing growth through the trade/Pro business. As Mr Kinnaird explained:

    We are also encouraged by the momentum we continue to see with our larger Pro customers. These medium to large repair and remodeller pros continue to post strong double-digit comps.

    Mr Decker pointed to some of the services that Home Depot has started, to ease the major "pain points" the Pro market experiences.

    Our Pros tell us that finding qualified, skilled labor is a pain point in their business. To that end, we recently announced our 'Path to Pro' platform, connecting skilled tradespeople with hiring trades professionals. This unique and proprietary platform is available at no cost to all Pro Xtra members. It already contains thousands of candidates, and pros have begun posting their open jobs.

    Aside from this, of course, there is a constant push to increase the productivity of in-store, customer-facing staff. One recent development by Home Depot is the Sidekick app, which helps direct staff to the most productive tasks.

    We are currently launching a new application on our in-store mobile devices called Sidekick, which is an in-aisle tasking tool designed to direct associates to the highest value tasks in real-time. The tool will direct associates to key bays where on-shelf availability is low or outs exist. By simplifying our operations, we can generate productivity and enhance both the customer and associate experience.


    In terms of the general economic picture in the US and Australia, there are two main complicating factors going on behind the scenes. The first is that "capitalism" - or, more simply, globalised markets - does not, at first, seem to be working the way it should. High demand and limited supply resulting in increased prices is supposed to trigger more supply. That's not happening, because it's easy to forecast that demand is going to fall steeply once the supply-lag is solved. For example, there is only limited building of new container ships despite a current shortage, because the current supply of container ships will likely be adequate to service trade in 2025.

    The other side of that problem is what we've seen recently with major tech companies in the US. Encouraged by the surge in demand during the COVID-19 pandemic, they staffed-up to build adequate infrastructure. However, while demand did not diminish, it did stop growing at a high rate. This led to large layoffs of staff during October and November 2022. (Though it is more complex than that, with Apple effectively ending growth in Meta's [Facebook] advertising business by making privacy controls the default on its mobile devices.)

    The second fact is that the economy - and many commentators on economics - do not fully understand what the Reserve Bank of Australia (RBA) is doing with interest rates. The RBA's goal is clearly to cut consumption back to the low levels of early FY2020, if not below that. In fact, it's likely planning to manage one quarter of negative, or near negative growth, during the current financial year.

    What the accumulation of these factors have led to is a slightly odd economy. There is certainly demand and growth present still in 2022, but it's regarded as ephemeral. The resulting contradictions are considerable. Business investment, as a percent of gross domestic product, is at the lowest level it has been in 30 years - all the way back to 1992. Business conditions are rated as being 20 points above average, the second highest level in 30 years. Business confidence is positive, but close to average. And capacity utilisation is around 87%, the highest it has been for 30 years.

    Typically, when utilisation goes up, so does business investment (as well as confidence). In this case, however, instead of investing in more plant and machinery (and software), businesses are hiring more people, driving the unemployment rate sharply down. It's also likely we're going to see poor productivity figures emerging for FY2023 as well.

    While all this matters in terms of the next two to three years, the real question that continues to linger, and will become increasingly important, is: after the COVID-19 nightmare is finally over, what kind of economy will Australia be left with? Looking at key numbers such as business investment, which has been in historical decline for the past decade, it's difficult to form an optimistic answer.


    Big box update

    Bunnings trialling new categories

    Work-from-home and wet weather are driving home repairs. This has led Bunnings to seek out new categories and go deeper into existing product ranges

    In a recent interview with The Australian, Bunnings Group managing director, Michael Schneider said Bunnings is growing more in the pool maintenance area, offering chemicals and pool water applications. The hardware retailer also sees a big opportunity in barbecues, selling cookers and smokers, and large equipment that involves slow cooking, pellet-fired flames or charcoal for enthusiasts and more advanced cooks.

    Many new ideas and categories are being tried out in the larger format Bunnings store in the Melbourne suburb of Mentone.

    Mr Schneider believes Australians are rediscovering their own surroundings through COVID-19 and lockdowns. He told The Austrlaian:

    For me, what I have seen really strongly after the last two or three years is Australians have re-fallen in love with the home. We are spending inordinate amounts of time there, it is a really safe place to be and we want to do things around the home and create really great experiences.
    Anything that helps customers fall in love with DIY, big or small, is what really excites us, which is why we have so much content on our YouTube channel, more than 640 hours of YouTube content just shows how much people are interested in learning those new skills."

    An especially popular category at the moment is indoor plants, given the unseasonably wet and cold spring much of the east coast of Australia is having, and that is keeping many people away from starting gardening and outdoor projects. Mr Schneider said:

    It's easy to be very Melbourne centric because we are here. It's certainly been well documented that Victoria had its wettest October on record, that NSW has already had its rainfall for the year.
    There's clearly a bit of a bias to indoors in the home so a lot of our marketing and advertising will be what can you do with your indoor garden. And when it's wet there is more to do around the home, around mould and moisture in the home, you can do indoor painting projects...
    And for the commercial pipeline there is a lot of demand, there's a bit left over from the HomeBuilder scheme and it is just flowing through, a lot in the alteration and addition activity, and obviously with people working at home two or three days a week now there is a lot more wear and tear on the home.


    Bunnings Strategy Day 2022 - HNN Flash #97, June 2022
  • Source: Weekend Australian
  • bigbox

    Big box update: IKEA

    IKEA trials Australia's first electric tuk-tuks for city deliveries

    The tuk-tuk-style vehicles will be used from its Tempe store in high-density urban areas around Sydney

    IKEA will debut the electric tuk-tuks as a "last mile" - the final journey of cargo and parcels from distribution centre to the customer - delivery vehicle in early 2023. It will enable the home improvement retailer to drop off parcels without polluting the air in heavily populated areas. The three-month trial is part of the big box retailer's move to reach its global goal to provide all customers with zero-emission deliveries by 2025.

    The tuk-tuks were unveiled by last-mile delivery specialist ANC, and rental and fleet management group ORIX Australia Corporation. The specially designed electric tuk-tuk is manufactured by BILITI Electric in India and imported exclusively by Brisbane company EMoS.

    The vehicle comes in flatpack form with assembly required. It has a maximum carry limit of 625kg including the delivery driver and is limited to a top speed of 50km/h with an effective range of 100km. While it lacks delivery van safety features such as airbags, the tuk-tuk's seatbelt, windscreen and third-wheel stability offer advantages over conventional scooters. The electric three-wheelers also have swappable 9kWh batteries. Their drivers will need to wear helmets.

    IKEA Australia chief executive Mirja Viinanen said the tuk-tuk was a natural fit for the company, as "customers have increasing expectations for the retail sector to reduce the environmental impact of its delivery services". Ms Viinanen is also the company's chief sustainability officer.

    IKEA led the way as the first Australian home furnishing retailer to implement home deliveries with electric vehicles. We are committed to this (2025) goal and want to bring the retail sector on the journey with us, so we are calling on the government to help us get there by introducing targeted incentives and charging infrastructure for last-mile delivery and logistics.

    According to The Driven website, electric trucks remain expensive and although there is an expected "after-market" in used batteries - for homes and the grid - the monetary benefits of that remain ill defined. The partnership with Orix will help create a "capital light" expansion into EVs, and demonstrate that the running costs are favourable, and better than renting. Orix CEO Reggie Cabal told The Driven:

    It's still early days for EVs as fleet vehicles and there are still many challenges, however, partnering with like-minded organisations helps overcome barriers and creates greener, more sustainable outcomes.

    He said many companies are in a "holding pattern" as they seek to understand the market and the technology.

    We are helping remove the complexity for delivery professionals to adopt EVs by aligning vehicles, infrastructure, energy and optimisation into a single, practical plan for a decarbonised fleet future. It's important we act now.
  • Sources: Australian Financial Review, Daily Telegraph and The Driven
  • Middle image from ANC Facebook
  • bigbox

    Sausage sizzle stars at Wesfarmers AGM

    Questions asked about environment, cybersecurity

    The Bunnings sausage sizzle received praise, and Wesfarmers faced questions about its environmental credentials at its annual general meeting. Managing director Rob Scott reported Bunnings continued to trade well in the September quarter, though wet weather affected sales.

    The parent company of Bunnings, Wesfarmers, held its Annual General Meeting on 3 November 2022. Both the Wesfarmers chairman of the board, Michael Chaney, and the managing director, Rob Scott, offered prepared comments, and Mr Chaney subsequently answered questions from shareholders.

    Jumping ahead to the shareholder questions, there is little doubt which part would be the favourite of Bunnings managing director Mike Schneider. It wasn't really a question, but more a comment and a "thank you".

    Mine is not a question, Mr Chairman, but a thank you to you and your board and all the people that came up with the idea Australia wide of the good old Sausage Sizzle. You don't realise how all the sporting clubs, all the sporting clubs and social groups that I'm involved with, this is such a great way of raising money. And I thank you very, very much for coming up with the idea.

    Yep, the old sizzle rated a mention at the AGM.

    Rob Scott

    Mr Scott began by offering some comments on general trading conditions during the first quarter of FY2022/23:

    Consistent with our update at our full-year results in August, retail trading conditions have remained robust, and we have been pleased with sales through the 2023 financial year-to-date.
    Australian consumer demand continues to be supported by low unemployment and high levels of accumulated household savings, but rising interest rates and the impact of inflation are starting to affect consumer behaviour.
    Over recent months, shopping patterns and customer feedback indicate some customers are becoming more price sensitive, as they try to manage household budgets. We see these conditions as an opportunity for our businesses, which are well known for their everyday low prices, to outperform relative to others in their markets.

    Mr Scott went on to more specifically detail how Bunnings is performing:

    In Bunnings, sales in recent months have been impacted by an unusually prolonged period of wet weather over the start of Spring, but overall sales growth for the year-to-date remains resilient and continues to be supported by strong demand from commercial customers. While sales growth from DIY customers remains positive, it has moderated from the high levels experienced through COVID.

    He went on to stress the importance of the OneDigital program at Wesfarmers, which includes its substantial investment in data analytics.

    2023 is a foundational year for OneDigital, as we invest in the systems, processes, and capabilities to support our data and digital ambitions. As customers become more digitally savvy and value conscious, the enhanced multi-channel experience and value provided through OnePass will be even more important. Our investment in OneDigital is in line with prior guidance, being an operating loss of $100 million for the 2023 financial year, excluding Catch. We will provide a further update on progress at the half-year results in February next year.

    Michael Chaney

    Many of the questions from shareholders addressed to Mr Chaney dealt with environmental and climate-change associated reductions in energy use. There were also several questions on the move by Wesfarmers into Lithium mining, and questions about how Wesfarmers planned to manage its new health business in the future.

    One of the questions particularly pertinent to Bunnings was whether Wesfarmers as a whole was too dependent on China as a source of supply for its products. Mr Chaney responded:

    That's a very live issue, Mr. Stan, and if I heard you correctly, [you suggested] 60 to 80% of Bunnings products come from China? That's not correct. It's a lot lower than that. But certainly amongst our companies, right across the group, we have significant imports from China.
    There are ways of diversifying and some of the businesses have. Put it this way. We've got 26,000 suppliers over - is it 34 countries, Rob? And we [get] supply a lot from places like Bangladesh. One of the issues about diversifying out of China is that a lot of the people who would produce a product elsewhere source the raw materials and components from China. And so you end up with a dependency anyway.
    But it's an issue I think that all companies and countries like the US are considering and thinking about, and making efforts to make sure that their sources of supply are very diverse, and we're certainly amongst them.

    Mr Chaney was also asked about what steps Wesfarmers was taking to protect itself against "cyberattacks" - hacking of data systems. Mr Chaney replied:

    Sure, well, this is a huge issue that all companies and boards are addressing all the time. And it's something we've been addressing for years. And there's a huge amount of activity, a lot of people employed in the company in the group, handling cyber matters and security matters. The recent attacks have focused everyone's attention, I think, and, you know, as a result, we're renewing our efforts where we're looking further at the question of what sort of information we hold and need to hold. But it's an ongoing issue.
    And it's going to be with us for a long time. And, you know, as soon as you think you're well protected, the villains out there devise some other way of getting into your systems. And it's a matter of being constantly vigilant and making sure you apply the right resources to it.

    Mr Chaney was also asked about how the company was prepared for the potential of a recession in the coming years.

    I mean, it's an interesting question, because over the last 30 years, the world has gone through a few recessions which have not occurred in Australia. The one that has occurred since 1991 was the COVID-related recession, which was very brief and minor.
    So it's possible that the rest of the world would go through a recession and we would not. People talk about the US and Europe going through a recession. And yet the government in its budget ... predicted a growth rate here at 1.5%, which, you know, recession is defined as two quarters of negative GDP growth. So it's possible, we won't, but there's no doubt that, as Rob said earlier, when you have rising interest rates, falling house prices, inflation, and so on, it'd be surprising if you didn't have a fall in consumption, or a reaction in consumption at least.
    So what you've got to do is make sure you've got a strong balance sheet and that you're well prepared. You're looking at your costs, and so on, you're well prepared, whatever happens and hopefully we won't have a recession - albeit, we'll probably have some sort of a slowing down of economic activity next year, as the government predicts.


    The hidden question in all of this from the AGM is: how well prepared is Wesfarmers for the future? While that ended up being spelled out piecemeal through questions about cybersecurity, recession, supply and response to adverse economic events, that central question remains open.

    There is no doubt that Mr Scott is making good and necessary preparations for that future. It's worth noting that he has shown a good deal of restraint when it comes to acquisitions, and both the move into Lithium production and health care through a pharmacy acquisition are strongly predictive for future strong markets.

    The lingering questions that remain are really over the legacy retail operations. In the short to medium term, both Kmart and Bunnings will likely get through a declining economy, as both are value retailers. There are larger questions about Target and OfficeWorks. Target has been failing because it is largely a fashion business, and it did not adopt the quick reactivity that fast fashion groups such as Zara, H&M and Uniqlo have deployed. OfficeWorks remains as an apparent relic from 2004, with a product line largely devoted to paper products, and technology buying that only appeals to the least sophisticated customers.

    The real question that Wesfarmers faces is whether to treat these businesses as essentially EOL (end-of-life), and to extract what remaining value there is from them, or to invest in essentially new businesses, using their legacy value to leverage new opportunities.

    In terms of Bunnings itself, questions remain over its potential for real innovation. The acquisitions of Beaumont Tiles and its ongoing development of Tool Kit Depot are worthy, but they are not especially innovative in a broader sense.


    Big box update

    Pre-Christmas opening for Bunnings Hervey Bay store

    The hardware retailer turns its catalogue digital and managing director Michael Schneider emphasises training for young tradies

    The new Bunnings store being built in Pialba, a suburb of Hervey Bay on the Fraser Coast in QLD is close to completion. It is being built on Main and McLiver Streets, next door to the existing store on Boat Harbour Drive.

    Bunnings area manager Annabelle Fawkes-Jones recently confirmed the new Hervey Bay store will open prior to Christmas. She told the Fraser Coast Chronicle:

    The existing store in Boat Harbour Drive will close the evening before the new store opens.
    The new store represents an investment of around $59 million, and we expect to create approximately 80 new team members jobs to add to the existing 200 team members currently employed...

    The retail development will feature a warehouse, outdoor nursery, landscape and material yard, trade yard, cafe and over 460 car park spaces.

    The highly recognisable Bunnings signage has been put up, and finishing touches are being added to a retail area about 5000sqm larger than the current store, reaching more than 17,000sqm in floor space.


    Bunnings' Hervey Bay development sold - HNN Flash #72, November 2021

    Catalogue turns digital

    Bunnings is replacing its old-school print catalogue with an online offering that includes mobile apps, emails, social media and YouTube videos, according to The Australian in an exclusive report.

    The retailer continues to embrace a digital future as its customers increasingly shift to online shopping.

    The decision to go digital with its catalogue comes after Bunnings informed suppliers at a forum in July that it would review its print catalogue. At the same time, it would look at its digital capabilities to create better experiences for shoppers and how to best showcase its latest products and project ideas.

    In a recent letter to suppliers, Bunnings merchandise director Jen Tucker confirmed the fate of the paper catalogue. According to SmartCompany, it reportedly said:

    Following this review, we've decided to move to a fully digital version of the catalogue in both Australia and New Zealand, which will kick off with a Christmas gift guide special ahead of the festive season.
    We are excited to be moving to this digital-only format which gives us the ability to reach more customers, provides an easier platform for customers to transact and can be evolved to meet the changing needs of our customers.
    The new format will also allow us to amplify and promote our catalogue in mediums where our customers increasingly spend time, including on social media and online as part of our digital advertising.

    Bunnings director of marketing Phil Wade said the retailer was being led by the behaviours and preferences of its shoppers. In, he said in a statement that it hoped the digital push will make "transacting even easier".

    We know more of our customers are choosing to seek project inspiration and product information online. As such, we recently reviewed our printed catalogue and, like many retailers, have now made the decision to move to a digital-only version...

    Mr Wade added that products will be promoted through Bunnings' website, email, and social media channels and through the popular Bunnings custom magazine. He said:

    This will still be printed and offered for free in store,

    During the pandemic in 2020, Coles, unveiled plans to scrap its weekly printed specials catalogue in favour of digital catalogues. A t the time, Coles announced it was revamping the website to include a new section, dubbed coles&co, which will publish a digital catalogue with shoppable specials and exclusive content, including daily recipes, which incorporate the week's best deals, new products and shopping tips.


    Bunnings' merchandising team has been restructured - HNN Flash #104, July 2022

    Future tradies

    At Wesfarmers' annual general meeting in Perth (WA), Bunnings managing director Mike Schneider told The West Australian that the shortage in construction (tradie) skills should be taken more seriously. He said:

    ...The biggest challenge we find on the commercial side is just access to trades. I think that requires structural change over time around getting young people into trades.
    There's a lot of talk about getting people into STEM (science, technology, engineering and mathematics) subjects at school and into data science and technology at university.
    That's critically important for the country but it's just as important to get carpenters, electricians, plumbers and boilermakers.

    Bunnings is also feeling the shortage, finding the trades expertise it needs for its near 300 stores has become more difficult. Mr Schneider said:

    We've seen quite a significant reduction in the number of people wanting roles in our stores, not because the employment environment is not attractive but because you have almost full employment and there's not a lot of labour out there looking for work.
  • Sources: Fraser Coast Chronicle, The Australian, The Australian Financial Review, 9News and SmartCompany
  • Image credit: Real Estate Source
  • bigbox

    ABS building stats show sharp changes

    Work in pipeline grows

    The building stats from the ABS show a market generating strong demand, and an industry struggling to cope with backlogs. For the June 2022 quarter, there was an increase in new projects for multi-unit dwellings, compensating for slack demand during the pandemic.

    The Australian Bureau of Statistics (ABS) has released its statistics for the building and construction industry and markets through to June quarter 2022.

    While these are very useful statistics, they do take a certain amount of navigating to extract their full value. One aspect of the ABS it is best to remember is that their provision of stats is largely driven by historical government department demand. In the case of the building stats, there is a certain amount of repetition and overlap, and the stats don't quite mesh in a way that might be expected.

    There are seven key stats provided.

    1. Building work not yet commenced

    The anticipated completion value of jobs which have been approved, but not started construction at the end of the quarter.

    2. Building work yet to be done

    The value of work remaining to be done on jobs under construction at the end of the period. This would be the completion value of a project, minus the sum of building work done on the project.

    3. Building work in the pipeline

    The sum of the two categories above, work not yet commenced and work to be done.

    4. Building work commenced

    The anticipated completion value for jobs which started during the quarter.

    5. Building work done

    This is the estimated value of building work carried out during the quarter. This is the measure of the actual activity in the construction industry for the specific quarter.

    6. Building work under construction

    This is the anticipated completion value for jobs which were under construction at the end of the quarter.

    7. Building work completed

    The total completion value of jobs which completed in the quarter.

    In these seven stats, there are two primary categories. The first category includes all those stats which are always about the total value of the project. The second category consists of those stats which are about a partial value of the project, and relate to its progress.

    In Table 1, we provide a fictional history of a house with a project value of $1,500,000, that takes 14 months to build, from a building approval in September 2020, to final completion in November 2021.

    It's helpful to think of each of these stats as a kind of "sensor" that records events. One way of looking at the first category is that it includes only "binary" sensors, which record, just "on" and "off", a light sensor - on being the total project value, and off being zero. The second category records extent, like a thermometer.

    In the first category there are three main stats: work commenced, work under construction, and work completed. These are really market tracking stats. They give us an idea of the gross capital that is moving through the construction market.

    The other stats track how the industry is actually performing, under the given market conditions. Building work in the pipeline indicates the total "pressure" in the system, and the primary measure of all these stats, building work done, indicates how that pressure is being handled.

    Depending on what is going on in construction, these stats assume different priorities in understanding what is happening. In the case of current stats, during what is (hopefully) the post-COVID-19 Australian economy, the single most significant stat is for work in the pipeline, as shown in Chart 1.

    This chart illustrates very clearly what extraordinary times the construction industry is going through. Looking at the numbers for houses in the top two graphs, it is clear that starting in March quarter 2021, there have been unprecedented levels of growth in the pipeline of projects. June, September and December quarters of 2021 all recorded growth rates of over 60%. Throughout FY2022 the level of work in the pipeline has remained above $24 billion, where the previous average value for FY2017 to FY2020 was under $16 billion.

    Looking at the numbers for other residential (mostly multi-unit dwellings), there is something of a reverse image, with FY2021 showing very low values, seconded only by the low values of FY2020. However, there are also clear signs of growth in this area for FY2022.

    The corollary to this chart is Chart 2, which shows work to be done. Once again, the top two graphs show remarkable growth in the backlog of construction work in the market for houses, starting in March quarter 2021, and continuing throughout FY2022.

    The two lower graphs show work to be done for other residential. What is most striking here are the very low numbers for both FY2020 and FY2021, followed by numbers at the high end for FY2022.

    Chart 3 shows the number for actual building work done during each quarter.

    The top two graphs for houses show a sharp increase in capacity, especially for the September and December quarters of 2021, with this level maintained through the rest of FY2022.

    The bottom two graphs for other residential show a very different picture. Capacity for both FY2021 and FY2022 has been lower than the historical average, though this began to change in June quarter 2022.

    Chart 4 shows the same numbers on an annualised basis for financial years.

    This chart highlights why it's necessary to see the full stats, in particular the growth in the pipeline, to understand what is really going on in the industry. These graphs would appear to suggest there has "simply" been a mix in composition, with more houses replacing other residential. The pipeline indicates very high demand, that is being filtered out through a limited capacity.

    Chart 5 details building work commenced.

    Perhaps the most significant of these stats is illustrated by the lower graph, which shows the sharp turnaround in projects for FY2022, as commencements for houses drops steeply from its historic high for FY2021, to a level below commencements for other residential.

    This is in sharp contrast with the under construction stats, illustrated in Chart 6, which shows the numbers of projects.

    These show the historical "overhang", with house projects dominating over other residential.

    That overhang is also present in the stats for the number of residential completions, again showing houses as dominant, in Chart 7.


    These charts do make clear just exactly how extraordinary the current period in the construction industry really is. These stats bear out the commonly accepted analysis of the situation, which is that there remains a backlog and ongoing high level of demand, which is stretching the capacity of the industry. The meaning of the stats has shifted from identifying demand, to illustrating where supply has managed to shift.

    It is highly unlikely that the demand will be fully serviced before the end of FY2023, and may extend to the end of calendar 2023 as well. The question that remains is what happens past that point. Are we witnessing a mammoth "pull forward" of demand, which will create a subsequent "shadow" period, where demand decreases sharply, or will demand revert to a more historically normal level?

    That is a difficult question to answer, as it will largely depend on how both the Australian and global economies develop in 2024.

    What is most interesting about the construction situation, however, is that it echoes conditions that we've seen elsewhere in the general economy, both during the COVID-19 pandemic and over the past year as global economies emerge from its influence. There are still radical shortages in the economy of basic goods, including everything from microprocessors for automobiles to staples in grocery stores. While there are still aspects of supply chains that are constrained, it is noticeable that few industries are willing to see shortages as opportunities to invest.

    That is, at a basic level, driven by a fear that investing in boosting supply will produce over investment that will not be justified when the supply problem is solved and demand reverts to normal. You do not, for example, want to double the size of a construction company, only to see it crash when demand reduces in mid-2024.

    Underlying this, however, is what might be interpreted as overall pessimism. There is a growing sense in many economies, as part of what is sometimes described as "secular stagnation", that growth opportunities will be limited in the future.

    However, HNN believes that there is a far more complex situation developing. What we are seeing now is the spread of effects developed by the increasing importance of technology in economies. For example, if we look at the car market, there will come a point when electric vehicles begin to dominate, where the price of internal combustion engine (ICE) vehicles will decrease sharply, as their resale potential declines.

    It's also unclear at the moment how the second-hand market in electric vehicles will operate. Outside of needing to have their battery packs entirely replaced every seven or eight years, maintenance costs will remain low, and durability should be radically increased.

    There are similar effects already at work in areas as widespread as energy markets and transportation. As for construction, there is strong potential in areas such as increased pre-fabrication usage to see the economic situation change radically over the next 10 years.


    Big box update

    Portland, VIC could get a Bunnings store

    A furniture maker in Queensland is in a legal dispute with Bunnings Group Limited after signing a supply contract with the company in 2019

    Glenelg Shire Council has received a planning application from Bunnings Group Ltd, for a store on Richardson Street in the regional town of Portland, Victoria.

    The store would have a total retail floor of more than 5300sqm, according to The Warrnambool Standard.

    Bunnings area manager Patrick Neicho said the application was for a small format store. He told The Standard:

    It would represent a significant investment in the Portland community of more than $15 million. The proposed store would be located near the corner of New Street and Henty Highway and would span more than 5000 square metres, with onsite parking for 125 cars.
    Should our plans progress, we'll look forward to becoming part of the Portland community and supporting the region's economic growth.

    Legal dispute

    Birbilis Bros, a manufacturer of kitchens, wardrobes and furniture based in Logan, Queensland has gone into voluntary liquidation. It is understood cash flow difficulties began in 2019 when it signed a supply contract with Bunnings Group Limited, according to a report in the Albert & Logan News.

    After signing the supply contract, company director Terry Birbilis invested heavily in extra staff, retooling and other expenses so it could supply kitchens and joinery products to the hardware retailer's trade division.

    Mr Birbilis said in court documents that Bunnings agreed to buy a minimum of about $5 million a year in products but bought substantially less, resulting in them taking court action in June 2021.

    The court case is still ongoing, with no resolution following mediation. Mr Birbilis declined to comment but he submitted a statement of claim to the Supreme Court.

    Bunnings general manager - commercial, Rod Caust said Bunnings was defending the claims. He told the Albert & Logan News:

    We have made attempts to resolve the dispute, but unfortunately these have not been successful. As the matter is before the courts, we are unable to provide further comment at this time.

    Founded in 1969, Birbilis Bros was based in Springwood before moving to a larger, 10,000sqm factory at Crestmead in 1994. At one stage it was supplying 120 kitchens a week to Kitchen Connections and other retailers.

    Nick Kombis from liquidators Vincents said it was unlikely the company would be able to return to its factory but the directors still hoped to regain control of the business. Mr Kombis said:

    They have submitted a proposal for a deed of company arrangement. I'm liaising with stakeholders and creditors. The directors are hoping to salvage the company, but at the moment it has ceased trading.
  • Sources: The Warrnambool Standard and Albert & Logan News
  • bigbox

    Big box update

    Bunnings set to tweak its inventories: report

    The new $55 million Bunnings store in Pialba (QLD) is taking shape just metres from its existing premises

    Bunnings is slimming down stock of some of its products and increasing others as it tightens inventory coming out of COVID restrictions.

    The Australian reports that in a letter to suppliers, Bunnings merchandise director Jennifer Tucker revealed the early stages of changes to its inventory management. Ms Tucker wrote:

    With the most disruptive phase of the pandemic-related supply challenges behind us, it's pleasing to see our in-stock performance continuing to improve. With more stock now in stores and our warehouses, we're continuing to calibrate our inventory management to ensure we have the right stock for customers.

    For suppliers to the hardware retailer, it will mean a stronger focus on ensuring the retailer can maintain its low price position while also maintaining the right level of stock to suit changing demand. Ms Tucker wrote:

    Our focus continues to be on ensuring we have stock that supports our lowest prices position, key seasonal categories and demand from our commercial customers. We will however tighten up the inventory settings of lower-turning and niche products.
    For some lower-turning and niche products we'll adjust down our holdings per store ... to reflect the rate of sale rather than presentation levels...
    There'll be more rigour around the approval process for off location and minimum presentation requests. Where requests add too many weeks cover, they may be rejected.

    It is believed this latest change to Bunnings' inventory management relates to the number of products to be displayed at the end of aisles, referred to in her letter as "off location", and will further tighten the volumes of products in store.

    The Wesfarmers-owned retailer could be cutting down stock that was built up this year due to concerns that factory shutdowns and lockdowns in China would disrupt supply chains.

    Along with many hardware stores, Bunnings saw revenues rise over 2020 off the back of a jump in renovation and DIY activity. China is a significant supplier of inventory sold through the Wesfarmers retail networks including Bunnings, Kmart and Officeworks.

    According to the Australian Financial review, the company has never revealed the percentage of goods sourced from China, but the annual report says the Wesfarmers supply chain includes 190 sites in China, Indonesia, Taiwan and Vietnam covering more than 43,000 workers.

    With supply chains continuing to improve, many retailers are looking to slim down inventories to better match demand. In a statement to The Australian, Ms Tucker said:

    There's no doubt COVID was a disruptive period for all retailers with supply chain challenges and unprecedented levels of demand across different product categories.
    Now that we are beginning to come out the other side, we are working with our suppliers to ensure we're managing stock as we always have, in a practical and common sense manner.

    Ms Tucker also told Daily Mail Australia the process was standard for large retailers.

    We're constantly improving our processes to ensure we have the right product on our shelves at the right time and at the lowest prices for our customers. Like all retailers, we regularly review inventory.

    Barrenjoey analyst Tom Kierath said it made sense for Bunnings to finesse its inventory levels to a level more closer to what the business was holding in 2019 before the pandemic hit.

    Mr Kierath said it was difficult to gauge inventory levels, but that the retailer should be tweaking its inventory to benefit from the changing sales mix flowing from the end of the worst of the pandemic. He told The Australian:

    The dynamic here is that all the retail, do-it-yourself products that they sell, the demand for that has been really strong through COVID because people were stuck at home with nothing to do.
    Now they're out travelling and so the demand for those products is going to be lower than what it has been in the last couple of years. And you contrast that with trade products that tradies buy, so power equipment and nuts and bolts ... that part of the market is still strong because of all the work in the pipelines to be done.


    Bunnings consolidates its merchandising team - HNN Flash #104, July 2022

    Hervey Bay store

    A new Bunnings store is currently under construction in Pialba, a coastal town and suburb of Hervey Bay (QLD).

    When completed, the expansion will create 20 jobs for the region, Bunnings area manager Andy Stewart told the Fraser Coast Chronicle:

    The new warehouse would also create around 145 jobs throughout construction. Building on the things customers like about our current store, it would feature an even wider range of home improvement and lifestyle products.

    The development includes a new warehouse, outdoor nursery, landscape and material yard, trade yard and cafe.

    It is expected to be completed this year.


    Bunnings development for Hervey Bay - HNN Flash #24, November 2020
  • Sources: The Australian, The Australian Financial Review, Daily Mail Australia and Fraser Coast Chronicle
  • bigbox

    USA update

    Lowe's India is becoming a technology engineering hub

    CEO Marvin Ellison said India could also become the retailer's second largest product sourcing destination as it looks for alternatives to China

    On his first visit to India, Lowe's chairman and CEO Marvin Ellison emphasised the company's commitment to its technology centre in India. He said that India continues to play a pivotal role in the company's journey to become a USD100 billion omnichannel retailer.

    In March, Lowe's India announced the expansion of its operations with a second office in Bengaluru to support its local workforce, which grew by 60% during the pandemic. Today Lowe's has almost 4,000 IT staff in Bengaluru almost as many in the US, according to The Times of India.

    This period of growth coincides with the time Mr Ellison and chief digital & information officer Seemantini Godbole has been at the company. Both joined in 2018. During this time, Lowe's turnover surged from USD67 billion, to an expected USD97 billion this year.

    Mr Elliso said one of the major reasons why the company has done so well in the past four years has been the "amazing" progress it has made in technology. He believes Lowe's was a technology laggard four years ago, but it is now at the cutting edge. And the centre in India has played a vital role in this development.

    Much of the revenue growth has come from e-commerce. Four years ago, it was 3.5% of total revenue but this year it will be 10% of a larger revenue base. Mr Ellison told The Times of India:

    The key part of our digital strategy is run out of here [India]. The entire transition of our e-commerce site from a very clunky infrastructure to the cloud, most of the work was done here in a very accelerated fashion during the pandemic.

    During the pandemic, Mr Ellison said customers started looking for more options.

    Some wanted to buy online, and then pick up the purchase from the store; some wanted to pick it up from a locker in the store instead of engaging with our associates; some wanted our associates to deliver to the parking lot. Earlier, we couldn't do those things because our technology limited us. So, Seemantini's team here and in the US had to develop all those options.

    Mr Godbole said a lot of the components were developed in India. The centre also developed some of the iOS features, and components for the merchandising, pricing, and promotion systems.

    Our associates here are millennials, they are extremely digitally savvy, and are extremely data driven, so a lot of our data capabilities reside here.

    Mr Ellison said new opportunities in the home improvement industry are emerging in the US. There is a rising population of older people, and they want to live independently so they have to modify their houses such as changing the bathtub to a walk-in shower, changing steps to a ramp, and lowering the heights of cabinets. Millennials are becoming home-owners, and they want to do home projects or work in the yard. More women are also taking on DIY projects themselves.

    Despite inflation and higher interest rates, demand for home improvement remains high, along with the need for technology staff.


    Vietnam is currently is Lowe's biggest sourcing country after China but Mr Ellison said the range of products that India can potentially supply could make it bigger than Vietnam in the coming years. He said:

    I went through some of the great products we are sourcing from here, from long-handle tools like axes and picks, to textiles and sheets, and curtains to storage devices like shelves, fencing material.

    Garden products, and appliances are Lowe's biggest categories. But the fastest growing are storage products and decor. India has good potential because of this, Mr Ellison said.


    Bunnings sets up IT centre in Bengaluru - HI News 6.02, May 2020, page 26

    Big box update

    Bunnings' new Narrabri store is open for business

    The hardware retailer recently confirmed it has no current plans to open a store in Mansfield, Victoria

    Bunnings has launched its new $15 million store in Narrabri, located around 521kms northwest of Sydney. It is the town's biggest-ever single retail development, according to the Narrabri Courier.

    It is anticipated the store will attract shoppers from a wider area in the north west, and will help to solidify Narrabri's status as a regional centre.

    Located on the corner of Saleyards Lane and the Newell Highway, Bunnings Narrabri covers more than 5000sqm, including a main retail area, nursery, paint department and tool shop, kitchen range and displays, a two-lane timber drive through and trade desk to service local trade customers, with more than 80 customer car parks.

    Bunnings store manager, Caroline Wells, said the team had been "working flat out" over the last few weeks to get the store ready for the first trading day. She told the Narrabri Courier:

    We'll be able to service locals who may have previously travelled to Bunnings stores in nearby towns. Now customers can grab everything they need off the Bunnings shelves right here in Narrabri.

    As part of the store opening celebrations, the team provided donations to local schools in the area, including Narrabri Public School and Wee Waa Public School.

    Bunnings Narrabri will also have a range of sustainability initiatives that will reduce the store's environmental impact, such as LED lighting throughout, on-site water reuse and a 99kw solar PV system, said a Bunnings spokesperson.


    Bunnings' Narrabri store development in regional New South Wales is nearing completion - HNN Flash #108, August 2022

    Mansfield, VIC

    Bunnings has confirmed to the Mansfield Courier that it has no plans in place to open a store in Mansfield at the present time.

    In 2019, "very reliable" informants told the local newspaper there was a "very real possibility" of Bunnings setting up shop at the old saleyards site in Mansfield.

    Further speculation cited potential locations at the old timber mill site on Deadhorse Lane and near the commercial complex on Mount Buller Road. But those rumours were dismissed by Bunnings director of property, Andrew Marks. At the time, Mr Marks said:

    Benalla remains an area of interest for us and we would consider opening a store there in the future should the right opportunity become available.

    Three years later and Benalla is yet to get a Bunnings store. However, Mansfield locals believe the goal posts may have shifted since then, with most recent census data indicating huge growth in Mansfield compared to the neighbouring rural town.

    An area near the showgrounds has since been suggested, until the most recent rumours pointed to a future industrial estate between Lakins Road and Deadhorse Lane, opposite the racecourse on the Midland Highway.

    This location has been earmarked as a prime location for future industrial development, in an independent report from Charter Keck Cramer, The report was submitted to council for its proposed Commercial and Industrial Land Use Strategy finalised in April 2021.

    The location piqued further interest amongst locals after council removed an item from their most recent meeting agenda a few days after its release, which was entitled "Lakins Road Industrial Precinct Master Plan Project".

    Council confirmed the matter, which would have been confidential, was not discussed at the most recent meeting. The matter likely had to do with council's depot and an industrial/business park subdivision, not the private property to the east, but nevertheless, it fuelled speculation in town.

    Bunnings confirmed recently that while they regularly review opportunities to improve their existing store network, they have no plans in place to open a store in Mansfield.

    The owner of the Lakins Road/ Deadhorse Lane property on the Midland Highway confirmed plans for future industrial development of the land, but said that he hadn't spoken with Bunnings or a supermarket about acquiring a site, and had only heard the rumours like everyone else.

  • Sources: Narrabri Courier and Mansfield Courier
  • bigbox

    Big box update

    Modifications requested for planned Bunnings Wagga store

    Bunnings announced it has teamed up with Afterpay for in-store payments, but with no minimum spend attached

    Wagga City Council's approval for the proposed 18,000sqm Bunnings store on the corner of the Sturt Highway and Pearson Street in Wagga Wagga (NSW) came with a number of conditions. They include the design and configuration of traffic lights at the intersection of Pearson and Bye Streets.

    The previously submitted plans for the development included entries and exits for customers on the Sturt Highway and Pearson Street. To preserve traffic flow, council has said the highway access must be entry-only and the Pearson Street accessway must be removed entirely. Council wanted to make Saxon Street the only exit for customers leaving the store.

    Bunnings has submitted a request to the council, asking it to modify the consent conditions to allow for an additional customer exit directly onto Pearson Street.

    The hardware retailer argued the current restrictions would divert almost all of their customers through the "arduous and counter-intuitive" Saxon Street exit, according to The Daily Advertiser.

    Representing the interests of Bunnings, town planner Aaron Sutherland submitted the request, and said funnelling all vehicles from the hardware store through Saxon Street would create serious traffic issues. He wrote:

    The current approval requires all customers wishing to leave Bunnings to undertake the arduous and counter-intuitive trek around the rear of the building. The compresses the entirely of all Bunnings egress traffic into a convoluted and inconvenient egress pathway which is considered a poor traffic planning outcome.

    The only other customer exit currently permitted for the $24 million development is a merging lane onto the Sturt Highway heading out of Wagga.

    Mr Sutherland argued the majority of customers would want to head east toward the city's CBD after leaving Bunnings - making the highway exit inconvenient for them and forcing them down Saxon Street.

    The council rejected the original request for an exit on Pearson Street due to fears it would create major congestion at the nearby roundabout. Specifically, there were concerns many cars leaving the Bunnings would turn left onto Pearson Street and then make a u-turn at the Sturt Highway roundabout to then head south toward Glenfield Park.

    Bunnings' request to modify the conditions includes modelling conducted by Transport and Traffic Planning Associates which suggests the exit would not create any issues at the intersection.

    Wagga City Council has placed the request to allow a Pearson Street exit at the Bunnings site on public exhibition until October 7.


    Bunnings store development in Wagga Wagga (NSW) - HNN Flash #76, December 2021

    BNPL at Bunnings

    Bunnings has introduced Afterpay in time for the busy DIY/renovation period during spring and summer. It will offer the popular BNPL (buy now, pay later) service for in-store purchases across its 375 outlets, but there is no minimum spend required to access the service.

    Afterpay allows customers to split the upfront cost of a purchase into four, interest-free payments over six weeks. It is free for customers who pay on time. Those who don't keep up with instalments are charged a late fee, which is capped at 25% of the total purchase price or $68, whichever is lower.

    The decision to offer a BNPL also comes as many Australians feel the pressure of rising inflation, forcing many to cut back on household expenses such as renovation projects.

    Katrina Konstas, executive vice president and country manager at Afterpay said 34% of Australians enjoy DIY projects and hobbies.

    Australia is a nation of DIYers with a passion for their homes and gardens, and nothing embodies this more than our national love for Bunnings. We are excited that Afterpay will now be available to Bunnings' shoppers, which will help Aussies to create inviting spaces within their homes, while balancing their budget.

    To checkout with Afterpay in-store, customers need to first install the payment app, and add the Afterpay card to their digital wallets.

    About BNPL

    Software company Block, formerly known as Square, acquired Afterpay at the end of January 2022.

    In the US and Australia, Block said BNPL transaction sizes were three times bigger than those paid all at once. Globally, the number of new customers paying with Afterpay's service grew by 180% between February and March this year, the company said.

    BNPL companies have faced some criticism in the wake of their growing popularity. Critics have said the payment option allows consumers to rack up debt.

    In Australia, an issues paper canvassing the options for BNPL regulation is scheduled to land in October. Treasury is undertaking a review of the sector to decide how to best bring it within credit regulation, including garnering feedback from the industry.

    Financial Services Minister Stephen Jones said impending regulation of the BNPL sector is intended to create a "level playing field" and not stifle competition among lenders.

    Large players such as Afterpay have argued their instalment payment product is not a form of credit because interest is not charged, and often market BNPL as a budgeting tool.

    Afterpay does not conduct credit checks of customers but its main rival, Australia Zip, undertakes identification and credit assessments.

    As a form of limited self-regulation, the domestic industry has formalised a BNPL code of practice that came into effect in March 2021. Players bound by the code include Afterpay, Brighte, Humm, Klarna, Latitude, Openpay, Plenti and Zip.

    The BNPL sector faces a host of challenges, including a surge in funding costs, rising bad debts and greater competition from banks and other players. Despite four straight monthly rate hikes by the Reserve Bank, retail spending by consumers has remained resilient. That bodes well for the instalments sector, which needs to keep turning over its loan book to earn fees from retailers and other merchants.

    Players offering the product will need to be approved by the Financial Conduct Authority, and borrowers will be able to complain to the Financial Ombudsman Service. A consultation on draft legislation is slated to be released toward the end of 2022, followed by secondary legislation by mid-2023. After that, the FCA will consult on its rules for the sector.

  • Sources: The Daily Advertiser, Daily Mail Australia, 9News, National Post (Canada) and The Australian
  • bigbox

    Big box update

    Bunnings Caboolture expected to open at the start of 2023

    The new store, valued at $32 million is expected to create more than 100 jobs and will include the main warehouse, outdoor nursery, timber trade sales area, cafe and playground

    The Bunnings Caboolture outlet will span more than 13,000sqm and have parking for over 400 cars.

    Regional operations manager Margaret Walford said the new Bunnings would provide greater convenience to local residents living in the growing area of Caboolture and surrounding suburbs, and complement existing stores located in the Moreton Bay Council area. She told the Caboolture Shire Herald:

    The opening will be celebrated with a range of events and in store activities...

    Some delays were experienced due to COVID-19 related challenges and wet weather, but the store development will be completed not long after the previously announced time frame. Initially, the store was planned to open in the second half of 2022.

    The new Bunnings forms part of the $80 million retail precinct at the Big Fish business park, on Pumicestone Road. A Caltex service station and McDonald's were built at the 15ha site in 2018 and 2020.

    Plans for a shopping centre, which will be anchored by Coles and Chemist Warehouse and a Red Rooster have also been approved. Further plans for a PetStock retail centre and veterinary service were also lodged with Moreton Bay Regional Council in August 2021.

    The huge retail centre will service not only the growing Caboolture region but also the future residents of Caboolture West - a satellite city set to be home to close to 70,000 people within the next 40 years.


    Bunnings store in Caboolture (QLD) - HNN Flash #62, September 2021
  • Source: Caboolture Shire Herald
  • bigbox

    Europe update: Kingfisher

    Sales boost from COVID-19 lockdowns could be over

    However, the energy crisis in the UK has pushed up demand for insulation products such as loft insulation

    B&Q and Screwfix owner Kingfisher has reported a significant drop in profits as it battled higher prices for raw materials such as metal and plastic and energy, as well as ongoing global supply chain disruption caused by higher demand, congestion at ports and the impact of COVID lockdowns. As a result, sales have slowed following the pandemic DIY boom.

    Pre-tax profits at the FTSE 100-listed company which also owns Castorama and Brico Depot in France, fell to GBP474 million in the six-month period to 31 July, an almost 30% decrease compared with GBP669 million a year ago.

    The DIY giant brought in GBP6.8 billion in like-for-like sales in the six months to July 31, a 4.1% fall from the GBP7.1 billion reported in the same period last year, but in line with analysts' expectations.

    Kingfisher had a very strong first half last year because DIY stores were allowed to stay open during COVID-19 lockdowns, and the move to home working prompted many people to make DIY improvements to their homes and gardens.

    This appears to be over, and Kingfisher chief executive, Thierry Garnier, warned of "a more challenging environment" as a recession looms and household budgets are hit by soaring energy and food bills. In The Guardian Australia, he said:

    The cost of living [crisis] probably is worse in the UK [than France]. The French government very early on decided to cap energy prices ... We are really welcoming the decision of the new [UK] prime minister [Liz Truss] in this area.

    At the same time, the company is benefiting from soaring demand for home insulation because customers had been keen to buy energy efficiency products. Mr Garnier said insulation sales were up 110% over the first three weeks in September compared to 2019, and are 82% higher year on year. Overall, across the group, insulation sales are up 70% from 2019, and 32% higher than a year earlier.

    Kingfisher said it has seen a shift back to DIFM - Do it For Me with household jobs outsourced to professionals - now the pandemic has mostly past.

    In the Evening Standard, Mr Garnier said sales were 16.6% ahead of pre-pandemic levels in the first half of the year.

    He said Kingfisher was back to "pre-pandemic levels for in-store product availability", after supply chain problems led to gaps on shelves, and there was good demand for outdoor and big ticket items such as kitchens and bathrooms. Mr Garnier added there were no signs of customers "trading down" to cheaper ranges.

    Kingfisher also warned that it expects inflation pressures to persist in the second half of the year even though raw material prices have dropped from recent highs and freight costs have slowed since January. This is because of the time lag between ordering more expensive products and subsequently selling them, the group said.

    Mr Garnier said Prime Minister Truss' first priority should be to support people faced with soaring energy bills, especially those on lower incomes, but he also stressed the importance of long term measures to improve homes' insulation and energy efficiency.

    The houses in this country are relatively poorly insulated. We need government decisions in this area.

    Kingfisher has sent a number of recommendations to the UK government such as reducing stamp duty for homebuyers who undertake energy efficiency work.

    Online sales

    B&Q's new online marketplace is performing ahead of expectations, with sales from partner brands representing 8% of its online sales in August, said Kingfisher.

    The move to enable partner brands to sell via the marketplace resulted in 100,000 product lines SKUs being added by about 200 partners in a month. The group now plans to launch additional marketplaces in France, Poland and in its Iberia market.

    Ecommerce group sales were 19% lower than a year earlier - but 156% ahead of the same period in pre-pandemic 2019. Some 16% of sales took place online - down from 19% last year, but ahead of 7% in 2019. Digitally-enabled sales accounted for 24% of sales. That's down from 26% a year earlier and up from 20% three years earlier. Kingfisher said in its half-year statement:

    Approximately a quarter of group sales are from ecommerce channels and online orders placed in-store, delivered through click and collect or to customer homes. We expect digitally-enabled sales to continue to grow over time, in line with the continued evolution of both customer behaviours and our in-store technologies and solutions.

    Click and collect remains the most popular online fulfilment channel - although sales via the channel were 22% down on last year but 195% ahead of pre-pandemic levels. Home delivery sales fell by 11% year-on-year - and rose by 97% on three years earlier.

    During the half-year, Kingfisher said it invested in faster fulfilment and in expanding product choice. To that end, it expanded its store-picking model to enable faster click and collect and last-mile delivery, managed orders through digital hubs - now present in 54 B&Q stores - to make home deliveries from store. It also rolled out click and collect lockers in Poland which are now being tested at B&Q in the UK, and expanded one-hour delivery in the UK through Screwfix Sprint to more than 300 shops, covering 45% of UK postcodes. The average delivery time is now 45 minutes, and its fastest delivery has been eight minutes.

    It has added mobile Scan & Go into the B&Q app, expanded its self-checkout terminals and offered a wider range of 3D design capabilities.


    Kingfisher provides a trading update.

    Kingfisher said demand for DIY remains resilient - HNN Flash #96, June 2022

    B&Q expands its e-commerce platform.

    B&Q's online marketplace - HNN Flash #86, March 2022

    Kingfisher saw continued growth in most segments during 2021.

    Growth at Kingfisher in the future will rely more on trade sales - HNN Flash #87, March 2022

    Lowe's and Home Depot at retailing conference

    The Goldman Sachs 29th Annual Global Retailing Conference

    The big question every home improvement retailer has is how the pandemic boom will change in 2023. Both Home Depot and Lowe's are optimistic, but both also see the need for ongoing change to retain market share and enhance margins.

    US investment firm Goldman Sachs held its 29th Annual Global Retailing Conference in early September 2022. This was attended separately by the CEOs of both The Home Depot and Lowe's Companies, who answered questions posed by the event's host, Kate McShane.

    The Home Depot

    Ms McShane started off the questions for Home Depot CEO Ted Decker and Jeff Kinnaird, the company's executive vice president of merchandising, by asking whether home improvement hadn't exhausted the market through the pandemic years.

    Mr Kinnaird outlined how he has seen consumer projects progress in recent years:

    In the early stages of the pandemic, I think everyone painted - we probably all painted something at some point in the early stages. That shifted to this investment cycle in the backyard and the entertaining in the backyard and we saw that in categories like grills and patio and landscaping and patio heaters and other categories that were about that backyard and about that backyard experience.
    That investment we still see a significant investment there. Past that, we are seeing this project-related investment ... this investment in finishing a basement and finishing a bathroom and repairing [an] issue in a home, replacing sinks and faucets and things that are seeing more wear and tear [as] the consumer spends more time at home. So we do see a transition in the business. It's a healthy transition.

    Mr Decker expanded on those comments by pointing out the evolution of home painting in the North American market:

    Paint is an interesting category in this dynamic ... As Jeff said, when the pandemic hit, everyone painted. The paint business and specifically the DIY - which we have pretty good visibility into if it's a Pro or DIY making the purchase. In the DIY, engagement in paint spiked in the early part of the pandemic and that reversed what has been a very long trend of painting ... It used to be a lot more, at least in our channel, used to be a lot more DIY and less Pro, but over decades now, the DIY share of actually painting has been coming down and the Pro has been going up, because most of us now hire someone to do the painting. That reversed in the first phase of the pandemic as DIYers were home, I'll paint. Now the Pro is re-emerging.

    Asked about how supply chain in changing for Home Depot, Mr Decker spoke about the evolution of three different types of facilities the company is building out:

    One is for big and bulky goods, which we call our flatbed distribution centres. And the great thing about those centres is, we always have had building material distribution centres for replenishment to the stores. And what we do is we move those into newer, larger, more optimised facilities and you can also deliver to job sites from those facilities.
    So you leverage huge inventory quantities that can replenish a store or go to the job site. Those are, I don't know, halfway built out at this point. That's where we are getting a lot of Pro share growth as we are now able to deliver the quantities and materials on time and complete to the job site.
    The second type facility that we are building, calling a direct fulfilment centre, these are both traditional pick, pack and ship e-commerce facilities, which, again, as we've started to build these out, we are about halfway built on these has been supportive of our e-com business. We've doubled our e-com business in the last two years, grew again 12% in the second quarter on top of that doubling.
    The third set of assets are what we call our market delivery operations and these are flow facilities for big and bulky product. So the big and bulky product will leave the FDC, flow to the MDO. Think of this as the last mile then when it goes on a box truck and has a dense route to either job sites or homeowners and the foundation of that flow is our appliance business.

    Mr Kinnaird added a comment about how these facilities were not just about throwing products on a truck.

    And just going back to the flatbed deliver centre as an example, our Pros are, in many cases, demanding deliveries from those facilities. It is not as easy as just putting a product on a truck and shipping it to a Pro. If there is a process of building an order, it's how it's packaged how it's positioned for that Pro. You can make a Pro's life much more productive just how you stack goods together. So, we have Pros demanding that delivery and that's creating a lot of energy around that opportunity.

    Asked about what Home Depot was doing to improve margins overall, the response was that increasing ticket size (order total cost) was important. Mr Kinnaird sees innovation as being an essential part of that.

    I'd also say that part of that ticket is innovation and we continue to see an enormous amount of innovation across our business and that's virtually almost every category. I mean, it's great to see that we've got many longstanding partnerships. It's great to see throughout the pandemic the innovation pipeline didn't slow down, and our merchants have worked alongside of our partners to build an opportunity to think of the continued electrification of tools.
    You think, there is dynamics changing there. I think we used the example earlier, the new Milwaukee M18 framing nailer is now the one tool you buy with the battery platform. Previously, you'd buy a nailer compressor, a cord, fittings and all the pieces that go with that process and today, it's a pneumatic nailer with this electrified nailer. That's changed the market.

    Lowe's Companies

    The CEO of Lowe's, Marvin Ellison, began by fielding questions about how Lowe's saw the overall market developing. He pointed to ongoing demand being driven by macro areas, such as the age of houses in North America.

    Roughly 50% of the homes in the US over 40 years old, and that's probably the largest number since World War II. And we are seeing a cycle where the big home building phase that took place in the early 2000s, those homes are now turning 20 years old, which means you are getting ready to hit a whole different investment cycle.
    And even though the work-from-home phenomenon is subsiding somewhat in certain sectors, I don't think any of us believe they will ever get back to pre-pandemic levels of people working in the office and not using their existing residence for home offices.

    Mr Ellison was also upfront about some of the mistakes that Lowe's has made over the years.

    One of the biggest mistakes that Lowe's made is that everything we did was store centric, everything we shipped, every system and every type of technology because we desired to serve the customers from our stores first. But when the customers decided that they wanted curbside and they wanted lockers and they wanted to bottom line, pick it up in store, we had to pivot. And at the time, we didn't know how to do it. And so now we've created a flexible agile model that we can easily or more easily pivot to the needs of the customer.

    Mr Ellison also pointed to some of the mistakes Lowe's made with its Pro (tradie) market. One of the advantages that Home Depot has over Lowe's is a market split 50/50 between Pro/DIY, while Lowe's is more 25/75.

    But then the question is, how do you serve the Pro? And so we're creating a fulfillment network of different nodes, including market delivery that will enable us to deliver products directly to the job site for the Pro.
    And over the course of the past 15 years, Lowe's exited a lot of the national brands that Pros really, really migrate to. Pros are extremely brand loyal and a lot of those brands had left for a variety of reasons and we've been bringing those brands back and now getting price right.

    One of the strengths of Lowe's has been its embrace of innovation in products, and the company sees this as an ongoing strength.

    And for DIY homeowners, we are trying to make projects easier by upgrading our digital experience with them on, investing in a broader set of direct-to-home fulfilment capabilities and enhancing all of our product assortments with new innovative easy-to-use products.
    We noted on our earnings call that one of our best selling outdoor power equipment SKUs was an EGO battery operated mower that reach out over USD700. We could barely keep it in-stock. And so what that means is that customers have a different definition of value. Value is not always just focus on price. It is focused on many other elements and we believe that if we stay closely engaged with our customers, we will always find the right level of elasticity from a pricing standpoint and we've done a really nice job so far this year.

    Big box update

    New Bunnings Ulladulla store plans in progress

    Bunnings Hoppers Crossing, one of the largest stores in the network, has been sold for $100 million: report

    Planning for the new Bunnings outlet in Ulladulla (NSW) is ongoing. Bunnings regional operations manager, Robyn Hudson, said the company is still working on the development with a number of agencies. She told the Ulladulla Times:

    Bunnings was pleased to receive development approval for a new store in Ulladulla earlier this year. At this stage, we don't have any firm timings on when construction will commence.
    We continue to work with Shoalhaven City Council and Transport for New South Wales and we look forward to keeping the local community updated with progress once we know more.

    The proposed Bunnings Warehouse will be located between 189 to 197 Princes Highway, Ulladulla and represents an investment of more than $16 million.

    The new Bunnings warehouse will include the main warehouse, outdoor nursery, timber trade sales area, playground and will span more than 11,000sqm, with carparking for over 180 cars. It is also expected to create more than 80 additional jobs for local residents.

    The current Bunnings Ulladulla is located at 131 St Vincent Street and the hardware retailer does not own the existing site.


    Decision on a new Bunnings store in Ulladulla (NSW) has been deferred - HNN Flash #84, March 2022

    Bunnings Hoppers Crossing

    The 21,670sqm Bunnings Warehouse in Hoppers Crossing (VIC) together with an Amart Furniture store was sold to ESCB Holdings, a company owned by Guirong Zhang, reports The Age.

    Beau Coulter, who negotiated the sale with colleagues Billy Holderhead, Yosh Mendis and Zomart, did not comment on or disclose the final sale price. However it was listed with expectations of around $100 million.

    Mr Coulter said recent interest rate rises were not dampening investors' interest in large format assets. He told The Age:

    People are looking for properties with long weighted average lease expiry (WALE). Money is moving out of the stock market and residential property, which has seen changes to tenancy laws.

    The properties return a combined annual income of $4,284,186, which would suggest a sharp yield under 5% for the transaction.

  • Sources: Ulladulla Times and The Age
  • bigbox

    Coroner reports on Bunnings-related death

    Fight with Bunnings LPOs has tragic consequences

    Anthony Georgiou passed away hours after loss prevention officers (LPOs) scuffled with the 31-year-old ex-brickie outside Bunnings Frankston in September 2016. Death was due to a medical condition combined with drug use, but the fight probably contributed to his demise, a report by the coroner found.

    The video footage, available through, is highly confronting. Two men crouch on either side of another man held prone on the ground.

    Footage shows Anthony Georgiou pinned down, struggling to breathe, hours before death

    Both the prone man's arms are held behind his back, one by each of the other men, as he screams, "I can't breathe! Help! I can't breathe!"

    That took place around 11:00am on a Monday morning, 12 September 2016. (We note that this was three and a half years before the murder of George Floyd by police in the US, which renewed the efforts of the Black Lives Matter movement.) The location of the event was the Bunnings Warehouse store in Frankston, Victoria.

    The man being restrained was Anthony James Georgiou (friends called him "AJ"), a 31-year-old former bricklayer. The two men who restrained him were Abdul Brenzai and George Oyee. They were employed through an outside contractor as "covert operatives" to prevent loss through store theft in that Bunnings store.

    Police arrived at 11:12am. Mr Georgiou reported being "sore all over" his body, and the police called for an ambulance. Some 33 minutes later, at 11:45, Mr Georgiou was being triaged at Frankston hospital. The police spoke to him at 3:30pm that day. He died later in the day, though the exact time of death is not recorded in the coroner's report.

    The causative event behind Mr Georgiou's detention right before his death? Mr Brenzai and Mr Oyee believed Mr Georgiou had attempted to steal a saw blade.

    Obviously, that's not an outcome anyone wanted, including Mr Brenzai and Mr Oyee - as well as Bunnings itself. The medical forensics indicated what a specialist forensic pathologist called a "perfect storm" of medical conditions contributing to the death of Mr Georgiou. However this was paralleled - according to the coroner's report - by a process that seems to have nearly negated the series of safeguards Bunnings had attempted to put in place on the behaviour of its "covert operatives".

    For those of us who spent some time during Melbourne's initial long COVID-19 lockdowns watching the public state inquiry into the failures of the quarantine system, all this has a familiar echo. The Victorian Department of Health employed security guards to manage quarantine, as Victoria police refused participation. The result was undisciplined chaos. Who can forget, for example, the security guard who was placed in quarantine after exposure, got bored, and took up a job delivering takeaway food to households during his isolation period? As a workforce, they were utterly unsuited to their task.

    In a somewhat similar outcome, the coroner did not see any of the matters discussed below as being directly contributive to the highly unfortunate and very sad death of Mr Georgiou. Perhaps the most essential of his statements is this:

    Mr Brenzai and Mr Oyee gave evidence that they acted in self-defence. On the basis of the material before me I am unable to gainsay these assertions.

    That said, HNN still thinks it is worth pursuing this matter at some length. The reason for this is that there is an ongoing dispute, argument and, hopefully, discussion about hardware retail and the form it should take.

    Independent hardware retailers believe that to operate this form of retail successfully requires a depth of knowledge that exceeds that of other forms of retail. There is just too much at stake to do otherwise.

    Bunnings and other corporates tend to disagree. They believe that codes of practice, training, safe systems and good management can work just as well.

    There is much to be said on both sides, but HNN would suggest that the set of events surrounding the death of Mr Georgiou really does illustrate the limits to the Bunnings-style model. That's not because Bunnings was careless, or ill-prepared for what happened. On the contrary, the big-box retailer had Codes of Conduct and a training day for the employees engaged in "covert operations" around loss control.

    The most important thing the coroner has to say is that he is not convinced that even if Mr Brenzai and Mr Oyee had signed the Code of Conduct, attended the training day, and understood what was required in terms of avoiding physical engagement, that this would have made much difference.

    The reality is that probably Mr Brenzai and Mr Oyee should never have been put in the position they were in, not just as loss prevention staff, but also operating covertly. What was needed wasn't a set of guidelines, it was experience, and a real "feel" for the retail environment.

    Basically, if you actually have to tell a staff member "don't get into a brawl with a customer under any circumstances", then you've already made a mistake. Nobody in independent retail has a rule book that begins with Rule No. 1 "Don't punch the customers."

    The simple truth is that not everyone is cut out to work in retail, and that applies double to home improvement retail.

    The coroner's report

    Nearly six years after the event, the Victorian Coroners Court has released its findings. (That's not an uncommon delay for the Court, which has suffered a severe backlog for some time.)

    Coroner's Court findings (pdf)

    The end finding of that report is as follows:

    However, the coroner also acknowledges that there may be more to this death than a medical condition:

    66. Dr Brouwer's report sets out that medical cause of death and further explains the role of the struggle between Mr Georgiou and Messrs Brenzai and Oyee being at least a cause of the manifestation of the conditions which led to Mr Georgiou's death. That is, there seems little doubt that had Mr Georgiou not been involved in the struggle with Messrs Brenzai and Oyee he would have walked away from Bunnings that day.
    67. Submissions made on behalf of Bunnings support this conclusion.
    68. Such a conclusion is not a statement that anyone is, or may be guilty of a criminal offence, nor is it a determination of civil liability but it 'points up' the most significant issue in the Inquest - how the struggle involving Messrs Brenzai, Oyee and Mr Georgiou could have been avoided.

    That finding largely repeats the statement made by Dr H. Bouwer, a specialist forensic pathologist practising at the Victorian Institute of Forensic Medicine. In more detail, Dr Bouwer's report stated that the Mr Georgiou's death was triggered by electrolyte imbalance leading to rhabdomyolysis, which, as explained by Dr Bouwer, is:

    ...the break-down of cells which can occur after a violent, physical, activity or a struggle the effects of which can be complicated by methylamphetamines.

    Dr Bouwer explained that in the setting of physical exercise or strenuous activity the heart rate and blood pressure go up, adrenaline and noradrenaline are released causing stress on the heart. Methamphetamine increases the release of adrenaline and noradrenaline creating more stress and has a direct effect on the heart muscle.

    However, Dr Bouwer also left open the possibility that other injuries may have contributed to Mr Georgiou's death. In particular, he noted an unusual pattern of fractures in Mr Georgiou's thyroid area.

    Dr Bouwer described his examination of Mr Georgiou's body revealed bilateral superior thyroid horn fractures associated with haemorrhage, facial suffusion, bilateral conjunctival petechiae which he said is usually caused by pressure applied to the 'Adams Apple' area of the throat. Whilst Dr Brouwer was unable to describe how much pressure would have been necessary to cause the fractures to which he referred, he explained that in younger people, such as Mr Georgiou, the structures are more cartilaginous than in older people where they are more ossified and in younger people more pressure would be required to cause such fractures.
    Dr Bouwer commented that these injuries did not appear to be immediately fatal because the deceased spoke to police after Dr Bouwer thought that they occurred. Dr Bouwer gave evidence that if these injuries inhibited breathing, then they may have contributed to the cascade of events which resulted in Mr Georgiou's death. That is, a headlock, depending on how it was applied, may have caused the injuries, and if a headlock did cause the injuries and restricted Mr Georgiou's ability to breath, that this too may have contributed to the cascade that caused his death.

    This takes us to the description of the actual encounter between the "covert operatives" and Mr Georgiou. With the benefit of some CCTV footage (though the area where the scuffle occurred had only indirect coverage) the coroner was able to construct a step-by-step scenario. It goes like this:

  • The "covert operatives" say they observed Mr Georgiou remove the tag from a saw blade and place this in a pocket. He went to the register and paid for a number of other items, but was not seen to pay for the blade.
  • Mr Georgiou leaves the main store and enters the enclosed space outside the doors, where he stops for a drink of water.
  • The "covert operatives" approach him. They request that he return unpaid items and accompany them back into the store.
  • According to testimony by Mr Oyee, Mr Georgiou told them he didn't want to go back into the store, but agreed to give them the items he had in his pocket.
  • When the "covert operatives" insisted he return to the store, he told them to "F*** off", and started to force his way past them.
  • As Mr Georgiou pushed past them, Mr Oyee took a 25cm long gas cylinder from him. Meanwhile, Mr Brenzai ends up with his left arm wrapped around Mr Georgiou's neck, in what the coroner describes as a "head lock".
  • According to the coroner's interpretation of the CCTV: "A vigorous struggle ensues, and Mr Brenzai can be seen to punch and knee Mr Georgiou."
  • The struggle goes on from around 11:00am to 11:06am. The police arrive about 11:12am.
  • Testimony of the covert operatives

    Mr Brenzai and Mr Oyee were employed by security firm New Security Solutions (NSS), originally through a subcontracting arrangement with a man named Ali Haidar. In June 2016, the two men began working for NSS directly, an arrangement which was "formalised" in September 2016, but it's left less than clear exactly when that happened. Interestingly, when asked about his employment with Mr Haider by the coroner:

    Mr Brenzai said that he couldn't remember when he started work with or for Mr Haider or how Mr Haider paid him.

    It's perhaps helpful to add this rather short but pithy remark made by the coroner in the summation paragraphs of his report.

    Despite their best-efforts police have not been able to locate Mr Haidar.

    The three key points that were brought up by the coroner were: could Mr Oyee and Mr Brenzai have de-escalated the conflict; if they signed a copy of the Bunnings Covert Operative Instructions Code of Conduct and were therefore responsible for its content; and if they attended a training course held by Bunnings at its Melbourne head office for covert operatives on 19 August 2015.


    When the coroner asked Mr Oyee why the two men didn't just step away from Mr Georgiou, Mr Oyee replied he didn't want to turn his back on the former brickie. The coroner pointed out that he could have stepped back without turning his back.

    Coroner: So, you could've stepped away from him while you were looking at him. Is that right?
    Mr Oyee: That's right. But the whole issue, your Honour, I wanted to prevent the product off him. I wanted to get the stuff off him.
    Coroner: Get the stuff off him?
    Mr Oyee: And wanted to take him up to upstairs to get the paperwork.
    Coroner: To get the paperwork?
    Mr Oyee: At the end of the week, you have to do the report to, ah, to NSS.

    In a slightly inchoate statement, Mr Brenzai declared that he did not simply let Mr Georgiou go because:

    We feared for our own safety with this gas bottle.

    This was despite Mr Oyee removing the gas bottle during the first minute of the attempted "arrest".

    Code of Conduct

    According to the coroner's report:

    Mr Oyee was shown the Bunnings Covert Operative Instructions Code of Conduct. Mr Oyee gave evidence that his signature was on the copy of this document at p.168 of the Inquest Brief but that he didn't remember signing any such document and that the document didn't look familiar to him.

    When shown a copy of the document, the testimony went like this:

    Coroner: And that's a document you signed? Is that right?
    Mr Oyee: Yes, Your Honour. I haven't directly signed.
    Coroner: I beg your pardon?
    Mr Oyee: I haven't directly signed.
    Coroner: Is that your signature?
    Mr Oyee: It looks like my signature, but I have a doubt.
    Coroner: I'm sorry, I don't understand?
    Mr Oyee: It doesn't look like my signature.

    It goes on like that.

    As the coroner sums up the exchange:

    Mr Oyee gave evidence that he had never seen the document at page 306 before and that it wasn't his signature at the bottom and that nobody from Bunnings had told him not to engage in arguments with a customer or physically restrain an offender except in self-defence.

    Mr Brenzai related a similar account, according to the coroner.

    46. Mr Brenzai was shown a document "Code of Conduct", attached to AM7, the same type of document that Mr Oyee was shown, this version of it ostensibly contained his, Mr Brenzai's signature. The Code of Conduct sets out Bunnings' expectations and instructions to 'convert operatives', that is 'plain clothes' security guards working at the stores looking for 'shoplifters' as Messrs Brenzai and Oyee were on 12 September 2016.
    47. Mr Brenzai gave evidence that the writing on the document was not his handwriting and that the signature was not his. He explained that points 1 - 4 of the document had been explained to him verbally by Mr Naffah, a then employee of New Security Solutions, his then employer although he could not remember when. Mr Brenzai gave evidence that he had never seen the "Code of Conduct" document at page 165 of the Inquest Brief, allegedly bearing his signature. Mr Brenzai gave evidence that nobody had given him any documents or instructions about how he was to perform his role other Mr Naffah explaining to him points 1 - 4.

    The importance of these signatures is laid out by the coroner, as he quotes these two key instructions from the document:

    7. Never attempt an apprehension unless I am 100% certain that the offender has stolen.
    8. Never engage in an argument of any kind with a customer or physically restrain an offender except in self-defence.

    The signatures were, of course, witnessed - but by Mr Haidar, who, as mentioned above, seems to have become somewhat unavailable. This meant the coroner could not make a final determination on these matters. As he reported:

    It is regrettable that Mr Haider could not be located - I can take this matter no further absent further evidence.

    However, in summing up his findings about this area, the coroner states:

    Even if the document had been signed by Messrs Brenzai and Oyee, and they had read Bunnings Covert Instructions I could not say with any degree of surety that what occurred, would not have. It is of course possible that having read those documents Messrs Brenzai and Oyee would have acted differently but on the basis of the evidence I cannot say with any confidence that this would certainly have been so.

    He goes on to comment:

    I am unable to be critical of Mr Brenzai or Mr Oyee for breaching the Bunnings Code of Conduct - and I am not. Their evidence is that they were simply not aware of it. As I have referred to above, even had they been, as the evidence currently stands, I am not clear that such knowledge would have made any difference to what happened.

    August training course

    While Bunnings might have held a training course for its "covert operatives" in August 2015, it seems this was not that memorable an event. Mr Brenzai has some recollection of attending something at Bunnings somewhere around that time, but he could not recall any of the content.

    When asked about whether he recalled attending any covert operative training conducted by Bunnings, Mr Brenzai said that he had attend a meeting in the Bunnings Head Office for which was late. He initially thought that he had attended after lunch although he could not precisely remember. He said that he thought that he attended this meeting while he was working for Mr Haidar and that he, Mr Brenzai was late - he didn't remember if he went back after lunch. He conceded that it may have been August 2015. Mr Brenzai was taken to the PowerPoint slides at pages 281-304 of the Inquest Brief and told that these were presented to students at the covert operative training in August 2015 and asked if the slides or their content were familiar to him. He responded that he didn't remember.

    Mr Oyee seems to have drawn a similar kind of blank regarding the Bunnings training, according to the coroner:

    Mr Oyee was also shown PowerPoint presentation slides said to have been used at a Bunnings training course conducted on 19 August 2015 for covert operatives in Bunnings Stores.
    Mr Oyee gave evidence that he could not remember if he had attended that training session and that the slides didn't look familiar to him. Mr Oyee gave evidence that he didn't recall going to any meetings of security staff or being provided any training at all by Bunnings.

    In the summation paragraphs, the coroner states:

    Mr MacDonald, the then National Investigations Security Manager for Bunnings gave evidence that Bunnings had no evidence that Mr Brenzai or Mr Oyee attended the training session on 19 August 2015.

    It's unclear whether attendance was taken, but the two "covert operatives" did not sign in, or if no efforts to record attendance were made.

    However, again, the coroner does not believe that attendance or non-attendance were determinative:

    There seems to be no controversy that Messrs Brenzai and Oyee didn't complete a full day's training on 19 August 2015. There is however insufficient evidence for me to conclude that if such training had occurred that Mr Georgiou would not have died as he did.


    Just about everyone in hardware retail - including suppliers - who reads this story is probably as much puzzled as horrified by these events. That is just not how you do loss prevention. Really.

    Why didn't the "covert operatives" simply calmly confront Mr Georgiou immediately after he made his other purchases, and say something like - pleasantly but firmly - "Mate, I reckon you might have forgotten to pay for the saw blade in your pocket, right?" That would have made the point, retrieved the allegedly stolen property, and burned up as few resources as possible.

    Or, later, after Mr Georgiou was confronted and offered to give the saw blade back, but refused to return to the store, why didn't Mr Brenzai and Mr Oyee simply accept that offer, and cut their losses? By all accounts, whatever his concealed ailments, he was, well, built like a brickie - a really big, solid guy. Plus, of course, he was under the influence of methylamphetamines. Most retailers know when they are dealing with a drug-addled customer.

    Every single independent retailer knows how to de-escalate and deal with that situation. You don't need to hurt anyone physically, when you can publicly shame or poke fun at the perpetrator. Often you just wait until the next time they visit the store - or try to.

    The odd thing is that HNN has been witness to just exactly this type of good judgement by Bunnings staff in the past. We've seen some young kid (probably a poor apprentice) get stopped on the way out of the Hawthorn Bunnings, and take to his heels, closely chased by a staff member - who was called back immediately by a manager.

    Afterwards, the manager and the staff member had a very quiet chat. The manager pointed out, very seriously, that the staff were under no circumstances to place themselves in that kind of danger, adding that they were also endangering the customer. As the manager said, very clearly, "It's never worth it".

    This also brings to mind, of course, the recent controversy about Bunnings using facial recognition over its CCTV systems to track loss prevention. As HNN wrote at the time, looking at the protections Bunnings has in place, these all seemed very reasonable, and almost a draft for future regulations. But are the assurances the company gives us about how it handles privacy going to result in better outcomes? Are they realised in place, or are they regulations that are seldom followed in a practical sense? The death of Mr Georgiou goes to how much confidence the public can place is guarantees issued by Bunnings.

    But beyond these abstractions, there is a single truth here. There is now an eight year-old Melbourne girl who has to grow up without AJ, her Dad. There's no way to ever make that really right.

    It would be good if everyone in our industry can just try to make sure this doesn't happen again. We can start by respecting expertise, training and experience, rather than just taking the cheap option.


    Big box update

    Bunnings Tempe superstore is greenlit

    Bunnings Group managing director Mike Schneider recently said in an interview there are still opportunities for growth, with a focus on the national roll-out of Tool Kit Depot

    The Sydney Eastern City Planning Panel has given the go-ahead for a huge Bunnings store to be built in the suburb of Tempe, on the Princes Highway in Sydney's inner west.

    It received approval with a local area traffic management plan (LATM) endorsed by the Inner West Council. However, the LATM was rejected and deferred by the same council's traffic committee due to a lack of traffic lights and a fear by residents that their narrow streets could turn into dangerous rat runs.

    Now the planning panel has given the all-clear for the megastore to begin construction with the LATM endorsed. According to the Inner West Courier, the determination stated:

    The panel is now satisfied that all relevant preconditions to consent have been satisfied and there is no reason that would warrant refusal of this modification application.
    The Local Traffic Committee had deferred or failed to decide on the (Inner West) Council's Officer's recommendation to approve the independent study and its recommendations, and both the applicant and the community should be able to expect certainty and timeliness in the planning system.

    The determination by the panel gives Bunnings permission to start construction. However some local community members said the outcome was "extremely disappointing". Local resident Jack Breen told the Inner West Courier:

    This is extremely disappointing news for the Tempe community. Bunnings has successfully used their bulldozer approach to push their way through the NSW planning system to get approval to start their build - opting for the quickest way, rather than the safest way.
    The one silver lining is that the need for a soft closure of Union Street from Smith Street has been agreed, although this is only addressing part of the challenges that remain about this problematic traffic plan for Bunnings Tempe.

    Bunnings welcomed the determination. Chief property officer Andrew Marks said:

    We welcome the Sydney Eastern City Planning Panel's decision to approve the LATM for the new Bunnings Tempe store, which we believe is the safest possible solution for local roads.
    Bunnings Tempe represents an investment in the community of approximately $100 million dollars and will create around 200 new jobs for locals.
    We look forward to being able to progress with the new Tempe store which will provide local residents with a wide range of home and lifestyle products, as well as ongoing local community support through hands-on projects, sausage sizzles and product donations.


    Decision pending on proposed Tempe store - HNN Flash #88, April 2022

    Tradie market

    Bunnings managing director, Michael Schneider has told the Australian Financial Review (AFR) it will soon open two "dark stores" on the east coast to service Tool Kit Depot (TKD) online orders, with the first stand-alone retail store to open before the end of the year in Queensland. WA already has six stores that are focusing on product categories in the landscape garden market.

    TKD is about landscaping power tools as a growth sector, expanding online before physical stores, and will include repair services. Mr Schneider said:

    The Tool Kit Depot business is helping us cater to more of the specialist trade customers. We're able to deliver even more choice including an expansive power garden range used for landscaping, as well as an onsite service and repair offer.

    According to the AFR, trade sales currently make up around 40% of sales but the goal is to reach 50% of sales compared to DIY.

    The retailer has made big investments in online commerce and is also looking to make a push into more personalised digital communications to consumers and expand Bunnings' marketplace offering.

    Wesfarmers-owned Bunnings will join the newly revamped membership program OnePass around November. Its stablemates Kmart, Target and marketplace Catch are already under this subscription umbrella.


    Bunnings has signed onto Flybuys as a loyalty program.

    Bunnings makes data play with Flybuys - HNN Flash #74, December 2021

    Bunnings FY2021/22 results.

    Bunnings posted modest gains in FY2021/22 - HNN Flash #108, August 2022
  • Sources: Inner West Courier and The Australian Financial Review
  • bigbox

    Big box update

    Bunnings in North Wollongong to close

    A super-sized Bunnings store in Sydney's inner west may get the green light for construction, as concerned local residents wait for a ruling on a contentious traffic management plan

    Bunnings is set to close its Wollongong (NSW) store in January as the lease comes to an end next year, according to the Illawarra Mercury.

    The store's last day of trade will be January 26, 2023 ahead of the lease expiring in March. Staff will be retained and redeployed at surrounding outlets.

    Bunnings regional operations manager Robyn Hudson said the company's outlets in Bellambi and Kembla Grange offered customers a newer and expanded site. She told the Illawarra Mercury:

    Because our lease expiry was nearing, and because North Wollongong is one of the older stores in our network, we've made the decision to close and service the local community from the nearby stores instead, rather than commit to a further lease term.

    Bunnings opened on the current site in 1997 and the North Wollongong store is one of the oldest Bunnings in NSW. Ms Hudson said:

    As our store portfolio evolves and new investments are made, we continually review our network and our needs in the local areas in which we operate. And while many of our stores play an important role for a long period of time, we continually reassess operations based on lease arrangements and store location.

    The Wollongong location, which covers 27,320 square metres, delivers an annual rent of $1,501,165 to its owner BWP Trust and is currently valued at $26,100,000, according to BWP Trust's 2022 annual report.

    Michael Wedgwood, managing director of BWP Management - the company that manages the properties on behalf of BWP Trust - said the business would assess what is next for the site.

    We will undertake a detailed assessment of all potential uses to determine the best alternative for the site.

    The property was originally purchased in 2003 for $12 million from BBC Hardware Limited which developed the site.

    Bunnings thanked the staff at the North Wollongong store and said their work would be recognised in the coming months.


    The Eastern City Planning Panel in NSW is expected to hand down a ruling relating to the planned construction of a Bunnings store in the suburb of Tempe.

    Bunnings has proposed changes to approved plans to allow construction to begin with the approval of a traffic management plan by the planning panel. The traffic plan was made in consultation with Inner West Council and an independent traffic consultant.

    However the planning panel deferred a decision on Bunnings' proposed changes in March, to give time for council to notify residents of the company's amended development application.

    The Inner West Council recently released its Traffic Signals Feasibility Study (TSFS). Its findings include road safety such as Transport for NSW 'Warrants', traffic signals and road delineation. Physical constraint suggestions include a heritage wall and an IKEA service driveway. Councillor Mat Howard told Inner West Independent (City Hub):

    We have been pressuring Bunnings to improve traffic arrangements at their new Tempe store for close to a year...
    We wrote to the Minister for Transport and Roads seeking approval for these traffic signals almost a year ago, to no avail. Our independent and new feasibility study is clear that traffic lights is the safest option and will have the least impact on our community.
    The Minister for Metropolitan Roads and Transport for NSW owe it to our community to do their job, assess the feasibility study and confirm it is the safest option for our community. Bunnings should then do the right thing by the community they want to be a part of.

    City Hub reached out to Bunnings for comment and a spokesperson said they "remain committed to achieving a safe and efficient outcome for local residents, inclusive of traffic calming measures to minimise any impacts."

    The spokesperson for Bunnings also said:

    However, we're yet to receive approval of the Local Area Traffic Management Plan (LATM), which is delaying the implementation of our development consent issued three years ago. We understand the unchanged LATM will now be put out for consultation again.
    We continue to participate in the Sydney Eastern City Planning Panel process and are hopeful the matter can be resolved through the scheduled meeting on 1 September, so we can move the project forward and provide certainty to our contracted builder and hundreds of trades people who will be engaged to undertake the work.


    The battle against the proposed Tempe store is now in its sixth year.

    The Eastern City Planning Panel deferred a decision on Bunnings' proposed changes to Bunnings Tempe store - HNN Flash #88, April 2022
  • Sources: Illawarra Mercury, Inner West Courier and Inner West Independent/City Hub Sydney
  • bigbox

    USA update

    Lowe's is offering enhanced supply chain services

    The home improvement retailer is looking to better tap professional customer demand through new fulfillment and delivery pilots

    Lowe's launched its Pro Fulfillment Center in Charlotte, North Carolina in the second quarter, offering customers same and next-day deliveries directly from the facility.

    The company also expanded its fulfillment capabilities direct from its Charlotte stores in April this year, with the rollout of a gig delivery network offering professional customers same- and next-day delivery, a spokesperson told Supply Chain Dive.

    Lowe's and competitor The Home Depot have both invested in enhanced professional fulfillment capacity in recent months, building out operations to cater to the niche consumer segment.

    The Home Depot, which has dominated the segment in the past, began a plan in 2020 to build three Georgia-based distribution centres over the following 18 months, with a key focus on fulfilling large orders for the segment with same and next-day delivery.

    At Lowe's, the company hopes to make fulfillment faster and easier in a bid to be more competitive.

    The Charlotte facility is one way the company is looking to speed fulfillment. As part of the pilot's launch, Lowe's expanded the facility's ability to handle large orders on multiple flatbeds, a spokesperson said.

    In designing the pilot, the company increased inventory levels for pro customer specific SKUs, CEO Marvin Ellison said in June. The fulfillment centre is stocked with more than 1,000 professional-grade products, such as timber, building materials, roofing, sheetrock and insulation, according to a spokesperson. Mr Ellison said:

    This new Pro fulfillment centre combines all these functionalities under one roof. So we're excited about what we're seeing in the short run, and we have a long-term plan to take these facilities and build out a network.

    Retooling its delivery operations has been a focus for Lowe's since the early days of the pandemic, with a goal to simplify the process of getting products to customers. In doing so, the retailer aimed to free up space at stores and grow other supply chain activities, such as same-day and next-day fulfillment to job sites.

    Lowe's also expanded its delivery network to select Florida markets in early August. Mr Ellison said during the company's recent earnings call to investors:

    Because time is money for Pros, one of the most valuable ways that we can serve them is by saving them time with enhanced fulfillment.


    Lowe's is opening its first Pro Fulfillment Centre dedicated to serving professional customers - HNN Flash #95, May 2022
  • Source: Supply Chain Dive
  • bigbox

    Bunnings FY2021/22 results

    Results trend upwards, but at reduced rate

    Bunnings' results for FY2022 reveal a modest increase in revenues, and less than 1.0% increase in EBIT. However, this comes after two years of double-digit increases, and after a tough season of retail due to COVID-19.

    Australian retail and chemicals conglomerate Wesfarmers has released its results for FY2021/22. As expected, after two prior years of robust growth in many categories, the results were not quite as buoyant. Wesfarmers overall recorded revenue of $36.8 billion, up by 8.5% on the previous corresponding period (pcp), which was FY2020/21. However, that revenue includes inorganic growth from acquisitions in the health sector. Excluding those revenues, revenue was $32.6 billion, for growth of 4.9% over the pcp.

    Similarly, with earnings before interest and taxation (EBIT), after interest and lease liabilities, and excluding significant items from FY2020/21, this came in at $3.4 billion, down -3.8% on the pcp. Net profit after tax (NPAT) was $2.4 billion. After excluding significant items from FY2020/21, this indicates a decline of -2.9% on the pcp.

    While Wesfarmers' WesCEF (Chemicals, Energy & Fertilisers) and Industrial and Safety businesses reported strong gains in EBIT, Kmart Group saw EBIT decline by -39.7%, and EBIT at Officeworks fell by -14.6% on the pcp.

    Bunnings results

    The topline for Bunnings saw revenue grow by $883 million to $17,754 million, an increase of 5.2% on the pcp. EBIT was $2317 million, up by just 0.7% on the pcp. Total stores sales growth was up 4.2%, and store-on-store (comp) sales growth was 4.8% higher than the pcp.

    In terms of overall market performance, hardware retail sales across Australia grew by 5.3% according to Australian Bureau of Statistics (ABS) figures. Given Bunnings' concentration of stores in Victoria, which saw hardware retail sales fall by -0.2% for the recent year, that likely indicates that Bunnings kept pace with the market but did not outperform it.

    In terms of second half performance, Bunnings saw revenue of $8,545 million, and EBIT of $1002 million, which represents an increase of 9.3% and 3.4% respectively over the second half of FY2020/21. ABS figures indicate hardware retail sales grew by 8.5% for that half over the second half of FY2020/21. A note in the Wesfarmers Annual Report for FY2021/22 indicates that total store sales for Bunnings increased by 7.8% during the second half as well. This indicates Bunnings most likely did outperform the market from January to June 2022.

    The results presentation followed a different pattern this year, at the request of the investment analysts, with less time spent on direct company reporting, and more time given over to questions. However, in a change of format, most listed companies are bringing out their annual reports to coincide with the full-year results, and these have provided some interesting material.

    In outlining progress during the year, Mike Schneider, the managing director of Bunnings stated in the Bunnings section of the annual report:

    Strong progress was made on the commercial 'Whole of Build' strategy, with new product ranges, enhanced capability of frame and truss, and improved sales support. Bunnings also launched a new fully-transactable e-commerce platform for commercial customers, and made further improvements to the PowerPass app with increasing usage by commercial customers to support ease of shop.
    Tool Kit Depot expanded into Western Australia with six stores catering to local demand for professional tools and the acquisition of Beaumont Tiles completed in November 2021.

    Mr Schneider's vision of the business is:

    Over the past 10 years, Bunnings has evolved from a warehouse model offering around 34,000 hardware and home improvement products to an omnichannel business with over 110,000 home, commercial and lifestyle products across its in-store, online and marketplace offers.

    Among the items listed as a "focus for the coming years" in the annual report were listed:

  • Reinvest in price by simplifying processes and systems to lower costs
  • Improve customer order fulfilment efficiency
  • Deliver low prices by lowering the cost of goods
  • Own-brand products to provide greater value in selected categories
  • Leverage data investments to personalise customer experiences
  • Continue to enhance online search and functionality to improve ease of shop
  • Network expansion opportunities across Bunnings, Tool Kit Depot and Beaumont Tiles
  • More personalised digital communications
  • Expand Frame and Truss offering
  • Strengthen product range and offer within Tool Kit Depot and Beaumont Tiles
  • Evolve PowerPass membership program to include Beaumont Tiles and provide members greater benefits
  • Use space better to accommodate new ranges, layouts and product adjacencies
  • The path out of COVID-19

    As Bunnings and Wesfarmers were quick to stress, the increase in both revenues and EBIT has been substantial for the big-box retailer when viewed over a longer timeframe. According to the ABS, retail sales grew by 28.4% from FY2018/19 to FY2021/22. Sales at Bunnings increased by 34.8% over that time span, while EBIT absent property income increased at close to 40%.

    Laying out the results in that way indicates that the hardware retail industry has now come to the point that many - including HNN - forecast back in 2021, where the peak in growth has occurred, and the market will, at best, level off. There's little doubt that one reason for the apparent buoyancy in the current market is relatively high background inflation.

    As HNN said back then, the task for publicly listed companies such as the Wesfarmers' owned Bunnings has always been to invest those high-phase earnings back into the business in such a way that the inevitable swing back to more diminished growth - or possibly even negative growth - will be cushioned by new and broader revenue streams.

    How well has Bunnings managed to do this? In particular, what does the exceptionally low EBIT number mean for this context?

    It's a question that also taxed the thoughts of several analysts, with Craig Woolford of MST Marquee putting it into a succinct question:

    Just wanted to ask a question about the Bunnings...I guess I'd phrase it as the "EBITDA margin", particularly for the second half. To look at, I guess one of the measures you guys have looked at the second half 22 sales are up 36% [over three years]. But second half costs on a consistent accounting basis looks to be about 36% [over three years] as well. Unfortunately, we don't get enough disclosure to really understand whether that's product cost or cost of operating the business. But can you give us some clarity about, of that 36% cost growth, what is transitory in nature within that mix, and what is likely to be ongoing?

    Mr Schneider replied:

    We talked about the $71 million in extra costs [due to COVID-19], roughly half of that was in the second half. So that's clearly some, there's a little bit of cost in supply chain as well. And clearly, we're making some investments for the longer term as well, because that's the thing that, ultimately, we're really focused on, is long term growth and long term returns for the business.

    Anthony Gianotti, the chief financial officer for Wesfarmers, added some additional clarification:

    I think probably the only thing to add on there is there's probably a little bit of a mix change through that period. Because as Mike pointed out earlier, commercial has grown stronger through that period, particularly in the second half. And as we know, commercial is slightly lower margin, then consumer. And I think the only other thing is, there's been some investment through that period. So we've had [Tool Kit Depot] investments, and we've had Beaumont Tiles come on board. So I think there's a combination of things going on in there, as to the split in terms of there's obviously a level of investment that will continue. But there's a level of that that will actually reverse over time as well.

    Mr Schneider also added that an additional factor was earlier stocking up in seasonal supplies for the first half of FY2022/23.

    In fact, Bunnings has been investing in growth across four basic areas. There is the new tools business, Tool Kit Depot (TKD), which is designed to compete with Total Tools, Sydney Tools and a range of other trade tool specialist retailers. Secondly, there is the acquisition of Beaumont Tiles, which is an expansion not only into floor surfaces, but also bathroom fittings. Thirdly there is Bunnings ongoing expansion into trade and commercial business, with the company setting a 50/50 revenue goal, based on expanding both trade and DIY/consumer markets. Finally, there is Bunnings' ongoing expansion into online sales, and the further development of digital channels for sales, marketing and community.

    It's important to understand that these changes are not just about market expansions, they are also fundamentally about broad shifts in markets. That idea that the markets have to play a large part in all this was brought up by analyst Richard Barwick of CLSA:

    As you say, it's been a remarkable period of growth. Just be interested to hear your thoughts on how you can sort of work your way or cycle through this. Is there an inevitable slump in sales and earnings that we will be seeing in FY2022/23? And you will be restricted in what you can say, but perhaps if you can give some context around the shape of sales. So, obviously, in the second half, you saw trade outperform DIY. I just go back to one of your comments. I think you made it at the strategy day, wasn't this year but perhaps last year, talking about people that [won't] paint their house twice [in the same year]. So just love to hear your thoughts on how you think Bunnings will shape up over the next 12 months.

    Mr Schneider replied:

    We can see more clearly on the commercial side of the business because of the sort of pipelines of work, that one's a little bit easier to sort of see. And with availability now in categories like timber, insulation, board product, there's pent up demand. I think Anthony touched on that sort of mix in the second half, some of that is a little bit of catch up in the work that's outstanding.
    But talking about builder customers, strong pipelines, two and three years out, and the type of construction that we're focused on, the smaller builder, they're not managing some of these bigger projects, where you've seen some building companies get themselves into a bit of trouble. So I think there's a lot of opportunity for us to pursue there.
    The "whole of build" strategy, the team have sort of built into the way we're thinking about that through the different segments of Bunnings. Also TKD, and Beaumont tiles, I think gives us a great opportunity to really earn the right to be chosen by customers in that space.
    On the consumer side, I think there has been a structural shift in the way that that our customers think about their home, it's become a workplace, it's become a classroom, it's become somewhere that you're spending more periods of time. When you're working from home two to three days a week, there is more wear and tear on the house, you're seeing more things to do. And we saw also see that over the last few years, customers have actually really developed quite a new array of DIY skills. We've been able to bring new products and services and categories into the market to be able to meet those needs. So we sort of, you know, have a view that with people at home a little bit more, that is going to [grow].
    As I touched on earlier, we've got some parts of Australia and New Zealand where for the first time in quite a while we've got the ability to actually trade our stores through a spring and summer cycle, hopefully without interruption. So I think that that structural shift is there, and I'm really focused on driving strong growth as we move through this financial year and beyond.


    When we look back over the history of Bunnings, we see a company that began at the intersection of a number of trends that would help to define the first two decades of the 21st Century in Australia. There was the floating of the Australian dollar during the 1990s, the opening up of China as a manufacturing base, the increasing financialisation of home ownership as urban centres grew in importance, and the rise of new, more efficient logistics models.

    To a large extent, we seem set now to witness the beginning of the end or at least the transformation of most of those trends. That's not necessarily because any of those areas has grown all that less important, but because the potential for growth in all of them has diminished sharply in recent years.

    The question, then, for companies such as Wesfarmers and its subsidiary Bunnings is where is the growth - which is what is needed in order to continue as a viable investment vehicle on the Australian Stock Exchange - going to come from?

    At the moment, the answer that Bunnings at least is providing is to follow a "tried and true" pattern of expansion using Wesfarmers capacity to organise and efficiently scale businesses. The move into trade sales, for example, is something HNN predicted back when Metcash first decided to acquire Danks/Home Timber & Hardware and create the Independent Hardware Group (IHG). That merger was presented to the Australian Competition & Consumer Commission as a "hedge" against Bunnings' influence, but it also set up the trade market for more competition.

    That said, one would be forgiven for thinking that the approach that Bunnings has chosen to take to trade sales, what it terms "whole of build", is somewhat associated with IHG's "whole of house" strategy, first formulated by IHG CEO Annette Welsh in 2018.

    TKD may have some innovative ideas behind it, but it's also a straight competitor to an existing retail solution, already pioneered by Total Tools and Sydney Tools. We don't know exactly what Bunnings plans to do with Beaumont Tiles, but while it's certainly a worthy company, the only real innovation the tile industry has seen for some time is the spread of inkjet printed tiles which can better emulate other surfaces.

    Then of course there is online. It's difficult to think that anyone comparing the websites for The Home Depot, Lowe's Companies or Kingfisher's B&Q with Bunnings would see the Australian site as being anywhere other than at the bottom of that group. It's not a bad website, but it doesn't excel, either.

    What Bunnings did really well back around 2000 was to understand that there was an emerging discontinuity in the market. Taking advantage of that discontinuity disrupted standard hardware retailers then, and still continues to disrupt them today. But now there is a new discontinuity on the horizon, and there are few signs that Bunnings, or even Wesfarmers, are really positioned to take advantage of this.


    Big box update

    Murray Bridge gets new Bunnings store

    The hardware retailer also confirmed its Narrabri store development in regional New South Wales is nearing completion

    The new $16 million Bunnings outlet in Murray Bridge, located around 78 kilometres east-southeast of Adelaide in South Australia, has opened to customers.

    The new store replaced the existing smaller building, just down the road, which opened in 2009. It spans around 7500sqm - more than 3000sqm larger than the existing store.

    Features of the new location include a four-lane trade drive through, a larger nursery, and tool shop, plus an in-store cafe and playground. It also has a new Kitchen Design Centre, a newly laid out paint department, bathroom displays, new look trade service area, a wider range of site safety and workwear products, as well as an aisle for transport and moving needs.

    Bunnings complex manager Jade Sander is leading the Murray Bridge team of 95 and, according to Bunnings, the new store has created over 40 new jobs with around 50 existing team members transferring across from the existing store.

    Ms Sander said team included a number of skilled experts in areas such as timber, tools, paint, kitchens, plumbing, garden and outdoor living who will be on hand to provide residents with expert advice. She told The Murray Valley Standard:

    The new store offers a convenient option for locals who may have previously travelled to larger stores or placed orders with us to access our full range.

    In 2020, a report prepared for the council by consultants URPS described the new store as a "significant investment" in Murray Bridge, but one which would be justified as the city's population grew.

    Bunnings was encouraged by the local council's Make It Yours campaign, which predicted the district's population would reach 29,000 in a decade, the consultants said.

    URPS predicted the expansion would allow Bunnings to generate an extra $70,000 worth of investment for local community groups each year, including by hosting sausage sizzle fundraisers.


    The doors of Bunnings' new store on the Newell Highway, north of Narrabri (NSW) are expected to open by October this year.

    Bunnings area manager Deb Thompson said recruitment for its local store had been completed, with around 40 new team member jobs created in the community. She told the Narrabri Courier:

    Internal racking, shelving and signage has now commenced, and car park and landscaping works are ongoing. We will soon be busy filling the shelves with thousands of products as we prepare for opening and we look forward to welcoming customers to the new store soon.

    External barriers have come down as the outside work of the store development nears completion. Workers are busily preparing the car park and vehicle entry areas ahead of the opening.

    While the external work nears completion, the focus is shifted on the internal fit-out in anticipation of the October opening.

    The development of a Bunnings store represents a $15 million investment in the venture, and it is anticipated the Narrabri store will cater for the North West region. The store will span more than 5000sqm on its highway site, on the edge of the Narrabri industrial estate. It will feature a main retail area, outdoor nursery, timber and building materials area, as well as parking for more than 80 cars.

    When Bunnings submitted its development application in 2020, it estimated that $15.1 million was spent at hardware businesses outside the region, including at Bunnings stores in Tamworth and Inverell. The company said in its response to submissions lodge in relation to the development in 2020:

    The proposed Bunnings Narrabri represents a tangible expression by Bunnings (and parent company Wesfarmers) in support of the economic potential of the town, and the important regional service role and function that Narrabri serves to surrounding areas...
    This includes the ability to attract customers seeking access to a Bunnings from other towns in the surrounding region, including Moree, Boggabri, Wee Waa, etc.
    Store data indicates customers from Narrabri and surrounds are ... travelling a significant distance to existing Bunnings stores (primarily Tamworth and Inverell), representing 'escape spending' from the region by customers seeking the popular Bunnings warehouse store format...
    The proposal reflects a strong level of confidence in the economic prospects of the town and region, rather than a concern relating to economic vulnerability.

    Of 35 submissions, 32 were in favour of the project, and three were against.

    As part of the development approval granted by Narrabri Shire Council in 2020, Bunnings will enter into a voluntary planning agreement to pay a contribution towards upgrades to the intersection of Newell Highway and Saleyards Lane to accommodate an increase in traffic as a result of the store.

    While the store will have prominent exposure with its frontage on the Newell Highway, access will predominantly take place from Saleyards Lane.

  • Sources: The Murray Valley Standard, Murray Bridge News and Narrabri Courier
  • bigbox

    Home Depot results FY2022/23 H1

    Positive outlook as high demand continues

    The US is facing a home improvement market similar to Australia's - and the same good fortune. Even as the economy reverts closer to 2019, high spending on homes continues.

    US big-box home improvement retailer The Home Depot (HD) has released its results for the second quarter of its FY2022/23, which means the results from the company's first half are available for comparison.

    During the more severe quarters of the pandemic, there was a broad divergence between the US and Australian home improvement markets, and the responses of retailers. For example, the US market had already heavily invested in online e-commerce, where the Australian market had not. It's also necessary to always point out that the US market is far more diverse than the Australian market, in terms of many factors, including weather and culture.

    However, as we begin to enter the pandemic exit-strategy stage, there are more similarities emerging, including inflation caused by both demand and supply shortages, and strong governmental action to curtail that inflation. In fact, Richard McPhail, chief financial officer at HD, summed up US situation that sounds familiar to Australian retailers:

    We find ourselves in a unique environment with many cross currents. We are operating in a broad-based inflationary environment not seen in four decades while managing through constrained global supply chain conditions, all against a backdrop of monetary policy shifts intended to moderate demand. We also see engaged and resilient homeowners who have strong balance sheets, consumers spending more time in their homes, and continued structural support for home improvement project demand.

    From that viewpoint, the results from US retailers provide some interesting perspective on past and emerging markets.

    The numbers

    While the quarterly numbers are interesting, we'll mostly look at the numbers for half, as these provide a more comprehensive overview.

    Sales at HD for the half ending 31 July 2022 were USD43,792 million, an increase of 6.5% over the previous corresponding period (pcp), which was the six months to 1 August 2021. Operating income (much the same as earnings before interest and taxation) was USD7210 million, up by 6.0% over the pcp. Net earnings were USD5173 million, up by 7.6% on the pcp.

    Interestingly, in terms of customer transactions, these fell by 3.0% to 467.4 million, but increased their average value from USD82.48 to USD90.02, up 9.1%. This resulted in an increase in sales per retail square foot of USD700.62, up by 5.7% on the pcp.

    According to Jeff Kinnaird, the executive vice-president of merchandising:

    Big-ticket comp transactions, or those over $1,000, were up 11.6% compared to the second quarter of last year. We saw big-ticket strength across many Pro [tradie] heavy categories like pipe and fittings, gypsum and fasteners.

    He said that the ticket gains were largely driven by inflation, but noted also that tickets were deflated by 0.14% due to falling lumber prices.

    Mr McPhail clarified in response to an analyst's question, that much of the growth in HD's Pro business was coming from larger Pro customers.

    According to HD's CEO, Ted Decker, there was disappointing growth in seasonal items, but this was made up for by ongoing growth in larger housing projects. As Mr Kinnaird pointed out, the seasonal areas that disappointed included BBQ grills, fertilisers, chemicals, and mowers. One reason these trended down was that the 2021 comps were quite high.

    The categories that did much better, according to Mr Kinnaird, included building materials, plumbing, millwork, paint and hardware, while electrical, de´cor and storage, kitchen and bath, outdoor garden, tools, appliances, indoor garden, lumber, and flooring posted positive gains, but were below the overall average for growth.

    In answer to an analyst's question, Mr Kinnaird also provided some details about shifting demand:

    As Ted [Decker] commented, there's COVID pull-forward, there's stimulus effect. We went from a very wet and cold spring, to a very hot summer in the majority of our markets, and the consumer is focusing on other projects... You think of the last year, it was all about the backyard. This year, it's about categories like paint and other large renovation categories, and we're seeing that across our business.
    And then, I'll also say we continue to see the consumer and the Pro trade-up around innovation, and couldn't be more proud of the merchants and our supplier partners on what we delivered around innovation for our customers. We've got a lot of products helping our Pros finish the job faster and simplifying the project for consumers, so no significant trade-down taking place.

    Mr McPhail also set out the forecast for FY2022/23. Sales are expected to be 3.0% up over sales for the prior year, with sales coming off their first half increase.

    Analysts questions

    Michael Lasser of UBS asked the core question that everyone in the industry asks, which is how are sales continuing to grow even as the demand for new housing contracts, due to higher interest rates?

    As Mr Decker stated:

    Our customer in our markets has been incredibly resilient. As Jeff said, project demand is incredibly strong. Our Pro in particular is very strong, and their backlog remains healthy. In DIY, we did see some seasonal weakness. But as we parse through that, it's difficult to say is that weakness in the seasonal businesses the overlap of the two prior incredibly strong years? Is it the weather where we had a really bad and late spring and then it turned incredibly hot across the country? Or are they fundamental demand pressures? Again, we have not seen a broad-based fundamental demand pressure in the business.

    Mr Decker elaborated further on this theme in response to a question about the potential for reversion to pre-pandemic levels of sales:

    Clearly, the US consumer has re-engaged in activities outside the house and travel is incredibly strong right now and eating out and hospitality... But home improvement in particular has been, again, just incredibly strong as Richard laid out, which led us to increase our guidance from what was essentially flat at the start of the year to the 3% we just affirmed.
    But we just don't - we don't see a slowdown from that and remain incredibly bullish about the engagement level. It's really all the dynamic of the home improvement. Again, so many cross-currents in the economy. But when you think of the wealth, our core customers, and their home equity up $9-odd billion; the excess savings rates; the strong jobs and earnings growth of wages; and the fact that we're just continuing to spend more time at home in general, people are still super-engaged in improving that home that they're spending more time in. So, we're certainly benefiting from that longer-term dynamic.


    Perhaps the most interesting section of the presentation, from an analytical perspective, was where Mr Kinniard detailed some of the newly released products that HD expects to perform well. There were four that he called out specifically: a paint, a bathroom shower/bath insert, a power tool series, and a smarthome system.

    The paint is Henry's Tropi-Cool Roof coatings, which increases reflectivity, to help keep buildings cooler. The bathroom kits are the Delta Classic 500 series, which is not stocked by rival Lowe's.

    The tool is Makita's XGT 40-volt and 80-volt system. According to Mr Kinniard:

    The XGT system is engineered to achieve the optimum power required for heavier load applications without sacrificing run time. And these one-battery solution tools are exclusive to The Home Depot in the big box channel.

    The smarthome system is HD's own Hubspace platform.

    These four products provide a look forward into where HD sees the market heading. While HD is careful to describe Tropi-Cool as being useful for reducing the electricity costs of air-conditioning, it is also, of course, and ecologically aware, global warming prevention product. That trend is likely to be a growing one through 2022/23.

    The bathroom kits are an interesting choice, as these are in the somewhat grey area between DIY and DIFM. The kits enable customers to put together complete waterproofing floor/wall systems made from acrylic. This is really a direct pointer to a reviving part of the market in both the US and Australia, which is the acutely cost-conscious DIYer.

    Obviously, the Makita XGT system is a trade product, but it's interesting that this won out for promotion over a Milwaukee/Ridgid tool system.

    As interesting as these are, it is actually the last product, the smarthome system, that is more revealing as regards HD. Smaller home appliances are rapidly approaching the stage where, if not all of them offer smarthome connectivity, that will at least be a range option. Hubspace is a loose alliance between some regular suppliers to HD to make their appliances directly network via Bluetooth or Wifi, and controllable through a shared smartphone app.

    What is surprising, however, is that by the end of 2022 the connected smarthome standard known as Matter will be available - indeed, serious smarthome companies such as IKEA have already announced their Matter hubs. Matter is an "everything" protocol, that will enable just about any smarthome device to communicate with any system.

    Matter uses a communication protocol known as Thread, which overcomes the difficulties inherent to Bluetooth and Wifi systems (such as poor connectivity response times), while also building in more functionality that the pre-existing low-power standard, Zigbee (such as direct internet connectivity).

    While HD has been clear that Hubspace is designed for people who want some connectivity without any fuss, it's just difficult to see those standard surviving very long. Similar standards, from both HD's main competitor Lowe's (Iris) and the electronics big-box BestBuy have failed in the past, angering customers who invested in them, even though conditional refunds were offered.

    The reality behind this is that the US market is set to not so much bifurcate in the future, as to develop definite clustering. One cluster is going to want the most advanced systems of smarthome management it can get, along with, most likely, more climate change aware products. The other cluster is going to want the benefits of technology without having to understand much about it, and probably not be that interested in climate change.

    It's being able to predict for than level and type of variance while will likely determine those home improvement big boxes prosper in the future.


    Big box update

    Bunnings Oxley warehouse to be demolished, rebuilt

    The flood-plagued Oxley store has been closed since the deluge in February this year. The hardware retailer hopes the new-look warehouse will reopen in 2024.

    Bunnings has lodged plans to demolish its flood-affected Oxley warehouse in Queensland and replace it with a raised building that can be reopened one day after waters recede.

    The existing store has experienced at least three major flood events since it was built, but Bunnings is confident the planned version will resist damage. The new store would be higher and much bigger - going from the existing 14,350sqm gross floor area to 19,344sqm. The new-look Oxley warehouse will also have two levels of shop space and carparking underneath, according to a development application (DA) lodged with Brisbane City Council.

    It will be based on a design similar to the warehouse in Bundamba (near Ipswich) which successfully resisted damage in the February flood, reopening 24 hours after floodwaters receded, and stores in Virginia and Acacia Ridge.

    Flood doors would protect the main and nursery entrances and essential services would be raised. It would also mean only the car park would go under water, as the suspended retail floors would be above the one-in-200-year flood level.

    The internal layout would be similar to the existing warehouse, including the main retail area, outdoor nursery and timber trade drive-through. But there would be a wider range of home and lifestyle products.

    Bunnings said it would spend $60 million on the new store. Bunnings regional operations manager, Jason Doyle, said he was hopeful the store would be open again to local customers in 2024, pending council approval. He told South West News:

    We have been working closely with the relevant authorities while preparing our application and we're hopeful of getting a timely approval so we can get on with construction and get back to serving the community, giving them access to the products they need.

    Town planners Property Projects Australia said in the development application (DA) documents that reopening a flooded warehouse could take up to four months. They stated:

    In addition to the impact on flood recovery, approximately 195 team members have been displaced (from at the Oxley store), having to be temporarily relocated to surrounding stores to ensure no significant job loss from the temporary closure.
    Bunnings Group Limited is seeking to replace the existing store to establish a flood-resilient Bunnings Warehouse to ensure the continuity of service and trade through major flood events and to maximise the utility of the land.
    This proposal is founded upon the principles that have been adopted at the (flood resilient) Bunnings Warehouse Bundamba store.

    In "pre-lodgement'' meetings, Brisbane City Council and the State Assessment and Referral Agency told Bunnings that a designated flood warden would have to be on duty at all times during opening hours,

    The existing Bunnings warehouse store is located at 32 Blunder Road in Oxley. Council officers pointed out during the meetings that both access points, on Blunder and Factory Roads, had flooded in January, 2011 and in February this year. They wrote in the DA documents

    To facilitate vehicular evacuation, it would be beneficial to provide a 3.5m wide flood emergency egress point (fitted with removable bollards or boom gate) at the higher part of Blunder Road.

    Bunnings offered to gift land to widen Blunder Road and its verge, to improve that exit. There would be an increase in parking spaces, but it submitted a traffic report on the impact of the extra car movements.

    The two existing access points would be retained, but the safety of a proposed new access to the Ipswich Road Service Lane would need to be considered, Council officers said.

    Council officers also raised concerns about visual screening of the taller building, which would be up to 15.5m high.

    Only 6.2% of the site would be devoted to deep planting (large trees with roots in the ground), less than the required 10%. Officers said the "undercroft'' parking area needed to be screened from the road by landscaping. Property Projects Australia said:

    Council raises no concern with the proposed uses in this location and the proposed redevelopment of the site to ensure the Bunnings is flood resilient providing the issues relating to the visual impacts to the street frontage, can be addressed through landscape screening/buffering.
    It is considered there is merit for a 'performance outcome' (exemption) regarding height as the raised structure is only slightly exceeding the preferred maximum to address the flood constraints affecting the site.

    The warehouse, which has flooded multiple times since it was built, was deemed a high risk stormwater area, but Bunnings said it should not have to submit a hazardous chemicals flood plan as all stock would be on the new, raised levels.

    In June, Bunnings reopened its flood-hit Rocklea store after major repairs, adding new features including a revamped cafe and kitchen design centre. It had to seek specialist advice to ensure the warehouse was structurally and hygienically safe to reopen.


    Bunnings Oxley store left devastated from February 2022 flooding - HNN Flash #94, May 2022
  • Sources: South West News (Brisbane) and Urban Developer
  • bigbox

    Lowe's FY2022/23 first half results

    Growth stutters, but maintains

    Lowe's has seen a difficult first half unfold for 2022, with the company claiming that poor weather limited seasonal sales. The big-box retailer points to ongoing development of its tradie sales as an indicator of a better future.

    US big-box home improvement retailer Lowe's Companies has reported its results for the first half of FY2022/23. Overall, revenues came in at USD51,135 million for the half, a decrease of 1.7% compared to the previous corresponding period (pcp), which was the first half of FY2021/22.

    Operating income (effectively earnings before interest and taxation) was USD7531 million, an increase of 1.0% on the pcp. Net earnings were USD5325 million, a decline of 0.3%.

    In describing the results, Lowe's CEO Marvin Ellison suggested that weather patterns had produced a less than ideal spring trading season, which resulted in poor sales of seasonal categories. He also pointed to cycling the strong comps from the previous year's pandemic buying sprees, which particularly affected categories such as BBQ grills and patio furniture.

    Lowe's executive vice president of merchandising Bill Boltz noted that there was increased demand for more innovative products.

    Another interesting trend from the quarter is the ongoing demand for innovation, reflecting underlying consumer strength. Rather than seeing trade down, in many cases, we are seeing customers trade up, spending more to purchase the latest technology like battery-powered products available in the EGO, Kobalt, CRAFTSMAN and Skill brands.
    In fact, one of our top-performing products this quarter was an EGO 56-volt self-propelled mower that retailed for over USD700. This unit dramatically outperformed our sales forecast despite being one of the most expensive battery mowers in our assortment, proven what we have said before that value doesn't have to be low priced.
    In refrigeration, we continue to see consumers trade up to higher-priced products in brands like KitchenAid, Samsung and LG, with features and benefits that serve a busy family's lifestyle. And while client sales were below our expectations, we continue to take incremental share and lead the market as the number one appliance retailer in the US.

    Mr Ellison pointed to strong performance in the Pro (tradie) categories, as Lowe's moves to increase its sales split from 25/75 Pro/DIY to better favour Pro sales. Lowe's executive vice president for stores, Joe McFarland, commented further on the development of the Pro market:

    We continue to deliver incredible results with Pro comps of over 13% in the quarter. In fact, this is the ninth quarter in a row that we have driven double-digit Pro comps. Even in a quarter that is traditionally our most DIY-heavy, we saw Pro penetration of over 23% in the U.S., an increase of over 500 basis points from 2019.

    Mr Ellison also went into some detail as regards the home improvement market in general:

    I'd like to address some concerns that I've heard from our shareholders about the home improvement market. I want to begin by clarifying that the market dynamics that pressure the home builder are not necessarily the same market dynamics that pressure the home improvement retailer. At Lowe's, the three highest correlating factors of home improvement demand are home price appreciation, the age of the housing stock and disposable personal income.
    While housing turnover is important, it does not index at the same rate as home price appreciation, housing age and disposable personal income. And while we acknowledge that housing turnover has slowed, home prices and home equity remains at record highs, which gives customers confidence that they will get a return on the investment that they make in their homes.
    And also importantly, those homes keep getting older. More than half of the homes in the U.S. are over 40 years old and millions more built at the peak of the housing boom in the early 2000s are now starting to turn 20 years old, which is a key inflection point for big ticket repairs.

    Lowe's is predicting sales in the range of 1.0% to -1.0% for its FY2022/23 as compared to FY2021/22.


    If there is a single noticeable difference between Lowe's and its main competitor, The Home Depot (HD), it's that you can discus HD without referring to Lowe's, but it's difficult to discuss Lowe's without referring to HD.

    The two companies have had a markedly different experience through the pandemic years. Comparing the first half results at Lowe's between FY2019/20 and FY 2021/22, Lowe's shows a 34% increase in net sales, and whopping 96% increase in net earnings. On the same comparison, HD saw a 37% increase in net sales, and a 49% increase in net earnings.

    One major contributing reason for that is Lowe's heavier orientation to the DIY market, which not only took off strongly during the pandemic, but also - of course - produces higher profit margins. Other reasons include Mr Ellison's astute management of the company, and the availability of new product lines, such as the Craftsman DIY tools from Stanley Black & Decker.

    This half could be a harbinger of what happens to Lowe's now that DIY is fading somewhat, and the Pro market is becoming more significant. There is little doubt that, given its troubled history, Lowe's made the right decision to pursue profits through the pandemic, but this has left it with what we might describe as a bit of a Pro headache after the DIY party.

    The difficulty is, of course, that winning over the Pro market requires deep CAPEX investment over a significant period of time. So Mr Ellison's task is now how to management that transition, while keeping earnings within an acceptable range.


    Big box update

    Kyneton locals considering court action to fight Bunnings development

    Victoria's planning tribunal has allowed a complex that includes a Bunnings to be built in Kyneton, but some residents fear it will detract from the town's country charm

    Macedon Ranges residents are considering Supreme Court action following a state planning tribunal decision to overturn a council vote to put a stop to a development for a Bunnings store, a McDonald's outlet, another restaurant, and a 24-hour service station. It was approved by the Victorian Civil & Administrative Tribunal (VCAT) after the applicant decided to challenge the council's decision and the conditions imposed.

    Susan McNab is one of the locals leading the fight against the development and said residents were disappointed by the tribunal's actions. She said the group would look at viable options to counter the decision, but accepted that a loss in the Supreme Court would be costly. She told ABC Premium News:

    Naturally, we don't feel the decision is to the benefit of Kyneton. That part of the town is the main access to nearby reserves and people often go out that way climbing and for classic car rallies and cycling. It's difficult for many residents to not be considered at VCAT.
    It's been about the economics of the matter. The council said that area would be developed at some point, but this particular style of development works against Kyneton's character.

    The decision almost confirms the introduction of commercial development in Kyneton, which one community group has labelled the "tide of overdevelopment". Residents fear the big brands will take away the small country charm that the town is known for, with small businesses and well-known eateries losing out. However VCAT's decision said:

    The proposal will not detract from the rural character of the Shire. The proposal will reinforce the rural character of the Shire by its location [in a commercial zone] within the protected settlement boundary; [and the] containment of its impacts within the subject land.

    The decision by VCAT attracted hundreds of submissions regarding concerns about traffic and safety, and the effect the development could have on the nearby environment and local economy. Ms McNab wrote to the group:

    Our options on a personal and group level are very limited. We can attempt to appeal the decision on a matter of law ... within 28 days. That is incredibly expensive, and we would have to pay the other party's costs if unsuccessful. It's down to what the shire council may be able to do now.

    Macedon Ranges Shire Council said it was not considering pursuing legal action. A spokesperson told the ABC:

    An appeal of a VCAT decision is made to the Supreme Court of Victoria and must be on a point of law. Council has received communication for the community expressing their disappointment in the decision.

    The council's design guidelines from 2012 showed the council's aim was to "reinforce" the rural character of the Macedon Ranges, particularly in areas that were visible from main roads, the Calder Freeway, rail corridors, and key public viewing areas and from adjoining rural and residential areas.

    Several residents have asked for a review of VCAT's decisions after a similar development in regional Victoria was not allowed to go ahead. Some also said it was difficult for small-town community groups and residents to fight organisations and businesses with access to a lot of money.

    The tribunal has ordered VCAT to remove multiple signs, and reduce the height of one, and resubmit the plans to show those and other changes.


    VCAT approves Bunnings build in Kyneton (VIC) - HNN Flash #105, August 2022
  • Source: Australian Broadcasting Corporation
  • bigbox

    Big box update

    VCAT approves Bunnings build in Kyneton (VIC)

    The tribunal disagreed with council the new store would be inappropriate for a site located on Edgecombe Road

    The Victorian Civil and Administrative Tribunal (VCAT) has dismissed a claim that a Bunnings store cannot be built in Kyneton (VIC).

    In 2021, developers took the Macedon Ranges Shire Council to VCAT after it failed to make a decision fast enough on their application for a Bunnings store 1.6km away from the centre of town in Kyneton. It would be the anchor tenant for a collection of retail premises.

    The council told VCAT that if it had made a decision, it would have opposed the Bunnings on a number of grounds, according to a report in the Bendigo Advertiser.

    It argued the Bunnings building would clash with the area's unique, rural township character and detract from a gateway into Kyneton, in part because motorists would be able to see it from the Calder Freeway. The council told VCAT:

    While the proposal is an appropriate use of the site, the development response fail [sic] to recognise the sensitivities of the site.

    Witnesses for the developers argued the building's design was one Bunnings had used at other regional locations.

    VCAT described the building as a generally typical Bunnings Warehouse design, with a low-pitched roof, dark green metal cladding walls and white panelling along the lower portion of the facades.

    VCAT said the land was not at the town's border and was in an area zoned for commercial use, with industrial lots already visible to people entering that part of town. It also expected the rural feel of the area would change over time, and that building designs and landscaping would soften the Bunnings' visual impact.

    The council lodged a number of other objections that failed to sway VCAT. They included arguments that more landscaping was needed, especially to soften the building and car parking from roads like the Calder Highway.

    The council also argued designs for a 190-odd space car park could be more pedestrian-friendly.

    VCAT found current landscaping plans and car parking would be appropriate. It ordered developers to submit updated plans to planning authorities.

    In Star Weekly, the council said it was "disappointing" a Bunnings is now on the way to the outskirts of Kyneton.

    Last year, the council knocked back two separate proposals for land at the intersection of Edgecombe Road and Pipers Creek Road, which included plans for a Bunnings Warehouse. It received more than 500 objections to the proposal.

    The decision was appealed at VCAT, and while the proposal for a service station and attached McDonalds at the same location is still pending, the tribunal granted a permit to construct a building, put up signs and create access and parking for Bunnings.

    The council's planning and environment director Rebecca Stockfeld said it had blocked the planning application for a range of reasons which had not been addressed by the VCAT decision. Ms Stockfeld told Star Weekly:

    The proposal had detrimental amenity impacts, a poor design and interface with its surrounds, inadequate landscaping, removal of native vegetation, and poor layout for pedestrians within the car-parking and access areas.
    The VCAT decision to approve the development with little change to the design is disappointing.
    The approved Bunnings will have a generic design, similar to many others in large cities, rather than responding to the unique character of Kyneton and the Macedon Ranges.

    A spokesperson from one of the four respondents to the VCAT hearing, the Macedon Ranges Sustainability Group, said they could not comment at this stage as an appeal for the second proposal was still underway.

    At a council meeting in September 2021, mayor Jennifer Anderson said developers for both applications had not met the necessary standards for approval. Cr Anderson said last year:

    We are now declared an area of distinction and landscape, and we have a standard of planning policy and we must look at when we look at any application. It is mandated upon every authority to do so, and the officers have assessed this application against that and feel that it doesn't meet all those criteria.

    Ms Stockfeld said council would "continue to push for new developments to comply with the design standards incorporated within the Macedon Ranges Planning Scheme" into the future.


    A proposal for a Kyneton store in regional Victoria has been rejected.

    Kyneton development goes to tribunal - HNN Flash #67, October 2021

    A new development in the central Victorian town of Kyneton includes a Bunnings.

    Bunnings proposed for Kyneton -HNN Flash #57, August 2021
  • Sources: The Bendigo Advertiser and Star Weekly (Sunbury & Macedon Ranges)
  • bigbox

    Europe update: Kingfisher

    Cost-of-living increases present opportunities for own brands

    Kingfisher believes own brands are becoming increasingly important in an environment of higher inflation. Price may be the reason shift, but own brands can offer much more than just cheaper products.

    In a recent edition of UK publication Retail Gazette, Kingfisher chief offer and sourcing officer Henri Solere writes that the cost-of-living crisis is "a moment for own brands to shine".

    Own brand products have a number of benefits for consumers, and against the current backdrop of rising living costs, affordability has leapt to top of the list, according to Mr Solere. He writes:

    At Kingfisher, our own exclusive brands - or OEBs as we call them - are 15-30% cheaper than branded products. Our OEBs have significantly grown in popularity in recent years, up 19% since 2019 and now account for 45% of Kingfisher Group sales.
    But while the affordability argument for buying own brand is clear, there remains a lingering perception that own brand can mean compromising elsewhere - whether that's on quality or on other considerations such as sustainability.
    That might have been true twenty years ago, but today's reality could not be more different.
    It is no longer about sourcing the same products for less, but instead about how we can add value as retailers who know their customers inside out, using that insight to design and develop products that truly suit their needs.
    With consumers thinking more about their finances, now is the time for retailers to step up and show what own brands can deliver.
    The truth is that most own brand products have gone through an exceptionally rigorous design, testing and development process.
    For Kingfisher, the development of any of our OEB product starts with our customers' home improvement challenge whether that's in DIY or trade - and we work back from there. We then find ways to develop and supply the product at scale, so great design is affordable and accessible to everyone.
    To give an example, through listening to our customers, we learnt that they need more space efficient, multi-functional areas in their homes, particularly in the kitchen. So, we created the Romesco smart space sink, which has the functionality for a work surface on top of the sink bowl for preparing food or drying dishes when it isn't in use.
    As retailers, we need to make sure we are not just thinking about now but pre-empting what our customers will need in the future.
    For example, our team undertake in-depth trend analysis to identify changes around how we live in and improve our homes, so we can design products that make customers' lives easier for the long term.
    The success of any of our OEB products is rooted in our ability to truly understand a customer's problem and create a product that fixes it, with our award-winning in-house design team dedicated to delivering just that.
    Having an own brand offer means that a retailer has complete control over the process of bringing products to market. Our depth of knowledge and expertise in home improvement means that we have the ability to create products that solve our customer's challenges, with the reassurance that they are buying from a business that they can trust.
    The 'no compromise' approach doesn't just apply to quality. We want to help customers live more sustainably, without a price premium.
    Our Erbauer 18V power tools are an excellent example of this. We know that most carbon emissions when manufacturing drills come from the battery and charger, so we've developed a product with a battery that can be used in multiple tools thanks to its modular design. In addition, the products' brushless motors mean they last longer between charges, use less energy and have a longer product life.
    Going forward, we're committed to making sustainable home products affordable and accessible to all.
    That's why, despite the cost-of-living crisis, we've increased our sustainable home product target to account for 60% of sales by 2025/26, 70% of which will come from our OEBs.
    As retailers, we need to tackle head-on the outdated myth that buying own brand means buying an inferior product.
    The innovation and expertise that goes into the development of own branded products is remarkable, and the cost-of-living crisis means it has never been important to show what they can do when it comes to affordability and innovation.
    It's time for retailers to rise to the challenge and prove what own brand is really capable of achieving for consumers.


    Kingfisher provides a trading update.

    Kingfisher said demand for DIY remains resilient - HNN Flash #96, May 2022

    Earlier this year, Kingfisher released its full year results.

    Kingfisher FY2021/22 - HNN Briefing No.5, March 2022
  • Source: Retail Gazette
  • bigbox

    Big box update: Store development

    Application for bigger Bunnings Lithgow store

    Bunnings in Hoppers Crossing (VIC) up for sale and Bunnings Timaru in New Zealand is expected to open in 2023

    A larger Bunnings store could be part of Lithgow's Pottery Plaza in NSW after a development application (DA) was lodged with Lithgow City Council. The proposed commercial premises would be located in Lot 26 DP 1244557 at 21 Willowbank Avenue, off Valley Drive, according to the Lithgow Mercury.

    Bunnings area manager Michele Ward said the new site would replace the existing Lithgow store which is currently located at 295 Main Street in Lithgow. She told the newspaper:

    The proposed store represents an investment of more than $13 million and would span more than 6000sqm, 1500sqm larger than the existing store.

    Ms Ward said the store would create 35 new jobs in the Lithgow community and feature an improved store layout, nursery, a timber trade drive through and car park dedicated for more than 100 cars.

    Bunnings has been part of the Lithgow community since 2010 and we look forward to providing local customers with a much wider range of home and lifestyle products. We will keep the community updated as our application progresses.

    The application and plans for the proposed site are available for public inspection at Lithgow Council's administration centre and on the council's website until August 5.

    Bunnings Hoppers Crossing

    The 55,000sqm Bunnings Hoppers Crossing store in Wyndham City (VIC) is being offered through an expression of interest campaign which closes on 11 August, reports The Property Tribune.

    The store is one of the largest in the Bunnings network, at 21,670sqm, and is complemented by an Amart Furniture outlet. Amart recently renewed its year, resulting in a weighted average lease expiry of seven years, and a total net income of over $4.72 million. Almost three-quarters of this is paid by Bunnings, owned by ASX-listed Wesfarmers.

    Billy Holderhead, a partner of Burgess Rawson, said investor appetite in this sector remains strong, with considerable interest from the top end of the market. He told The Property Tribune:

    Given the scale of the Bunnings store, the quality of its location, forecast growth in the trade catchment, size of the landholding and its robust lease structure, we've backed the property as the best Bunnings freehold ever offered on the open market.

    This Bunnings store is in a high-profile location in what is considered to be the fastest growing local government area in Australia over the past two decades.

    Business consultancy Deep End Services also said the property has the largest concentration of large format retail floor (LFR) space in Victoria. Harvey Norman, The Good Guys, JB Hi-Fi and Barbeques Galore are all located within 500 metres. Mr Holderhead said:

    With swathes of undeveloped residential land in Wyndham City there's still much more growth to come, and the Hoppers Crossing LFR precinct is strategically placed to benefit from this.

    The Bunnings store is being sold as part of a $350 million commercial property auctions and expressions of interest campaign beginning in August. This includes a Wattyl Paints store in Sunbury (VIC) which has signed a new seven-year lease to 2029, with options to 2034.

    Bunnings Timaru, New Zealand

    A Bunnings store located in Timaru, a port city in the southern Canterbury region of New Zealand, is expected to open next year. It is part of the Showgrounds Hill retail development site.

    Ben Camire, director of Bunnings New Zealand said work on the new store is progressing well. He told The Timaru Herald:

    The store's steel structure is now complete to make way for construction of the roof and store exterior, with concrete floor pours also underway. We anticipate the store opening in mid-2023...
  • Sources: Lithgow Mercury, The Property Tribune and The Timaru Herald
  • bigbox

    Big box update

    Bunnings consolidates its merchandising team

    Bunnings and Kmart Australia have paused the use of facial recognition technology while the Australian Information Commissioner investigates their personal information handling practices amid privacy concerns

    Recently appointed Bunnings merchandising director Jennifer Tucker has reduced her direct merchandise reports from three to two. This restructure means that dozens of categories will be grouped into two new portfolios: "building" and "home and lifestyle", according to The Australian.

    Adrian Pearce will lead the "home and lifestyle" portfolio and Cam Rist will lead the "building" portfolio. As a result, Tracey Lefebure will leave Bunnings after a career with Wesfarmers of 34 years.

    In a letter sent to Bunnings suppliers, obtained by The Australian, Ms Tucker told suppliers the change in the merchandising teams would help drive growth and "simplify the way we work". She wrote:

    This simplification of our structure will position us to accelerate our growth strategy in our commercial (tradies) business while also driving our core DIY business.

    Ms Tucker's rationalisation of teams that report to her replaces the structure set up by former Bunnings merchandise director Phil Bishop, who was recently appointed as CEO of discount retailer The Reject Shop. He was Bunnings' director of merchandise and marketing until early 2021.

    The Australian also reports Bunnings held a supplier forum in early July- its first in-person mass meeting with suppliers in more than two years - where issues around Bunnings' strategic agenda and the focus on merchandise strategies were fleshed out.

    For the suppliers who attended the forum, of which 450 were in person and 350 people online, Bunnings laid out merchandise growth opportunities around deepening and evolving its range for both consumer and commercial markets.

    Suppliers were told Bunnings was keen to expand its depth across existing product categories, with particular opportunities in room and furniture storage, garden and garden decor, and kitchen and bathroom. New growth opportunities were also revealed to be in in-home services, pet durables, recreation and the online Bunnings Marketplace.

    The suppliers were also told Bunnings believed that broader consumer growth would come from driving the core pillars across lowest prices, widest range and best experience. From a commercial range point of view, focused on tradies, it would be about better catering for each stage of the build and the needs of specialist trades.

    During the forum, Bunnings also discussed opportunities for its suppliers to partner with it on product innovation and new solutions to address the opportunities the hardware giant sees in the market.


    Bunnings plans trade revenue growth of $5bn - HNN Flash #97, June 2022

    Facial recognition tech on pause

    Bunnings and Kmart have stopped using facial recognition technology after CHOICE named large retailers that do not collect and use such biometric information, and have no plans to introduce it. Those retailers include Woolworths, Coles, Aldi, Target, Big W, Myer, David Jones, Dan Murphy's, BWS, Vintage Cellars, Liquorland, Rebel and Officeworks.

    Bunnings managing director Mike Schneider said facial recognition allowed the hardware retailer to identify when a banned person entered a store. He told the Australian Financial Review (AFR):

    When we have customers berate our team, pull weapons, spit, or throw punches, we ban them from our stores. But a ban isn't effective if it's hard to enforce.
    For absolute clarity, an individual's image is only retained by the system if they are already enrolled in the database of individuals who are banned or associated with crime in our stores.
    We don't use it for marketing or customer behaviour tracking, and we certainly don't use it to identify regular customers who enter our stores as CHOICE has suggested.

    In the Australian Associated Press, Mr Schneider said:

    If a particular Bunnings store has facial (recognition), and not all of our stores do, the camera will scan your face. It will map it back to the database, and if it doesn't recognise it, no data is held.

    If the camera does 'recognise' a face, their image goes back to Bunnings' loss-prevention team, which determines whether there is a genuine match and they should call the police. He said:

    That's what's been so frustrating for us in the way that this has been characterised by CHOICE. .It's not in any way designed to look at shopping patterns or anything else, it is purely there for the wellbeing of our team.

    It temporarily switched the technology off in stores ahead of a platform shift earlier this year, and has since informed the privacy watchdog it will not be reverting to it for the time being. Mr Schneider said:

    Given an investigation is underway, we won't be using it for the time being.

    CHOICE also polled 16,000 supporters in July that that indicated 80% of people want Bunnings and Kmart to stop using facial recognition in stores.

  • Sources: The Australian, Australian Financial Review, The Guardian Australia and Australian Associated Press
  • bigbox

    Big box update

    Bunnings store proposed close to South Australian cultural site

    There are plans for the site to be turned into a shopping hub after a developer from Victoria looks to buy the land

    Developer Troon Group has entered negotiations with the Indigenous Land and Sea Corporation (ILSC) to purchase the southern portion of the 707 Lot along Marion Road at Bedford Park in South Australia, reports the Eastern Courier Messenger.

    The site would encompass a Bunnings store, two fast food chains and hundreds of car parks.

    Bunnings regional operations manager Jessica Hitchin confirmed the company is considering the site. She told the Eastern Courier Messenger:

    We regularly review opportunities to improve our existing store network, but have no firm plans in place at this stage.

    The Troon Group also said no decision had been made on the development.

    However this has not stopped residents pushing back against the shopping hub proposal. Local resident Carolyn told the Eastern Courier Messenger that the site's cultural significance should be given first priority.

    Warriparinga is an important sacred site for the Kaurna people. The current proposal surrounds the Elders Village with businesses that operate until late at night, increasing noise and light pollution, and will not be the peaceful environment that was envisaged in the original plans.
    I am hoping the new [state] government can do better and quickly provide the means for a better quality of life for the Elders at Warriparinga.

    In June 2021, the-then Marshall Government announced a $10 million village next to the Warriparinga Wetlands that would create a purpose-built village for Aboriginal Elders living in Adelaide. At the announcement, former Premier and Aboriginal Affairs and Reconciliation Minister Steven Marshall said:

    ...Empowering Aboriginal South Australians by supporting them into home ownership, ensuring they have access to safe and secure housing and giving them a greater voice in determining their housing future is all crucial to helping them reach their housing aspirations.

    The 4.3ha vacant site next to the culturally significant Warriparinga Wetlands went on the market back in 2020.

    In documents supplied to The Messenger, the Kaurna Yerta Aboriginal Corporation (KYAC) have been working with the ILSC on a strategy for the land since 2013. An ILSC spokesman told The Adelaide Advertiser:

    ILSC purchased the land some years ago with an ultimate intent to benefit the Kaurna people of Adelaide.
    In 2019-20, the Kaurna Yerta Aboriginal Corporation, Kaurna's native title body, applied for authority under the Aboriginal Heritage Act 1988 to allow the sale and development of the Lot 707 and to specifically construct an Aboriginal Elders' Village on part of the land, and to provide an income stream for Kaurna people from the lease of buildings on the land.
    Most submissions received from Aboriginal people supported the sale and development of the land.
  • Sources: Eastern Courier Messenger and The Adelaide Advertiser
  • bigbox

    UK update

    Kingfisher adds 3D and VR planning tools

    The home improvement group is partnering with 3D Cloud[tm] by Marxent to roll out new 3D visualisation, planning, and design technology

    Kingfisher's latest initiative includes 3D and virtual reality visualisation, planning and design tools across a number of its banner stores. They offer what tech partner Marxent said is "a superior hybrid planning experience" that flows seamlessly between in-store colleague-led design systems and ecommerce.

    Kingfisher's B&Q and Brico Depot Romania stores have already launched the 3D room planning system in the UK, Republic of Ireland and Romania. B&Q UK also has a line-up of intuitive, mobile-first 3D product configurators for fireplaces and the Kingfisher-exclusive Atomia and Alara product lines.

    Using the Kingfisher 3D planning and design tools, shoppers are able to explore, design, visualise and checkout in a single app. Simple enough for consumers and sophisticated enough for experienced kitchen designers, even novices can draw a custom room layout, drag and drop products directly into the space, and customise finishes. More complex design features are available for experienced designers.

    The result is a realistic picture of any kitchen, bathroom, or storage project in both 2D and 3D. Finished designs or proejcts can be exported to HD renders or 360 panoramas for an immersive virtual reality experience. For those shopping from home, items can be added from the finished 3D scene directly to their e-commerce basket.

    Customers can book an in-store planning appointment, sharing measurements, budget, style preferences, and designs and collaborate on final project details.

    The suite of tools also offers the retailer localised to specific banners, markets and product lines, as well as personalisation and customisation options. It comes with auto room scanning and offers a drag-and-drop photo feature, millimetre perfect precision and an add to basket option for easy online check out.

    JJ Van Oosten, Kingfisher's chief digital and technology officer, said:

    At Kingfisher, we're focused on offering the best experience for our customers, offering greater convenience, choice and speed as part of our Powered by Kingfisher strategy.
    We chose 3D Cloud by Marxent because they have the tech, team, and experience to implement 3D experiences at enterprise scale. The 3D room planner tool in stores combines leading-edge visualisation and configuration technology and provides customers with a seamless and personalised shopping experience.
    In partnering with Marxent, it has enabled us to focus on our mobile first approach, with tools to allow our customers to design from pictures and room scanning. 3D technology is just one of the initiatives we have launched to ensure Kingfisher is at the forefront of innovation in retail.


    JJ Van Oosten at Retail Connected - HNN Flash #44, May 2021

    Sources: Internet Retailing and 3D Cloud[tm] by Marxent


    Big box update

    Investigation by federal Privacy Commissioner

    The probe into Bunnings and Kmart follows a report from consumer advocacy group CHOICE about the retailers' use of facial recognition technology

    The Office of the Australian Information Commissioner (OAIC) announced it will launch an investigation into the personal information handling practices of Bunnings and Kmart in how they use the facial recognition technology in store, and whether it is consistent with Australian privacy law.

    The retailers say facial recognition is being used in some stores to protect shoppers and staff, combat anti-social behaviour and reduce theft.

    Bunnings chief operating officer Simon McDowell said it is aware of the OAIC investigations into the use of facial recognition technology in its stores and would co-operate with them. He told

    As we've previously explained, this technology is used solely to help keep team and customers safe and prevent unlawful activity in our stores and we have strict controls around its use.

    In a previous email exchange with Electronic Frontiers Australia (EFA) chair Justin Warren, published on the EFA's website, the Bunnings Privacy Team said the company is "comfortable" that its use of facial recognition is "undertaken in accordance with the requirements of the Privacy Act".

    Bunnings explained how facial recognition software attached to CCTV systems is used to enforce bans on customers. It said only the facial images of targets are stored by the system to make sure that, if a banned individual walks into a store, the CCTV cameras can immediately notify staff or security. It said:

    The facial recognition technology checks for matches against these uploaded images, and where there isn't a match then no action occurs. No data relating to anyone other than these uploaded images are stored in the system.

    The Australian Information Commissioner and Privacy Commissioner Angelene Falk said before she announced the investigation:

    It is important that all retail stores, when they are deciding whether to use technology to collect personal information, consider the impact on privacy, the community's expectations and the need to comply with privacy law.
    The Privacy Act generally requires retailers to only collect sensitive biometric information if it's reasonably necessary for their functions or activities, and where they have clear consent.
    While deterring theft and creating a safe environment are important goals, using high privacy impact technologies in stores carries significant privacy risks. Retailers need to be able to demonstrate that it is a proportionate response to collect the facial templates of all of their customers coming into their stores for this purpose.

    The OAIC is the independent national regulator for privacy, and said no further comment would be made while the probe continued.

    The Commissioner is authorised to investigate an act or practice which may be an interference with the privacy of an individual or a breach of the Australian Privacy Principles under the Privacy Act 1988.


    CHOICE submitted a formal complaint to the OAIC, detailing how Bunnings, Kmart and The Good Guys may have breached the Australian Privacy Act through their use of facial recognition.

    Specifically, it said the retailers have broken Australian Privacy Principles 1, 3, and 5 which relate to the companies' privacy policies, the reasonable collection of sensitive personal information, and obtaining consent from people whose faceprints were gathered. In the complaint, CHOICE senior campaigns and policy advisor, Amy Pereira said:

    CHOICE is concerned that the retailers' practices related to their use of facial recognition technology pose significant risks to individuals.
    The social and economic risks include invasion of privacy, misidentification, discrimination, profiling and exclusion, as well as vulnerability to cybercrime through data breaches and identity theft.

    Businesses are generally allowed to use CCTV to photograph customers on their premises, but CHOICE raised concerns that privacy law has not kept pace with advances in facial recognition technology.

    While an investigation is underway regarding Bunnings and Kmart, the OAIC said "preliminary inquiries" have commenced with The Good Guys after the retailer said it will "pause the trial of the upgraded security system with the optional facial recognition technology".


    Journalists and publishers make mistakes. Often those mistakes arise not out of a pure drive for success or recognition, but because they believe passionately in something.

    It's that passion which might have caused Choice to commit what HNN would regard as a real error in covering the issue of facial recognition in retail environments. What is at issue is not actually the article that Choice published, calling out a range of retailers, including big-box hardware retailer Bunnings, for potential mis-use of FR. Instead, it has to do with the way in which that article was promoted to the press.

    In brief, the promotional media release provided information and opinion that was not present in the original article. As that information and opinion was largely negative in nature, this method of dissemination left Bunnings with less recourse to answer and address the insinuations and allegations made.

    It's bewildering that if Choice, a publisher, had important statements to make and facts to declare, they would not put this in an article, and instead use a media release to convey the message.

    The article

    That original article made a number of very good points. More than anything it did the research to show that Australian consumers have been largely unaware they are subjected to FR when shopping. While retailers (including Bunnings) did disclose that information, it was not done in a clear and thorough way. Information could be obtained by browsing the websites of the various retailers. In Bunnings' case, there was also a physical sign present at the entrance of stores using the technology. However, these signs and small and not prominent, according to Choice.

    A particular focus of the article was the use by retailers of what is know as "faceprint" technology, which essentially converts a facial image into a unique identifying set of numbers, making future recognition simpler and more reliable.

    As part of the article, Choice quoted Mark Andrejevic, professor of media studies at Monash University and a member of the ARC Centre of Excellence for Automated Decision-Making and Society, who stated:

    I think the other set of concerns is we don't have a clear set of regulations or guidelines on the appropriate use of the technology. That leaves it pretty wide open. Stores may be using it for the purposes of security now, but down the road, they may also include terms of use that would say that they can use it for marketing purposes.

    Choice did suggest that retailers such as Bunnings might have been in breach of the Privacy Act. Choice quotes its consumer data advocate, Kate Bower, as saying:

    We also believe that these retail businesses are disproportionate in their over collection of this information, which means that they may be in breach of the Privacy Act. We intend to refer them to the Information Commissioner on that basis.

    That's all well and good. Choice is doing a public service here by alerting both the public and governmental agencies to a developing problem with FR technology in large stores. Great.

    Reading the article alone, the general impression most readers might have had was that the principal "sin" of Bunnings was that it definitely needed bigger signs in front of its affected stores. A deeper reading is that the industry would benefit from the establishment of clear standards, and some kind of audit process, to ensure that this information was not abused in the future.

    It's very difficult, however, to condemn a retailer operating in what Choice admits, through quotes from experts, is not a very well-defined legal area, for what comes down to not guessing what form future legislation and guidelines might take.

    The press release

    The Choice media release of 15 June 2022 differed in some ways from that article. For example, where the quotes from Ms Bower in the article were somewhat guarded, the media release quotes were less so. For instance, the media release quotes Ms Bower as stating:

    The use of facial recognition by Kmart, Bunnings and The Good Guys is a completely inappropriate and unnecessary use of the technology.

    This is a little confusing as Ms Bower states elsewhere that only Bunnings responded to queries about the technologies, so it's not clear where the background research to that statement originates.

    The quote continues:

    Using facial recognition technology in this way is similar to Kmart, Bunnings or The Good Guys collecting your fingerprints or DNA every time you shop. Businesses using invasive technologies to capture their customers' sensitive biometric information is unethical and is a sure way to erode consumer trust.

    If these are such important points, why were they not included in the original article? Perhaps that's because it is something of a stretch to link gathering DNA to facial recognition. It's certainly evocative, but is supported by analysis?

    The real final point where it seems to HNN that Choice may have stepped over a line is in this statement quoted from Ms Bower:

    The technology is capturing highly personal data from customers, including infants and children.

    Bunnings has very clearly stated since the publication of the article - or, rather, media release - that it has no interest at all in using FR on minors. Presumably Bunnings would have answered that question the same way prior to publication - if the company was asked. And, again, apparently the other retailers did not provide any information. So it's simply difficult to work out to what facts Ms Bower is actually referring. Does she have an inside source? Or is it guesswork?

    If this is so important, why isn't it in the actual article? Why would you omit the important fact that FR was being used on "infants" from the article?

    It's good to be passionate about good causes, and it can be frustrating when the pubic pays insufficient attention to them. That frustration is just part of being a journalist. You just have to believe that even if an issue doesn't get the attention it deserves, it still matters, it still counts. Because the alternative is far worse.


    Bunnings uses facial recognition technology - HNN Flash #98, June 2022
  • Sources: The Guardian,, Australian Financial Review, AAP General News Wire, Australian Computer Society Information Age and Gizmodo
  • bigbox

    UK update

    Kingfisher sets stronger zero-net targets

    It has unveiled a new wave of environmental targets as part of its annual report on responsible business

    Home improvement retail group Kingfisher - owner of B&Q and Screwfix - said it is bringing forward its net zero target to 2040.

    In its 2021/22 financial year, it reduced the carbon emissions - scope one and two emissions - in its own operations by almost a quarter (24.5%).

    At the same time, 44.1% of its annual sales - or GBP5.8 billion of GBP13.2 billion sales made in the year to January 31 - were from sustainable home products - a figure that the retail group now aims to raise to 60% by 2025.

    The group said that 87.2% of the wood and paper in its products, and in all of its catalogues, are now being responsibly sourced and will be Forest Positive by 2025/26.

    Kingfisher reduced its emissions this year by moving to 100% renewable energy, investing in energy efficiency measures and starting to use alternative fuels in its delivery fleets. The group now aims to cuts its operational emissions by 37.8% by 2025/26 and to reduce its scope three emissions - from the use of its products once sold, as well as from the goods and services that it buys - by 40% per GBPmillion of its turnover by 2025/26. Thierry Garnier, chief executive of Kingfisher, said:

    We are committed to helping tackle climate change by setting targets both in the short and in the long-term. In the short term, we are on track to reduce our carbon emissions in line with global efforts to limit warming to below 1.5°C by 2025. In the long term, we are now committed to reach net zero emissions by the end of 2040.
    Helping our customers to live in more sustainable homes is another of our key priorities. We think everyone deserves a greener, healthier home - that's comfortable to live in but uses fewer resources and costs less to run. With rising energy prices, home energy efficiency has never been more important.

    Its four responsible business priorities are tackling climate change and creating forests, making greener, healthier homes affordable, tackling bad housing and becoming a more inclusive company. Mr Garnier said:

    There is more to do, but we have made good progress since last year, not only with our progress on carbon reduction but also with our work to become a more inclusive company, and our commitment to help people living in unfit housing.


    Wesfarmers' retail clean energy deal in Queensland.

    Wesfarmers' retail businesses sign onto clean energy - HNN Flash #88, April 2022

    Bunnings pledges to source 100% renewable electricity for its operations by 2025.

    Bunnings aims for 100% renewable electricity by 2025 - HNN Flash #22, November 2020
  • Source: Internet Retailing
  • bigbox

    Big box update

    Bunnings store proposal in Perth arts precinct

    The local arts community believes the unique district is at risk of being destroyed by a large development

    An area of Perth known as the Pickle District has become the latest location for a $25 million development application to build a Bunnings store, with a childcare centre, and retail and hospitality tenancies in a five-storey complex.

    The Pickle District is currently a burgeoning arts precinct, home to art galleries, design and photography studios, a boutique theatre and event spaces, all within a 300-metre radius.

    WAtoday reports the development would take up the block between Cleaver, Newcastle and Old Aberdeen streets to the border of gallery Linton and Kay and demolish the buildings that house existing businesses including Cleaver Street Co, STALA Contemporary, Voxlab, Old Habits, Gourmet Trader and 2 Brothers.

    Pickle District's Town Team spokesman and artist Jon Denaro said the development would be devastating. He told WAtoday:

    We are not opposed to a development in the area, however we want to see a development that honours the existing precinct and is geographically, and culturally valuable.
    The proposed development destroys everything we have been building, the community and the whole potential of the precinct.

    Bunnings property and store development director Andrew Marks said the proposed store would be a small warehouse and form part of a wider development which is being led by a developer.

    We're always very mindful of community feedback and as a potential tenant, we would listen to concerns raised and work closely with the developer through their continued community engagement as they progress their application.

    Developer Saracen Properties said it would bring extensive investment to West Perth and act as a catalyst for the redevelopment of the Pickle District. A report to council said:

    This development will be the first major mixed used multi-storey redevelopment within the locality.
    Taking advantage of these corner locations, the proposed development will comprise recognisable and iconic building features which reflect existing structures and operations within the Pickle District, intended to strengthen its relation with the history of the area.

    Saracen Properties said it had incorporated two spaces - a lower level community space and rooftop event space - to allow the Pickle District's Town Team to continue to operate on the site, and ensure the demolition of warehouses did not take away the area's character.

    Janet Holmes à Court is the owner and director of Holmes à Court Gallery located in the Pickle District. She also told WAtoday:

    Over the past eight years I have seen and have been a part of a growing Pickle District. It has become a totally unique, one-of-a-kind arts precinct.
    The proposed Bunnings development is slap-bang in the middle of [it] and its impact will be insurmountable.
    Not only will it erase small businesses and art galleries, but also shatter the heart of the Pickle District and future opportunities for the ongoing development of this area as a unique multi-arts destination.

    City of Vincent mayor Emma Cole said council was on the cusp of developing a precinct plan for the Pickle District.

    Wesfarmers will not land a business-as-usual Bunnings in this unique area unless they do something extremely innovative.
    Wesfarmers is a big investor in the arts and my suggestion was for them to look at adding a dedicated rooftop level for live music, art galleries and a space for existing tenants to continue their operations. This would make huge difference to how Bunnings lands in the area and adapts.

    The City of Vincent will provide a recommendation to the Joint Development Assessment Panel which will make the final decision.

  • Source: WAtoday
  • bigbox

    USA update

    The Home Depot undertaking a network refresh

    The hardware retailer is also rolling out 125,000 mobile devices to enhance store staff and customer experiences

    The Home Depot is investing in its network infrastructure that will also allow it to streamline its IT management and operations.

    The home improvement retailer is making a large-scale investment in edge technology and network as a service (NaaS) to drive enhanced customer and employee experiences across its North American stores.

    The Home Depot said it has selected Aruba ESP (Edge Services Platform), delivered via HPE (Hewlett Packard Enterprise) GreenLake for Aruba networking, because it provides a solution with agility and flexibility.

    The retailer continues to enhance the interconnected experience that blends the digital and physical worlds; one that allows customers to peruse, research, and purchase with ease, and delivers a familiar experience, regardless of whether they're in-store, online, or using the mobile app.

    Home Depot bricks-and-mortar stores continue to be the centre of the customer experience - in the first quarter of 2022, more than 50% of online orders were fulfilled through a store.

    Delivering a seamless experience to its customers and 500,000 employees is important to The Home Depot. Daniel Grider, vice-president of technology, said:

    Our goal is to enable technology to remove the friction from our customers' and associates' experiences each and every day.
    Our customers trust us to have the right tools and materials to complete their home improvement projects; having an in-store network that further supports interconnected capabilities like in-store navigation or image search allows them to get back to their projects more quickly.

    The Home Depot's technology investments and initiatives are intended to make it easier for customers to design, visualise, and buy materials for their projects. For example, maintaining strong connectivity in stores will help provide Home Depot staff the ability to deliver a great customer experience.

    The Home Depot's refreshed network should streamline IT management and operations. Solutions such as Aruba Central cloud with AIOp capabilities allow the company to proactively monitor network health and address issues before they negatively impact performance.

    The Home Depot's wireless solution includes Aruba location services via WLAN APs, which provide zero-touch determination of AP location, continuously validate and update location, and provide a set of universal coordinates that may be transposed on any building floor map or web mapping platform.


    Lowe's commitment to edge technologies - HNN Flash #98, June 2022

    Mobile devices

    The Home Depot is also beginning to roll out 125,000 new mobile devices for store staff. The devices, called hdPhones, will be in all US stores by the end of the year, so that every staff member working in-store will have a new device.

    With the latest mobile device technology in collaboration with Zebra Technologies, HPE and Aruba, The Home Depot is making it faster and more convenient for its store associates to serve customers.

    The Home Depot is the first major retailer to combine the new Zebra devices and Aruba Wi-Fi 6 across its more than 2,300 stores, it said. With the combined technologies, the new mobile devices can communicate anywhere across the entire store and into the parking lots.

    The new hdPhones will improve engagement between customers and store staff, while helping customers locate products faster, and quickly connect with experts across the store and beyond. Advanced-range barcode scanning enables staff to locate products, check pricing and inventory availability in hand or from more than 40 feet away, which is particularly helpful when serving customers and locating products in overhead storage.

    Additionally, docking with Zebra's Workstation Connect enables store associates to help customers by viewing and demoing products and specifications on larger screens. Additional capabilities include multi-device integration, more efficient app speeds, in-store texting, direct walkie talkie communication, and more. Executive vice-president and CIO, Fahim Siddiqui, said

    Our customers expect a frictionless experience, in our stores and on their mobile devices. We continue to identify ways to make it more seamless for our customers to shop wherever, whenever and however they want. The enhanced digital in-store environment allows our customers to more quickly get what they need to complete their projects with the help of a more connected associate.

    The home improvement chain first deployed handheld tech for associates in 2010. At the time, the retailer deployed 30,000 transactional/communication devices in 1,970 of its stores, providing store staff with handheld technology that combines inventory management and analytics functions, a phone, a store walkie-talkie, and label printing with POS.

  • Sources: Chain Store Age and RIS News
  • bigbox

    USA update

    Lowe's enters the metaverse

    The home improvement retailer is making more than 500 digital assets available for free to virtual and augmented reality developers

    Lowe's said it will begin helping builders of the metaverse create new possibilities. Rather than entering the metaverse with a storefront to sell virtual goods, Lowe's aims to equip developers free of charge with items from its real-world shelves to make their creations more useful and more inspiring.

    To start, Lowe's will make more than 500 3D product assets available for download for free via Lowe's Open Builder, a new hub designed to be available to all creators. They assets address key challenges of interoperability and accessibility, and are based on real products the company currently sells online and in its stores.

    As the first major home improvement retailer to enter the metaverse, a key goal would be to watch consumer behaviour to eventually capitalise on the opportunity that might exist.

    Lowe's executive vice president and chief brand and marketing officer Marisa Thalberg told CNBC in an exclusive interview the retailer decided not to choose one metaverse platform or game like Fortnite or Roblox but rather "a kind of an agnostic and kind of democratised approach".

    While other brands have found immediate ways to make money in the metaverse, even on an experimental basis, Ms Thalberg said:

    This isn't about immediately jumping in and trying to make an event or immediately commoditising it.

    Rather, she told CNBC:

    Our goal really is to take this new frontier and help people use their imaginations and help them make their virtual spaces as exciting and inspirational and enjoyable as their real world spaces. And that's the only benefit we seek to obtain at this point.

    Lowe's is also releasing a free, limited NFT* collection of boots, hardhats and other related accessories for builders on the Decentraland platform to the first 1,000 participants.

  • An NFT* (Non-Fungible Token) is a financial security consisting of digital data stored in a blockchain, a form of distributed ledger. The ownership of an NFT is recorded in the blockchain, and can be transferred by the owner, allowing NFTs to be sold and traded.
  • Seemantini Godbole, Lowe's executive vice president and chief information officer, also told CNBC exclusively the retailer is applying many of the principles it currently uses for shoppers for this metaverse project.

    What we have noticed in our current mediums like and in our stores ... people like to experiment and while they're shopping and getting inspired they like to put things together in the virtual world before they start their project.
    It's the same idea for the metaverse. That you want them to experiment, feel and understand how it's going to look before they start the project in the real world.

    Ms Godbole said many of these metaverse assets had already been created as 3D digital versions of physical products available for purchase, to help online shoppers visualise the real-life dimensions and features.

    Lowe's is already using virtual and augmented reality technology to allow shoppers to design an entire kitchen online or map their home's floor plan using their smartphone as examples. Ms Godbole said:

    There is just a huge appetite from our customers to use emerging technology [like the VR and AR tools]. We are applying some of those lessons in the metaverse.

    At the moment, Lowe's isn't offering a physical good with the purchase of a virtual one, or any link back to its website from any metaverse platforms, Ms Godbole said. But that could change.

    In the future, we could absolutely think about, how do all these different things link, and make sure that [metaverse users] are able to shop these items on Lowe's dot com or in our stores.

    Through its experimentation and focus on delivering what customers need, Lowe's believes it is uniquely positioned to leverage emerging technology to help people imagine the possibilities. Ms Godbole said:

    Over the past several years, we have infused new technologies into the planning and shopping experience and know our customers have benefitted greatly from being able to explore and test home improvement projects in the virtual world before taking the leap to implementation in their real-world homes or job sites.
    By entering the metaverse now, we can explore new opportunities to serve, enable and inspire our customers in a way no other home improvement retailer today is doing.

    Ms Thalberg acknowledged that the typical metaverse participant "skews really young" likely younger than the typical Lowe's shopper or homeowner today.

    But if you look at kids who've used platforms like Minecraft and Roblox, a lot of what they do there, is fascinatingly enough, build and design. This idea of being able to build and decorate and design and improve is kind of core to how these spaces are emerging.
    And so if we catch them young, that's great, but we see a real utility too, as we look to a huge wave of millennial new homeowners who aren't afraid of technology.

    Analysts see a big breakthrough coming for the metaverse. By 2026, a quarter of consumers will spend at least one hour per day in the metaverse, said consulting and research firm Gartner estimates. Morgan Stanley estimates the total addressable market for advertising and e-commerce opportunities could be worth USD8.3 trillion in the metaverse, with USD697 billion in home and home related spending. The firm lists walking through "home renovation plans" as an example.


    While this is the company's first step into the metaverse, Lowe's has been using emerging technology to help customers gain inspiration and more easily visualise and plan their home improvement projects for many years. This includes the beta version of an end-to-end room scanning, measurement and estimate tool called "Measure Your Space" in its iOS app.

    Lowe's launches room measurement tool - HNN Flash #71, November 2021
  • Sources: CNBC, Wikipedia, Chain Store Age and Lowe's Home Improvement
  • bigbox

    Big box update: Delivery and store network

    Bunnings Group will use Zoom2u delivery platform

    Bunnings' flood-hit Rocklea store has reopened after major repairs and Bunnings Shepparton turns five

    Zoom2u Technologies (Z2U) recently announced its partnership with Bunnings Group for the use of its delivery platform.

    The Zoom2u platform is an Australian owned delivery platform that connects users with local independent couriers in their area for fast, same-day delivery. It provides customers with a live tracking link showing the real-time location of the delivery as well as an estimated time of arrival.

    The agreement is not exclusive and follows the completion of a trial undertaken with Bunnings across select stores in Australia. Under the agreement, Bunnings is under no obligation to meet a minimum volume of spending or fee commitments.

    The finances are yet to be revealed as it is dependent on delivery volumes. In The Market Herald, Z2U founder and CEO Steve Orenstein, said:

    ...To be chosen as one of Bunnings' last mile delivery providers is a validation of the Zoom2u Platform. It has been a pleasure working closely with Bunnings over the past few months as they trialled the service.

    About Zoom2u Technologies (ASX:Z2U)

    Z2U's core service is the Zoom2u platform, which is a tech-based courier service that allows accredited drivers to make deliveries. It is an algorithm-based platform that can respond with flexibility to demand surges, and provides detailed location data for customers.

    The company does not have warehouses and does not own or lease a fleet of vehicles. Instead it has a team of over 20 tech developers tinkering with software for customers and more than 7000 drivers. Unlike Amazon, which processes deliveries from warehouses and delivery centres, Zoom2U often facilitates deliveries from brick-and-mortar stores to consumers.

    Mr Orenstein said this model gives smaller players an advantage, as businesses can "leverage their retail footprint" instead of working through the Amazon ecosystem. Stores can operate as "micro-warehouses", he said.

    That allows them to be really close to the consumer, and to be able to do an even faster delivery because the delivery system is really short.

    The platform passed 2.7 million completed deliveries in late March, as the market shifts towards customers with larger volume requirements.

    The company also has the Locate2U platform, a SaaS-based tracking delivery service that allows clients to manage their logistics in-house. It is essentially a white label product for businesses to manage their own delivery fleets. Locate2U's customers Amart Furniture, Bing Lee, Super Pharmacy, and waste management firm Cleanaway.

    Z2U has been operating for eight years after it was founded in 2014, with early backing from Perennial Value Management, Gandel's Invest (the investment vehicle for the billionaire Gandel family) and Deals Direct co-founder Mike Rosenbaum.

    Its client base now includes names such as Australia Post, Best & Less, Couriers Please and JayCar.

    By December 2021, Z2U also completed the acquisition of the Local Delivery Shopify App in an $880,000 all-cash deal. Integrating the Local Delivery app gives Zoom2u direct access to another 570 customers across more than 45 countries.

    After its ASX initial public offering (IPO) in September 2021, the business raised $8 million to fund its future growth.

    For more information, visit the Zoom2u home page here:

    Zoom2u delivery platform

    Rocklea store

    Bunnings' Rocklea store has reopened with a revamped cafe and kitchen design centre after being impacted by the floods. It had to seek specialist advice to ensure the warehouse was structurally and hygienically safe to reopen, according to The Courier-Mail.

    However the hardware retailer said it still had not decided what to do with its Oxley store, although redevelopment options in the coming six to 12 months could include a flood-resilient design.

    The revamped Rocklea Bunnings now includes energy efficient LED lighting throughout, a children's playground, new bathroom displays and new format Trade Desk for tradies.

    Bunnings Shepparton

    Bunnings Shepparton celebrated its fifth birthday on the Queen's Birthday long weekend, marking five years of trading. Bunnings Shepparton complex manager Trish Fedley said staff at the store were excited to be celebrating the fifth birthday. She told Shepparton News:

    We love being part of the Shepparton community and it's a great milestone that myself and the team are really proud of.
    Helping customers with their DIY and project needs, and supporting our local community groups through the sausage sizzle and other hands-on activities, has been the highlight for us.
  • Sources: The Market Herald, Stockhead, Inside Retail, Rask Media, The Courier-Mail and Shepparton News
  • bigbox

    Big box update: Privacy concerns and new-gen customers

    Bunnings uses facial recognition technology

    During his keynote speech at the 8th Global DIY-Summit Bunnings Group managing director Michael Schneider spoke about strategies to attract Generation Z

    An investigation by consumer group CHOICE has found that Bunnings, Kmart and The Good Guys are analysing images of people's faces from video camera - CCTV - footage to create profiles based on customers' unique biometric information such as facial features (known as a "faceprint"). Facial recognition technology captures and stores this information.

    CHOICE consumer data advocate, Kate Bower said most customers aren't aware how their face is being captured and used which is raising privacy concerns.

    In CHOICE magazine, Ms Bower said the Privacy Act considers biometric information to be sensitive data, and that a higher standard is applied to it than to other types of personal information.

    It requires that your collection of that information has to be suitable for the business purpose that you're collecting it for, and that it can't be disproportionate to the harms involved.
    We also believe that these retail businesses are disproportionate in their over collection of this information, which means that they may be in breach of the Privacy Act. We intend to refer them to the Information Commissioner on that basis.

    Irrespective of whether the retailers are in breach of the Act or not, Ms Bower believes that clearer and stronger regulations are needed around customer consent and how retailers obtain and use facial recognition data.

    According to CHOICE, Kmart and Bunnings have small signs on the stores where facial recognition technology is used. Both the Bunnings and Kmart privacy policies state the technology is for "loss prevention or store safety purposes". Ms Bower said:

    The use of facial recognition by Bunnings, Kmart and The Good Guys is a completely inappropriate and unnecessary use of the technology.
    Discreet signage and online privacy policies are not nearly enough to adequately inform shoppers that this controversial technology is in use. The technology is capturing highly personal data from customers, including infants and children.

    Simon McDowell, Bunnings' chief operating officer, told CHOICE that facial recognition is one of several measures the retailer has in place to prevent theft and anti-social behaviour. He said:

    At selected stores our CCTV systems utilise facial recognition technology, which is used to help identify persons of interest who have previously been involved in incidents of concern in our stores. This technology is an important measure that helps us to maintain a safe and secure environment for our team and customers.
    We let customers know about our use of CCTV and facial recognition technology through signage at our store entrances and also in our privacy policy, which is available on our website.
    It's really important to us that we do everything we can to discourage poor behaviour in our stores, and we believe this technology is an important measure that helps us to maintain a safe and secure environment for our team and customers.

    Businesses are generally allowed to use CCTV to photograph customers on their premises, but CHOICE points out that privacy law has not kept pace with advances in facial recognition technology. According to Dennis B Desmond, lecturer in Cyberintelligence and Cybercrime Investigations at the University of the Sunshine Coast (QLD) wrote in The Conversation:

    Current Australian privacy laws require retailers to disclose what data are being collected, retained and protected, as well as how it might be used outside of a loss prevention model.

    The investigation

    CHOICE said it asked 25 leading Australian retailers whether they were using facial recognition technology and examined their privacy policies. Based on that investigation, it said Bunnings, Kmart and The Good Guys appeared to be the only retailers among that group who were using the technology.

    Between March and April 2022, CHOICE canvassed more than 1000 Australians in a survey to gauge consumer awareness of facial recognition technology.

    CHOICE staff members also visited some of these stores in person as part of the investigation. Ms Bower says the Kmart and Bunnings stores they visited had physical signs at the store entrances informing customers about the use of the technology, but the signs were small, inconspicuous and would have been missed by most shoppers.

    CHOICE said most customers are not aware some retailers are using facial recognition technology. More than three in four respondents (76%) said they didn't know retailers were using facial recognition.

    This lack of awareness doesn't mean people aren't concerned, according to CHOICE. Most survey respondents (83%) say retail stores should be required to inform customers about the use of facial recognition before they enter the store, and 78% expressed concern about the secure storage of faceprint data. Nearly two thirds of respondents (65%) are concerned about stores using the technology to create profiles of customers that could cause them harm.

    As the statement from Bunnings indicates, most privacy policies can be found online. However Ms Bower said:

    Most of these privacy policies you have to search for online, and they're often not easy to find. But because we're talking about in-person retail shops, it's likely that no one is reading a privacy policy before they go into a store.

    Privacy Act

    CHOICE said it has notified the OAIC (Office of the Australian Information Commissioner) of its findings and asked it to determine whether the use of the technology is consistent with the Privacy Act. Ms Bower said:

    CHOICE is concerned that Australian businesses are using facial recognition technology on consumers before Australians have had their say on its use in our community.

    A five-year review of the Privacy Act is currently being conducted by the Attorney General. Ms Bower said it is an opportunity to strengthen measures around the capture and use of consumer data, including biometric data.

    CHOICE is also calling on the federal government to create a guide to protect consumers who don't want their "faceprint" on file.

    New generation customers

    In The Australian, Bunnings MD Michael Schneider said Bunnings is increasingly reaching out to social media influencers and bloggers, building its YouTube presence and developing apps to help younger people better visualise their living spaces.

    Speaking at the Global DIY Summit in Copenhagen, Denmark, Mr Schneider focused much of his keynote address on the challenges and opportunities of Gen Z and what changes to the business were being made to appeal to this key demographic. He said:

    Just as we got our collective minds around millennials, along came Generation Z. In the Asia-Pacific region, they make up around 20% of the population and are reaching adulthood at a moment of reckoning for the environment, not to mention when home ownership is harder than ever to attain - and having just spent some of their most formative years in many and varied forms of lockdown.
    We believe Gen Z have defined attitudes and preferences that will require a reimagining of the DIY shopping experience. Today, they are infrequent purchasers of DIY products, relative to the average DIYer. And whilst that's probably not too surprising given most still live at home, it means there are fantastic opportunities to connect and engage and inspire them around all things DIY.

    Mr Schneider told the conference that he believed younger Australians were still focused on their future homes despite the declining home ownership rates of young Australians.

    I say this because our research shows they are absolutely thinking about their future homes and, despite affordability challenges, they're optimistic they will own a home one day.
    Their affinity with technology means they are smart home enthusiasts - more than two-thirds are interested in installing smart home tech in the future and similarly Gen Z are really interested in learning more about interior design and home styling.

    Mr Schneider said that unsurprisingly, Gen Z turned to online sources for DIY information and inspiration, and this was a space Bunnings would increasingly play in. He said Bunnings would join with social media influencers, create YouTube videos to help Gen Z discover the Bunnings brand and be inspired about home projects.

    They want to source their DIY inspiration and discover products much in the same way as they curate their social media feeds and use other digital services. For Bunnings. that's meant doing things a bit differently, seeking out social influencers and brands on social media, and thinking about apps to help visualise a space online, blogs and YouTube videos.

    This was shaping how Bunnings communicated with Gen Z on digital platforms, he added. He said Bunnings was working more with social influencers too, recognising the important part these people played in Gen Z making their own retail purchasing decisions.

    We're working extensively with social influencers to bring DIY inspiration to life in a relevant and relatable way. We started working with influencers a few years ago and today we have an extensive program.

    Bunnings has been developing an online community called Bunnings Workshop that provided ideas and inspiration customers need to start a new project. This was being embraced by younger consumers, Mr Schneider said.

    Pleasingly, our membership base has more than doubled in the past two years, and 35 per cent of the Workshop audience are Gen Z or Gen Y, and we have big plans to expand Workshop, including exploring community engagement opportunities such as promoting local community projects and connecting groups with volunteers - to help Gen Z fulfil their desire for purpose.


    Bunnings' Workshop went live in 2016.

    Bunnings goes social with Workshop website - HI News 2.16 - August 2016

    Bunnings is marketing towards Millennials with its "Make It Yours" video series.

    Bunnings reaches out to Gen M with "Make It Yours" - HNN Flash #11, December 2019

    UK DIY retailer Wickes said it launched the home improvement industry's first campaign on TikTok.

    DIY campaign stars TikTok influencers - HNN Flash #30, January 2021

    About the Global DIY-Summit

    Mr Schneider's keynote speech at the Global DIY-Summit in Copenhagen, Denmark, was centred on the theme: "Always Evolving... Markets, Offers and People". It was held from 8 to 10 June 2022.

    According to the event's in-app voting tool, over 31% of visitors were retailers, approximately 55% were manufacturers while the remaining delegates were consultants, industry associations and education providers.

    Attendees were given the opportunity to attend a Store Tour of Copenhagen, visiting a range of home improvement retailers, including one store pioneering sustainability through re-furbished building materials.

    In addition to presentations, three main workshops focused on driving high productivity in business, remaining relevant in times of disruption, and driving incremental sales on Amazon.

    The next Global DIY-Summit will be held in Berlin, Germany, from 14 to 16 June 2023.

  • Sources: CHOICE, The Guardian Australia, ABC News, The Conversation and DIY Week
  • bigbox

    USA update

    Home Depot and Adobe partner on customer personalisation

    Lowe's Companies is bolstering its omnichannel approach using Dell Technologies

    The Home Depot is deploying the Adobe customer data platform to get a deeper view of customer journeys and to enhance the omnichannel experience. The data platform is part of Adobe's Experience platform.

    The technology will allow the home improvement retailer to deliver personalised campaigns within 24 hours, which previously took seven to 10 days to deliver.

    The effort is an expansion of Adobe's continuing partnership with The Home Depot. According to a company press release:

    With so many touchpoints, the Adobe partnership will provide comprehensive insights into the customer journey. This will enable The Home Depot to optimise experiences across channels while refining marketing investments. This marks the next phase of a partnership that began with digital tools including web analytics and A/B testing, as well as creative cloud applications to design and deliver new online services and experiences.

    Melanie Babcock, vice president of integrated media at The Home Depot, said in the release:

    The Home Depot made early investments in providing omnichannel shopping experiences, and these digital and physical assets continue to guide our strategic priorities.
    Our expanded partnership with Adobe will enable us to enhance the customer experience even further, driving personalisation at scale and further optimising The Home Depot experience across online and in-store.

    Anjul Bhambhri, senior vice president, Adobe Experience Cloud, said in a statement:

    With Adobe Experience Platform, The Home Depot can align teams around a single view of the customer, with strict governance and activation capabilities that will make experiences even more connected and relevant.


    Home Depot tech focuses on customer experience - HNN Flash #92, April 2022

    Lowe's and Dell

    John Dabek senior director of infrastructure at Lowe's and Alison Biers, director of global marketing for edge solutions at Dell Technologies, recently spoke with industry analysts Dave Vellante and Lisa Martin at the recent Dell Technologies World event. They addressed Lowe's commitment to edge technologies as a key to maintaining its market positioning. Mr Dabek said:

    It's the edge, and the edge has become very, very important for us, because that's where we want to put all of our technologies in the store, closer to the store.

    The extension of compute and storage capabilities to the edge has become imperative for companies to stay competitive, according to Ms Biers. This notion is especially important in a field like retail, where the margins are slim and customers can be fickle.

    Companies like Lowe's have to balance the satiation of perceptive buyers looking for quality and convenience with a complex business model in a changing landscape. Dell's VxRail has been that answer for Lowe's. Mr Dabek explains:

    When you talk about modernising at a fast pace, the first 600 stores that we did with VxRail, we did in three months with the help of Dell. The main goal was zero disruptions in the store. Now we're talking about 100,000+ square-foot stores, so big stores, and we have a very short window.

    In addition, the pandemic exponentially increased the value of Lowe's contractor-facing operations. To maintain pace and create convenience there, the company leaned on edge yet again. Mr Dabek said:

    We have 140,000 mobile devices deployed in our stores for our employees that can do everything from finding merchandise, taking and receiving calls. They can take the device and do a checkout instead of you having to come into the store and then go out again.

    Here's the complete video interview, part of SiliconANGLE's and theCUBE's coverage of the Dell Technologies World event:

    As pandemic fuses digital and in store retail channels Lowe's taps Dell to stay ahead
  • Sources: Retail Customer Experience and SiliconANGLE
  • bigbox

    Bunnings Strategy Day 2022

    Bunnings plans trade revenue growth of $5bn

    The Bunnings part of the Wesfarmers Strategy Day saw the retailer launch a new strategy, which includes growth of its trade business, and evolution of its DIY business from supplier of goods to partner in transformation. Tool Kit Depot is to launch additional 60 stores.

    Wesfarmers held its annual Strategy Day on Thursday, 2 June 2022. HNN will be covering the Bunnings aspects of this in more depth in our upcoming edition of HI News. However, we do want to provide a summary of what seem the most important points delivered by Bunnings managing director Mike Schneider. Some of these may have an immediate impact from a strategic and operational viewpoint for hardware retailers and suppliers.

    Strategy Days tend to vary widely in terms of their importance. The most significant ones were those that occurred from 2010 to 2012, when Bunnings outlined its strategy to overcome the challenge from Woolworths' failed Masters Home Improvement big-box retailer, followed by the 2017 and 2018 Strategy Days which dealt with the decline of Bunnings UK & Ireland (BUKI).

    While the 2022 Strategy Day was not as significant as those, it is the most significant since 2018, as it highlights a shift in strategy for Australia's only big-box hardware retailer. That was outlined - to some extent - by Mr Schneider in his introductory remarks to the Strategy Day presentation:

    We've achieved transformative acceleration of our capabilities, not only in our technology, but across our network design and commercial offer. But a bit like our tagline, this is just the beginning for our next stages of evolution and growth.

    Unfortunately, we have to report that many of these changes will have a direct and significant negative impact on smaller independent hardware retailers over the next year to two years - in other words, it's more immediate than medium-term.

    HNN would highlight the following points as being the most significant.

    Commercial/Trade markets

    It's no secret that Bunnings has been expanding its trade business over the past four years. When the Australian Competition & Consumer Commission (ACCC) gave the go-ahead for Mitre 10 to merge with the Danks-derived Home Timber & Hardware Group (HTH) to form Metcash's Independent Hardware Group (IHG), HNN commented that the end result would be more competition in trade from Bunnings - and that is pretty much what has happened.

    However previously it was not possible to quantify the scale of Bunnings' ambition in that area. Now it is, as Mr Schneider outlined this in response to a question from veteran analyst Shaun Cousins of UBS.

    Yeah, well our aspiration in time, Shaun, is to get the two businesses [DIY and Trade/Commercial] roughly 50/50, which it is in New Zealand, and has been for a long time. But that's not at the expense of consumer growth. So commercial is slowly tracking towards 40% at the moment. But that's because consumer continues to grow well for us. So the commercial [team at Bunnings] have got a big job in front of them.

    Bunnings total revenue for FY2021/22 H1 was $9.2 billion, and revenue for FY2020/21 H2 was $7.8 billion, so the total for the 12 months to December 2021 was $17.0 billion. If we consider Bunnings' trade revenue is around 38% for that period, this means the trade/DIY split is $6.5 billion to $11.5 billion, a difference of $5 billion.

    What Mr Schneider is talking about here is not an even redistribution of that $17 billion so that trade increases by $2 billion to $8.5 billion. Instead, he expects trade to reach $11.5 billion as well - an increase of $5 billion. Added to that, as Mr Schneider points out, overall revenue continues to grow, as that number will be closer to an increase of $5.5 billion.

    Obviously, that is not going to be achievable in the short term, but even if it is a five-year goal, that means extracting over $1.1 billion a year from, essentially, the market currently held by independent hardware retailers. To put that in perspective, that's close to half the annual revenue of Metcash's Independent Hardware Group (IHG) prior to the acquisition of Total Tools Holdings.

    In case there is any doubt that Bunnings intends to compete in the same market as independent retailers, the retailer was very explicit about the profile of its intended market. Mr Schneider remarked:

    But [trade] has got to grow hard in a very profitable way. So we're not taking our eye off the types of customers we're serving and chasing high volume, low margin, that's got risk all over it for everyone. So we're sticking with the sort of small to medium builders and trades and really deepening those relationships, which is setting us up really well.

    This was backed up by Bunnings' chief financial officer, Rachael McVitty (she has been in the role since September 2021, coming over from Blackwoods) in response to an analyst's question.

    We've got a pretty diversified portfolio and mainly focused on the small- to mid-tier residential builders. So credit limits are quite small, and there's no single exposure to any one customer or portfolio of customers. So you know, average size is less than $20,000, to give you an idea, and average credit terms are 30 days. So we have a pretty good read pretty quickly when payment is not made but really strong relationships with our customers. So we've also got really deep understanding of their credit profile as well.

    It's interesting to place this in context with the remarks by the CEO of IHG, Annette Welsh, at the Metcash Strategy Day in 2021, when she said her goal was to have IHG surpass Bunnings in trade revenue.

    One key part of this ambition in trade seems to be Bunnings' truss manufacturing. As Mr Schneider said:

    We're optimising our capabilities, brands and assets to partner across more phases of the build from frame to fix through to finishing. There are significant opportunities for us to participate more strongly in the frame to fix element of the build. We're addressing these through stronger project management capabilities, and an expanded frame and truss network. Our frame and truss sites in Australia supply high quality roof trusses, floor trusses and wall frames.

    This also extends to providing specific builder services:

    We're also introducing new supply and install services including joinery, windows and flooring to save our builders time.

    Tool Kit Depot

    Fairly evidently, the Bunnings expansion into power tool specialist retail with Tool Kit Depot (TKD) will be a part of this planned growth. Mr Schneider provided a thumbnail sketch of projected growth in this area as well. In response to a question by analyst Craig Woolford of MST Marquee he said:

    Tool Kit Depot's aspiration is to get to sort of 70 odd stores over the next few years.

    He provided something of a timeline as well:

    We also plan to expand our Tool Kit Depot store network beyond Western and South Australia in the new financial year, moving into regions where we see strong underserved demand for professional tools.

    Mr Schneider also said:

    Tool Kit Depot is now established in Western Australia with four stores and a refresh of all stores in South Australia is almost complete. And our network planning for national coverage is shaping up really well.

    It seems likely from these statements that there will be an expansion in TKD outlets sometime between July and September in 2022.

    Category growth

    Identifying key areas of category growth from Strategy Day remarks is not always easy. These are narratively scattered, so it is best to start by listing them.

    Mr Schneider on opportunities:

    We've identified a range of opportunities to optimise and expand our existing offer to cater to strong customer interest, including smart security, outdoor furniture and cleaning with a renewed focus on healthy homes.

    Mr Schneider on growth:

    We're focused on growth across all of our product categories, with some specific examples including expanding our room furniture solutions to help our customers organise their homes, strengthening our garden and garden decor offer by extending and localising our plant ranges and improving service in our nurseries.

    Mr Schneider on kitchen and bathroom:

    Further, in kitchen and bathroom, we're increasing our range of customisable and modular products and introducing more complementary accessories.

    Further to that, Mr Schneider on in-home services:

    We're seeing strong interest for in-home services, where Bunnings designs, assembles and installs solutions for our customers. For the first time, we're introducing design consultants to help our customers design their dream bathrooms.

    Mr Schneider on pets:

    We're introducing new pet categories from collars, toys, bowls and beds through to smart pet products.

    Mr Schneider on caravan/RV:

    We're lining up a new range of products to help caravan and RV owners maintain their home on wheels.

    He also mentioned the introduction of appliance sales to some "selected stores". So the list would be, roughly:

  • Garden/plants
  • Room furnishings, including kitchen and bathrooms, but expanding beyond that (home offices, etc.)
  • Indoor and outdoor furniture
  • Expanding existing kitchen design services to include bathroom design
  • Pets
  • Caravans and RVs
  • Smart security (CCTV, Bluetooth door locks)
  • Cleaning/home wellness
  • When we see these categories in a list, it becomes evident that what is really going on here is a shift from selling individual items/products, to selling systems. It's less about "do you want to buy a table?", or "how do I build a bookcase?", and more about "how will I furnish this room?"

    It's a move to an experiential economy, where the "lived in" experience of the house has changed. That fits in with several comments Mr Schneider made about the shift in the way families value their homes.

    The last two years have seen a considerable shift in the way that DIY customers see their homes: as a safe sanctuary, a home office and classroom, as well as an asset that underpins their financial security.

    This translates into the way Bunnings presents its "offer" to customers:

    We're focused on creating more ways to inspire and support our customers to build, improve and maintain whether it's catering to our customers love of DIY, property investors or the growing demand for services and installation.

    That cycle of "build, improve and maintain" is mentioned several times throughout the Strategy Day briefing. It might be that Bunnings is transitioning from being a "supplier" for home projects, to more of a home "partner". The goal is to take that total budget for home development, and work out how to get more of that budget spent at Bunnings. If anything, it seems to be leaning towards the approach taken by Kingfisher's brands B&Q and Castorama.

    As part of this change Bunnings is also stepping up its surveillance of supplier brands as well:

    With customers well and truly back exploring our stores, we've increased the frequency of our range reviews to present the very best of the latest products.

    Own/exclusive brands

    Mr Schneider introduced the issue of own and exclusive brands by saying:

    Our own-brand range continues to grow and has never been stronger, with names such as All Set and Garden Basics giving customers incredible prices and names such as Full Boar, Matador and Mimosa providing outstanding value.

    In response to a question by an analyst regarding how much of revenue was down to own brands, he expanded on this:

    It's a hard number to call, it's sort of around the 30% mark. But there's some swings and roundabouts in that because we've got exclusive brands like Ozito and Trojan that are actually provided to us through our supplier network. But the brand is exclusive to us or it's a brand that we own. So in the case of Trojan it is owned by Bunnings, it's licensed out to a different organisation [which does] an incredible job of innovating and doing all those sorts of things. So it's a little bit blurry at the margins, but no significant expansion, you know, purely based on the fact that we don't think we've got the sourcing sort of capabilities that many of our suppliers do.

    One area where Bunnings is quite different from, for example, US-based home improvement big-box retailers is that it participates less in the development of new products. While the Australian company may have input into product development, both Lowe's and The Home Depot at the very least partner up with some big suppliers to specify what they think the market needs.

    It's an interesting selection of own brands to choose to nominate, as well. Mimosa began as simple outdoor furniture brand, but has morphed into providing outdoor fireplaces and gazebos as well. Matador is the Bunnings outdoor barbecue range. It's rumoured to be a response to US barbecue maker Weber declining to supply Bunnings over a dispute regarding what Weber took to be "grey market" sales.

    Full Boar is the most recent Bunnings own brand, with the trademark registered in June 2020. This is mostly a line of construction/demolition equipment. It's an interesting move, because usually equipment in this range is purchased from established brands, due to the high level of stress it undergoes.

    One possibility is that as it features petrol-powered compactors and spray washers, it's aimed at the market that brands such as Milwaukee are abandoning as they move to cordless battery-powered tools. Additionally, of course, it's also a brand being sold in TKD, providing TKD with another unique point of difference from its competitors.

    Store network changes

    This is one of the more difficult areas to fully interpret. For example, Mr Schneider introduced the topic of store growth by saying:

    We've always had a variety of different but complementary store formats and sites across our network, reflecting a disciplined approach to investment and the evolving needs of the communities we serve... If we consider the next five years, we see lots of runway ahead for network growth and upgrading existing sites. We're forecasting 15 to 20 expansions, upgrades or new Bunnings warehouses and small formats per year.

    An important element of this is that Bunnings is also changing how its stores manage space.

    We're also optimising space in our stores, reviewing how we display our products to maximise ease of shop and inventory productivity. This is showing up in new, easier to shop layout through our power tools, new-look paint shop concepts, and the improvements to in-aisle product information for our barbecues, and co-locating accessories.

    When asked by Mr Woolford of MST if he could provide a percentage estimate of growth in retail floor area, he replied:

    It's about 10 to 11% over the next five years. And the way we sort of think about that is using space more efficiently.

    Mr Schneider went on to explain why space utilisation was so important to Mr Woolford.

    As we make more investments into space management and planning, and as our online offer gets stronger, we can actually scale up and down the sort of assortment that we would have in a store. So, think about a small format store. For a while there, we'd have patted ourselves on the back that we had a full Bunnings range, you know, 95 [to] 96% of the full range crammed in a small store.
    With our online offering, we might scale that back to 70% of the range, but actually a wider availability of that product in store so that the customer experience on the things that really matter are being serviced. And then we've got online and our largest stores to sort of fill out the rest of the range.

    Finally, Mr Schneider was very clear about the number of stores this would involve:

    So that that guidance, I think we've probably given over time of that sort of five to seven net new stores here. That's about that's about right. And obviously there's a couple of other things in there with frame and truss sites and fulfilment centres.

    In fact, though, from 2011 to 2020, the median value for new warehouse stores alone has been nine. So it's possible that Bunnings is slowing its development of new stores. That could be an indication that there is more concern about intra-network store competition (cannibalisation), but it also likely reflects the energy and effort that will be put into building and additional 60 TKD stores over the next three years or so.

    Supply chain changes

    In terms of its foundational strategies, perhaps the most interesting announcement at the Strategy Day was for a shift in its logistics supply chain. Mr Schneider introduced this by stating:

    Some of the current opportunities include: continuing to improve our in-store click and collect capabilities, developing stronger transport management capabilities underpinned by data and technology, introducing fulfilment centres to support our growing range and channels to market across consumer and commercial... Adding additional products to our existing cross-stock programs where it makes sense to optimise store replenishment and stock availability, and implementing technology where it makes sense.

    This was enough to alert veteran analyst David Errington of BankAmerica, who asked exactly what this "evolution" in the supply chain might mean. Mr Schneider clarified that he was talking about the "logical next step", not a "big bang" change to fully automated warehouses, like Amazon. The following three extracts describe this evolving attitude to supply hain.

    Bunnings directly controls its supply chain for globally sourced product via our distribution centre network. But most of our products come direct from local suppliers who source product on our behalf. These suppliers replenish our store network largely through third party logistics providers. The strength of this model was clear during the pandemic, where along with our supplier partners, we were able to handle unprecedented volumes of stock and maintain industry leading in stock availability of around 90% for our customers.
    I think about cross-stock there's opportunities there. And we should be thinking about these as low capital investments, you know, our products set the way stock moves through our supply chain, you know, there's not much we're seeing globally... We've been running cross stocks for a long time, particularly in our GreenLife. area. Some of our suppliers, we'll take Dulux, for example, world class supply chain, very sophisticated manufacturing process. Us doing anything with that supply chain would bring no value to anyone.
    There's lots of little suppliers in Bunnings, who are probably not as efficient with their supply chains as they could [be], could we bring value through some cross docking of those low hanging smaller suppliers, where we could consolidate products in a cross dock facility shipper to store in a more efficient manner. Make it more efficient in store from a backdrop to shelf logistics point of view, take some cost pressure off supply. That's how we're thinking about it.

    What makes this so interesting is that over the past 20 years Bunnings has been very adamant that its low level of involvement in supply chain was a real strength. The logic to that went something along the lines that time, effort and expenditure spent managing supply chain would be better spent on other activities which had a higher potential for growth.

    There have certainly been some environmental changes. With Bunnings stocking 80,000 SKUs, where once it managed 34,000 SKUs, the need for delivery consolidation is very real. Then there are also some Bunnings stores - most noticeably the one under development in the Sydney suburb of Rozelle - where planning agreements limit the number of truck deliveries per day, making cross-stocking a necessity.

    The additional possibility to consider, however, is whether growth opportunities have reduced, and the growth that can be extracted from logistics management is now worth the expenditure of effort.


    No analysis of this situation would be complete without mentioning the external environment. That environment is highly uncertain, and continues to pull in opposite directions.

    Displacement of expenditure

    The chart below shows the recent pickup in international departures from Australia:

    Note that the figures for April 2022 from the Australian Bureau of Statistics (ABS) are estimates. However, they do give a good indication of both how fast they could grow, and also of how they still remain at historically low levels. What would happen to the home improvement market if they not only return to previously high levels, let alone go into overdrive as people rush to take overseas vacations?

    COVID-19 continues

    On the other side of that are the grim statistics that Australia is currently sixth in the world for the rate of COVID-19 infections per 100,000 people during a week, at 94. It is also ranked at tenth for deaths in a week per 100,000 people, with a daily average of 39.5. At this point, only two-thirds of the population has received the third booster vaccine injection.

    While the current COVID-19 variant has a relatively low morbidity rate, the danger is from some new variant developing a morbidity rate closer to that of the Delta variant. The pandemic, in other words, is very far from being over in Australia.

    The economy

    Outside of that, there is, of course, rising inflation in the Australian economy, and the subsequent increase in interest rates. As this was a situation that was evidently going to happen, HNN's conclusion about the housing market during 2022 was that Australian homebuyers knew what would happen, and had decided to purchase houses and go through the down cycle anyway. That said, it is one thing to plan for something, and quite another to actually live through it.

    Other measures aren't looking all that great either. For example (via the Reserve Bank of Australia) consumer sentiment:

    Business investment as share of nominal GDP has done the seemingly impossible, and actually dropped lower over the past year, to a 29-year historical low.

    And, of course, the wage price index growth has managed to make it only back up to where it was in 2018, despite inflation.

    Is Bunnings in the right markets?

    While all that matters, perhaps the most important question is more fundamental. Is the Bunnings basic store format really what the current market needs? Or, to put that in a different way, will the store formats Bunnings uses today be basically unchanged by 2030?

    That seems unlikely, which means that what needs to be considered is mostly a matter of timing, and what the change would be. The Bunnings store format is what might be called a "narrative" style. The bare floors and general low amenity worked 20 years ago, as it was taken as a signal of "inexpensive", "good value", and even "cheap". It backed up the idea that low overheads meant that the goods on sale could have a lower profit margin.

    Today, however, that narrative barely registers with younger customers from Gen Z, and it just seems a bit odd to many from Gen Y. It's clear that Bunnings could, if it wanted to, boost amenity without having to so much raise prices as sacrifice 0.2% of its profit. Yet that would be incredibly risky, as it puts in doubt the big-boxes entire identity.

    Probably that dilemma is best illustrated by the Bunnings website itself. There is something almost institutional in feel about the website, like something built by a keen but not very versatile government department. One big factor that one senses is missing, present on the websites of The Home Depot, Lowe's Companies, Castorama, and even Homebase, is simply people. Not staff members in green aprons, but people who represent the customers. For example:

    What a great idea. But could you see Bunnings doing that? Or is it simply too friendly?

    There is nothing so difficult as taking an established, successful, popular brand, and changing it to better suit both the moment and the emerging markets. Yet if finding new sources of growth is really the problem confronting Bunnings, then it may have no choice other than to contemplate such a transition over the next three years.

    The rise of the independent?

    There is much in this Strategy Day for independent hardware retailers to have some concern about. Bunnings is about to increase its pressure on the trade market, and it is difficult to predict what the outcome of that may be.

    Yet it is difficult, for HNN at least, to shake off the sense that somehow the overall hardware retail market is moving in a direction that does favour independents - if they can rise to some of the new challenges. That's largely because, gradually, the market is seeing its intangibles increase in value.

    Where we've been through a couple of decades where tangible investments, such as stores and stock, have dominated business, now intellectual capital is becoming more important.

    It's still very important to work out how to leverage those intangible values, but it could be that independent retailers discover a path out of what has been a tough two decades.


    UK update

    Kingfisher said demand for DIY remains resilient

    The home improvement retail group also reported that product availability improved following recent supply pressures

    Kingfisher - owner of B&Q and Screwfix in the UK and Castorama and Brico Depot in France and other markets - said it is managing inflationary pressures amid "resilient demand" for DIY despite cost of living pressures.

    Consumer spending is expected to drop as household budgets are squeezed by inflation, particularly in energy prices which have soared in part because of Russia's war on Ukraine

    It said sales had remained at elevated levels seen during the coronavirus pandemic, and that it was confident enough about its outlook to launch a GBP300 million share buyback.

    In a recent trading update, Kingfisher's chief executive Thierry Garnier said the company had retained a "significant proportion of the increased sales during the pandemic".

    Like-for-like sales in the February to April quarter were 16% above the same period in 2019 at GBP3.2 billion, although they dropped back by 5.8% overall compared with the boom in 2021. UK and Ireland sales were down by 14% compared with the year before, but were up nearly 17% on 2019, with kitchen, bathroom and storage products among the bestsellers at B&Q.

    Kingfisher said it was "mindful of the heightened macroeconomic and geopolitical uncertainty that has emerged since the start of the year" but added that it will look to increase its market share. It left profit guidance unchanged at GBP770 million for the full financial year. Mr Garnier said:

    Looking forward, we are reiterating our profit guidance for full year 2022-23. We are focused on delivering on our strategic objectives and growth initiatives, including the growth of our scalable ecommerce marketplace, the expansion of Screwfix in the UK and France, new store openings in Poland, and further increasing our trade customer base.

    One of the big challenges across B&Q and Screwfix since the pandemic has been managing the disruption to supply chains and related increases in costs. The company argues that its scale means it has a strong negotiating position with suppliers, and it also allows it to offer lower prices in its own-brand ranges. Mr Garnier said:

    We continue to effectively manage inflationary and supply chain pressures. As a result, our product availability is now very close to 'normal' levels across all our banners, and we continue to deliver value for our customers through our own exclusive brands and competitive prices.

    Kingfisher also raised the wages of its lowest-paid staff at B&Q and Screwfix by 6.5% and 5.4% respectively.

    In City A.M., AJ Bell Investment director Russ Mould said of the results:

    Sales are proving more resilient than some might have feared. This suggests there is still some pent-up demand for home improvement despite the pressures on household budgets.

    This was echoed by senior investment and markets analyst at Hargreaves Lansdown Susannah Streeter, who said:

    This [sales] shows that a sizeable chunk of customers that picked up a hammer for the first time have kept coming back, thanks to their new skills and a shortage of labour in the building trade.


    Trade-focused Screwfix announced it will open 80 new shops across the UK and Ireland by January 2023.

    The expansion will create retail vacancies in locations across the UK and Ireland in places such as Swanley and Brackley. Screwfix chief executive John Mewett said its expansion plans are responding to sustained demand from tradespeople who need tools.

    We know how busy tradespeople are and how important it is to be able to find a Screwfix store close to site. In opening more stores across the UK and Ireland, we're making Screwfix even more accessible to tradespeople, ensuring they can get their job done quickly, affordably and right first time.
    We're also delighted to be having a positive impact on local communities, creating more than 800 jobs for local people.

    Screwfix opened 70 new shops in 2021, and the additions this year will take its total stores to 870.

  • Sources: The Guardian Australia, Yahoo Finance (UK), City A.M. and Press Association Limited
  • bigbox

    USA update: Home Depot

    First quarter sales rose 3.8%

    Demand is being driven by rising home values and a market in which many people prefer investing in home improvement to looking for another place to live

    The Home Depot said that the average amount spent per transaction rose 11.4% while the number of transactions declined 8.2% in the first quarter, as inflation continues to lift prices across its stores. Same-store sales rose 2.2% globally, and 1.7% in the US.

    Chief financial officer Richard McPhail said rising home values have helped maintain spending on homes, even as prices and interest rates rise. "The homeowner has never had a balance sheet that looks like this," Mr. McPhail said on the earnings call, adding that home equity values are up 40% the last two years.

    They've seen the price appreciation, and they have the means to spend.

    Home Depot was a major beneficiary during the height of the pandemic. It is now confronting a slowdown from that high and continued supply-chain disruptions. A late start to spring in most parts of the US, as well as the lack of a spending boost from last year's federal government stimulus cheques, contributed to the decline in customer transactions.

    But average spending per transaction is growing faster than Home Depot had expected. That is largely due to inflation across several product categories, including core commodities such as timber and building materials. If inflation persists at its current levels, the company said average spending per transaction would likely rise between 10% and 12% for the year.

    For the three months ended May 1, Home Depot posted earnings of USD4.2 billion, compared with USD4.1 billion, in the first quarter of last year.

    First-quarter sales increased about 4% to $38.9 billion, ahead of Wall Street expectations of USD36.7 billion, according to a survey of analysts by Zacks Investment Research.

    However, the quarterly sales exhibited the slowest pace of growth in two years, noted Neil Saunders, managing director of GlobalData, adding that it was still a pretty good quarter and that the company has managed to keep all the gains it made during the pandemic.

    Mr Saunders cautioned that Home Depot will need to keep an eye on some things, including customer transactions. While customers are pulling back on spending, particularly on big-ticket items, Mr Saunders said that it's not a major concern at the moment.

    We do not see an enormous collapse in demand as many households are still willing to invest in and improve their homes; but there is a definite softening on the cards which we have not seen for quite some time.

    Venture Capital Fund

    The big box retailer has also launched Home Depot Ventures, a venture capital fund to support early-stage companies that enhance customer experience and home improvement. It is way for Home Depot to accelerate emerging technologies.

    The USD150 million fund will consider investment opportunities in businesses at various stages of development, but will focus on early and growth-stage companies that help Home Depot customers and show potential to scale.

    It has invested in Afero, a platform that provides smart capabilities for products; Made Renovation, a digital platform for bathroom renovations; Loadsmart, a freight technology company; and Roadie, a delivery platform that facilitates same-day deliveries in more than 20,000 postcodes around the US.

    With its venture capital fund, Home Depot wants to invest in companies that cater to both professional and homeowner customers, assist its associates and optimise operations in ways ranging from deliveries to the use of data science. Mr McPhail said in a statement:

    With Home Depot Ventures, we're lending our support and expertise to enable rapid scale of innovation. This is an exciting opportunity to find and scale the next big ideas in technology and retail.


    Home Depot tech focuses on customer experience - HNN Flash #92, April 2022
  • Sources: Wall Street Journal, Transport Topics and Retail Dive
  • bigbox

    USA update: Lowe's

    First quarter sales drop

    The home improvement retailer is also opening its first Pro Fulfillment Centre dedicated to serving professional customers

    Lowe's chief executive Marvin Ellison said that cooler weather impacted spending plans for DIY customers, as they delayed buying items such as outdoor power equipment, BBQs and outdoor furniture. He added that the non-professional customer was the primary reason behind transactions declining at a double-digit rate in the first quarter.

    Lowe's saw the average spending per shopping trip grow 9.1% in the quarter due to product inflation and higher sales to professionals, while total transactions fell 13.1%.

    Mr Ellison acknowledged headwinds such as inflation, but said consumers are still willing to spend on their homes. He told MarketWatch:

    We're aware that we have inflation concerns. We're aware that there are rising interest rates. But as we look at the home improvement sector, we still remain very confident in the outlook and very confident in the sector.
    The home will be forever redefined by the pandemic ...

    Key reasons among the ways in which the home has shifted during COVID-19 is that for many it doubles as a workspace. Mr Ellison does not see American workers heading back to the office in the same way they did before the pandemic. He said:

    This drives a different kind of home spend that did not occur pre-pandemic. That bodes well for home improvement. The more you're home, the more wear and tear there is and the more investment you make...

    There are a number of other factors that Mr Ellison said continue to bolster housing spend, among them high consumer savings, an ageing housing stock, home price appreciation, and continued robust demand in the housing market.

    Consumers feel confident investing in a home.

    Mr Ellison also noted the "ageing in place" trend, wherein baby boomers are hanging on to their homes and investing in modifications. He said:

    They're more active and independent, and want to change their homes for their changing mobility.

    In November 2021, the company launched the Lowe's Livable Home program in partnership with AARP to serve the needs of aging homeowners.

    Lowe's Home Improvement offers ageing-in-place options - HNN Flash #77, January 2022

    Sales are turning around in May, and Mr Ellison is optimistic that the company can make up for the sales that were delayed by weather.

    Still, Neil Saunders, managing director at GlobalData, was cautious, saying fewer households are taking on projects and there was a downward trend in DIY. Mr Saunders wrote in a research note:

    This has come off a very elevated high from the past two years and is now returning to normal.
    As much as it is unhelpful for all home improvement players, it is especially punishing for Lowe's which disproportionally benefitted from newbie improvers and infrequent DIYers visiting its stores. It is these groups where the pullback on spending has been greatest.

    Mr Ellison says that two-thirds of Lowe's sales are for repair and maintenance activity, which is necessary to operate the home, rather than discretionary projects.

    A quarter of Lowe's business is in the professional (tradie) category. Sales in that category grew 20% during the quarter. This compares to Home Depot's greater reliance on professionals which make up around half of its total revenue. (Home Depot reported its first quarter sales rose in the same cooler weather conditions.)

    Lowe's said comparable same store sales fell 4% in the period. For the period ended April 29, Lowe's reported a slight increase in profit to USD2.33 billion. Overall revenue fell 3.1% to USD23.7 billion, just short of Wall Street expectations of USD23.8 billion, according to FactSet.

    Fulfillment centre

    Lowe's is making a big commitment to industry pros with a new fulfillment centre. The 200,000sqft centre is based in Charlotte, North Carolina, and currently serves pro customers in the greater Charlotte area.

    The Pro Fulfillment Centre offers local pros next-day delivery of the products they use most in the quantities they normally purchase. Key features include online tracking of orders, which are available through box or flatbed truck. Assortment consists of more than 1,000 select products, including timber, building materials, roofing, sheetrock, shingles, insulation, windows/doors, and big and bulky items with their key attachments.

    The facility is built to be zero-emission, with battery-powered forklifts. Lowe's will use it to test, learn and evolve its approach to provide an omnichannel experience tailored for pro customers.

    According to Lowe's it considers the Pro Fulfillment Centre as a pilot in the next step of its "Total Home" strategy to serve and attract pro customers, who the retailer says shop at a higher frequency and value speed and convenience.


    Lowe's launches a dedicated Pro Zone - HNN Flash #41, April 2021
  • Sources: MarketWatch and Wall Street Journal
  • bigbox

    Big box update

    Demo works continue for Bunnings Frenchs Forest

    The future of two flood ravaged Bunnings stores near Brisbane can be revealed with one to remain closed indefinitely and potentially be redeveloped

    An Australia Post distribution centre is being demolished to make way for a five-storey $48 million Bunnings store in the northern beaches suburb of Frenchs Forest.

    The Bunnings development application was approved by the NSW Government's Sydney North Planning Panel in February 2021. It would have been settled in 2020, but for a disagreement between the hardware retailer and Northern Beaches Council about safe vehicle access to the site from Allambie Road. (The store is being constructed at the intersection of Warringah and Allambie Roads.)

    There were concerns that due to the building's proximity to the busy intersection, there were "potential road safety issues with merging vehicles and conflicts with pedestrians". An agreement has been reached to move the main driveway to Rodborough Road, once traffic lights are installed at its intersection with Allambie Roadd.

    The project is still generating some community concerns about traffic in the area, especially with the new The Forest High School set to be built about 400m away on Allambie Road.

    The outlet will be first time Bunnings to offer three levels of retail, according to the Manly Daily News. There will be two levels of parking for close to 400 vehicles.

    Bunnings already has northern beaches outlets at Warringah Mall (Brookvale) as well as Balgowlah, Belrose and Narrabeen.


    Construction begins on Bunnings Frenchs Forest store - HNN Flash #75, December 2021

    Flood affected stores

    Queensland-based Bunnings stores in Oxley and Rocklea were left devastated from the catastrophic flooding in February this year. The stores sustained significant damage from the floors and had to undergo a full sanitisation clean and major repairs.

    Bunnings regional operations manager Jason Doyle confirmed to The Courier-Mail the Rocklea store was on track to reopen in June. Mr Doyle said specialist teams had been busy making sure this store was hygienically safe and structurally sound. The teams also rectified any store-related damage, rejuvenated floors and rebuilt amenities. He said:

    Our store team is now back on site and we're currently in the re-fit phase, where our teams are re-racking and re-merchandising, getting ready for reopening.

    It is also understood Bunnings is working on redevelopment options on its Oxley store, including floodproof design concepts, over the next six to 12 months. Mr Doyle said the Oxley staff would continue to work at and support nearby stores.

    We are really pleased to confirm that we are on track to reopen our Rocklea store in mid-June. We continue to provide care and support to all our Rocklea and Oxley team, and we thank them for their amazing work helping the community with recovery efforts.
    The safety and wellbeing of our team and customers is our number one priority, and we remain focused on getting Rocklea opened safely as soon as possible to provide the local community access to the products they need.

    Both Rocklea and Oxley stores were victims of the flooding back in 2011 and had to be closed for about two months.

    Mt Isa Bunnings sold

    The Bunnings store in Mt Isa (QLD) which opened in February has been sold for just over $16.2 million on a yield of 4.29%, according to The Australian.

    Set on a 15,430sqm landholding with a net income of $695,000 per annum and brand new 10-year lease, the Bunnings store is five times the size of the previous store that was in Mt Isa.

    Campbell Bowers, Burgess Rawson Queensland partner and joint head of agency, said the Bunnings Mt Isa was another example of the trend of regional Queensland investments performing strongly.

    PropTrack economist Anne Flahertysaid assets like Bunnings had consistently performed extremely well but since the onset of the pandemic there had been growing interest in the assets, which were viewed as a cultural icon. She told The Australian:

    It is seen as a safe, reliable tenant, they are very popular with consumers, and they have a good growth outlook. So from an investor perspective, getting an asset with a Bunnings on it, it's not just appealing from the sense of owning an asset that's housing one of Australia's iconic brands.


    Bunnings Mount Isa store gets ready for opening - HNN Flash #78, January 2022
  • Sources: Manly Daily News, The Courier-Mail and The Australian
  • bigbox

    Big box update: IKEA

    Planning Studios in Australia

    The first of these smaller format sites will be up to 500sqm and open in north-west Melbourne, followed by Newcastle (NSW) by the end of 2022

    IKEA Australia and New Zealand country chief Mirja Viinanen told The Australian Financial Review it will launch its small-format Planning Studio concept in Australia this year.

    The focus of the Planning Studio is to help customers to create "dream" kitchens and wardrobes, and there will not be any food served on site.

    According to the big box home improvement retailer, the Planning Studios are part of its growth strategy for Australia.

    Each studio will have a collection point nearby where customers can collect their products upon ordering. The goal of the format is to provide customers with more flexibility when accessing the retailer's products. Ms Viinanen said consumers wanted IKEA's products to be more conveniently accessible. She said:

    Convenience is at the heart of our strategy. We will continue to transform and test new formats like the new Planning Studios to be able to meet our customers where it is convenient for them, and we are constantly researching where this need is the greatest to inform our expansion strategy.

    The company expects the Planning Studios will help gather important customer insights and feedback during the first few months of opening. Based on this data, IKEA will consider if and where to open additional Planning Studios in the future.

    Ms Viinanen is also keen to further penetrate online. Pre-pandemic, IKEA generated about 12% of its sales online, but it now accounts for about one-third of group sales. The AFR reports sales reached AUD1.62 billion in the full year to August 31, 2021, based on accounts lodged with the regulator.

    Ingka Group, the largest franchisee of IKEA stores around the world, recently said that it would invest EUR3 billion by the end of 2023, building new outlets and remodelling existing ones to cope with "increasing demand for home deliveries".

    The money will primarily be used to modify its trademark out-of-town (suburban) outlets so they can double up as e-commerce distribution centres. Ingka Group retail manager Tolga Oncu said told Reuters:

    Most of it will be in our existing stores, since we talk about transforming, redesigning the purpose of the square metres.

    In the past few years, Ingka has adapted to the rise in online shopping by developing smaller stores, revamping its website and rolling out a new app as well as digital services such as remote planning tools. Mr Oncu said:

    We feel we have a catch-up to do on the back-end of our operation (and) we have realised that by including stores in our last mile and fulfilment design network we can create a win-win situation.
    Shipping online purchases from the warehouse sections of nearby out-of-town stores will mean faster and cheaper deliveries, with lower emissions, than by shipping from a few logistics centres..
    Instead of building central warehouse capacities for online buys, why don't we send it from our IKEA stores?


    It is not just all about store expansion for Ms Viinanen who is also the company's chief sustainability officer.

    IKEA has introduced more than 30 big-impact, sustainable-focused initiatives globally, with some in Australia. A clean energy storage initiative was launched to support the South Australian power grid as IKEA aims to achieve 100% renewable energy by 2030.

    The retailer is also using high-end technology to meet some of its sustainability goals, such as robotic automated box cutters and shredders in the distribution centres.

    According to IKEA research, nine out of 10 Australians believe businesses can do more to reduce emissions, and Ms Viinanen is firmly committed to delivering on those expectations. Other initiatives include its circular hubs in stores where shoppers can buy floor stock or get furniture others have returned through the buyback scheme. She told the AFR:

    All of this should be everyday business decisions, as part of business helping to create better everyday life.
    Wesfarmers' retail clean energy deal for retailers in Queensland - HNN Flash #88, April 2022

    Other recent stories about IKEA on HNN

    IKEA is changing up its business model in Australia.

    IKEA small format strategy - HNN Flash #50, June 2021

    IKEA continues to change the way home improvement gets done, reconfiguring what is meant by "DIY".

    IKEA and its place in home improvement - HNN Flash #77, January 2022

    IKEA's mobile checkout technology is being trialled through its Queensland stores.

    IKEA app in QLD stores - HNN Flash #74, December 2021
  • Sources: Australian Financial Review, Reuters and SmartCompany/Inside Retail
  • bigbox

    Big box update

    Bunnings Pymble store opens to the public

    Speculation about a Bunnings Healesville store, bodycams for staff, Bunnings Epsom on the market and Swan Hill outlet sold

    The new $80 million Pymble store - located in Sydney's upper north shore - looks different from the outside compared to more traditional Bunnings stores because of its uniquely shaped roof.

    It has a number of other distinctive architectural features such as coloured exterior glass and extensive landscaping with a boardwalk around part of the site. Brendan O'Hehir, Pymble complex manager told

    With its unique exterior design, it's unlike any other Bunnings in NSW.

    The Pymble store's unique architectural design was developed to suit the local area. It is the first store in NSW to have a newly laid-out paint department. There is also a kitchen design centre, bathroom displays and new look trade service area, a wider range of site safety and workwear products, as well as an aisle for transport and moving needs.

    In addition, it has familiar features including the main retail area, timber and building materials yard, and outdoor nursery. There are sustainability initiatives that will reduce the store's environmental impact, such as LED lighting throughout, energy efficient heating and cooling, on site water reuse and solar panels.

    The multi-level warehouse store spans more than 15,000sqm and has over 300 carparks. It replaces the smaller format store in Gordon, which has been serving the local community for more than 30 years and is the smallest Bunnings store in Australia. Mr O'Hehir said the team has received positive feedback from customers.

    Customers have been telling us they love the design and how nice and bright the store is, and they've really loving that they can get everything they need for their weekend projects so close to home.

    Bunnings Healesville?

    There have been hints on social media that Bunnings may be interested in opening a store in Healesville which is part of Melbourne's scenic Yarra Valley, approximately 52km north-east from the CBD.

    Although there are no current plans yet, it could be a possibility down the track. Bunnings area manager Craig Bleksley told Leader Newspapers (Lilydale and Yarra Valley):

    Healesville is an area of interest for Bunnings but we have no confirmed plans in place. We'll be sure to update the community should this change.

    It would be the first Bunnings to open in the Yarra Valley, with the closest stores in Lilydale and Croydon.

    Bodycam trial

    Three Bunnings stores are trialling body-worn cameras as a way to curb a rise in abuse directed at retail staff, according to The Courier-Mail.

    The move comes after a survey conducted by the retail workers union - Shop, Distributive and Allied Employees Association (SDA) - revealed 76% of participants reported customer behaviour worsened since the pandemic, and more than one in five participants personally experienced violent behaviour from customers including spitting or deliberate coughing.

    Bunnings chief operating officer Simon McDowell said it is crucial to do everything possible to discourage poor customer behaviour, and as a result had rolled out cameras to three stores across Australia.

    SDA Queensland secretary Chris Gazenbeek said he supported the use of the cameras, provided staff were properly trained and comfortable in wearing one. He told The Courier-Mail:

    [The cameras] support the reduction of violence experienced by retail and fast food staff as well as providing safety, reassurance and support during working hours.

    Australian Retailers Association chef executive Paul Zahra said that it was clear protocols surrounding coronavirus had led to a rise in worker abuse.

    We saw elevated levels of customer aggression when the most stringent COVID protocols were in place around check-in requirements, mask-wearing and showing proof of vaccination. Unfortunately, managing customer aggression has become a new skill for frontline workers.

    Bunnings Epsom

    The Bunnings Epsom store located in of Bendigo in central Victoria, has been placed on the market, according to The Bendigo Advertiser. Located on Midland Highway, the site is zoned for Commercial 2 and measures 27,010sqm including a 11,606sqm store.

    The site is expected to attract a high purchase price with other Bunnings sites selling for $65,300,000 (Nowra, NSW), $58,600,000 (Hervey Bay, QLD), $48,800,000 (Para West, SA) and $28,550,000 (Kempsey, NSW).

    The hardware store was built in 2015 and has a 12-year net lease (plus options) as well as fixed 3% annual rental increases and a net income of $1,606,000.

    The property is for sale through Stonebridge Property Group's Justin Dowers and Kevin Tong who are marketing the property in conjunction with Killen Thomas David Marks. Mr Dowers told The Bendigo Advertiser:

    We are continuing to see yields for these types of investments sharpen disproportionately to other asset sectors because of the exclusivity of the tenant and the quality of the lease.
    The market for Bunnings Warehouse investments has further improved over the last 12 months given how well they have performed in and out of lockdown restrictions.

    Adding to the potential for the site is the expected population growth in the Greater Bendigo region. Mr Tong said Greater Bendigo's population is forecast to grow at 1.54% each year from 2021 to 2036 which is more than the state forecast population growth rate of 0.91% each year.

    The growth in Bendigo is as strong, if not stronger than most metropolitan cities. Dwelling approvals, infrastructure investment and tourism help drive the City of Greater Bendigo to being the third largest city in Victoria.

    Mr Tong also said prospective purchasers would also benefit the 50% reduction in stamp duty for commercial properties bought across regional Victoria.

    That is going to be worth quite a significant amount of money especially given the total quantum at Bunnings Epsom.

    Bunnings Swan Hill

    A Bunnings store located in Swan Hill, near the New South Wales border, has sold for just over $18 million reflecting a 3.99% net passing yield.

    The property covers a 1.67 hectare Commercial 1 zoned site at 74 Nyah Road, with a 6666sqm warehouse attached to a nursery and 140 bay car park.

    Bunnings Swan Hill was sold by retired Adelaide doctor Prabhash Goel, who via an entity, Hawkers Property Group, paid $10.95 million at auction for the then new store in August 2015.

    The property is subject to the current lease expiring in seven years, with fixed annual 2.5% rises. With options, Bunnings as the tenant can stay until 2059.

    Rick Silberman, director of retail investments at Savills, negotiated the sale on behalf of Dr Goel. Mr Silberman said the location of the property in a growing regional hub further strengthened the investment case. He told the Australian Financial Review:

    The Swan Hill region has experienced significant growth over the past decade, led by the expansion of agricultural practices and supported by an innovative manufacturing sector.
    Swan Hill is the regional service centre to 38,000 people, supporting 9462 jobs and has an economic output of $2.964 billion.

    The nearest Bunnings is at Echuca, 155 kilometres away.

  • Sources:, Leader Newspapers (Lilydale and Yarra Valley), The Courier-Mail, The Bendigo Advertiser, and Australian Financial Review
  • bigbox

    Big box update

    Bunnings targets market for small to medium builders

    A NSW planning panel defers its decision on the proposed Bunnings store development in Tempe

    Bunnings plans to expand its footprint of frame and truss plants that fabricate and supply timber materials for framing houses. The hardware retailer said it will roll out its new plants over the next 12 to 18 months.

    In an exclusive report in The Australian, Ben McIntosh, Bunnings chief operating officer - commercial, said the additional frame and truss plants would help it service more builders as they planned and executed home building projects.

    We are excited to be expanding our participation in this market, improving our offer and working with even more customers to provide solutions for their projects, end to end.
    The expansion plans form part of our wider commercial strategy as we continue to be a trusted partner to builders, from the moment they are planning a build, right through to the fitout.

    Bunnings may be setting itself up as a major supplier of frames and trusses to home builders, according to The Australian. The thinking is that while builders pick up their home frames and trusses from a Bunnings site, and use their Bunnings trade account, they will be more amenable to buying other building materials that go to constructing their homes, such as fibre cement, doors, plaster, tiles and other building materials.

    Builders and other trades typically have a long shopping list of items they need to buy when constructing a home, and this could help lift sales across the Bunnings group of businesses including Beaumont Tiles. Bunnings' popular "Powerpass" program offers verified trade customers exclusive prices and deals.

    The customer for Bunnings' frames and trusses business will predominantly be a residential builder that has steady volumes of work in the medium-density residential market, typically less than three storeys. It could also be attractive to owner-builders.

    Manufacturing plants

    Bunnings has operated frame and truss plants in Australia for over 20 years. The operations have been a "quiet achiever" for the group, which now views the building materials category as one with growth opportunities.

    The hardware retailer currently operates three frame and truss sites in Australia - at Warnervale and Unanderra in NSW and Hallam in Victoria. This network of frame and truss plants supplies materials in the pre-fabrication of roof trusses, floor trusses and wall frames. The frame and truss team also provide service and advice, including quoting, estimating and detailing for both small and large scale projects.

    It is understood that the hardware retailer is scoping out land and exploring plans to establish as many as three more manufacturing sites. Building industry insiders told The Australian that Bunnings is searching for a site for a new frame and truss facility in Melbourne, another in Brisbane and potentially more in NSW.

    The use of pre-fabricated frames and trusses, to be pumped out by the growing network of Bunnings plants, should dramatically speed up the process on site, as the wall panels and trusses are simply erected as opposed to being constructed cut and nailed on site.

    Frames and trusses can be constructed with timber or steel, with timber the predominant material used across Australia.

    The expansion plans come at a time when many within the building industry are growing increasingly concerned about a new wave of building material shortages, especially timber used for building frames.

    The frame and truss plants give Bunnings a more secure access to core building materials when global supply chains are facing bottlenecks and major delays caused by the COVID-19 pandemic and the war in the Ukraine. The war between Russia and the Ukraine could disrupt supplies and increase prices substantially.

    The Australian construction industry was also left highly exposed to key building material shortages during the COVID-19 pandemic - namely wooden frames and trusses.

    Although supply bottlenecks have improved somewhat in the last few months, many parts of Australia are still in desperate need of timely frames and trusses with some parts of regional Australia waiting as long as four months for frames and nine months for trusses, according to The Australian


    Building materials cost and supply concerns continue around the country.

    Bunnings tells MBAV supply issues critical - HNN Flash #66, October 2021

    A ban on Russian timber.

    Bunnings bans Russian timber - HNN Flash #88, April 2022

    Tempe store

    Sydney's Inner West councillors have unanimously supported a motion to conduct an independent risk assessment and feasibility review of proposed traffic lights near the site of the proposed Bunnings store in Tempe.

    In passing a motion moved by councillor Mat Howard at a meeting, council resolved to "determine if safety and network impacts previously raised by Transport for NSW could be effectively mitigated", according to the Inner West Independent.

    The Sydney Eastern Planning Panel announced a deferral of their determination on the traffic plan modifications that would give way to construction of the store. In a statement, the panel said:

    The panel considers the matter should be deferred to allow the necessary processes to occur and for a supplementary assessment report to be completed and referred back to the panel for determination in a timely manner.

    It comes after a sustained community campaign by local residents as well as parents and students at the nearby Tempe Public School, who convened the "Safe Traffic Plan for Tempe Bunnings" group.

    The group has previously called for NSW Metropolitan Roads Minister Natalie Ward to visit the proposed site, which residents say is dangerous because of the increased traffic that the new Bunnings store would bring to its narrow streets.

    The group received the support of several councillors, including Cr Howard, Cr Justine Langford and mayor Darcy Byrne. Cr Howard said prior to the panel's decision:

    We're now calling on the Planning Panel to give us the chance to do this important work and then make a decision based on all the facts.

    The background to the motion affirms council's support for the residents' campaign and states that, at the start of March, Transport for NSW acknowledged the pressing safety concerns in a letter to residents.

    Transport for NSW acknowledged significant concerns of residents, Tempe Public School and the community, stating they would support further risk assessment to be undertaken by Bunnings or Council of the Princes Highway access and a feasibility review of traffic lights to determine if the safety and network impacts could be effectively mitigated.
  • Sources: The Australian, 9 News and Inner West Independent
  • bigbox

    USA update

    Home Depot technology renews focus on customers

    The home improvement retailer's chief information officer (CIO) is shifting into a newly created role dedicated to customer experience technology

    The Home Depot is doubling its efforts on online shopping, curbside pickup apps and other digital efforts, and moving its veteran CIO to a new full-time executive role overseeing customer technology.

    The home-improvement retailer was an early winner during the pandemic, when locked-down consumers turned to DIY projects around the home. Amid the lockdowns and social distancing, customers flocked to its physical and online stores, spending savings gleaned from staying at home and government stimulus checks on home-improvement projects.

    The new customer-facing technology leadership role is aimed at helping the company maintain that momentum.

    The company has named CIO Matt Carey as executive vice president of customer experience. Fahim Siddiqui is stepping in as CIO, overseeing technology strategy, infrastructure and software development.

    Mr. Carey joined Home Depot in 2008 as executive vice president and CIO, and Mr. Siddiqui served as the company's senior vice president of information technology since 2018. A company spokesperson told the Wall Street Journal:

    We created a new role that reaffirms our commitment to make shopping at Home Depot a truly interconnected, easy experience for our customers.

    Home Depot said both positions will report to chief executive Ted Decker, who started in his new role in March, after serving as chief operating officer and president.

    Mr. Carey contributed to the retailer's efforts to accommodate COVID-19 lockdowns and other restrictions by deploying digital tools to manage limited-capacity store operations, curbside pickup and online transactions.

    In his new role, Mr. Carey will be responsible for the vision, design and development of customer-experience technologies. Tim Crawford, CIO strategic adviser at Los Angeles-based enterprise IT advisory firm AVOA, told the Wall Street Journal:

    I have seen several CIOs make the move to a more customer-focused role and away from traditional IT.

    He said it makes sense to have a CIO oversee the underlying technology for customer experience tools, "in terms of understanding the tools, capabilities, integrations and requirements."

    Improved search tool

    Home Depot also said it has enhanced it online search tool for customers. According to the retailer, the number of customer searches has grown - now to more than 400,000 unique searches daily - so the technology team is constantly analysing how to improve the experience for everyone. As a result, it has built a search solution from scratch. Home Depot said:

    Not all search engines are created equal, especially when our customers bring various levels of home improvement knowledge to what they type into the search bar.
    That's why our team focuses on the intent of the person searching, rather than the actual words. This also solves any complications that could arise from geographic terminology differences (for example, "weed whacker" vs. "string trimmer"). Plus, our learning algorithm uses ongoing search data to more accurately show customers exactly what they're looking for the first time.
    In addition to building accurate, lightning-fast search results, we're also creating a personalised search experience for customers. Our technology team has built our online channels to consider location, past searches, personalised deal and guide recommendations when populating search results.
    This is especially helpful for customers in specific trade professions, such as an electrician searching for 'pliers' which the app will properly search for as 'electrician's pliers'.
  • Sources: Wall Street Journal and The Home Depot
  • bigbox

    Big box update

    Brunswick locals score a win over a Bunnings development

    A proposed Bunnings development in a residential suburb has officially been rejected

    The Victorian Civil and Administrative Tribunal (VCAT) has blocked Bunnings' proposal to build a $21 million store located in Brunswick East, an inner-city suburb north of Melbourne's CBD.

    The proposed two-storey store was to be 15.4metres in height with a floor space of around 8,600sqm. An underground park was planned with 236 parking spaces. In Daily Mail Australia, VCAT said in its ruling:

    This proposal has failed to achieve this outcome in an acceptable manner when all relevant policies are balanced in favour of sustainable development and net community benefit.

    The development site is surrounded by more than 120 homes, mainly in apartment blocks, and on a congested council road, which includes bike lanes and is a popular pedestrian route.

    Brunswick resident Andrea Bunting, president of the Glenlyon Bunnings Action Group who spearheaded the campaign against the development, said the site - on the corner of Pitt Street and Glenlyon Road - would have made the environment "unsafe" for cyclists and pedestrians.

    With operating hours of 6am to 10pm, Ms Bunting argued that the project would have had an adverse impact on residents because of traffic congestion due to delivery trucks and trade vehicles. She also said the building would be situated on an already busy street.

    The design failed to incorporate a safe way to safely enter and leave the site on a congested road.

    The VCAT panel recognised the local action group's issue with traffic congestion in the area and stated the project did not align with state government and council policies trying to reduce traffic in the inner-city. The panel said that the planned store would also create traffic "saturation" at a nearby intersection.

    However Bunnings has not ruled out submitting new plans in Brunswick East. Bunnings' director of property and store development, Andrew Marks, told Daily Mail Australia:

    Naturally we're disappointed with the Victorian Civil and Administrative Tribunal's decision not to grant a planning permit for a new Bunnings Warehouse in Brunswick, and will now review our options with the developer of the site.
    We're mindful of the positives a new store would bring over and above providing customers an improved offer. In addition to the $46 million investment in the economy, the proposal would create more than 50 new local jobs on top of our existing Bunnings Brunswick team.
    Bunnings has been part of the Brunswick community since 2015 when we opened our Sydney Road smaller format store. We remain committed to providing local customers in Brunswick with a wider range of home and lifestyle products.


    There was a community outcry at the initial Bunnings proposal, in August 2020, with 538 residents submitting objections to Moreland City Council in the middle of lockdown. According to Green Left, Nic Maclellan of Brunswick Residents Network said:

    For many months in 2020-21, Moreland Council staff had engaged with the Bunnings developer, without addressing the fundamental flaws of their application - especially around impacts on neighbouring apartments and on traffic congestion.
    It was only after a massive community campaign and hundreds of objections that Council fully came on board, with councillors rejecting the permit application and Moreland hiring a barrister to contribute to the case before VCAT.

    More than 200 residents donated $44,000 to the residents' VCAT case, with more than 50 residents becoming parties at VCAT.

    While the developers engaged a QC for the 12-day long case, residents engaged two experts, and a planning advocate to argue on their behalf. It was money well spent, with the residents' advocate winning most of the arguments.

    The case is significant for several reasons, according to Green Left. Many apartment blocks are now being built in commercial zones and, typically, residents have fewer rights than those in residential zones. The Bunnings developer argued that residents in commercially-zoned properties just had to put up with terrible impacts. VCAT disagreed.

    Neil Moreton, who represented many of the residents in an adjoining apartment block noted:

    Bunnings wanted to locate the exit lane for its delivery trucks right next to our balconies. The noise would have been horrendous. VCAT agreed with us that this was completely unacceptable.

    Moreland City Council aims to reduce car use and increase walking, cycling and public transport. The Bunnings Warehouse would be a huge backward step in achieving its aims. Pedestrian and cycling advocates also participated in the VCAT process. Faith Hunter from Moreland Bicycle Users Group said:

    We are very happy to see VCAT's decision affirming that the proposed Bunnings development at Glenlyon Road doesn't strike the right balance with sustainable development and net community benefit.
    In particular VCAT has recognised the substantial negative impacts on the local transport networks, particularly pedestrian and cyclist networks. These impacts directly affect the ways in which families and others will choose to travel on a daily basis.

    Ms Hunter also noted how the Bunnings development undermined residents' desires to become more sustainable:

    Residents in Moreland engaged in lengthy consultation processes over several years to help Moreland Council develop the Moreland Integrated Transport Strategy. This reflects their interest in and aspirations for increasing opportunities for active transport and mode shift.
    The VCAT decision affirms that developers cannot seek to make profits at the expense of local communities and their transport networks, either as they are now or as they plan for them to be in the future.

    Ms Bunting said the decision was a "great relief" for locals:

    Residents generally do want a say in shaping their community, but they get frustrated with the planning process. Too often, they are stacked in the favour of developers, especially those with deep pockets. This victory shows that, with a well-organised campaign, it is possible to win.

    Related: Brunswick residents battling to stop a Bunnings Warehouse being built

    Brunswick store battle is ongoing - HNN Flash #28, January 2021

    Related: Bunnings plans $21 million store in the Melbourne suburb of Brunswick East

    Some locals say "no" to Bunnings in Brunswick - HNN Flash #17, October 2020
  • Sources: Daily Mail Australia, Green Left and Herald Sun
  • bigbox

    Big box update

    Bunnings' bulk trade centre

    The hardware retailer has plans to expand its Noosaville store with a bulk trade centre

    Development applications have been lodged for approval with Noosa Council for Bunnings to build a two-storey trade centre at the Eumundi Noosa Road site where its Noosaville (QLD) store is located.

    The application lodged by town planners RPS Group stated the trade centre would be a stand-alone building at the northern end of its land, according to Noosa News. It said:

    The bulk trade yard will cater to builders and trades customers, rather than being targeted to retail customers.

    The bulk trade yard has a gross floor area of 1087sqm. It would have 57 undercover car spaces and nine proposed on the upper level which the application stated would be 44 more spaces than required under town plan rules. It said:

    The proposed development involves establishing a bulk trade yard for the purposes of providing timber and trade supplies primarily to professional builders and tradesmen.
    Carparking for 'walk in' customers will be in the lower level building undercroft. Customers collecting large quantities or bulky items (such as timber) can drive up the ramp on the building's southern side to circulate and short-term park to load within the upper level of the building.

    It would have carparking on the ground floor and some loading spaces on the upper level for customers buying in bulk. It also said the entry would be via Gateway Drive where it proposed some road upgrades including an extension of the right turn lane and a painted median strip.

    Bunnings subdivided its land in 2014 and the trade centre would be built on the second lot. No changes were proposed to the existing Bunnings Warehouse store. It said:

    It will not be physically connected in any way with the existing Bunnings store. It will not rely on the existing Bunnings store for access.

    The application proposed opening hours of 6am-8pm Monday to Sunday.

  • Source: Noosa News
  • bigbox

    Big box update: Bunnings

    Decision pending on proposed Tempe store

    Bunnings bans Russian timber and a retail premises in New Zealand with a long lease to Bunnings has gone up for sale

    A NSW Planning Panel is expected to make a decision on traffic plans relating to a mega-sized Bunnings in Tempe, a suburb in the inner west of Sydney.

    The store - planned for the corner of Princes Highway and Smith Sreet - will cost almost $50 million to build and will be one of the largest in New South Wales. However, local residents fear the customers of the hardware retailer would see their narrow inner-city streets transformed into rat runs. Jack Breen, Tempe resident and member of the Safe Traffic Plan for Bunnings Tempe group, told Inner West Courier:

    People are fine with the Bunnings, but there's real concern about the effect on traffic and how they're going about it.

    Bunnings has proposed changes to the previously approved plans in a bid for construction to begin without a traffic management plan - made in consultation with Inner West Council and an independent traffic consultant - being endorsed by the same council's traffic committee.

    The approval of council's traffic committee is required before any construction takes place.

    Bunnings director of property and store development Andrew Marks said the retailer simply wished to move forward with the process.

    We are yet to receive approval of the Local Area Traffic Management Plan (LATM) from the council's traffic committee, and we have received no indication as to when a final decision might be forthcoming.
    To move the process forward, Bunnings lodged an application to have the matter decided by the Sydney Eastern City Planning Panel.
    We hope this will allow us to proceed with the approved development with the implementation of all the safety measures proposed in the LATM, to ensure the safe management of local traffic.

    A traffic study by Inner West Council showed negative impacts on 15 local streets and indicated Union Sreet - a thin, pedestrian-heavy street adjacent to the proposed Bunnings - could see over 1500 cars a day, right past Tempe Primary School.

    Residents and councillors have called for the introduction of traffic lights on Princes Highway, in a bid to relieve the anticipated congestion and funnel cars away from Union Street. However, Transport for NSW is not supportive of the idea.

    Inner West Councillors are supporting Tempe residents of Tempe in urging the NSW Government to revisit the traffic management plan for the proposed Bunnings development. Mat Howard, Marrickville ward councillor on the Inner West Council, said:

    Traffic lights would be a win-win for Bunnings and the community, and the truth is the Roads Minister could fix this problem with the stroke of a pen.

    Transport for NSW said it was in dialogue with the other three parties. A Transport for NSW spokesman said:

    Transport for NSW is taking the community concerns seriously and has been working with Council and Bunnings to investigate options to satisfy the concerns raised by the residents, school and community.
    We have put forward a concept proposal to Inner West Council to ban the through movement into Union Street from Smith Street, which would prevent vehicles from leaving the Bunnings site and using the route past the local school.

    Mr Marks said traffic-calming measures would be introduced under the proposed traffic plan to allay concerns, but residents aren't convinced. Inner West mayor, Darcy Byrne said:

    Bunnings are playing hard ball with residents in Tempe and looking for their mega-store to be waived through without proper pedestrian safety measures being implemented. It's crunch time now and we need the NSW Government and Bunnings to act on the very reasonable requests from the local community for a signalised crossing.


    The community's campaign has been ongoing since 2016, when the plan to build a large Bunnings store in Tempe was approved by the Sydney Eastern City Planning Panel on the condition a traffic management plan was created. In 2021, Bunnings applied for the condition to be removed, with a decision due back by the end of March this year. Mr Breen said:

    We're opposed to that because once you build the store it'll be really difficult to add in traffic lights or other things that would change the layout of the carpark. It really restricts the options.

    Bunnings originally proposed installing traffic lights to allow cars to flow directly onto the highway. However, Transport for NSW opposed the idea saying the lights would be too close to the ones at IKEA. A Transport for NSW spokesperson told Inner West Review:

    It would pose safety issues for road users due to their close proximity to the existing traffic lights in the area and impact the efficiency of the network by increasing travel times.

    But Mr Breen said the lights at the Bunnings location would be within Transport for NSW's guidelines for a safe gap of 130 metres minimum between traffic signals to prevent the "see through" effect. The proposed lights would be 158 metres away from the nearest set. He believes traffic lights would be the "easiest and safest" solution.

    In October 2021, Mr Marks said Bunnings had been working with council on a traffic management plan which incorporates community feedback.

    It includes a number of traffic safety and calming measures to reduce the impact on local roads and slow down traffic, such as the installation of speed humps and signage, traffic direction, and the prohibition of heavy vehicle access to certain streets.


    Sydney's Inner West Council will push to improve traffic arrangements at Bunnings' Tempe store - HNN Flash #67, October 2021

    Russian timber ban

    Bunnings has asked its suppliers to stop buying "conflict timber" from Russia following recent declarations by global forestry bodies about timber from that country and ally Belarus, according to the Australian Financial Review (AFR).

    Bunnings said Russia was not a major source of timber for the local home improvement market, but warned of a shortage to supply - on top of existing constraints - of composite laminated veneer lumber, or engineered wood products, in coming months. Bunnings director of merchandise Jen Tucker told the AFR:

    In line with our timber policy which requires us to exclude source material under specific circumstances, we're working with the industry to source suitable alternatives.
    We're mindful that building material constraints are creating real challenges for builders and we're doing everything we can to support the industry to work through this.

    The conflict timber declarations by the Geneva-based Programme for the Endorsement of Forest Certification and Bonn-based Forest Stewardship Council affect buyers with strict procurement policies, whether a retailer such as Bunnings or a government.

    Private buyers of timber do not need to use the same strict risk assessment processes. But sanctions - which Foreign Minster Marise Payne threatened in February - could halt all supplies.

    While Russia only accounts for a small proportion of Australia's timber imports - around $80 million or just under 3% of the total - it accounts for more than one-fifth of the country's imports of LVL, composite material used for structural components such as lintels, I-Joists used in floors and the formply used for the moulds that concrete is poured into for large commercial projects.

    Australia's building industry representatives fear a bigger risk to its timber supply chain if the government imposes sanctions on Russian imports. Housing Industry Association chief executive for policy Kristin Brookfield told the AFR:

    There is a range of materials we do import from the region. If the Australian government was to make any decision around sanctions of products - timber is one of those things - then Australia would have a pain point in terms of supply.

    In February, the Australian Timber Importers Federation (ATIF) industry group wrote to Trade Minister Dan Tehan warning of a 10-20% loss of jobs across the supply chain if Russian timber imports were blocked. ATIF Chairman Nils Koren wrote in the letter:

    If there was a major interruption to Russian supplies of LVL and I-Joists, it is estimated this will disrupt more than 60,000 detached housing starts.

    The conflict timber declaration is also affecting the projects seeking Green Star certification. Green Building Council of Australia chief executive Davina Rooney said:

    As the only recognised timber certification schemes in Green Star, PEFC and FSC have announced that Russian- and Belarus-sourced timbers are now declared conflict timbers and no longer eligible for their standards, this means that Green Star will not be recognising timber from those regions.

    Bunnings in Mangawhai Central, NZ

    A purpose-built retail site that features a Bunnings store is up for sale in New Zealand.

    Mangawhai Central is a large-scale integrated development bringing together retail, hospitality and residential activities, just north of the Auckland regional boundary in Mangawhai. It is set to connect Mangawhai's two existing commercial centres, Mangawhai Heads and Village.

    The property is being marketed for sale through Bayleys in the North Commercial and Industrial and Bayleys Auckland Central. The sale will be by tender closing on 4 May, unless the property is sold earlier.

    The Bunnings location at Lot 9, Service Zone, Mangawhai Central, is currently under construction and due for completion later this year.

    Designed by award-winning Australasian architect Buchan Group, it consists of a large-format retail outlet of around 5418sqm on more than 1.5ha of freehold land with 154 car parks. The building incorporates a retail area, outdoor nursery, canopy goods area, timber trade and building materials yards, plus office and amenities.

    Bunnings New Zealand, a subsidiary of ASX-listed Wesfarmers, will pay semi-gross annual rent of NZD446,900 for its Mangawhai Central outlet, on an eight-year lease running through to 2030 with eight further six-year rights of renewal with a final expiry in 2078.

  • Sources: Inner West Courier, Australian Financial Review and New Zealand Media and Entertainment
  • bigbox

    Kingfisher FY2021/22 results

    Continued growth, new trade strategy

    Kingfisher saw continued growth in most segments during 2021. Surprisingly, it sees strong future growth prospects in do-it-for-me/trade sales, buoyed by its TradePoint service at B&Q stores.

    UK and EU based home improvement retailer Kingfisher has always been an interesting hardware company to study, as it is at the crossing point of so many cultural and economic currents. In its results announcement for its FY2021/22 released in mid-March 2022, the eddies and interplays in those currents are plain to see, and the effects they produce might foreshadow industry developments globally, including in Australia.

    The core element that most home im6provement results will concentrate on during 2022 is what markets and economies emerging from the COVID-19 pandemic will look like, and how those markets will respond to post-COVID concerns such as inflation, supply chain restrictions, and geopolitical instability.

    A major problem retailers struggle with is to work out what changed elements are structural and at least semi-permanent, and which elements are purely transitory. In most cases, of course, changed elements are a combination of both: a transitory trend fades out, but leaves a degree of structural change in its wake.

    One way of conceptualising all of this is to see that the 2020s idea of "home" has changed fundamentally from the 2010s idea of home. There are both practical, concrete changes driving that - such as the increase in work from home (WFH) - as well as more cultural, emotional shifts, such as a greater need for safety and security.

    In that context, home improvement retail is part of the process people use to make these transitions, and the success of retailers will come down to how well they facilitate the transition.

    Financial performance

    In terms of retail sales, Kingfisher overall saw sales for its FY2021/22 (12 months to January 2022) come in at GBP13,183 million, up by 6.8% over the previous corresponding period (pcp), which was FY2020/21. According to Kingfisher, in constant currency terms the increase would have been 9.7%, and in like-for-like (LFL) constant currency it would have been 9.9%.

    As has become common since the pandemic, Kingfisher also supplied the comparison with the pre-pandemic FY2019/20 period. The company stated that the current results represent a 18.1% increase over that period, in constant currency LFL terms.

    Profit for the overall group was GBP1148 million, up by 14.5% on the pcp.

    Breaking that result down by major geographic areas, the UK & Ireland region returned revenue of GBP6505 million, up by 13.3% on the pcp. Profit came in at GBP794 million, up by 16.6% on the pcp.

    France retail sales were GBP4498 million, up by 4.4% on the pcp. Profit was GBP221 million, an increase of 22.5% on the pcp.

    The "other international" category, which includes Poland, Iberia (Spain and Portugal) and Romania, returned revenue of GBP2180 million, which represented a decline of -4.8% on the pcp - though this was still up by 9.2% on the FY2019/20 period in constant currency LFL terms. Profit was GBP133 million, a decline of -5.8% on the pcp.

    Major brands

    Kingfisher's four major brands - B&Q, Screwfix, Brico Depot and Castorama - are responsible for 83.5% of its sales. B&Q had retail sales of GBP4178 million, up by 12.7% on the pcp. Screwfix saw sales increase by 14.3% to GBP2327 million.

    In France, Castorama's sales were GBP2296 million, up 1.4%, but up 5.9% in constant currency terms. Brico Depot had sales of GBP2202 million, up 7.7%, which would have been 12.5% in a constant currency comparison.

    Key issues

    Generally speaking, large home improvement/hardware retailers tend to set strategy according to specific circumstances. There is, first and foremost, the actual market situation, in terms of how much underlying demand is present, and whether this represents an increase or decrease. Secondly, there is the position of the retailer itself, how the retail "surface" it presents to those markets influences its ability to generate revenues.

    Thirdly there are the channels into those markets. Most broadly over recent years that has related to the development of ecommerce, but this also involves the number of stores and the types of stores. Ecommerce itself also breaks down into various path to purchase and path to access patterns, such as in-store purchase on mobile apps and click-and-collect.

    Fourthly, there is what might be called path to product, which is how the retailer goes about meeting established customer demand through sourcing products from external and internal supply chains, including an element of product development.

    The general situation that most home improvement/hardware retailers find themselves facing is that, after coping with high levels of demand during the two pandemic years of 2020 and 2021, markets are not entering a post-pandemic period, where demand remains elevated when contrasted with 2019, but reduced on a prior year comparison.

    A big part of the post-pandemic markets, as 2022 continues, is coping with additional external, geopolitical/economic pressures, which include, for example, Russia's invasion of Ukraine, the continuing fallout from Brexit, and growing economic instability in Turkey.

    For Kingfisher in presenting its FY2021/22 report, these were the key issues that emerged:

  • The ongoing development of ecommerce, beyond simply growing market share, including the ongoing growth in mobile device retail
  • The interrelationship between DIY and do it for me (DIFM)/trade services
  • Increases in the consumer price indices, and how this affects products/brands, especially in regards to what Kingfisher terms "own exclusive brands" (OEBs), which are a combination of home brands and captive brands
  • Store number, size and geographic distribution
  • Ecommerce/digital

    For the overall Kingfisher group, ecommerce sales were 18% of the total, which was the same number as for the pcp, representing a 10% growth over FY2019/20. Click and collect sales were at 73% of all ecommerce sales, down from 78% in the pcp. However, digital is having a stronger overall impact on sales, according to Kingfisher CEO Thierry Garnier, as he stated in his prepared remarks at the results presentation:

    Our e-commerce sales have almost tripled on a 2-year basis, with penetration up 10 percentage points to 18%. And our digitally-enabled sales now represent 26% of sales. Here I mean the sales coming from direct e-commerce channels as well as digital orders in-store for click & collect and home delivery. This new KPI helps us measure how well we are adapting to changing customer behaviours.

    In response to an analyst's question, Kingfisher chief financial officer Bernard Bot broke down the ecommerce numbers further relating to share of sales:

    On online, as we said, excluding Screwfix, we're above 7%. If you look at the difference between the banners B&Q is comfortably above 10%. And then the French banners are comfortably above 5%.

    While other paths to customer such as click and collect are important, Mr Garnier also sees possibilities in home and jobsite delivery services.

    We believe that faster home delivery can be a significant market share driver for us. In August last year, we launched Screwfix 'Sprint', offering one-hour delivery to customers. The services currently covers over one third of UK postcodes, with an average delivery time of around 45 minutes and a fastest delivery time to date of an incredible 8 minutes.
    Looking ahead, we remain committed to delivering strong growth in e-commerce sales through providing faster speed and convenience. We are moving towards home delivery for full store ranges, and towards faster click & collect and last-mile delivery options.

    One element driving Kingfisher's ecommerce expansion is its use of store-based order fulfilment, which means sourcing orders as close as possible to the delivery location.

    The company is also sensitive to the possibilities in mobile ecommerce. Mr Garnier stated:

    Customers are using mobile more than ever to shop home improvement, and this channel continues to be the fastest growing for us. Mobile sales are up by 300% on a 2-year basis.
    Last year, we launched the new Castorama France and Screwfix apps. The new Screwfix app has been downloaded 2 million times. It has a number of innovative new features, including geolocation, to speed up in-store pick-ups, and we have integrated Screwfix's one-hour delivery service, Sprint.

    In addition to these efforts, Kingfisher also launched an online marketplace in March 2022. According to Mr Garnier:

    Earlier this month, we launched our first e-commerce marketplace, on B&Q's, using scalable technology developed with Mirakl. This will dramatically accelerate the product choice that we can provide our customers.
    Our initial offer comes from carefully selected third-party sellers in four home improvement categories - wallpaper, lighting, power tools and lastly, a new category for B&Q, small domestic appliances.

    The intent is essentially to better "monetise" the high amount of traffic that the B&Q website attracts.

    DIY and DIFM-trade

    Perhaps the biggest surprise, especially for analysts, was Kingfisher announcing expanded measures to secure more market share in the DIFM-trade sector. Kingfisher released more detail regarding its market split between DIY and DIFM/trade. Overall, Kingfisher revenue is 49% DIY and 51% DIFM/trade. That's the exact ratio in the UK, while France is 52% DIY and Poland is 47% DIY.

    Year-on-year revenue growth in DIY has been 15% while in DIFM/trade it has been 7%. However, Kingfisher is outgrowing the overall market in DIFM/trade, with that number at -3% on a compounded annual growth rate (CAGR) over two years, while Kingfisher's CAGR number is 10%.

    According to Mr Garnier in his prepared remarks:

    While Kingfisher has embraced the resurgence in DIY, our outperformance of the market has been driven by our DIFM and trade business. We have seen a strong performance of Screwfix and TradePoint, we have launched new trade-focused own brand ranges, and we have invested in our showroom products and installation services, as well as our broader store and online services portfolio (including our NeedHelp marketplace).
    We are well positioned to capture the growth potential of both DIY and DIFM/trade, and we are executing on plans to further increase trade customer engagement.

    Mr Garnier went on to delineate just how big this opportunity is:

    Trade customers represent a GBP50 billion addressable opportunity for Kingfisher in the UK, France and Poland. Earlier on in the presentation I told you that DIFM and trade represent 50% of our sales, and that we have significantly outperformed the market here over the last two years.

    In particular, Mr Garnier sees TradePoint, the DIFM/trade services offered through the largely DIY-focused B&Q stores, as having strong potential. Its revenues stand at GBP830 million, and it has grown by 20% in the reporting period, and by 33% over the past two years.

    Mr Garnier sees this as a high performance category:

    Our data at TradePoint shows that trade customers shop more frequently than retail B&Q customers, and have a 60% higher basket.

    The move to trade is general across the group:

    Each of our banners is executing on ambitious plans to target trade customers. These include trialling new store layouts and concepts, creating more trade-focused OEB ranges, offering a more user-friendly and integrated digital experience, increasing the speed and convenience of order pick-ups, and further developing our trade loyalty programmes.

    In response to an analyst's question, Mr Garnier further outlined the commitment to trade, noting that this was partially inspired by major US retailers The Home Depot and Lowe's Companies:

    We are convinced that all across the group we have opportunities with the trade. And you see that in the presentation. We have learned from Home Depot from Lowe's. We have spent time on these. We have learned from TradePoint. You see that we did plus 33%, two-year like-for-like for TradePoint. That's very good. Therefore, all across the group, we believe that inside big boxes you have opportunity to do a proper job for the trade.

    Own exclusive brands (OEB)

    One of Kingfisher's real strengths (arguably largely developed by Mr Garnier's predecessor, Veronique Laury, but ably continued by him) has been its development of OEBs. These are now responsible for 45% of Kingfisher sales overall, and have grown in LFL sales by 19% on a comparison with FY2019/20.

    Mr Garnier said in his prepared remarks that he sees this as a strong growth opportunity:

    We are increasingly leveraging the scale of the Group to provide differentiated and specialised products for our trade, discounter and general home improvement banners. During the year we created an additional portfolio of 32 new and redeveloped OEB brands. Some of our OEB ranges, such as Magnusson and Titan, are significantly outperforming sales volumes of major branded competitors.

    Mr Garnier outlined some of the ways in which this has developed under his stewardship in response to an analyst's question.

    OEB, I don't feel there is any execution issue today. We have a good balance between the group and the banners. You see that the penetration of OEB continued to be stable or grows slightly, while at the same time, we have introduced in the past two years a lot of local brands. You'll remember in 2019, we said, well we are missing brands, et cetera so we - even some question with some of you saying, well how come you will increase local brands and still being strong on OEB? How come you - it will impact your margin?
    But today you see that OEB, it's stable or growing. I'm very happy with that and very happy with the new innovation coming in. We mentioned kitchen in the past two years with incredible success. It's very rare to see the same range of products successfully in absolutely every country.

    As items with a built-in higher margin, Kingfisher also sees OEB as a means to keep prices contained in a high-inflation environment.

    Store numbers and size

    One of Mr Garnier's insights has been that the move to constantly increase store sizes in big box retail might not be the best way to go in the future. As he stated in his prepared remarks:

    We continue to increase our store numbers, while aiming to reduce the average size per store. We are doing this by opening more 'compact stores' and 'medium-box' stores, and by 'rightsizing' a relatively small proportion of our larger format 'big-box' stores.
    Compact stores are an important driver for continued market share growth in urban areas. Last year we tested 20 new compact stores across the UK, France and Poland. These tests took place in urban retail parks, high streets and in supermarkets.

    The company has trialled size reductions on larger stores, with what Mr Garnier considers strong results:

    The B&Q results have been very good, with space reductions of 15 to 30% all taken over by discounter retailers. Since reopening, the stores have exceeded our performance expectations, with strong sales retention and improved profitability.
    Following on from these trials, we have now finalised our assessment of our property portfolio and future space requirements across Kingfisher. We are announcing today that up to 40 'big-box' stores across B&Q and Castorama France will be rightsized over the next 10 years. This will include a reallocation of space to e-commerce operations and 'dark stores'. The space reduction equates to circa 3% to 4% of the combined selling space of B&Q and Castorama France.


    One way of looking at what is happening at Kingfisher and other global large home improvement markets is something of a re-segmentation of the markets. Re-segmentation typically occurs when products and practices "jump over" what are really income/wealth levels.

    For example, pre-pandemic DIY was something that households on a budget would be more actively interested in than more established, wealthier households. The pandemic helped to change that as DIFM/trade simply wasn't an option, and with more people isolated at home with few options, DIY seemed an interesting activity.

    Post-pandemic, these segments are now more jumbled, with the main drivers being simply ability, time and inclination. Kingfisher quotes some very encouraging numbers for people in the 18 to 29 year-old age range, with 58% of them reporting increased DIY activity, and 52% intending to do more.

    Yet in some ways this kind of re-segmentation really misses the point. Kingfisher also reports that 40% of its customers are doing WFH, and that most of these predict this will not change for at least the entirely of 2022. That is a really radical shift in how people use and relate to their home space, and it points to a greater revolution that is underway.

    The real face-off that we're seeing at the moment is between people who accept that the pandemic has made strong, permanent changes to cultures and societies, and those who long for a return to how things were in 2019. The key to understanding how this works is that the pandemic has functioned as much as a catalyst as a reagent in encouraging these changes. For example, imposed social isolation revealed just how bizarre, in the age of computers, smartphones and high-speed internet, the idea of a five days a week mass migration to cities by workers had become.

    What is most important about the people committed to changing how their dwelling works as a home is that this type of revolution is not about re-doing a couple of rooms, adding storage or painting walls a new colour. People are really re-thinking how their entire dwelling works for them.

    Download hnn-brief-005


    Big box update

    Bunnings trying out electric trucks with Linfox

    The Victorian state government expands the number of Bunnings stores with pop-up COVID-19 clinics

    Logistics and transport specialist, Linfox, recently confirmed it is trialling new Fuso eCanters as part of its Bunnings contract.

    Bunnings' two all-electric Fuso eCanters are delivering home and lifestyle products to local stores in Melbourne's southwest.

    Powered by 100% renewable electricity, it is a Bunnings first. At least 60 tonnes of carbon dioxide equivalent emissions (CO2-e) can be avoided annually compared to the same size Euro 6 diesel powered truck, based on anticipated usage.

    According to Linfox, the eCanters can be recharged to 80% capacity in an hour using a 40kW DC fast charger, or fully charged in four hours.

    The electric vehicles form part of Bunnings' sustainability strategy with a pledge to reach net zero Scope 1 and 2 emissions by 2030.

    The trial will assist Bunnings to assess methods of transitioning to lower emissions transport in its supply chain in the future. Linfox executive chairman Peter Fox said:

    As leading Australian retailers continue to reduce reliance on traditional energy sources, Linfox is proud to support our customers' ambitious sustainability targets.
    Act Sustainably is a key strategic driver in our Leading the Way 2025 business strategy, and this includes a growing fleet of electric vehicles replacing diesel powered vehicles on suburban transport routes.
    Supply chain partners have an important role to play in the transition to renewable energy and the action we take now will determine our future and the future of generations to come.

    Built by Daimler Truck, the Fuso eCanter will recharge using a rapid charger at Bunnings' Laverton distribution centre.

    Daimler Truck and Bus Australia Pacific president and CEO, Daniel Whitehead, said the electric Fuso eCanter is ideally suited to help Bunnings achieve its sustainability targets. He said:

    We are thrilled Bunnings will use Linfox operated zero emission Fuso eCanters as part of its clear commitment to reduce carbon emissions and address climate change.
    The eCanter is a practical workhorse and its full suite of active safety features, including Advanced Emergency Braking System (AEBS), allows fleets to look after the planet and their workers at the same time.

    More COVID-19 clinics

    The Victorian government announced an additional five Bunnings stores across metropolitan and regional areas to the list of pop-up vaccination sites. Vaccinations have been available at Victoria-based Bunnings' car parks in Craigieburn, Tarneit, Sunshine, Mill Park and Mildura. Health Minister Martin Foley said:

    We're delighted that this fantastic partnership with Bunnings is providing Victorians with yet another way to get their COVID vaccination.
    These pop-ups will focus particularly on areas with fewer points of GP and pharmacy access and provide an easy and convenient way to get a jab while doing some shopping.

    More stores will be added and other pop-ups will target community and cultural groups with lagging rates. Just 42% of Victorians aged 18 to 29 have had their booster and 53.6% of those in their 30s.

    The federal government will also launch a $13 million advertising campaign to increase COVID booster vaccination rates ahead of winter. The campaign across television, print and digital will highlight the importance of a third jab. More than 6.3 million eligible Australians are yet to be boosted.


    The Victorian state government enlisted Bunnings to host 20 pop-up clinics - HNN Flash #86, March 2022

    Big box update

    Bunnings plans store development in Cowra, NSW

    The Victorian state government is pushing to lift its COVID-19 third dose vaccine rate before winter arrives, enlisting Bunnings to host 20 pop-up clinics

    Cowra Shire Council is expected to approve a $10 million expansion of the Bunnings store in Redfern Street, Cowra (NSW). The council's general committee recently approved a development application (DA) from Bunnings to expand its current store, according to the Cowra Guardian.

    The application seeks consent for the redevelopment of the existing Bunnings warehouse site in the following manner:

    The demolition of existing buildings; construction of a hardware and building supplies centre including a warehouse, covered outdoor nursery, bagged goods store, timber trade sales area, office, amenities and loading areas; seven wall signs and one pylon sign; a main carpark accessed from Redfern Street containing 91 car parking spaces; a secondary carpark accessed from Mulyan Street containing 15 car parking spaces; tree removal and new landscaping works.
    In addition, ancillary civil engineering works including earthworks, stormwater works and road and access works including directional signage and line marking to facilitate vehicular access, as well as consolidation of allotments.
    The new warehouse will be situated on the western part of the site with the main car park on the eastern side of the building.

    Councillors were told by Cowra Shire staff the current Bunnings store would only close for trade for a short time with the work to be carried out in stages. Mayor Bill West said:

    We've been looking for this sort of increased capacity and business and this is what we've got. It's been assessed well and a great benefit to the community...

    Vaccine pop-ups

    Victorians are being encouraged to flock to pop-up COVID-19 vaccination hubs at Bunnings stores across the state to lift third-dose rates ahead of winter.

    The state government announced the hardware chain will host 20 temporary clinics at various Melbourne and regional Victorian sites. The first hubs have opened in Wodonga, Keysborough and Melton East. They will operate between 8am and 1pm, and will remain open for a week.

    Seventeen more Bunnings vaccination pop-ups will follow, with work still being done to determine which shops are chosen.

    The rollout of the pop-ups at Bunnings stores will build on Victoria's success at the former Bunnings in Melton, which delivered more than 150,000 jabs into arms.

    Wesfarmers digital

    Wesfarmers is currently working on its new OnePass online subscription model that has replaced the old Club Catch loyalty program at its online marketplace business Catch Group, reports The Australian.

    It believes the subscription program can be handy for keeping shoppers bonded to Catch but also other parts of the Wesfarmers' retail divisions. It has set up a new corporate entity called Wesfarmers A Plus, with its own board. Its directors include Wesfarmers CEO Rob Scott as well as the CEOs of the conglomerate's key business units including Bunnings managing director Mike Schneider, head of Officeworks, Sarah Hunter and Kmart Group boss Ian Bailey.

    Also on the Wesfarmers A Plus board is Nicole Sheffield, the recently appointed head of digital and data for Wesfarmers who came from Australia Post. Ms Sheffield has also been appointed the first female president for the peak industry body, the Australian Retailers Association.


    Wesfarmers recently released results for its FY2021/22 first half.

    Wesfarmers-Bunnings results FY2021/22 H1 - HNN Flash #82, February 2022
  • Sources: Cowra Guardian, Australian Associated Press and Herald Sun
  • bigbox

    USA update

    Home improvement livestreams on the rise

    Lowe's and Home Depot see web-based events as a way of keeping customer engagement up

    Lowe's and Home Depot are betting they can keep consumers interested in home improvement projects via online and in-person workshops.

    Both retailers want to hold onto the customers that they gained during the two years of the Covid-19 pandemic, when homebound shoppers invested heavily in improving their living spaces. Now, that spending boom is expected to moderate as the outside world competes for attention - but livestreams may help to keep the retailers' momentum from flagging, and customers are now increasingly comfortable with online workshops. Bill Boltz, Lowe's executive vice president of merchandising, told Bloomberg:

    We did some virtual stuff. We saw success with it, so we wanted to keep that option.

    Early registrations for the streamed workshops, part of an initiative the retailer calls DIY-U by Lowe's, were fully booked, he said, while adding that customers are still looking forward to in-person events as well.

    The online and in-store events are part of efforts to boost spring sales in North America - a crucial season for home-improvement retailers as warmer weather sparks an increase in gardening and building projects.

    Livestreams are one way to keep consumers spending and companies will likely keep investing in them, said Ken Fenyo, president of research and advisory at Coresight Research.

    It's a format that's clearly catching on: Americans spent about USD5.6 billion on livestream shopping in 2020, according to data from Coresight. The firm estimates that the amount doubled to USD11 billion last year and will reach USD26 billion by 2023. As of 2021, about 30% of U.S. consumers had viewed livestreams. Among those, half have made purchases. Mr Fenyo told Bloomberg:

    We're seeing it really emerge in the US. For a lot of companies we're still in that test-and-learn period when a lot of the focus is on engaging customers.

    Livestreams also attract younger customers, he said.

    Many millennials became first-time homeowners over the course of the pandemic. Mr Boltz said he sees them as a key audience for the livestreams and workshops that Lowe's is offering. He said

    There's still a bunch of do-it-yourself business out there.

    Even if livestreams don't generate an immediate purchase, they can still help build customer loyalty down the line. Mr Fenyo said:

    It's a chance for people who are excited about a topic. It's probably less important that it directly leads to sales. It will probably have a longer-term effect, but the livestream in some ways is a great way to build trust and build excitement that should lead to sales down the road.


    Lowe's announced it will offer livestreams - and in-store experiences - during the spring selling season. Seasonally-themed shoppable livestream and in-store workshops will include "How to Build and Plant a Raised Garden Bed" and "How to Create a Beautiful Lawn," as part of its new DIY-U by Lowe's program hosted by Lowe's expert Red Vest store associates.

    Lowe's campaign for spring will feature the return of SpringFest, which debuted in 2021. This year's month-long SpringFest will have "in-store lawn and garden 'walking tours'". Perhaps in a nod to the fact that spring is the time that many people begin to shake off their seasonal affective disorder (SAD), the company will also reveal 12 "mood-boosting DIY projects," arranged by a number of lifestyle influencers.

    There will also be a promotion for Earth Day, a holiday that is becoming increasingly relevant as the global ecological crisis worsens. In observance of Earth Day (April 22), it said it will "bring up to one million new plants into the world." Or at least, it will be bringing the potential for that many plants to come into the world: for every person who posts a tulip emoji with the hashtag #SeedingSpring on the first day of spring, Lowe's said it will "share a real-life seed" at surprise giveaways hosted at select store locations across the US. The home improvement retailer will also be planting seeds in its hometown of Charlotte, North Carolina.

    The suite of experiences is aimed, in the company's words, at "seeding spring." In other words: providing consumers with the tools, know-how and inspiration that they'll need to make the most of the spring season.

    Home Depot

    At the same time, Home Depot is offering virtual "Homeowner 101" workshops on projects from boosting a home's curb appeal to outdoor living spaces.

    And as a way to further strengthen its position among professional customers, the big box retailer has introduced a virtual workshop series to offer business advice to professional contractors.

    The virtual workshops will cover a wide range of topics: using social media best practices for businesses, managing business expenses and identifying trends within the sector, according to a company announcement. Home Depot kicked off the series with a workshop taught by an associate professor of finance at Georgia Tech's Scheller College of Business. The workshops will run every other month.

    Home Depot's experimentation with livestream programming also includes DIY workshops and seasonal workshops.

  • Sources: Bloomberg, Chain Store Age and The Drum
  • bigbox

    UK update

    B&Q launches home improvement marketplace

    The retailer is enhancing its ecommerce platform to offer a bigger choice, with the ambition of millions of products being available

    B&Q customers will have access to an additional 100,000 products within six months via selected third-party sellers on its new online home improvement marketplace at This will triple the existing number of SKUs.

    B&Q's marketplace proposition will both expand existing ranges and add new categories, with products available for home delivery and click + collect options coming in the future.

    Customers will be able to choose from an expanded selection of wallpaper, lighting, and power tools, as well as a new range of small domestic appliances, a new category for B&Q. The home improvement retailer has already signed up 17 third-party sellers, including Black & Decker, Breville and Osram, to sell through the marketplace.

    All third-party sellers at will be selected by B&Q experts. Sellers undergo a verification process to ensure they complement B&Q's existing offer. Products sold by third-party sellers are easily identified by the description 'sold and shipped by [seller name]' underneath the product title.

    Marketplaces are growing in popularity, with nearly half (48%) of online product searches now starting on marketplace platforms in key markets including the UK and US [survey by Inriver]. B&Q's new marketplace is expected to accelerate its e-commerce growth. It will be hosted online at B&Q's website ( and the B&Q app.

    B&Q's is one of the top retail websites in the UK with significant traffic, giving third-party sellers access to a larger sales platform. For B&Q, the launch of a marketplace means will become even more of a strategic asset to the business, as site traffic grows in line with an increased product offering.

    The multi-channel approach of B&Q's marketplace makes it easier for customers to shop with online and in-store benefits. The integration with B&Q's network of over 300 stores nationwide also means customers can conveniently return many items purchased from the marketplace in-store. B&Q's CEO Graham Bell CEO, said:

    At B&Q, we're focused on improving shopping experiences for our customers to make shopping with us even more convenient. Around 85% of our customers' shopping journeys start online. With the launch of marketplace, customers can now access an even bigger choice of home improvement products online, with the convenient option to return many products at their local store, with click + collect options coming in time.
    Marketplaces are a rapidly growing retail phenomenon around the world and we're excited by the potential this model brings in combination with the convenience of our fulfilment capabilities. The unique multichannel combination of this online marketplace, along with our network of 300 stores, means we can offer customers a level of choice, speed and convenience that pure play retailers cannot match.

    B&Q's marketplace reflects evolving customer demand, with the shift to online and the need for speed, convenience, and choice, and creates a scalable model for Kingfisher, B&Q's parent company, to roll out marketplaces in other markets and banners.

    To support the operation of the marketplace model, Kingfisher has partnered with Mirakl, an enterprise marketplace SaaS platform. Mirakl brings a lot of expertise, shaped by working with over 300 retailers that have adopted the marketplace model including Decathlon and H&M Home.

  • Sources: Kingfisher, Mirakl and Retail Gazette
  • bigbox

    Big box update

    Legal precedent explored by Bunnings court case

    In New Zealand, a building company has succeeded in having a NZD202,000 demand made by Bunnings set aside, based on ruling by a High Court judge

    Bunnings has been accused of unfair dismissal under one of the more obscure provisions of the Fair Work Act, which prevents discrimination against employees for their "social origin", according to a report in the Australian Financial Review (AFR).

    The former employee is suing Bunnings for reinstatement, or $167,000 in damages, in the Federal Circuit Court, over claims his sacking was without merit. Bunnings is seeking to have the case dismissed on the grounds that it has no reasonable prospect of success.

    As background to the case, the AFR states the employee had been employed for six months at Bunnings, and had received a promotion. He was dismissed after details of his earlier conduct at another employer were revealed.

    That conduct, which occurred more than a decade in the past, related to the employee making unwanted sexual advances towards a fellow employee. This was followed by what has been termed "unwelcome sexual intercourse", while the other employee was heavily inebriated, after a drinks function.

    His conduct has led to him being denied certification as a Chartered Accountant.

    According to court documents, the former Bunnings employee claims that there is nothing to indicate he is a serial offender, and that he has suffered from the stigma of the previous incident.

    The "social basis" clause of the Fair Work legislation has been taken to relate mainly to "class-based" discrimination in the past.

    Bunnings' application to throw out the lawsuit is listed for directions on March 29.

    New Zealand court case

    In June 2021, Bunnings in New Zealand served residential builder Sunrise Management with a statutory demand to pay NZD202,312 for building supplies including Gib board, cedar panelling, flashings and other supplies for the construction of houses.

    Sunrise made an application to the High Court in Auckland to set aside Bunnings' demand for payment, according to news website,

    The judgment by associate judge Rachel Sussock said the application relied on Sunrise having a "reasonably arguable" counterclaim against Bunnings which exceeded the amount of the demand.

    The judgment said Sunrise's counterclaim related to the supply of weatherboards by Bunnings.

    Prior to it becoming a commercial customer, Sunrise said Bunnings made clear representations that it did not sell imported weatherboards - specifically, not weatherboards from China.

    Sunrise said that contrary to those representations and to Sunrise's order and Bunnings' invoices for the weatherboards, the weatherboards supplied were manufactured in China.

    Sunrise said that before it became aware of the origin of the weatherboards, they were used in the construction of four houses. The weatherboards on two of the houses had since been replaced and two more were to be reclad, it said.

    As a result of the alleged breach of contract, Sunrise said it had suffered loss exceeding NZD300,000, with a claim filed in the District Court to recover the loss shortly after the application to set aside was filed.

    Bunnings said that Sunrise's weatherboard claim was without merit, the judgment said.

    Bunnings is disputing it in the District Court including on the grounds of limitation and remoteness of damage and had brought a counterclaim for the amounts owing in respect of the weatherboards of NZD37,414.

    Bunnings said a no set-off clause in its terms of trade prevented Sunrise from relying on any counterclaim in seeking to set aside the demand.

    The judge said to succeed in its application to set aside Bunnings' demand on the basis of a counterclaim, Sunrise did not have to prove its counterclaim. Sunrise was only required to establish that its position was reasonably arguable on affidavit evidence, the judge said.

    The judge found it was reasonably arguable that Bunnings made alleged misrepresentations which induced Sunrise to enter into a contract. The judge said it was reasonably arguable that Bunnings' no set-off clause did not apply.

    The judge said it was reasonably arguable that Sunrise had a counterclaim that exceeded the value of Bunnings' statutory demand.

    The statutory demand was set aside, the judge said.

    To read more background details of this case, go to:

    High Court judge in New Zealand rules that Bunnings' NZD202,000 demand to builder be set aside - Stuff NZ
  • Sources: Australian Financial Review and Stuff NZ
  • bigbox

    Big box update

    Decision on Bunnings store in Ulladulla, NSW deferred

    In 2020, a development application was lodged for a new Bunnings Warehouse in Ulladulla

    The matter of traffic conditions surrounding a proposed Bunnings store in the NSW coastal town of Ulladulla was tabled at a Shoalhaven City Council meeting recently, according to the Milton Ulladulla Times. Traffic considerations will determine whether a Bunnings Warehouse in Ulladulla gets approval.

    Elected representatives voted that the item be "deferred to further consider the accumulative traffic impact" on Parson Street, Dowling Street and Princes Highway, and that the network modelling is presented to council for consideration. The initial recommendation put forward at the meeting was to approve the development application, by way of deferred commencement but all councillors were all for the item being deferred for further consideration.

    The proposed development incorporates a subdivision of Lot 23 2A Parson Street, Ulladulla and consolidation of the southern portion with Lots 1-5 189-197 Princes Highway. Construction of associated infrastructure includes roadworks (new roundabout, median and entry/exit driveways) on Princes Highway and a partial extension of St Vincent Street is part of the development application.

    Prior to lodging the current application, Bunnings sought pre-development advice from both council and Transport for NSW (TfNSW) in 2019 regarding potential access opportunities to the Princes Highway and St Vincent Street.

    TfNSW required the provision of a roundabout, a new median on the Highway and the staging of access works to the Highway in two stages.

    Initial access for patrons is to be provided direct entry to the highway with the provision of a roundabout at the junction of Dowling Street and median works north of the roundabout.

    An associated report also noted "public benefits as a result of the provision of additional infrastructure and employment opportunities" from the development.

    Larger Bunnings proposal

    The development application that was lodged on January 30, 2020 for a new Bunnings store, if approved, would be more than double the size of the existing smaller store.

    The proposed Bunnings Warehouse would be located between 189 to 197, Princes Highway in Ulladulla. It represents an investment of more than $16 million by the retailer.

    The development would replace the existing smaller format Bunnings store, with all current team members transferring to the new warehouse once complete.

    Features of the new warehouse will include the main warehouse, outdoor nursery, timber trade sales area, cafe, and a playground, along with click and collect services.

    The store would span more than 11,000sqm and have parking for more than 180 cars.

  • Source: Milton Ulladulla Times
  • bigbox

    USA update: Lowe's

    DIY-U by Lowe's makes its debut

    The retailer is targeting first-time millennial homeowners with an instructional livestream series that includes an e-commerce component

    DIY-U by Lowe's is a home improvement platform that features live and on-demand educational resources for both kids and adults. Livestream sessions are offered twice per month and will include opportunities for viewers to purchase items in real time.

    The company is leveraging high millennial homeownership rates and the affinity for DIY projects by this demographic. Citing a report by the US-based National Association of Realtors (real estate agents) that revealed millennial buyers comprise the largest segment of home buyers - at 37% - Lowe's is tapping into an opportunity to engage with a new generation of DIYers seeking a transformation in how-to learning and experiences.

    During a recent earnings call, Marvin Ellison, chairman and chief executive officer of Lowe's, stated current trends point to increased interest in home improvement.

    We're encouraged by the strengthening millennial household formation trends that will support home buying in the coming years.

    The retailer wants to become the social destination for home improvement DIY enthusiasts.

    The livestreams will be limited to 1,000 participants each in addition to a children's workshop hosted by Lowe's Red Vest store associates as an in-store experience for kids ages 5 to 12.

    The virtual programming hosts will be available to answer project-related questions live during the segment, and participants who attend the virtual workshops will get opportunities to buy supplies.

    Lowe's designed its programming schedule according to season but also incorporated feedback from consumers, which prioritised "flexibility, topic relevance and expert connection" - qualities that resonated most with millennial customers. It will create a natural tie to what customers are tackling around their own home throughout the year.

    The retailer plans to add features that gamify the experience for participants, such as sharing virtual high fives and earning project completion badges. Marisa Thalberg, executive vice president and chief brand and marketing officer at Lowe's in a statement:

    As new generations and new customers embrace DIY, we recognise how valuable our Red Vest store associates can be in providing project 'how-to' help and expertise.
    With the launch of DIY-U by Lowe's, we are making sure that support and a DIY community is available where, when and how people most want it: in-store, live and interactive online, or online on demand.

    Registration for the March schedule has begun and and includes programming that covers "A Bathroom Refresh You Can Do Yourself (How to Install a Vanity)", "Kids Workshop: Shoot the Moon (Build a Game to Compete for the Highest Score)" and "Make Your Home Office Work for You (How to Wallpaper a Room)".

  • Sources: Retail Touch Points, Chain Store Age, PYMNTS, Lowe's Companies, Inc. and RIS News
  • bigbox

    Big box update

    Bunnings South Nowra site sells for $65.3 million

    Two regional Bunnings warehouses are pilot sites for a Victorian state government program in which food supply businesses can click-and-collect rapid antigen tests

    Charter Hall's unlisted Direct Industrial Fund No.4 (DIF4) recently paid $65.3 million for the Bunnings property in South Nowra (NSW) that fronts the Princes Highway. (Charter Hall Direct Industrial Fund No.4 is an unlisted property fund with a major portfolio of Australian industrial properties.)

    With a 240 metre frontage, it is the only Bunnings in the trade area and the largest on the NSW South Coast. The property includes a nearly new, full format warehouse, offering limited capital expenditure over the remaining 11-year lease term. The sale by JLL represents a yield - or return - of four per cent.

    The total site area of 29,350sqm is completely covered by the Bunnings operation and includes an approximate gross leasable area of 17,982sqm and parking for 428 cars.

    This acquisition increases the number of Bunnings properties across Charter Hall's portfolios to 66, representing a gross annual value of almost $3.7 billion.

    Charter Hall Direct CEO Steven Bennett said DIF4's acquisition of Bunnings Nowra adds to the fund's growing portfolio of high quality properties with strong tenant covenants. He told Fairfax Media:

    Bunnings is arguably one of Australia's most trusted businesses and we are proud to add its Nowra store to the fund's long term and resilient tenants.

    The sale of Bunnings Nowra was brokered by Sam Hatcher and Nick Willis from JLL's Retail Investments (Australia), Mr Hatcher said large format Bunnings stores remain very competitively sought after by majority of buyer types.

    They are arguably one of the most secure covenants in Australia. Bunnings Warehouses have been among the most highly sought-after real estate assets since the onset of the pandemic.
    The long leases appeal to investors seeking a defensive and stable income, particularly given the strength of the Bunnings covenant and underlying business performance.

    The acquisition highlights the increasing crossover between retail (now often seen through the lens of last-mile logistics) and industrial property investment mandates, driven by the growth of online shopping and innovations like click-and-collect, according to the Australian Financial Review (AFR).

    Since the onset of the pandemic, there had been over $1.2 billion of Bunnings transactions, Mr Willis said. He told the AFR:

    This level of investment is being driven by increasing weight of capital locally and offshore seeking exposure to both Bunnings and supermarket-based assets. However, supply is becoming increasingly constrained which is driving [yield] compression.

    The Bunnings South Nowra complex opened in January 2021. The former store was demolished in late 2019 to make way for the new $27.8 million building.


    Nowra store opening - HNN Flash #23, November 2020

    RATs at Bunnings stores

    As part of an Andrews Labor Government pilot, more than 100,000 rapid antigen tests are being made available for Victorian businesses in critical industries such meat and poultry processing, as they grapple with staff shortages due to coronavirus infections.

    Eligible businesses will buy their tests through the Business Victoria website before picking them up at the Bunnings Geelong North and Shepparton stores when their allocation is available.

    Bunnings customer service experience team members will be assisting business customers along the way to help to make the process as simple and convenient as possible and will notify them when their tests are ready for pick-up. The test kits are not part of Bunnings general stock supply and are not available for purchase by store customers.

    Innovation and Digital Economy Minister Jaala Pulford said the unit price - $8.25 including GST per unit - was wholesale, plus a small administration fee and neither the government nor Bunnings was making a profit.

    Ms Pulford also said rapid antigen tests were helping people to live and work safely at this stage of the pandemic and Bunnings had the click and collect capability to keep this simple for businesses.

    Bunnings managing director Mike Schneider said the company was really pleased to be helping the government with the pilot by providing an easy and convenient way for critical workforces in Victoria to access rapid antigen tests. He said:

    As always, we're committed to offering community support where it can have the greatest impact and welcome any initiative that helps business keep their team safe and their operations moving, something that we know is more important now than ever.
  • Sources: Sydney Morning Herald, South Coast Register (Fairfax Media), Australian Financial Review, MENA Report, Herald Sun and Geelong Advertiser
  • bigbox

    USA update: Home Depot

    Home Depot has forecast slower growth as the pandemic-fuelled sales boom begins to level off

    Its chief financial officer said investments in building out the retailer's supply chain would continue to pressure gross margins

    The Home Depot reported that its sales increased 11% in the fiscal fourth quarter compared with the year-earlier period. But the retailer gave a conservative outlook for the next fiscal year, with sales trends "slightly positive" and earnings per share growing at a low single-digit pace.

    Revenues climbed 10.7% in the fourth quarter to USD35.7 billion, above forecasts for USD34.8 billion.

    In the fourth quarter, Home Depot's comparable sales figure, which adjusts for store openings and closings, increased by 8.1%. That trend, though flatter than the company's growth earlier in the pandemic, shows Home Depot is still building on gains stemming from a flood of home improvement activity.

    The number of transactions declined by 3.8% on a comparable basis, but the average transaction value was up 12%. Inflation in several product categories was responsible for much of that gain, Home Depot's chief operating officer and incoming CEO, Ted Decker, told analysts on a conference call.

    Sales to professional customers grew faster than DIY sales in the fourth quarter, but demand in both markets accelerated from the third quarter, the company said. Out-going chief executive and current chair, Craig Menear, said during an earnings call:

    Everything we hear from our pro customers is they've got more work than they can handle. I know for myself, it took a while to get somebody out to just do simple projects around my house. We hear that all over the country.

    Mr Decker said he wants home professionals to think of the company as more than a store of convenient purchases.

    The retailer wants to win contractors' larger, planned orders, like thousands of feet of flooring - not just be their choice for last-minute shopping when they scramble to find a tool or finish a job. That significant shift is part of Home Depot's growth strategy as it tries to sustain momentum beyond the pandemic and reach an ambitious target of USD200 billion in annual sales. He told CNBC:

    We're sort of the 7-Eleven for pros - convenience, value, tremendous product and brands - but what we're building now is something completely different and revolutionary to get the pro planned purchase.

    Home Depot executives did not say when the retailer expects to hit that USD200 billion goal, but it would mark a nearly USD50 billion gain from its annual sales in the year ended Jan. 30.

    About half of total sales come from home professionals, chief financial officer Richard McPhail said. He estimated that the retailer's total addressable market in North American is more than USD900 billion.

    Over the past several years, Home Depot has been investing in supply chain hubs to help it better cater to pros. It's in the middle of a five-year plan to invest USD1.2 billion in its supply chain, including the ongoing construction of flatbed distribution centres that can store and deliver larger orders.

    It built the first one in Dallas and plans to eventually open 40 of them across major US markets. It previously filled such orders out of the stores themselves.

    Mr Decker said the giant hubs have allowed Home Depot to carry a wider merchandise mix and given pros more assurance that they can get quantities they need. For example, he said a conventional store could be expected to stock only about 3,000 square feet of flooring - or enough for three odd jobs.

    With the flatbed distribution centre, he said Home Depot is getting sizable single orders such as 7,000 square feet of flooring and 150 doors.

    Slower growth

    The demand fuelling the company's sales growth has evolved as the pandemic progresses. The first phase of the crisis often brought in customers eager to buy home necessities and to tackle DIY projects around the house. As the pandemic's acute early phases subsided, Home Depot saw sales to professional contractors grow, with homeowners becoming more comfortable bringing workers into their homes again.

    Product categories involving more heavy-duty projects, such as electrical, plumbing and building supplies, saw some of the company's fastest growth rates in the fourth quarter.

    However, sales growth will likely slow this year for the home-improvement retailer said, an indication that the sector's rapid expansion during the COVID-19 pandemic is moderating.

    Also, Home Depot's gross margins, a measure of profitability, have been declining recently, partly because of investments the retailer has made in its supply chain.

    Against rising prices, demand from homeowners remains strong, Mr McPhail said, adding that keeping inventories healthy has been a priority. He told the Wall Street Journal:

    Right now, it's more a situation of staying in stock. We're paying more attention to the impact of staying in stock, compared with how inflation might impact us.
  • Sources: Wall Street Journal, CNBC and Financial Times
  • bigbox

    USA update: Lowe's Home improvement

    Lowe's raises forecast as it takes a larger share of home pro spending

    The retailer has also partnered with online grocery delivery platform Instacart to pilot same-day delivery

    Lowe's Cos Inc. has lifted its full-year sales and profit forecasts and offered an optimistic outlook for home improvement demand in the US in the face of rising mortgage rates.

    Aging houses, rising real estate values and generational trends are fuelling demand for home projects. Americans - including millennials, the country's largest generation - have been buying houses and upgrading to bigger ones during the coronavirus pandemic. That has depleted the supply of available homes and inspired some to hire contractors (tradies) to redo a bathroom, replace a roof or take on other similar projects.

    Executives said the extension of remote work policies would also support a step-up in home upgrade jobs.

    These dynamics have lifted sales for both Lowe's and its main competitor Home Depot. Lowe's CEO Marvin Ellison told CNBC:

    When home prices go up, consumers have confidence to invest in their homes.

    He said repair and maintenance projects will drive spending, even in the face of looming prices rise from inflation and a mortgage rate hike. About half of the country's single-family homes were built before 1980, according to data from the Federal Home Loan Mortgage Corp.

    In the fourth quarter ended January 28, Lowe's net income rose to USD1.21 billion, from USD978 million, a year earlier. Sales climbed to USD21.34 billion from USD20.31 billion last year.

    Lowe's same-store sales in the US increased 5.1% in the fourth quarter, as customers made fewer trips to the company's website and stores but spent more when they did.

    Mr Ellison said in a separate interview that a year ago the mix of purchases looked different as shoppers bought cleaning products and supplies for simple DIY projects. Now, major projects are driving a larger share of purchases.

    Transactions in the US fell 4.4% in the fourth quarter compared with the same period, a year ago. Mr Ellison said sales of big-ticket items that cost at least USD500 grew 15.6% in the quarter. The average ticket at US stores and on Lowe's website rose 9.5% to USD95.66 in the fourth quarter, partially due to inflation.

    Sales from home professionals jumped 23% in the three-month period, too. Professionals tend to be steadier and more lucrative customers.

    Lowe's has been chasing pros with a new loyalty program and perks like reserved parking and free air for tires at its stores.

    Lowe's doubles down on its commitment to pro customers - HNN Flash #80, February 2022

    Pro sales are growing for another reason, too. As the omicron variant recedes and schedules get busier again, some people are hiring contractors rather than taking on DIY projects.

    Like other retailers, Lowe's is seeing costs rise and chasing inventory due to supply chain delays. Inflation drove about half of Lowe's sales increase in the second half of the year, Mr Ellison said.

    In some categories, such as appliances, he said Lowe's has expanded its portfolio of merchandise, so shoppers have a wider variety if an item is out of stock.

    Mr Ellison said the retailer is working closely with suppliers, sourcing more products from the US and importing inventory from other countries. It opened coastal holding distribution centres on the East and West coasts where it can store products from other parts of the globe rather than ordering just in time - an approach that can help retailers' balance sheets, but make them vulnerable if ports are temporarily shuttered or congested.

    He said Lowe's already has its inventory in the US as it gears up for spring, its busiest season. As the weather warms, it will ship merchandise from the coastal holding facilities to regional distribution centres and then stores.

    It's an extra step, but that extra step has given us the ability to have a better in-stock position than most of our competitors.

    Looking ahead, Lowe's expects total sales of USD97 billion to USD99 billion for its fiscal 2022, compared to a previous forecast of USD94 billion to USD97 billion. The company forecast that profit will grow by approximately 8% to 13%.

    One hour delivery

    Lowe's is also partnering with a popular online delivery platform to test same-day delivery in as fast as one hour. It is collaborating with Instacart to make approximately 20,000 products, including small home appliances, building supplies, light fixtures, and garden and outdoor essentials, delivered from the store to their door.

    Lowe's is the first dedicated home improvement partner available on the Instacart marketplace, and should help Lowe's stay competitive with Home Depot in offering on-demand delivery.

    Same-day Lowe's delivery via Instacart is initially available in Boston and Charlotte, North Carolina, with plans for expansion.

    To begin shopping from Lowe's for same-day delivery via Instacart, customers can visit the dedicated Lowe's page on the Instacart site, or select the Lowe's storefront on the Instacart app. For all orders, an Instacart shopper will pick and deliver the order within the customer's chosen delivery timeframe. Customers can follow along and live chat with their shopper in real-time as needed. Mike Shady, Lowe's senior vice-president of online, said:

    Online is a key piece of our omnichannel strategy, and the combination of Lowe's home improvement expertise and Instacart's ability to help deliver right to your door within hours offers a new, convenient way to shop.
    As we explore a suite of solutions to meet our customers' same-day and next-day delivery needs, this partnership is enhancing the customer experience and providing the choices today's customers demand.

    Lowe's rival The Home Depot partnered with Walmart's white-label GoLocal delivery service to offer same-day and next-day delivery in October 2021. The service is limited to items that easily fit in a car such as fasteners, paint and small tools.


    Home Depot hires Walmart to handle local deliveries - HNN Flash #66, October 2021
  • Sources: CNBC, Reuters, Wall Street Journal, Chain Store Age and PR Newswire
  • bigbox

    Wesfarmers-Bunnings results FY2021/22 H1

    Bunnings maintains revenue, sees earnings decline slightly

    After a bumper first half for FY2020/21, concerns were that Bunnings would see a revenue decline. However, the retailer managed to perform better than expectations.

  • The following is a brief summary of this article. To read the full version, please download the full version by clicking the image/link below.
  • Download hnn-brief-001

    Australian conglomerate Wesfarmers has released results for its FY2021/22 first half, which include results for home improvement big-box retailer Bunnings. Wesfarmers recorded a near flat result in total revenue, at $17.76 billion, down by 0.1% on revenue for the previous corresponding period (pcp), which was the FY2020/21 first half. However, earnings before interest and taxation (EBIT) fell more significantly, to $1.91 billion, down from $2.14 billion in the pcp, a decline of -10.9%.

    Net profit after tax (NPAT) fell even further in percentage terms, coming in at $1.21 billion, down from $1.39 billion in the pcp, a decline of 12.7%.

    Bunnings offered a much better story, with a revenue increase of 1.7% over the pcp to $9029 million. However, earnings before tax (EBT) fell by 1.2% to $1259 million.

    The short-term retreat, however, masks a considerable step-change in revenue and earnings. Compared with the pre-pandemic first half of FY2019/20, Bunnings revenue for the reported half grew by 26.5%, and EBT grew by 34.2%.

    For Wesfarmers, the most significant decline came from the Kmart Group, which includes Kmart, Target Australia and the Catch online business, with EBT at a low of $178 million, down from $487 million in the pcp, a slide of -63.4%. Officeworks also did not do well, with EBT down from $100 million in the pcp to $82 million, a fall of -18%.

    Bunnings in detail

    In terms of the overall hardware and home improvement market, just how well did Bunnings do in revenue terms?

    If we take the raw, overall figures for Australian hardware revenue for the reported period as provided by the Australian Bureau of Statistics (ABS), actual growth in revenue over the pcp was 2.39%. This means that the Bunnings' increase of 1.7% in revenue would seem to be sub-par. In fact, looking at Chart 1, which shows the allocation of revenue across Australia's states and territories as detailed by the ABS, and Chart 2, which shows the distribution of Bunnings' store locations, it's reasonable to assume that Bunnings had more exposure in higher-growth states such as New South Wales (NSW) and Queensland (QLD) than it did to lower growth and negative growth states such as Victoria (VIC).

    If some rough assumptions are made, such as that the revenue generating capability of a smaller format store is 70% that of a warehouse on average, the growth exposure of Bunnings looks closer to a range of 2.7% to 2.9%.

    Yet growth for FY2020/21 H1 over the pre-COVID-19 FY2019/20 H1 at Bunnings did outpace the overall market. Growth in overall hardware revenue for Australia was 20.7%, while in top-line numbers Bunnings grew by 24.3%. If we apply those same calculations to Bunnings in terms of its growth according to store distribution, the growth opportunity was lower than for Australia overall, at around 16.5% to 18.0%.

    So the change that we've seen at Bunnings is sharp over-performance during the first phase of the COVID-19 pandemic, and mild under-performance during the second stage.

    We can only speculate about why that might have happened. Some candidates might be that Bunnings adapted quickly to the difficulties of the pandemic, outpacing other retailers by offering online purchasing, home delivery and click-and-collect services. Also, it could be that specific characteristics of the Omicron variant of COVID-19 might have disadvantaged Bunnings more than it did other retailers in late 2021. (That would include, for example, whether Bunnings enforced retail restrictions - such as denying entry to the unvaccinated - more vigorously than some of its competitors.)

    In his prepared remarks, the MD of Bunnings, Mike Schneider, detailed differences between the first and second quarters that made up the reported half:

    Government imposed lockdowns in Australia and New Zealand impacted quarter one trading and sales. Pleasingly, however, Bunnings was able to recover sales momentum in the second quarter, culminating in a strong Christmas, supported by a good stock position.
    Commercial sales growth remained strong for the half supported by robust housing construction and renovation activity and the execution of our strategy to better serve trades, builders and organisations. Online penetration rose to 4.3% driven by COVID-19 trading restrictions, particularly in Victoria, New South Wales and New Zealand.

    Looking at other performance numbers, these are very much inline with a general slowdown in growth. Store-on-store revenue grew by 1.5% (2021 H1: 27.7%), while total store sales growth was 1.0% (2021 H1: 24.8%). Return on capital (RoC) was, however, higher for the reported period at 79.0% (2021 H1: 76.6%). EBIT margin was slightly lower at 14.3% (2021 H1: 14.7%), but historically high. Chart 3 illustrates these numbers going back to 2013.

    As Mr Schneider commented:

    Overall, we were really pleased with our earnings performance given we were cycling such a strong first half last year, and the cost pressure that's been seen across the industry.

    Mr Schneider also pointed out that Bunnings continued, despite the difficulties of the pandemic, to grow and develop as a retailer:

    During the half the team continue to deliver on our long term strategic agenda. Despite the cost and stock pressures faced by the retail sector, we worked hard to maintain our everyday low prices and strong product availability for customers. We refreshed a number of our product categories with our updated garden care and storage ranges well received, and our new, easier to shop layout for power tools proving popular.
    We boosted in-store service by equipping our team with Push-to-Talk communications. That's allowing us to open additional checkouts quickly when traffic suddenly builds and quickly locate expert team [members] to assist our customers with specialist questions.

    Bunnings has also, according to Mr Schneider, continued to develop its digital capabilities. While the company reached a peak of over 4% of sales coming from online during the lockdowns, this later came down to around 2%.

    As part of our ongoing digital investment, we launched a new e-commerce platform for trade customers. The new mobile friendly website makes it easy for trade customers to shop our full range online, with their PowerPass pricing and arrange delivery to sites or collection at a store. We further improved search performance and personalisation on our new consumer web platform.
    We now have over 110,000 products SKUs available to purchase online. Digital engagement grew with the number of transactions made through Bunnings online store 41% higher than the first half of 2021.

    The three other developments of some note were the launch of FlyBuys, the launch of the first Tool Kit Depot (TKD) stores in Western Australia, and the finalisation of the purchase of Beaumont Tiles.

    In response to a question by analyst Shaun Cousins of UBS, Mr Scott outlined some of the advantages offered by FlyBuys:

    A big part of [launching FlyBuys at Bunnings and Officeworks] is, we have also reset the framework that the shareholder partners are working with Flybuys such that each of our businesses has greater rights around the use of data, which is highly complementary to all of our divisional strategies.
    We also believe - when you think about loyalty programs and data insight programs, from a customer point of view, having the capacity to earn more points and get more value across a broader range of categories really matters. And if you think about consumer-based retail loyalty programs, there is no other program in Australia that provides a broader reach and better value than Flybuys.
    So that's another good reason why our retail brands are keen to be a part of it. And then coming back to what's in it for our retailers, getting the benefit of capturing, you know, cost-effectively capturing customer transaction data in-store is a really key part of each of our divisions growth initiative.

    Mr Schneider followed up Mr Scott's comments by indicating the reception of the program had been positive, and that it fit well with the use of data analytics by Bunnings:

    I've got to say it's, it's something we're really excited about at Bunnings to be a part of, we're seeing really good participation from customers good engagement from our team in obviously reminding customers about scanning their Flybuys cards, but at the end of the day, what this comes down to for us is rapidly accelerating the amount of customer information we have, alongside the fact that the investments we've been making and talking about now for 18 months or so in terms of a data and analytics platform means that we've got the tools to use the information we have.
    I think had we sort of looked at this a couple of years ago, one, the construct probably wouldn't have worked for us, firstly, and then secondly, if we had the data, to be honest, we probably wouldn't have had anything really to, to do with it or meaningful nature.

    In terms of Tool Kit Depot, Bunnings has remained quiet about the development of this trade tool reseller. That partly has to do with the company's desire to develop it slowly through 2022, but also the only current stores are located in Western Australia, which remains somewhat isolated due to pandemic restrictions. The website ( indicates the retailer will sell Makita, Milwaukee, Festool and AEG tools, as well a wide range of tool accessories.

    As for Beaumont Tiles, it seems likely that this will be developed slowly through 2022 as well. Mr Schneider had this to say about the acquisition:

    The acquisition of Beaumont Tiles was completed in November [2021], further improving Bunnings' ability to meet the specialist needs of builders and trades. The business remains separate and distinct with the initial focus on making it easy for Bunnings' commercial customers to access Beaumont Tiles' specialist design knowledge and extensive hard services range.

    One aspect of Beaumont's that is not widely understood is that in addition to its consumer tiles business, it has an entire range of tiles for builders, representing value on bulk orders, as well a well-established business in supplying tiles to large commercial installations.

    In response to a question by an analyst, Mr Schneider also described how he sees the market potentially developing through the rest of 2022:

    What we've seen is, look at that sort of 26 or so percent lift in revenue over sort of a two year period, the split of 65/35 [DIY/Trade], broadly remains the same. So what we see is, people being at home or doing more at home, wanting to maintain the projects that they've done, taking on all the new DIY skills that they've got, alongside the fact that access to trade for small jobs is really difficult.
    The pipeline and what we sort of have, you know, and what we can see in terms of pre-orders and things like that, gives us confidence, as I said in my comments before, about what the next period looks like in terms of not only housing starts, but also additions. But that percentage [trade/DIY] hasn't shifted materially at this point in time.


    The first thing that any analysis of these results for Bunnings needs to state is that the retailer really did "nail" the half. It's not perfect - what would be? - but it is very good. To effectively retain most of the market gains from the exceptional FY2020/21 was an unexpectedly good result.

    As HNN has said in the past, the real challenge for Bunnings as part of a listed company is to now convert those gains into further profitable expansions, so that when the market slides again, as it is likely to do in FY2022/23, revenue from expansion business will replace the peak revenue at Bunnings warehouses.

    It's unclear at this moment just how that will work out for TKD and Beaumont Tiles. Certainly the few images HNN has seen of the TKD stores look very good. At a guess, we're not going to see TKD stores launched on the east coast much before September 2022, if then. It's going to be a very competitive marketplace, with both Total Tools and Sydney Tools not only well-established, but simply very good retail operations in their own right.

    As for Beaumont Tiles, while Mr Schneider emphasised the advantages for trade and commercial Bunnings customers, it is evident this remains largely a play for the consumer market. HNN believes there is a strong possibility that a desire to compete with companies such as Reece was one motivator for the acquisition. While Beaumont's will remain an entirely separate and independent business from Bunnings, the case will be that its expertise will be used by Bunnings, which could see an evolution in the way sells, for example, bathroom fittings.


    Bunnings links to data through Flybuys – HNN Flash #74, December 2021
    Wesfarmers' move towards data analytics – HI News 4.5, July 2018
    HiLo and everyday low pricing (EDLP) pricing strategies at Bunnings – HI News 2.2, February 2016

    For the full article, please download HNN Briefing using the links below:

    Download hnn-brief-001


    Big box update

    Bunnings Leppington welcomes customers

    A new two-level Bunnings store is being proposed for Tweed Heads (NSW), approximately 600 metres from its current location

    The recently opened Bunnings store in the Sydney suburb of Leppington spans more than 17,000sqm and has more than 350 car parks. It includes a six-lane drive through timber yard, a new format trade desk and an aisle for transport and moving needs to cater for customers moving home or office.

    This store also has new bathroom displays, a kitchen design centre and a wide range of site safety and workwear products. Bunnings Leppington complex manager Kylie Goss said the new warehouse gives customers an alternative to the nearby Hoxton Park and Crossroads stores.

    As part of the store opening, the team provided hands-on support to local community groups in the area. Ms Goss told the Liverpool City Champion:

    Some of our new team members recently headed out to Grow Rehabilitation Residential in West Hoxton, to put in new garden beds and a reflection seating area. We also visited The Animal Rescue Hub in Leppington to put up new gates and fencing and helped to paint some kennels, and we've also reached out to Swag Family in Liverpool to plan upcoming projects and donations.

    Tweed Heads

    The proposed new Bunnings store in Tweed Heads (NSW) would have an expected floor space of 18,200sqm, about double that of the existing store, with an underground parking lot.

    As part of the process, a Voluntary Planning Agreement (VPA) has been sought with Tweed Shire Council. The agreement would result in payments known as "trip ends" credits applied to the current site under the Tweed Road Contribution Plan to be transferred as "credits" from the existing site to the new site. Credits are claimed on the basis that the current store's future use won't generate as much traffic as its likely use is for less intense "Bulky Goods".

    The store's current site on Greenway Drive and the proposed new address which is several hundred metres away at 44 Enterprise Avenue are owned by Harvey Norman. Under the VPA, the existing Bunnings site would be provided for a "lower intensity use", according to a report in Tweed Daily News.

    Bunnings area manager Luke Underwood said the plans for the new store were still tentative, and no development application has been lodged.

    Tweed Shire councillors have discussed a VPA for the proposal. The Echo newspaper reports the VPA was approved by councillors with Mayor Chris Cherry reminding councillors that "it's important that we remember that this is not the development application for the building of Bunnings. This is just with regards to the VPA that allows the traffic trip ends that are currently in the current site to be allocated to, or partially allocated to, the new site". She also said:

    I think it is important that there will be an opportunity when the DA is considered to really address a lot of those traffic issues that were raised in submissions.
    We had 28 submissions, just about all of them raised the issue of traffic and how perhaps a roundabout or a traffic light is needed... some solution is needed because of the location and I think our traffic engineers are going to be looking at that very, very closely.

    Mayor Cherry is in favour of the 100 jobs the larger Bunnings store would create.

  • Sources: Camden Advertiser, Tweed Daily News and The Echo
  • bigbox

    USA update

    Lowe's launches home decor brand, Origin21

    The line offers on-trend pieces reflecting mid-century modern and Scandinavian designs

    Debuting in its 2,000 stores and online, Lowe's Origin21 range represents the home improvement chain's expansion in the home decor category. It has focused on home furnishings as an important growth area as it looks to expand its business and gain market share from its arch-rival Home Depot. Marisa Thalberg, executive vice president and chief branding and marketing officer for Lowe's, told Forbes:

    The Origin21 program fits into our total home strategy. This represents our next great step.

    Origin21 is the retailer's first true exclusive house brand in the home decor sector, and is targeting stylish, trend-seeking millennial consumer looking to modernise their home style.

    Lowe's said Origin21 pairs function and beauty through on-trend items each season. The collection includes everything from throw pillows, rugs, tabletop accents and outdoor furniture to light fixtures, faucets, and faux plants. The pieces can stand alone or flow together in a single space. Pricing is being described as "surprisingly" affordable.

    The brand will be updated seasonally, and Lowe's plans to expand into additional products going forward. Sarah Dodd, Lowe's senior vice president, global merchandising, explains:

    While the line's name pays tribute to 1921, the year of Lowe's founding, Origin21 brings fresh modern style, designed to add the finishing touch to any room across the home. We're excited to bring Origin21 to our customers, which is just part of our larger goal to offer consumers everything they need to finish their home improvement projects, all at an exceptional value.

    The line will be featured prominently in stores with showcase vignettes near entrances, but most individual pieces are shown in their respective departments within the store. Online shoppers can see Origin21 on its own landing page or find items within product-specific searches.

    The new collection joins Lowe's home decor private brand, allen + roth, and both brands are part of the retailer's new House of Style campaign, which aims to deliver on the company's goal to become the only retailer that completes the home style package through total home offerings and extensive selection in one location.

    Related: in late 2020, Lowe's CEO Marvin Ellison said the company will focus on winning more of the US home improvement market with a "Total Home" strategy.

    Lowe's unveils "Total Home" strategy - HNN Flash #27, December 2020
  • Sources: Forbes, PRNewswire and Home Textiles Today
  • bigbox

    Big box update

    Bunnings Garbutt store submits plans for expansion

    Bunnings area manager Merv Stanford said the retailer continues to look for opportunities to improve its existing store network

    A development application (DA) has been lodged with Townsville City Council seeking approval for the expansion of the Bunnings Garbutt store in the suburb of Townsville (QLD). About 2800sqm of store space is to be added, increasing the size of the main showroom and its trade sales, as well as adding about another 50 car parks, reports the Townsville Bulletin.

    According to the DA, lodged on behalf of property owner Dalrymple Townsville Pty Ltd, a road closure has been enacted to permanently close and acquire part of the Dalrymple Roadd reserve, bringing the site about 30m closer to the road frontage. The acquired section of road reserve now forms part of the site.

    An extension to the store is proposed over the western part of the site. The expansion includes reconfiguration of the car park and increase spaces from 668 cars to 718 cars. A number of changes to service vehicle circulation arrangements is also proposed to allow one-way traffic movement, new pedestrian paths and retaining and relocating a World War II hangar memorial.

    The memorial was in the road reserve and is to be relocated within a landscaped area adjoining a Dalrymple Road entrance, which the DA said would ensure an attractive setting.

    A study into the area's World War II heritage was part of the conditions of approval to develop the store in 2002. The memorial commemorates the area's former airfield hangar.

    Townsville market

    A recently released Townsville Regional Scorecard Report shows the city is faring well despite the disruptions being caused by the COVID-19 pandemic.

    The Queensland Country Bank Townsville Region Scorecard Report 2021-22 describes the performance of Townsville region in 2021 and the expectations of performance in 2022. Produced five times in the past 14 years by James Cook University in collaboration with local businesses, the report analysed 28 variables to chart the positive performance of the local property markets in 2021.

    Professor Colin Dwyer said Townsville's residential property market performed the best since 2007 and that commercial market activity was also improving. He said:

    Townsville's home affordability is comparatively better than all capital cities and better than all comparative sized cities.

    Propertyology head of research Simon Pressley said Townsville's 128% increase in annualised house sales to October 2021 was superior to every capital city and more than double the national average. He said:

    This impressive spike in demand is underpinned by arguably the most improved economy in Australia, relative housing affordability and cheap credit.

    Prof Dwyer said Townsville's residential vacancy rate remained tight throughout 2021, sitting at 0.9% for December 2021.

    There are fewer rental properties available in the total pool at the end of 2021, than at the start of 2019. Fewer investment properties, adds pressure and complexity to a tight Townsville residential rental market.

    2021 was a positive year for all commercial property sectors across the Townsville region. Townsville Colliers managing director Peter Wheeler said that Townsville's business confidence was high, with major projects and mining developments starting and flowing through and stimulating the local economy.

    The combined value of the top 10 sales for 2021 in Townsville City was around $200 million, excluding the sale of Kmart Plaza for around $40 million. Residential approvals improved over 50% in 2021 boosting construction activity and influencing inquiry for industrial property.

  • Source: Townsville Bulletin
  • bigbox

    USA update

    Lowe's doubles down on its commitment to pro customers

    The Home Depot and Lowe's are facing competition in home services as Walmart partners with Angi

    Lowe's Home Improvement is expanding perks aimed at attracting and locking in professional customers.

    The new loyalty program for pro (tradie) customers called Lowe's MVPs Pro Rewards, builds on the retailer's credit offering and provides benefits such exclusive offers to business management tools (ie. tips on taxes and warehousing) and select free drinks; chances to win gear and prizes such as a Ford F-Series pickup truck; and the opportunity to earn Lowe's e-gift cards. It is also promising an improved website to help shoppers keep track of their rewards. Shannon Tucker, vice-president of Pro and Tool Rental, said:

    It's a way of us helping the pros be better with their business. We specifically designed the program to help all pros regardless of size.

    Lowe's already offers credit incentives to pro shoppers such as 5% off on some items and no interest for 60 days for business accounts. The new services at Lowe's are aimed at helping contractors' small businesses grow and tackle back-of-house operations. Tony Hurst, senior vice-president of Pro, Services and International said:

    We're deepening our partnership with pro customers because when they succeed, we succeed. Lowe's MVPs Pro Rewards is another big step in Lowe's continued Total Home strategy when it comes to the important pro customer. We are committed to a true business partnership mindset to help pros as they grow their businesses and their futures.

    Pros at Lowe's

    Chief executive officer Marvin Ellison said in an interview with Bloomberg:

    When I arrived three and a half years ago, we didn't have credibility with the pro customers.

    The company had backtracked and stumbled with that key group of shoppers, he said. Now it's aiming to win them back.

    The retailer is trying to win over contractors at a time when their prospects are bright. This year, the majority of US homeowners are planning to use more discretionary income on home improvement projects compared to 2021, according to Lowe's research. Almost half of homeowners say they intend to hire a professional. Contractors are already inundated with jobs, thanks to the nesting trends of the pandemic.

    Lowe's is also targeting the market share held by smaller home-improvement retailers which Mr Ellison estimates is roughly USD600 billion in annual sales in the US, or about double the revenue brought in by Lowe's and Home Depot. Mr Ellison said his company is one of the largest importers of shipping containers in the US on an annual basis - potentially giving it an advantage as supply-chain challenges limit goods at smaller players. The broader selection will appeal to contractors, Mr Ellison said.

    If we're in stock and we are ensuring that we are investing in our business - and trying to limit the amount of costs that we push forward to our pro customers in price - we create a tremendous benefit to them.

    Contractors have been a key part of Lowe's recent growth, which includes eight straight quarters of rising sales and a market value that has risen more than 250% since the start of the pandemic. In December, Lowe's executives said they expect the company's pro sales to grow at double the market rate over the next several years. Mr Ellison said:

    The one thing that the pros said to us loud and clear in our research is that they wanted a business relationship and not a series of transactions.

    Home improvement professionals typically spend more than regular shoppers and visit stores more frequently. Their business is also an area where Home Depot is ahead. Currently, contractors generate about a quarter of Lowe's sales, which totalled USD95.2 billion in the 12 months ended Oct. 29, 2021. They make up about 45% of Home Depot's sales, which were USD147.7 billion over a similar period.

    Walmart home improvement

    Mass market retailer Walmart is expanding its home services offer. It announced a new partnership with Angi (previously Angie's List), which will make service professionals available to Walmart customers in nearly 4,000 stores across all 50 states in the US. When Walmart customers shop in-store or online, they will be able to also book an Angi professional for any of 150 common home improvement projects, including flooring, painting, fence installation as well as smaller jobs like furniture assembly or mounting a big-screen TV.

    Through this alliance, Walmart gets to partner with a known brand that will allow it to compete with the services offered by Lowe's and Home Depot.

    Lowe's Livable Home Services connects customers to "professional independent installers", in select locations, who can install anything from a new door to a smart-home heating device. Home Depot also helps customers find an "authorised service provider", for everything from flooring to landscaping to garage door installation.


    In 2018, Walmart had taken its initial steps into the home services market when it teamed up with Handy to sell in-home installation and assembly services in over 2,000 stores, and then later online. The idea was that when customers were purchasing items, like furniture, they could also immediately purchase an installation appointment to help them get the new item set up in their home. The move had followed rival Amazon's own entry into home services, which had included the launch of a dedicated Home Services hub on its retail website in 2015.

    Shortly after Walmart announced its partnership with Handy, the company was acquired by Angi Homeservices. And last year, Handy co-founder Oisin Hanrahan became the CEO of the combined organisation. It was expected that Walmart could also capitalise on this arrangement by later expanding its own deal to include Handy's full range of home services at some point, given the potential market.

    Today, Angi, not Handy, will become Walmart's home services partner. This will allow the retailer to link its customers to Angi's network of more than 250,000 professionals.

    Angi's branding - which was relaunched in 2021 - will be found both in-store and online. Last year, the company decided that "Angie's List" no longer accurately described its offerings as it was no longer just "a list" but rather a site where customers could research, book, schedule and pay service pros and other home contractors.

    Customers will be able to book Angi's services both online and in-store alongside any eligible item or from Angi's dedicated landing page at, which is expected to go live in mid-February, according to the TechCrunch website. After purchase, Angi will reach out to coordinate the booking. For larger services, a dedicated project advisor provides the customer with a custom quote, finds a pro and handles the work to make sure the project is successful.

    Once a service is purchased, Angi will reach out to coordinate the booking, and all projects are backed by the Angi Happiness Guarantee, which covers projects up to their full purchase price.

    Walmart will be Angi's first, limited-time exclusive retailer to offer its services. Mr Hanrahan said in a statement:

    We are pleased to launch Angi with Walmart, a leading global retailer, as our first retail integration. Since the start of the pandemic, the home is in focus and people across the US are doing more home improvement, maintenance, and repair work and they are often turning to Walmart to find the tools and materials needed to start those projects. Things like sprucing up an entertaining space by installing a new smart TV, painting a nursery for a family addition, and transforming an outdoor space and adding a patio are now projects that Walmart customers can get done seamlessly with the help of an Angi pro as part of the Walmart shopping experience.

    Angi is the result of a 2017 merger between two separate companies. Angie's List started in 1995 and was one of the first comprehensive online guides to local home-improvement contractors. It originally existed as a subscription service, before it was purchased by IAC and combined with HomeAdvisor, a similar service.

  • Sources: Retail Info Systems, Bloomberg, Techcrunch and TheStreet
  • bigbox

    Big box update

    Bunnings is Australia's strongest brand, according to Brand Finance

    The Bunnings Trade Centre in Naenae, New Zealand has been sold to a Wellington-based private investor

    Brand valuation consultancy Brand Finance has released its 2022 rankings that shows Bunnings jumping eight spots to become Australia's strongest brand, with a Brand Strength Index (BSI) score of 88.5 out of 100 (up seven points) and a corresponding AAA brand strength rating.

    According to Brand Finance, in the last 12 months Bunnings has remained top-of-mind for Australian consumers by continuing to provide essential household and trade goods as well as contributing to the country's vaccination rollout programme by setting up pop-up vaccination clinics in remote areas. Mark Crowe, managing director of Brand Finance Australia, said in a statement:

    Bunnings' efforts in responding to residential and trade demand along with aiding the vaccination rollout has not gone unnoticed by consumers, who ranked the retailer particularly highly in terms of quality, innovation, value for money, loyalty and customer service.

    Bunnings Group managing director Mike Schneider exclusively told the Australian Financial Review the acknowledgement in the Brand Finance rankings was a credit to the entire team "who provide friendly and helpful service every day and often go above and beyond to make sure customers have the best experience - whether that's in store, online or out in their local community.

    Even during a really challenging period for all Australians, the resilience, care and support our team have demonstrated is testament to the importance of creating a people-first culture, and why our team remains the heart of the Bunnings brand.

    Apart from calculating brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity including familiarity, loyalty, staff satisfaction, corporate reputation, and business performance. Certified by ISO 20671, Brand Finance's assessment of stakeholder equity uses original market research data from around 100,000 respondents in over 35 countries and across nearly 30 sectors.

    Bunnings' brand value was estimated to be AUD4.005 billion, up from last year's valuation of AUD2.732 billion, placing the hardware retail chain 12th on the Brand Finance Australia's brand value rankings.


    The retail sector remains the most valuable in the Australia outperforming other sectors including banking, mining and telecom for the second year in a row. It has a cumulative brand value of AUD40.4 billion, and accounts for 25% of the country's total brand value.

    The growth in brand value (15%) over the last year was largely spurred by the COVID-19 pandemic as consumers spent more time at home seeking not just entertainment, but also online shopping and home improvement projects. Mr Crowe said:

    The Australian retail sector has moved from strength to strength during the pandemic, overtaking the once dominating banking industry to become the nation's most valuable.
    While leading Australian brands such as Woolworths, Coles, Bunnings, and Officeworks have thrived, the sector will need to continue to innovate and keep up with new trends to continue on this positive trajectory in a post-pandemic society.

    Brands able to embrace e-commerce and those offering essential goods and services have forged ahead, with 16 of the 17 retailers in the Brand Finance Australia Top 100 2022 ranking recording brand value growth.

    Every year, Brand Finance every year puts 5,000 of the biggest brands to the test, and publishes nearly 100 reports, ranking brands across all sectors and countries.

    Bunnings NZ trade centre

    The Bunnings Trade Centre in the Hutt Valley suburb of Naenae in New Zealand has been sold at a yield of 4.51% in a transaction brokered by exclusive agents, CBRE New Zealand.

    The Bunnings Trade Centre site occupies an entire block bounded by Hollands Crescent, Cambridge Terrace, Vogel Street and a service lane just south of the Naenae shopping precinct, according to the Waikato Times. The property has approximately 9385sqm of gross leasable area and more than 80 car parks, with a brand new seven-year net lease to Bunnings.

    Matthew St Amand, managing director of CBRE Wellington said that the profile of the location was enviable; situated on an island site of 1.3 hectares of land. The building's convenient trade focused layout has undergone significant refurbishment works to improve the offer for local trade customers.

    Bunnings Trade Centre Naenae offered investors a chance to enter the investment market with a leading market retailer that allows for annual rental growth. This is a cornerstone investment to any portfolio.
  • Sources: Australian Financial Review, SmartCompany, Ad News and Waikato Times (Stuff Limited)
  • bigbox

    USA update

    Lowe's will open a number of in-store pet shops

    The Home Depot has named company veteran Ted Decker as its new CEO while outgoing CEO Craig Menear will continue to serve as chair of the board

    Lowe's Home Improvement is teaming up with Petco to open pet shops inside a selected number of stores as a way to spur sales and expand the customer base of both retail brands. The first one will open near San Antonio, Texas in early February, with 14 other locations planned in Texas, North Carolina and South Carolina by the end of March.

    The addition of pet merchandise is part of Lowe's strategy to become a one-stop shop for everything homeowners may need. Customers can buy dog food and cat litter, and visit with a vet, while shopping for paint and other supplies for home projects.

    Lowe's and Petco see the in-store shops as a way to draw in new customers, deepen loyalty and drive more frequent store and website visits.

    Both retailers have been pandemic beneficiaries, as Americans took on DIY projects and adopted pets while spending more time at home. In the coming months, however, they could face a more challenging backdrop if consumers feel squeezed by rising inflation or decide to spend a larger chunk of the budget on vacations and nights out instead of pet accessories and home projects.

    Lowe's has looked to new merchandise categories to keep sales growing, along with capitalising on the strong real estate market. It added more home decor to its website and stores. It launched an initiative to sell and install items that allow seniors to age in their own homes. And it began piloting fitness equipment, such as treadmills, rowers and dumbbells, at about 20 of its stores. It already carries some pet goods, such as dog beds and pet-proof carpeting.

    For Petco, the curated version of its stores is a way to get in front of more shoppers and potentially encourage them to visit its larger stores and website as it competes with online players such as Chewy.

    Petco chief merchandising officer Nick Konat said he expects the shops will especially resonate with DIY-inclined millennials. During the pandemic, many of those 20- and 30-somethings led the way with "nesting" trends, as they bought homes or moved into bigger places, adopted cats or dogs - and in some cases, saw pets as a "trial run" before having children, he said.

    They're a high-spend customer and they really take care of their pet like their family. And they've also been doing the same with their homes, with a lot of them being new homeowners or new renters.

    Each shop will feature Petco's logo and merchandise for cats and dogs, including some of its exclusive labels, such as its food brand, WholeHearted, and fashion brand, Youly. It will carry more than 700 items that customers can buy online and pick up in store, if they live near a Lowe's store that's part of the pilot. Some stores will also offer services from veterinarians and pet professionals who visit the sites, including for vaccination, microchipping, prescription pest prevention and mobile grooming.

    The store-in-store will vary in size, but the first location will be about 1,100 square feet and will be placed at the front of the store, said Bill Boltz, Lowe's executive vice president of merchandising.

    The shops will be staffed by a Petco employee, in addition to ones from Lowe's, Mr Konat said.

    Marisa Thalberg, executive vice president and chief brand and marketing officer at Lowe's, said the chain had been selling more and more pet accessories in recent years, including items like a PetProtect Carpet from Stainmaster. She told Ad Age:

    You take these two trends - the boom in the pet lifestyle market and the boom in housing and DIY market, and they do have this incredible intersection.

    Like many consumers, Ms Thalberg added a dog to her family during COVID-19. She said:

    When a store within a store concept works well is when you take two meaningful resonating brands that aren't overlapping, but have this incredible ability to complement each other.

    Through a survey, Lowe's found that nearly 70% of consumers say pets played a role in the decision-making process when they searched for their current home. Nearly 60% said they would be more likely to shop at a home improvement retailer if they could also purchase pet products in the same location.

    Along with pet products and services, Lowe's will have a photo station for pet pics. Even before the formal photo option, Lowe's customers have long been posting pictures on social media of their pets, Ms Thalberg said. The #DogsofLowes Instagram hashtag, an organic trend that Lowe's was not involved with creating, has more than 4,000 posts currently.

    Some of those dogs might even appear in the marketing for the collaboration. Lowe's and Petco are tapping four pet influencers, including a rescue dog named Waffles, to promote the effort. Lowe's is also running geotargeted social media marketing and a special landing page for for customers in the area of the Petco stores that will provide an option for buy online, pick up in store.

    Shop-in-shops have long been a trend for two like-minded retailers looking to maximise their sales potential and attract new customers. However, in recent months, the trend has grown in popularity. Experts credit the rise to marketers' willingness to try new things and add innovative, destination-type experiences to their brick-and-mortar outposts at a time when ecommerce continues to dominate. The Lowe's/Petco deal is no exception. Ms Thalberg said:

    This is how we create a 'destinational' retail experience.

    New Home Depot CEO

    The Home Depot announced that chief operating officer Ted Decker will step into the role of CEO, effective March 1. He has also been elected to the company's board of directors.

    Craig Menear, currently chairman and CEO, will continue to serve as chair of the board. He has been at the retailer for more than 20 years and began as CEO in November 2014. Mr Menear said in a statement:

    As a 22-year associate of The Home Depot, Ted has nurtured our culture by living our values and demonstrating servant leadership throughout his career.
    Ted has grown with the company by taking on expanded roles of leadership from his time in strategic business development, finance and merchandising to leading our day-to-day interconnected operations in his role as president and COO. His ability to blend the art and science of retail is exactly what is needed in the next phase of growth for The Home Depot. I have tremendous confidence that he will guide our company to new heights.

    Mr Decker joined The Home Depot in 2000 and was named president and chief operating officer (COO) in October 2020, where he was responsible for global store operations, global supply chain, outside sales and service, real estate, as well as merchandising, marketing and online strategy, serving pro and DIY customers in stores and online.

    Previously, Mr Decker served as chief merchant and executive vice president of merchandising, where he was responsible for all store and online merchandising departments, merchandising strategy, vendor management and services, and in-store environment.

    The retailer has seen tremendous growth during the pandemic, as nesting trends and a strong housing market inspired Americans to invest in their homes or move to bigger places. That growth has continued, including in the most recent fiscal quarter, even as some consumers hired home professionals in lieu of DIY projects. The company is in a similar position to Lowe's in that it will have to prove it can keep those sales going as Americans face rising prices due to inflation and potentially shift their spending toward services such as dining out and traveling.

  • Sources: CNBC and Ad Age and The Home Depot/PR Newswire
  • bigbox

    Big box update

    Bunnings Mount Isa store gets ready for opening

    Wesfarmers provides an earnings update and could be entering the pet supplies category through a potential acquisition of Greencross

    The new Bunnings 5607.5sqm store site in Mount Isa (QLD), located on the corner of West and Alma streets, is set to open in mid-February and replace the existing Bunnings on Camooweal Street, according to the North West Star.

    Bunnings Warehouse regional operations manager, Marg Walford, said she was excited to confirm the store preparations were on track. She told the North West Star:

    The new Bunnings Mount Isa will create around 50 new jobs in the local community, over and above our existing team, and represents an investment of around $19 million...
    The new store is more than double the size of the existing store and will provide customers with a much wider range of home and lifestyle products. Features include the main retail area, a fully enclosed timber yard, an outdoor nursery and over 150 on site car parks for customers.
    It will also feature a new building materials landscape yard and a bagged goods area in the nursery, both features not seen at the existing Mount Isa store.

    The new store was announced in 2017 when the plans went out for review. It was only in March 2021 that the builder was appointed to the construction, after a delay due to sewer and stormwater mains plans.

    Related: Building is taking shape at Bunnings new Mt Isa store.

    Bunnings Mt Isa store on track for 2022 opening - HNN Flash #66, October 2021

    Wesfarmers update

    Bunnings continues to deliver strong results for Wesfarmers as householders take on another round of DIY projects at home and avoiding shopping centres, outdoor activities and eating at restaurants because of the perceived higher risk of being exposed to the COVID-19 Omicron variant.

    The company said while there had been a weakening of overall retail trading conditions in the final two weeks of December after rising COVID-19 case numbers in most states, the hardware segment remained solid.

    In the Australian Financial Review (AFR), JP Morgan analyst Bryan Raymond said Bunnings has a robust outlook for the June half, with demand in the trade business strong and DIY spending underpinned by "customers spending more time at home through the Omicron wave".

    Bunnings is currently playing to its strengths in the face of COVID-19: a big box format and stores outside major shopping centres with a drive-in and drive-away model, according to The Australian.

    Along with Bunnings, Wesfarmers owns the Kmart, Target and Officeworks retail chains. In a recent earnings update to investors, Wesfarmers said customer traffic to stores has softened in the first half of January, and higher levels of staff absenteeism because of COVID-19 are causing increasing pressures in the supply chain and distribution centres, impacting stock availability and forcing some of its retail outlets to cut their trading hours. Wesfarmers told investors:

    These issues are expected to persist while COVID-19 cases and the number of team members requiring to isolate remain elevated.

    Overall sales for the Kmart Group, which comprises Kmart and Target, fell 10.3% in the December half from the year-earlier period.

    Wesfarmers said the extra supply chain pressures had resulted in higher costs, with international freight charges rising and inventory costs increasing because of decisions to carry higher stock levels as a buffer against uncertainty in delivery schedules.

    However solid results in its chemicals, energy and fertiliser businesses, as well as good performance from Bunnings, meant Wesfarmers should still deliver a first-half profit for the financial year ending June 30, in line with market forecasts. The company expects to report net profit between $1.18 billion and $1.24 billion for the six months ended December 31.

    Wesfarmers is scheduled to provide an update on its results on February 17.

    Pet supplies

    Wesfarmers has also emerged as one of the major contenders to acquire Australia's biggest specialist pets and vets retailer, Greencross, according to the AFR. This will allow the conglomerate to enter the pets sector in what would be a big way.

    Wesfarmers is said to be one of a handful of potential trade suitors left in the process. It has intense knowledge of Australia's retail sector, the changing consumer spending habits that have boosted revenues at Greencross, and the power of customer loyalty.

    Greencross owner TPG Capital is understood to have been talking to potential suitors in an effort to bring its review closer to a conclusion.

    It comes as TPG's Australian team works through options for Greencross, which was acquired in February 2019. The review included confidential talks with potential buyers or minority stake investors, and assessing other options including a refinancing, a break-up or an initial public offering.

    Greencross has been pitched as a $300 million-odd a year business in terms of earnings, making it three times bigger than when TPG invested three years ago. It owns Petbarn and City Farmers, which have pet supplies shops and online stores, and Greencross Vets, which has a national network of around 150 sites.

  • Sources: The North West Star, Australian Financial Review, Sydney Morning Herald, The Australian and Townsville Bulletin.
  • bigbox

    USA update: Home Depot

    DCs and new credit options for pro customers

    Home Depot and HD Supply will be stocking PPG's pro paint range at all their US locations

    The Home Depot is investing in its distribution centres to keep its lucrative pro (tradie) customers happy, according to Bloomberg News.

    Pros' needs are very different than the average customer's, and while they make up only 5% of Home Depot's shoppers, they account for 45% of its USD132 billion in annual sales. They often buy bulky items in vast quantities and want - or rather demand - to receive the orders on a stringent timeline. That has become an especially intense problem for Home Depot amid the supply chain crunch that's upended stocking and transport around the world.

    The new DC facility in Stonecrest, Georgia, which is a flatbed distribution centre, is designed with contractors and professionals in mind. The hub is the centrepiece of Home Depot's plan to ease the complexity of direct-to-consumer sales - and win market share from both its main rival, Lowe's, and independent distributors.

    Home Depot has built similar distribution facilities in major markets such as Dallas, Baltimore and Miami and more are coming. It's part of USD1.2 billion of investment over five years on supply chain improvements that started well before the COVID-19 pandemic roiled the world's shipping markets. The company is betting that if it can keep contractors happy, other customers will follow.

    Home Depot's DC made for trucks - HNN February 2020

    Additionally, funnelling the direct-to-contractor business to the facilities is meant to simplify store operations.

    In Home Depot's Georgia hub, most orders move in and out on flatbed trucks, with merchandise heading to stores or job sites up to 200 miles away. The Georgia centre is also located on a rail line, so boxcars carrying as much as four times what a flatbed truck can hold arrive directly.

    Prior to these distribution centres, orders for professionals were mostly filled from stores. This depleted inventory and put pressure on workers. Sometimes, purchases would have to be completed from two or three different stores, meaning that different parts of the order could arrive on different days, much to the chagrin of backlogged contractors.

    With the flatbed facilities, Home Depot is betting it can control last-mile delivery to earn its pro shoppers' trust. Stephanie Smith, senior vice president of supply chain, said the centres aim to carry everything that a contractor or pro might need. If Home Depot meets that goal, it expects broader success to follow, she added. Ms Smith said in an interview:

    In our history as a company, if we develop something for our contractor pro customers and get it right, then it really generally works well for our DIY customers as well.

    The initiative was well timed. As retailers struggle to adjust to widespread logjams, Home Depot is well into its overhaul. After the investment is fully deployed, Home Depot will have around 150 distribution facilities in its network. About 30 to 35 of those will be flatbed distribution centres.

    The investment in its supply chain is one of the biggest initiatives Home Depot has taken on since building out HD Supply in the early 2000s, said Keith Hughes, managing director of equity research at Truist Securities.

    The challenge, Mr Hughes said, is that there's no single solution to meeting the needs of contractors, whose work ranges from lawn and landscaping to drywall and demolition. He told Bloomberg News:

    I think one area where Home Depot has struggled is with time delivery. There are all these little idiosyncratic things you have to do around the pro that is very job-specific or trade-specific. The cookie-cutter approach doesn't always deal with it.

    Ms Smith said that since the flatbed facilities have opened in other markets, the company has been able to notch better on-time and complete orders. And the relieved pressure on store employees lets them "focus on the customers that are shopping there - and that's a better experience for them as well."

    Related: The Home Depot has been making major investments in supply chain distribution and delivery since 2018.

    Home Depot in the delivery economy - HI News, page 81

    Credit card for pros

    The Home Depot is expanding its commercial credit offerings for its pro customers and introduced the Pro Xtra Credit Card. It can be linked with the Pro Xtra loyalty program to earn registered users perks four times faster on card purchases.

    The Pro Xtra loyalty program provides member-only benefits, including volume pricing, exclusive product offers, paint rewards, and other perks. The company will reward Pro Xtra members with a USD100 credit on registering for the new credit card.

    The Pro Xtra Credit Card is a new iteration of the retailer's Commercial Revolving Charge, as well as an update to its Commercial Account Card. Both credit options are powered by Citi Retail Services, one of North America's largest and most experienced retail credit solution providers.

    To help ease the shopping and billing process, the Pro Xtra Credit Card and Commercial Account Card provide the following features:

  • The ability to issue cards to entrusted employees to make purchases on their behalf
  • An extended return period of up to a full year, four times longer than a non-commercial credit purchase
  • Easy-to-read itemised billing statements and simplified purchase tracking options.
  • Online account management including the ability to view, manage and make online payments from anywhere.
  • Additionally, Commercial Account Card members will receive flexible billing preferences including a 2% early pay discount if the bill is paid online within 20 days or an extended 60-day payment window.

    Home Depot's pro customer segment has been witnessing robust sales growth for the past several quarters. Pro sales growth outpaced DIY sales in the fiscal third quarter.

    Growth in the pro segment reflects significant demand for larger projects in the home improvement industry. In the quarter, the retailer experienced in several pro categories like drywall, pipe and fittings, and millwork. The company expects continued sales growth from pros as project demand is strong and their backlogs are growing.

    PPG Pro paint

    Paint and coatings company PPG is offering a line of PPG paint products and services designed specifically for professional customers through The Home Depot and HD Supply. It began rolling out on shelves in the fourth quarter of 2021. Jaime Irick, vice president, architectural coatings - US and Canada, said:

    We look forward to utilising PPG's team of paint experts, leading professional paint products, and national, digital fulfillment network in combination with The Home Depot's vast national store footprint to service the professional and drive strong growth for both organisations.

    The full product range will also be available through HD Supply, a wholly-owned subsidiary of The Home Depot and a national distributor of maintenance, repair and operations (MRO) products.

    Pros shopping The Home Depot and HD Supply will benefit from PPG's more than 135 years of expertise and product knowledge, network of knowledgeable sales representatives, same or next-day delivery, free professional colour rendering services, easy-to-use colour tools, and more. Chris Waits, vice president, merchandising, The Home Depot, said:

    We're proud to expand our relationship with PPG to ensure The Home Depot is a one-stop-shop for paint, supplies and other items to help pros complete their projects with ease and convenience. Our enhanced relationship with PPG will allow us to further deliver on the needs of our pro customers.
  • Sources: Bloomberg News, Industrial Distribution and The Home Depot
  • bigbox

    Big box update

    Bunnings' customers in data breach

    They have been caught up in a cyber security breach affecting 3.7 million people worldwide through online booking system FlexBooker

    Customers who have used Bunnings's contactless drive and collect service may have had some of their personal information stolen after the software firm behind the service experienced a major security breach.

    FlexBooker is a popular tool for scheduling appointments used by Bunnings for its drive and collect orders.

    A few days before Christmas, FlexBooker sent a data breach notification to customers, confirming the attack and that the intruders "accessed and downloaded" data on the its Amazon cloud storage system.

    "On December 23, 2021, starting at 4:05 PM EST our account on Amazon's AWS servers was compromised," reads the notification, adding the intruders did not access "any credit card or other payment card information".

    In the "incident alert", FlexBooker said it worked to restore a backup within 12 hours. It also said customer passwords included in the data were encrypted and the encryption key was not accessed or downloaded, and "will continue to work with Amazon to maintain security".

    Bunnings chief information officer Leah Balter said the company was aware of the FlexBooker data security breach, which might include the data of some customers who had booked a time slot with its drive and collect service. Ms Balter told 9News:

    The customer information shared through this third party provider is limited to full name and email address only. Bunnings' customers are not required to enter sensitive personal information through this provider, such as passwords, mobile numbers, or credit card information, so we are confident that none of these categories of customer data have been compromised.

    The retailer is working with Flexbooker to understand how the breach occurred and determine the extent of its impact.

    Bunnings also encouraged its customers to be cautious of any unusual activity in their email accounts and to regularly change passwords "as a precaution". Ms Balter said:

    Bunnings takes the security of our customers' and team members' personal information very seriously, and will carry out a thorough investigation into this incident.

    Bunnings said it had notified the Office of the Australian Information Commissioner (OAIC). It introduced the drive and collect service in April 2020 at 250 stores across Australia in response to the COVID-19 pandemic.

  • Sources: The Canberra Times, 9News, Bleeping Computer and Waikato Times (Stuff NZ)
  • bigbox

    USA update: Lowe's

    Lowe's wants to help its customers age in place

    The retailer also says pandemic-fuelled home improvement demand could cool in 2022

    Hardware-home improvement chain Lowe's recently formed a two-year partnership with AARP (the largest non-profit organisation in the US that has been serving people 50 years and older along with their families for more than six decades) to provide ideas and information for older adults ageing in their homes.

    During its third-quarter conference call, Lowe's chairman and CEO Marvin Ellison directly addressed this market segment. He said:

    For the past 18 months, the home has increased in importance for all of us and perhaps especially for our baby boomer customers, who are increasingly interested in ageing in place in their own homes.

    The partnership with AARP is an "online and in-store collaboration in customer education" and part of Lowe's Livable Home initiative that should help position it as the leading retail destination for aging-in-place and life-change solutions. It will offer tips and how-to information and inspiration through a library of articles and videos featuring ideas around smart home technology, lighting, kitchen and bath design, and topics such as caregiving, preventing falls and promoting independence.

    There will be guidance around home improvement and design techniques to support older adults and family caregivers to help make living spaces more accessible for everyone, and allow older adults to stay in their homes safely and comfortably as they age.

    A click into will take visitors to a virtual library of articles and videos that will be updated regularly.

    Lowe's collaboration with AARP comes at a time when less than 1% of US homes have particular features needed to support ageing in the home, according to AARP, while 77% of people aged 50 years and older would like to stay in their current home as long as possible. Eight in 10 adults aged 50 years or older want to stay where they live, but many people lack the expertise or resources to adapt their home.

    There is also an increasing need for functional and stylish home spaces designed with an eye toward accessibility for residents of all ages, as people spend more time in their homes, working, shopping online and socialising. In addition, households headed by people aged 65 and older are expected to grow from 34 million to 48 million in the next 20 years, according to the US-based Urban Institute. Mr Ellison said:

    Nearly every family in America at some point, including my own, faces the important and often intimidating responsibility of preparing a home for life's changes.
    Lowe's Livable Home is uniquely positioned to help address the customers' desire for a one-stop destination with trusted resources and affordable solutions they need throughout every step of the journey. It's a commitment to our customers who turn to Lowe's to make their homes better no matter what change they face in life.

    Lowe's said the in-store enhancements are underway in nearly 500 stores and are expected to continue expanding throughout 2022.

    In select locations, customers will be able to access free virtual assessments with Lowe's ageing in place specialists. Lowe's store staff and independent service providers network of professionals will provide ongoing customer service support for installations and remodelling ranging from low-threshold shower installation to more simple installations of grab bars and temporary or permanent stair lifts and ramps.

    Store staff and managers will participate in AARP training to better understand the needs of consumers aged 50 and above when it comes to home fixes, upgrades and renovations with long-term living in mind. Once complete, they will wear an AARP-branded badge that communicates to customers that they can help them find age-friendly options.

    Lowe's and AARP will also co-develop a "Livable Home" in-store resource guide for customers. Mr Ellison said:

    AARP's more than 60-year legacy of helping families 50 years and older brings a deep level of expertise and knowledge to Lowe's Livable Home.

    Rodney Harrell, vice president of family, home and community at AARP, said:

    This process of sharing information and articles with Lowe's is going to help people make better, more informed decisions about trying to meet their needs today, but also help people think ahead.
    You may not know that you will have a fall six months from now or six years from now, but you might think ahead about that rug that's a trip hazard or that doorway that is hard to get through.

    This collaboration, Mr Harrell said, will help people "take a lifetime approach to housing."


    Retailwire asked a number of marketing, retail and communications experts about Lowe's move to target the specific home improvement needs of baby boomers who want to age in place.

    David Naumann, marketing strategy lead - retail, travel & distribution for Verizon, said:

    The aging population represents a niche that retailers may not have paid special attention to with custom products and services. Many older adults can afford premium priced products and customised services and they appreciate new ideas that can help them enjoy living in their homes as long as possible. The older generation may be a prime opportunity for retailers that offer creative products and services that address their unique needs.

    David Spear senior partner - industry consulting, retail, CPG and hospitality, from software company Teradata, said:

    Most certainly this category or genre of products/services will grow consistently for many years, and it's a smart move by Lowe's...One of the biggest opportunities is "sensorized" products that enable digital connections so individuals can view, understand and leverage huge amounts of knowledge right at their fingertips. Retailers will be well served to not only offer unique IoT products, but also deliver analytical services in support of them. There is a long tail to this.

    DeAnn Campbell, chief strategy officer, Hoobil8, said:

    Seniors today are ageing up, not out, and are remaining more engaged and active well into their golden years. Baby boomers still control over 70% of discretionary spending in the US and are willing and able to spend money on products and services that help them live well and remain in their home. But at present there is still no place for people to view, test and understand how smart home products, services, monitoring devices or other "ageing wellness" solutions function or work together. This is relatively untapped white space for products/services that will see surging demand in coming years, especially as services like telemedicine become more user friendly. More retailers need to develop showrooms and display systems that demonstrate how smart aging ecosystems can work to improve life at home for this growing demographic.

    Bob Amster, principal, Retail Technology Group, said:

    This is a good idea with some runway, since the US population is getting older...The sector will travel less than they did and resist the idea of senior living facilities and thus will spend more on maintaining and improving their homes.

    Cathy Hotka, principal, Cathy Hotka & Associates, said:

    The success of this program will depend on the publicity that Lowe's can generate. A quick visit to doesn't reveal it and a search for "age in place" doesn't provide relevant results. I love the idea, but wonder about the execution.

    David Slavick, co-founder & partner, Ascendant Loyalty Marketing, said:

    Wow - everyone is on the bandwagon here. Do you think targeting the older segment of society is something new? Do you think Lowe's Home Improvement has had difficulty "finding" older consumers in and around their store trading radius? Do you think suppliers have somehow just started manufacturing goods and services for this segment? Partnering with AARP is a natural given their credibility with this segment which by the way "starts" at 50. It used to be that retirement age had you qualified to own a membership. Becoming a trusted destination for goods and services catering to a segment of the population with particular needs, and with buying power is all part of the format dynamic. In this case, seniors with specialised needs. Incorporating a service model to support the specifications, build and servicing of those needs - now that would be a very nice enhancement to this construct.

    Cooling DIY demand

    Lowe's recently indicated that the robust pace of home improvement sales could decrease during 2022, according to CNBC. The retailer said same-store sales could drop by as much as 3% or be roughly flat in fiscal 2022 compared with 2021 fiscal.

    Mr Ellison said the company can keep driving growth by launching new private labels, expanding its e-commerce business and becoming a one-stop shop for supplies to help older adults age in their own homes.

    For example, he said it is debuting a modern decor brand called Origin 21. He said it is speeding up deliveries of big and bulky purchases, such as appliances, with a new pilot in Florida and Ohio. That more efficient process is boosting profits and customer satisfaction, he said.

    Together, he said, those efforts will "expand our share of wallet with both the DIY and pro customers."

    Mr Ellison said the retailer will benefit from a favourable backdrop, too, including more money in consumers' savings accounts, historically low interest rates, rising home values and an aging inventory of US homes. About two-thirds of the company's sales are driven by repairs and maintenance, he said.

    Mr Ellison also said the pandemic has inspired people to invest more in their homes, from millennials who are buying first homes to baby boomers who are adapting an older home. He told CNBC:

    There's been a longer-term shift in the consumer mindset about the importance of the home. Our view of the home is a sanctuary that may need to serve several multiple purposes: residence, office, school, gym, and a gathering place for indoor and outdoor entertainment. And given the extension of remote work, we're expecting a permanent step up in repair and maintenance cycle.

    Lowe's sales outlook disappointed investors and raised concerns the pandemic-fuelled boom in DIY and decorating projects is cooling. It is estimating overall sales of about USD95 billion for the 2021 fiscal year, which is one week shorter than the 2022 fiscal year. Total same-store sales will range from USD94 billion to USD97 billion in its upcoming year. That fell below analysts' estimates of USD97.64 billion, according to Refinitiv Financial Solutions.

    During an analyst meeting, chief financial officer Dave Denton acknowledged that Lowe's is preparing for a "modest sector pullback in 2022" when compared with a year of such high demand and sales boosted by government stimulus.

    Lowe's sales have gotten a lift from Americans who fixed up their yards, tackled DIY projects and redecorated rooms during the COVID-19 pandemic. Even as some of those "nesting trends" recede, however, its sales have been buoyed by the strong real estate market.

    Separately, the company said it plans to buy back about USD12 billion in shares both this year and next year.

  • Sources: Retailwire, AARP, PRNewswire, Lowe's Home Improvement and CNBC.
  • bigbox

    Big box update

    More Tool Kit Depot stores open in WA

    Bunnings Group managing director Michael Schneider spoke to The Australian about the tradie market and how the hardware retailer dealt with some of its supply issues during the pandemic

    New Tool Kit Depot stores have opened in Western Australia in the suburbs of Rockingham and Malaga with a fourth soon to open soon in Mandurah, according to (NCA NewsWire).

    There are plans for the Bunnings-owned specialty stores catering to tradies and DIY prosumers to grow to 75 stores around Australia, but the retailer will first add more stores in WA. Commercial chief operating officer Ben McIntosh told NCA NewsWire:

    Remember that Bunnings has a very, very strong DNA in Western Australia. We know the market well.
    It goes without saying from a macroeconomic point of view that the West Australian economy is booming ... the mining influence is strong, it was obviously sheltered from a lot of the Covid shutdowns and uncertainty, which is obviously an advantage.

    The Adelaide Tools acquisition in 2019 included five tool stores and a mowers outlet in South Australia. Bunnings tested out new concepts in the Parafield location before launching as Tool Kit Depot this year. Mr McIntosh said the first few months were spent understanding the Adelaide Tools business and its customers. He said:

    I am very passionate about being a leader that inspires a team to earn our way into a market, not just arrogantly expect to win. It was a successful business - hence why we liked it, hence why we wanted to buy it. We then thought, 'What is the future, where do we take the business for the next generation?'
    We want to make sure we are doing this in the way that is right and that is earning our stripes with our customers first, then talking about bold expansion after that.

    The initial expansion only came after the experiments in Parafield proved successful, he explains. COVID-19 restrictions also meant that Mr McIntosh has been unable to re-enter WA since March this year. He said:

    It's all about giving that specialised knowledge, that specialised service and also the full range of both brands but the commercial-grade models of the brands (and) highly specialised woodworking equipment that the Bunnings environment just doesn't cater for.
    We have specifically trained team members that know woodworking, that woodworking is their passion and they can have a good conversation about all things woodworking.

    Mr McIntosh did not confirm how long it would be before stores started opening up on the east coast, saying "a good amount" would open their doors in WA first. He said:

    We're not going the popular trod path [yet], which is Sydney or Melbourne. We didn't want to follow a normal formula. We wanted to invest where we think we can earn people's trust and we think Western Australia ticked that box. It's not an eastern-focused company. We've got more stores to open in Western Australia first.
    We've got more stores to open in South Australia - that's focused on rounding out the network in SA more than just Adelaide.

    Related: Tool Kit Depot store in Belmont (WA) caters for Perth tradies.

    Tool Kit Depot opens first store in Western Australia - HNN Flash #69, October 2021

    Related: Could Bunnings' acquisition of Adelaide Tools be the first step in establishing a new sub-brand?

    Adelaide Tools acquisition sees Bunnings set to sell Milwaukee brand tools - HNN Flash #10, October 2019

    Bunnings MD on tradies, supply and more

    In his role as the boss of Bunnings, Michael Schneider, recently told The Australian that he wants to build a tradie business as big as its DIY business. He said:

    We have had a great decade of really building trade credibility with trade customers through our PowerPass account program and our 2019 acquisition of Adelaide Tools is morphing into Tool Kit Depot.
    Our aspiration on the trade side is to have a business that is as big as our consumer business without actually slowing up on growth on the consumer side.

    The plans to roll out 75 Tool Kit Depot stores across the country is just part of the way for Bunnings to grow its share of the trade market. They will compete with Metcash-controlled Total Tools, privately-owned Sydney Tools, Queensland-based Trade Tools and Hardware & Building Traders' (HBT) Industrial & Tool Traders group amongst others.

    Mr Schneider sees the Bunnings brand of long trading hours, the trade reps on hand and local access to stores as the right foundation to build up and out. Another bolt-on acquisition, Beaumont Tiles, creates another pathway to customers who are builders.

    According to The Australian, Mr Schneider's growth principles are straightforward and involve growing the market, the ability to participate in that market; and then outperforming the market.

    In the last two years, the number of Bunnings staff have increased subsstantially from 45,000 to 55,000. Data analytics and a rethinking its floor space is refreshing familiar product categories and pointing to new ones.

    Related: In 2018, HNN reported on Bunnings potentially turning to the tradie market for growth.

    Bunnings goes shopping for tradies - HI News Vol.4 No.5

    Supply management

    At the height of COVID-19, Bunnings had to manage 13 or 14 different settings of how stores operated. Except for Victoria, hardware and home improvement retailing was classed as essential, but when the Delta variant surged in western Sydney LGAs (Local Government Areas), the directive came to shut down in those areas. Mr Schneider chose to close all stores across Sydney. He explains:

    In other markets where a local store was closed, customers would move about because they would still want the products we were selling, so we made the decision to close for about 10 days and purely trade online.

    When stores were closed to DIY customers, they remained open for tradies. He said:

    Even in Victoria we were allowed to be open for the trade customer and then the DIY customer could come up to the store and we'd pop their product in their boot in our contactless drive and collect model. We saw huge volumes go through that.

    Behind the scenes, the Bunnings team worked to convince governments of the important role the retailer plays in domestic production. Mr Schneider said:

    Being open meant suppliers like Dulux or PPG that manufacture paint or Seasol, that manufactures the fertiliser for your garden, or the hundreds of small businesses that are providing plants to us have the confidence to continue to stay open and keep their own manufacturing going.

    Within stores, the pandemic challenge has been inventory management. When Mr Schneider noticed elevated demand for home improvement products in April 2020, Bunnings made a sizeable bet on inventory investment even if it meant product being held at third-party sites. He said:

    We asked our suppliers to go the extra mile for us in having the confidence to bring more product into the country and that has paid dividends.

    However, access to structural timber remains difficult. Mr Schneider sees pressure on timber supply continuing. When timber product is available internationally, a lack of shipping containers prompted Bunnings to think laterally. He said:

    We have just brought a ship down from PNG with well over 100 containers worth of Merbau decking. Instead of containers, it was an open-air ship which was different but what it meant was you could problem solve for the lack of containers in that part of the world.

    Bunnings also had its own approach on last mile logistics, deliberately partnering with smaller delivery companies like ANC (Australian National Couriers) - Bunnings is its largest client - for what Mr Schneider believes is better service for customers. He said:

    We have avoided some of the challenges we know other retailers have faced with some of the bigger names in last mile logistics.

    To keep pace with online orders, Bunnings has a pilot site at North Laverton (VIC) for rapid fulfilment to take pressure off stores. It has focused on getting product to customers safely and quickly. Solvents, chemicals and big and bulky products don't easily fit into last mile logistics, which has made click-and-collect and drive-and-collect more popular.

    However, there are no plans for any major new distribution centre. Mr Schneider said:

    The team are out there having a really good look and also trying to understand what the cycle looks like. Supply is quite tight and demand is quite high which is good if you are a landlord. Those conditions probably won't remain as intense as they are now and as we think about evolving our network, that will undoubtedly create opportunities.

    Local community

    Bunnings has been redefining the idea of the "local hardware store" for almost three decades. The Bunnings brand is consistently pitched at the community level, and its car parks became mobile vaccination hubs during the pandemic. Mr Schneider explains:

    We had well over 140,000 people vaccinated at a Bunnings site, including somewhere where you could get a jab and a snag at the same time, very much the case in Queensland and WA. So the fact that people see Bunnings as a genuine part of the community gave many people the confidence to say, 'you know what? I should get vaccinated'...
    People are curious as to which store you work in. They don't see a big business, they see the store they shop at in the local community and the things that store does for its local community. If you've got that sort of brand recognition, it's hard not to be proud of it. I'm part of the Wesfarmers leadership team with fantastic access to capital to do the things we want to do.
  • Sources:, NCA NewsWire and The Australian
  • bigbox

    Big box update

    Green light for Bunnings Warehouse in Wagga Wagga

    Before construction starts, the hardware retailer must design traffic lights for a nearby intersection

    Wagga City Council has approved an application to build an 18,000sqm Bunnings store on the corner of the Sturt Highway and Pearson Street, subject to certain conditions, according to the Daily Advertiser. These conditions include multiple tweaks to the current plans, as well as the design and configuration of nearby traffic lights.

    Significant upgrades to the intersection were deemed necessary as the council has called for the only customer exit to the warehouse to be located on Saxon Street, which connects to the road network through Bye Street.

    Submitted plans for the development included entries and exits for customers on the Sturt Highway and Pearson Street. But to preserve traffic flow, the council has said the highway access must be entry-only and the Pearson Street accessway must be removed entirely.

    Bunnings' director of property and store development Andrew Marks said the company would review the conditions. He told the Daily Advertiser:

    We're pleased to have received development approval for a new warehouse in Wagga Wagga, however there are a number of conditions that require consideration. We are committed to bringing a bigger and better store to the local Wagga community ... however, we need to ensure an appropriate traffic outcome is achieved to allow customers safe and efficient access.

    Mr Marks said there was no timeframe for the development at this stage.

    The new Bunnings store is only 500 metres away from the existing Wagga Bunnings, but it will be 5000sqm larger and have parking for more than 400 cars.

  • Source: Daily Advertiser
  • bigbox

    Big box update

    Construction starts on Bunnnings Frenchs Forest store

    Fund manager Newmark Capital's first listed real estate investment trust that includes several Bunnings stores made its debut on the ASX

    Demolition has begun on a vacant two-storey office block on the corner of Warringah and Allambie Roads in Sydney's northern beaches to make way for the new $48 million Bunnings store, according to a report in Manly Daily.

    The Frenchs Forest outlet will span more than 20,000sqm and it will be first time in NSW that Bunnings will offer three levels of retail with two levels of parking for almost 400 vehicles.

    An Australia Post distribution centre will also be taken down to make way for the hardware store.

    The Bunnings development application was approved by the NSW Government's Sydney North Planning Panel in February this year. There were delays to the approval because of issues relating to safe vehicle access to the site due to the building's proximity to the busy intersection of Warringah and Allambie Roads.

    There was also another conflict over the size of the Bunnings Warehouse logos and signs, as well as the building's predominantly green colour scheme. The retailer agreed to reduce the size of the logo by 33% on Rodborough Road, remove a number of hammer logos from the rest of the building and restrict the amount of green paint is used on the facades.

    The opening hours will be finalised closer to the store's opening.

    Related: Bunnings has gained approval from NSW planning authorities for a store earlier this year.

    A five-storey Bunnings Warehouse is planned for Sydney's northern beach suburbs - HNN Flash #34, February 2021

    Newmark's Bunnings REIT listing

    Securities in the Newmark Property REIT (real estate investment trust) - trading under the ticker NPR - closed up 2¢ or 1 per cent at $1.92, after Newmark raised $129 million through its initial public offering at $1.90 per share, according to the Australian Financial Review.

    At a closing price of $1.92, the trust, which owns eight large format retail properties, mostly leased to Bunnings, closed with a market capitalisation of just under $350 million.

    Three-quarters of the trust's income is derived from leases to Bunnings. Prior to floating, Newmark bulked up the trust, acquiring three Bunnings with an end value of more than $200 million. These include Bunnings Eastgardens in Sydney's eastern suburbs, a new Bunnings being constructed in Preston (VIC) and another in Melton in Melbourne's outer west.

    Newmark, which created the REIT after combining two unlisted property trusts, the Newmark Hardware Trust and the Chadstone Trust, remains its largest shareholder with an 18.2% stake held across a number of entities.

  • Sources: Manly Daily and Australian Financial Review
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    Bunnings links to data through Flybuys

    Bunnings signs up to data resource

    Why did Bunnings sign on for Flybuys? As privacy becomes more of a concern online, loyalty programs such as Flybuys offers better access to customer data.

    After Wesfarmers spun off the supermarket chain Coles in 2018, the company took steps to set up the Coles-based loyalty scheme Flybuys as a separate entity. Coles and Wesfarmers split the ownership at 50% each.

    Since that time, it has been something of a puzzle to commentators as to why Wesfarmers did not move to expand Flybuys to cover more of the Wesfarmers-owned retailers - in particular its primary business, the big-box home improvement retailer Bunnings.

    The puzzlement ended on 9 November 2021, when Wesfarmers announced that Flybuys would be extended to both Bunnings and the company's office-supplies business Officeworks. That means that Flybuys will now be partnered with 25 businesses. According to Wesfarmers, as of the 30 June 2021 Flybuys is used by 6.4 million active households.

    Why now?

    One reason for the delay is likely the problem that Wesfarmers has struggled with for 20 years, but with more intensity over the past 10 years. As a conglomerate, it has gained strength from being able to buy businesses that were in a down-cycle, bring them into and up-cycle, and then sell them. Coles supermarkets is the most recent example.

    However, to maintain that flexibility, the company has had to retain each business in its own silo. That lack of integration means its easier to sell of these assets without other assets suffering any harm.

    While that's good from a demerger perspective, it is less good from an efficiency perspective. For example, if you order goods online from the range of Wesfarmers-owned retailers, you can get a separate delivery from Bunnings, Officeworks, Target and Kmart all on the same day. Wesfarmers clearly has enough delivery business it could set up an entire business segment to handle this - but that would make its individual businesses more integrated, and thus more difficult to sell.

    Perhaps just as pressing, the Bunnings culture that was initially developed under former managing director John Gillam and ably continued by current managing director Michael Schneider made keeping your cards close to your chest into something of an art form. The idea of sharing data from Bunnings customers with any exterior organisation, even a 50% partnership, does not sit well with that approach.

    So what changed? There's a hint to what changed in the very lucid statement made by Wesfarmers managing director Rob Scott in the press release making this announcement:

    Bunnings and Officeworks joining Flybuys will expand the value of the Flybuys program for members and provide exciting new opportunities to support customers. This partnership will complement the development of Wesfarmers' data and digital ecosystem, providing insights that enable our businesses to offer more relevant, personalised customer experiences.

    It's that second sentence that matters. At the moment, the internet world is on the cusp of a major change, where users of browsers and other means of information access will find their personal data is being protected by default. Up until now, those protections were available to users, but this often meant going outside the "safe" world of familiar software. For example, the Brave browser offers a wide range of data protections and ad-blocking (including a facility to make micro-payments to some websites as an alternative funding mechanism outside of advertising). But downloading that browser, and setting it up was something that just made users a little uncomfortable.

    The first big company to make a significant change was Apple. Its protections are quite comprehensive. For example, its Mail app will make it so that companies using email for marketing cannot track when mail messages are opened, and also hides the internet protocol (IP) address of the computer, iPhone or iPad that may click on any links.

    Apple also enhanced its feature that prevents apps from obtaining any information from users without the users granting explicit permission. That means that, for example, your Bunnings iOS app cannot tell Bunnings anything about you, unless you grant permission.

    Then there is a new feature to Apple's online storage service iCloud called Private Relay. This is something like a virtual private network (VPN), but easier to implement. Any web request is encrypted on the Apple device, then sent to a relay server, which assigns a random IP address, and spoofs the request to a random geographic location. A second relay then decrypts the request, and forwards it to the correct server.

    One thing to remember about Apple is that while it does not have a controlling share of the smartphone market, it does have a controlling share of the market revenue derived from smartphones. iPhone owners simply spend more than Android users do.

    If that isn't enough, the parent company of Google, Alphabet has also announced that it will no longer serve ads to users based on their browsing history. The company announced it would remove the core technology that enables that tracking, so-called "third party cookies", and then replace it with an anonymised service that grouped users in cohorts with similar profiles.

    Many observers believe that even this privacy hedge will not work, and that the drive for user privacy will simply steamroll such efforts. While Alphabet's Chrome browser has a large market share, the privacy issue might be enough to drive users to adopt alternatives, such as Firefox, or revert to operating system-linked browsers, such as Apple's Safari and Microsoft's Edge browser.

    The value of data

    Given that push many companies, especially in the US, are accelerating efforts to obtain data from users through other means. This includes competitions, polls, membership deals - anything they can use to secure personal information about their customers.

    Part of that has to do with a fear they will soon lose the kind of data they need to make personalised marketing work, but there is also a cost factor involved. If their own systems of information gathering break down, then they will need to rely more on providers such as Alphabet, and it's likely that will become costly.

    Against this background, it becomes clear exactly why Bunnings would see a strategic advantage in sharing data with a loyalty program that will aid it in contacting and reaching existing and new customers.


    Big box update

    Bunnings MD discusses digital transformation with AFR

    IKEA Australia has introduced an app through its stores in Queensland that will cut wait times at the checkout

    Bunnings Group managing director, Michael Schneider said the retailer's digital makeover is about improving the customer experience as well as encouraging a friendly environment for "digital natives" - people joining the business who are accustomed to digital - and existing employees. He recently gave an interview to the business column Chanticleer in the Australian Financial Review (AFR).

    Part of the retailer's tech transformation has been targeted towards its trade customers. It recently launched a new website for tradies that is mobile friendly, replacing the old process of an email system with a click and collection option through a smartphone.

    Bunnings' product finder app has also been updated with interactive store maps that show customers the best and fastest course around the stores.

    Mr Schneider said Bunnings is gradually moving all of its customer data to a cloud-based platform, which will support the entire group's operations, including inventory management. This project is due for completion by June next year.

    It was reported that most of the digital transformation is being done by an in-house Bunnings team, not an outsourced IT provider. Mr Schneider told the AFR:

    We partnered up with some fantastic external partners, but we also built this wonderful team in-house, which shows a different way of thinking about it. We've now got just over 500 team members in our tech and digital division under a dedicated chief technology officer, Leah Balter.

    Bunnings' digital investment has been about building deeper engagement with its employees. Mr Schneider said:

    This thing for us is not about maximising sales online. It's about improving our business so the next generation of people who are working here can put down roots and grow and build a career.
    Sure, we want to give our customers a compelling offer. But what's been fantastic in doing the work we've done in the digital space, has been thinking about the customer journeys and the blend of our long-term team members and our new people.
    People who understand the Bunnings way understand our product and understand the way that the customer experiences feel, [and] are sharing their knowledge with people who are joining the team.
    We've now got really fantastic tech skills, digital skills, code-writing skills, digital marketing skills and data personalisation skills. That sort of collaboration between the long-term Bunnings team members and newer team members is giving us a best-of-breed when it comes to the customer experience.

    Bunnings has been using social enterprise tool, Workplace by Facebook which developed it as a way of creating online communities within companies and facilitating greater co-operation among staff. Mr Schneider said:

    We've got over 40,000 of our 53,000 team members really active on their platform [and] that's allowing us to keep them informed on what's going on. We've built two production studios in our national support centre where we develop training material, deliver live content, and really connect and engage.
    If you're a buyer, and you bring a new product to life, you can speak directly to the team members who are selling that product and hear feedback on what's working, what's not working with your customers.

    Mr Schneider spoke at the Workplace Transform APAC 2021 Facebook live event earlier this year.

    Facebook's Workplace for employee engagement at Bunnings

    Mr Schneider said he wants to send a "subliminal message" to employees that Bunnings is "a place you can actually hang around for a while and have a bit of fun and do something different". He said part of the challenge of digital adoption within companies is demystifying technology for staff members who have been there for 20 years while making it a place tech-savvy young people want to work.

    The new Bunnings tech support centre is based in the inner Melbourne suburb of Cremorne which has been developed as a technology precinct by the Victorian state government. Mr Schneider said he is keen for Bunnings to be on the radar of graduates considering a career in tech.

    ...We are deep in a really genuine tech transformation - we're going pretty solidly at it, both from a resourcing point of view and an investment point of view.
    Those are the sorts of things that when you're wanting to build your career in the technology space, you're really looking for, and Bunnings is providing that, alongside all the things that we're famous for in terms of culture.

    Related: HNN has reported previously that as Bunnings launches into digital, it's likely to encounter the need for deeper change.

    Bunnings upshifts digital - HNN Flash #17, October 2020

    Related: Bunnings has produced another strong result.

    Bunnings results FY2020/21 - HNN Flash #60, August 2021

    IKEA app in QLD stores

    IKEA's mobile checkout technology allows customers to scan products on their phone and pay on the way out without needing to unpack their trolley. It is being used at its Logan and North Lakes stores in Queensland in the lead up to Christmas.

    The home improvement retailer plans to roll out the technology across all Australian stores in 2022, according to The Courier-Mail.

    IKEA's country customer manager Christian Becker said it took an average of six minutes to stand in line and unload and reload items. The app should make shopping easier for customers. He told The Courier-Mail:

    Our co-workers can now also support more customers where their help is most needed, which is super important in the busy Christmas shopping period. Our goal is to provide our customers with a consistent, seamless, and efficient shopping experience across all channels.
    Mobile check-out is a first for home furnishing retailers in Australia, and we're proud to lead the way with this initiative with the aim of creating a no-wait checkout experience for our customers.
  • Sources: Australian Financial Review, Motley Fool and The Courier-Mail
  • bigbox

    Big box update

    Bunnings "hotel" expected to open before Christmas

    A Mercure brand hotel in the Melbourne suburb of Doncaster will open atop a Bunnings store

    Construction works are progressing at the multi-level Bunnings Doncaster site, next to Westfield Doncaster shopping centre, according to a report in the Whitehorse Leader.

    The new warehouse store sits below a high end Mercure Hotel, which is also preparing to welcome guests in December. Bunnings area manager Craig Bleksley said the store would include familiar features such as a main retail area, timber and building materials yard and an outdoor nursery. He told the Whitehorse Leader:

    It represents an investment by Bunnings of more than $90 million and will span just over 11,000sqm, with over 300 carparking spaces.
    We're excited to be creating 180 new jobs in the local community, with recruitment now complete.
    We look forward to opening the doors and welcoming local residents to the new store, offering a wide range of home and lifestyle products, backed by great service from our team.

    At the time of its announcement, Bunnings acting general manager - property, Garry James, said:

    We identified a need for Bunnings in the Doncaster area and this site provided an opportunity to build something in line with Manningham Council's vision for Doncaster Hill.
    We are always looking at opportunities to innovate the design of our stores and we have a number of different formats that cater for the local markets where we operate. There's no cookie cutter approach - we always assess the local need and what can be achieved in a space.

    The Mercure Melbourne Doncaster has 183 contemporary guest rooms along with an elite fitness centre, expansive outdoor terraces and indoor/outdoor swimming pool. The property will also host functions, with One2One Events to be launched on level three of the hotel, with the space offering views over the city skyline and Yarra Ranges.

    Mercure Melbourne Doncaster will also introduce contactless options for room keys, parking, minibar and room service along with environmental initiatives such as the elimination of single use plastic bottles and guest amenities.

  • Source: Whitehorse Leader
  • bigbox