Metcash has released its results for its H1 FY2023. While the results show broad growth in its hardware division - IHG and Total Tools - the store like-for-like sales reveal organic growth is below the overall growth rate for hardware retail sales.
While the results from UK hardware retailers Kingfisher and Wickes were not disastrous, they do track a downwards trend in the market. With an economy set to endure yet another bout of austerity, including high energy prices, it is difficult for the retailers to capitalise on the few market advantages.
Elders chief executive believes generational change in the farm services industry, along with rising wage bills and labour shortages are set to push increasing numbers of independent businesses to sell up
With a market capitalisation of $12 million, Perth-based distribution group Stealth Global Holdings has executed a number of acquisitions in recent years, delivered organic growth and is refocusing on the Australia market
Located about an hour's drive from Melbourne CBD, Woodend Hardware is a classic of how to make a regional store valuable to its community, its staff and the owners. That's all build on a lot of experience and, of course, daily care and good practices.
Metcash has delivered its results for its FY2022H1. For its hardware segment, this included EBIT growth for IHG, ex of acquisitions of 4.4%, even as the hardware retail market saw negative growth for Australia overall of 2.5% in the report period.
Roy Morgan has a rosy picture of post-COVID retail, at least through to February 2022. Christmas sales will retain the high levels of 2020, the company says, and Black Friday sales will be strong. However, there are some real threats that could unravel this forecast as well.
In late October 2021 the RBA released details of its review of debit payments systems. In particular, it sought to reduce the fee burden on smaller businesses, and has mooted allowing merchants to apply a surcharge for buy now, pay later services.
In 2019 Bunnings release its video series "Make It Yours", which made use of "influencers" to encourage younger customers to explore DIY. In 2021 the big box retailer released "Make It Happen" - which was a return to the way it marketed in 2017. What's behind that, and what will it mean?
Tool Kit Depot Gympie opens its doors to customers
David O Jones Mitre 10 owners say they have no intention of leaving Ararat (VIC) after a "For Lease" sign was placed outside its Campbell Street store
Thu Dec 29 2022
After helping to launch the first Tool Kit Depot store on the eastern seaboard, Tool Kit Depot Gympie store manager, Braden Bunker, said his team was looking forward to meeting local tradies and helping them with their next job. He said:
There has been strong demand for online orders to Queensland, so we are glad to now be able to provide Queenslanders with the opportunity to shop in store and become a trusted trade partner with locals....
Our team worked hard ... getting products on the shelf in preparation for the store opening. It's been a huge effort by all involved and we're really proud of what we've achieved.
With sites already operating in South Australia and Western Australia, Tool Kit Depot said the new Gympie store provides tradies and serious DIYers with a one-stop-shop for tools, outdoor power equipment, storage, welding and construction equipment, safety and workwear, as well as a workshop for repair and services.
Its in-store tool repair centre sets the brand apart from its competitors. Customers can have their tools serviced on site, with genuine expert advice across all product ranges including specialist carpentry equipment. Stores will also provide a battery bar service.
In addition to a premium range of products from suppliers such as Festool, Husqvarna, Hard Yakka, Milwaukee and Makita, the Tool Kit Depot range extends to products from AEG, Irwin, Empire, Kango and Full Boar.
In addition, there will be trade nights and invitational events such as beer and pizza nights, where tradies will get a chance to see demonstrations by product company representatives and sample the latest product lines and services.
Spanning 1,200 square metres, the new store represents a $3 million investment in the Gympie community and has created 14 new jobs for locals with trade experience. It is located at Tenancy 2, Hall Road, Glanmire, across from Bunnings.
Store owner Simon Jones said he and fellow owners David and Margaret Jones are currently negotiating a new lease agreement with landlords, because their current agreement expires in January 2023. While negotiations previously resulted in a stalemate, Mr Jones said both parties had finally reached an agreement. He told the Ararat Advertiser and Stawell Times:
We haven't wanted to leave the premises, and we won't be leaving the premises as well, I'll make that clear right now...We met with them again and have come to an agreement, pending us seeing the new leasing agreement, which is amended...
Mr Jones clarified jobs were staying in Ararat, and that he'd even explored other property options in case current negotiations fell through. He said:
It would have been extremely difficult, but we still would have been trading at another site in Ararat had we vacated the Campbell Street site. There was never any question about a Mitre 10 presence in Ararat, and never a question about the Jones' being in Ararat either. We were always committed to that.
Mr Jones said Ararat residents had been very supportive of the store, particularly during recent difficult years, with business expected to grow even further for the "silly season".
Our Christmas period has already been very, very good, both from a retail point of view and our trade customers as well.
David and Margaret Jones purchased the business from previous owners Max and Bernie Perovich in 2013.
Sources: Tool Kit Depot and Ararat Advertiser and Stawell Times
Hardware retailer faces court action for blocking competition
The competition watchdog in New Zealand is taking a Mitre 10 operator to court over action allegedly to prevent Bunnings build
Thu Dec 29 2022
New Zealand's Commerce Commission alleges a company operating a Mitre 10 Mega store bought land in Tauranga and tried to prevent a Bunnings Warehouse from being built on it.
The commission has filed proceedings in the High Court in Wellington in an anti-competitive land covenant case against NGB Properties Ltd for allegedly contravening section 28 of the Commerce Act.
NGB is a sister company of Juted Holdings Ltd and operates the Mitre 10 Mega in Tauranga, the commission said in a statement.
Section 28 prohibits land covenants that have the purpose, effect, or likely effect of substantially lessening competition.
The regulator has alleged that NGB bought a property in Tauranga and placed a covenant on the land to prevent Bunnings from building close to a Mitre 10 Mega store owned by an NGB-associated company Juted Holdings.
That amounted to a purpose of substantially lessening competition for the retailing of hardware and home improvement goods in central Tauranga, according to the commission.
The commission and NGB had agreed on a settlement to resolve the proceedings, and a penalty hearing in the High Court at Wellington will be scheduled shortly.
Because the matter was before the court, the commission was unable to comment further for now, it said.
Bunnings director of store operations and New Zealand, Ben Camire confirmed the commission's case against NGB Properties Ltd was related to a land covenant allegedly lodged to prevent a Bunnings Warehouse from being built in Tauranga. He said:
As the matter is before the courts, we are unable to provide further comment.
A Mitre 10 New Zealand Ltd spokesperson acknowledged the negotiated settlement in the case.
NGB Properties is an independently owned business which shares directors and shareholders with another business that is part of the Mitre 10 co-operative. Mitre 10 New Zealand was not involved in the matter...
The Commerce Commission action is the first step in a crackdown it plans against the anti competitive use of land covenants and lease exclusivity agreements, that it said are used by big, established retail chains to protect their dominant market positions.
There have previously been ugly turf wars in hardware retail, between incumbents such as the Mitre 10 Co-ops, and more recent arrivals including Bunnings. In Queenstown, the Environment Court found the Mitre 10 Mega owner had abused court process in its attempts to stop a new 8100sqm Bunnings store opening 500 metres away. Mitre 10 owner H&J Smith was ordered to pay the maximum NZD60,000 in legal costs.
And in 2011, the Commerce Commission issued warnings to Mitre 10 and Bunnings over misleading advertising in which both claimed to have the lowest prices.
Attempts by challengers to open new stores have been subject to continuing delays. Four years ago, the owners of Bunnings in Whanganui announced plans to open a new 8400sqm store, spending NZD19 million in the town and creating 50 new jobs. Locals welcomed the news, saying it would "give Mitre 10 a run for their money". But today, the land beside the BP on London Street remains vacant. The project has been tied up, first in resource consents and now in other unspecified delays.
According to Commerce Commission analysis, the three largest merchants hold more than 80% of sales of key building supplies, though this is slightly diminished from five years ago. In some regions, there are only a couple of building retailers, limiting competition in prices.
There are several key factors in finding suitable sites. These include location - retailers need sites with plenty of customer traffic, and easy access to facilitate delivery of materials to building sites. The site needs to be large enough for a building supplier, which can be particularly challenging in urban areas, given that merchants need a large amount of land. And the land must be appropriately zoned for development.
The commission has found that some suitable blocks of land come with exclusive lease agreements or covenants attached. This is registered by a previous owner or tenant, and restricts how that land can be developed or used.
Fuel retail chains, supermarkets and building supply merchants all use this tactic to stop competitors coming onto their turf. It's such a problem in supermarkets that the New Zealand Parliament in 2022 passed a law nullifying such covenants, and the two big supermarket chains agreed to get rid of them.
But large, established building supplies incumbents like Mitre 10, Carters and Placemakers have been slower to change. The problem is such that the Commerce Commission is now warning it will use its new powers under section 36 of the Commerce Act, to stop them engaging in behaviour that will "have the effect of substantially lessening competition".
The commission has identified 60 restrictive covenants set in place for building merchants, and another 80 exclusive leases that potentially limit competition.
Most of the covenants block competition for years to come - and the remaining ones don't have a fixed expiry date. Sometimes new merchants are precluded from operating on a site, long after the merchant who benefits from the covenant has left the area.
The covenants are over land adjoining, or near, land leased by a merchant, where the landlord has agreed to lodge a covenant for the merchant's benefit.
Sources: Bay of Plenty Times, Stuff NZ, Radio New Zealand and Newsroom (NZ)
Metcash has released its results for its H1 FY2023. While the results show broad growth in its hardware division - IHG and Total Tools - the store like-for-like sales reveal organic growth is below the overall growth rate for hardware retail sales.
Fri Dec 09 2022
Metcash has released its results for the first half of its FY2022/23, which includes the six months from May to October 2022. Overall the company reported that revenue came in at $8.9 billion, up by 7.8% on the previous corresponding period (pcp), which was the first half of FY2021/22. Earnings before interest and taxation (EBIT) were $255 million, up 10.3% on the pcp. That results in net profit after tax (NPAT) of $126 million.
The company notes that on a three-year basis - referring to results prior to the pandemic, from May to October 2019 - revenue increased by 32% and EBIT by 64%.
Unfortunately, Metcash has not posted a recording of the results presentation, so this report is derived from the company's press release, its slide presentation and ASX filing.
In terms of overall hardware sales, including both the Independent Hardware Group (IHG) and Total Tool Holdings (TTH), revenue including charge-through sales, was $1732.6 million for the half, an increase of 16.8% on the pcp. However, some $134 million of this was from new joint-venture and company-owned stores, which means organic growth was 7.7%.
EBIT for hardware came in at $116.6 million, up by $17.7 million on the pcp, an increase of 17.9%.
In comments provided in a press release, the new Metcash CEO, Doug Jones, had this to say about Metcash's hardware operations:
Our independent retail networks performed well. Overall network health continued to strengthen, and retailers are operating with a high level of confidence and reinvesting to further improve the quality of their stores and offer.
The success of our investments in Total Tools and IHG, and significant growth in the underlying performance of the Hardware pillar, has led to a rebalancing of the Group's earnings profile with Hardware now the largest contributor.
We now have ~160 company-owned or joint venture stores in our hardware network that together are delivering significant sales growth.
Sales at IHG came in at $1.4 billion, an increase of 7.9% on the pcp. Metcash also claims the wholesale EBIT margin was 2.8%, while the overall EBIT margin was 4.9%.
However, like-for-like (comp) sales were up only 4.1%, with trade rising by 5.2% and DIY/consumer sales by 1.5%. The company states that trade sales continued to represent 64% of overall sales, despite the growth disparity.
The company states that some 30 Thrifty-Link and True Value stores have been converted to Home Timber & Hardware (HTH) stores, as part of IHG's move to a two-brand strategy of Mitre 10 and HTH. The overall goal is to reach 400 Mitre 10 stores and 200 HTH stores in the network.
TTH saw sales of $566.7 million an increase of $296.9 million on the pcp, up 93.4%. In organic growth terms, sales grew by 9.5%. The company reports that comp sales were 4.7%. TTH EBIT increased by $13.7 million to $46.8 million, an increase of 41.4%. Two new stores were added to the network during the half.
As mentioned above, without the benefit of the presentation recording, it's difficult to fill out the necessary background. However it is worth noting that overall hardware retail sales as provided by the Australian Bureau of Statistics (ABS) increased by 6.9% when comparing the period from May to October 2021 with May to October 2022.
Taking the comp sales recorded by both IHG and TTH, that means that in terms of organic growth from existing stores, both of these actually lost market share during the half.
HNN will be releasing our analysis of Metcash's Investor Day held in October during this week. We had decided to hold off on doing our analysis until the half-year results were released, as in the past we've noted discrepancies in the figures used in those two presentations. Hopefully Metcash will release the recording of the presentation of these results, and we will be able to update this article as well.
Tool Kit Depot offers everything from power tools to storage, a battery bar as well as repair services at the new store in Gympie, Queensland
Fri Dec 09 2022
Tool Kit Depot area manager Wayne Sheehan and store manager Braden Bunker recently gave a sneak peek tour of the new store in Gympie to the Gympie Times. It is located at Tenancy 2, Hall Road, Glanmire, opposite Bunnings Gympie. Mr Bunker said:
It's exciting to be a part of this milestone, opening Tool Kit Depot's first store on the eastern seaboard, and we look forward to paving the way for more to come. Gympie is a key base for tradespeople who need professional tools and equipment, so it's great to be able to provide them with the best brands, service and value.
The store offers up to 10,000 products across tools, storage, workwear and power, welding and safety equipment as well as a tool repair centre and expert advice. The 1200sqm store is a $3 million investment and has created 14 new jobs.
Mr Bunker said Gympie is a prime location and a "big opportunity" considering the commercial market in tools.
The closest tool shop is 45 minutes away for a decent tool specialist. We think this will be pretty good for the locals.
Before becoming Tool Kit Depot's store manager, Mr Bunker worked as co-ordinator at Bunnings Gympie. He has been part of the Bunnings family for the past 11 years.
The business has sourced all of its staff locally. Half of the team moved from Bunnings while the remainder are tradespeople.
It is expected to open by December 12, to be followed by an official opening soon after.
Parent company Kingfisher has opened its first Screwfix store in France. The expansion of Screwfix in France is helping the group drive growth.
Fri Dec 09 2022
B&Q is expanding its presence on the high street in the UK with new B&Q Local convenience stores.
The DIY and home improvement retailer has plans to launch two stores in London's Palmers Green and Camden districts with the new name in the first quarter of 2023. They will be the first to bear the B&Q Local brand, which B&Q recently applied to register as a trademark. In a statement, Graham Bell, chief executive of B&Q, said:
Depending on the test and trial we could probably see quite a few, there are 50 odd catchments where we're not represented. But it's finding the physical location and getting planning permission.
Retail veteran Mr Bell, who previously worked for Asda, said B&Q had looked to the success of the big grocers' convenience stores for inspiration. He said:
Grocers have led the way with [ventures like] Sainsbury's Local and Tesco Express.
B&Q's smaller stores themselves offered a "takeaway range that's probably most of the DIY generic bits and pieces" but also allowed shoppers access to "the full proposition you would get in one of our large stores", he said.
You'll still be able to plan and buy a complete kitchen and order lots of goods in larger stores and get them delivered the next day for click and collect.
However, Mr Bell stressed B&Q planned to continue opening larger stores as well as the convenience outlets. B&Q had cycled through "a lot of different names" before deciding on B&Q Local. He added:
Customers have this expectation and they want a bit of clarity. We've tried to do something with the fact that they're local communities, local stores and local access for convenience.
There were "huge populations" that struggled to reach B&Q's larger stores, he said, particularly in urban areas.
London is a huge catchment and we obviously can't get the representation of the large stores that we'd like. It's areas we're not so represented in and allowing those communities ease of access.
The first Screwfix France store officially opened in Wattrelos in Lille, with three to four more stores set to open by the end of January 2023, all in the Hauts-de-France region.
The store openings follow the successful launch of the Screwfix banner as an online retailer in France in April 2021. The website, www.screwfix.fr, has seen a positive response from customers to date, with strong traffic and conversion rates and growing brand awareness across the country.
Screwfix France aims to gain a share of the significant trade professional market in France, which has an estimated total market size of over GBP20 billion. The business will be based on the proven Screwfix model in the UK and Ireland, with product ranges adapted to the French market.
Each Screwfix France store will offer around 10,000 products aimed at trade professionals with an additional 5,000 products available online - ranging from plumbing and electrical products to power tools and workwear. Customers will be able to click & collect from store in as little as 10 minutes.
In preparation for serving the growing business, Screwfix France opened its first distribution centre, in Nanteuil-le-Haudouin, Oise, earlier this year, enabling next day delivery to home or site. Thierry Garnier, Kingfisher CEO, said:
Kingfisher's strong relationships with French suppliers, combined with our deep knowledge of French customers and ranges, mean we are perfectly placed to bring the proven Screwfix model to France.
After a positive response to Screwfix France as an online retailer, we are now building the business for meaningful growth, from opening a new distribution centre to investing in scalable new IT. The expansion is being led by experienced teams made up of talent from across Screwfix UK, Kingfisher in France and beyond.
We are very happy to be opening the first Screwfix stores in France and believe they offer tradespeople a proposition unlike anything else in the market.
In October, the building supplies and timber group opened a store in Melton (VIC) after acquiring Melton Timber & Hardware
Fri Dec 09 2022
The official opening of the Bowens Warragul store in regional Victoria was attended by hundreds of invited guests, according to the Warragul & Drouin Gazette.
Since opening its doors in September, Bowens said the Warragul store has worked largely with small to medium-sized builders and trades, and attracted over 500 new customers.
It predicts that over the next 12 months, the store will make approximately 12,000 plus deliveries to local builders and homes throughout the region. The store has already created over 30 jobs in the community. Bowens director and chief investment officer, Andy Bowen, said:
We are excited to officially celebrate the opening of the Warragul store with the local community. A part of our continued store operations strategy is listening to our customers, their feedback and experiences are part of the secret to our success, and we are looking forward to connecting with them directly and further supporting the Warragul community.
As part of acquiring Melton Timber & Hardware (MTH), Bowens has kept on its previous owners Brad and Scott Morton to lead the team for the store's next evolution.
MTH has been a mainstay of the local community for decades after their father, Ken Morton first started trading in 1969. Ken originally worked for Bowens at its North Melbourne store prior to starting MTH so the acquisition represents a full circle moment.
The store currently has 16 staff, with Bowens planning to grow the team and servicing capabilities. Long term, Bowens will relocate the store to the recently purchased 5ha industrial site at Cobblebank in Melton. Mr Bowen said:
As a market leader in the industry, Bowens is committed to supplying the best quality products and advice to builders and trades alike, especially in areas experiencing significant growth. We recognise Melton as a key growth corridor and are thrilled to be ensuring the long-term serviceability of building supplies to the Melton area.
We will continue to lean on Brad and Scott's community knowledge and experience to tailor our service to local builders and ensure the seamless integration of Bowens and Morton family business values.
We intend to maintain the best elements of MTH while adding further value, where possible. It is our job to ensure the local community feel comfortable with the changes and, most importantly, receive the building products they require on time and in full...
Store manager, Scott Morton, said:
Since our father founded the store, we have witnessed first-hand the growth of Melton and the surrounding community. As the area grows, so does the demand for high quality building materials and increased support. Bowens ensures both in the long term and will enable us to continue to deliver for the Melton community...
Since October, the Bowens Melton store has been a service centre until the new, larger store in Cobblebank has been built. It is expected to be finalised in 2024 and will be the 18th Bowens store in Victoria.
Petries Mitre 10 Dubbo has been named Independent Hardware Group's 2022 NSW Garden Centre of the Year
Fri Dec 09 2022
Native Grace at Robertson, launched by Luke and Catheryn Maitland in November 2020, has been awarded the Best Small Retail Nursery at the Nursery and Garden Industry NSW & ACT (NGINA) awards.
Hosted by ABC Presenter, Costa Georgiadis, the awards recognise wholesale/production nurseries, retail garden centres, allied suppliers, apprentices and the next generation of industry leaders from across NSW and the ACT for being at the top of their fields.
Luke and Catheryn, reinvigorated the 60 year old centre, one of the oldest in the Southern Highlands which had been closed for ten years prior.
Luke Maitland is a horticulturist who specialises in native plants and the centre has hundreds of plants, a cafe and a retail store. He told Southern Highland News:
It is an honour to be recognised by the industry for all the hard work the team have put into the nursery over the last 12 months.
Having launched in November 2020 we've had major challenges including COVID and floods so it's a great way to end the year on a high winning this award. It was an exciting moment to be presented the award by legendary gardener, ABC talent Costa Georgiadis.
We'd like to thank the Nursery Garden Industry NSW ACT for this Award and for their support and efforts, it's really terrific to have such a strong industry body who supports businesses.
According to the judges, Luke and Catheryn Maitland created a "little gem of a place" at Robertson. They said:
It is a clean, neat, tidy and impeccably presented garden centre. It has a design studio creating sustainable Australian Native gardens for clients, a gift shop focusing on Australian products and bush foods and there is an onsite cafe van. The stock is top quality, and it is a winner in so many ways.
Petries Mitre 10 Dubbo
The team at Petries Mitre 10 Dubbo is preparing for the national title announcements in early 2023 after winning 2022 NSW Garden Centre of the Year for Independent Hardware Group.
Judging criteria included the best use of space, range of stock and stock presentation, sales, signage, customer service and more.
Sources: Southern Highland News and Dubbo Photo News
Kingfisher is using Google Cloud in a new five-year partnership for a range of solutions, from infrastructure to data analytics
Fri Dec 09 2022
B&Q's ecommerce range is expected to grow from 300,000 to more than four million in coming years, as its online marketplace grows. At the same time, the Screwfix website is expected to become a hundred times faster through re-platforming.
Both results are predicted as parent company Kingfisher capitalises on Google Cloud's infrastructure, platform services, and artificial intelligence (AI) solutions. It should provide customers with faster and more intuitive searches, as well as improve the efficiency of deliveries such as its less-than-one-hour Screwfix 'Sprint' service.
Adopting Google Cloud technologies will also allow Kingfisher to experiment with advanced testing environments at much lower cost.
In addition, Kingfisher plans to create a new, real-time order system that will vastly improve stock accuracy, and deploy visual search using Google Cloud AI tools to help customers discover the product replacements that most closely match their needs.
A long-time user of SAP software, Kingfisher, has begun moving its legacy data to Google Cloud. JJ Van Oosten, chief digital and technology officer at Kingfisher, said:
At Kingfisher, we have an ambitious technology strategy in place. Google Cloud is an engineering organisation at its heart, while simultaneously understanding the complex retail landscape. As we look to the next phase of growth and the kind of talent we want to attract, this meeting of minds was a real draw for us.
To reach our goal of creating a world-class engineering centre, we need a technology stack that will support us to experiment and move quickly. Google Cloud is helping to position us as a true digital leader, and our global teams and customers will benefit as a result.
While the results from UK hardware retailers Kingfisher and Wickes were not disastrous, they do track a downwards trend in the market. With an economy set to endure yet another bout of austerity, including high energy prices, it is difficult for the retailers to capitalise on the few market advantages.
Fri Dec 02 2022
With the UK undergoing somewhat linked political and financial crises, it's hardly a surprise that forward-looking statements from hardware retailers are couched in cautious terms. Where hardware retail markets in the US and Australia show a degree of robustness and stability even as interest rates rise, the UK (and French) markets seem to have become flat, possibly trending backwards if inflation is taken into account.
In particular, with winter coming on, there is grave concern about the impact of increased energy prices, both for customers but also for retail businesses themselves. The flip side of this is that there is some increase in retail sales of products that will help consumers conserve energy in their homes.
Kingfisher's major home improvement chain in the UK, B&Q, reported sales of GBP935 million for its third quarter FY2022/23. In constant currency terms, this was down 2.7% on the previous corresponding period (pcp), which was third quarter FY2021/22. In like-for-like (comp) terms the decline was 3.5%.
The company reports strong demand for products such as insulation, while the bathroom and storage categories retained sales. Unseasonably warm weather meant that outdoor category sales fell. Online sales continue to grow, and B&Q's Tradepoint product, for tradespeople saw sales increase.
Screwfix, Kingfisher's trade-oriented rapid service brand, fared better, with revenue of GBP610 million, up by 4.9% in nominal terms. However in comp terms, sales fell by 0.5%. The company reported that demand from trade customers remained strong, especially in building, joinery, bathroom and storage. Sales in tools, hardware and the electricals, plumbing and heating categories remain constant. Screwfix continues to expand, opening 17 new stores in the UK and Republic of Ireland, as well as its first two stores in France.
In Kingfisher's French businesses, Castorama reported sales of GBP564 million which represented an increase of 0.8% in constant currency terms. Sales were steady from DIY and do it for me (DIFM) customers, with heating products and energy efficiency solutions helping to drive sales.
Brico Depot recorded sales of GBP533 million, an increase of 0.2% in constant currency terms. Building and joinery as well as insulation helped to drive sales.
Other international sales, including France, Spain, Portugal and Romania reported overall sales of GBP621 million, an increase of 8.4% in constant currency, and comp growth of 6.7%.
Overall, Kingfisher Group had sales of GBP3263 million for the quarter. In constant currency, this represented growth of 1.7% and comp growth of 0.2%. From a year-to-date (YTD) perspective, in constant currency, the group has negative growth of 1.4%, and negative comp growth of 2.7%.
On a three-year comp basis, the revenues have grown by 15.3% for the quarter, and 16.2% in YTD terms.
Kingfisher has dropped its guidance for pre-tax profit from GBP770 million to a range of GBP730 million to GBP760 million.
While Wickes does not release much detail, the company says that trading stabilised during third quarter 2022/23. Where its core business had negative growth on an annual comparison basis for the first two quarters, in the third quarter it reported 0% growth.
However in its DIFM (Do-It-For-Me) business, Wickes reported growth of 12.2%, resulting in total growth for the quarter of 2.6%.
According to the company:
Local Trade sales performed strongly, with our TradePro customer base continuing to increase by 10K per month to [circa 720,000], as we continue to grow the awareness and appeal of the scheme through its compelling value proposition. DIY sales remain below last year although with no signs of further softening since our July trading update.
Chart 1 shows the sales for the UK hardware market, as provided by the UK Office of National Statistics (ONS). This is based on a 100-index.
As this indicates, while the UK market did experience some of the same lift to the hardware retail market, in their case in May 2020, that market has also seen wide fluctuations, and has been gradually moving back to convergence with the pre-pandemic market.
This is shown more clearly in Chart 2, which tracks the percentage change in the index.
It can be clearly seen that in the most recent p2022 (the green line) this consistently tracks in negative territory, as the market drifts back towards its pre-pandemic levels.
The event allowed some participants to discuss what they perceived to be the industry's current challenges
Fri Dec 02 2022
For the first time since the pandemic, 30 suppliers put up a stall at Tamworth Building Supplies for tradies, DIY enthusiasts and renovators, and offered information about the industry.
Manager Steven Brazel told The Northern Daily Leader he was pleased to put on the event, and celebrate moving past the issues caused by the pandemic. He said:
The supply issues aren't actually a big problem at the moment for our industry. It's actually fairly stable now, so there's actually a bit of a glut of timber and things like that.
However recent floods affecting New South Wales and extreme weather has held up the process of getting materials out west, and to Narrabri. Mr Brazel said:
You just can't get there. Wherever it's flood affected, it is hard for us to get gear to them.
Usually tradespeople spend the lead up to Christmas "running around", according to Mr Brazel. He said:
It usually is a madhouse leading up to Christmas. Because everyone wants to get into their new house, or finish a renovation.
But this year is slightly different, with homeowners feeling the sting of interest rate rises, he said.
One of the stall holders, Hyne Timber, participated in the trade event to raise awareness for its new product range. NSW sales manager Richard Dawson said COVID-19 put a strain on the sawn timber producer's staff numbers.
But the biggest issue for the company remains the black summer bushfires of 2020 in northern Australia. It will take a decade or more for the forestation to bounce back, he said.
We're still working through those numbers, and pulling timber from other areas of NSW for service as normal.
The hardware retailer continues to grow its revenue and income partly through private label products
Fri Nov 25 2022
For the third quarter of 2022, Ace Hardware posted revenues of USD2.2 billion, an increase of 10.0% from the same period last year. Third quarter net income was USD100.6 million, an increase of 1.3% from 2021.
In the quarter ended October 1, total retail revenues for the quarter were USD193.4 million, an increase of USD4.3 million since last year. Wholesale gross profit was USD272.5 million, an increase of USD34.4 million since Q3 2021.
The approximately 3,600 Ace Hardware retailers who share daily sales data reported a 5.8% increase in US retail same-store-sales during the third quarter of 2022. Estimated retail inflation of 11.2% helped drive the 9.5% increase in the average ticket price. Same-store transactions were down 3.4%.
Ace also added 35 new domestic stores in the third quarter of 2022, and closed 10 stores. It announced earlier that it has already opened 130 new stores in 2022, and is planning to open at least an additional 40 stores in Q4 for more than 170 by the end of the year. John Venhuizen, president and CEO of Ace Hardware said:
My sincere thanks to the entire Ace team for their determined and relentless pursuit of our three strategic imperatives - service, convenience, and quality - which delivered yet another quarter of record sales and profit. Revenue and income ... now stand 44% and 66% higher than just three years ago. Despite, and in some cases because of rampant inflation, the Ace team continues to deliver superior financial results and exceptional customer service to and for our neighbours.
Furney's Town and Country in Dubbo, NSW will become part of the PETstock network
Fri Nov 11 2022
Long-established pet store, Furney's Town and Country will be rebranded under the PETstock banner after more than 35 years.
Current owner Michael Edwards has been a fixture during this time after working at the store - including sister business Pet Xtra for 25 years - and becoming the owner. He has seen the business go from strength to strength with the support of the community. He told the Daily Liberal and Macquarie Advocate:
We only recently moved the business down here to the old Holden car dealership site and that's been hugely popular and successful. We sold the old premises with apprehension, it always is when you move a large business, but it's worked amazingly well.
I went to work with the Furney family to run the site when it was a significantly smaller stock feed store. And we expanded on the pet side of things and opened the Pet Xtra on Erskine Street. And it continued to grow and grow.
We've been very lucky to have that experience and have the support of the Dubbo and regional community.
Ready for retirement, Mr Edwards said age and finding a "like minded buyer" made now the right time to take a step back from the business he has built. Australian owned and operated pet retailer PETstock has 47 stores across NSW and will take over the store.
...The store offers a great service to the community and PETstock is very conscious of community support, and that's always been key to me.
The new owners planning on expanding the range of services to include DIY dog wash, grooming and personalised pet ID tags. PETstock state Manager, Tom Ginty Wise, said:
In addition to expanding existing services, the store will support local organisations, such as local rescue groups, by providing them with free in-store space, temporary or permanent, for our PETadopt program where adoptable pets can find forever families in a convenient and friendly environment.
Mr Edwards said he is optimistic about the direction PETstock would like to take the home-grown business in, and said the handover seemed fitting given the similarities in the history of both stores.
In so many ways PETstock comes from a similar background in that they started off with a young family and a small stock feed store.
After decades of helping Dubbo locals care for everything from horses to hermit crabs, Mr Edwards said:
When you've been involved in something for so long and you've built a lot of relationships through the years with your clients and customers, that's what I will miss. That interaction with people.
Often those relationships go beyond a business interaction and you take genuine interest in what their activity is ... it's quite a range of people you meet. And they all have such a genuine interest in their pets.
Source: Daily Liberal and Macquarie Advocate
Main image credit: Furney's Town and Country Facebook
Lowe's sells Canadian interests to New York private equity firm
True Value is expanding in the farm category after it acquired the brand trademark rights of Agway Farm & Home Supply
Fri Nov 11 2022
Lowe's has struck a deal to sell about 450 stores in Canada to Sycamore Partners for USD400 million in cash and "performance-based deferred consideration". Its Canadian business, based in Boucherville, Quebec, operates under various banners including Rona, Lowe's Canada, Reno-Depot and Dick's Lumber.
Marvin R. Ellison, president and CEO of Lowe's, said in a statement that the sale of its Canadian subsidiaries "is an important step toward simplifying the Lowe's business model."
While this business represents approximately 7% of our full year 2022 sales outlook, it also represents approximately 60 basis points of dilution on our full year 2022 operating margin outlook.
By executing this transaction, we will intensify our focus on enhancing our operating margin and [return on invested capital], taking market share in the US and creating greater shareholder value.
The company said it would register a USD2 billion write-down related to Canadian retail activities in the third quarter of 2022.
Sycamore Partners managing director Stefan Kaluzny said the private equity firm would "establish Lowe's Canada and Rona as a standalone company headquartered in Boucherville, Quebec."
The companies say they expect the transaction to close in early 2023, subject to regulatory approval.
Lowe's entered the Canadian market in 2007 and expanded its footprint in 2016 with the purchase of Rona for USD2.3 billion. The acquisition was controversial at the time, with a major Quebec company being sold to foreign interests, and many Canadian politicians tried to stop the deal.
The retailer's sale of its Canadian interests is a recognition by the company that it couldn't make the takeover work. The business has struggled and Lowe's has cut jobs and closed dozens of stores in several provinces.
For Rona, it will likely be the beginning of another period of turbulence. Private equity firms typically hold on to investments for a limited period of time and the chain is almost certainly headed toward new ownership after Sycamore decides the time is right to sell.
Lowe's began a strategic review of its Canadian operations in the third quarter of fiscal 2019 and later that year announced actions to improve the performance and profitability of that business segment.
In fiscal 2020, the company had pre-tax operating costs of USD45 million related to inventory write-downs and other closing costs.
The Agway acquisition expands True Value's capabilities in the Farm, Ranch, Auto & Pet (FRAP) category. As part of the purchase, True Value has also obtained the rights to select private-label products and equipment. Currently, close to 600 retail stores operate under the Agway name. True Value CEO Chris Kempa said:
Purchasing the Agway brand is an excellent fit for True Value as we continue to grow through strategic acquisitions. Farm & Ranch is an important category for True Value and owning the Agway brand deepens our capacity to support our retailers in providing their customers with the products they need.
Agway Farm & Home Supply was formed as a farmer-owned cooperative in 1964. Today it is a wholesale product distribution company serving a network of independent retailers, primarily in the US Northeast. Agway stores carry a variety of products including lawn and garden, wild bird seed and supplies, pet products and farm supplies.
The Agway transaction represents True Value's second completed acquisition in 2022. In March, True Value announced the purchase of Majic, the Yenkin-Majestic Paint Corporation's consumer paint division.
Sources: Montreal Gazette, Retail Dive, Globe and Mail and True Value Company/PR Newswire
Stanthorpe Mitre 10 has won Independent Hardware Group's Garden Centre of the Year in Queensland
Fri Nov 04 2022
Rockhampton local Peter Hunt is the owner of West Rocky Hardware, part of a portfolio of businesses that also include Think Water and Wandal Need and Feed.
Located in West Rockhampton (QLD), Mr Hunt operates his three businesses under one central hub for an easy shopping experience. He told CQ (Central Queensland) Today:
We saw a need for a hardware store on the southside of Rockhampton. After the closure of Gunna Do Hardware, someone had to pick it up. This warehouse became available, and based on the community interest, we decided to give it a go...
West Rocky Hardware has been operating for 12 months, and Mr Hunt said he is excited about the future of the business.
We are learning what to keep and are finding it's quite seasonal. Coming into Spring, we are selling many gardening products like mulchers, potting mixes and weed killers.
People are also buying a lot of seeds to make their own veggie gardens.
Describing themselves as "not your average hardware store", Mr Hunt is proud to offer residents an alternative option compared to larger companies. He said:
Overall, our store prides itself on our service with a smile and knowledge of what we sell. West Rocky Hardware is the type of store for the DIY person. We have a good range of products that balance quality and price.
Mr Hunt said that being in business has taught him a couple of things, but the biggest has been confidence and believing in yourself.
Your first instinct is normally right, so have the confidence to know you can do any task you put your mind to.
Owning the other two businesses, Think Water and Wandal Need and Feed, for 12 years has given me the confidence to go into hardware. We are trying to make it the hub for people's daily needs.
As we evolve, we will be looking at expanding to other areas as well.
Located on 234 Lion Creek Road, West Rockhampton, West Rocky Hardware is next to Think Water and Wandal Need and Feed.
Stanthorpe Mitre 10 owners Bill and Melissa Kerr said it was an amazing feat to win Garden Centre of the Year for Queensland. Melissa Kerr told Warwick Today & Stanthorpe Today:
We are actually at the bottom end of the category because we are a medium end store. We came up against bigger stores throughout the state and they have bigger store areas then us.
It was exciting and a big surprise to have won the award. We are all very proud of our achievement.
Stanthorpe Mitre 10 competed against Mitre 10, Home Hardware and Timber and Thrifty Link and True Value Hardware stores across Queensland to take home the award. Mrs Kerr said:
The competition was tough and to come up winners, being a small country town is excellent. It was a team effort with Kay-Lee Antonello and all our staff and suppliers; we'd like to thank them. We'd also like to thank our loyal customers.
After the initial expansion of the old garden centre, it was completed with metal display shelving, an automatic watering system and shadecloth for protection from the elements.
Mrs Kerr said she remembered standing back with her very keen gardening team member Kay-Lee thinking how they were going to fill this area. Then the task of filling the garden centre with plants, pots, decorative ornament and features began.
Now, we have started to overflow past the garden gates and feel we need to expand again...
The locals are our greatest supporters, and the new garden centre is the talk of the town. We have visitors from as far as New South Wales and the coast dropping in to see what is new in store.
Gubbins Pulbrook Mitre 10 in Moss Vale, NSW has picked up a store award from the group
Fri Oct 28 2022
A new destination for DIY enthusiasts and professional tradies will be open for business in the farming town of Blayney in the central west region of New South Wales.
Hoadley's Hardware is located at 22 Adelaide Street in the old Blayney Mowers and Heating building.
Blake and Tayla Hoadley are behind the venture with plumber Blake well aware of just how quickly Blayney is growing. He told the Blayney Chronicle:
With all the developments going up around the town there's a big need for all the essential hardware items, especially on the weekend. We'll stock a good range of items including bags of cement, timber, Wattyl paints, Villaboard, Gyprock and plumbing supplies.
"All the essential stuff that you need and if you want it quick, you won't have to wait until your next trip into Orange or Bathurst," Tayla said.
Moss Vale Mitre 10
The team at Gubbins Pulbrook Mitre 10 in Moss Vale won hardware store of the year in trade and retail at the recent awards given out by Mitre 10. The awards are determined by secret shoppers who visit the stores in the network. Owner Nick Gubbins is thanked his staff and customers and told 2ST:
We built the store eight years ago, the locals wanted it, and it's their store. It's all because of their support.
The hardware store is located at 54 Berrima Road, Moss Vale (NSW). The other retail locations in the Gubbins Pulbrook group include a retail and trade store in Mittagong and one in Bowral.
Gippsland Power Equipment opens another branch in the town of Warragul, Victoria
Fri Oct 28 2022
A Tool Kit Depot (TKD) outlet will soon open close to the Bunnings Gympie (QLD) store, just south of the city. It will be the first Tool Kit Depot retail store on the east coast of Australia.
The Bunnings-owned business is in the process of moving into a new building recently completed in the precinct adjacent to the Bruce Highway and on the southern outskirts of Gympie, according to The Gympie Times.
Construction on the project is expected to be completed on November 14, 2022, with doors to open to the public shortly after.
Tool Kit Depot is positioned as a one stop shop for tradespeople. In a statement it said:
We sell only the most respected brands of power and hand tools, safety and protective gear, outdoor power equipment and more. Our range is epic - but we're not just a tool supermarket. Our full-service workshop offers expert servicing and repairs, plus tool hire to keep you working.
Earlier this year, Bunnings Group managing director Michael Schneider said the company planned to expand its Tool Kit Depot network beyond Western and South Australia ... moving into regions where it sees "strong under-served demand for professional tools".
It has established the TKD brand in Western Australia with four stores and has also refreshed the existing (Adelaide Tools) stores in South Australia.
Gippsland Power Equipment (GPE) have been offering its exclusive range of products and services to Warragul (VIC) and surrounding areas since opening in September.
GPE's exclusive quality brands include Cub Cadet, Rover and Gravely & Supaswift. It employs five full time technicians with over 50 years combined experience and have a reputation for fast turnaround times and quality workmanship.
There is a huge turning area for utes and trailers, making it easy to get repairs in and out. It services brands including Husqvarna and John Deere.
The other GPE outlet is located at 259 Princes Way, Drouin (VIC).
Sources: The Gympie Times, The Australian and Warragul & Drouin Gazette
The group will continue to push into the wholesale market
Beacon has shifted to "must haves" as new housing developments and renovations were completed. This means trade customers such as builders.
Fri Oct 28 2022
Following Beacon Lighting's recent annual general meeting, chief executive Glen Robinson said he is optimistic about growth as housing construction and renovation rebounds from lockdowns, promising a strong sales pipeline. However, he believes robust consumer spending since the pandemic began will start to fade away as rate rises rein in discretionary spending.
With 119 stores in its network, Beacon Lighting will continue to push into the trade market and remain focused on its growing North American operations. In The Australian, Mr Robinson said:
At the end of the day, if you are building or developing a house, doing a renovation, you have got to eventually put the light fitting at the end of a wire. You can have discretion whether you want to go for something cheap or something more expensive, but we offer both.
I think we are enjoying those times at the moment. We are usually at the end of the project, we are late cycle, and that is seeing us through pretty well at the moment.
He added there was a "massive backlog" in construction.
Mr Robinson said same-store sales had been encouraging since the start of the new financial year, although year-on-year sales might moderate as the lighting speciality retailer cycled very strong 2022 sales.
I think probably looking at other retailers, we are doing well. We are pretty confident at the moment, but we are heading into a (federal) budget period, there is inflation, and we've got to be cautious.
He also said inflation and higher rates would slow discretionary spending.
The reality is that is bound to happen, things will probably have to slow down a bit, but there are still a lot of (housing) developments that have to be done. Discretionary might slow down a bit, as interest rates tighten, but people still have to finish their projects and there is still a good pipeline there.
In August, Beacon Lighting posted record annual sales and profits, helped by its US business and the new division that caters to trade professionals.
Its annual revenue had risen 5.4% to $304.3 million. Profit lifted by 8.2% to $40.726 million, a record, as it opened five new stores in the period and saw strong growth for its recently established Beacon USA business, which booked a 51.9% rise in sales for the year.
Beacon said its new initiatives for trades saw a 22.3% lift in sales. At the time, Mr Robinson said:
Supporting our trade customers and growing trade sales remained Beacon Lighting's number one objective in fiscal 2022. Our trade customers responded very well to the various trade strategies, which resulted in strong growth in trade club members, trade sales and online visitations to the trade website.
Total online sales up 31.3% to $34.1 million, which included an increase in Trade Club online sales of 67.6%.
Metcash chief executive Doug Jones provided another trading update during an investor roadshow in Adelaide
Fri Oct 21 2022
The Mitre 10 outlet in Benalla in north-eastern regional Victoria has been recognised as having the best garden centre across the store network in Tasmania and Victoria.
Benalla Mitre 10 retail manager Stacey Stylianou said this was the third year in a row the store had picked up the award. She told Benalla Ensign:
...It feels really good to win again. The other two which we picked up we only got last year due to COVID-19 restrictions. Our owner Gary Woodruff and our operations manager Brad Collette went down to the awards day.
Ms Stylianou said the criteria for the award was tough so the whole staff were very proud of the achievement.
It is about good customer service, how it's set up, how its maintained, the look of it and sales numbers. It takes everything into account.
Metcash trading update
Metcash chief executive Doug Jones recently told investors that he is building on the company's five-year plan to boost its retail network by upgrading stores, introducing wider ranges and new formats such as Supa Valu, trimming prices, and upgrading distribution centres and digital systems. Metcash will spend $110 million on distribution centres by 2025. In the Australian Financial Review (AFR), he said:
We were in growth before COVID in the food business and, like many trends, COVID accelerated this one. The destination bigger box stores suffered as people wanted to shop more locally. We now firmly believe customers have stayed.
We are refreshing the stores, continuing to invest in the range and price. We relaunched our price match campaign this week.
Strong sales momentum has continued in the first half in all of Metcash's business units, underpinned by the improved competitiveness of its retail divisions, and by wholesale inflation, which is sitting at 5.8%. Wholesale inflation was up 4.9% in the first quarter, excluding tobacco and fresh produce.
Sales jumped 17.1% in the hardware unit, with sales gaining 9.6%, underpinned by like-for-like sales of 4.6%. Total Tools sales have surged 75.2% so far in the half. Mr Jones said inflation remained high, particularly in trade, although there had been an improvement in the availability of supply.
Total Tools is targeting eight to 10 new sites a year with a network size of about 130 stores by 2025, from its current 101 stores. The Wesfarmers-backed Tool Kit Depot continues to make a move into professional tools, but Mr Jones was not concerned. He said:
We are not going to rest on our laurels. We have a strong pipeline of stores ... in the future, we think there are at least 170 stores that we can open across the country. What's really pleasing is that we're seeing strong performance from the new stores.
Mr Jones said COVID-related costs had started to ease, as had supply chain challenges. However, he warned the availability of labour remained tight.
Under Project Horizon, Metcash is replacing nine enterprise resource planning (ERP) systems with one system to simplify the business. Metcash said a key focus into calendar 2023 is the food and liquor program update, adding there is no change to Horizon capital expenditure.
Mr Jones flagged an increase in funds employed, driven by multi-year investments in its hardware businesses, distribution centre redevelopments in Victoria and WA, and more inventory due to inflation, as well as digital and other bolt-on M&A (mergers and acquisitions) opportunities.
Metcash issued a trading update just prior to its AGM.
For the third time, Bunnings will lend a helping hand worth $200K to women's footy clubs
Fri Oct 21 2022
Women's Big Bash League (WBBL) team, Adelaide Strikers has welcomed Tool Kit Depot (TKD) as its new principal partner. TKD's general manager Trent Emmins said the partnership will be exciting news for its team and customers. He said:
Tool Kit Depot is really pleased to join the Adelaide Strikers family as principal partner for the Women's Big Bash League 08. With a shared commitment to professionalism, expertise, and love for the job we do, we look forward to this being the beginning of a meaningful partnership, on and off the field.
With five stores in South Australia, TKD is the all-under-one-roof power tool, equipment, safety and workwear destination for trade professionals. South Australian Cricket Association's chief commercial officer Phil King said:
This announcement has only heightened our organisation's anticipation for the coming season ahead of the Strikers' first match...It's great to see two organisations with local roots come together to help each other thrive and support the growth of the game.
We truly appreciate Tool Kit Depot's support of our Strikers women's team and are looking forward to what we can achieve together this WBBL season, starting with our match against the Sixers...
The Strikers and Tool Kit Depot have agreed to a one-year deal.
In SA, Tool Kit Depot stores are located in Mile End, Lonsdale, Parafield, Melrose Park and Gawler.
The Bunnings Helping Hand program will once again help community football clubs. The initiative is designed to assist community football clubs to build and upgrade female-friendly facilities that are important to the continued growth of the women's game at a local level. A total of 10 x $20,000 grants will be on offer as part of the program.
Since its inception, the Bunnings Helping Hand program has provided $240,000 to more than 17 football clubs across Australia through its grants program. Bunnings' director of operations, Ryan Baker, said:
Creating an inclusive and welcoming environment where people feel a sense of belonging to be their best is important to us. We have been lucky to play a small role in the growth of the women's game at a local level through the Helping Hand program and our local store teams have loved lending their support to recipient clubs to upgrade their facilities to be inclusive for women and girls.
Grassroots sport is a cornerstone of strong and resilient communities and it's a pleasure to be able to extend this opportunity to even more clubs this time round.
AFL executive general manager customer and commercial, Kylie Rogers said:
The Bunnings Helping Hand program is a welcome initiative to support the rapid growth in participation of women and girls' football across the country.
The AFL has a stated ambition of building or upgrading an oval per week every week for five years to cater for growth in the grassroots game, particularly in women and girl's football. The grant program provides a lasting legacy for female football - ensuring better facilities are available for future generations to come.
Three-time AFLW Premiership player and 2022 Bunnings Helping Hand ambassador, Erin Phillips said:
The initiative provides much-needed funds to support the development and growth of the women's game at a local level. I encourage community clubs to jump on board and apply for a grant to help provide a better environment for their women's programs.
The NAB AFLW competition wouldn't be where it is without grassroots football club and now that we've seen a large uptake in women's football, we look to strengthening that from the bottom up.
Nationally, 47% of venues are used for female football competition and training, however, only 34% are considered female friendly, as shown in the Women's Football Vision 2030, released last year.
Applications for the Bunnings Helping Hand program are open until 11 November.
Entrants are required to explain in 200 words or less why their club needs funds to implement female-friendly facilities and an overview of the intended project, as well as images of their current facilities to support their entry.
Winners will be announced ahead of the 2022 NAB AFLW Grand Final Season 7.
Group managing director Mike Arnold discusses the business offering, M&A activity, clients, 2025 strategy and financial targets
Fri Oct 14 2022
In a brief interview with Tim McGowen from ShareCafe, Mike Arnold talked about how Stealth Global operates "a diverse distribution network across its portfolio, customer types, geography, brand and infrastructure, connecting customers with products across multiple sales channels and markets". He describes the company as "an industrial supply company". Mr Arnold said:
We sell industrial goods as well as safety, truck and trailer automotive products as well as general workplace supplies. So our simple tagline is, providing supplies and solutions for every workplace. We listed the business in 2018 October. And since that time, we've had quite a large raise from $20 odd million in revenue to $100 million revenue in FY22.
Mr McGowen said:
And there's been quite a bit of M&A [mergers and acquisitions] activity, you've acquired some businesses along the way. How does your internal growth look? What does that look like relative to your growth from those acquisitions?
We've made five or six acquisitions actually, in the last three and a half years. In FY22, we grew organically by 21%. And the year prior to that, we grew at about 18%. So we've been very deliberate in terms of building our capability first and foremost, and scale, reaching $100 million odd turnover, having the network in place so that we can get the buying power to be stronger as a business. But ultimately, organic growth is equally as important as that acquisition growth.
And who's your typical client? How do you sell to them and who are you competing with?
We run an omnichannel strategy. So we have branches that cover business customers, we have retail outlets that cover the retail and trade consumer, we also have independent members ... to give us that buying power and network reach. So we actually cover all those platforms and how we cater our services in those particular markets is very different.
...The beauty about it is we give multiple options to all different customer types, from large to small. And clearly large customers have more complex needs. We're fully integrated, and we can provide IT solutions around that. Or anybody can buy a single product from us, whether that be in a store, or through one of our sales reps, or online.
And you spoke about reaching your target of 100 million in revenue, and you've got a 2025 strategy. So where are you positioned in regards to that strategy?
...Right on track, in fact, probably ahead of track. We doubled our store locations in FY22 so we now have 274 locations throughout Australia. Our run rate after the first two months of FY23, we're sitting about an eight and a half percent organic growth, which is great. And from a strategic point of view, we're embryonic in the acquisitions that we've just completed. So the upside of that, and obviously offsetting that against inflation, gives us the ability to actually increase our margins. So our margins have developed from 18 and a half percent to 30.2, in FY22. And we see that there'll be a higher push towards that as we get the integration of those new acquisitions completed.
And Mike, the stock looks cheap. It's probably off the radar of some of the fund managers at the moment, and probably some retail investors. What are the sort of financial targets that you're looking towards, moving forward?
So we've always had a strategy for 2025 to have an 8% EBITDA [Earnings before interest, taxes, depreciation, and amortisation] with about a 5% net profit before tax, and there's been a number of periods that we've looked at in other markets and how we've modelled our business to achieve that. So clearly, it's tried and tested. And our model is heading towards that.
Everything we've done was about building a revenue scale and scale around capabilities. We have invested and continue to invest in building that, and building capability. Now our push is very much on better margins, and a lower cost operating model focused on profitability. So we're really comfortable about where we are and where we're heading.
We are cheap. Absolutely. And I think for a business doing over $100 million to be having a valuation or 11 and a half is clearly something that we are going to put more effort into. Getting your business more well-known and obviously, in front of the right groups. We are focused on getting the business right, first and foremost, particularly in the last couple of years. And we're now set to obviously take the advantage of that.
Headquartered in Perth (WA), Stealth Global Holdings Limited is an Australian publicly listed, multinational distribution group with interests in Australia, the United Kingdom and Africa under five subsidiary brands: Heatleys Safety & Industrial, C&L Tool Centre, Industrial Supply Group, Australian Workplace Supplies, and BSA Brands (UK) in a joint venture with Bisley Workwear.
Combined Rural Traders kicks off a new cross-platform campaign called "It Starts with CRT"
Fri Oct 14 2022
Peter Hammond and his family have been running the Oberon Industrial and Farming Supplies store in the central Tablelands region of NSW, for 13 years.
Mr Hammond was a farmer, and still has a number of farms in the area managed by family members. When the opportunity to buy the store came up, he decided that it would be a good opportunity to have an additional source of income. He told the Oberon Review:
Owning the store would also give the farms access to products at wholesale prices.
The store carries a very wide range of products including clothes, the essentials for equipment maintenance such as chain and two-stroke oils and filters, farm and garden chemicals, fencing wire and fittings, and almost anything else that someone might need for a farm or garden.
The fortunes of farm suppliers can follow the fortunes of farmers, but the store isn't badly affected by droughts, floods or changing seasons. Mr Hammond said:
Even at the worst of times, farmers need to buy things and seasonal changes just mean that our biggest selling items change throughout the year.
What customers want in winter can be totally different to what they need at other times of the year. This means that we have to be ready for the changes, but after thirteen years we usually get it right.
A recent addition to the products offered has been the Stihl range, which now occupies a significant space in the store.
The store operates well with a small team of four. Expanding the store could require more staff but Peter is satisfied with the level of service he can provide with the number of people working there.
Anyone working in retail needs a sense of humour, Mr Hammond said, because "the customer is always right" even when he isn't. A year or so ago someone decided that he needed a few spare chainsaws and drove a vehicle through the front of the store one night and made off with six saws.
The store is part of the Combined Rural Traders (CRT) network that includes a few company-owned stores as well as some that are majority owned by the store operators.
The Oberon store is one which is completely independently owned. Unlike a traditional franchising operation, store owners are shareholders in CRT. The company is the wholesaler to the stores and passes on the benefits of pricing gained from buying in large quantities, with about 240,000 products available from 650 suppliers.
By being part of the CRT network, Mr Hammond said he can source almost anything a farmer or grazier might need. If it's not in the shop today it can be there very quickly.
To reinforce CRT's dedication to regional farming communities, digital agency Next&Co partnered with creative agency GK Collective for the latest "It starts with CRT" campaign.
For the first time, the campaign stepped into the farmers' shoes to showcase their relationship with CRT, particularly the support CRT offers for all farming activities, from cropping to animal health.
The campaign has been rolled out across TV and print, with an initial call to action, "It Starts with CRT", while the digital component of the campaign includes a retargeting strategy to help customers find their local store. Nutrien Ag solutions national marketing manager of Independent Business, Sarah Wilcock, said:
This campaign distils the relationship that farmers share with their local CRT store, being the first point of call for any farming activity, from cropping to drenching. The inspiration for the campaign was the relationships between farmers and CRT stores that the business has watched grow and flourish over time, while facing the challenges and changes in the industry.
Next&Co was recently appointed to lead strategy, planning and media buying for CRT. It will manage all CRT's TV, radio, print and digital media planning, buying and strategy, focused on maintaining the brand's presence in market and building reach.
The Wendouree store was the largest hardware store in Ballarat, Victoria when it opened in 1977
Fri Oct 07 2022
The largest store in the G. Gay & Co Mitre 10 group of three stores will undergo renovations to become more "tradie friendly".
Customers will still be able to shop at the store located on Howitt Street, Wendouree (VIC) but the building - which was built in the late '70s and has had several extensions - will be renovated between now and March 2023.
Trade sales manager Jake Weber said it was business as usual during the changes. He told the Ballarat Courier:
The work's already started. We have new racks and have also laid slabs. Some of the walls are coming down as well. The Wendouree store is our biggest, at 9000 square metres, and 95% of our customers are already tradies.
Ballarat's two other Gays Mitre 10 stores will remain open and continue to focus on the retail trade. Mr Weber said staff numbers would remain- and possibility increase - after the renovations were finished.
He also said members of the Gay family were still actively involved in the business, over a century after it began selling building supplies and mining equipment.
G. Gay & Co was established in 1918 by Godfrey (Gough) Gay with Bill Valpied and George Norris. They originally sold new and second-hand building materials, timber and mining supplies after starting a timber yard in Armstrong Street, Ballarat.
The business started to include new materials and phased out the second hand products. It continued to expand at the Armstrong Street site under the management of Edwin Gay, Godfrey's son. He was a fitter and turner for a local foundry for years before taking on the family business around 1932. His son Jim spent six years at the same foundry before joining the business in 1956, at the age of 22. In 1977, he relocated the business to the Howitt Street location.
G. Gay & Co expanded over time, with second, third and now fourth generations joining the team. The Gillies Street South site was purchased in 1991 and another in Albert Street Sebastopol in 2014.
The three stores switched from Home Timber & Hardware to the Mitre 10 banner almost a decade ago.
The development proposal includes a large retail showroom complex that would cover more than one hectare of land
Fri Sep 30 2022
Sydney Tools has lodged plans for a three-building precinct on Carrel Drive in Harristown (QLD) that will include 10 tenancies over nearly 11,000sqm of floor space. The site is directly opposite the Bunnings Warehouse on Anzac Avenue.
According to the submission by town planning consultant, Paul Kelly from Precinct Urban Planning, the proposal would be split into three buildings, separated by a new road called Hyde Court. In The Toowoomba Chronicle, Mr Kelly wrote:
The design of all buildings ensures visual interest when viewed from the street and internal carpark through the use of extensive glazing, sun shelters and above awning signage panels for entries to individual tenancies.
The visual appearance is also enhanced through the use of contrasting colours and mix of building materials particularly along frontages where direct access cannot be provided.
The application also includes a request for a different infrastructure charges calculation, with Mr Kelly's report arguing much of the proposal would be used as storage rather than as a "showroom". The report said:
This request is based on the fact that the large areas to be used for storage purposes within each tenancy will not be used for retail purposes and will have the same or lower demand on services as would be the case for a 'warehouse' use over these same areas.
The applicant would be willing to meet with relevant Council officers prior to a decision being made on infrastructure charges for this application if required, to provide further information with respect to this request.
The development will be supported by more than 200 extra car parks.
Reports were also submitted in relation to traffic impacts, landscaping and waste management.
While the land is included on the Department of Environment and Science's environmental management register, a letter from Range Environmental Consultants found the proposal would be consistent with an existing site management plan.
The council has yet to respond with an information request.
DIY retailer Woodie's trials a same-day delivery service
It has partnered with retail platform Buymie, the first outside of the traditional grocery shopping space for the company
Fri Sep 30 2022
Buymie is a grocery delivery service that operates in the UK and will enable customers in southeast Dublin to order from 20,000 DIY and home improvement products stocked in their nearest Woodie's store.
The pilot scheme with Woodie's - which is part of the London-listed builders merchants business Grafton Group - will initially see shopping delivery services provided exclusively in the area, with a view to expanding nationally soon after.
Buymie co-founder and chief executive Devan Hughes said the deal was a "flagship moment" for the company. It is the company's first foray outside grocery, where it works with retailers such as Dunnes and Lidl in Ireland.
Mr Hughes said the deal was partly inspired by his own experiences with becoming a homeowner and the various trips he had to make to pick up goods for his own DIY projects. He told the Sunday Independent:
Over the years I have been very focused on grocery as a category ... With the experience of becoming a homeowner, which involved multiple trips to my local Woodie's store picking up pieces for the house, my own experience made that retailer and category interesting. So we had conversations, and they were equally excited about the possibility for same day delivery.
The new service, 'Woodie's powered by Buymie', emulates the extended 'Asda Express powered by Buymie' trial in Leeds and Bristol, where Buymie has integrated into the grocery retailer's delivery options.
Buymie designed the customised Woodie's app in partnership with the Woodie's team, which will see the retailer leverage the delivery capabilities of Buymie and its network of independent personal shoppers.
It makes Woodie's the first retailer in Ireland to access Buymie's newest enterprise technology platform.
Suzanne Quinn, Woodie's chief commercial officer, said the partnership was an opportunity to build and grow its online delivery offering.
Our online business has seen rapid growth in recent years and this partnership allows us to further build and grow our omnichannel proposition, keeping ease and expertise at our core.
This partnership with Buymie is an important step for us as we continue to find new ways to help our customers shop the way that suits them.
This store expects to service hundreds of local builders with a commitment to ensure building products are consistently delivered on time and in full
Fri Sep 23 2022
The brand-new Bowens Warragul store is the first of three new store openings in the coming months for the group with Melton (due to open in October) and Cheltenham (in February) as well as major extensions planned at existing sites in Hastings and Epping.
The Warragul site will not only better support local builders, but relieve demand on the neighbouring Pakenham store, delivering quicker supply for local businesses, saving them time and money.
With 35 planned new full-time jobs for the area, Bowens has recognised an increased construction demand across West Gippsland.
Bowens is proud of its top-quality customer service, with account managers prioritising developing strong relationships with local builders and the broader community, as construction demand in the area continues to grow. Bowens director and chief investment officer, Andy Bowen told the Warragul & Drouin Gazette:
We are excited to be formally opening the doors of our newest store in Warragul, marking the seventeenth store in Bowens' network across Victoria.
We've been watching the demand in the area grow and are proud to be able to better service local builders in and around Warragul.
We'll be looking to support the community in meaningful ways outside of building supplies and look forward to better connecting with the people of Warragul. Part of that will be hiring local talent and creating jobs for people in West Gippsland and the surrounding areas.
Some staff already living in the Warragul area will be relocating from the established near-by Pakenham store.
The size and location of the Warragul store will create more full-time employment opportunities as we scale up, eventually aiming to have 35 full-time employees based out of Warragul.
Long-time employee and Bowens Warragul store manager, Dean Armstrong said:
I've worked with Bowens for 19 years, living in Warragul for 11 of those, so I know the community really well.
As Warragul store manager, I'll be able to work closely with builders in the area and better understand their ways of working, projects and priorities. Our main goal is supporting local builders, keeping up with increasing demands and ensuring our orders are delivered in full and on time.
The new store will represent a great opportunity for Bowens to support local causes and groups, showing our commitment to the local community.
Hitting the ground running, we're bringing some of our experienced staff from the Pakenham store across, ensuring our top-quality service remains.
The Bowens Warragul store will integrate existing and new employees, with many team members already living in the Warragul area moving across from existing stores.
The home improvement retailer worked with graphics chip maker Nvidia to build digital versions of its stores in Washington and North Carolina
Fri Sep 23 2022
Lowe's Cos. said it has created immersive, interactive three-dimensional models of two of its US stores to achieve better visibility into inventory data and store layouts.
The models, also known as digital twins, are essentially fully virtual versions of the physical stores, updated in real time with information from sensors and point-of-sale devices such as cash registers.
Seemantini Godbole, chief digital and information officer at Lowe's, said its purpose includes helping store planners optimise layouts and better perform analytics on inventory and sales data.
Additionally, store staff on the ground can access the digital twin by wearing augmented reality headsets. They can then see detailed information about the inventory in front of them, including partially obscured items in hard-to-reach places.
"The way I think about it is, we are trying to give superpowers to our associates [store staff]," said Ms Godbole, adding that floor staff tasked with restocking or reorganising inventory can check their work by overlaying a hologram of the digital twin over the actual version to ensure they've placed the correct inventory in the correct place.
Although the project is in its initial stages, Ms Godbole said it is showing promising results. So far, the digital twins have been used to better understand when two specific products are frequently bought together so they could then be placed closer to each other.
Ms Godbole said Lowe's had already done some of the groundwork for this by creating three-dimensional, virtual representations of its products to put them on its website for customers shopping online. Additionally, it already had some sensors in place.
Lowe's said it has no clear timeline for when it might extend the digital twin technology beyond Mill Creek (Washington) and Charlotte (North Carolina). Ms Godbole says it's unlikely the company would roll it out to all its stores in the immediate future. She said it might explore doing so for a handful of stores, potentially giving priority to those that frequently update their layouts to focus customers' attention on seasonal products.
About digital twins
The concept of a digital twin has been around for a while and involves creating virtual three-dimensional versions of all kinds of real-life objects or places.
Until now, most uses for digital twins have been concentrated in factories and the manufacturing sector, said Tom Mainelli, an analyst at research firm International Data Corp. Creating digital twins of machines can help train workers on how to use the machines and provide internal visibility into any problems with them without having to take them apart, he said.
One challenge with manufacturers, he said, has been the complexity of creating digital twins, especially of older machinery where information about its components doesn't already exist in digital formats.
Built by its Lowe's Innovation Labs team, Lowe's digital twin is a completely virtual replica of a physical home improvement store, created in Nvidia's Omniverse environment. It fuses spatial data with other Lowe's data, including product location and historical order information, and pulls all of these sources together into a visual package that can be accessed on a range of devices, from desktop computers to Magic Leap 2 augmented reality (AR) headsets. Jensen Huang, founder and CEO of Nvidia, said:
AI and digital twins are reinventing the retail experience for associates and customers, in person and online.
Nvidia is known for its graphics processing units - graphics chips originally designed to deliver cutting-edge performance to video games. They have gone on to help power everything from artificial intelligence calculations in data centres to cryptocurrency mining.
A few of the areas that Lowe's is currently exploring with its digital twin include:
AR reset and restocking support
Wearing a Magic Leap 2 AR headset, Lowe's store staff can see a hologram of the digital twin overlaid atop the physical store in augmented reality. This can help them compare what a store shelf should look like versus what it actually looks like, and make sure it's stocked with the right products in the right configurations.
AR "X-Ray Vision"
"X-ray vision" is the ability to gather and view information on obscured items on hard-to-reach shelves. For example, under normal circumstances, an associate might need to climb a ladder to gather information on a cardboard-enclosed product held in a store's top stock. With an AR headset and the digital twin, they could look up at a partially obscured cardboard box from ground level, and determine and view its contents via an AR overlay.
With access to a Magic Leap 2 AR headset, store staff can do more than just view the digital twin - they can also update it and collaborate with centralised store planners in new ways. If a store associate notices an improvement that could be made to a proposed planogram for their store, they could notate that on the digital twin with an AR "sticky note."
Store visualisation and optimisation
The digital twin enables new ways of viewing sales performance and customer traffic data to enhance the in-store experience using 3D heatmaps and distance measurements of items frequently bought together.
Using historical order and product location data, Lowe's can also leverage Omniverse and Lowe's created AI avatars to simulate how far customers or associates might need to walk to pick up items often bought together. Lowe's can also test changes to product placements within Omniverse to create better customer and staff experiences.
In June, the retailer debuted more than 500 free digital assets in Lowe's Open Builder, its metaverse hub.
Sydney Tools submitted a development application for a warehouse, showroom, and storage facilities
Fri Sep 16 2022
Industrial power tools group Sydney Tools has revealed plans to build a $4.5 million hardware and trade supplies outlet in Hervey Bay (QLD).
According to the development application (DA) currently before Fraser Coast Regional Council, the project will take about 18 months to complete and support more than "30 jobs locally across various trades".
The developer is looking at a vacant block of land next to a service station located at 168-172 Main St, Kawungan. The application calls for a single storey "industrial building" that will accommodate three different retail shops. One of the tenancies will be occupied by Sydney Tools.
The 3384sqm DA indicates the outlet will have a "striking facade" in an array of colours and shapes. It will also include warehouse, showroom and storage components. In the Fraser Coast Chronicle, the application said:
The proposed development has been designed to contribute to a modern and accessible mixed use precinct with services and amenity provided for workers and customers.
Once construction is completed and the proposed development is operational, the development will support the direct employment of up to 20 full-time employees.
There will be 59 carparking spaces, including two disability car spaces, with site access on Main Street and Innotech Drive.
Sydney Tools now has more than 60 stores across Australia.
Sources: Fraser Coast Chronicle and The Courier Mail
Reece Bathrooms has launched a campaign on the back of The Block's latest season, collaborating with Trout Creative Thinking
Fri Sep 16 2022
Capitalising on The Block's 2022 season, Reece Bathrooms has embarked on a campaign to launch its Imagin3D digital bathroom visualisation tool for homemakers. Both the tool and creative are by Trout Creative Thinking, with support from production company Sherpa to bring the campaign to life.
Imagin3D gives renovators the ability to create and plan their dream bathroom for free using real products, materials, surfaces and colours. Visualising a bathroom look can give renovators confidence in their choices, before committing to buying products or booking trades, and helps to avoid making expensive style mistakes.
The launch campaign includes a TV commercial, in-store presence and digital marketing overseen by Trout, in addition to integration into this season of Nine's The Block where contestants use the tool to plan their bathrooms.
Software company Thoughtworks assisted with developing the digital platform and the tool's functionality is illustrated in the TV commercial using VFX (visual effects) crafted by Soma.
Imagin3D is proving valuable for home renovators embarking on their bathroom journey; with one in five Imagin3D webpage visitors signing up to use the tool, according to Reece.
Imagin3D is available via the Reece Bathrooms website, and is being used in Reece Bathrooms showrooms across the country. Trout creative director Anthony Bologna said:
Launching Imagin3D in the 25th year of our partnership with Reece is a huge accomplishment and Sherpa was the perfect partner to bring this to life. Creative collaboration across agency, client and supplier teams really open doors for businesses to engage customers by creating better brand experiences.
Sherpa producer Elizabeth Malcher said:
It was such a pleasure working with the teams at Trout and Reece on our third collaborative campaign this year. We were able to do a creative production deep dive and get to the heart of their messaging.
Petrie's Mitre 10 in Dubbo (NSW) has officially opened its new drive through trade centre following a soft launch
Fri Sep 09 2022
The Mitre 10 store in Gympie (QLD) that is part of the Sunshine Mitre 10 network recently celebrated its tenth birthday. Its team of more than 40 employees had some fun with local customers from the Gympie community.
Marketing operations manager Nick Brindt said the store's success comes down to several factors. He told Gympie Today:
It's a culmination of many things to be honest, the quality of our staff and their experience, being invested in helping grow and support not only the Gympie community, but surrounding region whether that be through sponsorships, donations, major local events, school groups or something simple like carrying a heavy product and loading it into a customer's vehicle.
Over the past decade, there have been some memorable moments and colourful characters. For Mr Brindt, it was the fortitude he witnessed first-hand during the floods. He said:
The resilience of this great community and banding together of people to recover from multiple flood devastations, and knowing we play a very small part in helping rebuild Gympie and the surrounding region - it's humbling.
In that time, they also get to know their customers. Mr Brindt said:
All our customers brighten our day. We have a very loyal trade base of builders who love turning up at 6am in the cold for a barbecue brekkie...
And we have our regular DIY customers that visit our nursery every week to talk with Glenda our garden expert. We are blessed to have such a genuine and loyal customer base.
Like many hardware stores, the team at Sunshine Mitre 10 Gympie are generous with the various sponsorships, donations and fundraising events they get involved in in the community. Mr Brindt said:
To be honest, there are too many groups to list. We do our best to support as many groups throughout the region, and believe that we play an important role in supporting these groups, as these group are the life blood in regional locations.
We also believe it's so important to develop, support and grow the next generation. And with the recent floods of 2022, we donated $40,000 in building materials between various community groups, and local families.
At the end of the day, that's what the business is all about, according to Mr Brindt.
The most enjoyable part is knowing that we play a pivotal role in the Gympie community, and knowing a lot of our customers on a first name basis.
If you were to ask all our staff, they would say our customers are the best part.
Petries Mitre 10 Dubbo
Brad Petrie, manager of Petrie's Mitre 10 Dubbo is keen to know what people are thinking about the new trade facility after the team put a lot of effort into preparing it for opening. He told Dubbo Photo News:
The shop has been opened all month and it has been going really well.
Petrie's Mitre 10 Trade Centre Dubbo is located at 62 Fitzroy Street, Dubbo (NSW).
Mr Petrie and the team also paid tribute to Malcolm Petrie who sadly passed away aged 90 in late August, on the day of the Dubbo trade centre launch. Mitre 10 staff formed guard of honour for their colleague as the hearse passed by Mudgee's Mitre 10, according to the Mudgee Guardian and Gulgong Advertiser.
There have been ongoing tributes from local and business communities around Mudgee and the Central West for Malcolm since his passing. Malcolm's daughter Annette remembered her father as a kind and generous man. She told the Mudgee Guardian:
His kindness, strong intellect, love of people, sense of fairness, humor, shone through in whatever he did. He connected with people; he saw the best in people.
She said the outpouring of love for her father has been overwhelming.
...The respect shown from our local community and beyond has been incredible. The beautiful comments on Facebook, the caring, respectful words from people we would meet in the street, the phone calls, the flowers. It has been unbelievable. We knew our father as a wonderful presence in our family and we also knew what a friendly, well-known man he was in our community.
Dad never sought acknowledgment of who he was or what he did, he was just a good man. The past few weeks and the response to dad's death has shone a light on that fact, that he was a good man, a good friend, a respected member of our community.
The hardware store carrying his namesake, opened in Mudgee in October 1986. Liam Collier, business development manager at the Independent Hardware Group remembered Malcolm as a titan of the industry and a great bloke. He said:
Mal had many years serving on Advisory Councils. He quite enjoyed seeing the workings of Mitre 10 and the responsibility of setting direction for the brand. He even represented the brand on TV commercials when Paul Cronin was the Mitre 10 frontman, and was generally recognised as one of the faces of Mitre 10 NSW ... Mal gave his guidance, his mentorship and his cooperation towards other Mitre 10 members and suppliers...
He will be sadly missed by the Mitre 10 families across Australia, but we are very grateful for the time he gave to our brand, and the amazing family that remains to continue his work.
Delta Agribusinses is seeking a new investor who will be able to replace its private equity backer and help fund growth: report
Fri Sep 09 2022
Metcash recently issued a trading update just prior to its annual general meeting that showed sales are up by 8.9% across the group for the first months of the 2023 financial year.
It said that sales this year of the hardware business have increased 19.5%. Independent Hardware Group (IHG) posted same-store sales growth so far this year of 7.3%. IHG is also building a network of about 400 Mitre 10 and about 200 Home Hardware stores. Around 20 ThriftyLink/True Value stores have been converted to Home Hardware, and another 30 are planned for 2022-23.
There is a major focus on DIY categories such as kitchen/laundry/bathroom. The company said it is on track to build a network of about 130 Total Tools stores by 2025, and is targeting more upgrades and adding exclusive brands.
Hardware now makes up 20% of Metcash sales and 40% of profits. Inflation remained high, particularly in trade, although there were signs of easing as the availability of supply improved, said new chairman Peter Birtles.
Trade now represents 64% of the sales mix, up from 60% in FY21, with the remainder 36% in DIY.
Metcash said it wasn't yet clear if inflationary pressures would change shopping behaviours in the near future. Mr Birtles said:
A higher rate of inflation has also continued into the first half of [financial year 2023], and there is uncertainty over its level going forward and whether it and other cost of living increases will impact consumer behaviour in the retail networks of our pillars.
After expanding its network into South Australia, NSW-based farm services group, Delta Agribusiness, is believed to be seeking fresh financial backing to replace the private equity group, Odyssey, which bought a 24% stake in 2019.
Sources told the Street Talk in The Australian Financial Review that it is targeting private equity firms, private capital players and bigger retail groups.
The business is expected to be pitched as the third-biggest rural services supplier, behind Elders and Nutrien (which acquired Ruralco in 2019). It is understood to be making about $800 million a year in revenue and about $60 million in EBITDA.
The business describes itself as a leading force in rural inputs and advice in regional Australia, offering similar services to the larger Elders. Its five brands include Delta Ag, North West Ag Services, Agrivision Consultants, Aglink David Gray's, Cox Rural and ARH Agquire Rural Holdings.
Established in 2006, Delta's rural service platform also encompasses merchandise, agricultural chemicals, agronomy and precision agricultural technologies, animal health, seed and fertiliser finance and insurance. It operates grain marketing and farm consultancy services too.
Sources: Australian Financial Review, Sydney Morning Herald, The Land, Farm Online and The Australian
Filmed in Tasmania and based on the successful overseas format, The Bridge will see a group of strangers work together to build a 330metre long bridge in just 17 days, with $250,000 up for grabs
Fri Aug 26 2022
Don Edmonston, owner of Zeehan Hardware, played an important role in helping create the set of a new television show, The Bridge that was filmed on the West Coast of Tasmania. (The store is a member of HBT National Buying Group.)
Mr Edmonston, who is involved with Hydrowood, the company that gave the film crew access to the lake, said he supplied materials for units used by those involved with the show. He told The Examiner:
My role was to cart material into the site for them to build some units as the site is very remote and inaccessible. The set required materials that looked old, which are hard to obtain.
We (at the hardware store) cart a lot of our own materials to the West Coast. We are always driving throughout the state picking up our own supplies, so it helps that we know where things are that are needed.
Mr Edmonston said his knowledge and skill sets have also been used on sets from the ABC show Bay of Fires and another unnamed production that is also being filmed on the West Coast. He said:
If there was more filming done on the West Coast, it would be good to be involved in but I wouldn't chase it anywhere else in the state.
Mr Edmonston expected more people to travel to the area once these shows were aired. He said:
It's good for Tassie and especially for the West Coast - we can do with all publicity we can get down here. A lot of people don't realise how nice it is down here.
Mr Edmonston was all praise for the production crew of The Bridge, saying they were "unbelievable to work with".
The Bridge sees 12 strangers meet on the shore of Lake Pieman and together they must to build a 330-metre bridge in 17 days, using just their bare hands and basic tools. If they succeed, only one will claim the cash prize to be faced with the ultimate dilemma - keep the entire money haul for themselves or share with their fellow bridge builders.
The show is airing exclusively on the Paramount+ streaming service on Fridays.
(Photo credit: Zeehan Hardware image is from ABC News by Mitch Woolnough)
It also posted second quarter revenues of USD2.5 billion, an increase of 2.7% on top of last year's increase of 8.2%
Fri Aug 26 2022
Ace Hardware is continuing its brick-and-mortar expansion and opening 60 more stores by the end of the year and plans to open three new warehouses over the next five years.
So far, the company has opened 105 stores this year.
The addition of the three warehouses will add 4.4 million square feet of capacity to its distribution network. Over the past four years, the hardware retail chain has added more than 2.5 million square feet of warehouse space for its distribution network.
The company currently operates more than 5,600 hardware stores across 70 countries, including the US. It has opened more than 840 stores over the past five years.
Ace Hardware's decision to open more distribution facilities was driven by the need to keep up with the new stores it plans to open, according to the company. It has distribution capabilities in China, Panama and the United Arab Emirates, as well as the US.
Ace Hardware president and CEO John Venhuizen said in a statement:
With over 100 new stores already opened for the year, we remain enthusiastically bullish about the continued prospect for new store growth.
I applaud our local Ace owners for the pace with which they've integrated our digital efforts with our physical assets. Seventy percent of Acehardware.com orders are picked up in store and 20% are delivered to customers by our own red vested heroes, thus further advancing the relevance and necessity of our neighbourhood stores.
Ace Hardware operates under a retailer-owned cooperative model in which local entrepreneurs own their local store operation and become part of a limited number of shareholders of Ace Hardware Corporation.
The hardware retail co-op also reported a record second quarter 2022 revenues of USD2.5 billion, an increase of USD66.1 million, or 2.7%, from the second quarter of 2021.
Net income was USD124.8 million for the second quarter of 2022, an increase of USD8.8 million from the second quarter of 2021. Included in the results for the second quarter are USD10.8 million in non-recurring charges related to the closure of The Grommet. Mr Venhuizen said:
Nominal growth continues to be solid. The primary fuel has come from last year's 182 new domestic stores, this year's 88, and the aberrant and stubborn impact of inflation.
The approximately 3,600 Ace retailers who share daily retail sales data reported a 0.6% increase in US retail same-store-sales during the second quarter of 2022. Estimated retail price inflation of 11.4% helped drive an 8% increase in average ticket. Same-store transactions were down 6.9%.
Though Ace Hardware is expanding its physical presence, the company has recently made some cuts. After acquiring a majority stake in e-commerce marketplace The Grommet in 2017, Ace Hardware shuttered the platform in June and laid off 44 employees. Jules Pieri, founder of The Grommet, announced its closure on LinkedIn.
Temple & Webster, launched in 2011 and ASX-listed in 2015, has successfully expanded into the soft end of home DIY with The Build ecommerce site
Fri Aug 19 2022
Temple & Webster (T&W), an online home-furnishings retailer that has recently entered the "softer" end of DIY home improvement, demonstrates both the opportunity in the Australia's home improvement market - and the threat established retailers are under if they fail to evolve.
T&W started up in 2011 with a combination of eBay Australia and Newscorp Digital Australia executives, and launched online the same year. After a series of acquisitions, the company listed on the Australian Stock Exchange in 2015. Currently, the company is Australia's largest pure-play online retailer in the furniture and homewares market. It sells over 200,00 products, sourced from over 500 suppliers. The basic business model combines a drop-shipping model with a line of private label brands.
T&W's most recent move is to launch The Build (www.thebuild.com.au), which is a shift away from home furnishings and into simple forms of DIY products. The company has identified home improvement as a $26 billion market, with $16 billion relevant to its own retail efforts.
Revenue for FY2021/22 was $426.3 million, an increase of 30.6% over the revenue for the previous corresponding period (pcp), which was FY2020/21. Profit before tax was $13.3 million, down by 30.1% on the pcp, and profit after tax was $12.0 million, down by 14.2%.
The overall approach to presenting its current results has been to focus on the current results as compared to those for FY2019/20, treating the results for FY2020/21 as fortunate, but more of an outlier. So, for example, the company points out that its earnings before interest, taxation, depreciation and amortisation (EBITDA) came in at $16.2 million, which represents a compounded annual growth rate (CAGR) of 55%.
As is often the case with pure-play online companies, T&W also made available figures which indicate important areas of growth, such as active customers, which improved by 21%, the company states, for FY2021/22 over the pcp.
This tallies also with revenue growth per active customer, which was up by 6%, according to T&W, over the pcp.
DIY home improvement
While those numbers establish the bona-fides of the company, both in terms of market and management acumen, the most relevant part of the business from the perspective of HNN is its new website dedicated to home improvement DIY, launched in May 2022. During the results presentation, this is how the company's co-founder and CEO Mark Coulter outlined strategy for The Build:
Home improvement is the newest kid on the block, and revenue associated with these categories grew 61% across the year. As a quick refresher, the Australian home improvement market is worth around $26 billion, of which $16 billion is relevant to our business. Currently, this market lags furniture and homewares in terms of online penetration. However, we believe we'll see similar market dynamics to those we're already seeing in furniture and homewares.
This includes a shift to online shopping as the channel of choice for shoppers who have grown up buying everything online and are now buying, decorating and renovating their homes. To further capitalise on this opportunity, we launched a new online-only store for the home renovator, The Build by Temple & Webster, which is thebuild.com.au.
This site leverages our core technology platform, our digital marketing expertise and data capabilities. The Build features an initial range of more than 20,000 products across 40 categories. Our goal is for it to become Australia's first-stop shop for all things DIY and home improvement. I'm sure many of you are wondering how The Build is going. Well, it's early days, and we only launched for trading during May. However, we're seeing very encouraging signs. For example, it is growing at a rate significantly faster than Temple & Webster did in its first year. Of course, we know a bit more now than we did 11 years ago.
While we do not want to get in the habit of putting out guidance specifically for The Build, we have included our estimated first 12-month revenue of $10 million to $15 million to show its initial strong take-up.
As the company's results presentation states:
Leveraging our core technology platform, digital marketing and data expertise, The Build features an initial range of more than 20,000 products across 40 categories. Our goal is for it to become Australia's first-stop shop for all things DIY and home improvement.
There are a number of ways of looking at this development. From one perspective, we could say that T&W's The Build represents some of the money that Wesfarmers has left on the table by not being able to pursue online commerce successfully.
There has been a temptation to accept the relatively slightly above-average efforts of Wesfarmers with Bunnings, Officeworks, Kmart and Target as being acceptable, when really they are strictly utilitarian websites that succeed due to their association with physical retail. The Build represents a far more intelligent, well thought-out approach to online commerce, and one which is likely to grow into a substantial force in home improvement.
An additional point here is that there is a tradition for Australian listed companies to be very stingy in terms of the operational data they supply. One reason why T&W has become something of a "darling" for professional investors is that the company supplies US-style data. One reason it can do this is that its strategies do represent something new and difficult for other companies to implement.
From the point of view of independent hardware retailers, The Build might not represent much of a concern just at the moment, but it has the potential to grow into something far more impactful within two to three years.
Online at the moment is an area where buying groups and individual retailers have accepted they perform at a mediocre level. That needs to be revisited, and a strategy that will actually work needs to be developed. Treating online as simply a utilitarian way to order stuff a customer already knows they want is going to fail as genuine pure-play online competitors emerge.
The DIY offering is part of the retailer's August Living collection, and allows shoppers to transform their home or hack a product in an affordable way
Fri Aug 19 2022
Wesfarmers-owned Kmart has added an all-new DIY range as part of its latest homewares line.
The DIY collection has been designed to provide simple-to-use and value-driven solutions that change the look of homes. The range means Kmart shoppers can create room transformations both big and small with items such as self-adhesive removable wallpaper designs, floor and wall tiles, curtains and blinds.
The collection also includes furniture chalk and mineral finish paints that sell for $10 a tin, decor and furniture lacquer (including terrazzo paint chips), door hardware, shelves and more.
One marketing expert suggests that Kmart's new paint range could be a strategy to attract a wider range of shoppers into its stores.
Head of marketing at Auckland University business school Bodo Lang said there was an advantage for Kmart in selling many different types of products because it could attract a larger proportion of shoppers. He told Stuff (New Zealand):
A secondary advantage is that shoppers who are already in store have a greater opportunity to buy other products. This is known as cross-selling.
If there were lower sales for one type of product, that could be compensated for by sales in other types of products. A retailer with a broad range of products was less exposed to dramatic changes in sales, making sales more predictable, he said.
But there could also be disadvantages in trying to be a "one-stop shop". Mr Lang said:
The first is that stores only have a limited amount of shelf space and the more diverse the types of products that a store sells, the less depth there will be in each of those product categories. For example, Kmart may not be able to offer 10 different types of self-adhesive tiles but only two.
Put simply, having more choice across different types of products means there is likely to be less choice within each of those product categories.
The DIY collection was inspired and created from a combination of market research, customer feedback and trends on social media, according to Kmart's divisional merchandise manager, Meryn Serong. She said:
We are thrilled to deliver another new and exciting range of homewares this winter with the bonus of our new DIY range. As cost of living is on the rise, we remain committed to giving our incredible community great value and we are proud to continue to deliver on this with this range...
Sources: The Daily Telegraph, 9Now and Stuff (New Zealand)
Tool Kit Depot opens its doors in Melrose Park (SA)
A new Mitre 10 Trade Centre in Dubbo (NSW) is making it easier for local tradies to pick up their building supplies
Fri Aug 12 2022
Tool Kit Depot has announced the opening of its newest store in South Australia which will replace the existing Adelaide Tools store in St Mary's, a suburb of Adelaide.
The new Tool Kit Depot stores are built to provide everything trade customers need - with more than 10,000 products across tools, safety gear, outdoor power equipment, workwear and much more - all under one big roof.
The Melrose Park store is more than double the size of the existing St Mary's store, offering an extended range of speciality tools and equipment, and a new layout with hands-on displays that make it easy for customers to find exactly what they're looking for.
A Battery Bar, tool hire, and a tool servicing and repairs workshop are available in store to keep existing tools in good shape. Customers can access on site tool repairs to keep their business moving, including blade replacements, tool sharpening and test and tag.
The latest store opening marks the completion of the program to transition all existing Adelaide Tools stores in SA to the Tool Kit Depot trading name. Refits at the Lonsdale, Gawler, Parafield and Mile End stores were completed earlier this year.
Tool Kit Depot Melrose Park store manager, Luke Helps, said the team is looking forward to welcoming the community to the new store and meeting local tradies and tool lovers in the area.
We're excited to show customers just how much more we have to offer here at our Melrose Park location. We want this store to be the ultimate one-stop-shop for busy trade professionals who love what they do and need great quality tools and service to do it.
We've got twelve experienced team with specialist knowledge to help with all jobs big and small, such as Max who is an auto mechanic and experienced welder, Bel who joined us from Bunnings wanting a new challenge and Ethan who is a qualified carpenter.
Tool Kit Depot's next SA store will be located South of Adelaide in Seaford Meadows, with additional SA stores to be launched as part of the national rollout strategy. Further locations will continue to open in West Australia, before seeking new locations in other states.
Tool Kit Depot Melrose Park is located at 1031-1037 South Road, Melrose Park SA. It officially celebrated the store opening with the local community and former Adelaide Football Club player Mark Ricciuto.
Petrie's Mitre 10 Trade Centre manager Brad Petrie said its new giant warehouse at the northern end of Fitzroy Street in Dubbo (NSW) recently held a "soft" opening and received rave reviews. He told Dubbo Photo News:
It was great, we think we probably had anywhere from 80 to 100 people ... We had breakfast on, we had a coffee van and we had a lot of good feedback from the builders relating to the stock, and the accessibility to drive into the yard.
Originally part of a truck depot, Mr Petrie said there is a lot of space for tradies with trailers, small and medium trucks or even semi-trailers to have ease of access to the stock, with the loading bay able to accommodate many varied vehicles at the one time. So there's little likelihood of getting caught in a traffic jam and wasting time off the tools.
Mr Petrie also said it is a facility designed for quick load movements.
It's impressive to have the sheer size of land and the shed. Being a logistics yard, it was designed for trucks to be loaded and unloaded, so when a builder comes in they're able to pull up wherever, we can load them and there's still space for other builders to access it as well. So the original design use of this shed is really going to be a benefit for us.
We're currently organising the line-markings for our traffic management plan which will consist of a number of parking bays, and we've overserviced regarding space from the get-go so we should be able to get our customers in and out quickly.
We know from our old site - we didn't have a very good yard - if you pulled one car up no-one else could get past them, so having this ability now, it's premium for Dubbo.
It is expanding its Gold Coast head office and warehouse
The bathroom products business generated $140 million in annual revenue in the last financial year
Fri Aug 12 2022
After starting out as a small outlet in Southport (QLD) in 2004, Highgrove Bathrooms now has 50 stores around Australia.
Managing director James Sinclair said the company - started by his father Lindsay - had seen some "crazy exponential growth". He told The Courier-Mail:
Year-on-year we've recorded 20-40% growth and we opened our 50th store in Rockhampton earlier this year.
One of our biggest challenges is being able to manage that sort of growth year on year and being able to expand the business and the infrastructure that goes with it.
Mr Sinclair said there were more growth plans with Highgrove building stores in Darwin, Ballina, Bathurst and Tweed Heads. The company is also looking to establish a distribution centre in Sydney within the 12 months.
At the moment we are waiting to see what happens in the property market, but despite uncertainty sales remain strong. We're still facing cost pressures from incredibly high overseas freight prices, (but they) are slowly subsiding.
Mr Sinclair said Highgrove had tapped into the homeowner renovator market, including DIYers as well as tradies and new-home builders.
There are a lot of companies that incorporate bathrooms, but there aren't many national companies that specialise only in bathrooms. That's the big point of difference for us.
Most of our customers don't renovate often or have never renovated, so we offer personalised service and advise people who come and visit our stores.
Our ethos hasn't changed over the years. It has always been our goal to offer our customers the best in design at an affordable price point.
During the pandemic, Highgrove recorded a 30.5% rise in revenue in 2019-20 to $100 million; 30.2% in 2020-21 to $130 million; and 8% to $140 million in 2021-22. Mr Sinclair said while there was a home renovation boom during COVID, a key driver of Highgrove's growth was ensuring its stores and warehouses were well stocked. Mr Sinclair explains:
When COVID was first disrupting everything we were getting pressure from stakeholders to hold off ordering from overseas as no one knew what was going to happen.
Not knowing what was going to happen, we kept our normal orders in place with the belief that the risk of being overstocked was easier to deal with than not having stock.
This proved to be fortunate as stock shortages with competitors helped us to achieve record results, leaving us short on stock anyway. Since then, given the uncertainty in supply chains, we have focused on increasing stock levels nationally both in our stores and distribution centres.
When Lindsay Sinclair - who remains actively involved in the business - opened Highgrove's first store, it was focused on furniture, but the Sinclairs quickly recognised the opportunity in specialising in bathroom products.
The company now has 350 staff and a head office and warehouse in Molendinar on the Gold Coast and a distribution centre at Dandenong in Melbourne's outer south eastern suburbs.
In 2021-22, Highgrove sold about 20,000 baths, 44,000 toilets, 53,000 vanity units and 46,000 basins.
The company designs products in-house, gets them manufactured mostly in China and Vietnam, and sells their own brands through their stores. Importantly, most of their stores operate under a partnership arrangement with individuals who are part of the local community, which has seen it build relationships with groups such as The Smith Family and Rural Aid.
Mr Sinclair also said the impact of home renovation television shows on his business could not be understated.
With the popularity of TV renovation shows, people are looking for a bespoke designer look for their bathrooms.
People are looking for a far bigger variety of finishes when it comes to baths and we're offering a far bigger range of finishes and textures these days than what we were offering previously.
Eight years ago it was enough to offer a matte black range, four years ago a range of products in pastels. Today the market is far more discerning and fastidious.
Buyers now were seeking products such as brushed nickel tapware and accessories, concrete baths and basins, and a range of high-end timber vanities. Mr Sinclair said the company needed to be "flexible" to be unique.
We're constantly re-engineering ourselves to keep up with an ever-evolving market. Recently one of our main focuses has been on the introduction of interchangeable components, allowing every customer to tailor a bathroom that is totally unique to them.
The home improvement retailer has partnered with digital services agency iSite to launch over 130 online shoppable videos
Fri Jul 15 2022
Wickes has launched a shoppable video player which allows customers to add products directly to their basket, while learning how to complete a variety of DIY tasks.
There are more than 130 videos available, including buying guides, step-by-step tutorials and design inspiration. Items featured in each video are listed in the sidebar, with the option to "add to basket" without opening a new tab or disrupting the video.
The digital-first strategy was rolled out in partnership with digital services company iSite and features a range of over 1,300 products.
The home improvement retailer said the shoppable content is part of its initiative to support mission and project-based shopping. Gary Kibble, Wickes chief marketing and digital officer, said:
We know that customers shop by project or by mission, whether it's garden maintenance or painting a room. Through our digital channels we've been improving our customer shopping experience with extra tools and functionality to support mission-based purchasing.
In creating shoppable video content where DIY products can be easily moved to a customer's basket, we're helping the nation feel houseproud by giving them the confidence in their product purchase and ensuring they have everything needed to complete their project.
Being the first in this space is really exciting for us as it continues to underpin our digitally-led, service enabled business strategy.
The move comes as research by software company Brightpearl suggests that video is now becoming a more important role in consumer shopping journeys, with as many as 85% saying that video plays a role in what they buy and 71% being very drawn to interactive video, such as making purchases in videos.
Wickes is also making efforts to improve its product availability and meet consumer demands.
Recently, it announced a partnership with RangeMe, a global product sourcing platform which will help to support its customer buying team and enable them to access the most relevant products.
The partnership will create visibility for more than 200,000 suppliers, allowing them to present their products directly to Wickes buyers, as part of a direct and unified journey. Andrew Cotterill, director of strategic procurement and responsible sourcing at Wickes said:
Wickes is very excited to begin working with RangeMe to expand our access to new products and innovation and to streamline the procurement process.
The hardware retail group is also contributing to a White House supply chain task force
Fri Jul 15 2022
In 2019, the Wall Street Journal reported that True Value was overhauling its distribution network to improve how it manages inventory as part of a USD150 million initiative.
The company was revamping the network to deliver goods along a "hub-and-spoke" model to use inventory more efficiently so that seasonal items like outdoor furniture don't take up space where faster-moving products such as hand tools and plumbing supplies could be stored.
Instead of stocking each warehouse with every product, True Value placed slower-moving goods in large central locations and pushing inventory that turns over more quickly out to satellite facilities closer to customers. Orders drawing from the hub are sent out to the spokes, where they are matched up on the loading dock with items pulled from those distribution centres.
More recently, CEO Chris Kempa spoke to HBSDealer about what he sees as the current issues facing the distribution, post-pandemic. He said:
We just continue on a monthly basis to assess where we're at. The good news is we are in a better place...
The pandemic drove feet into our customers' stores, and they keep coming back. So the independent hardware retailers, and specifically our hardware stores, know how to manage in their markets. They know how to serve customers. They had a lot of them come back through their doors and they're keeping up.
Mr Kempa also listed the challenges facing the business of moving products across land or sea including closed ports in China, container shortages, truck availability, driver shortages. On top of it all looms the threat of a strike at ports along the West Coast of the US.
For True Value, rising to the challenge of supply-chain uncertainty begins with its people. Mr Kempa told HBSDealer:
We have over the last couple years, built the best-in-class team that really manages the end-to-end supply chain. And so we have gained an advantage based on our team. We are doing everything we can to move and get goods. And from my perspective, our team has done an incredible job.
That job includes building diverse options into the supply chain, finding dual sources, looking at new countries of origin and preparing for the unexpected. Mr Kempa said:
Our perspective is easy. Please help me get goods so that I can take care of my customers.
We're also helping leaders understand all the challenges we go through, to try to make this work better. Now, things are getting better. But better is not normal.
Mr Kempa also described the labour shortage as the "biggest hangover from the pandemic". The situation demands looking inward at pay scales, benefits, work environments, and assessing all the things that lead to retention and recruitment of employees. He said:
It makes you examine the basics of just good environments, good leadership and good engagement with your teams. And so we have put a lot of emphasis on that.
White House task force on supply chain
Earlier this year, True Value joined a White House task force on supply chain challenges. Mr Kempa was part of a roundtable discussion at the White House with Secretary of Transportation Pete Buttigieg and National Economic Council Director Brian Deese to discuss the launch of Freight Logistics Optimization Works (FLOW), a data-sharing pilot program created to ease supply chain congestion.
FLOW aims to improve congestion and speed up the movement of goods by establishing a baseline supply chain data infrastructure to significantly improve goods movement coordination.
True Value is contributing critical data about the supply chain to help give a clearer, real-time picture of the flow of goods and where infrastructure improvements should be focused.
True Value is expanding the number of businesses it serves after moving away from its historic roots as a member-owned cooperative through the 2018 sale of a majority stake to private equity firm Acon Investments.
Australia's largest independent electrical retailer, Middy's has taken on PowerPlus stores located in the Riverina region of New South Wales
Fri Jul 08 2022
Bunnings owned Tool Kit Depot (TKD) has opened its sixth store in Western Australia, located in Albany. Spanning 1,500sqm, this store represents a $3 million investment creating eight new jobs in the local community.
The new TKD specialist tools stores stock all the gear tradies and serious DIY'er needs, carrying 10,000 products across power tools, outdoor power equipment, hand tools, storage, workwear, welding equipment, construction and safety equipment all under one roof.
Similar to other TKD outlets, the Albany store has a Battery Bar, tool hire, and a tool servicing and repairs workshop to keep existing tools in good shape. Customers can access on site tool repairs at the store, including blade replacements, tool sharpening as well as test and tag.
Prior to the opening, TKD store manager Colin Kuiper said the Albany team were looking forward to getting to know local tradies in the area and finding out how they can help them with their next project.
Our Albany team have been busy ... working flat out to get products on the shelf in preparation for the store opening. It's been a huge effort by all involved and we're really proud of what the team has achieved.
In addition to products from suppliers such as Festool, Husqvarna, Hard Yakka, Milwaukee and Makita, the TKD range extends to products from AEG, Irwin, Empire, Kango and Full Boar.
Tool Kit Depot Albany is located at 348 Albany Highway, Albany WA 6330.
Tool Kit Depot is part of Bunnings' planned growth.
Middy's has completed its acquisition of the PowerPlus branches in Leeton and Griffith, both in NSW, reports The Rural.
PowerPlus Griffith opened its doors in April 2004 and was followed by PowerPlus Leeton in March 2009. Both branches were owned and operated by Adam Truscott and Anthony Martinello. They joined the Gemcell Group - Australia's largest group of independent electrical wholesalers - as product members in 2007.
In late 2021, both PowerPlus branches were bought by Middy's Electrical. They have become important additions to the company's NSW and ACT market presence, which now has a total of sixteen locations across the two regions.
Like Middy's, PowerPlus was based on local needs and is driven by the desire to offer the best personal service.
Proudly supporting Australian made where possible, Middy's remain committed to ensuring they are not buying or selling products that don't meet Australian Standards. Middy's customers can also use their accounts at PowerPlus branches, and likewise PowerPlus customers are welcome at Middy's.
Both PowerPlus branches are currently undergoing a re-brand of both internal and external signage. Once complete, they will soon be easily identified by Middy's trademark pink.
The retailer also recorded an increase in first quarter 2022 revenues and added new stores
Fri Jul 08 2022
The Grommet, a marketplace owned by Ace Hardware and specialising in small brands and quirky products, is shutting down, according to Retail Dive via a LinkedIn post from Grommet founder Jules Pieri. It also notified customers by email of a liquidation sale.
Ace Hardware acquired a majority stake in the platform in 2017 for an undisclosed amount. At the time, the companies said The Grommet would retain its autonomy and that Ace had no plans to interfere with its strategic direction.
When Ace took over The Grommet, it seemed like a lucrative opportunity for the marketplace and its sellers. The hardware retailer's scale and well-known brand, plus the two companies' merchandising synergies, seemed like upsides. Their deal gave the platform and its sellers a portal to brick and mortar, and Ace a way to appeal to younger consumers.
Yet the tie-up may have been The Grommet's downfall, as "Ace's co-op structure meant having to sell each store owner individually on a Grommet program," according to the LinkedIn post from Ms Pieri, who maintained a stake in the marketplace and remained in charge when it was sold but announced in 2020 that she left at Ace's behest.
Ace Hardware stores with The Grommet displays featured merchandise from small, independent brands, many of them DTC (direct to consumer) - but on a much smaller scale and absent of any coordinated theme.
The closure of the marketplace also demonstrates more general difficulties often faced by e-commerce companies. While legacy retailers like Walmart, Target and even Ace have developed online and omnichannel capabilities, many pure-play e-retailers have struggled to establish physical footprints.
That has led many DTC brands to turn to wholesale as a more efficient channel for growth, and that had been Ms Pieri's strategy when Ace came calling, according to her LinkedIn post. "As CEO I decided to commit hard and invested for wholesale success at Ace and beyond," she said, adding that the co-op setup made that time-consuming and expensive.
Growth slowed and losses mounted. On top of that, customer acquisition via Google and Facebook (without concurrent investments in brand awareness) got impossibly pricey.
Ace Hardware also recorded first quarter 2022 revenues of USD2.2 billion, an increase of USD181.8 million, or 8.9%, from the first quarter of 2021. Net income was USD119.8 million for the first quarter of 2022, an increase of USD14.4 million from the first quarter of 2021. John Venhuizen, president and CEO said:
Our first quarter increases in revenue and income brings our two-year stacked growth to nearly 51% and 205%, respectively. Revenue growth from the 54 new stores we added in the first quarter was real and incremental. The remainder of the first quarter revenue growth, however, was not as it was the result of ongoing inflation.
Estimated retail price inflation of 9.5% helped drive a 10.0% increase in average ticket. Same-store transactions were down 7.8%.
The approximately 3,500 Ace retailers who share daily retail sales data reported a 1.4% increase in US retail same-store-sales during the first quarter of 2022.
Ace added 50 new domestic stores in the first quarter of 2022 and cancelled 11 stores. The retailer's total domestic US store count was 4,790 at the end of the first quarter of 2022 which was an increase of 110 stores from the first quarter of 2021. On a worldwide basis, Ace added 54 stores in the first quarter of 2022 and cancelled 11, bringing the worldwide store count to 5,626 at the end of the first quarter of 2022.
TAFCO Rural Supplies is providing $338,000 back to members after a successful trading year
Fri Jul 01 2022
The Terang and District Co-Operative Society in regional Victoria recently announced at its annual meeting that it recorded a $821,835 profit, according to The Warrnambool Standard.
The co-op's hardware businesses saw Terang Mitre 10 being a finalist in Hardware Australia's Store of the Year and Camperdown location taking out the award for small format Mitre 10 Store of the Year for Victoria and Tasmania.
Its annual turnover of $29 million is second only to the 2020-21 results which were influenced by COVID-19 lockdowns.
The co-op exceeded its pre-COVID 2019-20-year turnover by 18%. The growth was built off strong IGA and liquor sales and consistent sales performance from both Mitre 10 businesses.
Chairman Geoff Barby said the co-op had worked hard to retain the business and customers gained during COVID-19 travel restrictions and lockdowns. He said the IGA Supermarket continued to thrive on the back of a refurbishment and topped off the year with winning the State IGA Awards of Retail Excellence for the Best Grocery and General Merchandise Department.
Mr Barby said the before-tax profit result was a great testament to the hard work of staff. He told The Warrnambool Standard:
Our co-op is only ever as strong as the support we are given from our members and community and we welcomed 189 new members during the year.
Membership now stands at a record 3239. They accrued $286,513 in rewards during the year while the co-op's total assets grew to almost $12.5 million. Mr Barby said:
We continue to look towards ensuring a sustainable future for our members and our co-op communities.
Chief executive Kevin Ford also said the turnover of $29 million was a great result and the co-op captured more gross profit with better controls in place.
...Not only do we have a great supermarket, a great trade and retail home improvement store, we have an engaging and exciting community co-op.
Mr Ford said the co-op continued its sponsorship and donations program.
In 2021-22, when many organisations were hampered from their normal activities throughout the year, we are pleased and proud to be able to assist the community in such times of need.
Mr Ford said the co-op was putting considerable focus on improving its business and information systems and planned to develop a total integration of systems.
The co-op will evolve and change in an ongoing process of continual business improvement into the future.
The directors of TAFCO Rural Supplies have issued a 5% dividend on shares and a 5% rebate on members' 12 months trading to March 31, 2022.
The Myrtleford-based community co-operative will provide just over $338,000 back to members as a credit on their account in June, taking its return to members and the community to more than $4 million since its formation in 1987 to service tobacco and other farmers of the region in Victoria.
TACFO general manager Rupert Shaw said the co-operative continues to grow with new members joining each year. He told the Myrtleford Times:
Anyone who trades is eligible to be a member. It's not just the farming community who benefit from membership.
If you shop at TAFCO for pet food, garden supplies or even just salami making supplies, you should consider joining as a member - it's open to anyone in the community who purchases goods.
We work on fair competitive pricing and return profits back to members through rebates on trading and dividend on shareholding, with the emphasis on rewarding members on their trade.
Every purchase made at TAFCO is supporting a locally owned business with 700 shareholder members, employing and training local people and returning profits back to members. TAFCO chairman Lachlan Campbell said:
TAFCO is about our members and the community, this year we have continued to support Into Our Hands Community Foundation and GROW Myrtleford+ the local philanthropic trust. Members have the opportunity to make a tax deductible donation from their TAFCO rebate/dividend directly to the foundation.
Elders moving into Goldtower Central in Queensland
Shepparton-based Riverside Gardens Garden Centre has changed hands, locations and products in over 40 years of trading
Thu Jun 23 2022
Agribusiness Elders has moved into new premises at the Goldtower Central complex in Charters Towers (QLD). The new facility is a 1300sqm building with an all-weather drive-through area.
Goldtower Central owner Paul McIver said the expansion was a logical next step for the region and the business. He told the Townsville Bulletin:
Elders is the newest tenant of our commercial development ... Our development has seen six buildings completed with new constructions of Poppet Head Plaza and Treasure Towers now leasing.
We had a vision of establishing a strong presence in the West. Elders shares our vision and the growth of this national brand into our precinct promotes a strong appeal to do business in regional Queensland.
Charters Towers mayor Frank Beveridge said the new expansion was a welcome development. He told the Townsville Bulletin:
We are pleased to see the expansions of the Elders into a larger premise. With the demand for food increasing for the next 25 years, agriculture, especially the beef industry, needs businesses to grow to cater to this pressure. This expansion shows faith in Charters Towers region...
The new branch will employ three extra staff, bringing the number of the team catering to the Charters Towers community to nine.
Existing franchises at the location include Hollimans Rural Mitre 10, rural clothing specialist W. Titley & Co and Queensland Rural.
The Smith family's history with Riverside Gardens Garden Centre in Shepparton (VIC) began in 1982 when Moira and Bob Smith bought the nursery, then located on the banks of the Broken River.
In the first six months, the nursery was mananged by the Smiths and their son Murray, with another son, Larry, travelling from Melbourne on the weekends to pitch in, according to Shepparton News.
After Larry left his position at Government House gardens to move his family back to Shepparton, he made the jump into the business - with his brother Rodney not far behind.
Now, Larry, Murray and Rodney are at the helm, along with the garden centre's popular cocky, Charlie. He told Shepparton News:
We've quite literally weathered our fair share of storms with the old and new nursery. Both the old and new nursery have been severely damaged in four storms, we've been burnt by a couple of devastating fires, survived more than 10 years of drought and suffered regular minor flooding at the old site.
He said the 1993 floods affected the business in a devastating way, as they did many others, prompting the move to the Emerald Bank location. Throw in a pandemic, and the nursery has just about seen it all but regardless, the support and generosity from the community has been "heart-warming". Larry said:
Back then, moving a few kilometres out of town surrounded by cows was a gamble! But it's one that's proved beneficial over the years. We were a lonely tenant for a while but we're grateful to have neighbouring businesses that have made Emerald Bank more of a destination point than we could've thought.
Across 40 years, Larry said the whole industry had changed. He said:
Initially it was 'you work for a nursery, you just sell plants' and quite often they were just wrapped up in paper. Now it can't be dirty at all - you can't be dirty coming into a garden centre.
While it began with simply plants, the store has since become a seller of all sorts. Additions include a coffee shop, gift lines, home and garden decor, and furniture all the way through to clothing and the mini golf course. Larry said:
To actually grow the nursery from what it was; it was very small and now it's one of the leading nurseries in Victoria.
The nursery won the Best Medium Garden Centre of Victoria award three years running from 2008. He said:
...Yes, a great deal has changed over 40 years, but one thing that will never change is that we are forever appreciative to our customers who have supported us over the years, and we thank them for being a part of our journey.
The home improvement retailer has curated a range of over 4,000 products to target eBay's visitors
Fri Jun 10 2022
Wickes has launched its own store on eBay as it takes its first step into the online marketplace. Its eBay range includes its best selling flooring, internal doors, tiles, paint, ready to fit kitchen and garden products.
Wickes said the marketplace is the "ideal platform" to acquire and retain new customers and is the start of a six-month trial. Chief marketing and digital officer, Gary Kibble, said in a statement:
We're customer curious at Wickes and do a great deal of work to understand why and how our customers shop. We know that home improvers are always on the hunt for inspiration in creating a beautiful home and will source products from a wide variety of sellers to create their perfect space.
By launching with eBay we can introduce even more home improvers to the Wickes brand and help them feel house proud. We believe partnering with eBay underpins our strategy of being a digitally-led, service enabled business. And with DIY products selling every 12 seconds on the site, this is a massive moment for Wickes to attract new customers and delight existing ones.
The collaboration will help us understand the home improvement customer further and inform more channel opportunities in the future.
Wickes also recently said it expects to avoid the slump in post-pandemic home improvement trading with customers still returning to stores and trade customer order books at record levels.
However group sales were down 0.6% for the first 20 weeks of its financial year compared with last year. Like-for-like sales were also down 7.2% for the period.
DIY sales increased by 30.9% over last year. On a three-year basis, which compares with the pre-COVID period, total group sales were 22.4% ahead. The firm said sales were "significantly ahead of pre-lockdown levels".
Wickes added it was "mindful" of customers facing huge rises in the cost of living due to inflation. CEO David Wood said:
Looking ahead, while we remain mindful of the uncertain macroeconomic environment, we continue to be confident of the opportunities for Wickes within the large and growing home improvement market.
The retailer is repositioning its brand as "The Other Hardware Store" in the latest series of ads
Tue May 31 2022
The most recent Mitre 10 campaign emphasises and promotes its role as "the other hardware store". Karen Fahey, Mitre 10 general manager of marketing said the brand had a significant following of small to medium builders who recognise the value of their relationship with their local Mitre 10. However, many people interested in DIY didn't always think of Mitre 10 when they think about hardware. In Mumbrella, she said:
The data showed that more than 90% of Australians are on autopilot on where they shop for their DIY needs, and while Mitre 10 is known for service and quality of range amongst existing customers, we are often not considered in the moment of hardware store choice by people not familiar with Mitre 10. They're missing out on the benefits of the knowledge that sits within our network, we can give them solutions to their home improvement challenges on their first trip.
The campaign includes four 15-second ads that use humour to remind Australians of the care and customer service offered by Mitre 10. It indirectly pokes fun at market leader Bunnings by demonstrating there are other hardware stores that people can go to. Ms Fahey said:
It's a cheeky reminder that there is an 'other' choice for hardware in Australia while also telling the Mitre 10 brand story of service and expertise, and the unique connection our stores have to their local community.
We are different, and proud of it. This is an invitation to learn more about the personal experience you get with Mitre 10. Because, for us, the grass isn't just greener on the other side ... it's blue.
Peter Cerny, chief creative officer at Dig - the creative agency that developed the campaign - said it knew that developing a distinctive and relatable tone was an opportunity for Mitre 10 to stand out in a category that tended to be "bland and impersonal". He said:
This idea challenges the category by embracing Australians' love of the underdog. The campaign cleverly plays off the salience of the bigger brand, whilst not poking at it.
In one spot, an older couple sit naked on camp chairs outside of a campaign renovation site, as naked elderly people go about the work behind them. The couple explain that the people at "the other hardware store" suggested some coveralls to help stop the paint getting "everywhere".
A young boy with his head stuck in staircase spindles features in another ad as his dad casually watches TV. Thankfully his mum pops to the other hardware store "where they really care about your DIY challenges".
In the third ad, a tradie's unfortunate portaloo experience after a somewhat funky colleague. As he holds his breath upon entry he explains, "If you're like me you'll want to be in and out as quick as possible" - which is exactly why he uses the other hardware store as they "have a dedicated trade team so he's back on site in no time".
The final of the four ads features an older "cougar" woman with her young "stud" boyfriend who can be seen trying to hang a picture in the background. She soon explains how finding a stud at her age is one thing, but finding one in a wall is something else entirely. The failed hanging attempts result in her having to send him to the other hardware store "where the staff are really helpful".
In The Australian, Ms Fahey said the hardware retail group prided itself on offering that little extra personalised service and expertise to help customers get the job done right the first time. She said Mitre 10 saw an opportunity to engage with those less familiar with the brand, to stop them in their tracks and let them know what was so special about the "other" store.
It's disruptive, fun and memorable. We don't take ourselves seriously but we take our customers very seriously and we take immense pride in the particular care and attention we give to our trade and DIY customers - whether that's in-store, online or on site.
The campaign is being released across TV, outdoor, radio, print and digital channels. The new-look identity and "The Other Hardware Store" tagline will also be seen at store level.
Bowens Timber and Hardware is taking over the former Bunnings site located on June Court in Warragul (VIC)
Tue May 31 2022
Peter Ingram from Ingram's Home Hardware in Kingscote (SA) said the business has just installed two Tesla Powerwall battery systems on both its Home Hardware and Bi-Rite Home Appliances stores. He told The Islander:
We are now energy neutral.
The Tesla Powerwall is a rechargeable lithium-ion battery stationary energy storage product manufactured by Tesla Energy. The Powerwall stores electricity for solar self-consumption, time of use load shifting, and backup power.
This means a business like Ingram's can operate five separate uninterruptible power systems or UPSs in its stores, allowing them to trade during a power outage. Any access power is fed back into the system thanks to a long-term leasing arrangement with the Allstate Solar company, a specialist in battery storage systems.
Ingram's is also building a large shed for building supplies at the entrance to the town. Mr ingram said construction was going well but one issue still being sorted with the council was drainage and paving of Karatta Terrace, which will be the main access road to the location. The new shed will also eventually be fitted out with a solar and battery system.
The plan is to move the building supply products into the new shed, which would then free up the existing shed at the back of the store on main street for hardware, he said. This would in turn, free up more space in the front of the shop on Dauncey Street for homewares, fishing, and outdoor products.
This year, Ingram's Home Hardware will also celebrate its 70th anniversary, after Peter's parents opened its doors for the first time in 1952. This makes Ingram's one of the oldest family-operated hardware stores in South Australia.
The new Bowens regional outpost in Warrugul (VIC) is expected to open in August. It is part of a $50 million investment in six new stores and refurbishments across Australia by the group this year.
Bowens director and chief investment officer Andy Bowen said the company has been looking to set up shop in the area for some time. He told the Warragul & Drouin Gazette:
This is a decision that has been made over four or five years. We've been watching the area grow and we think we've found the perfect site to set ourselves up in."
Mr Bowen said there was still some work to be done on the site - where the previous Bunnings outlet was located - but believes it is the ideal fit for a Bowens store.
It is perfect for what we do, we are absolutely focused on professional builders, professional trades. That's what we do.
The site is fantastic from a logistics perspective. We can move product in and out really quickly.
Mr Bowen said most of the company's customers are medium to small sized building companies, many of which operate in Warragul and surrounding areas. But anyone can purchase their products.
We have a really diverse range of timber and building supplies ... we will service whatever needs the market requires. Bowens is more focused now more than ever on other building supplies - not just timber.
Some staff already living in the local community will be moving down from the established Pakenham store, and the new store will create additional full-time work opportunities. Mr Bowen said:
Our hope is that within a couple of years we'd have 35 full-time employees there. We are not just there to sell building supplies, we are there to be a fabric of the community and support the community.
Part of that is hiring local talent and local residents, and that is exactly what we intend to do in that area.
New trade centre at Petrie's Mitre 10 Dubbo branch
Global paint manufacturer DuluxGroup is expanding its presence in North Queensland with the opening of a large store and facilities in Garbutt
Fri May 27 2022
Petrie's Mitre 10 has had a presence in Dubbo (NSW) since 2020 after taking over Brennan's Mitre 10 which had been serving the area for more than four decades. It plans to open a trade centre in August this year and expects to fill a gap in materials pick-up options for local tradies
Dubbo branch manager Brad Petrie and his team understand that the pickup function at the store on Macquarie Street is not reflective of what they could achieve because it is a small space. He told Dubbo Photo News:
We're opening a trade centre to offer a wider range of product and provide more efficiency with easier access for builders to be able to pick up what they need.
Mr Petrie said it will also have a sales hub for specialised orders and delivery options.
The main intention is for builders to pull up before they go to work in the mornings, or throughout the day, and pick up the stock they need.
We know builders need their stocks or products as soon as possible without much preparation or planning, so our role is to be able to supply to multiple builders and get the job done.
In addition to the Dubbo outlet, the Petrie name is attached to Mitre 10 stores in Orange, Mudgee, Bathurst, Port Macquarie, Young, Coffs Harbour, Taree and Gunnedah.
Related: The Petrie Group took over Brennan's Mitre 10 store in 2020
The paint company is taking over a over a large showroom in Garbutt (QLD), according to the Townsville Bulletin. It is located next door to Clark Rubber and adjacent to retail premises being established for Nick Scali, on Dalrymple Road.
DuluxGroup regional sales manager Andrew Pyne said the company would more than double its stocks of paint in Townsville to meet the needs of customers and reduce constraints caused by road closures during natural disasters such as the recent floods in south east Queensland and NSW. He told the Townsville Bulletin:
We've outgrown our previous site. We needed more space to service our customer needs in Townsville and North Queensland.
We see the city and region as a growth market. This will be the best paint store in North Queensland.
Dulux has reconfigured the fully airconditioned property to create a 920sqm showroom and warehouse. A new spray centre will offer sales, hire and service as well as stock a larger range of parts and accessories.
Mr Pyne said the property had more parking for customers and improved access for deliveries. It will have a business centre for trade customers and be a hub for protective coatings for the industrial and mining sectors.
Ben Wheeler of Colliers Townsville said the property is located in the retail hub of Garbutt which is attracting large retail businesses.
Related: DuluxGroup became part of Japan's Nippon Paint Holdings in 2019
Retail expansion continues as independents expected to retire
Elders chief executive believes generational change in the farm services industry, along with rising wage bills and labour shortages are set to push increasing numbers of independent businesses to sell up
Fri May 27 2022
Agribusiness Elders has made five acquisitions in the first half of this financial year and said it has received approaches from 39 other businesses, reports Stock Journal.
Recent store acquisitions have included Esperance Rural Supplies in Castletown (WA), Sunfarm in Bundaberg (QLD) and South Australia's YP Ag Services. Its expansion plans are set to gain pace in the next six months with a further 17 active candidates currently on the radar.
Independent family-owned or regional business groups operate about 620 stock and station agency and farm services businesses around Australia. They compete against national players Elders and Nutrien Ag Solutions, and several smaller groups including NSW-based Delta Agribusiness and members of the AgLink farm supplies network.
The sector has faced considerable challenges despite the bullish mood in agribusiness and strong seasonal and market prospects.
Much improved seasons since 2020 have resulted in declining livestock numbers for sale which, in turn, has chewed into livestock agent commissions, while at the same time serious regional labour shortages have left many business owners working harder to service their farmer customers. The coronavirus pandemic has also left fewer staff regularly at work, less reliability in product supply lines and dealing with many social distancing and workplace health precautions. Elders CEO Mark Allison told Stock Journal:
The rural services industry has had to work very hard to get products on the ground and keep pace with some extraordinary demand during challenging times.
He believes agriculture is getting "very good value" from its service sector under the circumstances, but it was not easy and had been costly. He said:
We've already seen some wage inflation happening. There is a lot of competition for staff out there, and not just people with specialist technical skills.
In regional towns you're just as likely to lose someone to the likes of Bunnings or Woolies if they have any retail experience and they like the offer. Even mum and dad farmers are so busy on their own places these days so there aren't many of them available to fill gaps at our stores either.
Elders wants to build on its own business momentum, making itself "a company people want to join". The company has also been happy to promote its status as regional Australia's most trusted agribusiness brand, based on the 2021 Roy Morgan industry risk survey.
Mr Allison said Elders is working hard to invest in innovation and target strategic branch expansion to improve its customer offering, but it also had a keen respect for cost control and generating strong returns on capital investment.
Acquisitions were invariably made "at low multiples", yet there was still plenty of inquiry from potential new enterprises to recruit to the group.
Succession plans in many cases independent business owners were near to, or had reached, the point where business succession was top of mind, but their own families were not so inclined to follow in their footsteps. He said:
The kids have grown up, gone to uni and are choosing careers that don't involve coming back to take over from mum and dad.
Independent owners were not necessarily looking to retire immediately, but many had taken over or started businesses having previously worked for corporates, and were therefore open to returning to the fold, with Elders at least.
Around 95% of the strategic acquisitions completed by Elders in recent years had involved the original owners staying on. Elders also gained extra footprint when some members of the Ruralco and the CRT farm supplies group left that network after the Nutrien takeover in 2019.
Elders has reported a 34% lift in net profit after tax to $91.2 million, and posted earnings before interest and tax of $132.8 million for the six months to 31 March, up 80% on the corresponding 2021 half-year figure.
Sales revenue for the period was $1.5 billion and is up 38% on the same period last year.
Elders' retail and wholesale products divisions, as well as its four services divisions - agency, real estate, financial, and feed and processing - have outperformed the previous year's results in all product areas and geographies.
Sales of rural products is up $312.9 million, or 47%, and wholesale product sales up $46.7 million, or 27%. Elders said growth across the rural products business has been driven by strong demand for fertiliser and crop-protection products following favourable seasonal conditions across key cropping regions.
Rural business Tom Grady is expected to expand its footprint further in Gympie (QLD)
Thu May 19 2022
In its 100th year, Jeays Hardware continues to thrive in the coastal suburb of Sandgate, north of Brisbane.
For the grandsons of the store's founder, Peter, Charlie and Richard, keeping the fourth-generation business in the family name is a matter of pride and testament to good old-fashioned service. Peter Jeays told The Courier-Mail:
I remember working in the business as a teenager handing out flyers at the front of the shop and being paid 50 cents. I have been in retail more than 40 years and have the busted knees to prove it.
Charles Joshua Jeays started Jeays Hardware in 1922 when he made the decision to start his own firm after working at Perry Brothers Hardware. He rented a small building and yard with his brothers Joe, Albert and Arthur.
In 1932, they moved into a larger building with Charlie's son Charles Albert (father of Peter, Charles and Richard) joining a few years later.
During World War II, the business was relocated to Sandgate, where the Jeays family had lived since the 1870s. In the days before forklifts, they worked hard loading heavy bags of cement, timber and iron onto their delivery truck by hand.
Charlie Jeays says his great uncles Albert and Arthur had been seriously injured in World War I but still managed to complete a full day of physical labour. He told The Courier-Mail:
Arthur had a bad limp after being shot in the leg, while Albert lost his leg in Gallipoli. Arthur always wore a suit, tie and hat even when he was driving the delivery truck.
The younger generation Jeays remember their father's love of Moreton Bay where he enjoyed sailing and fishing when not busy in the hardware business. Peter Jeays said:
Dad, who served in the Army's small-boat unit in Borneo, came back from the war and built a boat which helped in his recovery.
Charles Albert Jeays retired in 1985 after 50 years of service, with Charlie Junior taking over the reins as managing director. Peter joined the business in 1987 and became manager of the Jeays Aussie Auto business. Charlie said the biggest change in the hardware business during his time has been the move from bulk product to pre-packaged items.
In the old days, you would sell nails by weight. Things like kerosene and turps also were in big drums and you would buy a small tin. Now it is all pre-packaged.
Charlie said his father, who died aged 98 in 2018, was one of the first to join the Mitre 10 cooperative in the 1960s, with Jeays being the last of the original nine Mitre 10 hardware stores in Queensland to survive.
We would not be here today without being part of Mitre 10 because it helped with buying power and marketing.
Peter Jeays said the arrival of big box retailers have been a challenge but a loyal customer base and the fact Sandgate has few large development sites have helped to protect the family business.
We have had customers coming to us for over three generations. People like the fact they can pop into our shop for a can of paint or brush and get away quickly without having to walk 300m across a big car park.
The family have celebrated the centenary of the business with a number of long-standing staff including Harry Jones, who drove the firm's delivery truck for 60 years, and Carole Green, who was the office manager for 40 years. Charles Junior said:
We have always believed our staff are the most important people because they make the business. The staff's current total length of service to the business is in excess of 250 years.
Tom Grady Rural
Gympie-based Tom Grady has unveiled plans to add to his eponymous rural merchandise store, according to the Gympie Times.
A new development application includes construction of a new building with an office and drive through service on the 1.5ha block. More parking spaces in a covered area will also be included as part of the expansion.
If approved it will the latest addition to the rural services offered at the property, which served as a butter factory from 1925 to 1978 until that part of the factory was shut down.
Mr Grady recently sponsored this year's Gympie and District Show fireworks despite his real estate office not yet reopening after the devastating floods in late February,
Annual events held by hardware retail buying groups often feel something like a mix between an exercise bootcamp and several hard days at the information dojo. That is to say, they are a combination of delight, and what feels somewhat like a mild but persistent percussive experience.
At least, that's when they "work". And the 2022 Conference for the Hardware & Building Traders (HBT), held in early May 2022 at the Gold Coast Conference & Exhibition Centre certainly did work.
HBT events can end up being like workshops that deal with many issues related to managing effectively as an independent retailer. As a result, what gets workshopped at them can, ultimately, effect the entire industry, spreading beyond HBT to other buying groups.
It is certainly the case that while other industry groups might have more revenue, more stores, more members (and, certainly, equivalent passion), there is nowhere else in the industry that generates quite as many ideas.
One consequence of this is that while the organisers of an HBT conference might have a particular direction for a conference in mind, in the end it is the community that attends the conference which really decides what happens, and what the conference is going to actually be about.
Inside the workshop
HNN will provide more comprehensive Conference coverage in our next edition of HI News. We wanted, however, to start by taking a closer look at that "about" - which at the 2022 Conference has proved to be complex.
Some of that complexity is due to purely external reasons. After going through a difficult two years of COVID-19, Australia has, for the moment, put aside much of its pandemic caution - though the infection rates remain high enough to still be of extreme concern.
Added to that is a high inflation environment, which is bringing on, as a direct result, higher interest rates - set to break through 2.0% in FY2022/23. The big question that looms over hardware retail is whether the next two years - as property markets contract - will see a retreat back to, say, 2018 levels of revenue, or if the 2021 levels of revenue will continue.
The reality is, at least for the rest of 2022, and likely much of 2023 as well, that the industry faces a period of real uncertainty. It's just impossible to forecast with any real accuracy what happens next.
The next normal
One way that retail analysts have of defining this current era is to refer to it as the "next normal" - a play on the earlier concept from 2020 that dealing with COVID-19 as a part of business processes was the "new normal".
Faced with that uncertainty, it's good to remember that one of the basic principles of retail is that when there is a lack of clear forecasts, the best thing to do is to go back to operational basics.
For hardware retailers that means reinvesting some of the gains over the past two years in better efficiencies. In management terms, it's all about deploying capital now to increase earnings potential later.
The beauty of using efficiency as a strategy is that the correct kind of capital investment will continue to increase earnings in both a down market and an up market. That's in sharp contrast to the alternatives, business expansion or business contraction, which depend on accurate forecasts for positive results.
Which brings up the next question: what does efficiency and best practices really mean in 2022? Because the answer today is likely to be quite different to the answer from 2018.
The next path
Outside of factors largely external to the hardware retail industry, there are also factors internal to it as well at work. The past decade for all hardware buying groups has largely been about catching up to the industry behemoth, Bunnings, in terms of both pricing and range.
Bunnings still does hold a distinct advantage, but that decade of hard work has brought independent hardware retailers close enough that they can bridge the gap through other means. The task has now shifted - partially, at least - to working out how to better utilise the unique features of independent retailers to not just resist the ongoing expansion of Bunnings, but to at least equal it. The prospect of real growth for independents is clearly within reach.
For HBT - and independents in general - FY2022/23 will see their retailers really coming to grips with what the next part of this struggle is going to look like.
The difficulty that buying groups now face is one of strategy. The problem in developing that strategy is familiar to many industries. It's often said that military generals tend to fight the current war with the strategies and tactics that won them the previous war - not always to good effect. Businesses often do the same thing, and use prior successful strategies for new tasks to which they are not suited.
Driven by HBT CEO Greg Benstead and buying group general manager Jody Vella, there were two core strategies that HBT employed to hold its own in the pricing struggle. The first was to regard the whole supply side of hardware retail as a holistic entity, one where it was possible for both retailers and suppliers to win, through new efficiencies, and concentrating on growing the available market.
The second was to understand that most "wins" were going to be small and incremental. It wasn't necessary to make broad, sweeping deals. If you could piece together just a dozen or 20 smaller "wins", the result would be almost as good.
As beneficial and smart as that strategy has been, it's possible that other techniques will work better in the next phase of development. In very broad terms, this is because the price breakthrough phase of development was about achieving strategy cohesion in a widely disparate group.
The coming phase is really about helping individual retailers achieve success by drawing on their unique talents, unique store locations, and unique market positions.
A different future
Reviewing everything we were told by both HBT members and the many suppliers at the 2022 Conference, HNN really did find there was a core to what people were discussing, a central issue that was getting workshopped. That central concern, HNN would suggest, is something that has come to be called in recent years the "path-to-purchase".
Not that path-to-purchase was directly mentioned by anyone, but putting together all the comments and opinions voiced at the conference, this was what emerged.
For hardware retailers, path-to-purchase has two components. The first is the connection that customers feel to a particular store. The second is the "journey" customers undertake in arriving at the decision to buy a product from a retailer through the utilisation of different information and transactional channels.
The advantage of thinking about path-to-purchase is that it delineates a really clear objective for independent retailers. That objective is, very simply, to be considered as a reasonable option for any hardware purchase being made - paint, a new deck, kitchen or bathroom renovation, or simply buying batteries for a flashlight.
Win or lose the sale, independents need to own a part of the path-to-purchase to just remain in contention.
Path-to-purchase has something of a harried history to it. Largely, there has been considerable confusion between what we might regard as over-arching conceptual models, and more specific models, which relate either to product categories or narrow cohorts of customers.
Virtually every management consultancy, from McKinsey to PwC, has its own path-to-purchase diagram - and most of these are, at best, inadequate.
For example, one of the most common conceptual models is represented by this diagram:
While this is convenient, and somewhat comforting, it's more of a "hoped-for" model than anything that relates to how consumers buy things today. At its basis, it relies on what marketers refer to as "AIDA", which refers to attention, interest, desire, action, a well-known framework for modelling customer behaviour. The primary problem with AIDA, as many commentators have pointed out, is that it is exceptionally linear - as is the diagrammed model.
A better conceptual model is provided by UK-based marketing strategist James Hankins, known as the "Hankins Hexagon".
Commenting on this model, Mr Hankins has this to say:
So, what does that mean? Well, simply put, a person can make their own way from A to Z any way they choose. In reality there are very few 'fixed' pathways and most are two-way (feedback loops and changes of mind). This model posits that an individual can start wherever and eventually make their own way to purchase, that is if they do buy in the end because not everyone always gets there.
The core mechanism that's identified is the formation of "long lists" of possibilities, followed by the formation of "short lists" through a process of comparisons. What has largely changed in the modern, information-rich environment is that where in the past short lists were focused on rankings by sets of requirements (price, longevity, suitability to particular purposes), today short lists are often based on sources of recommendations (friends, influencers, Amazon reviews, YouTube reviews, etc.).
Developing these initial short lists typically leads to the creation of a "meta short list", which doesn't list products, but rather the requirements the consumer has developed for the products. This is then reapplied to the "long list" of potential purchases, resulting in a final short list, and a final decision is made.
Abstract models are good, but they only fulfil their function when they are combined with less-abstract, research-based insights into consumer behaviour.
Some of the most outstanding work on path-to-purchase in the hardware-home improvement area was undertaken by Kingfisher in the UK and European Union during the 2010s. One of the areas studied by the retail conglomerate was bathroom renovation, resulting in the following diagram:
Of the 28 steps, the first eight would seem of primary importance to hardware retailers. However the other 20 steps are also important. That's not only because they contribute to customer satisfaction, and hence ongoing loyalty, but because in making a purchase, the DIY customer needs to be able to conceive of the next 20 steps. The imagined completion of the project is, in other words, a key part of any purchase made.
Why path-to-purchase is important now
The surge in hardware retail revenue for independent stores during the two pandemic years has triggered hopes that at least some of this will continue. What actually happened during the pandemic years was less - as many seem to hope - a relocation by consumers, as a "delocation". That is to say that consumers were dislodged from some of the major retailers - such as Bunnings and the supermarket chains - but this doesn't mean they were automatically "re-homed" to smaller, local retailers.
That is particularly the case as the majority of consumers today start their path-to-purchase by doing research online. The proportions of online-first research various studies have determined range from 53% (Google) up to 81% (MineWhat.com). Conservatively, though, for hardware, it's likely to be around 60% to 65%.
One really difficult fact to bear about this is that probably 80% of initial or secondary searches made by DIY customers will go through the Bunnings website. That's largely a matter of setting price expectations, as well as checking availability.
However - fortunately for independent retailers - the Bunnings website is somewhat lacking when it comes to the level of product information presented. This opens up opportunities for independent retailers.
Not only might independents attract consumer attention with their own information provision, but consumers will be motivated to continue their research in-store. It is possible for independents to participate in post-research path-to-purchase more effectively than in primary research. That does mean making an adjustment for dealing with more informed consumers, further along in making their choices.
Post pandemic path-to-purchase
In outlining how that might work, it's best to start with some of the efforts that suppliers are taking. In overview, what each of the suppliers we spoke to managed to do with their products was to really understand how customers approached their products, and how they put them to use in their trade work or DIY tasks.
These examples illustrate three different techniques: providing depth; convenience and informational diversion; and overcoming the assumed problems.
Klingspor wire brushes
When HNN spoke to him at the HBT Conference, managing director of Klingspor Australia, Paul Hoye, reported that the new line of wire brushes the company had released had been doing very well. In fact, Mr Hoye had played a part in encouraging Klingspor to develop the product line, and, as he expected, the Australian market had responded well to the new product.
This is an example of one of the really important parts of path-to-purchase, because it relates to having a deeper understanding of what customers need. Wire brushes might not seem that exciting as a category, but for metal workers in general, and especially welders, they are really essential. For example, this extract from The Welder magazine illustrates just how complex this product line really is:
When choosing a power brush, you have several knot styles, wire gauges, and trim length options. By changing one or more of these characteristics, you can fine-tune brush performance for a specific application. For example, stringer bead brushes have narrower knots twisted from base to tip, making them better suited to penetrate tighter spaces like corners, fillets, and root pass welds. Cable-twist brushes are also twisted to the tips but have a wider profile that can quickly cover more surface area for fill passes. Standard twist brushes flare at the end, providing an even wider footprint as well as additional conformability.
It's not only about answering a direct need of a customer, it's also about providing real differentiation. It looks like such a simple category, but for the target customers it's deep.
Cowdroy insect screens
If there is one product on the market that deserves a lot of attention, it is the innovative insect screens released by Cowdroy. It's not only a great product, but it really illustrates the role of path-to-purchase.
That begins with Cowdroy realising that the "traditional" insect screens of the past were a disregarded, utility category that had a lot of potential to develop into a real feature for houses. As part of that, they also are a classic "upsell", a way to offer something pleasing and unexpected to customers.
The screens include products that are designed to have as little visual impact as possible, to resist the wear and tear that pets produce, and even to help block out pollen and dust.
Importantly, though, Cowdroy knew that it needed to "demonstrate" the screens effectively, and so developed a special mobile app to go along with the product line. That app enables customers to preview how the various screens on offer will alter the view through a window.
In path-to-purchase terms, that's a technique known as "information diversion". It invites a consumer to go down a quite shallow "rabbit hole" of information. After downloading the app, and playing around with the different options that are available, how can they possibly go back to just plain, old ordinary flyscreens?
The latest innovation that Cowdroy has brought to the line is to introduce packs of flyscreen in pre-cut lengths. HNN would guess that this development is based on customer research. Getting flyscreen cut from a roll can be one of those "difficult" moments in a hardware store - especially with staff shortages. Pre-cut lengths increase the likelihood a customer will complete the purchase immediately at the point of selection.
That helps the customer make a fast and convenient choice - but it also reduces the real cost of selling the product for retailers, as less staff time is needed. It's perfect.
Cement Australia Trade Mortar
In talking with Cement Australia, HNN sometimes imagines the theme from Mission Impossible playing in the background: "Your mission, should you choose to accept it, is to sell a commodified product as something unique, highly valued and reliable."
Yet the company does keep delivering on that tough task, and its Trade Mortar product is testament to this. Log onto any decent trade site, and you will find a lot of arguments about pre-mix versus self-mix when it comes to mortar. Surprisingly, though, most of those arguments aren't about cost, they are instead about the quality of the pre-mix. The complaints range from pre-mix being poor quality with too much sand, to just the "trowel feel" being wrong - not sticking well.
Cement Australia targeted those precise complaints, and produced a product that is designed to help really busy tradies "smash out" their walls quickly and conveniently. It's easy to mix, which means apprentices can manage the process, and it provides the kind of consistency needed with colour contrasts.
What is most significant about the hints of path-to-purchase thinking we see in the product innovations mentioned above is that the suppliers have considered the entire context of the purchase. Klingspor knows how important wire brushes are to welders. Cement Australia knows the problems tradies have experienced with pre-mix because they understand how their products are used to achieve an end result. Similarly, Cowdroy understands the frustrations of homeowners working on a project to refit flyscreens in spring. They've changed a utility purchase into genuine home improvement.
Path-to-purchase for retailers
Suppliers can, however, only solve a part of the path-to-purchase puzzle. In general, when it comes to path-to-purchase, suppliers concentrate on removing certain frustrations from the purchasing experience - a lack of different types of wire brushes, a pre-mix you can really rely on, flyscreen you don't have to find a sales associate to cut for you.
Retailers can go further. That means having a good understanding of where customers are in their journey towards completing a project. And that, of course, means being able to conceive of what that project might be.
This brings up one of the most long-running tensions in retail, which is how much stores should focus on project-orientation (bathroom/kitchen renovation for example) as opposed to displaying goods purely as categories (flooring and plumbing, etc.).
For the majority of independent retailers, of course, there really is no option, as their stores are not large enough to support any kind of project display. One way around that, of course, is by providing a "virtual" project space on a website. In the US, this is what The Home Depot does. For example, it presents a range of different room designs, with a "Shop this room" button, which pulls up a list of products needed to achieve the "look" of the interior design photograph.
While that gets around the problem of space limitations, it introduces other difficulties in terms of online capabilities.
The virtual path-to-purchase
When it comes to path-to-purchase for independent hardware retailers, the ultimate goal is to get included in the initial lists that are derived from online research. The best way to do that is to provide an information resource that will deliver a high score in terms of its search ranking through Google and other services.
It's here that the nature of the next challenge really does come into focus. The difficulty is that no individual store has the resources (let alone the finances) to develop an online presence that could attract the attention needed - plus, of course, as they service a confined geographic area, achieving success across the broader internet is not really efficient.
What is needed is a central source of information that is detailed and well-designed, and does provide a high level of exposure. That site could then offload site visitors to local independent hardware stores for the transactional part of the interaction.
At the moment, however, there does not seem to be much possibility of that being achieved in the industry. Yet there are some suppliers who are working hard to step into that gap. Matt Haymes of Haymes Paints was kind enough to take some time during the busy tradeshow at the Conference to chat with HNN. He described how Haymes is working hard to develop an online presence to help consumers choose paints.
It's clearly directed, he said, at boosting the sales of the independent retailers who stock Haymes. That's what independents have come to expect from Haymes, but it is also exceptionally generous.
The task ahead
Twelve years ago the task of catching up to Bunnings on price seemed almost unachievable. That led to some pretty desperate measures in the industry - most notably by Mitre 10, and its launch of the Mega stores in Australia.
Despite the difficulties, that job did get done. Today we're facing the next very difficult tasks. They also look virtually impossible to achieve. But there is something of a track record there, that can serve to give one a sense of hope.
What is most required, however, is an additional point of focus, and an understanding that it is time to develop and adopt a new winning approach to the Australian hardware retail market. We know that, as a resource, independent retailers can get to the point where they equal the growth rate of Bunnings. It really is a question of how best to access this pool of talent and potential.
This article can be read as a HNN Briefing PDF. To read the PDF, please download by clicking the image/link below.
It wants to be a major digital presence for home renovators to buy products for DIY, renovation, and home improvement
Mon May 09 2022
Online homewares and furniture retailer, Temple & Webster plans to bring its "expertise in e-commerce and the home" and broaden its reach to make The Build the "first-stop shop" for home renovation and home improvement in Australia. This will bring it into direct competition with Bunnings and Mitre 10.
Chief executive Mark Coulter told the Australian Financial Review (AFR) that after building the largest e-commerce home furnishing player in the country, moving to DIY and home improvement was a logical step.
Mr Coulter believes there is an opportunity for the online retailer to maximise share of spend in the home and realise synergies with its core furniture and homewares business. The home renovation market will also be counter cyclical to the housing market, namely moving versus renovating. He said:
I think the home improvement category or renovation category is a natural extension for Temple & Webster, we are already famous for the home and we've built the largest e-commerce business in furnishings and homewares.
I think moving from the loose furnishings to what is attached to the wall and floor feels like a very natural extension, and we are already seen as a place to come to make your house beautiful so why not do the whole room.
Bunnings and Mitre 10 are great retailers. Bunnings has done an amazing job to educate Australians about the benefits of DIY, renovating your place or doing design jobs - big or small. The market is very big.
It's still growing. There's definitely room for an online-only player which has the breadth of what we're planning across multiple categories to really be that first-stop shop, and really provide customers with the convenience and value that the online channel has over stores.
The Build's initial range will have more than 20,000 products across 39 categories. These include bathroom fixtures such as vanities, toilets, sinks and tapware; kitchen fixtures such as cupboards, sinks and taps; indoor and outdoor lighting fixtures; ceiling fans, blinds and curtains; and wallpaper.
New categories such as flooring and tiling, outdoor living and landscaping, tools and building-renovation equipment will be added in the coming months.
Mr Coulter also believes Australian shoppers would begin to gravitate to shopping more online for home renovation and project products, with millennials especially more open to shopping for home improvement on their laptops and smartphones.
We have already seen that overseas. If you look at the US and UK it is already following a similar adoption curve to furnishings and homewares where people, millennials are growing up and buying homes or renovating homes, they're turning to these channels and as we have always said online offers convenience and value - and that is a compelling proposition.
I think it is very similar dynamics, in some respects one could argue that dynamics for home improvement may actually be better than furnishings and homewares with the touch and feel for many categories is less important than for example a sofa.
With more Australians shopping online than ever before, The Build by Temple & Webster meets the needs of today's digital-first shopper who prefers the convenience and ease of renovating online rather than the traditional renovation process of driving from showroom to showroom to source projects.
The Build has been in the works for about eight months and the company has spent about $2 million getting ready to launch. The company plans to spend $10 million over this financial year and the next establishing The Build. Mr Coulter has not disclosed further ongoing investment costs but said it would be split out in future results. He was not concerned about launching the website despite an apparent shift back to bricks and mortar after two years of higher online spending with the lockdowns. He said:
That underlying trend of the shift from offline to online is really driven by consumer preferences, which are independent of those macro factors. There may be a period of potential inflation or slowing year-on-year growth. However, that underlying trend of people wanting to shop online, that's not going anywhere.
The business runs a drop-shipping model, whereby products are sent directly to customers by suppliers. These ranges are complemented by a private labels sourced directly by Temple & Webster from overseas suppliers.
Mr Coulter acknowledged it was "hard to know what happens with China" suppliers given the lockdowns and delays in the port of Shanghai, one of the world's busiest. However, he said Temple & Webster and The Build sites sourced from 100 factories in China and shipped from 10 different ports besides Shanghai's congested harbour.
We're also increasingly diversifying our supplier base outside of China. So places like Malaysia, Vietnam and Philippines. We have such a big range and so many suppliers that if a particular supplier goes out of stock, there is substitution between suppliers and between products.
Mr Coulter also said he has "stopped trying to understand the market many, many years ago" regarding the group's falling share price, which, along with other online players such as Kogan.com, had suffered steep declines on the sharemarket in recent months.
Temple & Websters shares have declined in value more than 9% after the group reported a disappointing trading update that implied a large miss of market consensus earnings targets and slowdown in sales, according to The Australian.
It suggests that shoppers are slowly but surely retreating from online shopping and that boomtime conditions enjoyed through the first two years of COVID-19 are coming to an end.
The market for online improvement in Australia could be worth around $16 billion and the category was yet to make its mark online, with just 4% of DIY shopping happening online compared to around 25% in the UK, the company said.
However investors were sceptical, and RBC Capital Markets analyst Wei-Weng Chen said the company's sales were tracking well below estimates. He said while the total addressable home improvement and renovation market is around $26 billion, and margin opportunity and online-penetration for the home improvement category looked attractive in the medium to longer term, the market could approach the launch of The Build with "an element of caution" given the current macro headwinds facing the Australian property market.
The company will also face a tough job when competing directly against Bunnings which holds around 50% market share for home improvement in Australia.
Perhaps in recognition of this, Temple & Webster said it doesn't expect The Build to make a material contribution to its overall sales and earnings for the first four years. However, it expects the long-term margins for the business will be better than its furniture and homewares category.
The expansion into home improvement is a notable deviation for the online furniture retailer, which has established itself as a significant player in Australia's home goods market during the pandemic, thanks to a boom in demand for home office equipment such as desks and office chairs.
However Mr Coulter sees the move has having enormous potential for the ASX-listed business as Australians are drawn to home improvement projects.
Australia is a country of home renovators ... and we love making [our homes] more beautiful. We believe our expertise in ecommerce and the home will help make The Build become Australia's first-stop shop when it comes to renovating and redecorating.
Related: Temple & Webster has been talking about its plan to challenge Bunnings in the home improvement sector for some time
Not-for-profit organisation Habitat for Humanity has set up a retail outlet in Adelaide to help cut the cost of building materials
Mon May 09 2022
Bowens has purchased a 4.9 hectare block at Cobblebank, a developing suburb in the City of Melton, located around 31km west of Melbourne's CBD, according to realestatesource.com.au.
There are plans for an outlet and distribution centre to be built on the site to service the north west region, as part of Bowens' expansion in Victoria.
The hardware and building supplies group is paying $12.32 million for the former Melton City Council controlled parcel at 27-39 Abey Road, near the Ferris Road exit of the Western Freeway. In realestatesource.com.au, Bowens chief investment officer, Andy Bowen said:
As a market leader in the building supplies industry, Bowens is committed to supplying the best quality products and advice to builders and trades alike especially in areas where it is most need.
The Cobblebank property is close to the 13ha Melton South site which the state government acquired from the Catholic Church last year with plans to develop the 24-hour Melton Hospital. It is also about 500 metres from the Cobblebank train station, which opened in 2019.
Habitat for Humanity has opened a ReStore outlet in Adelaide offering builders and home owners an opportunity to buy materials at lower prices, all donated by building companies, home improvement businesses and individuals.
The goods, including paving and landscaping materials, tiles, flooring, bathroom fittings, lighting, and door hardware will generally be offered at around half the usual retail price. Slightly used home furniture items will also be available.
The first of its kind in the state and 15 years in planning, ReStore will be owned and operated by Habitat for Humanity, a not-for-profit organisation that builds homes and apartments for low-income families, disadvantaged communities and homeless youth.
Habitat for Humanity executive officer Louise Hay said the retail venture would meet a key need for people building, or setting up, a house while being benefitting the environment.
ReStore will sell building materials that may be left over after a major construction job. These surplus materials, which are brand new, often end up in landfill because builders don't have the time to find another home for them.
Funds raised through the store will be used to support Habitat for Humanity's projects in South Australia that includes a small-scale home building program, a home maintenance program and disaster recovery work. Volunteers also worked for 18 months cleaning up properties in the Adelaide Hills after the devastating bushfires in 2019-20.
Habitat for Humanity has already built more than 40 homes and apartments in South Australia for people struggling with shelter or experiencing homelessness.
Sources: Realestatesource.com.au, Australian Associated Press and Glam Adelaide
The site where the Taits Mitre 10 store is situated in the Melbourne suburb of Glen Iris has quietly changed hands
Thu Apr 28 2022
Hardware and building materials group Bowens said it will spend $50 million on growing its store network in Victoria, according to an exclusive report in The Age and The Sydney Morning Herald.
Bowens already operates 16 stores in Victoria, and will open three new sites in the state as well as revamp another four in a move that is a direct response to the current post-COVID construction upturn. The company's director and chief investment officer Andy Bowen told The Age and The Sydney Morning Herald:
If we had three, four, five more stores open right now they would be just as busy as our other 16. We need more stores to meet the demand that's in the market now.
Now it's not always going to be this busy, it's a perfect storm in terms of government grants and post-COVID recovery that's led us down this path, but we think the demand in housing and construction is going to be pretty consistent for the next 30 to 40 years...
This word's been used to death, but it really is unprecedented volume. There's massive demand for building materials, and coupled with supply constraints on top of that, it just means our industry is being challenged. It's just so busy, we've never seen it like this before.
Mr Bowen said the construction industry has been far from exempt from rising prices such as inflation which has risen 5.1% in the past year based on recent data from the Australian Bureau of Statistics.
He said building supplies have risen consistently by "high single digits" in recent months. This has caused an increase in the cost of new builds - both residential and commercial. Mr Bowen said the cost of building its new store in Hastings (VIC) had increased by around 15% after a delay in construction caused material costs to rise.
Bowens is targeting Warragul, Cheltenham and Melton for its new sites, with the hardware executive saying the company sometimes takes cues from Bunnings on where the best locations are for new expansion opportunities.
Bunnings has been making a number of acquisitions and strategic moves in an effort to grow its trade-focused offerings, which is Bowens' bread and butter. However, Mr Bowen said the business has not been approached by the hardware giant with a potential buyout offer, and probably wouldn't be interested anyway.
We love being a family-owned business and an independent business, and we want Bowens to stay that way.
In a profile in The Australian, CEO John Bowen said that private ownership is important to the staff.
There are plenty that have been there for 20 years-plus. I'm fiercely independent. It is a shame how many businesses are being swallowed up by big box players.
The fourth-generation family-owned Bowens is considered a market leader in supplying quality timber and building supplies throughout Melbourne and regional Victoria. For the past 11 years Bowens has also owned Timbertruss, one of the largest prefabrication timber manufacturers in the country, which employs staff in Victoria and Queensland.
During the pandemic Bowens continued to invest in its operations, including a new prefabrication plant, showroom and a new timber yard in Geelong. John Bowen told The Australian:
You've got to keep investing. Independent businesses can't just stand up and say 'We are family-owned and independent so therefore people should walk in and buy from us'.
We need to keep rebuilding our stores, investing in them and making sure the product that they stock is relevant, rather than just resting on the laurels of 127 years." He said the firm will stick to its knitting, increasing its site footprint with new facilities and innovative products.
He believes the Timbertruss plant at Geelong - which specialises in producing roof trusses and wall frames - is the most technically advanced in Australia.
We are doing a few really exciting projects, not just walls, roof trusses or floor systems. We are doing some pre-finished panels for customers. Our version of next stage prefabrication, we're calling it.
John Bowen also wants more women in what continues to be a male-dominated business. Last year, the company held its first women in trade event at its Port Melbourne showroom.
Since joining forces in 2020, they have collaborated on ranges across kitchens, furniture, home accessories, lighting, outdoor structures, gardening, tiling, wallpaper and now paint
Thu Apr 28 2022
The new Country Living and House Beautiful exclusive paint ranges from Homebase are part of the home improvement retailer's three-year partnership with content business, Hearst UK and its magazine brands.
Country Living is inspired by nature and brings the countryside indoors with soft, delicate neutrals. The paint is made in the UK, and is durable for walls, ceilings, wood and metal with a luxury matte finish. It is air purifying too, created with a special additive to make the paint non-toxic.
The House Beautiful range embodies a contemporary style, ideal for customers looking for more bold, vibrant pops of colour. The paint is also made in the UK and its washable finish is suitable for walls, wood and metal. Its stain repellent technology means that any liquid touching the painted surface turns to droplets, making it far easier to keep clean.
Each range has 30 curated shades. Jason Hines, trading director for decorative & home at Homebase, said:
We're excited to launch two exclusive paint ranges with our partner, Hearst UK. Filled with plenty of beautiful colour and quality finishes, our customers can pair these new ranges with our stylish furniture and home accessories...
Sharon Douglas, chief brand officer, lifestyle, homes and weeklies at Hearst UK, said:
We're delighted to build on our Homebase licensing partnership with these brand new paint ranges. Our editors' and stylists' rich expertise in homes and interiors means that the Country Living and House Beautiful audiences regularly come to us for inspiration when in the market for a home upgrade. Collaborating closely with Homebase, our trusted specialists have created a colour palette that is on-trend, versatile and fit for the modern consumer.
Homebase and Hearst UK announced they had entered into a brand partnership in late 2020.
As part of the deal, Homebase is working with three of Hearst UK's magazine brands House Beautiful, Country Living and Good Housekeeping to create household and lifestyle licensed products.
Together, this partnership would enable customers to be inspired by what they see and read in House Beautiful or Country Living and translate that inspiration into real-life purchases either in one of the 155 Homebase stores or online at Homebase.co.uk.
A kitchen range under the Country Living and House Beautiful brands was the first to launch in December 2020.
The partnership sees Hearst UK promoting the new ranges, which are exclusive to Homebase, to its readership, of which the majority are united by their desire to constantly upgrade their homes with the latest trends. At the time, Dave Elliott, commercial director for Homebase, said:
We're excited to be working with Hearst UK and creating a range of new products for our homes and gardens that help customers recreate the latest style trends in their homes. This partnership will give customers even more options to purchase quality products from Homebase knowing they've been created with the innovation and inspiration from the stylist teams at House Beautiful, Country Living and Good Housekeeping.
Ms Douglas commented:
We're thrilled to be working with Homebase on this licensing partnership. We know that our highly engaged audiences across Country Living, House Beautiful and Good Housekeeping turn to us when they want to create or get inspiration for their dream home. They trust our experts when it comes to what to buy, so a partnership with an iconic retailer like Homebase makes complete sense.
HBT's "Back to the Future" conference promises new strategies
Evolution after three years
Some conferences are more important than others, and HBT's 2022 Conference is set to break new ground with its strategic focus
Thu Apr 21 2022
The past two years have seen many hardware retail groups and businesses forced to cancel events such as expos and conferences. As Australia emerges (hopefully) from under the cloud of COVID-19 pandemic, it is becoming evident that during this time of limited contact, both the business environment and hardware businesses themselves have continued to evolve.
One clear sign of that evolution can be seen in the upcoming 2022 National Conference being held by Hardware & Building Traders (HBT) on the Gold Coast from 3 May 2022. Tagged as the "Back to the Future" conference, it's set to be an intriguing event.
Part of that intrigue is because HBT will be setting in place some strategies that were first conceived more than two years ago - but put on hold, partly due to the pandemic, and partly just because two National Conferences had to be cancelled, depriving the strategies of a suitable launch platform.
Also intriguing is that HBT is re-opening its Conferences with a unique approach: it is going to start off with a social event - an epic "business lunch" - prior to the standard meetings and presentations. That's going to give the HBT members an opportunity, after three long years of isolation and very hard work, to re-bond with their fellow members, and celebrate the one, really critical fact about the pandemic: we've managed to come through it, and survive (mostly) intact.
The evolution of the HBT strategies has been interesting to follow over the past five years. Back in 2017, the basic HBT position could be seen as more-or-less accepting that the group would always trail slightly in terms of having a competitive edge in the market. This was made up by providing its members with more freedom than other buying groups, such as Metcash's Independent Hardware Group (IHG).
The new strategies set to be released at the upcoming Conference, however, follow a very different path. Rather than seeing HBT's more social, camaraderie-based principles as being somehow a disadvantage in the market, these differences are now being pursued as one of its chief advantages. Where other buying groups have sought to centralise control to upper-management levels, the HBT strategies reach out to value all of the available "human/intellectual capital", in its retailer members, in its preferred supplier membership, and inside HBT itself.
To understand what these strategies are, it's important to first take a broad overview of how the hardware retail industry has developed over the past 20 years or so.
While there are around a dozen key hardware buying groups of varying sizes and with different areas of interest, the two largest in Australia are Metcash's IHG and HBT. Going back to the origins of HBT in 1997, the two groups were very similar.
One of the key points that led to the formation of the "rebel" group of HBT was dissatisfaction with group-wide mandates, such as participation in Australia-wide catalogues. HBT positioned itself as more of a "pure" buying group. It concentrated on getting the best wholesale deals from suppliers, and especially the best "rebates" (a form of post-sale discount, often conditional on certain requirements being met).
Mitre 10 has had four key inflection points in its history since 2000. The first was the emergence of the Wesfarmers-owned Bunnings big-box hardware retailer as a key competitor in the early 2000s. This led to Mitre 10 adopting a format strategy to win back business.
Mitre 10 management thought that Bunnings' success was down to its large-format "warehouse" stores, and sought to emulate these. In fact, though, the warehouse stores were simply functional endpoints to a unique and developing logistics chain. The result was that the large-format Mitre 10 stores failed, largely due to stocking problems.
This led to the eventual full acquisition of Mitre 10 by Metcash, which was completed in 2012. Meanwhile, in the background, Australian supermarket company Woolworths announced in 2009 that it was going to enter the hardware business in competition with Bunnings, through a joint venture with US big-box home improvement retailer Lowe's Companies. As part of this expansion move, Woolworths also acquired the Danks hardware group, which traded under the banners Home Timber & Hardware (HTH) and Thrifty Link.
The brand name - "Masters Home Improvement" - was announced in May 2011, and the first store opened in August 2011 - complete with its own McDonald's outlet. In January 2016 Woolworths declared it was winding down Masters. Stores continued to trade through to December 2016.
During 2016, Metcash acquired the Danks business from Woolworths, and added it to its existing Mitre 10 operations, under the IHG name.
HBT also had its own transitions to get through. In late 2016 the top executive of HBT, Tim Starkey, passed away unexpectedly. Mr Starkey had been one of the main driving forces at HBT - some would describe him as having been its heart and soul.
As happens with many well-liked, capable and charismatic leaders, there were no natural successors inside HBT, and so a search began for someone external to be the buying group's CEO. In the end it came down to two candidates, with one rumoured to be very much an Australian hardware industry insider, and the other lacking in hardware experience, but with a resume that included executive training at Woolworths, as well as an interesting, varied retail experience outside that.
HBT decided to go with the latter rather than the former, and Greg Benstead accepted the role of CEO in early 2018. This has turned out to be a highly fortuitous choice. Mr Benstead has been able to not only develop the strategy HBT needs in the modern hardware retail environment, but also to take the members of HBT along with him on that journey.
The primary change that Mr Benstead has brought to HBT is an evolution of its core business model. To understand that, however, it's necessary to first look at the dominant business model in Australia's home improvement/hardware industry, as followed by both Bunnings and IHG.
The primary concern of the general business model is price. Bunnings largely pioneered using price as the central driver of sales and expansion. This was one of the many insights of the person most responsible for building the modern Bunnings, John Gillam. Like Mr Benstead, Mr Gillam's own background was outside of hardware retail - in fact, it was mostly outside of retail itself. However, that outsider position enabled him to grasp that the fundamentals of the hardware retail industry had changed, and that Bunnings was in an ideal position to take advantage of those changes.
There were three forces at work in the early 2000s. The first was that Australia had been through a period of sharp reduction in tariffs, initiated by the Hawke government in 1988, following on from reductions made by the Whitlam government in 1973. While the 1988 reductions were meant to be fully effected by 1992, legislation saw them "smoothed" out to 2000 instead.
The second impact came from the ongoing development of China (specifically the Pearl River Delta region, adjacent to Hong Kong) as a source of manufactured goods. The third impact was the increase - globally, but especially in Australia - in the value consumers accorded to their homes. That was driven by a complex combination of factors, including increasing urbanisation, reduced concerns over inflation, deregulation of financial institutions and the "migration" of "middle-class" values to groups of people who had not previously considered home ownership.
One of the effects of a generally high tariff regime had been "price smoothing" between retailers. Tariffs had made strong price differentiation difficult, which meant that stores typically attracted customers through a combination of customer service and reputation.
Mr Gillam realised that by 2002 this was less the case, and that it would be possible for Bunnings to attract customers by reducing customer service to a basic but adequate level while offering goods at reliably lower prices than the competition. What is often not appreciated about this approach is how radical the logistics backing this were. Not only did Bunnings adopt the store as warehouse model pioneered by The Home Depot in the US, but Bunnings also managed to nearly eliminate the need for any of its own warehouses, by having suppliers take responsibility for direct-to-store deliveries.
Metcash at the time it acquired Mitre 10 had implemented a smaller scale revision of logistics itself. Its Independent Grocers of Australia (IGA) group relied on Metcash's central warehouses for distribution. In the food business, dealing with perishables, warehouses have always played a major role in what is essentially risk allocation between suppliers and distributors, and can lead to greatly reduced prices. And, as it is largely a commodity business with some quality price variations, grocery has always responded strongly to price incentives.
Unfortunately for Metcash and IHG, the model that worked for groceries did not translate directly to hardware. The Bunnings model relied on both price incentives, and large stores with wide ranges on sale. IHG combined some price incentives combined with the higher level of individual customer service which independent retailers could offer. But the customer service/price incentive model provided something of conflicted signals, and didn't - especially for the DIY customers - make up for more limited ranges.
While the merger of HTH with Mitre 10 into IHG is very far from being a failure, it also was not quite the success that Metcash had hoped for. Contrasting the store numbers released by Metcash during its strategy day in June 2019, with its FY2020/21 numbers featured in Metcash's annual report, there is an overall decline from 690 to 622 stores.
Of course, that is a very nuanced number as it combines the two major banners, Mitre 10 and HTH, with the sub-brands of True Value and Thrifty Link, which are typically smaller and less profitable. Certainly IHG's store retention/expansion would seem to have done OK in New South Wales (NSW). Mitre 10 stores increased to 95 from 81 (up 17.3%) and HTH stores declined from 85 to 79 (down 7.1%). What's not recorded is how much those results are driven by stores moving out of HTH and into Mitre 10, a move which IHG encourages.
Offset against that is the situation in Victoria (VIC), where there has been an overall decline from 170 stores to 145 stores (down 14.8%). Mitre 10 stores did increase, by one, form 74 to 75, but HTH stores fell from 96 to 70 (down 27.1%).
IHG seemed to have expected its model to dominate the independent market, which would have resulted in more stores migrating out of HBT and other buying groups into one of its brands. What it didn't count on were some of the changes in the market, and also that HBT - among others - would prove quite so adept at countering the challenges it presented.
One reason why IHG did not do as well as expected was that Mr Benstead made some evolutionary changes to the way HBT was managed. That began when, late in 2018, he hired Jody Vella to take over HBT's buying team - the group of people who secured deals with suppliers on behalf of the group's member retailers.
Mr Vella was himself a very experienced buyer, with a long career at Coles. But what has made Mr Vella unique in his position - supported also by the strategic views of Mr Benstead - is that he was critically aware that the buyer/supplier relationship had developed in many areas to become ineffective and a waste of resources.
The core business model of both Bunnings and IHG relies primarily on scale to achieve price advantages. As everyone involved in retail and supply knows, increased scale typically reduces the variable per-unit costs of producing goods, in part by amortising fixed costs over a larger base. Lower supply costs mean more room for either margins, or price reductions - which, in turn, may increase sales further, completing the virtuous loop of scaling.
Bunnings has been increasingly able to provide scale purely through the number of square metres of selling space it provides - it's big, it sells large quantities. For IHG, increasing size through acquisitions such as HTH is one factor, but it's not enough. It also has to limit the types of items sold in a particular range. Its goal is to forcibly encourage members of its retail group to buy from ranges that Metcash stocks in its warehouses. If a range goes from four items in a category to just one, that one item can achieve scale.
The effect of a scale strategy on business operations is to reduce much of management to a numbers game. The narrower the range of items, and consequently the number of items sold in each range determine success.
A by-product of this is that buyers and suppliers have an essentially adversarial relationship. The buyer's task, under a scale strategy, is to play each supplier off against other suppliers, and to do pretty much whatever it takes to secure the best deal.
While HBT remains committed to low prices for its members, the core insight offered by Mr Benstead and Mr Vella is that, ultimately, the goal of the suppliers, HBT and HBT members is very much the same: to sell as much as possible of a product at a price the market finds acceptable.
To achieve that goal, rather than reducing everything to numbers in a spreadsheet, it's necessary for all three groups to pool their resources, especially their knowledge, and to develop solutions that will work with the current state of the market.
Of course, it's not enough just to state that as a goal - you need mechanisms in-place that will help to achieve this pooling of resources. HBT has developed a series of such mechanisms, which enable both suppliers to assist retailers in working out what to stock, and also encourage feedback from members to suppliers - via HBT.
These strategies deserve closer examination. However, we will need to wait for the Conference itself to be fully briefed.
One of the major questions that has puzzled HNN over the past two years, has been regarding what Metcash's "endgame" will be concerning its hardware division.
The acquisition of Mitre 10 might have been quite opportune, but there would be little doubt that this division is probably reaching its maximum value, and might be ripe for a demerger of some kind. In the past, the potential sale of IHG has seemed a difficult task to pull off, as IHG consisted largely of independent retailers under contract, a situation that would rapidly destabilise in the event of a sale.
However, if we look at some of Metcash's most recent actions - the increase in "corporate" stores purchased from retailers, and most recently the move into Total Tools - it seems possible the company is potentially preparing to sell off hardware in two to three years' time.
It's hard to make sense of these recent moves without that as a possible outcome. While buying retailers, and thus benefitting from "full-stack" margin (everything from the wholesales cost through to the end sale price) is great when the market is going up, it also exposes the company to considerable downside risk.
Equally, there is just no way to make sense of what IHG members will do if the company decides to build a Total Tools store a kilometre or so away from an existing independently owned Mitre 10 store (for example). There is also what created the opportunity to buy Total Tools in the first place, which is the looming ramp-up of the Bunnings-owned and managed Took Kit Depot, which is likely to see outlets co-located with existing Bunnings stores.
Given the parlous state of much of retail in Australia, it is quite possible to imagine a number of retailers being willing to expand into hardware retail. Whether that would work out well for any potential buyer is, of course, quite another thing to consider.
With a market capitalisation of $12 million, Perth-based distribution group Stealth Global Holdings has executed a number of acquisitions in recent years, delivered organic growth and is refocusing on the Australia market
Thu Apr 21 2022
Stealth announced it has now acquired 100% of the shares in United Tools Limited with its network of stores around Australia. Group managing director Mike Arnold said in a statement:
...The completion of this acquisition is an exciting milestone for Stealth and United Tools, doubling the size of our store network to 66 stores Australia-wide, and creating one of Australia's largest one-stop distribution groups combining company owned and independent retailer assets.
We see opportunities to strengthen the competitive position of the Stealth Group and its independent retail partners, by investing in expanding product ranges, strengthening the supply chain, deeper supplier engagement and enhancing the customer experience through an interconnected distribution portfolio.
On completion, United Tools held $1.4 million of net cash which Stealth will use for working capital, reduce its debt and invest for the future.
In a story that first appeared on investor website ShareCafe, Stealth Global is described as both a business-to-business (B2B) distributor - 87% of its sales are to businesses - as well as business-to-customer (B2C), through its portfolio of core brands:
Heatley's Safety & Industrial (acquired October 2018)
Industrial Supply Group (acquired May 2019)
C&L Tool Centre (acquired December 2020)
Skipper Transport Parts (acquired August 2021)
United Tools (acquired March 2022)
Trade Counter Direct (expected in the second half of 2022)
Mr Arnold told ShareCafe that the United Tools and Skipper Transport Parts acquisitions are "major steps in building a larger, more relevant, and more diversified business."
Between them, the two businesses brought more than 600,000 new products, over 2,500 customers and over 1,400 suppliers into the portfolio. He said:
Our whole M&A blueprint has been all about building more muscle with deals that add big value by having a larger consolidated group. It's all about scale and leverage, and expansion into newer markets and geographies.
For example, United Tools doubled our store network, from 33 to 66. C&L has given us an east coast point of distribution, and has been a burster on many fronts - its net profit is up by about 35% since we bought it...
BSA Brands (UK)
In February, Stealth Global sold its 50% stake in in BSA Brands UK - a 50/50 joint venture established in March 2019 between Stealth and Bisley Workwear in the UK. This follows the sale of Bisley Workwear in December 2021 to US-based Protective Industrial Products (PIP), a global personal protective equipment (PPE) supplier.
Mr Arnold said Stealth realised "significant value" from the transaction, strengthening its capital position while retaining its partnership with Bisley and the PIP group as a major supplier partner to Stealth in Australia". (The sale of the BSA Brands stake brings the closure of Stealth's operations international operations in the United Kingdom and Africa.)
Stealth said it received AUD1.65million in cash after the FX (foreign exchange) conversion from GBP to AUD. The balance of AUD300,000 will be received over the next 12 months.
On its website, the company refers to itself as a "pure-play distributor" for industrial MRO - maintenance, repair, operations - and safety supplies and solutions. Mr Arnold told ShareCafe:
We want to be the biggest and best supplier of everyday products, for every workplace, at the best prices. We're the only company, as a single source, that can provide the depth and breadth of products that we can.
Mr Arnold said Stealth Global extends across the end-to-end supply chain, covering business, trade, retail, service and the specialist wholesale sector, serving customers of all sizes from a broad collection of industries including commercial, mining, resources, industrial, government, transport, automotive, agriculture, building, construction, manufacturing, engineering, trade and retail.
We have the most comprehensive product range, from tools to hardware to workwear to truck parts, in our markets. It's safety, industrial, truck & automotive, and workplace consumable products, selling into highly diversified end-markets - that's why we say, 'every workplace'.
We want to transform the delivery of industrial MRO products and solutions in Australia as the market leader, and the company of choice for customers and suppliers. Our mission is to connect thousands of our products to customers of all types and sizes in every industry - to get our products and solutions into every workplace, every industry and every home.
There are more than one million of these products, supplied by 2,500 suppliers, and at present, Stealth Global distributes these to 5,500 business customers and 34,000 retail customers. It uses a wide variety of sales channels, including its own sales team serving key accounts, in-store, on-site, online, delivery options and click-and-collect.
Mr Arnold believes this is an "omnichannel" approach, in which the multiple channels are integrated to create a seamless experience for the customer, who can pick-up on one channel where they left-off on another. Within that, Mr Arnold said Stealth is "investing heavily" in expanding its online channel.
With the current group structure, Mr Arnold said the business model is positioned to capitalise on the economies of scale and reach.
The business model is similar to the Metcash principle of how it works with IGA and Mitre 10: you don't just supply to them, you invest with them and evolve your business to work directly with them, whether they're company-owned or independent.
We've now got the depth and breadth in terms of ability to support the independents, but also grow with our company operations, that allows us to be able to provide a genuine alternative to the market. We're finding that a lot of organisations like dealing with us because we're agile, we're nimble in our decision-making, we're also very keen to invest with our customers, and in doing that we're seeing the benefits of upside...
Our market is very large - we estimate that MRO is a $40 billion addressable market - but it's very fragmented. We are the largest player with about 4%. But we've positioned ourselves between the majors - Wesfarmers and Metcash - and the minors. We think there will be more consolidation, and that's good for companies like us who are on fast-growth pathways.
Trading performance from continuing operations in the December 2021 half-year saw record half-year revenue of $44.3 million, up 55%, with online sales increasing ten-fold to $2.2 million, representing 5% of group sales (and 9% of retail sales). Underlying EBITDA (earnings before interest, tax, depreciation and amortisation) more than tripled, to $1.73 million. Mr Arnold said:
We're doing $100 million run-rate in sales now, up from $24 million in September 2018. It's interesting, we expect to see a bit of inflation, there have been a lot of supply chain bottlenecks, but that's been good for us because the products that we sell are absolutely aligned to the types of industries where that's being felt.
As supply chains become slower, we need to make sure that we have the right stock in the right locations at the right time. So, our inventory cost may go up, however, based on that demand, we also see that our sales activity will go up if we have the product that's available. We've made a lot of investments recently, they've hugely boosted our scale, but the benefits of that are yet to materialise. We're pretty excited about the opportunity in front of us.
Global interim president, Ken Seitz said Nutrien Ag Solutions in Australia was "punching above its weight"
Thu Apr 21 2022
Supply chain and production constraints has seen a major Australian rural retailer more than double the size of its stockpile as the industry heads into the winter cropping season.
Nutrien Ag Solutions managing director Rob Clayton told The Weekly Times the rush for inputs, including key fertilisers, has pushed prices to decade highs and forced a rethink in the way the business sourced product. He said:
We've had to stage product much earlier than we have in the past. Right now [we] have about a billion dollars' worth of stock sitting [in warehouses], where we would normally have about half of that.
The CRT group of stores became part of Nutrien Ag Solutions through its acquisition of Ruralco (Landmark) in 2019.
Mr Clayton said there was a need for Australian agriculture to get in front of supply chain issues, with calls from some sectors in the industry for more domestic production of inputs to counter rising costs and a huge blowout in transit times.
It is a lot longer supply chain channel now than it was before. For instance, product out of China from the first phone call to when that product arrives was usually around 30 to 40 days but now it is 120 to 150 days.
Thomas Elder Markets' analyst Andrew Whitelaw said an increasing number of nations around the world were looking to shore up supplies of key inputs through domestic production. He told The Weekly Times a combination of factors was leading to the reduced global supply, including the crisis in Ukraine, which had resulted in sanctions imposed on Russia.
He said while Australia was not a huge importer of fertiliser from Russia, other nations were, which meant they had been forced to look to other markets to secure supply.
Mr Whitelaw said fertiliser production facilities being planned for South Australia and Western Australia could end up "producing more fertiliser than we need in Australia by a country mile".
I think the one thing to remember, though, is that any of these plants, if they get built, which is probably still a big if, it's not going to be until 2026, so it is not going to fix any of our immediate problems.
Nutrien Ag Solutions in Australia is "punching above its weight" as a somewhat "unique and important stakeholder" in the company's network, according to global interim president, Ken Seitz on a recent visit. In Farm Online, Mr Seitz said:
I'd say it's surpassing expectations at the moment ... We've invested heavily in this part of the world, more than $2 billion, so it's very pleasing to see how Australia has performed, particularly during the past two years of good commodity prices and moisture conditions and big yields.
Despite the restructure and merger challenges and costs, Nutrien's Australian earnings have increased 108% since the acquisition. Its business footprint in rural Australia is now about 42% bigger than under the Landmark banner, with a portfolio spanning livestock and property marketing, water broking, water equipment sales and infrastructure planning, insurance, financial services, soil testing, yield mapping and wool marketing.
As post-drought seasonal conditions blossomed in 2020 and 2021 and demand for Nutrien's services increased, the company added an extra 800 staff to its ranks last year, with almost half of those roles filled by women. Its total payroll today exceeds 4000 staff in 700 locations Australia-wide. Mr Seitz said:
We're quite excited about how the merger has turned out. It's going very well. We know there are ups and downs in agriculture, particularly in Australia, but nature is a long term business and we take a long term view of what's needed in this industry.
He said while the Australian business offered a more diverse service than its crop inputs focused divisions in North and South America, the local subsidiary had helped it weather the tough seasons, providing "a lot of learnings to share" to operations in the US, Canada, Brazil, Argentina, Chile and Uruguay.
Nutrien had many reasons to be optimistic about this marketplace and was "betting big on Australian agriculture". Mr Seitz said:
Australian agriculture has the same aspirations for growth and shares the same values as our business globally. We are very proud of the role we play in the Australian economy and are committed to helping this industry grow and prosper.
Globally Nutrien's wholesale fertiliser and crop protection business and retail activities, including its Australian portfolio, generated about $3.4 billion in net earnings, from cash flow of $4.1 billion during 2021.
The Tasmanian-based nursery will have another location as well a private storage facility in partnership with Westwood Storage
Wed Apr 13 2022
Claire Edwards of family-owned Edwards Landscaping & Supplies in Wynyard (TAS) is set to open another nursery, bulk sales, firewood yard supplies yard at South Burnie, according to The Advocate.
Ms Edwards has been running a landscape supply business out of Wynyard for the last decade before developing the Burnie site.
The garden-enthusiast and serial entrepreneur said she had set her sights on Burnie a few years ago, buying up a business at Round Hill and starting a smaller-scale building supplies yard. She told The Advocate:
I'd been looking for something bigger so we could set up the landscape supplies, have room for the firewood and build another nursery.
Mrs Edwards said many of the customers at her Wynyard business were actually from Burnie, leading her to believe there was plenty of demand for services there. Add to that the growing demand for more plants and landscaping materials as more homes get built, and an increasing demand for firewood. She said:
The firewood market is growing rapidly. Through COVID we actually ran out, we didn't have enough dry wood so hopefully this will help.
It was the same with plants, we couldn't order enough because demand went through the roof, so that's why we began growing a lot of them ourselves.
Ms Edwards said she grew about 60-70% of her plant stock at Wynyard, particularly natives and more hardy species, and would then order more specialised plants in.
The new complex at South Burnie will be made of a series of brightly coloured shipping containers connected by an undercover walkway full of plants. Ms Edwards said she hoped it would form a sort of "oasis" within the industrial area, surrounded by green hills and the ocean and blocking out the noise of the freight route.
I want to try and make it more of an experience. Ok, you probably won't find all of the same stuff here that you might find in larger nurseries, so we try and make it unique, make it a great experience for people.
Ms Edwards said the business would likely open sometime in May, pending council approvals.
Australia's largest retail garden chain, Flower Power is back on the market after a deal with private equity firm Alceon collapsed
Fri Apr 08 2022
Diversified wholesale distribution company, Metal Manufactures (MM) has purchased 100% of shares in Synergy Business Systems (Synergy). Synergy comprises approximately 20 owned industrial supplies stores and manages a buying group that has an additional 40 independently owned stores around Australia. Members include CDA Construction Products (pictured) and Ballarat Bolts and Fasteners, to name just a few.
Independent corporate advisory and investment firm M&A Partners were engaged by Synergy in mid 2021 to advise the company on capital raising options for the purpose of funding several acquisitions and a sell down of shares by existing shareholders.
By November 2021, M&A Partners had launched an "expression of interest" capital raising process which resulted in several parties submitting "indicative offers". Two came from major trade buyers that expressed interest in acquiring 100% of Synergy.
Due diligence began in late January 2022 and concluded in February 2022 with Metal Manufactures confirming its offer to acquire 100% of ordinary equity of Synergy. Metal Manufactures subsequently commenced a 30-day exclusive due diligence period which concluded in the execution of a formal Share Purchase Agreement (SPA).
About Synergy Business Systems
Founded in 2006 as a partnership between four Australian industrial hardware suppliers, Synergy Business Systems is a construction and industrial supply group that offers a wide-ranging inventory to the construction, engineering, and industrial fastener industries. All store members have access to Synergy's data and provides products from its preferred suppliers. Synergy also has a privately owned Konstrukt brand.
Operating in the highly fragmented industrial hardware supply sector, Synergy sees itself as one of the leading industry aggregators in the segment.
About Metal Manufactures
MM was established in 1916 and has evolved into a major diversified industrial and distribution company in Australia. Its operations include MM Electrical Merchandising (MMEM, Heymans, TLE, AWM and other brands), MM Kembla, MM Plastics (Graphic Art Mart, Dotmar, AVS & Fluro Pacific), Rushmore Distributors (Repelec, Gilbert Lodge & Computer Dynamics in NZ), Seadan Security & Electronics, All Round Supplies and Underground Civil Services. MM is privately owned and employs over 3,000 staff in Australia and New Zealand.
Sydney-based garden centre chain Flower Power has been placed back on the market and it is understood that price aspirations are about $500 million, according to a report in The Australian.
Private equity firms and trade buyers are carrying out due diligence on Flower Power which has 10 stores located in NSW, and generates $25 million of annual earnings before interest, tax, depreciation and amortisation a year.
The opportunity is to grow the business beyond its 10 stores and expand into new markets.
Flower Power was founded by Nick Sammut in 1955. Mr Sammut began building cement pots and wrought iron stands in his backyard before creating the garden centre. Flower Power sells pots, plants, homewares and furniture.
Similar to other garden centres, it was largely immune to the negative impacts of the pandemic in the past two years as consumers invested in their homes while being unable to venture out into the community or travel overseas.
The company now is run by Nick Sammut's son John and his brothers Mark and Colin are also involved at executive level. Chief financial officer is Michael Spiteri.
Haymes Paint is preparing for its flagship store opening in its hometown of Ballarat, in regional Victoria
Fri Apr 01 2022
Hollimans Group which includes a Home Timber & Hardware store, located in Charters Towers (QLD), is moving to a new location in in the Goldtower Central retail precinct, also in Charters Towers. It will operate as Hollimans Rural Mitre 10 at the precinct, reports the Townsville Bulletin.
Ben North, owner of Hollimans, said the move was a significant expansion for the historic business which was established 130 years ago in 1892. He told the Townsville Bulletin:
The business is very similar to what it was back then, not just with the hardware but we have a gun shop ... we have a furniture shop. It has sort of died off a bit over the years but since we have owned it we have brought it back to life to where it was years ago.
The businesses in Hollimans Group currently consist of the following:
Hollimans Rural Supplies
Hollimans Home Timber and Hardware
Hollimans Gun Shop
Hollimans Wide Span Sheds
Westons Transport Services
Viper Water Solutions
Mr North said the two stores it traded at present would be combined and its range expanded at the new site under the Mitre 10 brand.
It opens the lid on a bigger range and increases the availability as well of a lot of products, which are in current shortage, so it's going to help as well.
Hollimans plans to offer rural supplies, hardware, painting, garden, home and commercial building items in a location that measures over 5000sqm, with a drive-through for trade items.
It is expected to employ about 30 people and should open for customers around mid-June.
Goldtower Central owner Paul McIver said it was important that Charters Towers featured businesses that want to grow, and the precinct can give them the support they needed.
Hollimans Rural Mitre 10 can now expand their product offering and create more employment for the region.
He said Goldtower Central is in Stage 1 of development and had delivered $12 million in direct infrastructure investment.
Haymes' new flagship store in its home base of Ballarat (VIC) is on schedule to open on April 4, according to The Ballarat Courier.
The company said it spent $10 million to develop the site, including the purchase price and construction works. PETstock's 200th store will also be on the same site.
Haymes Paint director Matt Haymes told The Courier the store is unique, unlike anything seen in Australia and possibly the world. He said when developing the concept, the owners wanted to have a "very safe-to-fail way" to set up a store, "try some stuff, be a bit different, be a bit more bold".
...[T]here are how-to areas. It's really interactive so people will be able to touch and feel and look, how to paint a deck, how to coat your garage floor, how to paint walls, how to paint and prepare your weatherboards.
Put it all together, create your own mood boards, but whether you're doing it yourself or you want someone to do it for you, this is the place to come get that advice and get that inspiration.
Mr Haymes said it was important for the business, and himself, to keep the flagship store rooted in Ballarat, where it was established almost 90 years ago.
We've been here since 1935 ... we've got well over 110 families that are in Ballarat, all our products are made here, the head office facilities are here, so having the flagship paint centre just makes sense...
Mr Haymes said he hoped the new store would become an iconic building for the city.
...We've got the big paint can on the roof there and the lighting is just unbelievable at night. We've done some really cool stuff that goes back to when Dad...ran the business and the paint store in Scott Parade. He had the man on the ladder and ... a little van with paint splashes all over and he had the Lego table for the kids. In the 1980s, that was revolutionary stuff.
This is now the 2020s version of doing some fun stuff, fun for your community and fun for your customers.
Mr Haymes said the new store would be an evolutionary move for the business.
We don't sell through corporate hardware, we're just through other family businesses, and if this works here, the idea is that we can then replicate it and take it out in various sizes and formats to the wider network across the country.
Sources: Townsville Bulletin and The Ballarat Courier
It is located in Castletown, a north-eastern suburb of Esperance in south-eastern Western Australia
Fri Apr 01 2022
Owners of Esperance Rural Supplies, Greg and Leonie Hard, have agreed to a deal to sell their business to Elders.
Since buying into the then CRT-owned business in mid-2000, the couple have grown it from a small enterprise worth about $5 million, to a significant business with an extensive customer base, 15 employees and its own transport trucks, according to Farm Weekly.
Mr Hard, who will be 71 in April, will continue working as manager for the next 12 months as he transitions to retirement at the couple's 40 hectare farm outside of Esperance. He said he was happy that, under the deal, Esperance Rural Supplies would continue to have a strong presence in the region. He told Farm Weekly:
I had several companies that were keen to buy it in the past year. Elders gave me the best price and I was comfortable selling it to them, because they wanted to buy my business and keep it the same as it is.
They are keeping the same place, the same shirts... everything pretty much the same as it is. The only difference customers will possibly notice is when they get a statement, it will look different.
Mr Hard also said the deal would provide the business with access to Elders' national buying network, which should offer benefits to farmers from its stronger purchasing power.
We will buy our stock through Elders now. I am excited as Elders, being a national company, I now realise [we] can buy its supplies cheaper than I do as an independent and those types of benefits can be passed onto the growers.
It will make the business more profitable, and pass on some of those extra benefits, which will put all the farming people who deal with us in a better situation.
Elders State general manager Nick Fazekas said Elders had identified the Esperance region as one of the largest crop protection and input areas in WA. It saw the purchase of the well regarded Esperance Rural Supplies as an opportunity to expand in the region.
Our decision to purchase Esperance Rural Supplies will provide us with greater market access to a wider customer base.
Elders will initiate a light touch business model whereby all staff, including branch manager Greg Hard, will be retained and will continue to run the business as normal in the existing location and under the existing brand...
The existing product range will remain and, over time, Elders' plans to introduce an additional product range portfolio such as finance, insurance, real estate and grain offerings.
Mr Fazekas said the Elders Esperance branch would not be affected by the transaction.
The Hards moved from Geraldton in mid-2000 to take up an opportunity to buy a 50% share in Esperance Rural Supplies and manage the business for CRT, an arrangement which continued for six or seven years until they bought the business outright.
At the time, Mr Hard had not long retired from his first own business, Abrolhos Reef Lodge. He said:
We managed that licence for seven years, then we sold that ... I was not quite 50 and within three months I was absolutely bored stiff.
When they arrived in Esperance, Esperance Rural Supplies was one of four rural suppliers in the town. Mr Hard said the business had a strong boost about six months later, when a competitor - IAMA - was bought out by Wesfarmers Landmark.
I got a fairly significant drift over a number of years, customers who used to be IAMA clients came to us. That helped to grow the business a lot.
When CRT (now Ruralco) decided to sell the store, the Hards were able to buy its share.
He said they had been the first rural suppliers in Esperance to start a service to deliver chemicals on farms to farmers, about 15 years ago, and were running their own triple road train, which twice a week transported all the business' supplies from Perth.
Mr Hard said it was fitting to re-establish the family's connection with Elders, as he had worked for the company for a large part of his career.
Having grown up with three brothers on the family farm in Denmark (WA), where they grew beef and potatoes, he worked for Great Southern Ag Supplies for about 18 months and then spent about 13 years with Elders, starting as a storeman and becoming a merchandise manager and area manager. He said:
Elders taught me everything I ever knew in the game, certainly in the early days and I suppose that's where I got my incentive to do what I have done.
Mr Hard said the pandemic, delays in global supply chains and the record-breaking grain-growing season, meant the business had just experienced a year like no other. Huge delays in shipping chemicals from China have become a significant challenge.
We have had probably the biggest season we have ever had this past 12 months.
We have seen very good loyalty from our customers and they gave us their orders early, so they knew that they have the chemical and can grow their crops. We are now ordering nine to 12 months ahead of where we used to order, so in June we start ordering for the following season.
Unfortunately we are so reliant still on China for the bulk of our chemicals so we order early and forward sell it.
Tool Kit Depot store in Melrose Park, South Australia
Construction is underway on a new Tool Kit Depot store in Adelaide which will replace the existing Adelaide Tools store in St Mary's
Fri Mar 25 2022
The Tool Kit Depot Melrose Park store is expected to open to tradies in May and represents an investment by owner Bunnings Group of more than $5 million. It said it will create around 15 new local jobs.
Melrose Park will be more than double the size of the existing Adelaide Tools' St Mary's store, offering a much wider range of speciality tools and equipment and a new layout designed to better serve customers.
Bunnings' announcement of the latest store comes as the program to transition Adelaide Tools stores in South Australia to the Tool Kit Depot format nears completion. Refits at the Lonsdale, Gawler, Parafield and Mile End stores will provide customers an extended range of specialised products and, for the first time, a workwear range.
Bunnings chief operating officer - commercial, Ben McIntosh, said this is an exciting next step in the evolution of the business.
The Adelaide Tools team can be immensely proud of what they have achieved, taking Adelaide Tools from a local business with a proud history, to a business that is now starting to expand nationally. We're really excited to be investing in the local store network and we can't wait to open the new Melrose Park store in May.
The Adelaide stores continue to be run by our dedicated teams who are passionate about delivering the best service and solutions for tradies and serious DIYers, from specialist product advice to the in-house repair workshop and hire service.
Tool Kit Depot stores recently opened in Rockingham, Mandurah, Malaga and Belmont in WA, with further stores planned.
Amazon announced it will build an operation facility at Amaroo Business Park in Craigieburn (VIC)
Fri Mar 25 2022
Queensland-based Sunshine Mitre 10 general manager Neil Hutchins said the group's new purpose-built distribution facility at Kunda Park is a response to supply chain challenges experienced across the industry since the start of the COVID-19 pandemic in early 2020. The distribution centre officially opened in mid-January. He told Sunshine Coast News:
It is no secret that there has been a significant shortage of building materials and delays in the supply of materials to Australia, so we wanted to do all we could to give our building and trade customers some security around this.
By increasing our storage and logistics facilities, together with our growing network of stores across Queensland, it means we can get the products to our builders when they need them.
The distribution centre also includes a logistics centre and covers 4500sqm under cover. Mr Hutchins said:
This distribution centre, along with our network of 18 locations across Queensland, means our group can meet the demand of the market and support our customers.
Sunshine Mitre 10's network will continue to grow this year with two additional greenfield developments, one at North Lakes, and another at the Stockland Aura Business Park on the Sunshine Coast.
Construction has begun on Amazon's 15,600sqm facility within Amaroo Business Park in the outer Melbourne suburb of Craigieburn, reports the Australian Financial Review (AFR).
Known as a "middle mile" warehouse, it will be Amazon's first dedicated sorting centre in Australia with capacity to process 300,000 parcels a day, to cater for the online shopping boom.
The facility will allow picked-and-packed orders to be sorted by final destination, then consolidated and shipped to last-mile sites for delivery to customers.
The Craigieburn Sort Centre is Amazon's fifth site in Melbourne, supporting the company's existing network in Victoria which includes fulfilment centres in Dandenong South and Ravenhall, and Amazon Logistics sites in Tullamarine and Mulgrave.
During the pandemic, more Australians shopped from their couches. According to the AFR, the latest NAB Online Index estimates Australians spent $54.23 billion on online retail, over the 12 months to January, equating to 14.7% of total retail sales. This is up from 9.2% of total sales in January 2020, when annual online sales totalled $30.8 billion.
Since launching its Australian business Amazon.com.au four years ago, Amazon's local revenues have risen strongly, doubling to more than $1 billion in 2020. The most recent accounts filed by Amazon Commercial Services show revenues almost doubled again in 2021 to $1.8 billion.
To put its sales momentum in perspective, Amazon is now bigger in Australia than Kogan, which last year booked gross transaction sales of $1.179 billion, and is steadily catching up to Coles, whose supermarkets had $2 billion of online sales last year, and Woolworths, which in 2021 had e-commerce sales of just over $5 billion.
The home improvement retailer is bringing its products and expertise to Tesco stores across the country
Fri Mar 25 2022
The new collaboration between Homebase and Tesco supermarkets will mean customers can pick up practical DIY buys including paint, power tools and hardware during their weekly shop. They can also peruse some of Homebase's home accessories, garden decorations, firepits, and other outdoor furniture.
Shoppers will be able to browse kitchen, bathroom, and lighting displays to gather inspiration for bigger home improvement projects.
The first store opened in Borehamwood, and this will be followed by the opening of a store in Walkden and Woolwich in April. Homebase CEO Damian McGloughlin said:
We're really excited to be partnering with Tesco, bringing our home and garden products and expertise to even more local communities. We're always looking for ways to make it easier for customers to shop with us and teaming up with Tesco means we're able to do just that.
Customers will also be able to use the click and collect service. They will be able to place an order on the Homebase website and collect it from selected Tesco stores within one hour.
Homebase staff will be on hand to advise customers on improving their homes and gardens. Kate Ormrod, principal retail analyst at GlobalData, said:
With 73% of Homebase DIY shoppers buying food and grocery from Tesco, the deal will bring greater convenience for Homebase's existing shoppers, while also opening it up to a new customer base - and making it more appealing to lapsed female shoppers. The deal emulates that of B&Q and ASDA, and given the consumer spend shift to food and groceries amid the rising cost of living, the concession partnership will ensure Homebase is in the right place as footfall at non-essential retailers suffers.
This new partnership follows on the success of Homebase opening eight garden centres in Next stores in 2021 in Southhampton, Norwich, Shoreham, Ipswich, Warrington, Cameberly, Bristol and Sheffield.
SA Mitre 10 store owner unable to join legal bid to block proposed Bunnings
Plans have been lodged with Toowoomba Regional Council to expand the Sydney Tools' Wilsonton showroom in Queensland
Fri Mar 18 2022
John Capaldo, owner of Glynde Mitre 10 in Hectorville (SA) has failed in his bid to join a lawsuit relating to the construction of a proposed Bunnings store located 400m away, reports the Adelaide Advertiser.
Mr Capaldo, whose family owns and operates the Mitre 10 store located on the corner of Glynburn and Montacute Roads, has campaigned strongly against the planned Bunnings nearby at 37-45 Glynburn Road. He gathered a petition of more than 1000 business owners and residents opposed to the new outlet, which was first proposed in 2016.
Bunnings argued in court that the traffic issues Mr Capaldo relied on for his case would be more of an issue from a proposed Aldi project in the same area. (Mr Capaldo has contracted to sell some of his property interests to Aldi.)
The planned new Bunnings has been rejected for approval by Norwood, Payneham & St Peters Council at least three times, with Bunnings lodging an appeal in December against the most recent rejection.
Mr Capaldo and the owners of another business, MLP Motors, applied to the Environment Resources and Development Court to be allowed to join the appeal case on the side of the council, arguing the Bunnings should not be allowed to go ahead.
However commissioner Alan Rumsby denied Mr Capaldo's request, in which he argued that a property owned by himself and three of his siblings on Lewis Road - 100 metres and one block over from the planned Bunnings - would be "seriously impacted" by the development, particularly in terms of traffic.
Bunnings countered that the Lewis Road property would be "largely unaffected" and told the court that the Lewis Road property "was only identified to the court and the parties once it was discovered that (his company) Capaldo No. 1 would likely not have standing to pursue its joinder application once the sale (to Aldi) of its property at 27-29 Glynburn Road, Glynde was completed''. According to the court judgment:
Bunnings said that the joinder application of Mr Capaldo, in respect of his interests in a largely unaffected property at Lewis Road, highlighted that his motivation was simply to secure standing in these proceedings in order to protect Capaldo Investments Pty Ltd's commercial interests in the Hectorville Mitre 10.
The proposed Aldi supermarket development, which has also been opposed by some in the local community and which was initially rejected by the State Commission Assessment Panel last year, would be next to the Bunnings and closer to Mr Capaldo's Lewis Road property.
Aldi later successfully applied for a code amendment for its project site to be rezoned as a "suburban activity centre".
Bunnings argued that the MLP bid to be joined to the case should also "be viewed with suspicion" and suggested it was "a vehicle for somebody else's interests''. The commissioner said there was nothing before the court to suggest there was anything improper in MLP wanting to join the case.
He also found there was no convincing evidence put to the court that the Capaldo property would be materially affected by traffic movement caused by the Bunnings development and refused Mr Capaldo's application to join the case. MLP's application was approved.
Bayswater Holding Pty Ltd submitted a proposal with the Toowoomba Regional Council to increase the footprint of the Sydney Tools showroom in Wilsonton (QLD). The expansion would turn the existing multi-tenancy building into one space for Sydney Tools, along with extending the footprint to cater for two other businesses.
As reported by the Toowoomba Chronicle, the report by Milford Planning said:
The applicant, Bayswater Holdings Pty Ltd, is seeking to establish three showrooms over the subject site, by converting the existing building in to a single showroom and constructing two new showrooms, one to the east and one to the west of the refurbished building.
The existing building has been refurbished to form one building as opposed multiple tenancies and Sydney Tools occupy and are operating from the refurbished building.
In terms of the end users of the two new showrooms, these will be complementary uses to Sydney Tools, for example safety work wear and equipment, so that patrons can conveniently visit multiple businesses during a visit to the site.
The council has yet to respond to the application.
Sources: The Adelaide Advertiser and Toowoomba Chronicle
Perrennialle Plants has recorded a massive increase in sales of 1400% since joining the Buy From The Bush movement
Fri Mar 18 2022
Agricultural services company Elders said it will exceed analysts' consensus forecasts for the full year to September 30. Chief executive Mark Allison said:
After finalisation of the February trading numbers, which continue improved earnings for the first quarter, we now believe we will exceed analysts' consensus for the full year to 30 September 2022 and produce an underlying EBIT (earnings before interest and taxes) result ... (20 to 30% above) ... which is necessarily broad given we are only five months into our financial year.
However, the improved guidance was subject to a number of caveats, including the potential of supply chain disruptions as a result of COVID-19 and geopolitical events, unexpected changes to seasonal conditions and commodity prices, as well as severe weather events.
Mr Allison said Elders had witnessed improvement in its retail and wholesale segments compared with the same time last financial year due to increased sales. (In 2019, Elders acquired Australian Independent Rural Retailers, a wholesale supplier of about 6000 products to 240 independent rural merchandise retailers.)
Favourable seasonal conditions and fears of supply chain disruptions have pushed many growers to order their herbicides and insecticides early, helping the company beat profit forecasts. He said:
While we believe some of these sales are forward purchasing by primary producers seeking to mitigate the risk of instability in supply chains, we consider the majority of sales are a result of increased activity.
Mr Allison also said a private label strategy in its herbicides and insecticides business was also paying off. Elders operates the Titan Ag brand after buying it in 2018.
The Elders Agency business, which conducts cattle and sheep sales, was performing strongly because of high prices. It had been offset to a small extent by lower volumes because of restocking and the good availability of feed on farms.
The group's real estate business is trading ahead of expectations because of increased turnover and high demand.
After its near collapse during the Global Financial Crisis in 2008 when its debt levels were extremely high (to $1.4 billion), the company finds itself taking advantage of exceptional growing conditions across most of Australia, many farming businesses cashed-up and looking to upgrade their equipment, and the COVID-19 pandemic triggering an exodus of people from the city to the country, to the benefit of Elders' property sales business.
In November 2021, Elders announced a 22% rise in net profit after tax to $149.8 million for the 12 months ended September 30.
Soon after launching an e-commerce store for Perrennialle Plants, which owner Chris Cuddy promoted via Facebook and Instagram, it was featured on the Buy From The Bush (BFTB) pages which he describes as a "game changer" for his business.
In addition to increasing sales since being part of BFTB, Mr Cuddy has renovated a building on the main street of Canowindra (NSW), to house the new nursery using local tradespeople and consciously sourced building materials locally to inject cash back into the town. He and wife Nerida have also opened a plant emporium, cafe and event space on site.
Prior to this, in 2019, the business was under severe strain owing to worsening drought so Mr Cuddy began to look at other revenue pathways to keep the business afloat.
The success he is experiencing feature in a new BFTB Impact Report. In the report, Mr Cuddy said:
Opening the emporium has created so much goodwill from the people in our town, and everyone is so grateful. We would never have taken the risk to expand if it wasn't for what happened with Buy From The Bush.
The report has shown over the last three years, BFTB has generated more than $9 million in revenue for rural small-medium businesses and dramatically shifted public perception of rural businesses and communities, with more consumers now reporting a stronger emotional connection to the bush
Over 70% of those surveyed said BFTB had positively changed their views on regional communities and the quality of products regional businesses could deliver.
The study also paints a strong picture of the changing faces of regional economies, leaning heavily away from the narrative of the dusty middle-aged male farmer and more towards digital business with over 96% of rural small medium business respondents believing that digital businesses are crucial to their income and the economies of their communities.
The report also found that digitally enabled small businesses could crisis-proof rural communities.
Sources: Australian Financial Review, The Australian and Canowindra News
Sunshine Mitre 10 donates to flood-affected Gympie clubs
The east coast of Australia has been battered by torrential rain which brought widespread floods across parts of Sydney, Brisbane and surrounding areas
Fri Mar 11 2022
Queensland-based hardware retail group, Sunshine Mitre 10 has given $20K to help Gympie clubs affected by the recent floods.
The local clubs to receive support include One Mile Recreation (cricket), Gympie Soccer Club, Gympie Cats AFL Club, Gympie Pony Club, Gympie Horse & Rodeo Association, Gympie Junior Rugby League, Victory Care Services, Albert Park Bowls Club, Gympie Touch Association, and Gympie Netball Association. Each group received $2000 accounts.
Sunshine Mitre 10 general manager Neil Hutchins said the accounts allowed the groups to get the supplies they needed most. The told The Gympie Times:
This flood event has affected so many in the community that as locals we wanted to do something to help.
Staff member Melina Nichols is a born and bred Gympie local, and said the team wanted to show their support and help in a small way with the clean-up.
We chose community organisations that so many of our local community, including our staff and their families, use and also those which may not be as likely to be eligible for support elsewhere.
Gympie Junior Rugby League secretary Katrina Birchall said the flood had been devastating for the club.
Our clubhouse has been completely flooded and the grounds have been damaged as well.
We were supposed to host trial games on the March 12 but we won't be able to get the grounds ready in time for that so they have been postponed. We are now working towards having the grounds ready to play on for the start of the season on Saturday 26th March.
Mrs Birchall Gympie Regional Council staff were already working to clear the grounds, while volunteers also cleared mud from the clubhouse, to get them in a hygienic and safe state for the kids to play on.
The clubhouse will need a great deal of work and while we are insured that will take time so the supplies, we will be able to get from Sunshine Mitre 10 will help us get set up so we can host kids at the ground sooner while the clubhouse is rebuilt. [The donation] means so much...
So many of our families have lost their homes, so we are working as hard as we can to get things up and running again as soon as possible. It will take a long time for homes to be rebuilt and the effects will go on, so if we can offer the opportunity for kids to come and play with their mates and get away from the devastation that is so important.
Bunnings held a country-wide fundraiser to help those directly impacted by floods across NSW and Queensland.
From 9am-4pm on 11 March every single Bunnings store in Australia, outside those impacted by floods, held a flood-fundraising sausage sizzle, with all proceeds expected to go to communities hit by the floods.
Money raised will go to the GIVIT Storms and Flooding Appeal, which works with the Queensland and New South Wales governments to manage and distribute the money.
Sources: The Gympie Times, Western Advocate and ABC (Sunshine Coast)
Ace signs with Epigraph for augmented reality and 3D content
The exclusive agreement validates the business case for AR and 3D even further, said Epigraph CEO Jasper Mullarney
Fri Mar 11 2022
Technology developed by Epigraph can be found on Ace Hardware's website in the form of 3D product tours and an augmented reality QR code that allows customers to envision how a product will look in their space.
In 2019, Epigraph started working with outdoor power tool maker EGO, which sells its products to Ace. That relationship opened the door to starting a six-month pilot with Ace in which Epigraph had to validate the return on investment for its 3D and AR technology and meet Ace's standards. As part of the pilot, Epigraph enhanced its technology. Mr Mullarney told Biz Journals:
It was a pretty big bet. There was a lot of upfront investment in our technology, in our infrastructure and things like insurance and policy to go live on a major retailer like Ace.
At the beginning, we were pretty confident that the numbers would be there and that users would respond well to this. ... It's a big bet that paid off.
The technology encouraged customers to spend longer on the website and made them more likely not only to add items to their cart, but then buy them. They also spent more money and had markedly lower return rates than those who didn't engage with the AR option. Brian Kritzberg, Ace's digital merchandising manager, said in a statement:
Epigraph's technology has delivered a significant improvement in both engagement and performance for Ace vendors, our customers really love it.
In the future, Ace plans to add more vendors to the AR and 3D program, Mr Kritzberg said.
For Epigraph, the Ace contract comes with an additional benefit. The brands that sell to Ace now are asking Epigraph to launch AR and 3D presentations of their products for other retailers, such as The Home Depot and Lowe's. Mr Mullarney:
These brands are approached by thousands of different companies a week in the adtech and martech agency space trying to sell them on different things that provide value.
This [relationship with Ace] gives us a way to cut through some of that. ... It makes the conversation much easier to have.
Epigraph said it can back up its offering with analytics showcasing the potential ROI.
The company also envisions adding another component for Ace. Brick-and-mortar stores have limited space for stocking inventory, but Epigraph can expand that virtually. Customers could scan QR codes on the sales floor to view additional options, experience a product in 3D or augmented reality, and then place an order.
In addition to Ace, Epigraph's technology is used by Milwaukee Tool. Its technology is live on The Home Depot, Lowe's and Wayfair websites, as well as countries including France, Australia and New Zealand.
Parent company Travis Perkins has also launched a national delivery tracking service
Fri Mar 04 2022
Kitchen renovations were in popular demand over the lockdown period, with sales of Toolstation's kitchen range up 19% at the beginning of 2021 compared to 2020. Its new range of kitchens in partnership with Kitchen Kit, is designed to be "easy to choose, easy to buy and easy to build".
The Kitchen Kit brand, created by British manufacturer BA, prides itself on offering the best hassle-free experience, with fast delivery and stress-free assembly of appliances. The cabinets are designed to be quick and easy to construct using Uniclic technology. After unpacking the product, the cabinets can simply "click" into place, taking as little as 30 seconds to build without any tools necessary.
Using the kitchen styler available on the Toolstation website, customers are able build a kitchen design to find the style that would best suit the home they are working on. The creative concept helps bring kitchen cabinets and worktops to life through the screen using a 360 visualiser. From there, they can choose from one of three door styles, a matte or gloss colour, and a range of accessories complementary to the kitchen to give that perfect finish.
Customers who have access to a Toolstation trade account will also benefit from the new 5% discount that will be available on the Kitchen Kit range. All customers with a trade account will get a 5% discount on all their orders. Cara Yates, category manager of kitchens and bathrooms for Toolstation, said:
Now that we have kitchen cabinets in our range, we really can offer the full kitchen solution and coupled with the wider Toolstation range, everything our customers would need to complete the job.
Travis Perkins said it is the first builders merchant in the UK to launch a nationwide, real time delivery tracking and management for its customers.
The service is designed to take the guesswork out of deliveries, and it means customers will know exactly when to expect their local branch delivery for building supplies. Customers can benefit from its delivery options that now include free delivery from the local branch; delivery day of choice; next day delivery; text message and email updates with real time delivery tracking.
Aligning with the strategy to deliver best-in-class service to trade customers, users will now receive text message notifications on the day of delivery with a named two-hour timeslot, live delivery tracking, and messaging received when the delivery is in a 20-minute delivery distance, plus proof of delivery email communication.
The latest initiative comes as Travis Perkins announced 50 new or relocated branches in the next three years, to improve the customer experience both in person and online.
Its mobile app was launched in 2021 and was designed in conjunction with customers and allows them to order materials and check stock on the go. James How, digital operations director said:
For our customers, time is money. We wanted to challenge ourselves across our 550+ strong national branch network to give our customers real time delivery tracking and management.
Travis Perkins has also bounced back to profit in 2021, as sustained high demand for property renovations enabled it to offset rising building material costs.
The home improvement retailer reported a GBP241million profit for 2021, compared to a GBP35million loss in 2020 when the first lockdown severely impacted trade and led to supply chain disruption.
Total revenue surged to GBP4.6billion as sales at its merchanting arm grew by around GBP750million following strong demand for home DIY improvements and new home completions.
The group's Toolstation business saw its revenue increase by another fifth to GBP761million, with sales having more than doubled over the last three years. This helped it gain additional market share and boost its store network across the UK and Europe by another 110 locations last year, with at least 100 further branches expected to be added this year.
Its European business did make a GBP20million loss as a consequence of costs related to store expansion, but it still made a significant profit from property thanks to the offloading of its former distribution centre in Tilbury.
Toolstation's trade has also been less affected by cost inflation than Travis Perkins' merchanting division, which saw the price of goods it sources climb by around 13% in the second half of the year as a result of product shortages.
The FTSE 250 company expects inflationary pressures to remain but still forecasts stability in trade amid the normalisation of hybrid working, buoyant levels of property sales and growth in the number of housing developments.
In 2021, Travis Perkins demerged its Wickes (DIY and garden retail) business after a string of COVID delays. Soon after, it sold its plumbing and heating division for GBP325 million in a bid to simplify the group.
Travis Perkins supplies both trade professionals and self-builders.
Sources: DIY Week, Retail Times, This is Money and Investors Chronicle (UK)
Located about an hour's drive from Melbourne CBD, Woodend Hardware is a classic of how to make a regional store valuable to its community, its staff and the owners. That's all build on a lot of experience and, of course, daily care and good practices.
Fri Feb 25 2022
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Located to the north and a little west of Melbourne, the Shire of Macedon Ranges is ranked second only to Melbourne as the most liveable area in the state of Victoria. Woodend, which is one of its regional centres, is less than an hour's drive from the state capital in weekend traffic. With a population of around 8500, it's a pleasant regional town, with wide streets and a relaxed, leisurely pace.
Woodend is also home to one of hardware retailing's regional success stories, Woodend Hardware. Located in a small shopping centre along the town's main throughway, High Street, and nestled next to the town's Kmart K-hub, the store is one of those rare regional jewels of a store. It's the end result of decades (over a half-century, in fact) of experience in hardware retail and hard work by the Paterson family's patriarch, Robert (Rob), and the manager of the Woodend store, his son Steven.
The first thing that hits you as you enter the store is just how clean and crisp it feels. Brightly lit (another store to newly convert to LEDs) with a general blue and white theme, the store features low-rise shelving, giving it a generous, open feel. The main floor area is anchored at the back by a large Haymes Paint in-store sign (newly installed the day before HNN visited), with long aisles stretching towards the main entrance. The store is stocked comprehensively, but not crowded, and there is evident care taken in what has made it onto those shelves.
As any retailer would tell, none of this has happened by accident. When HNN commented on that bright cleanliness after we entered the store, Rob's eyes lit up a little. As it turned out, the cleanliness and brightly lit space form part of the simple mantra that Rob sees as the key to success for any hardware store: clean, bright, good stock and good staff, is how that might be summed up. As Rob tells us:
Over the period of 60 odd years that I've been in hardware retail, really the basics have never changed. Really neat, clean. well presented.
It's just good management. I mean, if you say these are the rules, clean, tidy, clean floors, plenty of lighting. When I walk into a store, I look at the floor. Then I look at the lighting. Those are the first two things I do.
While Woodend Hardware today is a medium-large store, when Rob first opened up in the town he had much smaller premises. Back in 1988, the hardware store was housed in a small space that is today home to Riverwood Accountants, sandwiched between The Woodend Fruit Market and a Vespa retailer.
It wasn't a location that Rob discovered for himself. The first hardware store he opened in the Macedon Ranges area was in Gisborne, a town about 15 minutes south of Woodend on the road to Melbourne, in 1984. The idea for the hardware store in Woodend was down to a local real estate agent, as he tells it:
What happened was the local real estate agent came to us one day and said, "Look, Rob, I've got an offer to make you". And I said, "What is it?". And he said, "Oh, I've got a hardware store for sale up in Woodend". And I thought, oh Christ we are just building up Gisborne...
Anyway, I came up and had a look, and the price was very cheap, and I thought, well, let's go for it. So that's when we came up here to the little store across the road.
It was a real mess, so we cleaned it all up. Within the first 12 months, we more than doubled the sales. Just by cleaning the place up, putting some good stock in there. Got rid of all the dead stock. So that's basically how we started.
The next stage was surprisingly similar to the first stage, as again the impetus for change came from outside the store itself. At that time the area where the store now exists was nothing but paddocks with a shed or two on it. As Steven tells it:
The person who owned the local IGA, Ivor Johnson, he came into the store, and he said, "I want to build you a hardware store. We'll drag you across the road". Then he and Dad designed the store and Ivor built it. About seven or eight years ago, we designed out the back [the timber yard] and Ivor built that for us as well.
The next stage in Woodend Hardware's evolution was Rob sending Steven up to Woodend to manage the store.
I came up here when I was 21. I think Dad just shipped me up here!
I've always been in hardware. I left school at 16. I did five years under Dad after that, and then, I don't know what happened, but I got told to come up here and to manage this store. And I've been up here since.
Today the store gets by with just six full-time hard working staff. It's open seven days a week, with one staff member working Saturdays and two additional part-time staff helping out on the weekend. One thing the Patersons are proud of is how long staff choose to stay with the store. It's something Rob knew was important from the start.
We're fortunate. We've got very good staff who've been with us for many years. Jackie has been with us what? Thirty or 35 years. She was here at the beginning. She's part of the whole thing. And Greg has been with us 20-odd years. So I mean, we look after our staff. We look after them, we treat them just like family. That's the way you have to do, because they're your asset.
Stephen is convinced this is also important to the store's customers.
Some of the staff have retired, that's how long they've been here! And customers can come in and see the same people. Not chopping and changing all the time. They can build a relationship.
The COVID years
While metropolitan independent stores saw a strong lift in sales in Melbourne when lockdown restrictions limited customers to a travel a radius of just five kilometres from their residence, some regional stores also received a good boost. That was especially the case for Woodend Hardware, as it turned out it was in just the right location, outside the restricted metro zone, and close enough to regional population centres.
Victoria's metro restrictions were based on Local Government Authority (LGA) areas. The LGA of Hume included Sunbury, which included the nearest Bunnings to the Macedon Ranges area. Hume was locked down whenever metro restrictions came into force. However, the Hume LGA just missed Gisborne. Gisborne is a significant population centre of over 11,000.
As a result of these two factors, the store saw a very high increase in sales. Steven explains:
Our sales jumped, through COVID [in the first year] by 28% on the previous year. Which was - that's huge. Just huge. Because Bunnings was closed.
Bunnings is metro, while Gisborne is regional. Sunbury [the closest Bunnings] is metro, so customers found us. A lot of people came from Gisborne. When Dad shut our Gisborne store, they didn't come this way. They went the other way to Sunbury. But then [due to COVID restrictions] they had to come this way, and they found us.
According to Rob, taking the two years of the pandemic together, the hardware store saw revenue figures up 35% on those for 2019. The store also has high hopes that it will be able to hold onto much of those gains through 2022, at least. Though Rob is, as always, a realist about the future.
We've kept a lot. We've kept a lot coming back this way. Sales haven't gone on as big as they were, but they've gone up probably by 20%, over the sales from three years ago, pre- COVID.
Sales will plateau. We definitely have seen sales stay up, but not as much as we did last year. I wrote down July, August, September, October last year  were huge months. Huge months. But then it sort of has tapered back. But we're still doing very well.
One reason the store is likely to continue to prosper is that there has been a slight population shift to the regional areas. House prices in Woodend have increased substantially, with the entry-level now priced at over $500,000, and the median price at $900,000.
Leaving Mitre 10
One of the bigger decisions the Patersons needed to make some years ago was that, after 34 years of being part of the what is now Metcash's Independent Hardware Group (IHG) - specifically Mitre 10 - it was time for them to leave the group.
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Haymes Paint opens Benalla store in regional Victoria
Long-standing Lismore (NSW) camping and workwear store is on the market following the owner's retirement
Fri Feb 18 2022
As part of the first few days of its opening, Haymes Paint Shop Benalla was offering its retail and trade customers free accessories with the purchase of selected Haymes Paint products, according to Benalla Ensign. The official grand opening was delayed from 2021 as a result of COVID-19.
Haymes Paint Shop Benalla store manager Terry Mack said the team was proud and excited to welcome the community to the new store. He told Benalla Ensign:
With roots in Ballarat, Haymes Paint knows the importance of building strong, trusting and loyal community relationships. We can't wait to continue this in our store, while bringing the town specialist paint advice with a smile.
Mr Mack said Haymes Paint was committed to having a positive and lasting impact on these communities through working with other independently owned businesses that shared the same values.
Mr Mack said the team is also focused on providing a high level of service to its customers.
Haymes Paint Shop Benalla has a commitment to, and passion for, providing customers with high-quality products for any surface with exceptional service and specialist advice.
The Haymes Paint Shop network now has more than 56 locations across Australia.
North Lismore store, Aussie Digger is on the market for $1.5 million. It started out in an empty shed in 1994, and its owner John Barnes has been at the forefront of quality workwear and boots in that time. But after a routine scan found cancer, the 81-year-old went "under the knife". He told the Daily Telegraph:
We were lucky to catch it early. But it's made me think now it's the time to get out.
The store will remain the same and retain existing staff, but will have a new owner once sold. There has been significant interest in the business, he said.
Mr Barnes was working as a publican when a friend suggested he get out of that industry.
I was looking around at different businesses and a friend of mine from Maroochydore had something similar to this. He kept saying to me, 'John, you knock off at lunchtime on Saturday and have Sunday off. How does that sound?' and I thought that's pretty good [because] pubs are seven-days-a-week.
I didn't have enough money to go into a good coastal pub, and I looked around and found this building here and thought it looked like a good place, so I started out in an empty shed with camping gear and workwear.
Mr Barnes said he built the shop on stock.
If someone comes in and they want 30 shirts...today you've got to have a big range of all the sizes and it's the same with boots.
A bloke comes in looking for a pair of boots, he wants to come in and walk out with them so that's why I carry a lot of stock.
Mr Barnes said people come all the way from Murwillumbah and Byron, Evans Head, Yamba and Iluka to buy his products.
Going west we get people from Tenterfield and Dorrigo, Casino and Kyogle.
Mr Barnes said once the sale goes through, he will retire on a small grazing property outside of Lismore.
The hardware retail co-operative also reported record fourth quarter and full year revenues for 2021
Fri Feb 18 2022
Ace Hardware Corp. is implementing a new technology infrastructure for its Do-It-For-Me (DIFM) services offering.
It is deploying the field service software platform developed by Dispatch for its Ace Handyman Services home service franchise businesses. Ace Handyman Services - formerly Handyman Matters - is Ace Hardware's new handyman division, created to help Ace customers achieve home improvement goals.
Evolving from Handyman Matters, Ace Handyman allows customers to hire reliable, experienced contractors to come into their homes and assist with projects that may need an extra hand or additional expertise. Aaron Williams, Ace Handyman vice-president of technology, said:
Customer experience is even more important when you're thinking about stepping into someone's home. It's one thing for a customer to step into your store, but when you step into the customer's home - that attention to a customer's needs, and just showing respect and being truly helpful is really very important.
Dispatch works with home service enterprises to provide visibility into the performance of their locations and independent contractors. Through using Dispatch, Ace Handyman Services said it has been able to show measurable growth across several important indicators, including increases in service requests, location job volume and revenue, and customer satisfaction. Avi Goldberg, Dispatch founder and chief strategy officer, said:
Retailers across industries are realising that pairing services with their retail offering is the best way to build loyalty, drive foot traffic, and provide a complete experience to their customers - and Ace has quickly become a leader in this space.
Acquired by Ace Hardware in 2019, Handyman Matters was a franchisor of home repair, maintenance, and improvement services based in Denver, Colorado. The company's on-site services to consumers and small businesses include carpentry, plumbing, electrical, drywall, painting, and flooring.
At time of purchase, Handyman Matters had 57 franchisees who collectively employed approximately 250 handymen and women in 121 territories across 23 states in America. Chris Bue was in a leadership role at Handyman Matters, and is now president at Ace Handyman Services. He said:
Ace had services on the radar for quite some time, and when they went out to find a business like ours, our core values really lined up - our already great customer reviews, and our tagline of helping you love your home.
Related: Ace Hardware gets into the Do-It-For-Me sector.
Ace Hardware also reported record fourth quarter 2021 revenues of USD2.1 billion, an increase of USD14.2 million, or 0.7%, from the fourth quarter of 2020.
Fiscal 2021 consisted of 52 weeks compared to 53 weeks in fiscal 2020. Excluding the 53rd week in fiscal 2020, revenues in the fourth quarter increased USD114.1 million, or 5.8%, from the fourth quarter of 2020. Net income was USD9.3 million for the fourth quarter of 2021, a decrease of USD33.8 million from the fourth quarter of 2020.
Full year revenues were a record USD8.6 billion, an increase of USD831.5 million, or 10.7%, from 2020 revenue (an increase of USD931.4 million or 12.2% excluding the 53rd week in fiscal 2020). Net income for fiscal 2021 was USD330.0 million, an increase of USD13.1 million, from fiscal 2020. John Venhuizen, president and CEO, said:
In comparison to 2019, total revenue increased 38.6% and net income is up 129.8%. This transformational surge in business is driven by two-year stacked comp growth of 34.4%, digital growth of 279%, and the opening of 407 new stores globally over two years.
The 6.9% increase in retail same-store-sales during the fourth quarter of 2021 - based on the daily retail sales data reported by the approximately 3,400 Ace retailers - was the result of a 10.5% increase in average ticket, partially offset by a 3.3% decrease in same-store transactions.
The 7.5% increase in retail same-store-sales for the full year was the result of a 9.4% increase in average ticket, partially offset by a 1.7% decrease in same-store transactions.
Ace added 182 new domestic stores in fiscal 2021 and cancelled 78 stores. This brought the company's total domestic store count to 4,751 at the end of fiscal 2021, an increase of 104 stores from the end of fiscal 2020. On a worldwide basis, Ace added 206 stores in fiscal 2021 and cancelled 86, bringing the worldwide store count to 5,583 at the end of fiscal 2021.
Sources: Chain Store Age, PR Newswire and Ace Hardware Corporation
The land where Tait Timber and Hardware is situated in the Melbourne suburb of Glen Iris is up for sale
Thu Feb 10 2022
Nutrien Ag Solutions has acquired Wimmera-based Tylers Hardware and Rural Supplies. Both parties reached an agreement for Tylers Rural to become part of the Nutrien Ag Solutions retail network, which was completed on 1 February 2022, according to the Stawell Times.
Tylers Rural has three locations at Rupanyup, Stawell and Murtoa in regional Victoria and will operate as Nutrien Ag Solutions. It has been in the Wimmera for over 33 years, and throughout its history has had a strong affiliation with Nutrien Ag Solutions as an independent member.
Tylers Rural co-owner Kelvin Tyler said this was the start of a fresh new chapter for the business. He told the Stawell Times:
Our valued customers remain our priority, and they can continue to expect the same high level of service and support, from the same familiar faces at our existing locations.
The integration will also see all three stores expand their range of agronomic services, as well as offering additional finance, insurance, livestock, wool and real estate services.
Nutrien Ag Solutions South East Australia region manager Jon White said:
This is a really exciting announcement, and we are pleased to welcome the staff from Tylers Rural across to the Nutrien business. We have had a long association with Tyler family and business and are looking forward to building on all the great work that they and their team have achieved, particularly Tylers Rural's strong in-field agronomic presence, which complements our business.
This acquisition provides Nutrien an opportunity to expand our merchandise and fertiliser offering to customers in each of these key communities, and bring the full range of Nutrien Ag Solutions activities.
Terry, Kelvin and Adrian Tyler continuing to lead and manage the business.
Tait Timber and Hardware
The site at 15 Weir Street, Glen Iris (VIC) where Mitre 10's Tait Timber and Hardware sits is for sale and expected to fetch more than $26 million, reports The Age newspaper.
The store has been supplying materials for building and renovations since 1905. While the business and buildings were sold in 2011 to Woolworths for the now defunct Masters Home Improvement business, the Hayes family retained the 8687sqm of land adjoining the M1 freeway and the railway. Mitre 10's parent company Metcash has a "ground lease" over the property, paying around $1 million a year in rent, according to The Age.
Stonebridge Property Group agents Justin Dowers, Julian White and Kevin Tong, with Gross Waddell ICR's Andrew Waddell, Danny Clark and Andrew Greenway are selling the property via expressions of interest.
Advise Transact's Mark Wizel is representing the family who bought the property in the 1960s.
Sources: Stawell Times, Stock and Land and The Age
The building materials and hardware retail business is setting itself up for a sustainable future
Thu Jan 27 2022
Victoria-based Bowens has invested $1.2 million in a rooftop solar installation along with power factor correction units as a way of cutting its carbon emissions and implementing sustainable practices, according to pv magazine.
The fourth-generation, family-owned company has committed to reducing its carbon footprint through its investment in solar and power factor correction units (PFCs). It has led to 1,386 Trina solar modules installed by Beon Energy Solutions at Bowens' manufacturing subsidiary Timbertruss in Corio, Geelong (VIC). This should see Bowens' energy reliance reduced by up to a third on current annual use.
Beon Energy Solutions' business development manager Jeremy Mugavin said the project is worth celebrating and said Bowens is a "great example of a progressive business investing in suitable power alternatives to reduce their carbon footprint".
The increasing demand for sustainable building materials means Bowens' customers can be assured that what they are buying is powered, in part, by solar. Bowens chief investment officer, Andy Bowen, told pv magazine:
The world around us has seen a heightened focus on the environmental impacts of corporations and governments both big and small. It is our duty as an industry leader to play a positive role in this movement and do what we can, from recycling waste to reducing our power consumption.
Sustainability and energy efficiency is at the forefront of senior management's long term strategic decision making. The business is investing millions of dollars in upgrading our stores and facilities, making sure that we minimise our carbon footprint at every turn.
Bowens believes business leaders need to play their part in sustainable practices in the construction industry. Mr Bowen said:
Our ongoing commitment to helping Australians build better includes addressing long term challenges that face our industry by investing responsibly in sustainable practices. We will continue to prioritise sustainable business decisions as we deliver the highest quality building materials for all Australian builders.
The PFCs were installed by Energy Aware across 16 stores and should contribute to more savings in electricity consumption by maintaining reactive power levels.
Related: Mitre 10 in Horsham (VIC) worked local solar specialists at Wade's on how to maximise sunlight and extensive roof space.
Heemskerks Nursery in Tamworth (NSW) will be sold off after 50 years of operation in the same family
Thu Jan 27 2022
A new application lodged with Gympie Regional Council has revealed plans to construct a new building with an office and drive through at Tom Grady Rural Merchandise Store. Additional parking spaces in a covered area will be included as part of the expansion, reports The Gympie Times.
If approved it will the latest addition to the rural services offered at the 1.5ha property, which has been a butter factory from 1925 to 1978 until that part of the factory was shut down. Rural goods were already being sold from the building before this closure.
Tozer Street Properties purchased the land in 2016 for $1.4 million according to CoreLogic RP records. It is serving as a second location for Tom Grady Rural Merchandise in Gympie, which has another base at nearby Nash Street and a real estate shop front in Mary Street.
The development application notes that the site has been linked to the region's rural industry for 110 years, and once included its own railway siding.
Related: In 2020, the property was upgraded with 55,000 tonnes of soil used to fill in an unused gully to expand storage space and customer access.
The owner of one of Tamworth's longest-lasting businesses, Heemskerks Nursery, is selling out and retiring after 55 years in the job. Peter Heemskerk founded the garden nursery in 1967, with his dad Jacob Heemskerk, according to the Northern Daily Leader. He told the newspaper:
We built everything up from nothing. There was just a vacant block of land, so we did the excavating, we built walls, we built the steps, we did everything.
Mr Heemskerk is described as an avid gardener who is well beyond retirement age. The nursery is a seven-day business that demands daily attention. Even on public holidays, when there are no customers, the plants still need to be watered by hand. Without family who want to carry the business on, it's time to sell up, he said.
Heemskerks is one of just two privately-owned nurseries left in Tamworth, the other being Tamworth Nursery. Bunnings has taken more than a bit of the business, but there's always an edge for the family touch, he said.
We built a lot of loyal customers over a period of time. There's only two nurseries left in Tamworth because we've got the big green box, Bunnings and they do take quite a slice off your business. But there's no advice.
There's still room for independent nurseries. But we've got to always work hard at it. You have dedicated staff, and you give people the right advice for the situation they're in.
The nursery sector experienced a boom through the COVID-19 pandemic. Unable to leave their homes, many people turned to their gardens. Mr Heemskerk joked:
We have had an 18 months of fantastic trade. I look at the figures and I say, 'Do I really want to retire? [But] it is probably time to put it on the market.
The business is being sold as a going concern, not as a development site, and Mr Heemskerk anticipates that whoever takes over the business will keep the name, at least for a while.
He hopes his replacement can take the business even further, suggesting that a cafe would be a good option. Until the business sells, it will continue being restocked and operating as usual. It celebrated 50 years in business in 2017.
Sources: The Gympie Times and Northern Daily Leader
A 50-year-old Buttercup Bakery in regional NSW is set to be partly demolished and converted into a hardware store
Thu Jan 20 2022
Parramatta Park, a suburb of Cairns (QLD) is the location of the recently opened Sydney Tools store.
Area manager Ryan Luke said the family-owned business now has 65 locations across Australia - and opening in the Far North was a "no-brainer" with the current market demand. He told The Cairns Post:
We wanted to bring our brand and style of tools to Cairns to give the consumers the right type of shop to come to.
In a previous article, Sydney Tools director Elvis Bey told The Cairns Post the business already has a large online customer base in the area and preparing to take market share from local competitors, Bunnings, Trade Tools and Cairns Hardware. Its Cairns store could also be a reflection of a "retail resurgence" in the region, driving economic activity across the city with a large amount of industrial property being leased.
The tool retailer also just opened a new outlet in Nerang on the Gold Coast (QLD).
Related: Sydney Tools announced its Cairns store in late 2021.
Tamworth Regional Council (TRC) has given the green light to a plan to convert the former Buttercup Bakery building into a hardware store, reports the Northern Daily Leader.
The site of the old bakery in Taminda (NSW), which was built in 1968, is located across the road from Bunnings. It is still used for distribution of bread, with one section vacant, according to planning documents issued with the project development application.
The upgrade is expected to cost around $875,000 and replace the area used for the manufacturing side of the bakery.
TRC signed off on the plan on the basis the project was not contrary to the public interest. The council's development approval said:
The proposal is considered to be satisfactory, having regard to the relevant legislation, council codes and policies and will not have a negative impact on the site, or community. Accordingly, the application is recommended for approval, subject to conditions.
Conditions include that the building be built to national building standards, and require the developer to pay an $8,750 levy before opening, among other standard conditions. Once complete the building will serve as a "hardware and building supplies warehouse and retail sales facility".
Related: The town of Taminda in New South Wales may get a new hardware store.
Beacon Lighting's first half results in line with prior corresponding period
Alceon Group is expected to acquire garden centre chain Flower Power that could value the retailer and its properties at close to $500 million: report
Thu Jan 20 2022
The continued emphasis on home improvement and small renovations has generated solid revenues for Beacon Lighting's retail, trade, e-commerce, and international businesses. This has led the company to signal that its December half sales and profits would match those of a year ago, even though the retail sector has been through a very difficult time especially in Sydney and Melbourne because of extended lockdowns. Shares in the lights, lamps and ceiling fans retailer rose as much as 8% following this announcement.
About half of Beacon's store network had to close during COVID-19 lockdowns in NSW, Victoria and the ACT from July.
In the first half of 2020-21, Beacon generated sales of $151.3 million and net profit of $22.2 million.
There had been supply chain disruptions and lockdowns and restrictions, but underlying demand from customers was strong, even though they had to temporarily shift to online ordering or click and collect.
Chief executive Glen Robinson said there had been strong momentum across the retail, trade and e-commerce segments of the business despite it being a difficult time to run a business.
Households were continuing to spend on their home at a time when the Omicron variant wave brought fresh disruptions to travel plans and more people stayed home rather than going out. Mr Robinson told investors:
Despite these challenges, the group is aligned with the household goods sector and has benefited from the strong interest in the lighting and ceiling fan product categories from our customers.
Beacon has 116 stores and is the largest specialty lighting retailer in Australia, with an estimated 22% of the retail market.
According to a report in the Australian Financial Review (AFR), investment firm Alceon is in final discussions to buy Sydney-based garden centre chain Flower Power. This follows chief financial officer Michael Spiteri telling the AFR in early 2021 that the company was seeking a new investor.
The deal, should it be agreed, would take Flower Power outside the control of its founding family, the Sammuts, for the first time in more than 50 years.
The late Nick Sammut set up Flower Power in 1968, and has since passed it on to his three sons including John Sammut, who has run the business for the past 30 years.
Flower Power has 10 garden centre stores in NSW, and has established a cult-like following in some of its communities.
Interested parties were told Flower Power recorded $24 million EBITDA (earnings before interest, tax, depreciation and amortisation) in the 2021 financial year, and that revenue and earnings were expected to grow by more than 30% a year in the coming five years, while there were also plans to build or acquire new centres.
Bidders were told the business had performed well during the COVID-19 pandemic as a result of the lockdown-fuelled home improvement/DIY boom in which people spruced up their gardens and outdoor living areas. They went to businesses like Flower Power to buy plants and related garden accessories to upgrade their backyards.
The main question for potential buyers is whether the strong customer demand and business lift was permanent, or would return to more normal conditions in the future.
There is speculation that Flower Power was headed towards a $500 million-odd valuation, should the deal also involve its extensive property portfolio. It would be a large deal for Alceon, which invests in Australian real estate, credit and private equity opportunities.
Related: NSW-based Flower Power is reportedly looking for a partner to grow the business.
As a distributor of industrial MRO (maintenance, repairs and operations) supplies and related products, Stealth is expanding its retail footprint in Australia with this acquisition
Thu Jan 13 2022
WA-based, ASX-listed Stealth Global Holdings announced it has acquired all the shares in United Tools Limited (UTL) for $24,000 cash plus a deferred market subsidy of $1.25 million over two years. Stealth subsidiary, C&L Tool Centre, is a licensee member of United Tools.
Additional details of the transaction include:
United Tools FY2021 revenue $8 million, EBITDA $0.3 million
Under Stealth's ownership, United Tools will pay to its members excluding C&L Tools, a marketing subsidy of $1.25 million over two years, 50% payable in March 2023 and the balance in March 2024
Assets to be transferred to Stealth on completion includes ~$1.22 million net cash
Expected to be accretive to adjusted earnings in the first year after closing
United Tools' network of 33 physical stores and two online marketplaces will be added to Stealth Group's 33 physical stores and two online marketplaces.
The addition of United Tools to Stealth will boost its position as a major distributor in the Australian industrial MRO supplies marketplace. The company's store network will double from 33 to 66 across Australia, a combination of company-owned and independent retail outlets. Mike Arnold, Stealth Group managing director and CEO said:
The rationale for this acquisition and merger with United Tools is compelling. It complements Stealth's existing business and delivers strong outcomes to our shareholders and stakeholders with our enhanced attractive business model.
United Tools is highly synergistic, with a robust product offering and value-added service capabilities, an extensive MRO-specific distribution store network throughout Australia and an experienced salesforce that enhances the strong team Stealth has in place. Combined, it significantly enhances our scale, market position and further strengthens our buying power to accelerate profitable growth...
Preferred suppliers will significantly benefit as we plan to consolidate arrangements held by United Tools and all Stealth subsidiaries into a new master buying and wholesale distribution business unit. This initiative will drive deeper commercial engagement, brand reach and create more value by leveraging group wide buying power potential identified to be more than $200 million.
The MRO segment is large, fragmented and highly valued by Stealth in an estimated $40 billion marketplace as reported by the company at its AGM held 29 November 2021. This provides potential for significant shareholder value creation over the longer term. I'm looking forward to helping maximise each company's growth potential so they can be the best in their market.
Completion of this acquisition is expected 1 March 2022 and is subject to United Tools' shareholder approval.
Related: C&L Tool Centre is operating under different ownership.
United Tools is headquartered in Melbourne (VIC) and operates under multiple banners, including the United Tools brand and independently owned brands. All stores are locally owned and operated and focused on the sale and service of a large range of big-name brand industrial and trade related products.
About Stealth Group
In mid-2021, Stealth-owned subsidiary Heatley Sales (Heatleys) purchased Skipper Transport Parts (STP) from Eagers Automotive firm AMCAP for $4.2 million.
STP is a WA distributor of industrial maintenance, repair and operating, automotive, truck and trailer, mining, bus and agriculture products. The acquisition includes branch locations in Perth, Albany, Esperance, Karratha and Port Hedland, onsite store operations across WA and Queensland, along with around 1,250 customers and 300 suppliers. At the time, Mr Arnold told the ASX:
...The STP purchase and merger is transformational in terms of a significantly expanded product and high-touch solutions offering, distribution supply chain infrastructure, e-commerce platform and deeper customer and supplier relationships.
STP's physical branch and onsite stores network will allow us to enter new geographic markets to strengthen our market position and provide an endless assortment product offering suitable for customers of all sizes...
The depth of STP's wide-ranging Industrial MRO products in the customer markets of automotive, truck and trailer, bus, agriculture and mining, complemented with Stealth's existing business, will give the merged group significantly more scale and leverage from its distribution platform, branch store footprint, network reach, buying power and its broad in-stock product offering where Stealth can hold an advantaged market relevant position.
Importantly, comprehensive value is created by offering our customers an endless assortment of brands, products and solutions that deliver better customer experiences with more touch points instore, onsite, online, click & collect and delivery options, supported by experienced sales, service, technical and distribution professionals.
Stealth was founded in 2014 but only listed on the ASX in October 2018.
In its most recent trading update, Stealth stated that given the most recent sales growth and the acquisition of United Tools, it expects its annual revenue from its Australian operations to exceed $100 million when a full year of United Tools operations is incorporated into Stealth's financial results. Stealth targets an underlying EBITDA margin target of ~6% before significant item costs relating to acquisitions and the full integration of United Tools and STP.
Sources: Stealth Group, Fully Loaded and Kalkine Media
John Mewett, chief executive of Screwfix, said that the Sprint service had proved popular with builders, electricians and plumbers who typically charge about GBP80 an hour and have to take time off a job if they don't have the required tools or material. He told The Times:
Often they don't know what they need to fix a job until they get to a customer's house, so this way they can carry on working while they wait for an item to be delivered.
The company charges GBP5 for this delivery service, which is currently only available through its app, with a delivery time average of 44 minutes although Mr Mewett said the fastest time has been 14 minutes.
Screwfix had already invested in its online business prior to the pandemic to offer tradespeople a one-minute click and collect service.
Most Screwfix shops operate as a counter with a warehouse behind them filled with shelves of stock that staff can pick. Customers do not walk around its stores. Because the stores are already set up like distribution centres, they can be used as "dark stores" for quick deliveries, the only difference being handing over a product to a scooter driver rather than a trade customer.
Mr Mewett said the most popular products ordered were typically items required at the end of a fitting, such as sealant and rubble bags to tidy away mess caused during a refurbishment.
The service has been rolled out to 30 cities across the UK, while Screwfix has opened another 70 stores in 2021, higher than its original aim to open 50 stores. Mewett, said:
...The growth in our store network supports local communities with further job opportunities and the demand for added convenience from our busy tradespeople. Currently, 98% of the population live within a 30-minute drive of a UK store, so our continued expansion ensures we can bring Screwfix closer to even more customers.
Mr Mewett said that there was still appetite for more of its stores, particularly in city centres, because "time is money for our customers. They're not going to drive past a competitor's shop to get to ours if they need a job finished."
Screwfix recently launched as an online brand in France and has plans to open a store there in 2022.
Kingfisher has been called a "pandemic winner" after enjoying soaring sales during the crisis as people used lockdowns to renovate their living spaces and turn spare rooms into home offices.
The listed home improvement group employs 62,500 people and has 1,390 stores in Europe including B&Q, Castorama and Brico Depot.
Related: In early 2021, Screwfix announced plans to open 50 more stores in the UK and Ireland.
Benalla Produce becomes part of PETstock store network and Inspirations Paint selling confidence, not just colour, to customers
Mon Jan 03 2022
A Total Tools store is being proposed for the coastal city of Gladstone in Queensland; pet specialty retailer PETstock has added Benalla Produce to its list of regional stores; and customer experience research drives change at Inspirations Paint.
Developer Hutchings O'Brien has submitted a development application (DA) to Gladstone Regional Council for a Total Tools store in Gladstone Central (QLD), according to The Gladstone Observer.
The 4,358sqm site would have a 9.5metre tall building, space for 34 car parks, and the plan is for Total Tools to be open from 6am to 9pm, seven days a week.
The proposed location for the store is in the city centre on the corner of Hanson Road and Yarroon Street. It would be located next to a United service station and a McDonalds outlet.
The new Gladstone store would be the second Total Tools in Central Queensland, with the other located in Rockhampton.
PETstock - Benalla Produce
Benalla Produce owners Mike and Lynne Morrison are handing over the reins of their home-grown business to PETstock, another family-owned business that has deep roots in regional Victoria, reports Benalla Ensign. Mr Morrison told Benalla Ensign:
The Benalla community has been extremely supportive throughout the years, and after five years we couldn't be leaving it in better hands than with another, like-minded business such as PETstock. We know they will continue to show a dedication to the local community and cater to its needs for essential pet care and supplies...
With plans to rebrand to PETstock Country, PETstock will continue to support the local community by catering to rural property essentials including fencing, crop management, weed and pest control, general rural merchandise, water equipment, livestock health and feed. PETstock state manager Samuel Flanagan said:
...Once transitioning from Benalla Produce to PETstock Country, we will be able to introduce new services and thousands of products from our general pet range, providing a comprehensive stock food range and offering specialist hobby farm equipment.
In addition to expanding existing services, the store will support local organisations, such as rescue groups, by providing them with free in-store space, temporary or permanent, for our PETadopt program ... in a convenient and friendly environment...
PETstock said the addition of Benalla Produce highlights its commitment to servicing pet owners across regional Australia and expanding opportunities for its dedicated supply partners.
Joel Goodsir, head of marketing at Inspirations Paint, has been helping to oversee store upgrades as part of the company's transformational change that also includes newly built stores, according to The Australian. Mr Goodsir told the newspaper:
From research all the way through to the implementation in our 100-plus franchised stores I am across it. I get stuck in with the guys, I know exactly how every shelf is put together and where every category of paint is going.
He discussed the significant role that marketing and creativity has played in the group's success.
Inspirations Paint's customer experience (CX) research, which included more than 60 hours of in-depth interviews with trade and retail customers to understand all the pain points in its stores. Mr Goodsir said it must match up across all customer touchpoints - digital and in-store.
This consumer learning sees its stores and website mapped out in a simple colour-coded way with highly visible sections titled concrete, woodcare, metal, house et cetera. Following its research, which uncovered 34 in-store focus areas, the business came up with a design based purely around customer centricity.
Inspirations Paint worked with its marketing intelligence agency The Navigators, brand design agency Public Design Group and creative agency The Village of Useful, Mr Goodsir said the benefit of working with boutique agencies meant the senior managers or owners that actually ran the agencies were the ones at the table working with the group on its transformation strategy.
Our CX strategy is deeply rooted in brand and it's crucial that it links in with our all stores, comms, campaigns and our website. That's why having the best minds who run their agencies, working alongside us and working together as one has been such an important dynamic.
Mr Goodsir said its latest "Recall" advert, which launched in January 2020 and continues to sit at the heart of the group's messaging, has been its highest performing campaign yet.
He said sales growth in FY19-20 and FY20-21, off the back of its COVID-19 accelerated digital pivot and the Recall ad campaign, had resulted in "unprecedented" store retail sales growth which was up year on year in consecutive financial years.
The ad campaign, which is made up of 10 ads, used in rotation and seasonally adjusted, zones in on real painting concerns such as blistering, flaking and mould-related paint woes. Mr Goodsir explains:
Our customers need one thing from us and it's confidence, but the paint industry doesn't work like that - some think it's colour and that's it.
Instead of following the more traditional way of showcasing beautifully painted rooms as its rivals do, Mr Goodsir said that "room porn" style creative was not relatable to those who were in the throes of needing help and advice with paint. He said:
We analysed the consumer buying process and the actual problems people are having is where the most emotion was found. People have very real and varied paint issues so it made sense to embrace the yucky stuff, to show people that we understood what they were going through and that we have the product and expert advice they need to tackle these projects.
A new addition to the latest ads featured the 1975 released Dream Weaver song by American singer Gary Wright. As part of the strategy, the song was chosen for its likely appeal to the brand's typically older, aged 35 to 65, audience. Mr Goodsir:
The song appeals to the more experienced painters who have owned and renovated more homes and taps into the emotion and memories they may have of this song - acting as a shortcut about good feelings and good times.
The song, which likely would have cost the group hundreds of thousands of dollars to secure, talks about taking away "the worries of today" and during the "I've just closed my eyes again" part of the song, DIY painters can be seen closing their eyes for a moment before remembering they had the confidence and Inspirations Paint to get them through the painting challenge at hand. Mr Goodsir said:
It took us six months to go through the creative process for the advert which is an unusually long period of time. But our brand ads need to last three years and this is not something that we could rush.
The music is now used as part of its in-store music and telephone on-hold music.
Long term success
The paint retail group said it is witnessing its highest annual turnover since Mr Goodsir arrived nearly two decades ago. Since 2003, annual turnover has increased by 317%.
Inspirations Paint also attributes its success to how quick it was to pivot to two-hour click and collect and its "sprint" to get its home-delivery options up and running during the pandemic.
Since enhancing its delivery services and launching its speedy click and collect offering in December 2019, the company's online activity rapidly increased.
During the peak of lockdown, with some stores in local government areas of COVID concern, more than 50% of some stores' revenue was coming from online. To date, nearly 20,000 transactions have been made online.
Mr Goodsir said that while being part of such large growth had been rewarding, his number one reason for staying at the company for so long was down to his CEO, Robert Guy.
It's really nice to have a boss who you like and respect, who supports you, gives you autonomy and understands marketing and its importance as a growth generator. That's the number one reason I have been here for so long and the other is that I just love the company and the people.
Mr Goodsir added that he also relishes the fact that it's a franchise group as owners are operational, strong-minded paint store owners who don't necessarily know the ins and outs of marketing. He said:
It's my job to inform, educate and bring them on the journey towards improving and creating value for them and customers simultaneously...
Sources: The Gladstone Observer, Benalla Ensign and The Australian
Berry Springs Home Hardware and Dipper's Home Timber & Hardware win store state awards
Tue Dec 28 2021
North Lakes, located approximately 26km north of the Brisbane CBD, is set to get a Sunshine Mitre 10 store.
Plans for the store at Stapylton Street have been approved by Moreton Bay Council and construction is expected to commence early in the new year, according to The Courier Mail.
Sunshine Mitre 10 general manager Neil Hutchins said the growing population in the south-east of Queensland is fuelling an "increasing demand for building supplies and construction materials". He added:
More than 25,000 people are estimated to call North Lakes home and that population is predicted to grow by about 30% over the next decade, so the demand to service both trade and DIY customers is strong.
Earlier this year, Sunshine Mitre 10 celebrated the opening of a new flagship store in Nambour that sits on a 13,000sqm site. Located at 980 Nambour Connection Road, it includes 4,000sqm under-roof and is one of the largest in the Sunshine Mitre 10 network.
The retail group also signed a contract for three commercial blocks of land as part of the new Trade and Construction precinct at Stockland's Aura Business Park. The purpose-designed precinct will house key brands in the construction and trade industry to create a one-stop destination for construction supply needs. It is positioned alongside the Bells Creek Arterial Road, close to the Bruce Highway.
Berry Springs Home Hardware
The Northern Territory store recently beat out 22 other stores across the NT and SA to win Independent Hardware Group's state-based award.
According to NT News, the team consists of owners Russell and Lindy Willing as well as staff members, manager Ben Guy, Judd Dendle, and Alana Simmons.
Mr Russell attributed the accolade to the efforts of his staff who pride themselves on helping locals. He told NT News:
Lindy and I are truly humbled by this recognition. It's been just over a year since we opened the hardware store and, I have to say, nothing beats recognition like this for the hard work put in by us and our small, but wonderful team.
We're very thankful to the Berry Springs community for embracing our business with open arms.
Mr Guy said customer satisfaction was the team's priority. He said:
My favourite part is when they walk out the door with a smile on their face, ready for the next good experience. And they don't have to drive into town and spend $30 on fuel. We get really good community feedback, so we must be kicking goals.
A garden nursery has been the latest addition to the store which offers over 10,000 lines of hardware and rural products.
Related: The Berry Springs store officially opened in 2020 after a major revamp.
The Moree-based outlet has been named as been recognised as Home Hardware's top store in New South Wales. Owner, Rebecca Diprose said this was great recognition for her hard-working staff. She told the Moree Champion:
You don't get it right all the time, but it gives you the confidence that for the far majority of the time, you're doing a really good job.
There are about 20 staff working at the store. Mrs Diprose said:
We have a great mix in the retail department of experience and youth. We are lucky to have a great team led by our retail manager Luke Cubis who is guiding them in a direction we have been working towards for quite some time.
The store has made a lot of changes in the last few years including stock, display and ranging. She said:
...The business has evolved enormously since we bought it nine years ago. We have a far more customer-friendly shopping environment now.
Our trade department has also grown substantially. We're building that team back up, led by Mark Baker, our trade and site manager.
The store continues to grow its customer base as the drought comes to end, followed by a bumper harvest in 2020, and hardware retail getting a sales boost as result of COVID restrictions. Mrs Diprose said:
We saw faces that we'd never ever seen in Dipper's before. No-one could have predicted worst case to best case in 30 days. That was particularly difficult period to manage. Our stock holding was substantially down and then we had a quick turn around in increasing stock.
In our trade department, the boys have worked very hard at customer service. It's not to say we can't do better, we know we can, which is the next phase for us. Our next goal is to target our trade department store standard.
I am particularly blessed to have the fantastic team at Dipper's. Mark, Luke and I work extremely well together leading the team. I'm the big picture of the business but they're the detail.
And the other person who is absolutely crucial behind the scenes that doesn't often get recognised is Margaret O'Neill our office admin manager. It's been a big team effort.
Sources: The Courier Mail, NT News/Sunday Territorian and Moree Champion
Mitre 10 also chose Insider, the AI-powered platform to create individualised, cross-channel experiences, to boost its multichannel growth strategy
Fri Dec 17 2021
SmartOSC, a digital commerce agency headquartered in Hanoi (Vietnam) has reached a deal with Independent Hardware Group (IHG), to become its development partner to replace two existing legacy business-to-business portals for the Metcash-owned hardware subsidiary.
The initial phase of the B2B portal project is expected to improve customer experience by providing a "unified solution for cohesive interaction between their members and the IHG team", reports VietnamPlus (Vietnam News Agency). Adrian Wakeham, regional manager for Australia and New Zealand at SmartOSC, told the newspaper:
SmartOSC and IHG share a vision for the digital ecosystem, so we're thrilled that this iconic Australian business has selected SmartOSC as their development partner.
The deal comes at a time when there is an e-commerce boom as a result of the pandemic and it is happening alongside online price inflation and a tech talent shortage, according to SmartOSC. The company believes these factors combined with high logistics costs of up to 20% of the final cost of goods in some countries make it difficult to compete on price.
It sees challenges and opportunities for businesses in this environment. SmartOSC founder and CEO Thai Son Nguyen said:
Projects that previously would take nine months to implement now need to be launched in weeks.
He added that a minimum viable product approach allows businesses to get a market foothold quickly, gain proof of concept, and then swiftly scale upwards and outwards.
Mr Nguyen believes brands need speed and agility to scale up amid the e-commerce boom. He said:
More people are shopping online and for a more diverse range of products than before, so brands need to offer consumers what they want, when they want it.
Online inflation means consumers also have higher expectations for a personalised shopping experience, said Mr Nguyen.
We've reached tipping points for both consumers and brands in e-commerce adoption.
As companies look to scale rapidly, he believes a tech partner with the know-how and resources to solve complex problems is invaluable.
At SmartOSC we're doubling down on our greatest asset: our people. We're hiring tech talents every day and are fostering an environment where our people can grow, so they're ready to take on the challenges our partners face.
In addition to its head office in Hanoi, SmartOSC has offices in has offices in Ho Chi Minh City, Australia, Singapore, Japan, Thailand, US and UK.
Earlier this year, cross-channel marketing company Insider announced that it will be working with IHG brand, Mitre 10. Insider is known for its artificial intelligence (AI) powered tools. These enable companies to take dispersed points of contact with customers, and to develop a coherent view of their buying patterns and shopping behaviours.
This can lead to the creation of new customer segments. The information is then used as the basis for marketing outreach, through delivering tailored experiences in mobile apps, and consolidating email marketing to more effective approaches.
Mitre 10 will connect and add a layer of AI-powered capabilities to their customer data with Insider. At the time, Paul McGuane, national digital marketing operations lead, Mitre 10 (as quoted in Internet Retailing) said:
We find there has been great synergy in this partnership. Insider is easy to work with, and we have seen the immediate impact on our bottom line. We've also improved our customers' experience onsite by creating a more personalised approach. Additionally, working with Insider resulted in a fast turnaround of testing marketing campaigns, which reduced IT costs and increased sales.
Sources: Asia News Monitor, VietnamPlus (Vietnam News Agency), Internet Retailing and Globe Newswire
Metcash has delivered its results for its FY2022H1. For its hardware segment, this included EBIT growth for IHG, ex of acquisitions of 4.4%, even as the hardware retail market saw negative growth for Australia overall of 2.5% in the report period.
Thu Dec 09 2021
Australian wholesale and retail conglomerate Metcash, owner of the Independent Hardware Group (IHG) and Total Tools Holdings (TTH), reported results for its first half of financial year 2022 (FY2022H1) on 6 December 2021. The results cover the timespan of 1 May 2021 to 31 October 2021.
For Metcash overall, sales revenue for the reporting period was $7151 million, up by 1.3% on the previous corresponding period (pcp), which was FY2021H1. (Including charge-throughs, the figures are revenue of $8.2 billion, and growth of 1.5%.) Net profit for the period was $129 million, up by 3.0% on the pcp.
The company's food business saw sales fall by 4.9% to $4022 million (though excluding the loss of its Seven-11 contract, the fall was only 0.2%, according to Metcash). Liquor sales came in at $2170 million, an increase of 6.6%.
Metcash chief financial officer, Alistair Bell, announced that the company expects to acquire an additional 14 joint venture (JV) TTH stores in December 2021.
When it comes to properly assessing the success of the hardware segment of Metcash for the reporting period, a number of obstacles present themselves. There is, first of all, the influence of the COVID-19 pandemic, which resulted in the acceleration of hardware retail sales, and dominated almost all other factors, including seasonality, up until the present year.
Hardware retail sales environment
In fact, recent statistics indicate something of a return of seasonality. Chart 1 shows the pattern for retail figures for all Australia:
The pattern the chart shows from August 2017 up to February 2020 also holds true for the previous five years as well: a peak in sales reached during the final quarter of the year, followed by a steep fall to February, a local high recovery in March, then a continued decline through the second quarter. The third quarter shows a gradual climb back towards the high reached in October.
From March 2020 onwards that pattern was disrupted. That March saw a strong spike upwards, which continued to a new high for sales in May 2020. This declined to a local low in August 2020, and then the old pattern of a peak high in the final quarter of the year repeated, but at a much higher level. That older pattern continued through to July 2021, still running at that higher level, with an additional $300 million or so in sales each month. In August 2021 the upwards spike of the old pattern repeated, but to a level about $90 million higher than the previous high in December 2020.
This return to seasonality can be seen clearly in Chart 2, which compares each year of hardware retail sales Australia-wide:
In terms of the reporting period for Metcash, Chart 3 indicates the percentage change when comparing each month to its previous corresponding month:
As this graph shows, during the reporting period the first three months (May to July) showed negative growth, while the final three months were mildly positive. Only the Australian Capital Territory went strongly negative, while Victoria remained consistently slightly negative. Australia-wide the result was net negative growth for the period of 2.5%.
The hardware numbers
That's the background, which is complicated enough. However, the numbers provided by Metcash for its hardware segment also have their own complexities.
The two main numbers that are used to assess the operations of a retail company are its revenues and its earnings before interest and taxation (EBIT). Net profit after tax (NPAT) is also important, of course, but it can be affected by a range of factors outside the company's control.
Generally speaking, while the overall numbers for revenue and EBIT are important, it's also important to find what has come to be called the "organic" numbers. These relate to the operations of the company absent the effects of acquisitions and demergers/spin-offs.
For example, if a company sells off one of its divisions for a great price, in the next company reports the revenues from that division will be missing, so it will record a steep drop in revenue. Obviously, that is not a sensible number. So after such a sale, companies provide historical revenue numbers that remove the past revenues of the division that was sold.
Metcash did just that after the sale of its automotive business to Burson Group for $275 million in June 2015. In company reports for FY2016 it changed the revenue it had reported for its FY2015 from 13,626.2 to 13,369.8.
However, when the numbers run the other way, and companies purchase a business so that their revenue and EBIT numbers are grown non-organically, they tend to be somewhat reluctant to simply share the underlying, organic growth numbers.
Such is the case with the revenue numbers from Metcash's hardware segment, which have been affected by the company's partial acquisition of TTH in 2020, and made even more complex by additional TTH-related acquisitions during 2021. Add to that the acquisition of three more hardware retailers, and finding organic growth numbers has become difficult indeed.
To report the topline, fully non-organic numbers for hardware: Sales - including TTH - increased by 17.9% over the pcp to reach $1.48 billion. IHG sales - including the recent acquisition of three hardware retailers - grew by 7.2%.
The numbers for IHG do not seem to be explicitly mentioned, but we can back into something close to them, as total revenue for TTH is listed as $153.5 million, which means, non-TTH hardware sales - which would be close to, but not equal to IHG sales - would be around $1.33 billion. Metcash also states that IHG sales increased by 7.2% (which, again, would include sales from recent retailer acquisitions).
Perhaps the most relevant number is that given for like-for-like (comp) sales, which Metcash states were up 5.6%. However, that number is, according to the results: "Based on scan data from ... 282 IHG stores". Scan data would tend to select the stronger stores in the network, and on a store number basis this represents less than 45% of the total store network (including Mitre 10, Home Timber & Hardware, True Value and Thrifty Link stores).
When it comes to EBIT, Metcash has done a good job in making more information available. The topline number, as provided by Metcash is that EBIT for the current reporting period in hardware was $98.9 million, up by 53.3% on the pcp, which reported $64.5 million in EBIT.
However, that number includes, for the current reporting period, EBIT of $33.1 million for TTH, while the pcp included TTH EBIT of $4.8 million. Further, Metcash states that there was an additional EBIT contribution of $3.5 million from those other retail acquisitions. So, putting that together, organic EBIT would be $62.3 million in the current reporting period, and $59.7 million in the pcp, yielding an organic EBIT growth rate of 4.36%.
While that would not, in normal times, seem like all that great a number, it actually does show good growth. As Metcash reminds throughout its results, and as HNN's charts indicate, this comes not only on top of considerable gains in overall revenue for the past 18 months or so, but also during that down-cycle of hardware revenue.
On the other hand, of course, the numbers from Metcash have also been influenced by inflation, especially on some trade supplies such as lumber. In response to a question on inflation by analyst Tom Kierath of Barrenjoey, Metcash CEO Jeff Adams responded in part:
On trade, just to give you a range, it would probably be in sort of the mid-single digit range on trade, in the first half. It seems, and we said it in the Outlook comments, it's very difficult to predict what we think what's going to be in the second half of the year, because we are seeing some movements up and down, in some of that trade pricing. But we do believe some of it will still be there in the second half, let's put it that way. In trade.
DIY would be lower than that it would be lower than mid single digits on on DIY. But again, it'd be you know, those are not audited numbers.
The CEO of the hardware segment, Annette Welsh, expanded on those comments:
[Inflation] is very focused around the timber part of our business, doors, plumbing, and is linked to the balance of supply versus demand. So there's an uncertainty as to what it would look like going forward.
That's a helpful reminder from Ms Welsh that the inflation being experienced is not due to sources such as currency exchange rate fluctuations, increases in material supply conditions, or cartel activity. This is one reason why inflation is not seen as an imperative negative by economists at the moment. It's largely down to a lack of capacity in shipping, which, unfortunately, will take a year to clear.
As a final note on these numbers, Metcash also stated that, based on figures from all 94 stores, TTH saw comp sales grow by 1.5% over the pcp.
Metcash was also more forthcoming about how its online sales in hardware have been progressing than it has been in the past, stating that online now makes up around 3% of its total revenue, which is $44 million. Metcash certainly owes Ms Welsh a vote of thanks for that figure, as it was she who pushed hard since 2018 to grow Metcash's online sales capabilities - capabilities that are now being duplicated by the company's other retail segments.
As many predicted, IHG was not able to sustain the high level of DIY sales, with the balance between trade/DIY going to 64/36, where in the pcp it had been 60/40. In the comp sales figures, DIY went down by 0.1%, while trade grew by 8.9%.
According to Metcash, the overall EBIT margin for the hardware segment was 6.7%. The EBIT margin for IHG was 5.0%, while the IHG wholesale margin was 3.0%.
The two most pressing questions for the hardware retail industry remain: how long will the current increased sales last, and how bad is the "hangover" going to be after the "party" finishes?
There is one strand of theory that states the market has been permanently altered structurally, and that some proportion (at least) of the increase experienced since March 2020 will remain. A competing theory is that the reverse will happen, and that there will be a severe contraction coming in the market, especially as market demand is set to fall with declines in both birth rates and immigration - both changes where the effects begin to show up two to four years later.
Looking at the current charts for hardware revenue, it does seem as though the actual seasonal demand - the increase in the final quarter of the year - exists somewhat separate to the underlying increase in demand. That underlying increase is likely to be mostly trade building activity, with some DIY mixed in. It's the opinion of organisations such as the Australian Construction Industry Forum (ACIF) that the building demand, given restrictions on supply, will last until the end of 2022, and possibly into the first quarter of 2023.
Mr Adams backed up that view in comments he made on the effects of supply shortages, while replying to a question by David Errington, a senior analyst with BankAmerica:
I think because everybody in the market [is] sort of impacted equally, that what it's doing is really elongating, in hardware, more of the building cycle. Because, would our sales be higher if we could get everything that we're trying to get - absolutely. There's no doubt. But is it lost sales? I don't think it's lost sales, because again, it's a shortage in the market. So what that does do then is just elongate out this this current building cycle, because the builders are just not able to get everything.
One way of looking at the mathematics of this increase is to look at the delta between the highs and lows of the retail revenue cycle. Using ABS stats for Australia, we can see that the average revenue Q4 of the calendar year for years 2017, 2018 and 2019 is $5467 million, which compares with Q4 revenue for 2020 of $6668.5 million, an increase of $1201.5 million, up by 22.0%. The average for Q2 over the same three past years is $5038.9 million, and for 2020 it is $6030.0 million, an increase of $991.1 million, or 19.7%.
Looking back at Chart 1, one possible way of analysing this situation is to see there being a "baseline" of activity at around $1400 million through to February 2020, which is then replaced by a new baseline at around $1700 million from August 2020 onwards.
One of the conclusions that we've reached at HNN is that what has shifted is homeowners' relationship to the housing market. We know that there will be various forms of monetary policy adjustment by the end of 2023, especially as regards interest rates. We can expect relatively conservative fiscal policy responses to those adjustments. Yet the decisions homeowners are making have less to do with medium-term investments, and more to do with acquiring security for their families. Buying a larger, better house is all about being able to better cope with adverse outcomes if the COVID-19 pandemic continues through to the end of 2022.
That doesn't mean that consumer spending won't be negatively affected if house prices decline sharply, and some homeowners find their mortgages are "under water" (owing more than the value of the house). But it does mean that it is less likely that decline will be accelerated by homeowners choosing to sell to avoid that decline in value, possibly limiting how deep the decline runs.
Total Tools Holdings
Which brings us, indirectly, to the matter of TTH. One really good question that analysts have asked about TTH and its markets is, what is driving the expansion in this sector? Primarily that is by TTH and the new Bunnings-owned Tool Kit Depot (TKD), but there has also been substantial expansion from retailers such as Sydney Tools as well.
The two main sources of that expansion are increased innovation in power tools, and increased demand for anything that will help builders and tradies achieve better efficiencies in a relatively inefficient industry.
The result of those two forces working together is that the lifecycle in tool systems for tradies has shortened substantially. Just 20 years ago tools were expected to last at least seven or eight years, and potentially ten years if they were looked after. Today that cycle can be as short as three to four years, with tradies replacing their tools at the same time they need to replace their Lithium-ion (Li-ion) batteries. The market as a result has grown by something like an estimated 35% to 40% over the past five years.
Tool companies, in catering to productivity needs, have responded by launching more and more specialised ranges. What was once a market largely divided into 18-volt mainstream tools, and 12-volt subcompact tools, has seen additional categories spring up, including voltages as high as 108-volt, new intermediate ranges of around 36-volt, and compact 18-volt tools. Tradies and builders are desperate to somehow squeeze out the equivalent of an extra hour in the day through more power to do things faster, or with specialised tools that make particular tasks easier.
Of course, the difficulty with that kind of market is that should demand for construction fade out, tradies can very easily switch to not replacing tools every four years, and replace them every six years instead. There are not any external drivers to the demand, such as safety or reliability (many brands have five-year warranties, for example).
The real problem, though, that HNN sees developing with Metcash and TTH is, as we've mentioned in the past, that there is a definite conflict of interest between TTH and the independent stores that make up IHG. The best question from analysts at the results conference call came from Brian Raymond of JP Morgan, who asked:
Just on the Total Tools side. Just interested in that co-location or adjacent store base that you guys are highlighting there. I understand that's one of the first stores of that nature. Just interested in how that looks going forward of the 130 stores do you think there will be a sizeable portion that will be co- located? And do you think there is any cannibalisation of the Mitre 10 when you drop the Total Tools [stores] in there? So just interested in just generally how that impacts foot traffic and sales across the two on a net basis.
The adjacent store that Mr Raymond was referring to relates to a photograph on slide 11 of the results presentation:
The caption on that photograph reads: "Adjacent Total Tools and Mitre 10, Merimbula, NSW. Opened November 2021". That particular arrangement came about after a Woolworths supermarket left its established premises, and a regional Mitre 10 retailer decided to expand into Merimbula. There is another similar adjacency being developed in the town of Wonthaggi in southern Victoria.
Mr Adams responded to the question by stating:
Yeah, so we said from the beginning, this acquisition was quite complementary to the Mitre 10 business, because where in our tool business, there tends to be more DIY type of customers, whereas Total Tools is completely focused on the professional tool, and in tradies.
That one [Merimbula] was a trial for us. It started out very well. And then I don't know, if you want to make some comments on it. We do see opportunities in the network, is it going to be extensive? I'm not sure, I would say extensive, but there are going to be opportunities in that 130 target for us to do some combined sites.
Ms Welsh followed up with a comment of her own:
I think it's an exciting moment in our history, where we've got an opportunity to ensure that we're growing the market. And we're leveraging that market into the vein of Mitre 10, and Home Hardware and Total Tools. So that's the first. And yes, it was always part of the percentages that we thought were available to the network of independents when we brought the two businesses together.
Mr Raymond's references to foot traffic and sales on a net basis are very apt. Because, of course, if you do have conjoined stores, then the Mitre 10 retailer is essentially willing to give up sales of both power tools and power tool accessories in exchange for increased foot traffic, attracted beyond the Mitre 10 store's normal traffic by the TTH outlet.
From a corporate perspective, of course, if almost all TTH stores are going to be wholly owned or JVs in which Metcash has a significant stake, there's actually an advantage to be had in transferring tool purchases from an independently owned Mitre 10 to the TTH outlet. If instead the transfer is between a corporate-owned Mitre 10 and a TTH, in most cases it's going to be something of a "wash".
The difficulty comes in where there are independently owned Mitre 10 stores in a region where a couple of TTH outlets are introduced. The Mitre 10 stores will see a reduction in sales, most likely, and there will be no counterbalancing benefits.
The statement by Mr Adams that "because where in our tool business, there tends to be more DIY type of customers" might mostly kindly be described as somewhat disingenuous. It is certainly true that IHG has more DIY customers than TTH. However it is also true that independent retailers in IHG - and particularly Mitre 10 - have expanded their marketing of trade-quality tools since 2015.
Some evidence for this can be found in the videos that IHG has itself produced, highlighting (during a time of increasing corporate ownership) the "family based" nature of many Mitre 10 stores. A number of these videos feature - as, indeed, do many Mitre 10 stores - gleaming display "pods" of ranked high-end Makita cordless power tools. In fact, this seems to be a regular feature of IHG's Sapphire store upgrades.
Diamond Creek Mitre 10 promotional video:
"Industrial Power Tools" at Beck's Mitre 10 Launceston (TAS):
"Industrial Power Tools" at T&H Mitre 10 Moe: (VIC)
In contrast, the IHG line of tools for DIYers is somewhat lacklustre. It's made up of a bit of Bosch Green (with a larger range available through Bosch's Amazon store), the limited Rockwell brand from Chinese tool powerhouse Chervon, Worx which is also from Chervon, and some Black & Decker "orange" tools.
There is nothing in that lineup that competes, for example, with the Bunnings Ozito line, which offers, for example, the PXC 18V 10mm compact drill driver kit, with a drill, charger and 1.5 Ah battery for $49. There's even a basic Ryobi drill, with 2.0 Ah battery and charger for $99. And with both those tools, the batteries can power a wide range of additional tools.
But this misses a major point about power tool sales: it is just as much about the power tool accessories as the tools themselves. Smaller IHG retailers are not able to compete on price for many cordless power tools with Bunnings, but they do have reasonable sales of drill and impact driver bits, abrasive disks and circular saw blades. It is in that area where the impact of more TTH outlets could be felt most sharply.
In HNN's opinion, what we're really seeing in the TTH acquisition is the playing out of certain strategic consequences in Metcash's hardware segment. From the perspective of individual store owners, the amalgamation of Mitre 10 and the formerly Woolworths-owned Home Timber & Hardware (HTH) stores (aka Danks) has not turned out too badly. But from a Metcash corporate perspective, it is probably borderline disappointing.
IHG did a very good job at retaining HTH stores, but the second stage of the business plan, continuing to grow past that point by gaining stores from other buying groups such as Hardware & Building Traders (HBT), simply did not work out. To a large extent, IHG under the guidance of Mark Laidlaw relied as much on emotional arguments as business analysis to encourage membership in the group. It wasn't a winning proposition in the broader independent retailer market.
This meant the large investment made in creating IHG, an investment in capital, effort and opportunity cost, just did not seem to deliver the expected results that had been hoped for. The acquisition of TTH could be seen, in effect, as the next strategic play available to Metcash to make its hardware segment payoff as planned.
There are dual risks that this strategy takes on. The first is whether IHG independent retailers will feel the competition from TTH outlets is unfair, leading them to leave the group. The second is simply that by late 2022 TTH will be directly competing with TKD owned by Bunnings. The ability to leverage the foot traffic created by existing Bunnings warehouse operations is one part of that risk, but the other is that Bunnings is very good at strategic execution in Australia.
Related: Metcash released details of its trading for the first 16 weeks of the company's FY2021/22 year.
Reece purchases long-term trade centre in in Brisbane's south
Blackwoods in Mount Isa (QLD) has been recognised in the annual Northern Outback Business of the Year awards
Thu Dec 09 2021
Plumbing and bathroom retailer and supplier, Reece has paid $3.36m for its showroom/warehouse located at 11 Secam Street, Mansfield (QLD) which it has occupied for over 17 years.
The property covers 3008sqm and features a 799sqm tilt panel prime-grade showroom, warehouse and trade counter. Andy Carmody from real estate company, JLL told the Courier-Mail:
Reece historically likes to own their sites so they put it in their lease that if the landlord ever did sell they would have the option to buy it and that's what has happened.
The low site coverage aspect provides further potential development upside, and the location provides access to key infrastructure and amenity. Corbin Crain from commercial real estate agency, Crew Commercial said the sale price reflected a 4% yield.
Reece wanted to stay on as an owner-occupier and they will leave it as is having done their own fitout and they will stay there for many years to come.
Blackwoods Mount Isa manager Lee Potini believes it was probably their customer-first approach that won them the top prize in the Northern Outback Business Awards. She told the North West Star:
We listened to the customers and what their needs were. I just brought in a lot more stock to cover myself and cover our customers.
She said some customers would come in and want an item to find it on a four or six-week back order, so Ms Potini took it upon herself to order masses of essential products so they wouldn't come up short again.
A lot of the critical PPE items like face-masks and earplugs, we made sure we had a lot of that, and when we were ordering we were just putting more into our inventory and our warehouse to cover the demand.
She also praised the efforts of her staff across the team. Ms Potini said team members were answering calls even outside work hours, while the account manager was driving stock out to the mine sites when they needed it to keep things moving.
Ms Potini said the award was terrific recognition for her team's efforts over the past 18 months, and more broadly as they have rebuilt in the past four years since she came on board.
I took over four years ago and we were in a world of pain then - we weren't listening and stocking the correct stuff - but I have lived in the region for 10 years so I just listened to the customers and we spent tireless hours sorting the warehouse.
Since then, she has maintained the same strong and diverse team, saying it was something she was proud of.
Commerce North West president Emma Harman said the awards are a reflection of those businesses that had shown creativity and resilience given the challenges of the COVID-19 pandemic.
Roy Morgan has a rosy picture of post-COVID retail, at least through to February 2022. Christmas sales will retain the high levels of 2020, the company says, and Black Friday sales will be strong. However, there are some real threats that could unravel this forecast as well.
Thu Nov 25 2021
Roy Morgan has provided a YouTube video of its "The Future of Retail: Latest Industry Trends" webinar. This is an 18 minute video presented by Michelle Levine, the CEO of Roy Morgan, and Ross Honeywill, a social scientist and author, and the moving force behind the premium.net.au website. He has a unique and interesting approach to markets and marketing.
It's really worth setting aside 20 minutes or so to watch the webinar:
One of the most useful functions that these quick introductions from Roy Morgan perform is to develop and discuss a relevant agenda for retail over the following six months or so. Roy Morgan also brings a unique point of view, which is driven by the company's extensive research into consumer opinions and choices.
That said, however, it's also true that there are times, especially when the company crosses over from markets to broader economics, when the analysis needs to be questioned. It's an understandable expansion, as economics has in recent decades crossed over into psychology/sociology (think Richard Thaler with behavioural economics, and even Robert Shiller in his suggestion that housing markets are driven by opinion), but it tends to lack something in rigour. But, at the very least, Roy Morgan provides a good point of departure for discussion.
In this particular "Future of Retail" summary, the agenda was outlined as follows:
Christmas 2021 retail sales
Black Friday/Cyber Monday retail sales
Retail sales for Q1 2022
While the above generally portrayed retail as having a positive future, the webinar also pointed to some potential problems:
Experience economy recovery
Decline in online retail due to delivery speed
Pursuit of price as market stimulus
Christmas 2021 retail sales
According to Ms Levine, in looking at retail sales for Australia overall:
The good news is that our brilliant data modelling team has forecast retail sales in the run up to Christmas to match last year's record high. This is terrific news for the retail economy. You can see from this slide that the Roy Morgan predictive engine, the green dotted line has a very close correlation with actual sales. That's the solid black line back to January 2019. But what matters is going forward and looking forward, we expect Christmas sales to be more than 11% ahead of 2019.
Of course, that is a bit of a mixed message. Essentially, while the sales do indicate growth over the pre-pandemic period, they are essentially flat going back to Christmas 2020. Nonetheless, it is better news than a projected decline.
For Sydney retailers, the rise is expected to be 10%, while for Melbourne retailers it will be 11% over the Christmas 2019 figures. Tasmania is expected to grow by 15% over 2019, which is 4% more than Christmas 2020.
In terms of retail categories, hospitality is expected to post a gain of 12% over Christmas 2020. However, the household goods category will decline from Christmas 2020, but still be 14% higher than for Christmas 2019.
Black Friday/Cyber Monday
While the Roy Morgan forecast concentrated on those two days - at least nominally - it's evident that "Black Friday" applies to a period of between six to 10 days around the US Thanksgiving holiday. While there are some wild apocryphal aetiologies provided for the term, its initial significance was simply that this marked the start of the Christmas sales season.
In fact, US President Franklin D. Roosevelt (FDR) moved the holiday, from the last Thursday in November, to the fourth Thursday in November, to avoid the situation, as in 2018 and 2023, when the previous timing would have reduced the Christmas sale season to less than a month.
Cyber Monday was a term coined after online retailers found that online sales soared on the Monday following Thanksgiving (though really it was late in the Sunday night instead, initially).
Whatever the origin, Roy Morgan sees this season as being especially big during 2021. As Ms Levine states:
Roy Morgan is forecasting another lift. We estimate that $5.4 billion will be spent over the four days of Black Friday, Cyber Monday. That's just ahead of last year's record.
That estimate is somewhat above other market estimates.
First quarter 2022 retail sales
The biggest question for most retailers is what is going to happen during the first two quarters of calendar 2022. As Dr Honeywill puts it, referring to the predicted surge in Christmas sales:
The big question, though, is can it sustain past Christmas? Or, what we might call the "rebound party"? And when [will] we return to some kind of normality?
The answer from Ms Levine is surprisingly positive:
Our predictive engine, all things going as planned, has January  15%, up on 2020. It has February 14% up and March 4%, ahead of March 2020. And comparing the first quarter next year to the same period this year, the news remains positive.
But, as she quickly points out, that prediction is based on ongoing positive business sentiment:
But so much relies not only on the confidence of people, but on the confidence of businesses to invest in their future by lifting wages, opening more stores and employing more Australians.
Like any good forecasters, rather than just nominating a number, Roy Morgan provides an overall context to their predictions. In this case, that context comes in the form of developments that could introduce considerable downsides to the forecast recovery from the COVID-19 pandemic.
Problem 1: Inflation
Quite correctly, Roy Morgan has identified inflation as being a potential risk to a post-COVID recovery. However, this is one of those areas where, just as economists sometimes struggle with market psychology, the company does make some assumptions that are, at least, somewhat contentious for economists.
Introducing the subject, this is what Ms Levine has to say:
Inflation has both a practical and a psychological impact on retail spending. And of course, as with everything, there are winners and losers. So those who are living off interest or investment earnings with their home paid off are winners in an inflationary environment. They aren't by the way, typically big spenders.
On the other hand, those who are paying rent or have big mortgages, particularly with variable interest rates will be playing catch up in an inflationary time. And so these typically bigger spenders will have less to spend, and when possible, they'll spend on assets or investments that they believe will grow with inflation, not discretionary spending.
Perhaps the best thing that can be said about this introduction is that it is not entirely complete. To quote from the European Central Bank Economic Bulletin:
Other things being equal, when economic agents anticipate that inflation will increase, they perceive the real interest rate to fall. As a result, they spend more and save less to optimise their consumption and investment over a long horizon.
There is a less-technical article on the website of the US White House that describes the issues around inflation post-COVID. It's authored by Jared Bernstein, chief economist and economic policy adviser to the US Vice President, along with Ernie Tedeschi, a senior policy economist with the US Council of Economic Advisers.
We expect that moving from a shutdown economy to a post-pandemic economy-with demand fuelled by pent-up savings, relief funds, and low interest rates-will generate not just somewhat faster actual inflation but higher inflationary expectations too. An increase in inflation expectations from an abnormally low level is a welcome development. But inflation expectations must be carefully monitored to distinguish between the hotter but sustainable scenario versus true overheating.
The role of inflation post-COVID
For both the US Federal Reserve and the Reserve Bank of Australia (RBA), increasing inflation is a target. The RBA has clearly indicated that it essentially plans to increase inflation to around 2.5%, and sees 3.0% as an acceptable upper range.
In the US, while there are concerns being raised about the level of inflation, it's difficult to know how much of that is sound economic analysis and how much is purely political. One factor that observers don't always understand about the economic actions of the current US administration is that its economic stimulus plans are aimed not just at repairing the economic problems of the COVID-19 pandemic. They are also an attempt the heal the lingering wounds of the 2008 global financial crisis (GFC).
Of course, too high a level of sustained inflation is bad. That is due to some cyclical factors. Once a higher level of inflation gets embedded in an economy, it tends to continue to increase. In a simple form, the price of goods increases, wages increase to match those increases, which lifts production costs, which means the price of goods increases, and so on.
Yet while too much inflation is bad, some inflation can be very good. The reason for this is that inflation tends to promote growth, as it encourages consumers to make purchases now, rather than later, and because it can provide an additional discount on the interest charged on loans, which encourages larger capital expenditure (CAPEX) from businesses.
A frequent criticism of the RBA since 2018 has been that it underestimated the deflationary impacts on the Australian economy from 2016 onwards. Many of those occurred in the retail sector. Increasing competition, including from overseas sources via online purchases, more price transparency due to online price comparisons, the entry of Amazon into the Australian market, and further utilisation of less expensive labour in China and throughout south-east Asia, all exerted negative pressure on prices.
This helped, especially in retail, to push retailers towards a business model focused on cost containment, with low levels of CAPEX investment. One key problem with this is that productivity improvements have been, at best, incremental. According to OECD figures, for the key productivity measure of growth in gross domestic product (GDP) per hour worked at constant prices, Australia ranked outside the top 20 OECD nations in 2019, and in 2020 was ranked 37th. Of course, the latter result is affected by the COVID-19 pandemic, but so were the countries ranked above Australia.
Inflation, wages, productivity
Where things get really interesting is in terms of wages and inflation. One of the main reasons the RBA is pursuing a higher rate of inflation is to improve overall growth in wages, which has remained at exceptionally low levels for around a decade.
In a higher inflation environment, employers are forced to make annual cost of living adjustments to wages. This includes not only past inflation, but also predicted future inflation. This leads to wage variations, and workers will be attracted to higher wages. The market becomes competitive, and as the competition increases, employers begin to base wages on not only cost of living increases, but also a share of their annual earnings.
That leads, of course, to higher real wage growth, and a better distribution of economic growth throughout the economy. Effectively, in a low inflation economy, only managers in the C-suite share in growth, while in a higher inflation economy this tends to extend to more of the workforce.
This is what is currently taking place in the US economy. That lift in wages then drives further demand, especially at the retail level.
Problem 2: Lockdowns
This is a simple and direct threat: will new COVID-19 variants and/or a return of non-quarantined international travellers create the need for further lockdowns? If so, as Roy Morgan points out, the results could be severe. According to Ms Levine:
There is every possibility that a new COVID variant could emerge somewhere in the world spread to Australia and challenge our vaccination effectiveness. And according to our always-on predictive engine, if that did happen, the cost to the retail sector from a new round of lockdowns could top $4 billion a month. Over the worst of 2021, the New South Wales retail economy had a $14 million hit each and every day. And it was even worse in Victoria at 55 million every day of lockdown.
In an article from The Guardian newspaper, Dr Marc Baguelin, from the UK's Imperial College's COVID-19 response team, and also a member of the government's SPI-M modelling group, suggested that an out-of-control situation would be unlikely:
It is unlikely that such a new virus evades entirely all immunity from past infection or vaccines. Some immunity should remain at least for the most severe outcomes such as death or hospitalisation. We would most likely be able to update the current vaccines to include the emerging strain.
But doing so would take months and means that we might need to reimpose restrictions if there were a significant public health risk. The amount of restrictions would be a political decision and would need to be proportionate with how much this virus would evade current vaccines.
So this could be ranked as a moderately severe risk, but one with a low probability of occurring, and with solutions to hand.
Problem 3: The experience economy
One of the problems for retailers identified by Roy Morgan is the re-emergence of the "experience economy", with a shift back from purchases of goods to purchase and/or subscription to experiences. During the webinar, Roy Morgan used the following diagram to illustrate its view of how the experience economy functions:
The core difficulty Roy Morgan identifies is that retailers will be disadvantaged by a shift in spending from purchases of goods to purchases of experiences.
McKinsey & Company has also done some interesting research into this area, and what happens to spending post-COVID. This research can be accessed online:
While the research does not cover Australia specifically, it does include details from the UK and the US, which have some similar characteristics. One element of the pandemic consequences McKinsey points to is that, unlike other economic crises, this one affected goods and services differently:
As the diagram illustrates, services were especially hard hit, a consequence of both social distancing requirements and the hard lockdowns of commercial businesses.
One comment on this is that the return of the experience economy seems more like a problem for 2023 rather than 2022, as it will take most of the coming year to fully come to terms with the COVID-19 pandemic. If retail will be hit by a renewed experience economy, it's not likely to have too much of an effect until the second half of calendar 2022, at the earliest.
Decline of online retail
Roy Morgan sees difficulties with timely delivery of goods ordered online as potentially limiting future growth in ecommerce. According to Ms Levine:
[Delivery delay] is a real threat to digital acceleration continuing at the same rate of growth through 2022. There's no doubt that online and omni channel retailing in particular is here to stay. But if consumers are turning their mind to experiences, and at the same time are frustrated by delays in deliveries, it's a stumbling block for retailers.
Again, this is a pretty complex area. For example, how do you model the influence of click and collect on online retail and deliveries? What is the role of Amazon, which has pretty much evaded delivery concerns, at least through its Prime delivery subscription services?
It's helpful to unpack that a little. If retailers have seen online retail purchases grow from 10% in 2019 to 20% of total revenue in 2021, only to contract by, say, 5% in 2022 as delivery concerns continue, what happens to that 5% of revenue absent from online sales? Does it leave the retailer entirely, or will a proportion shift to click and collect and/or direct in-store purchases? Will it simply go to Amazon?
It's a bit difficult to see a scenario where someone wants to order a $200 set of headphones, sees that delivery will take three weeks, and decides to spend the money on a flight to Queensland or New Zealand instead.
What does seem likely is that retailers who can sort out and solve delivery issues are likely to see their online sales do better in 2022 than those who do not. This also creates an opportunity for specialist delivery services.
Price as market stimulus
While this is presented by Roy Morgan as playing a part in post-pandemic retail recovery, the issue of addressing markets less dependent on lower prices was a concern of the company pre-pandemic. This draws heavily on the work by Dr Honeywill, which relates to his ideas concerning the formation of a market segment he terms the "New Economic Order", or NEO. This segment is motivated by product experience, including design, innovation, and quality of construction. Outside of that segment is what Dr Honeywill identifies as the "traditionalists", who remain motivated mainly by price.
The best introduction to this segmentation is provided in an animated video on YouTube:
Essentially, what is being suggested is that high-value consumers can be identified in the marketplace through their attraction to specific forms of consumption. Retailers who continue to market to the traditionalist segment will experience slower growth than those who market to the NEO segment. As Dr Honeywill puts it:
The real threat is that too many retailers think the 10 million price-based consumers - the traditionals you mentioned - are all there is, that they are the entire economy. So they constantly drive prices down into the commodity space to attract these traditional consumers and ignore the huge upside that comes from premium consumers and the premiumisation strategy.
The major takeaway that most retailers should get from the Roy Morgan retail update is that the crucial period to focus on will from March 2022 through to the end of the third calendar quarter, in September 2022.
There are certainly going to be challenges in December 2021, January 2022 and February 2022. However, many of those challenges are going to be the sort that are "good to have": shortage of supply to meet demand, moderate price inflation, logistical problems created by the volume of orders, finding enough staff to handle customer numbers, and so forth.
One pattern that has repeated throughout the pandemic is that the economy and supply chain are placed under temporary stresses that overwhelm it for a transitory period of time, as there is no systemic solution available. For example, the toilet paper shortage of early 2020 was partially caused by hoarding and "panic" buying, but it was also the result of genuine supply problems.
The core problem was that demand for domestic toilet paper increased by around 40% as more people were forced to stay home, rather than going to workplaces, shopping or recreational facilities, such as gyms. There was a surplus of business grade toilet paper, but that would have been difficult to repurpose in the home. It would not have made sense to convert many factories to producing consumer toilet paper, because that investment would not be recouped, since eventually demand would revert.
The same thing is happening with container shipping today. There are only so many container ships, and also only so many containers to go on those ships. A container ship takes close to three years to build, so there is little point in accelerating construction plans in 2020, only to see demand fall again in 2023, just as they came online.
In the hardware retail industry in late 2021 we're seeing some of the same forces at work. Building demand is soaring in residential detached dwellings - which intersects with both the big box retailer, Bunnings, as well as smaller independent retailers. Fortunately, the building industry is a little saner in this regard than many other industries, and what we will see with that high demand is that it will spread itself out not only through all of 2022, but probably into early 2023 as well.
The real risk to the hardware retail market will originate in the housing market. We are currently in a puzzling time where ultra-low interest rates, and a changed view of the values of homes, have resulted in a surge in house prices. It is very difficult to see how that will not lead, certainly by 2023, to some rapid falls in house prices, particularly as the certainty of increased interest rates grows closer.
That's the risk, at least in terms of the trade business. The consumer/DIY end of the business will likely experience some of the same slowdown as more general retail from March 2022 onwards. The risk will be that hardware retailers pivot from DIY to their ongoing strong trade business. That will reduce the resilience of retailers, which could be important if the industry sees a downturn in trade business in 2023.
The township of Pearcedale, located an hour's drive south-east of Melbourne, has lost its local hardware store
Thu Nov 25 2021
Adrian and Liz Scialpi have run the hardware store in Pearcedale (VIC) for 21 years, building up a loyal customer base that included farmers and boat builders, according to ABC News. On its Facebook page, they posted the following message on November 20:
Today after 21 years we have had to walk away from our hardware business. It's been an amazing journey only to be ended by corporate greed.
To the Pearcedale community and surrounding suburbs THANKYOU for all your support. But most of all the friendships we have made and the bonds we have created.
We wish you all the very best and we will never forget our time at 3912.
There have been dozens of certificates of appreciation stuck on the wall above the shop's entrance, thanking them for their donations to organisations such as the local school, CFA and pony club. Mr Scialpi told ABC News:
I used to call on this little shop as a [sales] rep back in the late 90s. When it came up for sale ... I went home, and I said to Liz, 'Do you want to buy a hardware store?', and you know, her jaw hit the ground!
What we did is we actually fell in love with this place, we fell in love with Pearcedale, we fell in love with the people and lifestyle of Pearcedale, and it's just become our life now.
The store was their retirement plan. They hoped to rebrand it and work towards selling it, believing they could get a few hundred thousand dollars. But they say things began to look shaky when their lease lapsed in 2019, and the owners wouldn't sign a new agreement with them.
They were on a month-by-month arrangement, when in May this year their property agent emailed them a new leasing agreement. The landowners were tripling the rent - from $29,687 a year to $88,638 a year. Mr Scialpi said:
[I was in] disbelief. I couldn't believe what they were asking. So for my little store here, which is 180 square metres, in a country town, they're asking me for nearly $100,000, in rental, [if you include] outgoings as well. So it's a huge jump. It's impossible to survive.
The ABC reports that a perusal of commercial rents show it's substantially more than what other landlords are charging in nearby towns like Somerville and Hastings, where the population is double that of Pearcedale. A similar-sized shop in Hastings, in a prize spot next to the local Kmart, was just rented for $68,540 a year.
It's even cheaper to rent a similar-sized shop in one of Melbourne's most desirable suburbs, with one retail spot currently available in Brighton for $55,000 a year. Mr Scialpi said:
The little shopping strip here services purely just our local residents, so we have no passing traffic at all.
There's a limited market of 3,000 people that live in town, and the rate of $500 per square metre, which is what they're asking, is almost double the market value.
The Scialpis admit they were on a good deal previously, and say they were willing to pay more. They sought legal advice and put in a counter proposal to increase the rent by 50%, but it was rejected by the owners.
Moving isn't an option, said Mr Scialpi. The closest shopping centre in Somerville 10 minutes away already has a hardware store, while the next closest shops in Tooradin don't have a property big enough.
The Scialpis have closed their doors for the final time, with losses they estimate at more than $300,000. Both of them will need to find other jobs. Mr Scialpi said:
We're going to have to walk away with nothing. It's just devastating. I mean, we put our heart and soul into this place ... to walk away under these circumstances, it's pretty hard to take.
Pearcedale locals didn't bat an eyelid when the owners of United Petroleum - Avi Silver and Eddie Hirsch - bought the shops in 2015, under a company called Jasman Pty Ltd. Both Mr Silver and Mr Hirsch are worth a combined $3.6 billion, according to The Australian newspaper's 2021 rich list.
But now, they are concerned that transaction may cost them the heart of their town. In addition to the hardware store, two other shops have closed their doors for good, with fears more will follow, after Mr Hirsch and Mr Silver hiked the rent substantially on some tenants.
The other businesses are still under existing lease agreements, protecting them from dramatic rent changes.
While Mr Hirsch and Mr Silver own the Pearcedale shops through their company Jasman Pty Ltd, they rent them out through United Petroleum. In a statement to the ABC, a spokesperson for Jasman Pty Ltd said it was seeking new leases in line with the rental market.
As the rental the tenants enjoyed for [a] number of years was well below market rental rates, the tenants have decided to not take up new leases and leave the shopping centre.
Jasman has honoured a small number of historical leases with below-market rents for some years. Jasman has every right to negotiate market rentals with its tenants as new leases are negotiated.
But Alexi Boyd, from the Council of Small Business Organisations Australia, believes the increases are unreasonable. He told the ABC:
I think it's really disappointing to see a large company like this take advantage of a situation for small businesses where things are really difficult, we're trying to get back up on our feet again, and then they get hit and slugged with this enormous rent increase.
It doesn't just impact this small business person, it impacts all of their workers, their community. Often these shops are really an integral part of a small business community and part of the community as a whole.
Several valuers the ABC spoke to, said the owners would struggle to get new tenants in, while it would be tough for those who decided to stay to keep afloat.
The increases bucked the general trend of rents in and around Melbourne, which were flatlining as retail rental vacancies rose due to the pandemic.
While Kingfisher's Q3 results are down on 2020, they are still up on 2019. Homebase has lifted itself out of loses to make a profit in 2019, and was nearly sold for GBP300 million in early 2021.
Thu Nov 25 2021
While home improvement in Australia and the UK has shown positive growth, which seems set to continue into 2022, the earnings picture in the UK and European Union (EU) is less certain.
Yet while Kingfisher, the number one UK home improvement retailer through its B&Q and Screwfix stores, has seen revenue decline for 2021 over 2020 numbers, it still remains strongly positive in terms of 2019 sales.
In other news, Homebase, which Wesfarmers sold for a nominal GBP1.00 in early 2018, has returned to profitability. In April 2021 it seemed for a while that it would even be sold for GBP300 million, but the deal failed to close.
UK big-box home improvement retailer Kingfisher has released its results for the third quarter ended 31 October 2021. The group overall reported revenue of GBP3246 million. That is a decline of 6.3% compared to the previous corresponding period (pcp), which is the third quarter of 2020. Excluding the contribution of the company's Russian operations, which were sold off in September 2020, revenue fell by 4.2%. However, on a two-year, like-for-like basis (2YLFL) with constant currency, this represents an increase of 15%.
UK & Ireland
Regionally, sales for UK and Ireland were GBP1544 million, a decline of 2.1% on the pcp, while in 2YLFL this represents an increase of 15.7%. Breaking this down further, home improvement retailer B&Q saw sales fall by 5.3% on the pcp, while Screwfix grew by 3.9%.
The company reports that the strongest categories were outdoor, building, and kitchen. The company's own exclusive brand of kitchens were a particularly strong performer. B&Q's Tradepoint initiative, focused on the trades, saw sales on the pcp increase by 5%.
France and international
For France overall, sales were GBP1111 million, a fall of 9.5% on the pcp, but a gain of 14.1% on a 2YLFL basis. Castorama sales fell by 12.0% on the pcp, while Brico Depot fell by 6.7%.
For the other international operations of Kingfisher, excluding Russia, sales were GBP591 million, up by 1.2% on the pcp, and up 15.3% on a 2YLFL basis. Poland returned sales of GBP420 million, a lift of 1.4% on the pcp, and up 12.7% on a 2YLFL basis.
The company is predicting a strong end to the year, with sales in the fourth quarter up by 0.4% on fourth quarter 2020, and up 13.2% on a 2YLFL basis. For the full year, Kingfisher is predicting adjusted pre-tax profit to be near the upper end of its forecast range of GBP910 million to GBP950 million.
According to Kingfisher CEO Thierry Garnier's prepared remarks:
We continue to grow our market share, driven by strong execution of our new strategy. We are pushing forward with investments in key areas of the business to drive long-term growth, including further enhancements to our e-commerce proposition and Screwfix's launch in France.
Since the start of this year we have maintained, and in many cases improved, our product availability, which is amongst the best in our industry. This has supported our market share gains and allowed us to upweight promotional initiatives in the quarter. We have also continued to manage inflation pressures effectively, while retaining highly competitive pricing.
Homebase, the UK home improvement big box retailer previously owned by Wesfarmers, and planned as an international extension to Bunnings, has continued its recovery.
For the previous year ending 29 December 2019, the company provided GBP3.2 million in EBITDA profit, up from a loss of GBP114.5 million in 2018. The company has continued to be profitable since then. In April 2021 the company's current owner, Hilco, was reportedly close to selling Homebase to British entrepreneur Hugh Osmond for GBP300 million, though that deal did fall through.
Homebase was turned around after Wesfarmers sold it in 2018 by reverting to the approach which had made it revenue neutral shortly before Wesfarmers acquired it. That involved a "softer", home furnishings approach to home improvement, and the incorporation of many store-in-store concessions from a range of British retailers.
In late October 2021 the RBA released details of its review of debit payments systems. In particular, it sought to reduce the fee burden on smaller businesses, and has mooted allowing merchants to apply a surcharge for buy now, pay later services.
Thu Nov 18 2021
The Reserve Bank of Australia (RBA) has completed a review of retail payments regulation. The main focus of this review has been on least-cost routing (LCR) of debit card transactions. The review included examining costs, especially as these apply to smaller merchants.
In addition, the RBA has also looked at providing merchants with the option to add a surcharge to buy now, pay later (BNPL) transactions (something currently largely excluded in agreements with BNPL suppliers), and provided guidance around competition and regulation concerns about "mobile wallet" payment systems, currently offered by providers including Apple, Alphabet and Samsung.
Key points of interest
The RBA supports full access by merchants to LCR wherever possible. This means it will continue to place pressure on providers to supply dual-network debit cards (DNDCs) in preference over single-network debit cards (SNDCs).
In particular, the RBA "expects" all card issuers processing more than $4 billion in debt transactions a year to issue mainly DNDCs. This is an expansion from previous guidance, which addressed only the largest four banks in Australia. The new guidance would include eight issuers of debit cards.
LCR is expected from all payment service providers for in-person transactions.
LCR is expected to be implemented for online transactions by the end of 2022.
The RBA is set to reduce the cap on set rate interchange fees for debit transactions from the present $0.15 to $0.10.
The RBA is reviewing whether merchants offering BNPL payment alternatives can pass on all or part of the amount they are charged for these services, which can be as high as 4% of the total transaction.
The RBA outlined the concerns expressed to them by retail merchant stakeholders which helped to shape the review in Box B: Implications of the Review:
Central to [the stakeholders'] concerns was the low take-up of LCR by merchants, arguing that most merchants were not benefiting from the considerable savings that could be made through LCR. This was occurring at a time when changing payment behaviour - such as the ongoing shift towards contactless, mobile and online payments (and card payments more generally), as well as the rising popularity of BNPL products - was putting upward pressure on smaller merchants' payment costs. Merchant representatives also argued for the removal of the no-surcharge rules that are imposed by most BNPL providers, consistent with the approach that has already been taken by the Bank in relation to card payments.
While most retailers are familiar with LCR, it's worth going over the details briefly.
LCR applies to the way in which payments made by debit cards are managed. Most consumers are familiar with the "old" way of paying via a debit card: the card was inserted into the payment terminal, the personal identification number (PIN) typed in, and then a selection would be made between a "CHQ/SAV" option and a "CR" option. If the first was chosen, the transaction would be routed via the eftpos network, while the CR option routed it through the credit payment systems run by VISA Debit or Debit MasterCard.
The consequences for consumers would be similar, with the amount withdrawn directly from their bank accounts. The merchant experience would be quite different. As the RBA puts it:
For many merchants, payments via the eftpos network can be significantly less expensive than payments via the Debit Mastercard or Visa Debit networks.
Where this gets more complex is when contactless payments are made. As the RBA explains this:
When a customer makes a contactless ('tap-and-go') payment with their dual-network debit card, the merchant may choose to send the transaction via the debit network that costs them the least to accept. This is least-cost routing (also known as merchant routing). If the merchant chooses not to route, the transaction will be sent via the default network which is programmed on the card, typically the Debit Mastercard or Visa Debit network.
If a merchant uses least-cost routing, it should not affect which deposit account the funds are paid from, and the three networks offer similar protections to the cardholder from fraud and disputed transactions. A customer can always select a particular debit network by inserting their card and selecting a network rather than tapping their card. And least-cost routing only applies to dual-network debit card transactions; it will not affect customers using credit cards.
While the RBA has enjoyed some success at encouraging LCR, there are new challenges emerging. One of these is the mobile wallet system available on smartphones. As the RBA puts it:
The Bank has observed a number of emerging challenges to the viability of LCR over the longer term. One challenge is that technological changes have driven a significant shift away from the use of physical (plastic) cards at the point-of-sale to the use of new 'form factors', such as mobile wallets, which is increasing the pool of transactions that cannot be routed.
This shouldn't be confused with another issue regarding mobile wallets, where Apple restricts access to the near field communication (NFC) technology needed to implement a mobile wallet, thus making itself the only possible provider. That's an enquiry being pursued by the ACCC (Australian Competition and Consumer Commission).
What the RBA is concerned about is that, effectively, most mobile wallets are like other contactless payment systems, but don't give the merchant the option of LCR. That is because the routing depends on arrangements established by the provider of the mobile wallet, and these favour the large international providers.
While there have been some efforts to overcome these difficulties, they remain technically complex. What enhances the protection mobile wallets offer against fraud is that they never transmit or reveal any of the details of the consumer's account. Instead they generate a single, unique token (a cryptographic entity) that identifies the transaction itself.
To introduce LCR, it would be necessary to either decrypt that token, so the payment could be re-routed, or for two tokens, one for each payment system, to be produced. The first would undo much of the extra security layer, and the second introduces considerable complexity.
In responding directly to this issue, the RBA stated:
Accordingly, while the benefits of enabling LCR in the mobile-wallet context could be substantial, the Board's view is that these would likely be outweighed by the significant implementation costs, as well as other legal and practical challenges. The Board is also mindful that mobile payment methods could change significantly in coming years (through, for example, the use of quick response (QR) codes).
The use of quick response (QR) codes has grown in popularity in China (though its initial implementation was in Japan). Both Alipay and WeChat rely on this system of mobile payments. PayPal added this capability in 2020 to its mobile app. Since the start of the COVID-19 pandemic, QR codes have offered an option that requires no contact at all, which has further advanced its popularity.
It is, however, somewhat more time-consuming and complex than the simpler wallet systems. While it might be attractive in nations where contactless card payment are not popular, its ability to penetrate the highly contactless Australian market would be limited.
As with many aspects of payment systems, the RBA seems to prefer to set expectations rather than make explicit rules apply. Thus its overall approach is to state:
The Board's preferred policy to promote LCR is to state an explicit expectation that all acquirers and payment facilitators will both offer LCR functionality for device-present transactions and promote the functionality to their merchant customers.
Online transactions and LCR
As with many issues regarding technology, the path the RBA is taking with LCR for online (formally, "device not present" transactions) is a little odd and confusing. Essentially, the RBA is mandating that LCR should be available universally:
First, all acquirers, payment facilitators and gateways will be expected to offer and promote LCR functionality to merchants in the online environment by the end of 2022.
From that point there are two pathways a merchant can take. The merchant can allow the customer to choose which debit network will be used to process their payment, or the merchant can offer no choice.
In the first case, the merchant has to ensure that choice is not overridden at any point. As the RBA states:
This would apply, for example, where the checkout page provided the explicit choice of debit network or where the customer used a mobile wallet with a preselected debit network.
In the second case, the RBA's principles state that:
If a customer has not made an explicit choice of network, and the transaction may be routed by the merchant or another party in the transaction process away from the 'front-of-card' network, there should be reasonable notification that routing could occur. In the case of new recurring transactions, it would be appropriate to notify customers only at the time of setting up the arrangement. In the case of existing recurring transactions, merchants should notify customers that their transactions may now be routed. The Bank is not prescribing exactly how such notifications should occur.
The use of "recurring" is a little confusing here, but it likely refers to whether this is an account setting - for example, an Amazon login, or paying a telephone bill - or a one-off purchase. This is also one of those cases where the RBA is waiting to see what the market comes up with, which it will then comment and criticise.
Where this all starts to get a little difficult is with the examples provided by the RBA as to how this might get implemented.
Anyone with experience in online commerce knows that the payment process is a very delicate one - many purchases are abandoned at this point. The real, underlying problem is simply that, because the choice of payment network has little if any effect on the customer, but does have an effect on the merchant, it's hard to see how leaving the choice up to the customer actually achieves anything at all.
For example, if the merchant does choose the payment network for the transaction, then the RBA recommends a message is shown to the customer stating that: "If using a debit card with two networks, your payment may be processed through either network". It would be surprising if as much as 10% of customers actually know what that statement means, and the general advice that will emerge will be "simply ignore it" - which begs the question of why it should be implemented in the first place.
It's probably going to be worse if the customer is asked to choose a network. Not knowing what that means, they would be forced to make a guess, or spend an hour researching exactly what is going on.
One option that could emerge, especially where routing preferences are part of customer account settings, is to offer some incentive for customers who choose the most cost-efficient option. That might be, for example, providing a small discount on shipping costs, or early access to discount sales.
In general, though, this aspect of LRC seems so poorly thought out that it will likely be revised before the end of 2022.
While the RBA expressed itself satisfied with the overall structure around interchange fees, it did consider there was one class of transaction where problems emerged. This related to relatively low value transactions that were charged at the set fee rate of $0.15. As the review points out, this would mean that a transaction worth $15.00 would be charged an effective interchange fee rate of 1%.
Equally, however, the RBA noted that adopting an "ad-valorem" - value based - approach would not work, as the interchange fee should reflect the underlying costs, and most of those costs for debit cards are fixed on a per transaction basis. The RBA set out an alternative:
Instead, the Board favoured a reduction in the cap on debit card interchange fees that are set in cents-based terms, which will reduce the possibility of very high effective interchange rates on low-value transactions, without significantly changing the overall interchange framework.
In practice, this means:
The Board favoured a modified version of the proposal for lower caps presented in the Consultation Paper, whereby the 15-cent cap on debit interchange fees set in cents-based terms would be reduced to 10 cents for transactions on both SNDCs and DNDCs.
It has been previously established by the RBA that merchants can charge an additional fee on transactions where processing costs are high. Just such a scheme has been implemented recently by Amazon in Australia (and previously in Singapore) where transactions using Visa cards are charged an extra 1% fee.
However, BNPL transactions have escaped that requirement, even though the RBA sees this as a relatively helpful tool:
The Board's long-standing view - which has been supported by developments in merchant service fees over the past two decades - is that the right of merchants to apply a payment surcharge plays an important role in promoting competition in the payments system and keeps downward pressure on payment costs for businesses.
One reason why a surcharge for BNPL transactions might make sense is the high cost.
Data collected by the Bank from 9 BNPL providers indicate that the average BNPL merchant fee was a little over 4 per cent in the June quarter 2021, which is significantly higher than average merchant fees on card transactions. Some stakeholders have also emphasised that BNPL merchant fees can be much higher for individual merchants, particularly smaller businesses, and that there is considerable variation across BNPL providers. While it is possible that competition from newer providers could result in downward pressure on BNPL merchant fees, it was also observed that competition may take some time to have a meaningful impact on BNPL merchant fees.
Weighed against this, the RBA states, is that payment systems are based on networks, which means there are substantial barriers to market access. However, the RBA eventually does come down on the side of removing the barriers to charging a surcharge on BNPL.
The Board has formed the view that the costs of BNPL no-surcharge rules - in terms of efficiency and competition in the payments system - outweigh any potential benefits in terms of supporting the entry of new players into the market. BNPL has continued to grow in popularity and is now used by a significant number of Australian consumers, particularly for online purchases. Accordingly, it is now likely to be difficult for many businesses to decline to accept BNPL services, even if they wanted to, and the high cost of these services is pushing up their payment costs.
What this means in practice is that:
Accordingly, consistent with the Bank's current approach to surcharging card payments, the Board's preferred approach is that merchants should, if they choose, be able to recover an amount up to the total cost of accepting payments, including those from BNPL providers. As noted, businesses may choose not to surcharge if they perceive that they benefit from accepting BNPL payments.
However, the RBA does face some challenges in regulating BNPL systems:
While BNPL arrangements facilitate payments between consumers and merchants (just as credit and debit cards do), there is some uncertainty as to whether they meet the legal definition of a 'payment system' or whether providers of these arrangements are 'participants' in payment systems under the PSRA [Payment Systems (Regulation) Act].
It is likely that within three years the financial industry will look back on this recent review by the RBA with something of a sense of nostalgia. The reality is that current payment systems are simply not keeping up with the rate of technological change that is needed.
An analogy is the current telecom system. The technology of fraud - especially spoofing phone numbers - has outgrown the ability of telecoms to police this, resulting in an ever-expanding pool of fraudulent behaviour, which is gradually making voice communication more and more irrelevant.
One rapidly expanding possibility is the move to what has become known as "OpenBanking". This is where banks partner with third-party providers, who use a secure application programming interface (API) to render services to clients.
Of even more interest is the possibility built into cryptocurrencies such as Ethereum that enables what are termed "smart contracts". These are essentially a system of very low-cost escrow agreements, controlled by "contracts" made out of code.
A good example would be ordering goods online that need to be delivered to your home. Typically, when these goods are substantially delayed, or even not delivered, it can be difficult to get the merchant very involved in the problem - after all, they've already been paid their money.
Using smart contracts through Ethereum, the actual payment to the merchant would be triggered only when the recipient digitally accepts delivery. The delivery company would be incentivised to make that happen, because they would have a similar contract with the merchant. No delivery, and no one gets paid.
That has consequences for quality of service delivery, but it would also effect pre-order cash flow. Extended to its furtherest extent, goods could be offered for sale by a retailer, and the payment for their initial supply could be made immediately on their actual sale - a way to supercharge consignment selling.
The question that we end with, then, is whether what the RBA does today is establishing the future of payments processing, or really more administering a transitory phase before more technology upends the existing links to the banking system.
The agribusiness has posted a higher full-year profit and dividend, helped by the purchase of a group of farming stores
Thu Nov 18 2021
Agribusiness Elders has posted a higher full-year profit, assisted by the first full financial year of ownership of Australian Independent Rural Retailers (AIRR). Sales of rural products improved by 24% as a result of the AIRR purchase.
The company posted a 22% increase in full-year net profit to $149.77 million for the 12 months to September 30 as revenue lifted 22% to $2.548 billion.
The bumper profits were also driven by favourable market conditions, ranging from overseas pension funds pouring money into farm purchases to strong demand for cropping products.
The high demand for cropping products improved crop growing conditions that will continue to drive demand for its range of pesticides and chemicals, and a real estate boom is having a positive impact on the agribusiness giant. Chief executive Mark Allison told The Australian:
The diversified model for Elders allows us to continue to make increased profit even though there are droughts and floods or whatever, so the philosophy from day one has been we have to get the cost of capital for Elders at a position so that in bad conditions we make money, and then in good conditions we make lots of money...
Last year when we hit $120 million (profit) a bunch of commentators said this is as good as it gets, but hold on a minute, only 30% of our upside in profit this year has come from strong market conditions, and 70% has come from our bolt-on acquisitions and backwards integration and organic growth.
So acquisition and organic growth is 70% of Elders growth, it has nothing to do with seasons or cycles or cattle prices or rain or anything.
Like many other companies in Australia, Mr Allison said Elders was facing shipping and logistics problems caused by COVID-19 and the extra strain of supply chains, which had delayed shipments of key crop chemicals.
Around 70% of crop protection products come out of China. We have had examples of ships being sent back to China empty so they can send another shipment of inputs back here. Our supply chain has gone from eight weeks to 12 weeks, it has added an extra month for ordering.
This would still enable Elders to have enough stock on hand for next year's winter crops but the price of the products and as well as shipping and freight costs would need to be passed on to customers.
Elders' property arm was boosted by soaring demand for farmland and residential property. Gross margin improved by 33%. Prices in the property market were also expected to stay high, helped by low interest rates.
Looking ahead, Elders said favourable seasonal conditions and demand for agricultural commodities made for excellent trading conditions in the first-half of this financial year. The company also said there were good opportunities for more acquisitions.
Elders is also looking to the expansion of its growing seed genetics business, EPG Seeds. EPG Seeds is investing in new distribution channels so its products will be available beyond the Elders branch network through AIRR and all national reseller networks.
Mr Allison said the company has been involved in plant breeding and introducing crop genetics to Australian farmers for decades.
These added investments will take these operations to a new level and expand the distribution of innovative grain and forage varieties to new customers, with the backing of Elders.
Related: Elders continues to grow its branch network through its AIRR ownership.
Will the big-box retailer keep up with social media trends?
In 2019 Bunnings release its video series "Make It Yours", which made use of "influencers" to encourage younger customers to explore DIY. In 2021 the big box retailer released "Make It Happen" - which was a return to the way it marketed in 2017. What's behind that, and what will it mean?
Thu Nov 11 2021
Pandemic lockdowns have boosted DIY sales at independent retailers since April 2020, especially in Melbourne and Sydney. With Australia-wide full vaccination rates likely to go past 90% next January, while domestic and international travel restrictions ease further, most retailers are preparing for reduced DIY sales in 2022.
Lockdown was certainly an activity incentive, but just as importantly, customers had few other opportunities to spend money to improve their circumstances. Some genuinely new demand was created, but there has also been a considerably bringing forward of future demand. Few homeowners will add a second deck, a second pool, or a third storey onto their houses.
That's not to say, however, that independent retailers intend to simply surrender the additional (more profitable) sales they've reaped from DIY over the past 20 months. The question is, though, what tactics should they adopt to hold onto more of those dollars?
The first part of the answer to that question is to acknowledge that what is being discussed here has less to do with changing consumer behaviour, and more to do with industry competition. While it is true that DIY spending in general rose considerably during the more difficult periods of the pandemic, independent retailers likely benefitted as much from the restrictions themselves as the increase in activity.
In both Sydney and Melbourne, during the strictest lockdowns, people were restricted in how far they could travel, and over which local government authority boundaries. While the increased volume of sales benefitted Bunnings, the proximity rules - as well as the volume of traffic through each Bunnings store - made the nearest hardware store often a more attractive option, and in many cases the only option.
With lockdowns essentially over, independent hardware stores need to revisit how they can compete with Bunnings for DIY sales in 2022. To do this effectively, they need to acknowledge that past competitive practices have simply not worked.
Back in 2019, the industry saw the first signs, in 20 years, of independent retailers coming to terms with what Bunnings really meant as a competitor. One catalyst for this was that the merger of Home Timber & Hardware (HTH) with Mitre 10 to form the Metcash-owned Independent Hardware Group (IHG) really did not deliver the kind of market competitiveness that then-CEO of IHG, Mark Laidlaw, seems to have at one time suggested.
Pre-pandemic, IHG did OK, but did not attract enough additional stores post-merger to noticeably change the structure of the hardware retail market. Competing with Bunnings seemed to work better as a recruitment and member retention strategy than it did as a functional, working competitive strategy.
Prior to that, the message most independent retailers agreed with was that the Bunnings business model was flawed, and that its ongoing aggressive expansion would not generate adequate returns. Independents, it was suggested, would eventually triumph due to the greater expertise of their floor staff, the ability to build relationships with customers, and their enduring role in regional communities.
Bunnings did not fail. It succeeded at doing better than any other major retailer in Australia. Today, Bunnings continues to expand, recently into both hard surfaces with the acquisition of Beaumonts, Tiles and into trade tools through its launch of Tool Kit Depot, while also continuing to grow its trade business through its existing warehouse stores.
Hardware retail has come to accept this. Very few (though there are some) would continue to voice the opinion that Bunnings is somehow strategically flawed. The reality is, most realise, that Bunnings is a major influence in certain key markets, and it is likely to continue to dominate those markets through to the end of the current decade.
That's not a message of despair - for one thing, the Australian Competition and Consumer Commission (ACCC) is more attentive to the monopolistic power of Bunnings than it has been at any time over the past 20 years.
Beyond that, however, Bunnings will also, within the next five years, begin to struggle with changes to its base markets. The baby boomers which boosted it to its current pre-eminence are ageing out of the DIY market, and generations that are replacing them - Millennials and the younger Gen Z - have different values, and a different approach to both home ownership and DIY.
There are, HNN would argue, already clear signs of this struggle in Bunnings. The best single example of this is in the two major DIY video series that Bunnings has brought out, 2019's "Make it Yours" (MIY), and 2021's "Make it Happen" (MIH). Exploring those series, and also looking at what overseas home improvement retailers such as Lowe's Companies are doing with video, can provide some sense of the new, emerging markets that Bunnings may be less equipped to capture.
Bunnings goes backwards?
It has been somewhat surprising to see Bunnings, which has a very good history of execution, produce a quite good DIY series in MIY, then go considerably backwards with its next production, MIH. There is the pandemic to account for, of course, but Wesfarmers/Bunnings is a very large, national company: it has the resources to overcome those difficulties.
The answer, in HNN's opinion, may lie in the different strategies behind each series. In MIY, the show was overtly aimed at younger DIYers, with at least some attention to the possibility they might be renters. It relied on taking a very modest - in fact somewhat drab - suburban house which Bunnings bought, and engaging with a series of designers/social media influencers to renovate it. Each of them took responsibility for redesigning and then rebuilding one aspect of the house, with relatively high production values in the shoot.
By contrast, MIH is perhaps the most Bunnings video series ever. The host of MIH, Lucy Glade-Wright who runs a successful blog/marketing company named Hunting for George with her partner, Jonno Rodd, presented the MIY series on Channel 7Two. The association with Bunnings has extended to the remodelling of her own house, presented in a series of videos, which, while somewhat variable in their quality, highlight her ability as both a designer and a presenter.
One of the standout examples of this is the video capturing the remodelling of the couple's kitchen, in a late 19th Century house somewhere in Melbourne:
This is one of the best DIY home renovation videos that HNN has seen. There is genuine passion, coupled with lots of hard work by both Ms Glade-Wright and her partner Jonno (who has a background in marketing). Part of what makes it so interesting is the constant planning interrupted by the necessity to change up those plans to match the reality of the renovation. It begins with a desire to preserve the exposed brick of the kitchen, which then needs to be painted white, and then cabinets do not fit in spaces and need to be replaced.
Yet in that constant juggling, a very particular and real aesthetic emerges, producing a room that is hyper-modern in some aspects, yet also conforms to the contours of a 150 year past. It's a kind of ongoing salvaging, but what is salvaged comes from both the past and, seemingly, the future.
What really distinguishes this particular video is that Ms Glade-Wright makes evident the actual meaning of this kind of renovation. The kitchen really matters to her in a way that interior design really does matter to many, if not most, Australians. It's an expression of self, of culture, and even of the community one builds over time with friends. Australians tend to "mock up" a sort of "happy go lucky" surface life, but underneath this is a deeply felt sense of place.
This video also contains perhaps the single most effective promotional piece ever made for Bunnings' DIY kitchen supplier, Kaboodle. It illustrates effectively how the inexpensive Kaboodle components can be used as the basis for a modern, functional and stylish kitchen, when they are taken out of the standard, prosaic patterns of the "kitchen in a box".
Indeed part of Ms Glade-Wright's charm is an ability to "spruik" for a particular sponsor - Kaboodle, or Electrolux appliances - in a way that seems to reflect her genuine appreciation for these products.
When it comes to her role on MIH, however, these abilities are, at best, tamped down somewhat, if not at times nearly excised. While the series has some pretensions to be about DIY, the fact is that, as the majority of work is performed by the Bunnings staff, it's more about how to renovate a room by hiring tradies.
There is some attempt at DIY activity, which means that every episode focusing on an interior room has the hapless homeowner forced to undergo the trifecta of modern room transformation: painting, tiling something like a backsplash, and laying laminate floorboards. You see the participants paint about a quarter of a square metre of wall, actually hold tiles but not do much with them, or hit a laminate board with a rubber hammer.
The really difficult parts, such as working out how much of a partial laminate board will be needed to span the surface of a room, and cutting those boards laterally - not on a right angle, of course - to fit the room's contours, are simply not even mentioned. If you know anything about actual renovation, it's a bit like joining a Zoom meeting where a good friend has accidentally turned up the "pretty", face-smoothing filter to the max: all the wrinkles are gone, but it doesn't improve anything, and the result is barely recognisable. It's essentially DIY renovation mime.
The other problem is that the results of all these efforts certainly demonstrate an improvement over how the rooms started out, but the end-design is far below what Ms Glade-Wright would be able to achieve given a free hand. That's not a mistake, really, by either Ms Glade-Wright or the producers, because the homeowners are very evidently somewhat conservative (to put it mildly).
Looking at the "before" and "after" of the kitchen, there is no doubt that some improvements have been made, but it is more about updating than anything else.
For example, it's difficult to reconcile the floor with the new design. It's not quite a clash, but you know instantly that it would look great with the kind of limed-white floorboards Ms Glade-Wright used in her own kitchen. That accounts for the somewhat heavy over-counter pendant lamps: it's a device to link those disparate elements together, a counter-balance between a light and heavy tonality.
Of course, what is really going on here is as much generational as anything else. The designs and approaches used in MIH very much belong to the baby-boomer/Gen X side of things, where in MIY it was slanted to the Millennial/Gen Z demographics. The clearest illustration of that shift is in Episode 2 of the MIH series. The task is to take a living-room which has been split to create a third bedroom for a Gen Z young adult Max. As his sister is now moving out of the originally two-bedroom home, he can now have her room, freeing up the space.
In some ways, it's almost emblematic of the shift between MIY and MIH. The Gen Z is moving out of the main space, and this is being reclaimed.
It's also worth noting that Ms Glade-Wright and her partner Mr Rodd belong to the late-Gen X/early Millennial demographic, which makes their business (formerly a retail operation) Hunting for George an ideal vehicle for presenting this aspect of Bunnings. Probably the most evident effect of that generational influence is the constant battle of the TV that takes place in the living-room designs they produce.
It's increasingly the case that TVs create a kind of design confusion as, in a screen-intensive world, there's a sense they need to be the secondary focus of a room, which, as TVs have become huge, is difficult to achieve. In late Millennial/Gen Z houses that's not an issue - because they don't have TVs (because there is an iPad/laptop/big smartphone), or the TV is allocated to a secondary space.
It's all very well to criticise this particular effort by Bunnings, but is there a better alternative available?
Indeed there is - in fact several. The most on-point is a series produced by Lowe's Home Improvement titled "The Weekender". This uses a very good, experienced DIYer and presenter, Monica Mangin of East Coast Creative, who transforms spaces in people's homes by breaking them down into a series of four or five projects.
In series 4, episode 8, Ms Mangin tackles a very small kitchen in a small house (less than 75 square metres) located in a lovely part of the city of Philadelphia, PA. The house is owned by Katelyn, a young Gen Z woman, who has saved up to buy a home she can barely afford, and really cannot pay for renovations.
So, already you can see the boxes that Lowe's is getting ticked off: small house, small space, first homeowner, Gen Z, limited funds, and a space that needs renovation, but has great potential.
The process is also very different from both MIY and MIH. While there is a tradie working to take care of essential tasks such as demolition, Ms Mangin does much of the work herself, including activities such as cutting out the hole for the sink in the wooden countertop. She walks Katelyn through every step of that process, including using a hole-saw to drill out the rounded corners, then cutting the lines with a jigsaw.
The outstanding part of the project is replacing the floor. After tearing up the old linoleum, a wood floor is revealed. Unfortunately, that wood floor would take too much work to restore, and the show has only the weekend to work with.
What is really interesting here, though, are the choices Ms Mangin makes to advance the project. She does not choose laminate flooring, but instead tongue and groove hardwood boards - which install almost as easily as laminate. Of course they are more expensive per square metre, but this is a very small space.
Then, instead of a simple treatment, she has Katelyn help her to stain these boards in a range of different colours. The goal is to make the boards look as though they are repurposed timber taken from warehouses and other sources. To add to the effect, she topnails the boards, emulating the way standard floorboards would be fastened.
This is what the final result for the kitchen looks like:
The real difference between the "Weekender" and both MIY and MIH is that there is really a very clear focus on actual, useful DIY tips. When Ms Mangin does the backsplash, for example, there is a virtual tutorial on tile selection, working with mosaic pattern tiles, how to cut the tiles, and how to fill in gaps in the pattern.
Seeing the difference between these two approaches, you really do wonder if the Australian series is not a little haunted by the remainder of the British class structures, where doing things by hand, as "trade", is still seen as a demeaning. In the US DIY is almost universally seen as "canny"; in Australia it's as though it is a barely OK alternative to using tradespeople. At least, that is, for the baby boomer generation.
The marketing opportunity
What we're really discussing above is that interesting area where design and DIY cross over. Is that all just about promotion, however, or does it really sketch out how people think about DIY today?
One answer to that question is that the market is a lot more complex than just a single division between those who can/will DIY, and those who can't/won't. It goes all the way from people who can (just) replace the washer in a tap, but panic when the toilet cistern starts to leak and needs its gasket renewed, to those of us who sigh at every DIY renovation TV show, because no one, anywhere, sands the walls of older houses before painting them (really, minimum of an hour per wall, easily).
One thing that is clear is that for people with some interest in DIY, and the minimum set of skills required, today represents something like a bonanza of possibilities. Power tools are so cheap, so powerful, so well-designed. Products like paint seem to get a little easier to use every year. There has been fantastic product development in everything from waterproofing (pre-made corner membranes - amazing!) to sealants to fasteners.
That is, to some extent, the "missing piece" when we talk about the boom in DIY sales during the pandemic. It wasn't just the demand, it was also people discovering how much DIY has changed over just the past decade, how much easier and safer it is now.
One of the slight distortions we all have in the hardware industry, and which we need to compensate for, is that we all believe that there is something in DIY that is just good for people. Amidst all the blathering we hear about conservation, climate change and so forth, we know that being able to repair stuff instead of replacing it is just a good thing. It's, well, it's respectful, in some way that is really difficult to define.
Yet those values are simply not the values (for the most part) of today's DIYer. One of the phrases that keeps recurring in the Lowe's Weekender video series is "it's Pinterestable". The fact is that much of interior design is really influenced by the community that is formed through social media. What is shareable has become what is valuable, to a growing, important sector of the market.
It is this that is really the differentiator between the early MIY and the later MIH video series by Bunnings. In MIY, the designers doing the design and DIY were all "influencers", dependent on social media for their personal and business reputations. For MIH, Bunnings chose another influencer in Ms Glade-Wright, but one that is very much something of a cross-over.
That's evident because she is acutely conscious throughout the MIH series of the level of discomfort she may be causing the homeowners with whom she interacts. Because they, coming from older generations, are evidently not always all that happy being exposed to this particular social media driven world.
What does this mean for hardware retailers? There are several steps that retailers can take to help boost their profile and increase sales.
Your own influencer
On a simple, direct level, if the younger generations are greatly inspired by the "influencer" economy, can they locate influencers who are local to their suburb, town or region? One way to do this is to search resources such as Instagram using the hashtag for your local area.
If they can locate influencers who are at the start of their design careers, it's possible to work out relatively inexpensive promotional deals. Any kind of commercial deal is helpful to beginning influencers, as those deals actually enhance their reputation in the community, acting as a form of validation.
Instagram rather than Facebook
While some see this as something of a joke, the reality is that for the younger portion of the market, Facebook has become to Instagram (and to some extent Pinterest as well) as email is to text messaging.
What this really means is that there is a big change to the narrative of sales. Facebook fosters (to sometimes negative consequences) the sense of a particular community involvement. Instagram instead measures something like the visual "beats" to a person's life. It's an association of less-judgemental "likes", a WhatsApp conversation rendered more universal and available through using the visual as the means of communication.
The task of the retailer in this situation is to render the individual items of DIY to having some kind of meaning in that narrative. Let's take, for example, the "forest of taps" displays at most Bunnings warehouse stores (which HNN would argue was originally a development of a similar display pioneered by Masters Home Improvement, during its brief presence). To older generations, this is useful, as it makes it possible to easily compare different taps on appearance, price and utility.
To younger generations, however, it is something more towards a mass of noise and interference. The decisions that are being about tap choice are associative, and apply to the narrative of the space that is being developed. A simpler display, with simple classifications might work better.
Yet the prime ingredient that might really work is a QR code that links smartphones to more product information, but not that provided by the manufacturer. Rather, this should provide links to social media and other sources where the product has been featured or discussed.
The important thing to realise is that this is not a matter of developing a "digital" virtual store. What it is really about is the communal, the shared, and it is only incidental that this is best realised through the digital.
Of course, what is important about this for smaller retailers, is that it means not that scale - such as that used by Bunnings - means nothing, but that it will mean much less than it has in the future. Smaller retailers cannot stock and feature 80 different taps. But they can stock 30, and provide the linkages these customers seek in a satisfying form.
One of the potential big shifts we could see in the future for small independent hardware retailers is the development of industry-wide services for social marketing.
It's fairly evident that when we enter into this area that succeeding at this type of marketing will require not only considerable effort and time, but also a high degree of expertise. It's also a series of highly repeatable tasks that need to be done by each retailer.
The possibility would be that these promotional efforts will be consolidated, and see the formation of "marketing groups" somewhat along the lines of buying groups, such as the Hardware & Building Traders (HBT), or even the extension of groups such as HBT to cover marketing as well.
The other possibility is to see more product suppliers become engaged in influencer marketing, offering retailers "marketing packages". This could extend both to online media, and to in-store facilitation through store displays and QR code links to further content.
The rural merchandise store held its official opening recently in McDougalls Hill (NSW), located next to the Bunnings Singleton store
Thu Nov 11 2021
Farmers Warehouse is now in an expanded premises in McDougalls Hill, a suburb of Singleton (NSW). There is another Farmers Warehouse store in Dungog and both are owned by James Ramm.
According to the Singleton Argus, the Ramm family have been in agricultural supply services for many years with Mr Ramm starting out in the business running Farmers Warehouse as an online store.
He opened his first bricks-and-mortar location in Singleton on Ryan Avenue in 2009 before building a new facility across the road from his latest venture located next door to Bunnings. The need to have more supplies both undercover and in the yard meant they had outgrown their original site and further investment was required. He told the Singleton Argus:
Most of our biggest customers have probably never been in the shop. But they come to us because of excellent supply, delivery and pricing. The larger facility means we have more stock on hand to service our customers.
Three trucks ranging in size from 4 tonnes to 29 tonnes will enable more efficient deliveries for its customers.
With record prices now being received for many farm commodities, in particular beef cattle, farmers are keen to invest in farm infrastructure. With this in mind, Mr Ramm said he would love to see more local manufacturing of farm supplies.
We are at the mercy of overseas producers for so many farm inputs like herbicides, fertilisers and fencing equipment. It would be great to see these products made in Australia and therefore farmers would be less likely to be hit by sudden price rises and no supply.
Farmers Warehouse began as a web-based store in 2008. While Mr Ramm, was working at his father's store in Rutherford (NSW), he saw the need for rural products to be available on the internet as a way of reaching a broader regional customer base. He started www.FarmersWarehouse.com.au from his home.
It is a member of AIRR (Australian Independent Rural Retailers) which allows better buying power and provides access to distribution warehouses in most states.