Retail update

Narooma Mitre 10 surviving after fire next door

Since the fire, the store has been operating out of what was once a butcher's shop and a shopping arcade across the road from its usual location

Mitre 10 in Narooma (NSW) continues to trade after a fire destroyed two adjacent businesses in September 2020. The Mitre 10 building was damaged, and the store has temporarily relocated to a different location close by.

Now after almost a year, the burned mess of a building in the middle of Narooma is finally getting cleaned up.

Mitre 10 owner Phil Constable initially thought they could clean up themselves but the damage was more than they thought. Asbestos was discovered in the building next door where the fire started, and he had to wait until it was cleared up to gain access.

After juggling between locations, Mr Constable is looking forward to moving back into his original building. He told Narooma News:

It has been frustrating, we couldn't do anything until the demolition. I have an understanding of the problems, but it has been particularly frustrating to have the place next door demolished before they (insurance company) can establish the actual extent of damage to our building and assess the scope of works for reconstruction and rehabilitation.

Business was booming for the Mitre 10 store before the fire. Mr Constable said it was tough taking a step backwards.

We have suffered a significant loss of trade during this [with] not having the floor space in order to give the level of offer we have had.
We were trading very well coming out of the bushfires, and during COVID, there was a lot of DIY activity associated with the lockdown. The hardware industry and garden centres were beneficiaries of people looking at work to be done to their homes.

Mr Constable thanked customers for their ongoing support.

We have been grateful of customer loyalty and people have been patient when ordering. Delays have been most onerous.

At the time of the fire, Narooma Fire and Rescue Captain Scott Dawson said it was the first fire of its kind in about 20 years in Narooma.

The owner of the destroyed building, Heather Blessington, said it took a long time to get quotes for the job, due to companies' backlog of bushfire rebuilds.

  • Source: Narooma News
  • retailers

    UK update

    Homebase invests more in digital

    The home improvement retailer's chief executive Damian McGloughlin spoke exclusively to Retail Gazette

    Homebase CEO Damian McGloughlin recently told Retail Gazette the COVID-19 pandemic meant that the team had to learn and adapt quickly. He said:

    With more customers shopping online, the weighting of sales towards digital changed overnight. Over the last year, we've invested even more in this area through our 10-year partnership with The Hut Group.

    Mr McGloughlin also found that visits and dwell time on Homebase's online "how to" pages shot up significantly over the last year since customers were finding it hard to get a tradesperson.

    Almost as if in response, Homebase launched a refreshed website earlier this year after undergoing an overhaul to improve the customer experience online. New features include "before and after" makeovers to provide inspiration and "shop the look" content so customers can buy everything they need to recreate the latest trends in their homes. Mr McGloughlin said:

    Digital has significantly grown and is an important part of retail. Customers are generally inspired by what they see online first and will continue to do more research online about the kind of product they are looking for.
    The decision then comes down to whether they want to buy the product in-store or online.
    Some customers want to touch and feel a product before they buy it or speak to someone face to face about their project, so will come into store. On the other hand, some customers know exactly what they want and will just complete the transaction online.
    Because many people get their initial ideas for home and garden updates or transformation projects from social media, we've adapted the shopping experience in-store.

    The home and garden retailer also partnered with Checkout.com, a payments service provider so that it can accept all the usual payment tools as well as PayPal, Apple Pay and Google Pay.

    Homebase has also been using different methods to "understand customers better". Mr McGloughlin said:

    A lot of the work early in our turnaround focused on simplifying how we operated so we could get closer to our customers. We now understand them better, which has meant we've been able to deliver more of what our customers want when they want it.

    Homebase runs live customer listening groups where it receives "in the moment" feedback on new ranges or store layouts. Mr McGloughlin explains:

    We have an amazing tool called 'Feels Good To Be Heard' that allows us to constantly collect customer feedback on a store-by-store basis. It helps us continuously improve, and we often take things customers love and share them with other stores to introduce.
    We also use social media to inspire customers with the latest trends and must-have new products. It's an important tool for us to get their feedback - and even to inform what products we sell.
    However, feedback isn't useful unless you are doing something with it, so we also have systems to ensure that the right customer insight is getting to the right teams, from our commercial and buying teams to our marketing and store operations teams.

    Mr McGloughlin also told Retail Gazette that he was one of the longest-serving board directors at B&Q. He served as the retail director at B&Q before he stepped into the role of chief executive at Homebase three years ago. He described Homebase as "a very different business" since making the change from a publicly listed company to one that is private.

    While there were problems to fix in the beginning, the passion of the teams across Homebase is clear to everyone who works here...The role at Homebase is much broader with wider responsibilities and requires me to wrap my arms around the entire business. The thing I love most is that I have the total accountability to make a quantum difference. There is much more demanded of me as a leader.
    When you run a business such as Homebase, you have so much more ownership of the entire business, from strategy to operations and from the small day-to-day details to longer-term vision and plans...One of the main things I've learnt is the importance of agility, both as a leader and for the business.
    I'm a true believer in laying out a long-term plan, but you have to have the courage and agility to move away from it, adapt to the market and your customers when you need to.

    Since he started at Homebase, Mr McGloughlin said he was most proud of "keeping the brand alive". This means needing to make some bold decisions - from changing ranges to changing the layout of stores.

    Homebase is a family business, and throughout my time here, I have prioritised the team.
    While we do bring in new talent where we need it, we focus on growing and developing the team we have. If people have the right attitude but don't have the skills yet, we'll do what we can to train them to where they need to be. We always look at stretching our internal teams, making sure we're giving people opportunities.
    I've established myself as a chief executive and taken Homebase through a complete lifecycle, from selling the business, delivering a successful turnaround business, and now to the exciting next chapter of growth.
    The main thing I've learnt is that you've got to lead by paradox. One minute you're in the detail - and at the other, you're in the helicopter, thinking five, 10 years ahead. Because I've always been in the detail, I find it easy to zoom in and out.

    Mr McGloughlin said that moving forward, Homebase would continue to "cement" itself as home and garden experts.

    We've put a clear full stop to our turnaround and have now entered our next chapter of growth. We are very clear on who we are and therefore, what we offer our customers. Our plan now is to continue to accelerate that plan and deliver it through working closely with our suppliers and teams and offering the best products and service to our customers.
    Expansion across digital and fulfilment will continue to be a focus, as well as opening new stores in more communities, making it even easier to shop, whether it's online or in our stores. We'll continue to focus on newness and innovation, offering customers the right ranges and projects in partnership with brands and our suppliers.

    Related: Homebase and Bathstore showrooms offer a digital experience.

    Homebase and Bathstore showrooms go digital - HNN Flash #50, June 2021
  • Sources: Retail Gazette and Internet Retailing
  • retailers

    Retail update

    Sydney Tools gains approval for Bundaberg outlet

    The Terang Co-operative Society has reported a new record turnover of $31 million and posted a $1 million profit

    A development application for a Sydney Tools store was recently approved for a Kensington location in Bundaberg (QLD). The outlet will be situated at 20 Johanna Boulevard, filling the vacant lot between Bunnings Warehouse and the Boulevard Lodge. It will be open from 7.30 am to 5 pm seven days a week and 51 car spaces have been included in the design.

    Bundaberg Regional Council approved a material change of use application for a hardware and trade supplies business on Johanna Boulevard. The applicant, Bayswater Holding, intends to develop part of the site for a "building to facilitate the expansion of Sydney Tools", according to submitted documents.

    This approval comes after Total Tools was approved for the former Chipmunks Playland and Cafe Bundaberg site in the same area.

    Sydney Tools also recently opened its Morayfield (QLD), pictured.

    Related: A development application was lodged for a Sydney Tools store on Johanna Boulevard in Kensington, a suburb in Bundaberg (QLD).

    Sydney Tools store proposed for Kensington in Queensland - HNN Flash #48, June 2021

    Terang Co-op

    In its most recent annual report, Terang Co-op chief executive officer Kevin Ford said the turnover of $31.3 million it achieved was $6 million or 28% higher than the previous financial year.

    The before tax $1.05 million profit for the financial year ending on February 28 more than doubles the previous record of $440,101 set in 2013.

    Mr Ford said the result was boosted by COVID-19 lockdowns in 2020 and reinforced by changes in business practices. He said the Co-op struggled to keep some essential stocks on the shelves as panic buying set in during the initial lockdowns, while online deliveries hit new highs. There was a huge 38% jump in hardware and timber revenue, a 49% increase in the rural division, and 16% in the supermarket, which remains the biggest part of the business.

    Mr Ford said the COVID-19 lockdowns had "taught us the size of the potential market". He told The Warrnambool Standard:

    It meant people were forced to shop locally which particularly drove the March to June quarter results, but from then the changes and improvements we made gave customers reasons to continue shopping with us.

    Mr Ford said the Co-op was placing more emphasis of encouraging locals to shop locally and stop the substantial retail leakage out of Terang. He said:

    The Co-op's commitment to a quality customer service ethos, competitive pricing, and an increased range of quality products will deliver to our members' needs, encouraging more in our community to shop in our town.
    It is extremely important for a small town, such as Terang, to have a great supermarket, a great trade and retail home improvement store and community Co-op.

    The Co-op also reinvested more than $1.2 million worth of capital back into the business and will look to continue growth into the future. Its investments over the year included $850,000 redevelopment of the IGA supermarket, upgrades and rebranding of Mitre 10 and The Rural Store, new capital equipment in 360 Dairy Solutions and replacing the Co-op's fleet of vehicles.

    It employs more than 120 staff and has more than 3000 members.

    Related: Terang and District Co-operative ended its 2019-20 financial year with an increased surplus after a solid year of trading.

    Terang Co-op in regional Victoria delivers strong financial year results - HNN Flash #18, October 2020
  • Sources: Bundaberg Now, The Courier-Mail and The Warrnambool Standard
  • retailers

    Metcash 2021 full year results

    Hardware outperforms

    Metcash's results for FY2021 showed strong growth in its hardware segment. However, the company did not supply much data separating organic (non-acquisition) revenue and EBIT from inorganic elements, making its organic growth difficult to determine. Investment analysts also strongly questioned the company's logic in going ahead with a share buyback.

    Australian retail conglomerate Metcash announced its results for its FY2021, ending 30 April 2021, on 28 June 2021. While the results were, overall, very positive, the results presentation was somewhat more contentious than usual.

    In top-line terms, statutory revenue came in at $14.3 billion, up by 9.9% on the previous corresponding period (pcp), which was FY2020, ending on 30 April 2020. According to Metcash, if "charge through" sales are included, revenue grew by 10.1% on the pcp. Overall earnings before interest and taxation (EBIT) came in at $401.4 billion, an increase of 19.9%. Net profit after taxation (NPAT) was $239.0 million; NPAT for FY2020 recorded a loss of $56.8 million, occasioned by a write-down of $237.4 million to compensate for the loss of a contract with 7-Eleven by Metcash's food business.

    Metcash's hardware business also reported strong numbers. Sales including charge throughs came in at $2.6 billion, an increase of 24.7% over the pcp. EBIT for hardware came in at $136.0 million up by 61.5% (though this includes earnings from acquisitions, which we delve more into below). Like-for-like (comp) sales rose by 11.4% in what Metcash defines as the "the retail banner group", while in the pcp this number fell by -0.7%.

    In its other segments, Metcash's food business saw sales grow by 3.1% to $9.4 billion. In its liquor segment, sales came in at $4.4 billion, an increase of 19.2%.

    Results in csv file

    In the face of what would seem to be good news, it was, perhaps, a little surprising to find the analysts virtually attending the results presentation had some pressing questions for management about its internal investment plans, and exactly what the results meant. The initial presentation of the result numbers took around 30 minutes, and the Q&A session took over 40 minutes.

    At the heart of this contention was what many analysts saw as a surprising move by Metcash: a share buyback scheme. In announcing this buyback, Metcash stated:

    On 28 June 2021, Metcash announced that it is undertaking an Off-Market Buy-Back of up to approximately $175m. This follows the Board's assessment of Metcash's ability to distribute excess capital to shareholders having regard to: an improvement in the level of economic certainty; its near-term capital expenditure and working capital requirements; opportunities to grow and create shareholder value; while also maintaining a strong balance sheet with low gearing. When combined with $179m of ordinary dividends in respect of FY21, Metcash will have returned over $354m to shareholders since payment of the FY20 final dividend.
    The Board considered various alternatives for returning excess capital and determined that the Off-Market Buy-Back is the most tax effective and value enhancing strategy for distributing the excess capital. All shareholders who continue to hold shares following the Buy-Back, irrespective of whether they participate or not in the Buy-Back will benefit through earnings per share and return on equity accretive outcomes.

    The buyback would account for something over 5% of the shares currently issued by the company.

    HNN can make a good guess at what was actually disturbing to the analysts about this move (though it was never overtly mentioned). However, it is best to delay that until our end analysis.

    We need first to take the questions of the analysts at their (very valid) face value. For the most part, these related to the wisdom (or lack thereof) in returning capital to shareholders via a buyback, when those funds might have been better reinvested in Metcash.

    There were some really excellent questions asked of Metcash, in particular by Grant Saligari of Credit Suisse, Michael Simotas of Jefferies, Andrew McLennan of Goldman Sachs, and Craig Woolford of MST - as well as a seemingly simple, but very revealing question by Morana McGarrigle of Macquarie.

    However, as has often been the case, it was David Errington of Bank of America Merrill Lynch who really got to the heart of the matter with Metcash CEO Jeffrey Adams. What makes Mr Errington's questions so distinctive, is that, while they deal overtly with numbers, forecasts and decisions, they somehow also penetrate down to the character of the executives - and of the business itself - involved in making choices.

    Mr Errington's question begins by pointing out an interesting fact not at first clearly evident in the numbers supplied by Metcash:

    In the second half, your key [food] business in EBIT was down second half [FY2021] on second half [FY2020]. Now, I know that you've lost Drakes and that, but at the end of the day, that's what it is, it is what it is, you lost a couple of major customers here and you have to cycle it. [Also] you're not going to have tobacco excise benefits this year.
    So you're down from $94.3 [million] to $89 [million]. And you're going to give up another ten [million dollars] in not having excise from tobacco in food. So my question is in the main food area, is my concern in the industry is that there seems to be a step up in capital intensity going on at the moment, where we have got Woolworths, and we've got Coles both stepping up sizeably their investments.
    Is it wise to, you know, because your maintenance capex, I think you're basically highlighting that your capex is not much above maintenance. So I think capex is about $80 [million], and maintenance depreciation is about $60 [million]. So you're a little over that. Now, I know you're doing MFuture and all the rest of it. But giving money back to shareholders at this point, I know there's been a desire to give it back because he did raise $330 million last year, so [you've] got to give some back. I get that. But giving it back like this, when the others are stepping up sizeably their capital intensity... You know, Woolworths has announced last week, $400 million in another automated DC. Coles are stepping up, they're investing in projects. Do you think that you might need to step up to remain competitive? Because I know that you're saying that you've got to look at sales, excluding Drakes and all the rest of it. But at the end of the day, they are major customers that you lost. Are you at the position now that you can actually grow sales, once we do go through the normalisation period, given what's happening in the industry right now?

    Mr Adams responded:

    Yeah, well, look, Dave [sic], I wouldn't want to try to predict any further than what we've, what we've reported here on the first eight weeks. But again ... we're quite confident that, you know, we are still seeing again, if you go back to that, FY20 being a more normalised sales period, the growth that we're seeing against that is encouraging.
    As far as our plans, and you know, do we have the capital that we need for those plans? We're absolutely sure that everything that we spoke about at the investor day, I don't want to comment on what other people are doing, because I'm not, you know, familiar enough with their strategy, and why they're spending that kind of money. But we feel quite comfortable that we're spending the right level that we need to spend to deliver the plans that we've outlined.

    Mr Errington took up those points:

    Is it fair, Jeff, to compare it to FY20? Do you reckon right now, we're in a normal period, that you're comparing a normal period to a normal period? Because I don't know about you, but living in Melbourne in the last two months hasn't been normal. I've had to wear face masks in supermarkets. I wasn't allowed to go more than five kilometres for about two or three weeks. So do you really think it's fair comparing the numbers today? Do you think we've normalised today, do you? Do you think we've normalised that you can safely say and talk to us as, as the investment community, "compare yourself to FY20, because right now, it's normal versus normal"? Do you think that's right? Do you think we're in normal conditions right now, so that your trading is normalised?

    Mr Adams confirmed that this was, indeed, his basic approach:

    Compared to FY21 at that time, I think we probably are closer to normal. Maybe this is the new, new normal. The only reason we provided both of those, Dave, was so you can make that comparison to see, versus FY21, which was very volatile, we know, particularly at the start of the year. And then as we got more toward the end of the year, it was sort of what people are calling the new norm.

    Mr Errington asked for a final clarification:

    But do you think it's the new norm now? Does it seem like we're still in that new normal period now?

    Mr Adams agreed that this was his approach:

    Yes, I do! And until things change, as far as borders opening up, and people getting further into the vaccination, I think we probably will be living the way we are now for some time to come.

    One reason why this exchange matters so much is that it touches on one of the key strategic matters for the hardware industry, as well. In terms of capital intensity (to borrow Mr Errington's phrase), we're seeing something similar in hardware, with Bunnings not only investing in ramping up Adelaide Tools to a nationwide chain of tool retailers, but also buying Beaumont Tiles as well. And behind that, there is the ongoing, very large investment in data analytics that Wesfarmers managing director Rob Scott has instigated. While TTH (Total Tools Holdings) certainly is an investment in hardware, it's also a new business, rather than an ongoing investment in, for example, IHG.

    This is happening against an economic background that many would agree is highly uncertain - as Mr Errington points out. Mr Adams, in contrast, seems to suggest there is a predictable pattern to it, a pattern which will, it would appear, continue to benefit the businesses that make up Metcash.

    More concerning, however, is that there is a sense in all of this that Metcash may be, at least in part, willing to return funds to shareholders based not only on present performance, but also on future performance. Yet if we look at a venture such as TTH, much of the predicted growth has an element of risk to it. That's part of the point that Mr Saligari was trying to make when he asked some pressing questions about TTH:

    Just on the total financial commitment into Total Tools, at the moment, and maybe we just stick with the balance sheet amounts at the close, before talking about the additional 15%. So when you acquired this 70%, it was $57 million for Total Tools Holdings, and you recorded a liability of $122 million, and then there was $42 million dollars, I think, for the JV stores and a liability of $69 million for put options that the JV owners have back to Total Tools. And there was debt $40 million at acquisition. Is that ... sorry, can you maybe just confirm whether they're the right numbers?

    Metcash's chief financial officer, Alistair Bell, did respond to that question, but it was not quite on-topic, so Mr Saligari pursued clarification:

    All right, to just to, say, double confirm whichever way we cut it, whether we halve the liability or not, we're looking at about $180 million, approximately Total Tools Holdings, about $120 million for the JV stores, including the put options, so we're up to $300 million there plus the debt. So it is sort of $340 [million] or $360 [million], whichever way you look at it, should we then get in? So we should compare that amount with the $24 million? Is that approximately right?

    Mr Bell responded:

    I'm trying to follow your maths, Grant. So I'll have to, it may be easier to take it off and come back to you afterwards.

    Finally, as the last question to the event, Ms McGarrigle asked:

    Maybe just one other quick one on hardware, just given your positioning in the trade market and given the fact that the market is very fragmented. Should we be seeing more consolidation? Or should we expect to see more consolidation in the industry in the near term?

    Mr Adams replied:

    So, you know, we've said before, and we said again at the investor day in March that it does tend to still be quite a fragmented market, in hardware. Obviously, we've had a great opportunity to pick up Total Tools, and in the past picked up HTH. There's still lots of people out there, you know, it would depend now on what valuations they would be looking for, because a lot of people have benefited significantly during the COVID times. So unless people are willing to talk about normalised earnings, we wouldn't be interested. But it is still one of the markets for us and in businesses where it's still very, very fragmented and lots of opportunity.

    That's a revealing answer, in that it indicates the drive to acquire more corporate stores is likely to be muted for some time. It's also interesting that when it comes to investing in new stores, the prediction for future growth would seem to be less than completely optimistic.

    Assessing hardware at Metcash

    At this point, having spent considerable time looking through the financials presented by Metcash for its FY2021, HNN has to confess that we have, quite frankly, been defeated. We cannot, based on the numbers provided, derive an analysis from the perspective of the industry itself.

    That isn't to necessarily criticise Metcash. Corporations produce accounting numbers for three purposes: to substantiate their tax payments; to inform investors about past performance and future prospects; and to help with the management of a company by monitoring its performance. The first two are public and the third is private. HNN's purpose is frequently to somehow derive a sense of the third from the numbers contained in the other two.

    This year, however genuine performance figures seemed a little hard to come by.

    Revenues including charge throughs

    To give some idea of the difficulties involved this year, take, for example, the numbers provided by Metcash for revenues that include what the company describes as "charge throughs". On the Metcash website these are defined as follows:

    Charge through is a process that allows suppliers to deliver their non warehoused goods directly to our customers, with all accounts for those deliveries payable by Metcash. Metcash, in turn, on charges the receiving customer of those deliveries.

    In the most recent, full-year FY2021 results, this is the description of revenues for the hardware segment at Metcash:

    Hardware sales (including charge-through) increased 24.7% to $2.6bn (FY20: $2.1bn) with significant growth in DIY sales and a return to growth in Trade.

    In the statements for the first half of FY2021, this is the statement for the same category of revenues:

    Hardware sales (including charge-through) increased 20.6% to $1.3bn (1H20: $1.0bn) with significant growth in higher margin DIY sales. Excluding acquisitions, hardware sales (including charge-through) increased 16.2%.

    So, interestingly, the retail sales including charge through were split exactly evenly (at least when rounded to the nearest $100,000,000) between the two halves.

    For the previous year, FY2020, this is how the same category of sales is described in the results announcement:

    Hardware sales (including charge through sales) decreased 1.3% to $2.08bn (FY19: $2.10bn) reflecting the impact of the slowdown in construction activity on Trade sales and the loss of a large HTH customer in 1H19.

    Going back to the first half of FY2020, this is the description for that category of sales:

    Hardware sales (including charge-through sales) declined 4.2% to $1.04bn (1H19: $1.09bn) mainly reflecting the impact of the slowdown in construction activity on Trade sales.

    Once again, the amount of sales in the first and second halves were exactly the same, rounded to the nearest $10,000,000.

    For FY2019, there was some variance between the two halves.

    HNN has no further comment to offer on this.

    Organic versus inorganic growth

    In providing an overview of Metcash's Independent Hardware Group (IHG) from an industry perspective, it's crucial to be able to separate organic growth, which relates to growth in assets owned for more than a year, from inorganic growth, which relates to recently acquired assets.

    The reason that is so crucial is because we're more interested how individual retail premises operate, and less interested in who specifically owns them or benefits from their wholesale business. From an investor perspective, both are interesting, but who benefits from the revenues is somewhat more important.

    Crucially, when the market expands, as it has recently, we want to know which sectors are capturing more marketshare. Is it IHG, other independent groups, or is Bunnings the main beneficiary?

    In the current results, as provided, there is simply no way to work out, or even back into those numbers. We do get one hint, in the FY2021 first half results, which state:

    Excluding acquisitions, Hardware sales (including charge-through) increased 16.2%.

    Though, in the same document, when it comes to EBIT, we're back to no differentiation:

    Hardware EBIT increased $25.6m (+ 65.8%) to $64.5m, reflecting a significant increase in sales volumes, the increased weighting of higher margin DIY in the sales mix, an increase in the contribution from joint ventures / company-owned stores, and the earnings from acquisitions which included $4.8m from two months of trading in Total Tools Holdings.

    The same holds true for the full year FY2021 results. Regarding sales, these state:

    Total IHG sales (excluding Total Tools) increased 17.9% (FY20: -1.3%).

    When it comes to EBIT there is even less clarity:

    Hardware EBIT increased $51.8m (+ 61.5%) to $136.0m, reflecting a significant increase in sales volumes, an increase in the contribution from company-owned / joint venture stores, and the earnings from acquisitions which included $24.0m from the Total Tools Group.

    The difficulty in both cases is that the list of acquisitions is quite extensive. It's also not clear that notations such as "excluding Total Tools" means that everything related to Total Tools is excluded, including Metcash's 36% to 42% share in Total Tools franchise stores, or just the main companies that make up TTH.

    The only other recourse that we have to measuring organic growth are the "like-for-like" sales mentioned in the FY2021 results:

    Retail LfL sales in the IHG banner group increased 11.4% (FY20: -0.7%), with DIY sales up 25.1% and Trade sales 4.9% higher.

    However, LfL (comp) sales tend to understate growth, so using these as a proxy for overall organic sales growth would not be fair to IHG.

    About the only statement we have to offer is that the 17.9% growth figure - which does include acquisitions - is close to the overall figure from Australian Bureau of Statistics (ABS) for growth through that period of 18.3%.

    Other comparisons

    A curious addition to the results for FY2021 was an extended comparison to not only the previous year, but also two years in the past:

    This includes a 19.4% increase for the ten months ended February 2021 and a 12.3% increase in March/April 2021 sales. Compared with FY19, March/April sales increased 25.4%.

    HNN's chart for sales over this period illustrates why such comparisons might be tempting:

    After a strong peak in activity from April to June in 2020, stats since February 2021 show signs of decline in hardware retail revenues. Nonetheless, as these stats show a 21.5% increase from April and May 2019 to April and May 2021, the IHG sales figures show a stronger result - though they are described as being ex-Total Tools, but inclusive of other acquisition revenue, and thus do not describe purely organic growth.

    This multiple year comparison is carried over into the Outlook section of the results dealing with hardware:

    In Hardware, sales for the first eight weeks of FY22 increased 29.1% compared with the same period in FY20, and 15.5% compared with the same period in FY21. Total IHG sales for the first eight weeks of FY22 are up 15.1% compared with the same period in FY20, and 3.1% compared with the same period in FY21.

    Again, the sales numbers are footnoted as excluding TTH sales, but not other acquisitions.

    Analysis

    An announcement that Metcash made in February 2021 to the Australian Stock Exchange regarding the employment of its CEO, Mr Adams, states in part:

    Metcash Limited (ASX:MTS) today announces that the employment agreement of its Group CEO, Jeff Adams has been extended subject to the renewal of his visa, which is due to expire in August this year.
    The existing terms of his employment agreement are unchanged and include a maximum period equivalent to his visa (four years), and a notice period of 12 months for both Mr Adams and Metcash.
    Mr Adams has held the position of Group CEO since December 2017.

    As Mr Adams has been a very effective CEO, it will be interesting to see how his ongoing engagement with Metcash develops.

    The Remuneration section of the results for FY2021 provides this useful graph which describes the various performance reward schemes provided to key management personnel (KMP).

    The long term incentive (LTI) scheme relies on two main performance measures, returns on funds employed (ROFE), and total shareholder returns (TSR). Payments are, according to the document:

    Delivered in Performance Rights. Each Performance Right is a right to acquire Metcash shares at no cost, subject to the satisfaction of performance and service conditions.

    As expected, the announcement of the share buyback by Metcash has helped to boost its price.

    Conclusions

    What resonates most with HNN in looking at these results are the comments made by Mr Errington. There is a link, really, between what happens in some sports, and what happens in the relationship with share markets as mediated by corporate executives and investment analysts. The written rules of the game are important, but it's knowledge of the unwritten rules that leads most players to a better understanding of themselves and their team members, and helps some to achieve some small moments of actual greatness.

    If it was Metcash's intent to avoid a certain kind of scrutiny, a clear benchmarking of performance against industry statistics (though we can't know if that is the case), then congratulations are due, as from HNN's perspective at least that is what has happened. But constrained results are unlikely to serve Metcash's better purpose in the years ahead. Which is, in the end, the message the investment analysts at the results presentation might have wished to convey - in HNN's opinion.

    Related: Metcash held its Investor Day earlier this year.

    Metcash/IHG Strategy Day 2021 - HNN Flash #38, March 2021
    retailers

    Retail update

    Sunshine Mitre 10 invests in lifesaving equipment

    The hardware retail group will now include a defibrillator in first aid kits at all its stores across Queensland

    Sunshine Mitre 10 general manager Neil Hutchins said the defibrillators are an investment in emergency health care not just for their staff, but also for the communities in which they operate. He told The Chronicle:

    We have over 400 staff across our locations, and we take our duty of care very seriously so we have first aid officers at each location, and now we also have defibrillators which can help save lives for anyone experiencing a sudden cardiac arrest.
    But it's not only that, many of our stores are in regional and remote locations so by having a defibrillator on site, it also makes these lifesaving devices more accessible to the local communities.
    And while it's a very big investment, if we can save just one life, it will be money very well spent.

    The defibrillators were sourced from iHeart80, a company founded by former Australian ironman surf lifesaving champion Guy Leech after he experienced personal tragedy when he lost his close friend "Chucky" to a fatal heart attack. Quick access to a defibrillator could have been the difference between life and death for Mr Leech's mate. He explains:

    More than 500 people a week have heart attacks or strokes. Unless a defibrillator is put on you within about three minutes, you've got a 10% chance of survival. The average time for an ambulance to arrive is 12 or 13 minutes.

    Mr Leech said the defibrillators were easy to use, with the machine giving instructions during use.

    The defibrillators are with first aid equipment in all Sunshine Mitre 10 sites including Darling Downs and southwest Queensland stores in St George, Roma and Roma Steelyard, Dalby, and Kingaroy.

  • Sources: The Chronicle and The Gympie Times
  • retailers

    UK update

    Screwfix trials 30-minute delivery service

    The retail chain has partnered with UK-based delivery courier service Gophr to deliver products in Bristol

    Trade-focused retailer, Screwfix is set to launch a trial which will see it deliver products to customers in as little as 30 minutes. To provide this service, Screwfix is partnering with Gophr, a delivery courier business.

    While the trial is limited to the area, parent company Kingfisher has been looking to boost its last-mile delivery options, according to The Times.

    Sister company B&Q has been leveraging its store estate, operating dark stores out of its "digital hubs" to offer next-day delivery. B&Q also offers click-and-collect within an hour, while Screwfix offers the same service within one minute.

    Thierry Garnier, Kingfisher's chief executive, is an advocate of rapid deliveries because of his stint in China as boss of Carrefour's Asian divisions where shoppers expected goods to be delivered within 15 minutes. There he oversaw an operation where hundreds of motorbikes would deliver groceries from supermarkets at three-minute intervals every day.

    During the pandemic, Kingfisher grew online sales by 158% as the business switched to picking internet orders from shop shelves to speed up delivery times. As a result of Mr Garnier prioritising digital growth during the crisis, online sales account for almost a fifth of revenues.

    However, it is understood that Mr Garnier is keen to offer faster deliveries particularly to tradespeople who are working in homes.

    Mr Garnier is using Kingfisher's existing store network as a profitable route to growing its ecommerce business.

    In the UK, Gophr is a last-mile service that recently raised GBP4 million to accelerate its expansion and counts meal kit company HelloFresh, pharmacy retailer Boots, luxury fashion e-tailer Net-a-Porter and British consumer co-operative, Co-op as clients. Department store Marks and Spencer had previously chosen Gophr for its trial of online food deliveries, before striking a joint venture deal with retail software company Ocado.

    Amazon had originally disrupted the UK market with its offer of same-day deliveries but more frequently offers next day deliveries as its Prime Now service migrates to its main website.

    Related: During the pandemic, Kingfisher focused on speeding up its delivery times.

    Kingfisher is placing stores at the centre of its online strategy - HI News 6.3, page 86
  • Sources: The Times (UK) and Retail Gazette
  • retailers

    UK update

    Homebase and Bathstore showrooms go digital

    The home and garden retailer is bringing its Luton and Burton-on-Trent stores online by partnering with Jones Digital

    Homebase is creating a new hybrid model, which integrates both a physical and virtual showroom following the roll-out of its new generation kitchen and bathroom showrooms launched earlier this year.

    Customers will be able to browse the Homebase and Bathstore ranges independently or be guided by a design consultant with free design consultations available both in-store and virtually.

    Homebase currently has 152 stores and 15 stand-alone Bathstore outlets. Ian Penney, business unit director for room solutions at Homebase, said:

    So many people start their projects by looking for inspiration online, and our new 360-degree virtual tours of two of our kitchen and bathroom showrooms make it even easier for customers to see how they can turn their ideas into a reality. Our free design consultations are available in-store or virtually, so customers really can browse and plan everything from the comfort of their own home.

    As the KBB (kitchens, bedrooms and bathrooms) sector in the UK begins to recover post-lockdown, retailers that are able to provide an online experience in support of a bricks-and-mortar space is an effective way to build consumer confidence, especially among those who are shielding or feeling anxious about shopping in-store. Scott Currie, managing director at Virtual 360-degree Tours Glos adds:

    Safety still remains a huge concern for many consumers, so offering an online tour package can help attract and retain business opportunities without risk. We are very pleased that we can facilitate Homebase's many customers so that they can see even more of their fantastic ranges - whether that's from their own home or visiting a local showroom.

    Peter Jones, managing director at Jones Digital is pleased that UK retail brands like Homebase and Bathstore, are now able to reap the benefits of working with its multimedia solution that simulates an existing retail space. He said:

    We all need to move with the times and raise engagement with our potential customer base, especially at a time when clients are often building relationships online first, rather than by popping into to visit a showroom to get a feel for it...

    "Every showroom tour can be seamlessly embedded into the architecture of your website with tags, links and videos containing further product information, as required. This in combination with chat bots and online enquiry forms, which all help customers to interact with your business in real-time with messages instantly delivered to members of your team," explains Mr Currie.

  • Sources: Home Designer Architect and Retail Times
  • retailers

    Timber access challenges continue for retailers

    Lack of supply versus excess demand

    Hardware retailers have commented about the ongoing problems in providing timber supplies for building and renovation projects

    In Mackay (QLD), Porters Mitre 10 joint general manager Greg Porter remains confident the business can keep up with the current demand for timber and other building supplies despite the construction boom around the world.

    Amid restrictions on movement to stop the spread of COVID-19, people around the world are looking for bigger homes or embarking on renovation projects, sapping supply and driving up market prices for the most important component, timber.

    In Australia, the HomeBuilder grant was tipped to attract 27,000 applications, but so far has received more than 121,000 across the country. A combination of low interest rates, government stimulus payments during the COVID-19 shutdowns and border closures, saw Aussies turn to bricks and mortar either through renovations or new builds.

    Master Builders Queensland Townsville regional manager Emma Peters said the issues facing builders and trade contractors are "substantial". She told the Townsville Bulletin:

    The resulting demand has created the first-world problem of builders being extremely busy with the work they won while the grant was running - as well as dealing with the growing problem of trade and materials shortages, and price hikes.

    At Porters, the business is using all available supply lines to meet the "unprecedented" level of building approvals. Mr Porter told the Daily Mercury:

    I'm supplying more product than I've ever had to supply in a very long time.

    He said the pressure on building materials was amplified by an "excessive amount" of construction activity around the country.

    In the past, we've never had these challenges. We've never seen every state in Australia in a very strong position construction-activity wise. There's always been one or two states that aren't in a growth period.

    Queensland-based timber and hardware business, Bretts said it has been fielding desperate pleas for material from local builders and other states. Bretts managing director Bill Nutting said the firm would normally produce frames and trusses for 1000 homes a year. But in a recent week alone, they turned away requests for 600. He said suppliers were doing what they could, but labour shortages were impacting too. He had heard several stories of builders receiving calls from roofing contractors due to start work the next day demanding an increase of $5000 to do the job or they wouldn't turn up. He told The Courier-Mail:

    The market is so hot they could walk next door and get the money. This is going to go for 12 or 18 months. The prices are going to keep going north and there's going to be delays. It's inevitable.
    It's very unhealthy. We'd much rather see this play out over two years, not over 12 months.

    Building products group Williams Group Australia relies on softwood produced at Tumut (NSW) to help supply its needs. Sales manager Mark Pickett said the current climate was proving "very challenging" in light of the fact Australia can't produce enough timber to meet demand. He told The Land newspaper:

    This is across the board in NSW, Queensland, Victoria - demand for timber in all the states is very strong.
    Yes the [2019] fires had an impact and they have lost a shift at Tumut - the mill used to run two shifts - which means that we are dragging logs from further away and that raises the cost. The impact has been severe. In the US, the lumber price index is off the Richter scale and sawmills can't catch up, so they have gone to Europe for logs. In Australia we pay northern hemisphere prices for lumber and that equates to a significantly dearer price.

    Mr Pickett said prices were forecast to remain strong through 2024.

    Timber production is an investment, not just something that you can grow in a few years. It will be 25-27 years before we get a harvest from new plantings.

    Mitre 10 Goulburn operations manager Matthew Lawler put the timber shortage down to Covid-19, international tariffs and the ongoing impact of the 2019/20 bushfires. He told the Goulburn Post:

    The bushfires totally stripped supplies.

    Mr Lawler explained that burnt material meant suppliers went through blades faster which made manufacturing difficult. He said that while Mitre 10 had a good relationship with current suppliers and was "one of the priorities", they were searching for alternative solutions.

    He said alternatives included a laminated veneer lumber product (LVL) that could be used for frames and trusses. However, this product is also in short supply and manufactured in Europe and Russia.

    Steel was another option, but Mr Lawler said supply was "drained" due to current demand. He said builders were also finding it difficult to get hold of metal reinforcing mesh for concrete.

    In Orange (NSW), the timber shortage will cause delays in housebuilding for years to come. Brendan Kent from Kents H Hardware explains that pine framing is used for 90% of new houses. He told the Central Western Daily:

    What I've been told by suppliers is that it's going to be an issue that will take years to improve, it won't be fixed overnight. I've been told by a few of our customers that they're being delayed by two to three months. I hope I'm wrong but as far as I can gather this will be the new norm. There's no light at the end of the tunnel.

    Normally Mr Kent would import the timber from New Zealand or South America. But the global demand for the wood has seen prices skyrocket. He said:

    Now the US and Europe are buying it off them for 30-40% more than what we pay. Unfortunately most places are now limiting how much people can buy, so full packs of timber we unfortunately can't sell to anyone.
    The way we see it, instead of selling it all to one customer we're better off sharing it around so everyone can stay in work.

    Philip MacGregor, executive chairman at Sydney's Hardware & General, said the worsening shortage of timber, steel and other supplies hitting the industry is simply "overwhelming". Over the past 35 years, Mr MacGregor has experienced the "bust and boom" cycle of the construction industry. He told AFR (Australian Financial Review) Weekend:

    This is bigger than all of those because it's widespread.

    The huge increase in demand for new homes and renovations is colliding with a severely stressed global supply chain for basic materials. Shipping and transport bottlenecks caused by the ongoing pandemic have left consumers and businesses struggling to get their hands on everything from cars to mattresses and pianos, according to AFR Weekend.

    Hardware & General's biggest customers are builders that typically construct between two and five houses a year. Mr MacGregor said:

    Everything is going full steam ahead to the point where supply can't keep up, whether it be labour or raw materials.

    The result is a steep leap in prices and wait times. Canny builders are stockpiling more than they immediately need. Others, Mr MacGregor said, are turning customers away or absorbing hits to profitability.

    Bruce Parker, group manager at Hardware & General said locally produced timber costs have gone up by 20% to 25% this year alone, with more increases to come. Imported timber has increased by as much as 90% and more. Part of the reason is that Australian timber buyers are now competing for supply from Asian mills with American builders, who are in the grip of their own construction boom. He told AFR Weekend:

    All the costs in the supply chain have just gone crazy. This isn't going to ease off until global demand eases off.

    Pricing pressure

    Everything from steel reinforcing for concrete slabs to timber for framing and cladding, flooring, roofing, doors and fittings have soared in price, according to the Housing Industry Association (HIA), and are sometimes taking months longer to arrive.

    Stephen Havas, housing chairman at Master Builders Queensland old The Courier-Mail:

    [The costs] are not currently priced into building contracts or they are being gradually fed into building contracts. Builders have little or no margin left at the end of projects to pay wages or fix building costs.
    Builders have to increase their prices to match both what they are paying now and what they might have to pay in the future. The cost of construction from a consumer perspective is going to rise.

    Bunnings has also experienced "unprecedented demand" for timber products and expects elevated timber prices to squeeze its margins for up to another year. Managing director Michael Schneider said at its recent Strategy Day presentation:

    We think about timber (and) we've probably got another six to 12 months of some challenge.

    "Feedstock is in a reasonably good space, but getting it through the mills and, clearly, the strong demand is putting pressure on," added Mr Schneider, using the term for raw timber that is processed into usable wood products.

    Mr Schneider said Bunnings was reluctant to put up shelf prices and hoped to tackle the margin pressure by cutting costs.

    We do a lot of work with our suppliers to look at ways that we can offset costs through improved efficiencies in supply chain or volume purchases.

    HIA chief economist, Tim Reardon, believes the shortage was likely to last for another six months. He told the Herald Sun it was expected the housing construction surge would continue until the middle of next year, and then return to a "more normal market level".

    Mr Reardon said timber supply would also improve as domestic manufacturers to ramp up their output, which would come as they trained new staff, and open or commission new mills.

    Related: Hardware retailers have been experiencing supply challenges in building supplies for some time.

    Home reno demand leads to supply shortages - HNN Flash #44, May 2021
  • Sources: The Daily Mercury, The Courier-Mail, Townsville Bulletin, The Land, Goulburn Post, Central Western Daily, Domain, Nasdaq, The Australian Financial Review and Herald Sun (Online)
  • retailers

    Retail update

    Sydney Tools store proposed for Kensington in Queensland

    A material change of use for a hardware and trade supplies outlet has been submitted to Bundaberg Regional Council

    A development application (DA) has been lodged for a Sydney Tools store on Johanna Boulevard in Kensington, a suburb in Bundaberg (QLD). Rival Total Tools was granted development approval on the same street, according to Bundaberg Now.

    The Sydney Tools "Material Change of Use" application for hardware and trade supplies located at 20 Johanna Boulevard, Kensington was lodged by Baywater Holding Pty Ltd.

    If approved, the development would have a gross floor area of 2424sqm and fill the vacant lot between Bunnings Warehouse and the Boulevard Lodge. The application said:

    The proposed development is a natural consequence of the established character of the precinct, the zoning of the land and is a logical development of the site...
    The business provides a facility that would be similar in appearance and scale to others in the locality and the commercial built form is typical of the type of development along Johanna Boulevard. In that regard the development is commensurate with the local role and function of the centre...the development also incorporates a standard of urban design and landscaping that would positively contribute to the streetscape...

    Among the listed features proposed for this development are 51 car parks including two designated disabled parking bays, a proposed unroofed impervious area of 1,359sqm, 6-12 staff on-site and operating hours of 7.30am to 5pm Sunday to Monday.

    The development application for Sydney Tools is currently with Bundaberg Regional Council's development group for assessment.

    Related: Total Tools lodges DA in Bundaberg (QLD).

    Retail update - HNN Flash 44, May 2021
  • Sources: Bundaberg Now and News Mail Bundaberg
  • retailers

    Retail update

    Pambula Mitre 10 moves into Merimbula

    A paint supplies store in Albury is under new ownership following a retirement

    A report in Merimbula News Weekly has confirmed that Pambula Mitre 10 will take up space which was previously occupied by Woolworths on Main Street, Merimbula (NSW). The supermarket has move across the street into a new purpose-built building.

    Chris Flint, general manager of Mitre 10 Pambula said a tenancy agreement was nearly complete. He told Merimbula News Weekly:

    On top of convenient hardware, paint and garden items, the new outlet will feature kitchen, bathroom and laundry displays and appliances, outdoor furniture and barbecues, greatly assisting the residential and accommodation markets.

    The Pambula store went through a large redevelopment in 2019 and Mr Flint said the move into Merimbula offered a "natural growth opportunity". He said:

    The new combined operation will provide full time employment opportunities for up to 10 people, plus the chance to develop and promote the existing team at Sapphire Hardware. An additional 15 part time and casual jobs will also be created to support the new businesses.

    Separate to the Mitre 10 business, but taking the rest of the tenancy, is a Total Tools franchise of approximately 1200sqm or just over half the building.

    When Jindabyne developer Bruce Marshall bought the site in 2018, the area measured 3846sqm with a building of 2355sqm and 94 car parking spaces.

    Inspiration Paint and Colour

    After 21 years running the Albury-based paint supplies shop, local identity and businessman Errol Gibb has decided to retire, passing the store into new hands.

    Mr Gibb, formerly of Inspiration Paint and Colour on Kiewa Street, Albury (NSW) has a reputation for sponsoring various sporting teams, charities and men's sheds around the region. He told The Border Mail:

    I hope I'm thought of as being generous with donations and what not. It helps the community. I think it's something people should look at more.

    Mr Gibb plans to spend his retirement fixing up his house and travelling with his wife, but he said he'll still pop into the store occasionally to check in.

    New owner Geoff Gray has relocated from Melbourne with his family and said Mr Gibb was "an institution" in Albury. He said:

    I don't think we'll ever be able to get rid of him...The thing is, you struggle to go anywhere without running into anyone who knows him.
    I don't think I've had a customer that's come in that hasn't mentioned him. We went for a walk down the street the other day and I think he said 'hi' to every second person, because they just know him.

    Mr Gray has more than 15 years of experience in the paint industry and said although there had been a big uptick in business during the pandemic with people spending more time at home and wanting to do their own renovations, taking on the business was still a daunting task. He said:

    It's a big step.
  • Sources: Merimbula News Weekly and The Border Mail
  • retailers

    Retail update

    George Taylor's Store has a new owner

    Agribusiness Elders posts $68 million half year profit and Sunshine Mitre 10's 20th store

    Warrnambool-based George Taylor's Store has been purchased by a long-time employee; recent acquisitions and good seasonal conditions have helped Elders to a 31% rise increase in profits for the six months to March 31; and construction is expected to start in October for Sunshine Mitre 10's new store.

    George Taylor's Store

    Chris Snell and wife Simone Watts have taken ownership of the George Taylor's Store business in regional Victoria. They officially took over the operation of the three George Taylor's Stores on April 1.

    This follows former owners Greg and Jacqui Malseed who have retired after 15 years of running the stores. Mr Snell has been working at George Taylor's Store since 1989. He told The Warrnambool Standard:

    This was basically my first job when I left school. I started on the floor and slowly moved up.
    Greg and Jacqui have now retired, but I was Greg's right-hand man for many years and prior to Greg owning the business, he was George Taylor's right-hand man for many years. The baton's been passed on to me.

    Mr Snell spends most of his weeks travelling through the stores at Grassmere, Warrnambool and Camperdown, and Ms Watts has begun learning the ropes. Ms Watts explains:

    I'm an accountant at Sinclair Wilson. But I work at the Warrnambool store on the weekend. It's something to break up the week and it's fun to play shops.

    COVID-19 didn't slow down George Taylor's Stores and Mr Snell had no hesitation in taking over ownership. He said:

    Last year was actually quite good. We traded quite well, and I think people started to purposefully look for Australian and locally made products. We sold a lot of camping gear and we're going to be building on that.

    Since taking over the business, Mr Snell said he'd had a warm reception from regular customers and staff.

    I've been doing most things for quite a while but of course there's always some challenges that pop up. It's always been a good place to work, I never found the need to look for work elsewhere. I think it's all worked out well that we've taken it over.

    Elders

    The 182-year-old farm supplies company said it has picked up about 900 new customers directly from its main rival, Nutrien. in the six-month period to March 31.

    Half-year net profit after tax of $68.2 million is well above the $52 million recorded by the company for the same period last year. Revenue for the six months was $1.1 billion, 22% higher than the $900 million for the previous corresponding period. Underlying earnings before interest and tax were up 40% on a year ago to $73.8 million.

    A sizable contributor to margin growth was the recently integrated Australian Independent Rural Retailers (AIRR) business which was delivering "above pre-acquisition expectations", generating $29.3 million in gross margin earnings, or almost double its results in 2019-20.

    Managing director Mark Allison told the North Queensland Register that with the dust still settling on the Ruralco-Landmark merger 18 months ago, Elders expected to gain more agency and farm products supply businesses and customers, quitting Nutrien. In the first half of 2020-21 almost twice as many Nutrien customers had moved to Elders than were recruited throughout all 2019-20.

    Former Ruralco farm services business YP Ag in South Australia, and five other new real estate and horticultural and general farm supplies ventures in NSW, Queensland, SA and Western Australia generated 21% of its growth results in the first half of 2020-21. Elders also established six new greenfield sites in the past half.

    The company is currently weighing up another 17 potential bolt-on acquisitions which Mr Allison said would possibly add five or six new business to the group before the end of the trading year.

    In the longer term, the company has its eye on significant growth and marketshare target areas in most states, with rural product sales opportunities considered most notable in Queensland, WA, Victoria and NSW.

    Sunshine Mitre 10

    Annecy Properties will be developing Sunshine Mitre 10's new $7.25 million store in the trade and construction precinct at Stockland's Aura Business Park in Caloundra.

    Sunshine Mitre 10 has a 10-year precommitment of the site, according to The Courier-Mail. Annecy Properties director Neville Jensen said he expected doors at the new store to open in June 2022. He said he was in negotiations for some time with Sunshine Mitre 10 before the deal was struck. He told The Courier-Mail:

    Sunshine Mitre 10 is already a tenant of mine in Caloundra and I have been talking to them for the last couple of years about doing this deal. They targeted Aura as a strategic hold for their future, but it still took a while to get over the line.

    The 3309sqm building is on a 6051sqm site. Annecy paid $1.95 million for the land in a deal struck by Colliers International's Nick Dowling.

    It is understood that Sunshine Mitre 10 will pay about $400,000 rent a year. Mr Jensen said he expected to hold onto the property for at least the next two to three years.

    Related: Sunshine Mitre 10 is set to open another store on the Sunshine Coast.

    Retail update: Sunshine Mitre 10 - HNN Flash #44, May 2021
  • Sources: The Warrnambool Standard, North Queensland Register, The Weekly Times and The Courier-Mail
  • retailers

    USA update

    Home Depot's Q1 gets another boost from the pandemic

    Ace Hardware has reported first quarter revenues of USD2 billion, an increase of 42% from last year

    Sales for US home-improvement giant climbed to USD37.5 billion in the three months ended May 2, up 32.7% from a year earlier. Profit rose to USD4.15 billion or USD3.86 a share, from USD2.25 billion or USD2.08 a share, a year earlier.

    Its latest results have been fuelled by a pandemic surge in renovations and homebuilding in the US. There has been an unprecedented burst of home improvement projects, most recently with the distribution of vaccines and the rebound of the economy.

    Global same-store sales surged 31% for the quarter compared to 6.4%, a year ago. Paint was the only category to see same-store sales growth of less than 20%. Online sales grew by 27%. More than half of digital orders were fulfilled through stores.

    Big-ticket sales - transactions above USD1,000 - also indicated a strong willingness by shoppers to spend on home improvement, rising by about 50% on a comparable basis year over year. The average ticket rose to USD82.37 or 10.3%, from USD74.70 in last year's first quarter. Home Depot's tally of customer transactions rose to 447.2 million or up 19.3% in the quarter, from 374.8 million a year earlier.

    Some of that increase in consumer spending could be tied to higher prices. For example, the price for a sheet of oriented strand board timber has quadrupled over the last year, according to executives, but demand has kept pace.

    Although timber has been cited in recent months by investors and businesses as a contributor to inflation concerns, it has continued to fly off shelves amid rising prices.

    Home Depot CEO Craig Menear said that the supply chain bottleneck is in sawmills, where cutting capacity hasn't caught up with demand. He said:

    We don't see a lot of capacity coming online, so we're probably not going to see a lot of finished lumber product in distribution, so as soon as that product hits our stores, it sells.

    This is the first quarter that the retailer is facing year-over-year comparisons to its business during lockdowns.

    Even as much in-person retail evaporated in 2020 Home Depot worked to keep its stores open, arguing that it should be considered an essential retailer. In the year since, it also has benefited from the strong housing market and government policies such as enhanced unemployment benefits and stimulus checks that have supported consumer spending.

    Ace Hardware

    Ace Hardware Corporation has announced record first quarter 2021 revenues of USD2.0 billion, an increase of 42%, from the first quarter of 2020. Net income was USD105.4 million for the first quarter of 2021, an increase of USD69.2 million from the first quarter of 2020. John Venhuizen, president & CEO, said:

    Same-store sales growth of 29.9%, 51 new stores, a 220% increase in our digital business, and increased retail inventory depth drove the best first quarter in Ace's history. Elevated demand, limited supply, and a ridiculously disrupted global supply chain continue to create a difficult environment operationally...

    The 29.9% increase in US retail same-store-sales during the first quarter of 2021 reported by the approximately 3,400 Ace retailers who share daily retail sales data was the result of a 12.3% increase in same-store transactions and a 15.7% increase in average ticket sales.

    Ace added 48 new domestic stores in the first quarter of 2021 and cancelled 15 stores. The retailer's total domestic store count was 4,680 at the end of the first quarter of 2021 which was an increase of 114 stores from the first quarter of 2020. On a worldwide basis, Ace added 51 stores in the first quarter of 2021 and cancelled 16, bringing the worldwide store count to 5,498 at the end of the first quarter of 2021.

  • Sources: The Atlanta Journal-Constitution, CNBC, Wall Street Journal and PR Newswire
  • retailers

    JJ Van Oosten at Retail Connected

    Jean-Jacques Van Oosten (aka "JJ") is chief customer and digital officer at Kingfisher

    Retail Connected (organised by Retail Week) brought together some of the top retail talent in the world for a virtual conference. Jean-Jacques Van Oosten spoke about the need for change, and adapting to the urgent requirements of the pandemic.

    Well-known UK retail information publisher Retail Week held an excellent online conference recently, called "Retail Connected". In an entertaining and enjoyable format, they hosted a global range of retail talent for brief, informative and entertaining talks on a range of topics. It's free to access the recordings of this event, and HNN urges you to go take a look at this link:

    Retail Connected online conference

    One of the people interviewed at the event was Jean-Jacques Van Oosten (aka "JJ") who is chief customer and digital officer at Kingfisher, which owns the UK home improvement retailer B&Q and Screwfix, as well as a range of retailers in France, Poland and elsewhere in the EU.

    Like so many other home improvement retailers, Kingfisher found the COVID-19 pandemic to be something of a mixed experience in many regards. The first thing that JJ had to deal with was rapidly closing a number of stores, as the first wave of the pandemic hit the UK and the EU. As he puts it, the company was facing negative 80% like-for-like sales in the stores, and at the same time, positive 300% for ecommerce.

    In the end, Kingfisher emerged in very good shape from the pandemic - at least so far - with strong gains in profitability and customer share. One element that JJ emphasises is that the company adopted the need for speed as one of the essential services it had to supply its customers, and that in many cases the way the company scaled up and delivered that speed was by making better use of its existing retail network of stores.

    In fact, one area where they were lucky was that by chance, in the weeks before the pandemic hit, they had changed strategy in a very positive way. As JJ tells it:

    The irony of all of this is that three weeks before COVID, we actually decided as a strategic move to put stores at the centre of our ecommerce proposition. That means making the entire range available online. So we decided to do that three weeks before the lockdown, though we had no idea the lockdown was coming up.
    Our strategy was very much one of making that range completely available, as fast as possible, accessible to customers through either click and collect or for home delivery. Because we believed that speed is really the essence.
    You know the "youngsters", they buy things on their mobile - even people of my age, if I may say! And that's even just for shampoo or something to eat. They don't go into a big shop, they just order it mobile, and it comes back minutes later. You can only do this if you've got local presence. So our stores, in our view, were real assets, and not liabilities.
    Amazon, despite all of the fantastic, you know, out of this world type of logistics, they can't do same day, or within a few hours. We will be able to do that. In those extraordinary circumstances [of the pandemic], we put everything in place to make that happen very, very fast indeed.

    All that came from a lot of work, and being willing to really invest in the process.

    We invested very fast into digital equipment for colleagues to get all of the orders coming from the customers and located to the right stores. In the end, they could actually do all of this automatically, using a handset to go and pick [the orders] at Screwfix in one minute, and at other stores in under a few minutes. So it is quite fast.

    As JJ describes it, this was far from just a surface change. The company had to rethink how it did retail almost from scratch, change the way the network worked, and adapt to delivering unusual items.

    All that puts a lot of stress on your in-store routines in terms of availability, in terms of replenishment routines. You have to think about, if you want to do a home delivery from stores, you know, not all stores have got the depth of inventory to be able to do these. How do you optimize the network?
    So we had to build - I mean it's obvious now - but we had to create the concept of hub stores for digital, which are slightly larger stores in the UK then in France. We had to really work extremely hard on availability, because we had actually such a high level of demand not just for the normal building materials, but also for things like live plants.

    Beyond just the practical business of shipping what you had in whatever way would suit the customers, Kingfisher also focused on many of the intangibles it needed to help drive trade, such as delivering more choice.

    We also had to go and think about providing choice to our customers. How do we provide choice? Because they were asking for that. For example, they did not have much choice for services.
    For example, they were asking, "Do I go and set up a service with a tradesman? Or do I go instead to a marketplace for services?" So we actually went and bought a marketplace, which we are now rolling out to the UK and in Poland and in the other countries as well.
    In doing that, we chose deliberately to use an open architecture. So we would welcome what would be considered by traditional retailers to be competitors, but we don't look at it like that. That way, you can monetise some of your web traffic.

    While many retailers still look at recent events as bringing in a temporary state of affairs, JJ is quite clear that many of the changes caused by the pandemic will live on for decades.

    We talk about mutational events, the pandemic is a mutational event. The direction, what I can say is, people say they will continue to work from home to achieve a better balance for their own life, for their private life. But they will also go and collaborate in the office because they value this.
    So we'll have to have flexible working facilities at home, but they also want to see their homes as a place where they can relax. So that is important as well. They want to work in the gardens, on the balcony. They've also discovered the importance of local communities.
    We've gained 10 million new customers, we look at the 18 to 34 age range, many of them are new customers and never did DIY before. So they've learned about it, and they enjoyed it. They want to do more. And I think across all of the sector, the importance of contactless and mobile is going to increase as well.

    More importantly, though, JJ sees a profound structural change in the way retailers need to operate. Where in the past, retailers could dictate product availability to the customer, that will be much less the case in the future.

    I think you need to be very smart as a retailer now. Once upon a time, retailers were telling customers what to buy, your buying team was deciding what would be bought by the customers. That is probably a little bit old-fashioned now. Today, customers are telling you what they want to buy, and you need to personalise your offer.
    The level of automation is important as well. If you look in Walmart, they have invested heavily now in a lot of technology, they are looking at automating stores themselves with very advanced robotics.
    Historically, we have for 120 years, since the time of Piggly Wiggly, consistently provided cost advantages to our customers. The customers are doing our job for us, they come to our stores, and they pick stuff for us. In exchange, they get a lower price.
    Now, what customers are expecting is that we go to them, and we help them to do all these things. That increases our cost base. And that requires us to be far smarter to do that effectively and completely change our unidimensional economic model to add new lines of incomes. That might be marketplaces, it might be monetisation of traffic, or it might be a partnership.

    Asked what he felt he himself had learned through the experience of the pandemic, JJ pointed to the need to provide colleagues and team members with real representation.

    What I've learned is that, from a leadership perspective, is the importance of creating a safe environment, not just safe physically, because of the COVID situation, also mentally, where people can express themselves, and they can speak out. And I will always look for everyone around the table, the virtual table to be able to make a contribution.
    retailers

    Home reno demand leads to supply shortages

    Price increases

    After higher than expected sales during COVID-19 restrictions, a record boom in housing and home renovations has created an environment that is triggering shortages for key building products, especially timber

    Low interest rates, rising property prices, the government's HomeBuilder scheme and strong demand for extensions and renovations after COVID-19 lockdowns have resulted in record volumes of renovation applications and approvals, based on data from the Australian Bureau of Statistics and reported by the Australian Financial Review (AFR).

    Timber and lumber prices are proving an acute problem for the hardware retail and construction industry as limited supply combined with a massive lift in demand - as people renovate their homes during COVID-19 and new homes are built - generates big increases in costs. A shortage of skilled tradies is also adding to rising costs.

    A number of retailers said timber costs have already risen by up to 15% and say there will be more rises before year-end due to "serious constraints" on imports because of global competition.

    Mike Barry, chairman of Natbuild, told The Australian prices in Australia haven't increased to the same extent as 400% plus rises in the US but that since November pricing pressure in the Australian market has been evident. He said:

    The significant demand from new buildings and renovations has just skyrocketed and that is a global phenomenon, and the consequence is that we have not had the same supply of imported material. Towards the end of last year is where we started to feel the price effects.
    Our intelligence is everybody is feeling the same supply pressure here, and same supply disruptions, and our intelligence also says that the price increases are flowing through fairly consistently across the market.

    Ashley Waller, a Home Hardware director, has described "extreme and unprecedented demand" for timber and other building products, product shortages and "soaring" transport costs.

    Mr Waller said timber costs had risen between 6% and 15%, with additional price rises expected before the end of the year. He told The AFR:

    These circumstances have resulted in us not being able to source and supply many products that you would ordinarily expect us to have in stock or receive in-store within 48 hours.

    Horsham Mitre 10 owner, Chris Jones, said he had never seen a shortage like the current scarcity of timber. Wimmera timber yards in regional Victoria are reporting shortages as construction projects across the region continue to be delayed by up to several years. He told The Wimmera Mail-Times:

    There was a fair bit of disbelief in the industry, initially, due to the supply shortage because shortages are generally to bring the price up. That's not the case this time.

    Mr Jones said Horsham Mitre 10 had received calls from places as far afield as Geelong and Melbourne looking for timber.

    Pontings Mitre 10 timber manager Nick Slorach in Warrnambool (VIC) said while building projects weren't being help up, the shortage of supplies was starting to be felt. He recently told The Warrnambool Standard:

    We're sort of at the stage where some suppliers aren't taking orders. Generally through winter they will build stocks. They just didn't get a chance to do that last year.

    However, Mr Slorach said Pontings had been able to fulfill its orders and keep up a supply of stock.

    Timber is getting hard to get. We've been able to get through. We are getting drip fed what we normally would, so we are getting by. Hopefully it gets better sooner rather than later.

    Mr Slorach said pine framing, cypress, engineered products were the products that were very hard to get.

    The framing shortage means they can't build the trusses, so truss companies across the state have cut off as well. There's a three-month lead time for jobs that are in the books, for jobs that aren't in the books, who knows. So that will hold things up at some point.

    Mr Slorach said imports and shipping was part of the issue with other countries such as America paying more for timber - sometimes up to $500 more per cubic metre more.

    So your imports are less because we don't have as much timber coming into the country, but we're not producing as much either.

    Bunnings

    Duncan Bryce, Bunnings' head of builders' solutions, said the building industry was "facing a number of significant challenges" and that boom conditions were causing "serious constraints""on timber imports because of overseas competition and shipping issues. He told the AFR:

    The availability of product on a day-to-day basis is uncertain as our suppliers are working on a just-in-time basis, with limited inventory, making forecasting very challenging.

    Industry sources told The Australian that since November local lumber costs are up at least 20% and imported lumber up 60%. According to a report in The Australian, Wesfarmers CEO Rob Scott told the Macquarie Australia Conference:

    Lumber prices have gone up and there has been constraints there around supply, we have seen pricing pressure, similarly containing shipping is another area where there has been strong increases in pricing and there's also been some increases in other raw material prices, cotton and other categories, and I think what is important to note across all these areas the whole market is facing these cost pressures.

    But Mr Scott said that Wesfarmers would do whatever it takes to maintain Bunnings as well as its other retailer brands credentials of offering low prices to shoppers.

    The way we think about this is not just simply supply costs are going up, how much do we need to increase our price to offset that. That is not the way we think about it, we think about it far more holistically.
    And that is certainly what Bunnings is trying to do with lumber, they are trying to resist the pressure to just keep on increasing prices because in times like this we want to deliver even better value credentials with our customers.
    When cost prices go up the Wesfarmers business will do everything they can to keep our prices down because that's what our customers depend on us for.

    Bunnings general manager for merchandise, Toby Watson, told The Australian the retailer had seen "unprecedented demand for timber products" for a number of months now due to Australians spending more time at home and the incentives for new home builds and renovations. He said:

    This is creating a challenge for the entire industry with demand particularly strong for structural timber.
    We're working with our suppliers and trade customers to forecast demand and plan earlier in the build process so we have additional time to manage orders as best as possible.
  • Sources: The Australian Financial Review, The Wimmera Mail-Times, Horsham, The Australian and The Warrnambool Standard
  • retailers

    Retail update

    Total Tools lodges DA in Bundaberg (QLD)

    Sunshine Mitre 10 is set to open its eighth Sunshine Coast store at Stockland's Aura Business Park in Caloundra South (QLD)

    A Total Tools store could soon be located on Johanna Boulevard in Bundaberg (QLD).

    A material change of use for a hardware and trade supplies development application has been lodged with the Bundaberg Regional Council for a site that previously had a Chipmunks Playland and cafe. STMC Enterprises is listed as the owner and applicant.

    The proposed development would occur within the existing development footprint, not requiring any extensions to the building. The building footprint is just over 909sqm and covers about 35% of the site.

    The tools and hardware business would expect up to six stock deliveries per day, mainly in the mornings.

    Located within the Kensington industrial area, the application proposes that the new use would complement the location's zoning. According to Bundaberg Now, the application said:

    Whilst the development does not directly support industry activities, the proposal would be compatible with the existing industrial and commercial uses within the precinct.

    It also said that the long-term use of the land for industrial purposes would not be compromised because the existing building could be returned to an industry use.

    The proposed development is a natural consequence of the established character of the precinct, the zoning of the land and is a logical development of the site.
    The planning scheme sets an expectation that a mix of commercial and industrial activities are supported within the locality...
    ... the business would provide some secondary support to industrial uses through the selling of tools.

    The Total Tools application also states the new business would provide a boost to the region.

    The proposal provides a direct public benefit to the regional catchment with respect to economic development and employment.

    The Total Tools Material Change of Use application is currently with Bundaberg Regional Council's Development Group for assessment.

    Sunshine Mitre 10

    Sunshine Mitre 10 Group has taken up three commercial blocks in the new Trade and Construction precinct in the Aura Business Park to build its latest store. It is located alongside the Bells Creek Arterial Road, which was due to be connected to the Bruce Highway.

    Sunshine Mitre 10 general manager Neil Hutchins said the new store would be part of a steadily expanding network across Queensland. He told the Sunshine Coast Daily:

    With Aura being a thriving hub of construction with thousands of homes being built over the next 20 years, we know there will be a huge appetite from tradespeople, owner builders and homeowners alike.
    And with Aura to be home to 50,000 residents it fits with our focus on community, supporting community and sporting organisations in the towns in which we operate.

    Stockland's senior economic development manager Matthew Byrne said Aura was positioned "in the heart of the largest investment zone in the region".

    Once finished, the estate due to home 50,000 residents was planned to include two business parks, 10 sporting grounds, 25 community facilities, 20 educational facilities and 700ha of conservation and parkland areas.

    Mirco Bros stores sold to Nutrien

    Earlier this year, Nutrien Ag Solutions bolstered its local presence with the purchase of WA-based business Mirco Bros. The acquisition includes stores at Manjimup, Henderson and Neerabup, all located in WA. They will be rebranded Nutrien.

    Mirco Bros was established by brothers Vince and Peter Mirco and their wives June and Jean in 1968 and has been owned and operated by the family ever since.

    It stocks a wide range of fertilisers, chemicals, garden supplies and agricultural equipment to cater for commercial, market and backyard gardeners. The business also supplies tractors and associated implements to WA's vegetable, horticultural and vigneron industries.

    Nutrien Ag Solutions region manager Andrew Duperouzel said Nutrien was proud to build on the knowledge and relationships Mirco Bros had built up during the past five decades of serving WA growers. He told Countryman:

    We are very pleased that Martin Mirco (son of the late Peter Mirco) and the existing branch managers will remain within the branches to continue to provide the same great service, particularly to the horticulture industry in the South West.
    The horticulture industry is an important and growing part of the agriculture industry in WA, and we are keen to support growers to be as productive and profitable as possible through great products and advice."
    As a company, we have great confidence in the WA industry and are willing to invest to see it grow.

    Related: In late 2019, North American-based Nutrien Ag acquired the former Landmark and Ruralco businesses.

    Aussie agricultural retailers go global - HI News, page 26
  • Sources: Bundaberg Now, The Courier-Mail, Countryman and Sunshine Coast Daily
  • retailers

    Retail update

    Renovation destination Design 10

    A Mitre 10 store in regional Victoria is exploring the benefits of solar and renewable energy

    Design 10, located at Fagg's Mitre 10 Belmont Timber, is the first of its kind for the Mitre 10 group. The idea to convert the space - previously home to Tait Flooring and Hardings - into one big showroom came after a flooding incident in 2019. However it provided an opportunity to start again. General manager Andrew Pitman explains that a mains pressure pipe on the street burst, causing water to flow through the showroom and destroyed everything. He told the Geelong Advertiser:

    The idea came to life after that happened and change over took 12 months from idea to execution. This is the first Design 10 in Australia.

    He said the vision is for customers to visit the showroom for inspiration.

    The Geelong-based team created Design 10 as its own initiative and after seeing the results, Mitre 10 decided to buy in and roll it out across the country. Showroom manager Jules McDowall said it was discussed with Mitre 10 head office in the early days but was never picked up.

    Andrew drove it at ground level here and we just built and built. It got to the point when Mitre 10 visited and went 'wow'...
    We have flat pack kitchens but we have made them bespoke. We show people how you can take a flat pack and turn it into your own - for example, we have timber flooring on the sides of an island bench. Anything is possible.
    Prior to having this facility we weren't geared to help them achieve that in a retail environment. Now [people] can come here and achieve just about anything they see on The Block or Pinterest.

    Technology is also playing its part with a large in-built benchtop screen, allowing customers to explore different ranges virtually.

    The team has the ability to design complete kitchens. While Design 10 supplies all the products and materials, it has an affiliation with WeDo, which project manages and installs it.

    Solar energy at Mitre 10 Horsham

    Chris Jones from Jones Mitre 10 in Horsham (VIC) has used the advice from local solar specialists at Wade's on how to maximise copious amounts of sunlight, extensive roof space and a scheme to make it work for his retail operation. He also worked in partnership with landlord Plazzer Builders to access the Sustainable Australia Fund (SAF) through Horsham Rural City Council.

    After three months, he believes he is already seeing financial benefits. Mr Jones told The Weekly Advertiser:

    We're not only saving thousands of dollars but through the program we're also guaranteed a pay back from the fund provider. We're basically locking in our savings. It's not only taken the sting out of the power bill, but also putting us financially in front with power use.
    From my perspective the big part of the program is that I don't have to own the solar system - the landlord does - and the next tenant takes it on. It's a win-win situation for everyone.

    The SAF's Upgrade Fund is a fixed-rate, long-term loan, with terms of up to 20 years, for environmental-upgrade projects for existing non-residential buildings. Adrian Wade from Wade's Horsham said there was never a better time for commercial enterprises to invest in solar power.

    The Horsham council signing up with the Sustainable Australia Fund opens a large door of opportunity. It allows businesses to be able to finance environmental upgrades such as solar-power systems and to then pay them off a long period time through council rates.
    This has enormous benefits for owner-occupiers and in the case of Jones Mitre 10, long-term tenants.

    Mr Wade also said the fund removed some of the financial barriers that concerned many businesses contemplating a move to solar-power systems.

    It has provided a way to make the most of every dollar while reaping the benefits of solar power.
  • Sources: Geelong Advertiser and The Weekly Advertiser Horsham
  • retailers

    Indie store update

    AIRR store proposal in Gracemere (QLD)

    Gloucester Hardware owners are grateful after the overwhelming show of community support during the recent floods

    A warehouse to sell rural and agricultural supplies employing up to 10 staff members has been proposed for Gracemere in Northern Queensland.

    The development application (DA) was lodged on behalf of Australian Independent Rural Retailers (AIRR) which has more than 250 retailers in its network. It positions itself as the one-stop shop for farmers, growers, producers and pet owners, and sells a range of animal health, crop and pasture protection, livestock, fencing, farm management, water, pet, equine and poultry products.

    The proposal is for a warehouse facility with three separate buildings and associated ancillary offices and amenities, to be developed over two stages. The first stage will include two warehouse buildings, which will both be six metres high, and the associated ancillary office and amenities area, sealed driveways, parking and landscaping.

    Stage two will be for a third warehouse, which will have a 2170sqm ground floor area. The warehouses will connect to a covered loading area for deliveries. There will be no storage or handling of dangerous goods.

    The proposed site in Gracemere is located on a corner block with a total area of 13570sqm and currently contains a few demountable buildings.

    The DA was submitted by Gideon Town Planning to Rockhampton Regional Council and is now awaiting approval.

    Gloucester Hardware

    Gloucester Hardware owners, Jigna Vekaria and her husband are at a loss for how to thank all those who rolled up their sleeves before and after their hardware store flooded in March. Ms Vekaria told The Gloucester Advocate:

    We closed the doors on [the] Friday after the SES told us about the flood warning but people just keep banging on the door to come in and help get our stock up higher.

    Being relatively new to the Gloucester (NSW) region, the couple didn't know the full history of how the area has flooded over the years. And even as they learned more about it, they still didn't think it would be as bad as it was.

    In fact, no one did. As the threat of more flooding was predicted to continue Ms Vekaria opted to keep their doors closed. Little did they know that a message was posted on Facebook calling for people to help them start cleaning up. Ms Vekaria was shocked when the group showed up. She said:

    I couldn't imagine, with all the mud and dust, how to start. When the group came in - there are no words for that. It was amazing to see how many people came.

    The clean up took place over two days and the shop was able to reopen after a week of being shut. According to Ms Vekaria, without the helping hands, the shop would have been closed for a month.

    I cannot image where I'd be without the community. I really want to thank all the volunteers and builders - because of them we had a quick reopening.
  • Sources: The Courier Mail and Gloucester Advocate
  • retailers

    Retail update

    Pontings Mitre 10 to expand

    Total Tools in Shepparton (VIC) moves to a larger store and Mitre 10 New Zealand appoints new CEO

    The site of a former Caltex service station site located close to Pontings Mitre 10 in Warrnambool (VIC) will allow the store to expand on-site and use the additional space for storage.

    Pontings Mitre 10 director John Ponting told The Warrnambool Standard he had been considering options for off-site storage because of the the region's building boom. He said:

    We've been finding it hard to store a lot of the orders we get. When the former service station went on the market, we jumped at the chance.

    The service station closed in July 2019, and expressions of interest were sought for the parcel of land where it was located (Raglan Parade) in late 2020.

    Mr Ponting said the building on the site would be demolished and it would be used as a loading and unloading bay.

    It will help us get trucks out of the main yard and will be good for storage. I had been looking at off-site options for storage so we were lucky it came on the market.

    Mr Ponting said the business' last expansion was about 10 years ago.

    It's an expensive acquisition but we think in the long-term it will be beneficial for the whole business.

    Total Tools Shepparton

    Total Tools in Shepparton (VIC) moved to a larger store in March, the fourth time in five years that owners Ray and Haxhije Cox have upsized. Mr Cox said told Shepparton News:

    We started in a small store and it's grown over the years. It took us five years to get to where we are today and this is our fourth move, we're classed as a mega-store now.

    He said while there were plenty of tradies coming through the door, the number of people doing their own handiwork or renovations had increased.

    It's open to anyone, we've got plenty of ladies coming here and shopping as well so it's not just the traditional tradie types, it's a broad range of people.
    When everything first happened with coronavirus, we had guys who'd never welded before coming in wanting to learn how to weld, so they were buying welders. The biggest thing now is it's a bigger store but it's busier trying to keep up with the amount of stock going out the door.

    The new store is at 46-52 Benalla Road, Shepparton (VIC).

    Mitre 10 NZ CEO

    Andrea Scown has been appointed the first female chief executive of Mitre 10 New Zealand.

    She has taken over the reins from Australian-based Chris Wilesmith as the trans-Tasman commute to and from Coffs Harbour (NSW) under COVID-19 restrictions became unsustainable.

    Ms Scown told the Wanganui Chronicle her appointment represents stability within the business. She is focused on steering the company through the second year of its multi-year transformation program.

    Anything I'm doing is a build-on rather than a change out. We've got a very clearly defined strategic path, we've got support from the board and membership around that, so [I will be] managing all of those things and taking care of the team. There could be some reprioritising of things [ahead] but no wholesale change.

    The transformation is centred around enabling the business to operate more as a "bureau service" and is expected to be completed by 2025, said Ms Scown.

    It is part of a major overhaul of the way the Mitre 10 operates internally and its model as a co-operative. The company is also looking at how it can use new retail technologies from store sales through to back-end fulfilment. Ms Scown explains:

    We're a very inefficient business, again it's not unusual for retail, retailers don't tend to spend a huge amount of money in that real tech space. For us that inefficiency means we take a lot of people to do things and we'd love to have more people focused on customer service and value-added things.

    About half of Mitre 10's 84 stores are Mitre 10 Mega outlets. The hardware chain is also New Zealand's largest garden centre. It is expanding the larger box store format with new stores planned for construction in Silverdale (a village approximately 30km north of Auckland in the North Island) and Papamoa (a suburb of Tauranga in the Bay of Plenty region). Ms Scown said:

    We're at an age now with the store network that there is probably more ... refurbishments happening [than new openings]. We're also working on evolving [the concept] of what is our store of the future.

    Mitre 10 is realistic that once the borders open to international travel the level of demand for its goods will likely peter out after very strong trading in the last 14 months. Ms Scown said:

    The reality is if you're not travelling to Australia, you're going to build a new deck. Australians travelling here with their NZD5 billion spend [however] aren't going to buy decks or buy paint while they are here.
    As a sector we should accept that it will pull back a bit, certainly in the retail space. Trade though for us continues to grow really strongly year-on-year pre-COVID and I would not see anything happening that will pull that back. We've still got a housing shortage, we've still got unprecedented levels of consents [approvals] that we haven't seen since the 70s. There's no proof point for me or other senior leaders in the business or our members to say that will ease off anytime soon - subject of course to being able to get materials to do that building.

    Ms Scown comes into the CEO role as building materials company Carter Holt Harvey cut its supply to some of regular customers in New Zealand including Bunnings, Mitre 10 and ITM - as a result of accelerated house construction.

    The timber shortage has had varying "pockets of impact" across Mitre 10's network up until now, according to Ms Scown. While she does not believe it will have a massive impact on Mitre 10 as the co-operative stores are able to share assets, for the industry it will "probably shake down and will end up in a new normal".

    Ms Scown said there is no easy fix for the shortage as there are layers of complexity, and it is a situation she believes will stick around until at least the year's end.

    Ms Scown joined the hardware store chain in 2017 after working at multi-channel retailer EziBuy and has a background in fashion and apparel retailing, as well as private equity.

    At Mitre 10 (NZ), Ms Scown started as general manager of retail operations before later moving into the role of chief customer experience officer and then chief operating officer. She first applied for the role of chief executive at the same time Mr Wilesmith did in 2019 when former Pumpkin Patch boss Neil Cowie announced he would step down.

    Ms Scown hopes her appointment inspires the next generation of women, and was surprised by younger women across the organisation reaching out to her following the announcement of her appointment. She said:

    You forget how important those role model pieces are for younger women. [When] you do get reached out to from younger women in the organisation you realise actually they are looking [for representation], particularly in this type of industry, thinking it's hardware, building products, there's a lot of men about, is it a place for women - and I think it definitely is.

    Ms Scown said some of her biggest supporters have been male colleagues.

    Mitre 10's employee gender split ratio is slightly skewed towards a higher female representation versus male - just like its customer base. There are three women in Mitre 10's executive team and one - Tricia Indo - on its board.

    With a big family - Ms Scown is a mother of seven and now five grandchildren -she has plenty to do outside of work and said she does not believe in 13 to 14-hour work days. She said:

    There's always times when you have to put in the hours but I think as a routine it's about sending that good cultural message.

    Ms Scown also said she loves being in the stores and spends two or three days a month outside of Mitre 10's Albany office in Auckland's North Shore, where she is typically based.

    Related: In 2019. Australian executive Chris Wilesmith became CEO of Mitre 10 New Zealand.

    Mitre 10 New Zealand appoints Aussie CEO - HI News, page 33
  • Sources: The Warrnambool Standard, Shepparton News and Wanganui Chronicle (New Zealand Media and Entertainment)
  • retailers

    Indie store update

    AG-PARTS store is under new ownership

    AG-PARTS Echuca in regional Victoria is taking part of the Shop Local promotion sponsored by Forty Winks

    Independent store AG-PARTS located in Echuca (VIC) has recently been taken over by Kyabram-based Stuart Joyce, who already owns and operates Kyabram Bearings & Industrial Supplies and K2 Industrial Supplies in Echuca.

    The store has agricultural supplies such as farming implements, seeders and tillage equipment, as well as industrial tools and accessories. It is a member of Industrial & Tool Traders (ITT) which is part of Hardware & Building Traders (HBT). Manager Darryl Clark said AG-PARTS is one of the only places in town to sell Milwaukee Power Tools. He told The Riverine Herald:

    Milwaukee are a high-end, tradie's power tool and we stock a large range.

    After a difficult year in 2020 dealing with COVID-19, Mr Clark said the business is very grateful to the community and its customers. He said:

    We'd like to thank all our customers who supported us last year and stayed loyal by shopping locally.

    AG-PARTS is also a Castrol Australia stockist which is running a promotion with the chance to "Win a dream holiday with Castrol".

    Its local and knowledgeable staff are on hand to point customers in the right direction based on their budget and the task at hand.

    The store is located at 39 Mundarra Road, Echuca (VIC).

  • Source: The Riverine Herald
  • retailers

    UK update

    Homebase expands its garden power range

    Travis Perkins Group, owner of the Wickes chain, is betting on the current enthusiasm for DIY from millennials amid plans to demerge the retailer

    Home improvement retailer Homebase will introduce the Powerbase range of outdoor power equipment products in time for its spring season.

    Designed to make gardening easier, Powerbase is user friendly, catering to different levels of gardeners whether they are novices or more experienced. With 31 products, from lawn mowers and chainsaws to hedge trimmers and pressure washers, this range will provide customers with more choices when taking on garden projects.

    The range includes lightweight cordless options, and using the latest in rechargeable lithium technology. Using Powerbase means that one battery platform can power up to 12 different garden power tools. This can save customers time and money as well as being more environmentally friendly. Stephen Pitcher, director of trading for garden & seasonal at Homebase, said:

    We know that our customers have had to readjust to a new way of living over the past year and outdoor spaces have become one of the few places we can see friends and family.
    Tackling garden projects can be intimidating, especially for the less experienced gardener. As the garden experts, we're committed to providing our customers with the tools they need to bring their projects to life and the new Powerbase range does just that.

    All Powerbase products are covered by a two-year warranty.

    Wickes

    DIY retailer Wickes has taken another step towards becoming a standalone, listed business. Parent company, Travis Perkins, submitted its prospectus for a demerger of Wickes to the Financial Conduct Authority recently. Chief executive of Wickes, David Wood, called it a "milestone" for the business, according to The Times.

    FTSE 250 building materials group, Travis Perkins has been wanting to offload Wickes since 2018 when it believed that a younger British generation had fallen out of love with DIY, and it wanted to focus on its trade customers. Its spin-off plans were put on hold during the pandemic as companies across the UK hunkered down to ride through the crisis.

    However, Wickes has enjoyed a revival from a DIY spending boom as people have used their extra time at home to carry out renovations. Wickes has 233 shops and employs about 8,000 people.

    Investors will be given one share in Wickes for every share held in Travis Perkins and it is expected that there will be some volatility in the first few months of trading as shareholders have mixed views on UK retail stocks. (Travis Perkins has been valued at GBP4.03 billion).

    Nick Roberts, chief executive of Travis Perkins, said the separation "will allow both businesses to allocate capital to drive growth and further enhance their market leading positions".

    Wickes boosted like-for-like sales by 5% last year and increased total sales by 20% to GBP1.34 billion. While the group was boosted by a surge in first-time DIYers, it suffered a 27.8% drop in sales from tradesmen as COVID restrictions limited their work. The company increased click and collect orders by 450% while home deliveries rose by 120%.

    Mr Wood said there was a "large cohort of millennial first-time DIYers who have found the process enjoyable and have learnt a new skill over the past year. There is new blood in the market, which will be helpful to the business and the market".

    He added that there remained pent up demand in the professional trade sector because of projects that had been put on hold during COVID restrictions, while an uptick in housing transactions would lead to more renovation work on kitchens and bathrooms.

    The group said that it expects its retail growth to "moderate against tougher comparatives" but that hiring help will return and has had a high level of enquiries from trade clients. Wickes said that sales in this division were 50% lower than last year.

    Related: In early 2020, Travis Perkins put plans to spinoff its Wickes DIY retail arm on hold as the coronavirus outbreak continued.

    Europe update: Wickes demerger is on hold - HI News, page 129
  • Sources: DIY Week and The Times
  • retailers

    Metcash/IHG Strategy Day 2021

    Annette Welsh fronts the analysts

    Following up on the IHG Expo 2021, IHG announced a reduction in the number of brands, but few changes to its core strategies

    While the Independent Hardware Group (IHG) strategies announced at Metcash's Investor day in March 2021 were, for the most part, not entirely new, they did amount to a new pattern for the hardware wholesaler/retailer to take. To summarise the overall strategies quickly:

  • IHG is going to move to a two-brand operation, just Mitre 10 and Home Timber & Hardware (HTH) stores
  • This means that Thrifty-Link and True Value stores will either convert to HTH stores, or exit the network
  • Mitre 10 to become the "trade" brand, HTH the "DIY" brand
  • Accelerated investment in digital
  • Click and collect "live"
  • Continue to grow the DIY business, but...
  • Concentrate on growing the trade business
  • Goal for Sapphire conversions to go from 200 stores by 2022, to 300 stores by 2025
  • Introduce Planograms for stores, in size ranges
  • Expand offerings in kitchens and laundries
  • Expand connected home offering to include in initial construction
  • Using scan data for sales to power data analysis available via an iPad app
  • Whole-of-house to expand from 35% of expenditure to 70% of expenditure
  • Launch of Design 10 to provide a showroom for products
  • Integration with Xero accounting software
  • Loyalty program driving CRM
  • A new IHG?

    How do these strategies relate to each other, and what sort of IHG can we expect in the future?

    Perhaps the simplest way to see what is happening is that much of this is everything that HNN and a range of other analysts predicted would take place once HTH was merged with Mitre 10. A good deal of future growth for the company looks like it will come from operational alterations, rather than from expanding sales revenue.

    A clear example of that is the move to eliminate the True Value and Thrifty-Link brands, and to shift the emphasis on store branding towards Mitre 10 and away from HTH. While, as IHG points out, the two minor brands do account for only 3% of total revenue, these are, of course, real stores and with real owners, not just numbers on a spreadsheet. As the CEO of IHG, Annette Welsh pointed out in response to an analyst's questions about whether moving the smaller brands into the bigger brands might dilute the latter's market position:

    It's certainly the conversation that we have at the national advisory council in terms of how do we ensure that the brand isn't diluted. So there's standards that each store will hit in terms of their movement, depending on which brand they go to. But we see the majority of those stores probably moving into the [HTH] brand rather than into the Mitre 10 brand. It's the right one for them to go. It's the smaller model. It's probably more closely to aligned to DIY. And so that's probably how we see that tracking out.

    Very logical.

    What the analysts might have missed, however, was how these moves will directly improve the revenue for IHG. Many retailers have persisted particularly with True Value because the fees are much lower. Forcing some of them into HTH or Mitre 10 will likely increase the fees they pay to IHG.

    The same holds true, of course, for the move from HTH to Mitre 10. According to IHG predictions, the proportion of sales through HTH will move form 46% in 2017 to just 22% in 2021, and further down to 20% in 2024, while Mitre 10 sales will move up to 80% of sales by 2024. With Mitre 10 store contracts in general more expensive than HTH contracts, that should boost profits for the group.

    How popular that will be with smaller stores remains to be seen.

    Corporate/Joint Venture stores

    According to IHG, the amount of revenue that is derived from non-independent stores grew from 40% in 2018 to 45% in 2021. A number of statements were made which said that IHG planned only to acquire stores when either there was a sale due to members deciding to cash out for retirement and similar purposes, or when an "aggressive" offer was made for a store by a competitor. (Part of the contracts with IHG, it is HNN's understanding, include a provision which enables IHG to make a matching offer to buy a store offered for sale.)

    While that might seem like a slowing down of acquisitions, it seems highly likely that by the time 2024 comes around IHG will be deriving over 50% of its revenue from Corporate/JV stores. According to Ms Welsh:

    One of our great strengths is the strength of our independent members who are very supportive of the company store and joint network portfolio that we have, because they see it as us walking in their shoes, us experiencing what they experience every day, but also the opportunity for us to test and trial all of these initiatives and ensure that they are commercially proven before we roll them out.
    What that delivers for them is confidence that when we come to them to say, this is the right initiative for your business in your local community at this time, we can demonstrate to them that we have absolutely put it through the wringer and it is right for them to take advantage and deliver top and bottom line sales.

    This is a familiar suggestion from IHG, but, anecdotally, HNN seldom encounters hardware retailers in the group that are entirely comfortable with the increasing numbers of corporate stores. In order to "walk in retailers' shoes" you would surely only need about 25% at most of the revenue flowing through the corporates. It is HNN's estimation that this situation could become much more acute if Metcash continues with its roll-out of Total Tool stores, which will bring increasing competitive pressure to the established IHG retail network. For IHG itself, between Total Tools and its corporate stores, those retail dollars are completely fungible, but they could represent a substantial loss in sales from hand tools and power tool accessories for some Mitre 10 store owners.

    Sapphire

    As Ms Welsh mentioned, Sapphire upgrades have been one of the main ways the group has moved HTH members into Mitre 10 - which would indicate a reversal of its past policy which extended Sapphire upgrades to HTH as well.

    The story about Sapphire is itself interesting. With 130 conversions expected to be completed by the end of Metcash's FY2021, to meet its target of 200 a year later, they would obviously have to do 70 conversions. The new target is 300 stores by 2025, which means instead of doing 70 conversions in year, they need to only manage 170 over four years, or 42.5 per year - about 40% fewer.

    No doubt the COVID-19 pandemic slowed down the rollout of Sapphire, but this does cast doubt on whether IHG will be able to meet even this greatly reduced target. It represents a clear failure to deliver on past projections.

    Digital integrations

    This is how Ms Welsh describes one of the recent big digital leaps forward at IHG.

    Just this month, hot off the press. We have improved our offer to our customers and made our inventory click and collect in a store live. Not something that we had before. So remember a customer previously would go on to click and collect, they'd place an order, and then we would find them to tell them whether we had it in store. They would need to wait for a few days before we can get it. They now can see that for themselves. And it's a much more convenient offer than we've had before.

    OK, really? So, up until March 2021, ordering something for click and collect took from three to five days? That's honestly difficult to believe.

    Of course that really reflects the whole difficulty that IHG has had in implementing digital sales over a network which is widely distributed. One area where they at least seem to have done better, is with providing some data insights directly to store owners. According to Ms Welsh:

    In addition to our digital solutions for our consumers, we've got some fabulous solutions for our members themselves. This is part of that continuing strategy for us to add value back to the members. The members have been generous in trusting us with their scan data. What we now do is build that scan data and return it to them. What they have is an iPad on which they can then search their own insights related to their business that we've provided back to them. They can see benchmarking across the whole group. We indicate to them where they've got aged inventory, where their price is not competitive and where there are opportunities for them to create even better value.

    Probably the greatest advantage in that list of features is the capability to see benchmarking across the group. Other than that, most point-of-sale systems can provide this kind of information. To provide real data analysis would require more points of information, such as geographically linked demographics, perhaps an indication of what people from their geographic area are browsing online and so forth. Maybe some of that will be forthcoming, now that they've sorted out click-and-collect.

    Whole of house

    While the "whole of house" approach is something that Ms Welsh pioneered at IHG, it seems a very difficult area to quantify in terms of expected growth. The point that Ms Welsh makes is that currently the average involvement by a builder results in IHG supplying around 35% of their needs. However, there are builders that rely on IHG for 70% of their needs. While this is an identified growth area, it remains unclear exactly how IHG is going to achieve this growth.

    Though it is not especially clear, it seems that one way IHG might do this is through what it calls its Design 10 centres. As Ms Welsh explains it:

    A big portion of build trade is that fix and fit-out perspective. That piece at the end, that finishing touch that's really important. And for those familiar with our business, we've got some real strengths in here. We have our Harding's business, appliance and front of wall business. We have our Tate's flooring business. We have timber connected home kitchens, right the way through the whole gamut. So the pictures on the slide that I show you here are a brand new Mitre 10 design centre. We're calling it Design 10. Hopefully you see that cheeky connotation and that link between Mitre 10 and Design 10.
    ...
    The purpose of this is that ability for the builder to bring their consumer in and really finish off the home side-by-side with the expertise that we have. It's to bring the renovator in, to give them that real vision of what could be in their home. And that serious DIYer also has the opportunity to learn and connect with our teams to build their new kitchen or a new bathroom.
    This isn't just a bricks and mortar solution. We plan on probably having about 10 of these in central locations or major regional centres, but it is also an online solution that we should be building and ensuring that we compete with the best in the market here.

    This loops around, to some extent, to our sense of the difficulties that Metcash has as a whole when looking at the potential of digital enterprises. To HNN's knowledge, by far the most used resources for designing houses, renovations, kitchens, bathrooms and so forth are found online. Houzz, for example, or Pinterest, and videos on YouTube. Does it really make sense to invest in physical locations to which a limited number of people can travel? And while those showrooms do provide more than just an image downloaded online, or a video watched on a mobile phone, they are also very limited in terms of the products and designs they can offer.

    The forecasts

    The other area of great interest in IHG's Investor Day presentation was its forecasting. There seemed to be a real earnest wish expressed throughout most of the Metcash presentations that some of the exceptional circumstances brought about by the COVID-19 would stick around another two or three years. The food segment, in particular, seemed to express a strong hope that somehow Australians have been permanently converted from dining out, and there was similar sense of hope on the part of the liquor segment.

    While it does seem likely that these hopes will prove futile post 2021, there is some potential that areas such as DIY expenditure will show longer lasting increases. After you've painted a couple of rooms, or refinished a chair, there is a high potential that you will consider that work in the future as well.

    However, as Ms Welsh repeatedly makes clear, the DIY market is something of a side benefit and the real focus is on builders and trades. IHG makes use of the figures produced by the Housing Industry Association (HIA) in her forecast of future growth.

    While HNN has the greatest respect for the HIA, it's pretty clear to us that these forecasts are more likely to be incorrect. We're already seeing strong signs that the housing market is overheating in Australia, and without the potential to raise interest rates so as to slow the growth, there is a clear possibility of a crash.

    Outside of that, however, the HIA shows sharply reduced rates for growth in multi-unit dwellings. While the COVID-19 pandemic has certainly reduced the attraction of living in an apartment, it seems inconceivable to us that this will continue much past the end of FY2022. The simple fact is that with house prices continuing to increase, many younger families will need to choose between renting or purchasing some kind of multi-unit dwellings.

    That potential insight flows through to another of the charts offered by IHG, which shows their vision of the market they service:

    What that graph clearly shows is that if we do see a radical increase in multi-unit dwellings, at the expense of detached dwellings, IHG could be exposed to a declining market. Ms Welsh states that:

    We have, and have had for some time, a diversity of our consumer, which we think puts us in a very strong position. A little bit in that multi dwellings, which is going to become challenging in terms of its growth for the next few years, as there's an overpopulation of apartments, but the split between detached and renovation.

    It seems unclear where the notion of an oversupply of apartments comes from. Certainly there has been a reduction in demand, and current building approvals show a slow down in construction, but, post the COVID-19 pandemic, it would seem this form of habitation will retain its previous popularity.

    Analysis

    Ten months is not a long time to be in charge of a complex business like IHG, no matter how long you have worked as IC2. It will likely be another 18 months or so before we really start to see the kind of imprint that Ms Welsh intends to make on the hardware retail industry.

    One of the difficulties of the role is the shift that needs to be made between the needs of the members, and the needs of the sharemarket, as represented by the investment analysts. Members want to know that you care about their needs, that you value their human contribution, and that in seeking to profit yourself, you will also provide a path to income stability for them as well.

    Investment analysts are very different. Their primary need in a business such as hardware is that they need to see a clear path between CapEx and future growth. They want to see that a company is anticipating future change, and positioning itself so that it will benefit from those changes, and provide self-funding for future growth as well. The main requirement they have in communication is not promises, high aspirations or reassurances, but rather to be given the tools they need to make risk assessments.

    To achieve that, the major requirement is true coherence. They must be able to look at any single element of a strategy - for example, Design 10 - and be able to trace the logic of that investment through to how that reduces costs, grows markets, adds certainty, or anticipates future trends. Supplying instead what might best be described as a list of stuff that we did that was great, and more stuff that we are going to do that is also great, simply will not pass the test.

    For the hardware industry itself, as mentioned in the introduction, what we're seeing is IHG move to the position most of us predicted it would. In terms of the balance between letting independents to what they want, and exerting corporate control over them, the latter is going to come to dominate more at IHG. The countervailing force is that IHG is willing to offer more services, more help, to drive more sales to them, and to make the system more efficient. How the current members will feel about all that two or three years from now is not something HNN can predict.

    However, what we do feel really needs to be addressed is a word that both Ms Welsh and Mr Adams brought up in what we might term a disapproving way: fragmentation. There is a drive at IHG - and has been for some time - to seek to remove fragmentation from the hardware retail industry.

    The contrary viewpoint to that, as expressed by Hardware & Building Traders (HBT) and others, is to accept fragmentation, but make it work much better than it has in the past. Fragmentation is not disarray, it is the adoption of a different kind of order, and a different set of relationships. Pre-digital technology, it might have been true that there was an established trend to move from the fragmented to the less-fragmented. But today, with digital technology, that has changed. Efficiency has moved from the highly centralised to the decentralised.

    The real flaw in the hardware retail industry today is not that it is fragmented, but that it is lacking in innovation. A prime driver of that is the dominating presence of Bunnings in the market, which, aside from a high level of competition, makes obtaining capital difficult, not only for retailers, but also for companies that might service hardware retailers. In terms of where those innovations - despite the obstacles - will eventually come from, HNN is quite sure it will be from the "fragmented" portion of the industry.

    retailers

    Indie store update

    Nubco stores up for auction

    A major part of Tasmania's hardware real estate market will go under the hammer

    The Tasmanian-based hardware retail properties that are home to three Nubco stores - located in Kingston, Mornington and Wivenhoe in Burnie - are set to be sold at Burgess Rawson's next Investment Portfolio Auction scheduled for the end of March, according to The Mercury.

    All three properties are leased to ASX-listed hardware and industrial supplier Coventry Group Ltd on "identical, landlord-friendly, seven-year net leases to 2026, with options to 2036 at prominent and carefully selected locations".

    The Kingston property at No.176 Channel Highway features a prominent 4138sqm site with a 1632sqm warehouse and showroom. It is surrounded by major retailers in one of the state's fastest-growing regions. It returns a net rent of $216,678 per annum, plus GST.

    At Mornington, the Nubco at No.14 McIntyre Street is within 5km of the Hobart CBD and has a 3151sqm site within the leading industrial precinct on the city's Eastern Shore. It currently returns $108,594 per annum, plus GST.

    Entry-level investors are expected to be among the potential purchasers of the Wivenhoe property. Burgess Rawson agent Beau Coulter told The Mercury:

    Set just minutes east of Burnie and with its $71,823 annual rent, we will likely see it change hands between $900,000 and $1.1 million.

    Ray White's Trevor Fox said all three properties had the added appeal of clearspan, some hard stand and easy accessibility for vehicles. He said they also benefited from their proximity to Bunnings outlets, which compete for a different section of the hardware market. Mr Fox said:

    Everywhere the Nubco sites are, Bunnings has opened up within 500m, which is a ringing endorsement for the quality of the locations.

    Property owner Paul Krawczyk said the auction was a good launching pad to showcase some A-grade properties nationally. He said Tasmanian property assets were increasingly becoming "highly prized" and noted there had been a shift in mindset among interstate investors. He said:

    Some people wouldn't have dreamt of owning commercial property here six years ago. But now, anyone with a quite decent portfolio ... you would think they would own Tasmanian property.

    Mr Krawczyk is shifting his focus to apartment development and said the Nubco properties would be put towards these projects.

    The sale funds will be used to help resolve some of the inner-city living shortage that we have in Hobart.

    Related: In 2019, Coventry Group acquired Nubco.

    Indie store update: Coventry Group buys Nubco - HNN
  • Source: The Mercury
  • retailers

    Indie store update

    Rural supplies co-op diversifies membership base

    The Tobacco & Associated Farmers Co-operative Limited (TAFCO) is an agricultural merchandising co-operative. Profits are retained in local communities and equitably distributed amongst members.

    Myrtleford-based rural supply co-operative TAFCO in regional Victoria has opened its membership to different types of members, after previously only allowing farmers and agricultural workers to join.

    TAFCO secretary Kerry Murphy, said the decision came as a result of the impact the coronavirus pandemic had on the local economy. She told the Myrtleford Times:

    Since COVID, the importance of buying locally has really come through. It made us think we should really let everyone be a part of this wonderful business.
    It's been at the front of our minds with the COVID situation and I suppose a little bit of a change of attitude from people, looking closer to home for things, and thinking about their buying choices. We're encouraging people to put money back into the community.

    Ms Murphy stressed the difference between a cooperative business model and a traditional one. She explains:

    The core of our business isn't about maximising profit, it isn't about people investing to get a good return on it. We aren't the stock exchange; it's about investing in the local community and a local business and having a fair return.
    We exist for good pricing and quality goods and services to meet members' needs. Anyone can now buy shares in the TAFCO co-operative for a minimum of $250, but there are some requirements to be met.
    In any co-operative you must be active, there's an active membership provision in all co-operatives' rules, and in TAFCO's case that means you must trade. The $250 is the shares, your ownership, you're a member-shareholder of the co-operative. Then you have to trade, you have to buy things from us at least once a year, there's no minimum amount you have to spend with us, you just have to transact.
    We're the same as a normal business structure in that we have to make money, we have to pay tax and we've got to do all the things that a business does, but it's the philosophy behind the structure that's quite different.
  • Source: Myrtleford Times
  • retailers

    Europe update

    Screwfix store expansion

    DIY retailer B&Q will be launching in Saudi Arabia amid rising home ownership across the Kingdom

    Multi-channel trade retailer Screwfix plans to open 50 more stores in the UK and Ireland, as a direct result of the surge in demand for home improvements during lockdowns.

    Owned by Kingfisher Group, forty of the new branches will open their doors in locations across the UK and a further ten in the Republic of Ireland. The move marks a milestone in Screwfix's efforts to bolster its store network in the British Isles from 723, which employ 11,643 people, to 900 in the long term.

    The company typically targets trade customers but also serves a growing number of DIY shoppers, many of whom have kept themselves busy with projects at home during the pandemic. It has been one of the few businesses allowed to remain open as an essential retailer in the UK, and has boosted its e-commerce sales using click and collect deliveries.

    It credits a focus on e-commerce, using its stores as centres for click and collect deliveries, for its "rapid growth". The launch of its new app was also a factor. John Mewett, chief executive of Screwfix, said in a statement:

    We're delighted to be opening 50 new stores this year, creating 600 jobs. The growing demand for convenience means we now see scope for over 900 stores in the UK and Ireland, which will help our customers get their jobs done. We know that time is money for our customers and these new stores will enable us to provide them with added convenience and certainty, as well as providing job opportunities for local communities when they need them most.

    B&Q in Saudi Arabia

    The move for UK home improvement retailer B&Q into Saudi Arabia follows a franchise deal between parent company Kingfisher and the Dubai-based Al-Futtaim Group.

    B&Q is expected to launch two 50,000-square-foot stores by September 2021 to introduce the DIY brand to Saudi customers, the company said in a statement. Kingfisher CEO, Thierry Garnier. said:

    This franchise agreement is a great opportunity to expand our business in the attractive Middle Eastern home improvement market with B&Q, one of our most established retail banners.

    The expansion into Saudi Arabia represents a significant move for B&Q and comes amid the development of a local mortgage market in the Kingdom.

    The first B&Q stores in Saudi Arabia will stock a full range of home improvement products from the Kingfisher portfolio including Erbauer, Magnusson and GoodHome, alongside other locally and internationally sourced products. They will also have an online offering. The DIY chain is looking to expand in new territories via partnerships.

    The Al-Futtaim Group operates more than 200 brands across the Middle East, Asia and Africa. It has operated the retail franchises in the Middle East for Marks & Spencer since 1998 and for IKEA since 1991.

    Related: In early 2020, Screwfix announced more stores opening in Ireland.

    Screwfix store rollout in Ireland -HNN, January 2020
  • Sources: The Times, Arab News and The Daily Telegraph (UK)
  • retailers

    Indie store update

    Industry loses independent stores

    The small town of Helensburgh (NSW) no longer has a local hardware store and F.J.'s Discount Tools is shutting down

    Helensburgh H Hardware store owners Mike and Gail Tribe have decided to call it a day and told The Illawarra Mercury they are "sad and disappointed" to close the doors to the business, after 21 years.

    It wasn't always this way. When the business was up for sale in 90s, Mr Tribe saw an opportunity after losing his job as a contract driver and despite having no prior experience in retail.

    But being in the trades runs in the family with his father who is a carpenter, and his son as a builder. He has been able to learn some tricks of being a tradie.

    He said there was a "big increase" in sales over the first 10 years, but that was where it peaked. The couple decided in late 2020 that closing would financially be the best option after a decline in sales. Mr Tribe told The Mercury:

    Our trade has decreased dramatically year by year for the last three years. There's no way I can continue.

    They were planning to sell the business in the future, but the pandemic had other ideas for them. COVID-19 exacerbated the decrease in sales which meant that staff numbers also needed to be cut. He said:

    The only reason we're surviving is because of JobKeeper. We were very grateful that came along to keep us surviving.

    Despite JobKeeper, Mr Tribe said there was a slight surge in sales at the beginning of the pandemic with people doing more DIY at home, but it was not enough to survive. He also said that there had been less "shopping local" not just for the hardware store, but other smaller businesses in Helensburgh.

    ..It's our weekend trade more than anything that has suffered, which means that people are driving past your doorstep to go out of town to shop, which is really, really disappointing.
    People need to support the local businesses otherwise there won't be any. There's no customer loyalty anymore.

    Not surprisingly, the couple are both sad to leave their community, and their regular customers. Mrs Tribe said:

    The community is very friendly. I'll miss the people and I'll probably still come down because I've made so many friends. It's a part of history for Helensburgh.

    Mr Tribe believes there will be more inconvenience once the store closes. He said:

    I know a lot of regulars that we've got left will certainly miss this because it's a long way to go to a hardware store from Helensburgh.
    We help them through any problems, we usually are able to help them out, having done a lot of years of experience in the building trade. There isn't a lot of problems we can't solve for our customers.

    However, it is not goodbye for good. Mr Tribe explains:

    We will be maintaining the other side of our business, which is the gas deliveries. And see where we go from there.

    F.J.'s Discount Tools

    Longstanding retail outpost F.J.'s Discount Tools in the Victorian suburbs of Bayswater and Rosebud are shutting down after owners Frank and Sarah Greco decided to close the business after 30 years. Mrs Greco told the Herald Sun:

    We've just had enough; we've done it for a very long time and it's time to do something different. We've been here a really long time, and it's hard work, seven days a week.

    The couple's Rosebud store has been operating for almost 30 years, while the Bayswater shop opened in 1998. Mrs Greco said their customers had been sad to hear they were closing.

    They have said we will be missed, and (the stores) are a destination; we've been here so long, people are like 'We used to come here when we were kids with our dad' and people really love the shops.

    Mrs Greco said COVID lockdowns also had an impact on the couple's decision to close.

    The lockdown was stressful; we understand it was the right thing to do but it makes it really hard to run your business ... it's tough.

    Both the Rosebud and Bayswater stores are well-known for their lifelike mannequins, nicknamed Bob, who models the workwear the business sells and stands out the front.

    Mrs Greco said it had been a challenge taking on the bigger hardware chains.

    Although Rosebud is such a small community, the Bunnings at Rosebud constantly sends customers to us for stuff they don't have and we constantly send people to Bunnings so there has been a good relationship over the years.
    You just try and help people - if you don't have something you should send them to someone who does.

    She said her husband knew a lot about tools and could recommend products to customers.

    Frank is very handy and the things we get here, he chooses because he uses them and he knows that it's a good thing.

    Mrs Greco said the stores would close in the next couple of months, after they had sold the remaining stock from their warehouses. The Bayswater site is now up for sale.

  • Sources: Illawarra Mercury and Herald Sun (Online)
  • retailers

    Retail update

    Total Tools opens in Grovedale (VIC)

    The tool retail franchise said it is targeting DIY enthusiasts as well as professional tradies

    Total Tools chairman and Geelong-based franchisee Warren Jones told the Geelong Advertiser that while the group caters primarily to professional tool users, he also expects the new location on Victoria's Surf Coast Highway to attract aspirational amateurs. He said:

    Even though the bulk of our customers are tradesmen, because we sell to the tradesman it attracts a lot of serious DIYers.

    Mr Jones has added the 2000sqm Grovedale store to his own network of Total Tools franchises in North Geelong, Brooklyn, Melton and South Melbourne. The North Geelong store, which opened in 2010, and the Grovedale location will support each other. Mr Jones said:

    We would describe them as sister stores. They work well together. Tradies can buy from either store and we will share resources and stock between the two.

    The Grovedale store opened to customers shortly before Christmas but will have its official "grand opening" in March with a number of offers, specials and giveaways.

    The move to open a store servicing Geelong's growing southern fringe was on the radar for about five years, Mr Jones said. In addition to the Armstrong Creek growth corridor, he expects the store to service trades in the Surf Coast. He said:

    Torquay is very heavy with tradesmen. Most people won't pass one tool store to get to another; we needed to establish a presence in the south.
  • Source: Geelong Advertiser
  • retailers

    Retail update

    Reece Group posts record net profit

    Murray Goulburn (MG) Trading store switches up its brand and birthday events for DW Rural

    Online sales helped to boost half year results for Reece; rural retail business MG Trading is changing its name to AG Warehouse; and DW Rural will celebrate its first birthday in Warragul (VIC).

    Reece

    Plumbing and bathroom group, Reece experienced a net profit increase of 17.3% to $123 million in the six months ended December 31, from $104.9 million in the same period 12 months ago.

    Online sales rose 70% compared with a year ago, and the group has been accelerating a push to enable customers to have a "digital experience" when choosing products and designing bathrooms, as well as traditional face-to-face shopping in its showrooms.

    Sales from the group's 640 outlets in Australia and New Zealand were stable despite an extended lockdown in its home state of Victoria. The company said stores were impacted by COVID-19 but it developed an efficient process of testing of staff, deep cleaning of stores and social distancing amid the different states' restrictions.

    In Australasia, sales rose 7% to $1.47 billion, while in the US, where COVID-19 outbreaks were much worse, sales managed to increase just 1% to $1.51 billion.

    The company said it did not receive any JobKeeper payments from the federal government in July-December at its Australian operations.

    Chief executive Peter Wilson told The Weekend Australian in an exclusive interview the group has reaped the rewards of a population surge in regional areas during the COVID-19 pandemic. However, he remains wary of the medium-term impact of inflation flowing from booming commodity prices.

    Mr Wilson said the end of lockdowns across most of the country in the second half of last year saw an acceleration of demand for bathroom products.

    Post COVID-19, there is definitely a change happening. The home is now increasingly where the heart is. People are renovating homes because they are going to be spending more time at home now.
    The other big shift you can see is the move of people to regional areas. There is a real momentum to regional lifestyles.
    We have always had a big regional play - we are in all the regional centres. Those businesses for us will become bigger businesses.
    The short-term economic indicators look pretty good. You still have the stimulus, interest rates are pretty much zero, and we have got on top of COVID-19 compared to the rest of the world.
    There is quite a lot of cash out there that people want to spend on their homes. As the vaccine gets rolled out, consumer confidence will continue to grow.

    But Mr Wilson said Reece was starting to see the impact of booming commodity prices on input costs, which could spawn inflation.

    Medium term, however, we are still cautious. There are many twists and turns to come. We are also watching raw material and shipping price increases. We are definitely wary of inflationary pressures emerging in the medium term, which could impact on housing affordability,

    The Wilson family maintains a 67% stake in the company.

    Related: Executive chairman of Reece Group. Alan Wilson believes growth prospects for his business will be in the US.

    Reece sees future beyond ANZ market - HI News 6.1, page 31

    MG Trading

    MG Trading said it is changing to AG Warehouse as a way of strengthening its support to its dairy customers while increasing its focus on cropping, beef, sheep and lifestyle customers.

    AG Warehouse is a retail farm supplies business that provides merchandise, fertiliser, fuel and feed to customers through a network of more than 30 outlets across regional Victoria, southern NSW and Tasmania. (MG Trading) general manager Michael Loxton told the Wangaratta Chronicle:

    We've got a great business and as we continue to grow, it was time for a change of name. We have seen significant changes in recent times in the agricultural markets serviced by our footprint in southern Australia.

    "While dairy remains core to our business, we have also been diversifying and building our offering to cropping, sheep, beef and lifestyle customers....

    With AG Warehouse, our aim is to continue supporting our traditional dairy base, while also welcoming new customers from other farming backgrounds.

    AG Warehouse head of buying and marketing, Steve Andrews, said it was clear the business needed a new name to reflect its growth and one that would be recognised by all parts of agriculture, not just dairy. He said:

    AG Warehouse aims to be the 'one stop shop' for all farmers' agricultural needs.

    DW Rural

    As part of the festivities to celebrate its first birthday in Warragul, DW Rural announced a storewide sale throughout March for the Australian family-owned business.

    With more than 40 years' experience in rural merchandise. DW Rural's merchandise manager, Dennis Rankin, said the first year instore has been "tremendous" on so many levels.

    Joining the AIRR group (Australian Independent Rural Retailers) and including a free on-farm delivery service has introduced quantifiable advantages for its customers. Mr Ranking told the Warragul & Drouin Gazette:

    AIRR is the biggest group of independent rural retailers in the country, which has given us tremendous buying power.
    We'll remain a specialist in dairy supplies and calf rearing, but we now have the added bonus of a full range of all farm supplies for our customers, combined with the convenience of that free delivery service.

    DW Rural said it now stocks a full rural merchandise range, in addition to its specialist focus on dairy and calf rearing.

  • Sources: The Australian Financial Review. The Weekend Australian, Wangaratta Chronicle and Warragul & Drouin Gazette
  • retailers

    UK update

    Wickes and Toolstation benefit from a shift to online

    Demand for DIY and trade moves further online as professionals tackled essential work and homeowners improved their houses during COVID-19 lockdowns

    The existing digital infrastructure at DIY retailer and garden centre, Wickes and trade focused Toolstation meant that some of their branches could be repurposed as fulfilment centres during the first COVID-19 lockdown in early 2020. They could quickly transition to offer home delivery and click and collect.

    The number of online orders collected from Wickes' stores grew by more than 450% during its last financial year, while home deliveries more than doubled. The retailer is now working to make its distribution operations more efficient as it expects that an increasing share of online sales in the future.

    A strong domestic repairs, maintenance and improvement (RMI) market, buoyed by booming housing transactions, pushed LFL (like-for-like) revenue at Wickes up almost 6%. Sales of its core DIY range were up by 19.3% LFL, as customers made online purchase across a broad range of categories. But LFL sales in its DIFM (for-it-for-me) kitchens and bathroom business were 27.8% down as it was more affected by COVID-19 restrictions.

    By the end of 2020, Wickes had 233 stores, following two closures.

    Toolstation rebuilt its website within days at the start of the COVID-19 lockdown, and over the course of the following weeks, its IT infrastructure was re-platformed to make it scalable and more resilient.

    It added 60 new UK branches during the year, to take it to a UK total of 460, while its European business added 17 new branches, to a total of 83. These include trials of new small format stores and click and collect-led stores.

    Toolstation full-year sales of GBP 633 million were 42.1% higher than the previous year, growing by 22.2% LFL. Sales in the UK alone were 20.9% up on 12 months ago, despite lockdowns in late March and April. Adjusted operating profit came in at GBP24 million, down by 17.2% on last time, as the costs of adapting the store network to operate in a socially distanced way, the higher proportion of delivered sales, and the investment in digital offset its sales growth.

    Group results

    Parent company Travis Perkins reported sales of GBP6.2 billion in the year to December 31. That's 11.5% down on the same time last year. LFL sales - which strip out the effect of store openings and closures - were 7.1% down from the previous year.

    It reported a pre-tax loss of GBP7.7 million down from a pre-tax profit of GBP180.8 million a year earlier. But when GBP140 million of one-off costs - primarily from a business restructuring program that will see about 190 Travis Perkins builder's merchant and plumbing and heating branches close - are taken into account, the group reported a statutory operating profit of GBP77 million, down from GBP232 million a year earlier.

    Travis Perkins is also restarting plans to demerge Wickes that were put on hold at the onset of COVID-19 and expects the complete the process in April. The group has been able to repay all the GBP46 million government support given to Toolstation and Wickes at the onset of the pandemic as a result of their strong performance.

    Chief executive Nick Roberts said that despite the "unprecedented challenges" of 2020 the group has shown "great agility and versatility in adapting our working practices, further digitalising our engagement with customers and reshaping our business to suit the changing demands of our markets". He added:

    I am pleased to be able to confirm that the process to demerge Wickes has recommenced. The Wickes digitally-led model has proved highly effective during the pandemic and the business is in great shape to embark on its journey as a standalone entity.

    The retailer will have a market capitalisation of about GBP130 million when it is demerged from Travis Perkins.

  • Sources: Internet Retailing and Investors Chronicle
  • retailers

    Retail update

    Pontings Mitre 10 awarded national prize

    A garden supplies retailer is seeking a strategic investor and Beacon Lighting impresses with bumper profit

    A Mitre 10 store in Warrnambool (VIC) wins top award; NSW-based Flower Power is reportedly looking for a partner to grow the business; and Beacon Lighting delivered a 133% profit rise in the half year to December 31.

    Mitre 10

    Pontings Mitre 10 recently won the prize as Independent Hardware Group's number one medium sized store in Australia. Director John Ponting said staff received the "totally unexpected" award during a live-streamed ceremony. He told The Warrnambool Standard;

    It was a great honour to get the state award and then to go to the next level and get the national award, it says a lot for the staff behind us and the support we have from the community.
    It would be one of the standout achievements that we have accomplished as a family.

    Director Pam Madner (nee Ponting) said the prize was the first national award the family had won in its 98-year ownership of the store.

    We grew up as kids and this was always part of who we were. Probably a lot of it is the climate at the moment, lots of people are doing building, [and] interest rates are low.
    But it's also the relationship we have with our customers. That is what differentiates ourselves from non-family businesses.

    The hardware retail business, started by Walter Ponting and brother Len, is now owned and operated by the third generation.

    "I think they would be proud", Ms Madner said of her parents and grandparents. "One that it still exists, and two that we're recognised Australia-wide."

    Related: Pontings Mitre 10 won IHG's 2020 award for the best medium-format store in Victoria and Tasmania.

    Warrnambool store wins Mitre 10 award - HNN Flash #29, January 2021

    Flower Power

    Flower Power chief financial officer Michael Spiteri confirmed to the Street Talk column in The Australian Financial Review (AFR) that the company is searching for a new investor. He told the AFR:

    We're looking for a partner as long as it's the right business partner that can help us to grow.

    It is understood the family-owned Flower Power would like to sell a stake in the business, rather than sell out entirely.

    Sources said Flower Power was generating $15 million to $20 million earnings before interest, tax, depreciation and amortisation before the pandemic struck. However, it is understood the business had performed well through COVID-19 because of the home improvement/DIY boom that resulted from people staying home during lockdowns.

    Flower Power has 10 stores across NSW mainly around Sydney's outskirts, with a presence in western Sydney suburbs such as Penrith and Prospect, as well as north of the city in Warriewood, Terrey Hills and Glenhaven. Its stores include cafes and playgrounds for kids.

    Mr Spiteri is Flower Power's only shareholder not related to company founder Nick Sammut, according to documents lodged with the corporate regulator.

    Mr Sammut founded the business in 1968 and it is now run by his son, chief executive John Sammut with support from his brothers Mark and Collin. The brothers are all shareholders in the business, as well as two other Sammut family members.

    Beacon Lighting

    Bumper sales from the lighting retailer's bricks-and-mortar stores along with building and renovation activity throughout the pandemic lockdowns contributed to its 132.8% rise in first-half net profit of $22.2 million.

    Sales across the business increased 23.5% to $151.3 million. Its online sales grew 111.1% to $14.4 million.

    Profit margins climbed to 14.6%, from 7.8% a year earlier. A large part of that stemmed from the retail group not needing to have promotional sales and specials because the demand was so heavy from customers.

    The retailer also shifted to early opening hours - 7.30am - in an attempt to gain a bigger slice of the tradie market, and this helped trade club customer sales jump 50% in the first half. Beacon's trade club now has at least 39,800 customers, up almost 7000 from December 2019.

    The retailer never took JobKeeper payments. "Sales never reduced to a point where JobKeeper was necessary", said chief executive Glen Robinson in the AFR.

    The cooling and lighting retailer admitted that many customers' unfamiliarity with pricing on lights would continue to improve its gross margins, according to CFO David Spiers in The Australian. He said:

    Most people don't know the price of lighting products because they shop infrequently.

    Beacon Lighting opened new stores at Virginia in Queensland, Camperdown in Sydney, Tweed Heads in NSW, and at Belmont in Perth.

    The lighting company still sees its future in bricks and mortar despite the major boost to its online sales. It has acquired sites in Molendinar, on the Gold Coast in Queensland, and Traralgon, in regional Victoria. It is looking at 69 new store opportunities over the coming years.

    Beacon remains 55% owned by the Robinson family after going public in 2014.

  • Sources: The Warrnambool Standard, The Australian Financial Review and The Australian
  • retailers

    Big box update

    Frenchs Forest store gets the greenlight

    Over 200 people have signed a petition calling for the proposed Bunnings Warehouse at the former RAAF base in Dubbo to be stopped

    A five-storey Bunnings Warehouse is planned for Sydney's northern beach suburbs and a petition has called for a stop to the Bunnings development in Dubbo (NSW).

    Frenchs Forest

    Bunnings has gained approval from NSW planning authorities for a store to be built at the corner of Warringah Road and Allambie Road in Frenchs Forest.

    The $48million store will offer customers three levels of shopping and include a large outdoor garden centre, kid's playground and hardware and building supplies. The 20,000sqm development will also have two levels of parking to accommodate 400 vehicles.

    An Australia Post distribution centre and a two-storey office block will be knocked down to build the store.

    Bunnings regional operations manager, Alan Harvey told The Daily Telegraph the company was pleased to receive approval for the new multi-level Bunnings Warehouse.

    While it is too early to confirm an opening date, we look forward to providing a wide range of home and lifestyle products to the Frenchs Forest community.

    Northern Beaches Council was initially worried about safe vehicle access to the store because of its close proximity to the busy Warringah and Allabie Road intersection. Its concerns related to "potential road safety issues with merging vehicles and conflicts with pedestrians". The main driveway will be moved to Rodborough Road once traffic lights are installed at the Allambie Road intersection to combat safety concerns.

    The exterior of the warehouse will also change as a result of council complaints regarding the size of the Bunning's logo and colour scheme. Bunnings will limit the amount of green paint used on facades, have fewer hammer logos visible and reduce the size of the logo by 33% on Rodborough Road.

    Dubbo

    A petition to stop the construction of the proposed Bunnings store in Dubbo has been launched by locals. According to the Daily Liberal and Macquarie Advocate, it cited an increase in cars to the area, as well as trucks, and states:

    ...[T]he proposed development will create safety issues for residents, businesses (including child care) and schools in the immediate vicinity.
    This huge increase in traffic threatens the safety of pedestrians, including children, and other local road users. The associated noise will destroy the amenity of the area for local residents.

    However, Bunnings regional operations manager Robyn Hudson said access to and from the site has been designed by the developer's expert consultants and was "carefully considered to ensure a safe and accessible store".

    Concerns have also been raised about the Bunnings Warehouse building being "totally out of character" for the area because it will be "on the front doorstep of many residents". The petition states:

    The project delivers no benefit to the community as Bunnings is currently appropriately located on Sheraton Road in an industrial/commercial area, with room to expand if they need to.

    Ms Hudson said:

    Bunnings has been part of the local Dubbo community since 2008 and we're looking to move to a larger location that's expected to create over 40 new jobs for locals, in addition to our existing Dubbo team.
    If approved, the new store would represent a significant direct investment in the local community and would provide residents with an even wider range of home and lifestyle products...
    We value to views of the local community and we'll work with the developer and council to listen to and address community feedback as the application progresses.

    The development application for the $30 million store is currently before Dubbo Regional Council.

    Related: Building plans lodged for a larger Bunnings store in Dubbo (NSW).

    A bigger Bunnings Dubbo store is being proposed - HNN Flash #30, January 2021
  • Sources: The Daily Telegraph, Daily Mail Australia and Daily Liberal and Macquarie Advocate
  • retailers

    Indie store update

    Bellingen General Hardware closure

    The building housing Mitre 10 Pittsworth has hit the real estate market and a hardware store has leased space in inner-Melbourne

    A hardware store located in Bellingen (NSW) is set to close; a Toowoomba (QLD) based Mitre 10 building is for sale; and a Mitre 10 store is expected to open in a shopping strip in inner-city Melbourne.

    Bellingen

    Shaun Green, owner of Bellingen General Hardware has decided to shut the doors of his store for the final time. The closure will leave the small town with no hardware outlet.

    For the last couple of years, Mr Green had been running the store on his own with some unpaid help from family under increasingly difficult conditions. He told The Bellingen Shire Courier-Sun:

    I can't afford to pay wages. The last 12 to 18 months I haven't even paid myself very much.

    He believes Bunnings is only part of the number of challenges that led to closure of his hardware retail business. He said:

    It's a combination of things. There's the Bunnings advertising power. They've been doing it for 20 years and they've indoctrinated a generation. It's not just Bunnings, it's Big W, it's Kmart, it's the Reject Shop. All the big players.

    On a local level, he believes the main street beautification process as the first of a series of disruptions that have caused permanent changes to shopping behaviours in the town. He said:

    It wasn't just the loss of the parking, when they were doing the pavers you couldn't even walk down the footpath.
    That's when it started going bad. Because people get into habits, they started going into Toormina and Coffs Harbour. And since then, you've had the drought. Bush fires. Before COVID started we had the water restrictions, which meant people weren't doing gardening.
    Then COVID, which made a lot of things difficult to get. There was a limited supply of stock coming into the country. Things were harder to get, [and] more expensive. A lot of people started shopping online. Habits are formed, and they just keep doing it.

    Mr Green bought the store from Jim and Kathryn Hunt at the end of 2015, after working with them for six months. Prior to this, he worked at Norco Rural in Bellingen for seven years. But he does not regret the purchase at all. He said:

    I've learned heaps. I've made a lot of good friends and industry contacts. This has been part of my journey, everything happens for a reason.

    He expects the final day for the shop will be February 23, and he will take a well-earned break following its closure.

    Toowoomba

    The Pittsworth Mitre 10 freehold property on Yandilla Street has been listed for sale through an expressions of interest campaign by real estate group Ray White.

    In the online listing, lead agent Kathy Hohms said the hardware store held the lease on the property until the end of the year, with options until 2026. The listing said:

    The property has free street parking available at the front entrance and also off street parking bays at the nursery entrance off Short Street.
    The building, built circa-1950, comprises a large showroom and retail area with frontage display windows on both sides of the central entrance. The nursery [is] accessible from the showroom and it also has customer rear access.

    The expressions of interest period will end on March 31.

    South Yarra

    The Chapel Street shopping strip precinct in Melbourne's inner suburb of South Yarra may soon have a Mitre 10 store after real estate agency Gray Johnson negotiated a lease with the new tenant.

    According to a report in The Age, the retail space measures 201sqm and the retail business scored a five-year lease paying $60,000 (+GST) a year.

    The hardware shop is leasing No. 356, close to the corner of Chapel Street and Malvern Road.

  • Sources: The Bellingen Shire Courier-Sun, Toowoomba Chronicle (Online) and The Age
  • retailers

    USA update

    Lowe's trials giving customers stock for purchases

    Ace Hardware Corp. completed a strong fiscal 2020 when its stores in the US stayed open during the pandemic as essential retail operations

    In a pilot project for home improvement retailer Lowe's, fintech company Bumped found that customers who were rewarded for their purchases with shares of the retailer's stock increased monthly spending by USD47.82 and visited the store on average 0.84 times more per month.

    The data also showed that customers who were rewarded in fractional shares of Lowe's stock became more loyal and shopped less at Lowe's competitors, according to the press release. David Nelsen, founder and CEO of Bumped, said:

    In industries dominated by duopolies, like the home improvement category is, it's critical that brands look to build long-term, lasting relationships.

    Bumped gives customers fractional shares of stock when they spend with their favourite brands, and has been piloting its software app over the past two years.

    Ace Hardware

    For the fiscal year, Ace Hardware posted net income of USD317.6 million versus USD140.4 million in the year before.

    A 14.7% increase in average ticket and a 9.8% increase in comparable transactions versus the prior year drove Ace's 25.9% gain in comparable sales for the full year from the approximately 3,300 Ace retailers that share daily retail sales data with the parent company.

    Full-year revenues were USD7.76 billion with retail revenues of USD751.5 million and wholesale revenues of USD7.01 billion compared to total revenues of USD6.07 billion with retail revenues of USD506.7 million and wholesale revenues of USD5.56 billion in the fiscal year previous. Operating income was USD333.1 million versus USD133.8 million in the year earlier.

    Ace Hardware added 167 new US-based stores in fiscal 2020 and cancelled 76 stores. This brought the retailer's total US store count to 4,647 at the end of fiscal 2020, an increase of 91 stores from the end of fiscal 2019. On a worldwide basis, Ace added 201 stores in fiscal 2020 and cancelled 104, bringing the worldwide store count to 5,463 at the end of fiscal 2020.

  • Sources: Yahoo Finance and Homeworld Business
  • retailers

    SOLD: Seymour Timber and Hardware

    Retirement plans

    Owner Alan Bower is also looking to sell his other store, Broadford Timber and Hardware

    As the proprietor of Seymour Timber and Hardware, Alan Bower had mixed feelings when he sold the store. Although he's looking forward to retirement, Mr Bower is sad to see the end of the business he has owned for the past 15 years. He told the Seymour Telegraph:

    On one hand I'm really looking forward to retirement, but on the other I really enjoyed my time with the staff and customers.

    Mr Bower moved to Mitchell Shire 30 years ago to raise a family and was keen to work for himself after a career in the public service. He wanted to do something local in an industry he enjoyed and took the opportunity to purchase Broadford Timber and Hardware in 1996. Ten years later he purchased two hardware stores in Seymour and combined them into the current store on Anzac Avenue.

    Mr Bower is also looking to part with the Broadford store and hopes to sell it as a going concern. He said:

    It will be up for sale if a good price is offered. The stores are my superannuation, so I'm looking for the right offer.
    I want to thank the community for their loyal support through the years. We haven't got a closing date yet, but the Seymour store will likely be trading until May or June. I also want to thank the staff I've had through the years. They have supported me and always looked after our customers...I will miss the two stores, but I've been thinking about retirement for a while and I think now is the right time.

    A clearing sale will be held at Seymour Timber and Hardware before the store closes.

  • Source: Seymour Telegraph
  • retailers

    Europe update

    B&Q expands its tools hire trial with Speedy

    Screwfix sales reach GBP2 billion and ManoMano records a 240% sales hike in the UK during 2020

    Speedy brings tool hire into more B&Q stores; omni-channel trade-focused retailer Screwfix said it continues to focus on its team and customers; and web-based DIY marketplace ManoMano said it has 50 million unique visitors per month, an increase of 70%.

    B&Q

    UK home improvement retailer B&Q and tool hire chain Speedy have extended their trial of Speedy hire outlets in B&Q stores. The trial began in July 2020 with Speedy concessions now at nine B&Q stores throughout Britain. A further five outlets opened in January.

    The concessions, typically about 90sqm in size, give B&Q retail and trade customers the option to hire equipment from Speedy as part of their B&Q shopping trip. The offer includes Speedy's four-hour national delivery promise on certain products.

    Customers can order and collect Speedy products from the select B&Q stores, complementing Speedy's own network of 200 depots. They can hire a range of mobile access platforms, tower scaffolds, mini diggers and dumpers, plate compactors, floor sanders, mixers and heaters. Speedy chief executive Russell Down said:

    We are delighted to be trialling Speedy concessions in B&Q stores. These will make the option of hiring tools and equipment much more accessible to DIY customers and enable trade customers to hire equipment seven days a week...

    B&Q business development director Chris Bargate said:

    We're committed to testing new initiatives and are delighted to be trialling this tool and equipment hire service in our stores with Speedy. Our customers are continuing to adapt and change to new ways of living and shopping, and these new concessions with Speedy are just one way in which we're making it easier for people to improve their homes.
    We're excited by the potential re-use of our space to offer new services in store and are keen to understand how customers respond.

    Screwfix

    Screwfix recently confirmed that it had passed GBP2 billion in sales in its latest financial year. During the year it opened 30 shops, created more than 500 new jobs and benefited from high levels of demand both online and in-store during COVID-19 lockdowns. It now has 725 outlets across the UK and Ireland.

    In the past five years, Screwfix has created 4,000 new jobs in total, opened a new store once a week - on average - and doubled sales from GBP1 billion to GBP2 billion. The retailer said that many new recruits include the under-24 age group.

    The growth came as people now working from home or furloughed during lockdowns held over the last year looked to improve their surroundings, buying from retailers such as Screwfix and sister company B&Q either directly or through the tradespeople who are Screwfix's core customer base. During the first lockdown, Screwfix's branches operated as click and collect fulfilment points and saw sales grow across all in-store and digital channels.

    ManoMano

    ManoMano is an online marketplace for DIY, home improvement and gardening products, headquartered in France.

    After achieving EUR1.2 billion in sales turnover in 2020, the company said it is building its presence in Northern Europe, and increasing support for its merchant partners.

    By doubling its sales volume in 2020, ManoMano said it has demonstrated the scalability of its model. Philippe de Chanville and Christian Raisson, co-founders and co-CEOs of ManoMano, said in a statement:

    The year 2020 has been marked by a considerable increase in European consumers' digital expectations for DIY, garden and home products.

    ManoMano said it has 50 million unique visitors per month and 7 million active users. With 10 million products, ManoMano offers a significant online catalogue.

    The UK is most important market for ManoMano's growth. The company saw a major boost in demand during 2020, with sales turnover in the UK increasing by 240% to EUR105 million.

    ManoMano said it carefully selects its partners to ensure a qualitative offer for customers. On its UK platform, 75% of sellers are based in the UK. To support its growth plans ManoMano will make further investments in its UK-based marketing including TV advertising.

    In mid-2020, ManoMano partnered with order management specialist OneStock to optimise fulfilment logistics in the UK and across Europe. It appointed OneStock to manage all UK warehouse and merchant stock, enabling guaranteed delivery dates for shoppers and freeing merchants from logistical constraints.

    ManoMano has already rolled out its fulfilment service in France and Spain which promises delivery in either 24 or 48 hours. It is working with OneStock to extend this feature to customers in the UK, Italy and Germany.

  • Sources: Construction Index, Internet Retailing and Retail Times
  • retailers

    Indie store update

    Sunshine Mitre 10 building flagship store

    Brisbane's C&L Tool Centre was acquired by industrial distribution company Stealth Global in late 2020

    A new flagship store for Sunshine Mitre 10 in Nambour (QLD) and C&L Tool Centre is operating under different ownership.

    Nambour

    Queensland-based Sunshine Mitre 10's plans to build its optimal store in Nambour is in the same town where the business began 110 years ago.

    Sunshine Mitre 10 general manager Neil Hutchins recently announced the new site at 980 Nambour Connection Road (formerly occupied by Allclass Kubota Tractors), and said it already has council approval and will open later this year. He said:

    The transformation of the 13,000sqm site is well underway, and the local community has already shown excitement and support for this endeavour.
    The new location in Nambour is important because it not only meets the increasing demand from our retail and trade customer base, but it also supports the town of Nambour and pays respect to the heritage where the company was started by Walter Lanham in 1910.
    We have been steadily expanding the Sunshine Mitre 10 group across Queensland with more recent store openings in Bundaberg, St George, and Brisbane, and we have a focus on supporting the communities of the towns in which we operate.
    Nambour is at the top of that list in terms of regions we want to support. This new store is the next step in our expansion, and this flagship location will be the best possible representation of our brand and heritage. We're excited to see it unfold and transition into another 110 years of locals supporting locals.
    Sunshine Mitre 10 already employs more than 400 staff across our network of stores in Queensland, including the seven sites we operate throughout the Sunshine Coast. We are pleased to have committed to this multimillion-dollar investment on the back of a 25-year lease at this location.

    The site has 4,000sqm under roof and will be one of the largest in the Sunshine Mitre 10 network. It is expected that dozens of jobs to be created, in addition to the development and construction of the site being managed and built by local builders and tradies. Mr Hutchins said:

    This new flagship store will include all the latest brands and products and showcase the best hardware product available. The site will have everything you need to get in, get out, and get on with it. The entire project has been meticulously designed to provide the customer with the ultimate hardware shopping experience.

    The new store will feature dedicated departments around building and hardware, along with homewares, electrical, hand and power tools, kitchens, painting and decorating, gardening and outdoor, appliances and plumbing as well as the dedicated trade products and services Sunshine Mitre 10 is known for.

    Mr Hutchins said when the store opens, Sunshine Mitre 10 would continue to operate the existing Court Road store for the convenience of the local community and work to transition its loyal customers of 75 years to the new location.

    We look forward to inviting everyone to the grand opening mid-2021.

    Related: Sunshine Mitre 10 has 18 locations throughout Queensland. HNN took a tour of its operations in 2019.

    Sunshine Mitre 10: The Innovators - HI News, page 68

    Perth

    Distribution group Stealth Global Holdings, headquartered in Perth, has purchased construction trade-focused retailer C&L Tool Centre.

    Established in 1969, C&L is a reseller of industrial and tooling supplies, safety and personal protective equipment, and hardware, building, construction and workplace consumables primarily to professional (80%) and retail (20%) customers. They include multinational corporations, small-to-medium enterprises, schools and universities, and government agencies.

    C&L operates three divisions and offers well-known brands within a "mega-store" setup comprising a showroom and distribution centre across 2700sqm.

    Almost 25% of the company's sales orders are received and processed online through various digital channels.

    For the 2020 financial year, C&L delivered revenue of $14.3 million and earnings before interest taxation depreciation and amortisation of $1.26 million. Sales for the first four months of the 2021 year are believed to be tracking 25% higher than the previous corresponding period.

    The directors and management of C&L continue to work with the business under the change of ownership.

    The C&L acquisition is believed to be complementary to Stealth's existing business, with the companies sharing a similar customer and supplier base and offering similar services. Stealth said it would spend $3.83 million acquiring C&L.

    Stealth managing director Mike Arnold said the synergies would deliver on the company's aim of providing long-term value to shareholders and customers.

    [We believe] the depth of C&L's products and tailored services will give [our] merged businesses greater scale as we continue to build a national distribution network to deliver more value, better experiences, more stores in our network, a deeper assortment of merchandise and brand range, and a more complementary team of experienced [personnel]...

    Stealth is a supplier and distributor of safety, industrial, healthcare and workplace consumable products. Its services include distribution and logistics services, contract supply and on-site inventory management solutions. It operates through four segments: industrial, safety, healthcare and workplace supplies.

    The company's industrial segment provides maintenance, repair and operations (MRO) supplies, hoses and fittings, adhesives, sealants and fillers, tools and equipment and electrical products. The safety division provides clothing, footwear, hand protection and lifting and handling, height safety, and safety glasses products. Healthcare has first aid products including medical supplies, consumables, disinfectant and wipes and disposable towels products. Workplace supplies provides packaging and tapes, cleaning and janitorial, crib and kitchen, storage and hardware products. Its portfolio of brands includes BSA Brands (a joint venture between Stealth and Bisley Workwear) and Heatleys Safety & Industrial.

    Related: US big box retailer Home Depot acquired HD Supply, one of the largest distributors of maintenance, repair and operations (MRO) products in the multifamily and hospitality markets throughout the US and Canada.

    Home Depot buys HD Supply Holdings (again) - HNN Flash #25
  • Sources: Reflected Image Productions amd Small Caps
  • retailers

    DIY campaign stars TikTok influencers

    #MyWickesMyWay is a series of videos

    UK-based retailer Wickes said it is the home improvement industry's first campaign on the social media platform

    The #MyWickesMyWay TikTok campaign launched by UK DIY retailer Wickes in late 2020 involved seven content creators each producing a video on the social media platform.

    Working with influencer marketing agency Takumi, the TikTok creators were tasked with adapting existing trends, including DIY tips and transformation hacks, to drive awareness of Wickes' product range and reach new audiences. The sponsored posts encourage viewers to engage with the brand and its campaign hashtag, #MyWickesMyWay driving user-generated content by participating in hands-on home improvement challenges.

    Wickes' first influencer campaign on TikTok aims to engage younger consumers who use the app to follow their favourite DIY creators and share videos. By running its #MyWickesMyWay campaign with branded hashtag challenges, Wickes could demonstrate how to use its products for home improvement projects and urge people to visit its stores. As an essential business, its locations have remained open during recent lockdowns and offers delivery and "click and collect" service.

    Following its launch, the campaign delivered over 612,600 views and 120,000 likes as well as a reach of 442,000 and engagement rate of 17.9%, according to Takumi. Wickes head of marketing Shelley Allison said in statement:

    TikTok is the ideal space for creating fun home improvement content at a time when consumers of all backgrounds are either discovering or re-engaging with this area.
    We want to help the nation feel houseproud, and as we're all spending more time inside our four walls, we want to encourage new audiences to engage with our brand and home trends. The #MyWickesMyWay campaign helps to deliver important awareness for Wickes as the go-to destination for all things DIY, inspiring consumers to go out and get creative with new tips and tricks.

    Recent research from Wickes also revealed that over half (53%) of those working from home throughout the pandemic admit to deliberately sprucing up areas of their homes so they look better on a video call.

    About TikTok

    On average, TikTok users spent 52 minutes per day on the app in 2019. This is just shy of the 53 minutes per day Instagram users spent on the platform despite having been around almost a decade longer. And 90% of TikTok users return to the app multiple times a day, according to Marketing Dive.

    These high levels of engagement are driven by the entertaining short-form video content that populates users' feeds and makes it difficult to put down. It also offers marketers the chance to encourage user-generated content, spark trends and create viral content quickly.

    Although TikTok is a particularly effective way for brands to reach younger audiences, it's misguided to think there aren't opportunities beyond this core user base. In the US alone, TikTok's adult audience is growing by 357% annually.

    You can view some of the videos on Wickes' TikTok page at this link:

    Wickes'#MyWickesMyWay campaign on TikTok
  • Sources: Marketing Dive, Influencer Online, Decision Marketing (UK) and TikTok
  • retailers

    Indie store update

    Warrnambool store wins Mitre 10 award

    Sydney Tools opened an outlet located close to Domain Central in Garbutt, one of Queensland's largest homemaker centres

    Pontings Mitre 10, located in Warrnambool (VIC), has won Independent Hardware Group's 2020 award for the top medium-format store in Victoria and Tasmania. It recognises the store's retail excellence, engagement with community and innovation.

    The store opened in 1923 and traded under Home Timber and Hardware from 1993 before taking on the Mitre 10 banner in 2019.

    Co-owner John Ponting said he was "surprised" and "humbled" and could not recall winning another award in 15 years. He told The Warrnambool Standard:

    I think we have raised the standard of the business. It is all about customer service and building the customer's trust, and we have a good diversity of staff, young to old and male to female and customers really have some sort of connection with the store.

    Operations manager Kat Ross said the award was a "fantastic achievement" for the 55 staff.

    We would also like to thank our loyal customers for their continued support, especially throughout such unprecedented times of 2020.

    Sydney Tools

    In late 2020, Sydney Tools opened a showroom and warehouse on Bayswater Road, Garbutt, which is expected to be a retail hub for North Queensland.

    At the time, Sydney Tools manager Ryan Luke said like many retailers, there had been delays getting stock into the country because of COVID-19 but the store was fully stocked within a couple of weeks.

    Prior to launching its Garbutt location, Sydney Tools said it has executed on its expansion plan that involved opening 10 stores during 2020 including five in Queensland and one each in NSW and Victoria. It has also opened stores for the first time in the Northern Territory, South Australia and Western Australia.

    Ten more stores are expected to open in 2021 and in four years the company said it expects to have a network of 70 stores across the country.

  • Sources The Warrnambool Standard and Townsville Bulletin
  • retailers

    Mega warehouse for home and garden e-tailer

    VidaXL is a Dutch e-commerce giant

    The Netherlands-based online retailer is set to expand its local presence by building a mega warehouse in outer Melbourne

    Online retailer VidaXL has committed to a land and build package of 113,620sqm in Tarneit (VIC), after signing a deal with Frasers Property Industrial through its Australian subsidiary HB Commerce, according to a report in the Australian Financial Review.

    The e-tailer which sells home, outdoor furniture and garden products will occupy the space which includes a warehouse and two offices. Frasers Property Industrial general manager - southern region Anthony Maugeri said that the site will help VidaXL accelerate its e-commerce operations in Australia.

    The new national distribution centre is designed to help VidaXL accommodate its rapid online business growth and customer demand which is in-line with the rise of e-commerce and a structural shift towards online retailing.

    Completion of VidaXL's facility is anticipated in April 2022.

    The move by the Dutch home and garden products online retailer comes as a growing number of e-commerce businesses acquire new warehouse facilities amid the online shopping boom generated by COVID-19. Amazon will build an even bigger 200,000sqm warehouse in Sydney. CBRE director of advisory and transaction services industrial and logistics, Todd Grima, said:

    CBRE forecasts an additional 350,000sqm of additional new space will be required each year to accommodate growth in e-commerce. The VidaXL transaction reflects the growing e-commerce trend in Victoria and its new facility will be fully racked and hold over 100,000 pallets.

    VidaXL launched in Australia in 2014 and is currently growing at over 100% per annum.

    Founded in 2006, VidaXL has grown from selling products via other e-commerce platforms such as Amazon, Ebay and Kogan, to also sell from its own web-based store. Within 14 years, the Dutch company has grown its market reach across Europe and is active in 29 countries.

    But the continuing increase in online shopping and large pure-play online businesses such as VidaXL is unlikely to dominate retail spending. Retail expert at Queensland University of Technology's Business School, Gary Mortimer, told SmartCompany:

    There are still consumers that want to go out into a nursery centre, touch and feel and engage with products and also get face-to-face advice on technical products and electronics.

    According to Mr Mortimer, while Australians spent an estimated $45 billion online in 2020 - a 40% increase from the previous year - only 12.5% of retail sales are made online. He said:

    It still suggests that about 88 cents in every dollar is still being spent inside a physical store.
  • Sources: SmartCompany and Toy Hobby Retailer
  • retailers

    Indie store update

    Margaret River store wins Mitre 10 state award

    A Tasmanian based store described as a "well-established family business with a strong brand and customer base" has been listed for sale

    Margaret River Mitre 10 has won the retail group's state award for excellence in Western Australia. The store won the annual award on a criterion based on sales, customer service, store standards, stock availability and community involvement.

    The store changed to the Mitre 10 banner in October 2019, from the Home Timber and Hardware brand.

    A new layout helped staff and customers deal with the restrictions brought on by the COVID-19 pandemic. Store manager Paul Brown told the Margaret River Mail they could practice social distancing with a lot more ease than with the old layout.

    Mr Brown said it was extra special to receive the award after only being part of the Mitre 10 group for 12 months. He said:

    We're all thrilled to have taken out this prestigious award. It's a real feather in the cap for us. Since transitioning, the store has become the flagship Mitre 10 outlet in the South West [of WA] and continues to offer the best possible service and range to their loyal trade and retail customers.
    Our fantastic team provide our customers with professional and dedicated customer service, always striving towards 100% satisfaction.
    This award was only possible due to the fantastic support we have received from the local community, in what has been very trying times.

    The state awards were announced in late November 2020.

    Brighton Hardware

    The owners of a hardware store located in Brighton (TAS), around 29kms from Hobart, have decided to retire and placed the store for sale.

    For the past 15 years, Paul Diaz and Leanne Taylor-Diaz have focused on providing quality products and exceptional service.

    The store is a previous Tasmanian Telstra Micro Business Awards winner after turning the business around from a reputation of being poorly stocked and over-priced to successful regional store.

    At the time, Paul and Leanne told Brighton Community News that when they took over the store the stock was depleted, there were few customers, and they had only about $20,000 to stock the shop. Leanne admitted she hardly knew the difference between a nail and a bolt.

    While Paul said he had a strong background knowledge of what was required in terms of making sure the shop flourished, both of them also relied on finding out what customers wanted and then let their friendly personalities deliver it. Their loyal customers did the rest.

    In three years, Brighton Hardware became a $450,000-a-year business. Paul said:

    It's a local shop and once they saw that they could come in here and get what they wanted, they came and bought more and more.

    The store is currently operating six days a week and is set just off the main road with customer parking available.

  • Sources: Margaret River Mail, The Mercury and Commercial Real Estate
  • To read the latest edition, please download HI News:

    Download hinews-6-04

    retailers

    Europe update

    Wickes launches work-from-home kitchen range

    Homebase is selling premium Miele appliances and Grafton Group announces its latest acquisitions

    UK DIY retailer Wickes is selling a range of fitted kitchens with built in desks and bookcases to help its customers to work from home more efficiently. This collection of multifunctional kitchens is a clever response to a demand for more home office space.

    The new Fitted Kitchen Home Office range aims to provide a more professional set-up so that everyone can repurpose their space to better suit their needs.

    Available in Wickes stores around the UK, homeowners can mix and match a selection of 33 modern colours, cupboards, shelves, drawers and practical workstations to suit different design preferences. It gives those without a study the chance to easily create a dedicated space for the working week, while still keeping the kitchen functional for other family members.

    There are six styles to choose from including the shaker-style Chester range, Milton, Tiverton, minimalist Sofia, Melrose, and modern Camden.

    The idea rides on the back of recent consumer research that found only 49% of Britons have a proper desk or workstation, with 39% using the dining table, 28% working on a kitchen table, and 20% sitting on the sofa with a laptop tray. Whilst these are manageable for short periods of time, they aren't the best long-term solution. Paul Bangs, category director of Kitchens and Bathrooms at Wickes, said:

    We understand there can be challenges associated with working from home which is why we've introduced a new working solution that fits seamlessly into everyday life.
    We are always working to deliver innovative and helpful products and services that fit into our customers ever changing needs and believe the new option of a kitchen home office will provide them with more choice when considering at-home workspaces as we all continue to adapt to new ways of working.

    Kitchens at Homebase

    Home improvement and garden retailer Homebase has a partnership with Miele that allows it to sell the appliance maker's ovens, hobs, extraction, refrigeration, dishwashers and laundry products online and in showrooms. The Miele range of appliances have been on display in 15 stores including in the new "Kitchens by Homebase" showroom in Guildford, Surrey. Michael Hardwick, key account manager for Miele GB, said:

    Homebase is a new partner for Miele, enabling us to create greater brand awareness and communicate with a much broader audience.

    In August 2020, Homebase announced the launch of Bosch and NEFF appliances as part of its kitchen offering. At the time, Ian Penney, business director for Homebase Room Solutions, said:

    The kitchen is the hub of the home and we know our customers are looking for inspiration for how they can make their busy lives easier.
    Embarking on a kitchen renovation can be daunting, but we're here to take the pain out of the journey ... A kitchen isn't just units and worktops, the appliances, paint, flooring and tiling, accessories are just as important - and we have something for every taste. We're really pleased to be partnering with Bosch and NEFF, to help bring our customers even more innovative and quality products.

    In similar move, selected Bunnings stores began selling Samsung home appliances in late 2020. This rollout is expected to expand this year, according to Appliance Retailer.

    Bunnings director of merchandising and marketing, Phil Bishop said the partnership supports its focus on extending its product range in the kitchen category.

    We are thrilled to be working with Samsung to expand their home appliance range in the Australian market and to provide our customers with even more choice at the best price. Samsung is world renowned for their cutting-edge technology and we look forward to continuing to grow our partnership to offer our customers the latest innovations in home appliances.

    The partnership is a first for Samsung and aims to meet growing demand for smart products.

    Grafton Group

    Building materials distributor Grafton Group and owner of the Woodies DIY chain has agreed to acquire Dublin-based Proline Architectural Hardware.

    Proline specialises in the supply of traditional and contemporary architectural ironmongery products including door locks, hinges and handles. It works closely with architects on the specification and scheduling of ironmongery products for commercial, public sector and residential projects. The company reported revenue of EUR10.8 million in 2019.

    Grafton said Proline's product range and expertise allowed joinery manufacturers, contractors and trade customers to source ironmongery products from a single source. Grafton chief executive Gavin Slark said:

    Proline will bring specialist expertise to Grafton in the architectural ironmongery distribution segment in Ireland. It will also enable us to offer a broader range of products and services and to extend our customer base in this segment of the market. The acquisition of Proline is in line with our strategy of acquiring specialist, high-quality businesses that trade in complementary markets.

    Grafton said the deal is still subject to approval by the Competition and Consumer Protection Commission.

    Prior to its Proline acquisition, Grafton announced its purchase of AVC Ltd, a UK-based manufacturer and distributor of bespoke wooden staircases that trades as StairBox.

    Founded in 1994, StairBox has focuses on "the use of technology, operational expertise and a culture dedicated to cost effectively manufacture an extensive range of high-quality customised staircases".

    It has developed a software application that enables customers to accurately design, visualise and price staircases on the StairBox website. The resulting products are manufactured at what it said was a state-of-the-art production facility in Stoke-on-Trent.

    The company primarily serves trade customers operating in the repair, maintenance and improvement market.

  • Sources: House Beautiful (UK), Retail Times, Appliance Retailer, RTE, Irish Times, DIY Week, Proactive Investors and Irish independent
  • To read the latest edition, please download HI News:

    Download hinews-6-04

    retailers

    Metcash/IHG results for FY2020-21 H1

    Acquisitions help to drive growth

    While IHG continued to trail the market in terms of sales revenue growth, growth in EBIT was very strong, boosted by increased DIY sales and cost containment

    Metcash, the owner of the Independent Hardware Group (IHG), has reported its results for the first half of its FY2020/21, covering the period between 1 May 2020 to 31 October 2020. Results for the overall company showed sales of $7.06 billion, up from $6.29 billion in the previous corresponding period (pcp), which was the first half of FY2019/20. This represents an increase of 12.24%.

    Earnings before interest and taxation (EBIT) came in at $203.0 million, up from $155.7 million in the pcp, an increase of 30.38%. Net profit after tax is stated as $125.1 million for the half. As Metcash wrote down $249.3 million during the pcp, leaving a loss of $151.6 million, percentage comparisons are not meaningful.

    Hardware division

    The Hardware division, which includes IHG and the newly acquired Total Tools, earned $759.3 million for the half, up from $599.9 million in the pcp, an increase of 26.57%. Division EBIT came in at $64.5 million as compared to $38.9 million in the pcp, an increase of 65.80%.

    That's the simple version.

    First of all, these are the results that are derived from applying the Australian Accounting Standards Board (AASB) 15 standards, which exclude "charge-through" earnings. We can include those, in which case the Hardware division earned a total of $1259 million in the reported half, and $1044 million in the pcp, an increase of 20.6%.

    While that is useful in terms of comparing past first half-years, AASB 15 is here to stay, so it is best to get used to the new numbers, excluding charge-through sales.

    Acquisitions

    In a note on its presentation slides for the Hardware division (#14), Metcash states that:

    Excluding acquisitions, total sales increased 16.2%

    This is footnoted, and the footnote reads:

    Acquisitions include Total Tools Holdings and in FY20 G. Gay & Co, Keith Timber and Wormersley's.

    We would have to assume that "total sales" refers to sales under AASB 15, which means that acquisitions were responsible for $62.3 million in sales. Of that, Total Tool Holdings (TTH) is responsible for $18.6 million, which means the other acquisitions brought in $43.7 million.

    One additional part to this, however, is that, as Metcash's chief financial officer Brad Soller informed the analysts during the earnings presentation, while Metcash owns only 70% of TTH, it is required to report 100% of that company's revenues. The other 30% is then taken out in liabilities.

    So, effectively, $5.6 million should be deducted from the overall sales, bringing them down to $753.7 million. TTH is responsible for $13 million of that, the other acquisitions for $43.7 million, and IHG (for comparison purposes to the pcp) $697.0 million. (That's a derived estimate, so we cannot vouch for its complete accuracy.)

    In terms of EBIT, the Metcash presentation notes that acquisitions contributed $8.5 million to earnings, and lists TTH's contribution as $4.8 million. (In this case, as we're dealing with EBIT, we would assume the 30% liability has been already applied to TTH's EBIT numbers.)

    So that would mean that EBIT can be broken down into $56 million largely from IHG, $4.8 million from TTH, and $3.7 million from the other acquisitions. Which means that a rough estimate of EBIT growth directly attributable to IHG would be around 44.0%.

    The media release which accompanied the results indicated the growth in EBIT was the result of higher sales volumes, an increase in sales of DIY/consumer products which carry a higher margin, a shift to more direct revenues from joint venture and fully owned company stores. Hardware also delivered a great deal of cost containment, especially as regards necessary expenditure on COVID-19 containment measures.

    In response to an analyst question about the source of growth, IHG CEO Annette Welsh responded:

    Customers were unable to go further than five kilometres. And to that extent, it would have driven some of those customers to their closest hardware store, and we benefited from that.

    Other performance metrics

    According to the media release accompanying the results, like-for-like (comp) sales increased by 13.2%, with DIY/consumer up 35% and trade sales up by 4%. This helped to shift the balance for IHG between DIY and trade from its previous 36/64 to 40/60, in percentage terms.

    While IHG had good performance, the store network also saw a net loss of six stores during the reported half. The Metcash presentation reports a loss of 10 stores from the banner group, and a gain of 90 stores - though 86 of those are from TTH, so in terms of IHG, it was a gain of just four stores.

    The number of Mitre 10 stores increased by nine to a total of 330, while the number of Home Timber and Hardware stores declined from 168 to 153. True Value Hardware and Thrifty-Link store numbers remained constant on 161.

    Total Tools Holdings

    A number of interesting issues were raised by the analysts at the results presentation as regards TTH. However, this turns out to be a complex topic, and HNN will be covering it in more depth in our next edition of HI News.

    Outlook

    Metcash is very optimistic - with a few caveats - about the future of its Hardware division. According to the company's media release:

    In Hardware, sales in the first five weeks of 2H21 are up 25.3% (+19.3% ex-Total Tools) with sustained strong demand in DIY and Trade sales continuing to track positively. The business will continue to focus on its MFuture growth initiatives across Trade, DIY and digital, and retaining customers gained through the COVID-19 period. The second half will include a full six months of trading by Total Tools, including the four stores acquired and anticipated acquisition of a majority interest in a further eight independent stores.

    The caveat, however, is this:

    There continues to be a high level of uncertainty as to the potential impact on all our Pillars of any changes to COVID-19 related restrictions and resulting changes in consumer behaviour.

    The optimism the company has around TTH, and what that indicates both about Metcash and the market, is something that Andrew McLennan, an analyst with Goldman Sachs, picked up on as well in his questions:

    With respect to tools, with the successful Total Tools acquisition on your belt, you've got a very strong position now in trade. I'm just wondering how we should think about this business going forward from a consolidation perspective? Could you say that the growth - you are a mile ahead of anyone else in the trade part of the market. I'm just wondering how we should think about MFuture consolidation opportunities.
    ...
    Just given the scale and the positioning in the trade part of the market, just how much more consolidation could be?

    Metcash CEO Jeff Adams responded encouragingly, but with a degree of wariness as well:

    Look, I think it's still very fragmented. There's still lots of opportunities out there for us to, similar to Total Tools, really step change and if we're able to find the right strategic fit and the value work for that, then certainly, we'd be interested. But there's still lots of opportunity because it's still a very fragmented market in Hardware.

    IHG CEO Annette Welsh also responded to these suggestions:

    Yes. I think the one thing to say is that there's real confidence in the model that we have and in the heritage in trade in that format... So we'll look to continue to drive that.

    Analysis

    It is a somewhat well-worn saying, but a rising tide does lift all boats. Looked at strictly comparatively, the 16.2% increase in IHG revenue does not actually track the market. Overall hardware retail sales for Australia for the pcp were $9769.7 million. For the reporting half, sales were $12,214.6 million. That's an increase of 25.03%, leaving IHG a full 9% off the pace. And more likely, given that IHG has a larger presence in Victoria, New South Wales and Queensland, which gained the most sales during the recent half, closer to 10%.

    Of course that is offset by the large gain in EBIT that the Hardware division did manage to accrue, which is in part a tribute to extensive cost-cutting measures, as well as the surge of DIY spending.

    The real question that continues to linger over IHG is whether it is continuing to pursue an early 2000s strategy as we enter into the third decade of the 21st Century. Take for example, this statement by Mr Adams:

    Our retail banner groups are ideally positioned to continue benefiting from the change in consumer behaviour to more 'local' shopping, and their improved competitiveness supported by our MFuture initiatives is assisting them to retain new and returning customers to their stores.

    HNN would dispute that there can be any real evidence of that pattern change in consumer behaviour at this time. It is simply a myth to believe - in our opinion - that in the long term consumers will "wake up" to the benefits of shopping locally.

    There are some consumers that certainly like to shop locally, and there are consumers who find it easier - and more enjoyable - to shop at "big box" retailers. Rather than hoping that consumers have somehow been "retrained" to prefer local shopping, it might be better to research ways to better appeal to a broader market.

    This is actually a very deep subject - and one we will explore in more depth in the next issue of HI News. Perhaps as a pointer towards that, it is best to close with this: all the acquisitions that Metcash - and therefore the Hardware division - have pursued have been about acquiring businesses with established path-to-market which could be enhanced through a centralised, moderately scaled approach to business processes.

    Contrast that with, for example, Wesfarmers' acquisition of Catch - which was all about technology, innovation and personnel. The COVID-19 pandemic should have been a "wake-up call" (in the American parlance) to these possibilities not a further temptation to continue with what are really the market daydreams of the 1990s.

    retailers

    Indie store update

    Dahlsens Mitre 10 Myrtleford property sold

    Achesons changes to the blue banner and threw a party for the local community in Forbes (NSW)

    The 4560sqm building that houses the Dahlsens Mitre 10 store in Myrtleford (VIC) has sold for $3.35 million and Acheson's Mitre 10 recently held an event to celebrate its new look grand opening.

    Myrtleford

    The freestanding Dahlsens Mitre 10 property located at 39-49 Myrtle Street attracted 63 inquiries and sold on a yield of 8.5%, according to a report in The Age.

    The property, which was listed for sale for the first time in 30 years, hit the market early in the COVID-19 shutdowns.

    Just prior to the building's auction, Dahlsens reassured locals that while the landlords may change, there will be no change to the hardware store's services.

    At the time, Wangaratta-based director Mike Noble from Garry Nash & Co said the property and its location were very appealing for prospective buyers. He told The Myrtleford Times:

    When we have a really good regional asset come on the market we often get regional people enquiring because, without generalising, regional people understand regional assets.
    Generally you get a much better return on a regional asset than a city investment so we also tend to get the city people looking at regional investments based on the return. It has been quite competitive - this is not a cheap asset.
    With interest rates being the lowest they've ever been, it is a very good condition for people to be looking at commercial investments...

    The hardware store employs around 30 people and pays just over $284,000 a year in rent and is 10 years through a 15-year lease.

    Forbes

    The Acheson family owned hardware store has served the local community for several decades and first opened in 1970.

    Jacinda Acheson said the grand opening was a great day out for everyone and was a success. She told the Forbes Advocate:

    It was fantastic to see people bring their family out and support their local business.

    Ms Acheson said Acheson's Mitre 10 would like to thank the Forbes Magpies Junior Rugby League Club for running the BBQ, as well as Lars Coffee for providing hot drinks, Brianna Bell from Showbiz Foods, Dippin Dots, and 2PK/ROK FM.

    Along with thanking the everyone who attended the launch of the store's new look, Ms Acheson said they would like to thank and acknowledge the team at Acheson's Mitre 10 for all their effort and support.

    Related: Acheson's Mitre 10 was formerly a Home Timber and Hardware store.

    Acheson's HTH makes the switch to Mitre 10 - HI News, page 27
  • Sources: The Age, Myrtleford Times and Forbes Advocate
  • retailers

    Elders expects more retail members

    Australian Independent Rural Retailers

    Earlier this year, a Roy Morgan consumer survey of about 1000 respondents found the Elders brand the most trusted name in Australian agribusiness

    Listed agribusiness Elders has grown its branch and wholesale rural supplies member network as the sector continues to undergo a shakeup following the amalgamation of Landmark and Ruralco by major rival Nutrien Ag Solutions last year.

    The Australian Independent Rural Retailers (AIRR) network, which includes eight warehouses, supplies wholesale products to about 370 AIRR member stores. It has grown from about 340 back when the rural merchandising group agreed to the $187 million Elders takeover in mid-2019.

    Among recent additions to AIRR has been South Australia-based YP Ag - a former CRT (Combined Rural Traders) member. Elders chief executive officer and managing director, Mark Allison describes it as the sort of "blue chip" rural merchandising business that is likely to trigger another wave of recruits moving away from Nutrien. He told Stock Journal:

    We've had about 12 new members coming across from CRT to sign up to the wholesale group this year and we can see good growth potential in VIC, NSW and QLD.
    We haven't lost any AIRR members since the business became part of Elders. AIRR has already exceeded our performance expectations with earnings before interest and tax of $21.9 million and is highly likely to exceed year earnings we originally planned over a full year.

    Former rival operators are now trading as part of the Elders network after it spent a further $18 million on business acquisitions in the financial year. The NSW North Coast was proving fertile ground for new Elders/AIRR members who were previously aligned with Landmark and Ruralco.

    AIRR also has plans for a warehouse in Tasmania, which could see more retailers joining Elders.

    Mr Allison said other potential AIRR members may actually find a better fit as part of the Elders' agency and store network, or within its horticulture business, Ace Ohlsson.

    According to Mr Allison, part of the company's latest eight-point plant is to continue pursuing some "massive opportunities" to win more market share in new geographies and across all product and services areas.

    Although he said the company is taking a methodical and "low pulse rate" approach to growth, it is understood there are about six potential acquisitions under consideration. Mr Allison said:

    We have a pipeline of acquisition opportunities, but it comes down to talking about the right numbers, locations and being sure they are the right cultural fit for us.

    The company also launched a branch incentive program enabling store managers to share bonus reward payments with staff as specific sales benchmarks are achieved. Mr Allison said:

    We looked at our competition in the market, which is invariably private operators and we thought this platform would drive the right private reward mentality in our teams.

    Profit performance

    Elders has posted an 80% profit increase to almost $123 million in the year ended September 30. It has been bolstered by a rain-revived turnaround in cropping activity and restocking demand, and strong flow-on benefits from its 2019 takeover of AIRR. Mr Allison said:

    Coronavirus has had no material impact on us so far.

    Although some specific business categories experienced market price shocks, notably the wool market, Elders had not needed to tap any government JobKeeper funding, or cut staff or working hours across its 220 branches, or draw on a $50 million working capital facility it established to provide emergency trading headroom when the pandemic hit.

    Mr Allison said rural property vendors were experiencing high demand for their farmland, which was expected to continue well into 2021.

    Revenue rose 29% to $2.09 billion and underlying earnings before interest and tax jumped 60% to $119.4 million. Gross margin growth was recorded across all state geographies and products. Mr Allison said:

    Our solid business foundations and strict financial discipline, and a commitment to ensuring the safety and prosperity of clients, communities and staff, allowed us to succeed despite challenging operating conditions in FY20.
    We now have a business that can make good money in a bad year and great money in a good year.

    Mr Allison said the results included 10 months of contribution from the AIRR business. AIRR added $44 million in wholesale gross margin - well in excess of projections. Its portfolio of house brand crop protection and veterinary products, combined with growth in Elders' Titan chemical product sales, were expected to make even more impact as the farm supplies division attracted more retailer members.

    Elders has about 18% of the total farm services market across Australia, behind Nutrien with more than 40%.

  • Sources: Stock Journal and The Australian Financial Review
  • retailers

    UK's Homebase up for sale again

    Pandemic drives sales at DIY stores

    Hilco, the turnround specialist company that bought the home improvement retail group in 2018, looks to benefit from the boost in DIY sales

    UK-based Homebase could have a new owner - its fourth in five years - as its current owner, Hilco looks to capitalise on the pandemic boost for home improvement retailers by putting the DIY chain up for sale. It is seeking to secure a deal from potential buyers after just over two years of getting the company back on track.

    Damian McGloughlin, Homebase chief executive, told the Financial Times that a transfer of ownership within two to three years had "always been part of the plan" and that with Homebase's profitability restored "now was the right time".

    A stock market listing is also an option, added Homebase chief financial officer Andrew Coleman. He told the Financial Times:

    It is something we have looked at. We'll have to see how things play out but all options are on the table.

    The group is thought to be hoping to secure new ownership by next Easter.

    Hilco acquired Homebase for GBP1 (and its substantial lease liabilities) in 2018 from Wesfarmers which had paid GBP340 million for the group just 18 months earlier. Wesfarmers had wanted to convert Homebase stores to its Bunnings format, but customers proved unreceptive to the focus on building and DIY in warehouse-style stores at a retailer traditionally known for home decor and gardening.

    Under the deal in which it sold Homebase, it should be noted that Wesfarmers is entitled to 20% of the sale proceeds if the Hilco sale happens.

    Under Mr McGloughlin, Homebase has moved back towards its homewares areas and introduced partners such as Tapi for carpets and Bathstore, which it acquired out of administration, for bathrooms. He said:

    We operate across a broader range of categories than B&Q or Wickes. People come to us to finish a room, not to build one.

    Mr McGloughlin also helped to steer Homebase to a return to profit in 2019 with underlying profits of GBP3.2 million against losses of GBP114 million in 2018.

    Hardware and home improvement stores have been among the relative winners from the COVID-19 pandemic as consumers adapted their properties to incorporate home offices and diverted spending from holidays and leisure to DIY projects.

    Mr McGloughlin said that spending more time away from the office had "helped people fall back in love with their homes" during the pandemic and that the warm summer weather in the UK had helped its garden centres.

    However, he added that sales of big-ticket items such as kitchens had suffered, and the company's ecommerce operation had at times struggled to cope with the increased demand. He said:

    We did more orders in three weeks than we would ordinarily do in 52 weeks.

    Homebase has since signed a 10-year partnership with Hut Group to overhaul its ecommerce offering, and said it would be opening more stores and experimenting with new formats as it emerged from its rehabilitation.

    Hilco ownership

    In just over two years of ownership, Hilco has carried out a widespread overhaul, closing underperforming stores, securing rent-reductions and cutting jobs to shore up the firm's finances. It has also shut two of Homebase's six distribution centres and secured a GBP95 million lending facility from Wells Fargo, a major American multinational financial services company. In a statement, Homebase said:

    Having built an excellent foundation, Homebase is moving out of its turnaround phase and entering into an exciting new chapter of growth. Now is the right time for us to be starting conversations with potential new owners to accelerate our plan.

    Homebase said it hopes to build on the more than 10,000 product lines added in the last two years, introducing new and expanded ranges by working with brand partners.

    It also has plans to open around 15 new stores over the next two years in cities and regions where it does not already have a Homebase store.

    The DIY chain now has 155 shops and 15 Bathstore outlets with more than 6,600 employees. At its peak it had 250 stores and 12,000 staff.

    Related: HNN covered the Wesfarmers sale of Homebase extensively.

    Wesfarmers takes a new path to growth - HI News, page 34
  • Sources: Financial Times, Yahoo Finance UK, Irish Examiner, Telegraph.co.uk and The Australian
  • retailers

    In praise of families: Mitre 10

    Grass roots marketing campaign

    The "Built by Families" series uses documentary-style videos to bring to life the legacy of family-run businesses in the Mitre 10 store network, and their connection to their local communities

    The latest campaign from Mitre 10 seeks to celebrate the "real stories and people behind its stores".

    Independent Hardware Group general manager of marketing Karen Fahey said the video series aims to invite consumers to understand what the Mitre 10 brand stands for. In a statement, she said:

    We are so proud to tell the stories of the local and incredibly generous families in our network. The people within our stores are the real brand champions and this is one way we can give them a voice.
    Built by Families aims to demonstrate how family-owned businesses engage and support their communities. It invites Australian consumers into the lives of these families, stirring emotions and building relatability. There's nothing superficial or contrived about the stories. Just genuine tales told by authentic people in communities across Australia.

    The videos begin with three businesses, the Hitchins family based in Moe (VIC), the Hastings and Benton family in Diamond Creek (VIC) and coming soon, the Johnson family in Mona Vale (NSW). Brand ambassador, Scott Cam, provides an introduction for the series. Ms Fahey said:

    Consumer trust and belief in our brand stems from generations of families delivering on a service and work ethic and fostering strong relationships with their customers - the very trademark of locally-owned, family-run business.
    The generational knowledge and expertise contained within these families is priceless and cannot be replicated. These three stories are saying it's not just product on the shelf in our stores...it's the people who work there, their values and the small things they do that make their communities better.
    The spirit of Mitre 10 lingers on in towns long after the lights go out and the store is shut. We encourage consumers to think differently about the people behind their local hardware store and listen to their stories. When you shop with locals you'll not only have a more enriching experience, you'll invest in the health of that community.

    The campaign will be implemented through multiple channels including a dedicated "Built by Families" website, TV advertising spots during The Block and social media.

  • Source: AdNews
  • Related: HNN featured the Mitre 10 Diamond Valley store extensively in a previous edition:

    HI News: Diamond Valley Mitre 10: The corporate/indie balance
    retailers

    Pandemic delivers gardening boom in SA

    Newman's Nursery in Tea Tree Gully

    Industry association president expects the increase in sales, up 25% on average, to last for at least the next 18 months to two years

    In South Australia, demand for plants has increased so much since the pandemic that many nurseries and garden centres are struggling to find workers, according to a report in The Adelaide Advertiser. Nursery & Garden Industry of SA president David Eaton said members are looking for more staff in most areas, from production through to retail.

    Initially when COVID-19 hit, there was huge demand for vegetables then anything edible, then fruit trees that would take three years to bear fruit, then indoor plants.
    With more people spending time at home, perennial outdoor colour is showing strong growth and we think high demand will continue. This has sparked something that will be a trend for many years to come."

    Communications consultant Neville Sloss said surveys of garden centres revealed much of the rise in demand has come from new customers and many of them keep coming back. He told The Advertiser:

    Our garden centres reported that apart from extra business from existing customers, many more people new to gardening were shopping with them.
    What they are now reporting is that these people have kept coming back, and we estimate that there are now up to 30% new gardeners in our SA community - and that is the feeling nationally as well.

    At Newman's Nursery in Tea Tree Gully (SA), co-director Dianne Hall is experiencing a "major skills shortage" and has been unable to fill two full-time positions for trained staff. She said:

    People need expert guidance and so they ask lots of questions like 'Does that fruit tree need a pollinator?', 'How big will it grow?', 'What's the root system like?', 'Will it affect the footings of my house?' or 'Does it like sun or shade?'
    You need to be a trained horticulturalist. In the past, you'd advertise and there'd be 200 or 300 apply and half of those people would have horticultural qualifications. Now they haven't got any qualifications. They might be a keen gardener and mow someone's lawn but haven't got the knowledge to answer customers' questions.

    Members of the Horticultural Media Association Australia have been lobbying the South Australian state government to address the issue by creating more pathways for training the skilled workers that the industry needs.

  • Source: The Adelaide Advertiser
  • retailers

    Indie store update

    Marulan Rural Supplies

    Nagambie hardware store, F.W. Parris and Sons is closing its doors and the premises has been sold

    In Nagambie (VIC) Bruce and Gladys Parris have decided to slow down and make the most of their golden years after working in the family hardware store since 1968. Their store, F.W. Parris and Sons is shutting down.

    According to the Southern Riverina News, John Sanderson Machinery will take on part of the building where the store is located, and Rebecca Baker Pharmacy has purchased the showroom.

    Mr Parris said his dad and uncle borrowed a stationary hay bailer from their father to start the business. He told the Southern Riverina News:

    They worked with the old-school hay bailers where you brought the hay to the machine and it took a team of men to make it all happen. My dad was quite inventive and he and my uncle slowly improved their process until they were working with more modern, automatic hay bailers.
    They purchased the showroom in Nagambie in the '50s and began selling and servicing hay bailers, tractors and other machinery.
    I'm not entirely sure how they made the switch from hay bailers to hardware but over several years they decided it was more viable than trying to keep with the advancing hay bailing technology.

    Mr and Mrs Parris joined the business in 1968 after Mr Parris completed an apprenticeship in Melbourne. The couple was looking for an escape from the city and had always wanted to return to Nagambie. Mr Parris said:

    When my uncle died unexpectedly and my dad had semi-retired, I took over and have been doing it ever since...
    I was joking with Damian Sanderson (from John Sanderson Machinery) for a number of years about him buying the business and me retiring and one day it actually happened.
    Selling the business is not an option because small hardware stores aren't viable due to big businesses coming to town. Having the building in the hands of another local business is the next best thing.

    Mr Parris also told the Shepparton News in a separate interview:

    It's a bit sad the shop is closing, but on the other side it's a little bit of a relief, too. All this is going to continue on - it's not as if developers are going to come in and build on the land.

    He thanked his loyal customers who have kept his family in business for so long.

    Without them, there would be nothing here.

    The couple wants to stay busy in retirement and remain connected with the community. Mr Parris said:

    I'm going to continue carting wool and machinery. That will keep me going but will allow me to back the pace off. We will always remain in the Nagambie community. A big part of what we loved about the business was seeing local faces and finding out what they're up to.

    Serving farming customers

    It's a different story for Daniel Muller who purchased Marulan Rural Supplies (NSW) in November 2015. He recently told the Goulburn Post.

    Being part of a small community has been the most amazing experience. We came from Sydney, where we did not have the same sense of belonging. We have our kids' school teachers, netball coaches, soccer coaches, local shopkeepers, grandparents, aunties, cousins and siblings, employees from the mines, the police, they all come into the store.
    They all come in for a bag of scratch mix, and leave after a yarn and a laugh. Some bump into a neighbour here, others meet new friends. Our humble shop is the most social place.

    Being an active member of the community also means the store sponsors its local soccer and cricket teams and provides its schools with raffle prizes and donations. Mr Muller said:

    We engage with our community by being members of our Chamber of Commerce ... We always strive to support local business, groups and the community in everything we do.

    He described what Marulan Rural Supplies offers its farming customers.

    Our customer service, pricing and reliability is something we pride ourselves on. We carry all stock out to our customers' cars, engage with customers and find out their stories, research and source items that we do not currently stock and help our customers with all their needs.
    Our deliveries are always reliable. From our fencing contractors who come in at the crack of dawn to our 'I'm running late, can you just drop a bale of hay off on your way home' customers.

    The store is an authorised Supagas dealer and recently became a registered firearms dealer selling guns, ammunition and accessories. After responding to customers' requests, Mr Muller employed a resident gun expert and underwent a rigorous eight-month process before being granted a firearms dealer's licence. Mr Muller said:

    This side of the business has gone from strength to strength. Our customers are amazed at our low prices and range.
    We stock a large range of brands including Gamo, Howa, Savage, Lithgow, Adler, Ruger, Miroku, Akkar and many others in all different calibres from air rifles up to 6.5 Creedmoor.

    In addition to an extensive range of rural supplies, it also stocks treated pine from Penrose Pine and are able to cater for customer special orders. The store also sells a high-quality fencing range including treated pine or galvanised strainers and stays, hinge joint, netting and barb. Its stock feed covers animals from alpacas to peacocks, from cattle to bison - the store has a customer with bison - and from racing greyhounds to pedigree cats.

    Marulan Rural Supplies has a small and hardworking team with five full time staff and five casual weekend staff. Mr Muller said:

    Everyone brings their own strengths to the business which is such an asset in helping our customers with their needs.
  • Sources: Southern Riverina News and Goulburn Post
  • retailers

    Blackwoods industrials retail expands in NZ

    Store rollout and refurbishment

    The Wesfarmers-owned retailer said it is responding to changes in the market as it updates its Workhorse range

    Industrials retailer, NZ Safety Blackwoods - part of Wesfarmers - is embarking on an expansion plan for the New Zealand market over the coming year.

    National manager of trade centres, Chris Mason, said it is already two-thirds of its way through its nationwide store refresh program to upgrade stores and relocate a number of them to bigger sites. He told The New Zealand Herald:

    There will be more stores [opening], particularly in the Auckland market. What we'll be looking to do around the rest of the country is to either expand existing locations or refurbish and transform the retail experience.
    [Store growth] will be single-digits over the next year, but we've certainly got larger plans.

    NZ Safety Blackwoods currently has six stores in Auckland and 24 spread throughout the country, selling safety equipment, engineering supplies, uniforms and packaging.

    It has been operating in New Zealand in various forms for over 30 years. NZ Safety and Blackwoods were trading separately until about four years ago when Wesfarmers merged both brands.

    In Australia, Blackwoods is the largest provider of industrial and safety supplies with 60 branches and distribution centres.

    Growth factors

    The trend towards fashionable workwear among tradies along with a boom in infrastructure projects and advances in technology are helping to fuel its expansion, said Mr Mason.

    The drive for growth comes down to a changing trend from our customer base. A younger more image-conscious tradie who cares about brand and their image when on site. We're being driven by a desire for fashionable workwear - not just in clothing, even with tools.
    The industrial sector is also being disrupted by technology and things are changing at a rapid pace in terms of safety and innovation. You see it in tools, for example, with wireless connections to control speed and who can use them now, earmuffs with Bluetooth and different types of connectivity to allow people to communicate easily on site. We're not immune to that disruption from technology that you are seeing in other industries.

    Durable workwear labels designed for the "fashion conscious" tradie are now sold alongside tools, engineering supplies, safety and personal protective equipment (PPE) in a retail environment which for the first time has mirrors and changing rooms - features that would have been unheard of in this industry even just a few years ago.

    Mr Mason said the trade industries are shedding their traditional persona as a new generation of more image-conscious tradies emerge along with increasing numbers of women entering trade industries. Its stores are evolving to meet this changing demand.

    The old school self-image of the typical New Zealand tradie has changed over recent years and this has manifested in a growing design trend for more stylish workwear which was traditionally seen as purely functional.
    More commonly now, they are looking for workwear that they can come off the site, take off their work boots and head down to the pub.
    The designer label on their work clothing is just as important to them as their casual clothes are and a range of recognisable fashion brands like King Gee, Levis and FXD have developed an offering to meet this need...
    As a retailer, our offering has evolved to provide the service levels to match the positioning of this style of attire which now includes a more customised fitting service.

    Tools, clothing and apparel have been the fast-growing products for NZ Safety Blackwoods. Its plans were to increase the size of existing stores to accommodate larger ranges in these categories. Mr Mason said:

    The line between workwear and casual wear is certainly being blurred, and that's right across the industry ... With the infrastructure projects going on there is a need for a larger workforce and so younger tradies are entering that workforce. There's been a drive on recruitment into the trades and apprenticeships, and we're certainly seeing that drive some of the growth.
    In the short to medium-term there's still a large opportunity for expansion. The government through Covid has committed to big spending in infrastructure and construction to keep the economy moving forward so we see there is a big market.

    Mr Mason said Wesfarmers recognised "there was a opportunity here" and "would continue to invest where it makes sense to do so". NZ Safety Blackwoods turns over about NZD240 million each year.

    Flagship store

    It recently opened a new 1000sqm flagship store in Penrose, an industrial suburb in Auckland. The Penrose store footprint is twice as large as the group's next largest store and is its 30th store in New Zealand.

    Mr Mason said its investment in a local omnichannel expansion program will cover bricks and mortar stores as well as its e-commerce platforms.

    We are seeing more tradespeople working in smaller teams now and there is a move towards a centralised purchasing model where being able to get everything they need to get the job done in one place means greater efficiency and less time away from the site.
    Offering an integrated retail solution provides access to a wider range of products with the minimum time needed to make the purchase," he says.

    Mr Mason also said the number of customers using click and collect has doubled in recent months and the new store will include a touch screen terminal that allows customers to order from more than 100,000 products - with the option of delivery to their worksite or collection from one of its 30 trade centres across New Zealand.

    Workhorse range

    Blackwoods recently revamped its own brand of workwear called Workhorse, according to Manufacturers' Monthly. Originally launched in 2014, Workhorse now has clothing or both night and day wear.

    Apparel program manager at Blackwoods, Cahal Callanan, said the company wanted to provide a "real value proposition" to large industrial businesses who needed workwear to protect employees. She told Manufacturers' Monthly:

    One of the main factors in the new range was to add in more stretch fabric, so it fits to workers bodies and allows more movement for people on site doing these active jobs. They are working eight to ten hours each day of really solid work, so if their uniform can fit and move with them it makes them more comfortable and efficient.

    Workhorse launched a range with high visibility as a focus. Instead of using day-time high-visibility colours, such as yellow or orange, the range is made from white fabrics. The Blackwoods team believe white is the most naturally luminescent colour and contrasts well in dark environments.

    National category and sourcing manager of apparel and footwear, Leigh Eam, said the safety aspects of the designs across the Workhorse range is what makes it unique. She told Manufacturers' Monthly:

    White really does stand out in a dark environment and in addition with our biometric tape applied to the garments a person is really visible.

    Biomotion retro-reflective tape is another element of design for the nightwear range that is crucial to improving safety. She said:

    Usually you may only get one band of tape around the leg and arm for visibility. But to increase this, with our new range we added two bands on either side of the joint on the leg and arm and this makes it easier to identify which direction the person is moving in.

    She said there is also an "X" configuration across the back of the uniform so machine operators can easily identify which way a person is facing.

    With two bands featured on the arms and legs of the clothing, each band moves when a person is walking and people can clearly see the motion of that person. I think this range that Cahal has created really focuses on the fit-for-purpose needs for night works.

    Blackwoods developed the Workhorse range by listening to its customer support staff to identify the unique needs of Australian industries. One important aspect that came out of this direct feedback is the use of 100% cotton fabric. Mr Eam said:

    Australians love wearing 100% cotton and we know that the Australian high-visibility standard has been modified to allow workwear ranges to use the natural cotton that Australians want.
    There are also a range of other factors like clothing vents to combat heat and collars that can be pulled up around the neck to protect from the sun. We created clothing with these elements, and they are intrinsic to our workwear range.
  • Sources: New Zealand Herald, NZ Safety Blackwoods, The Press and Manufacturers' Monthly
  • retailers

    Indie store update

    Budget gets positive response

    Total Tools is set to open an outlet in regional Victoria and Narromine Hardware keeps it local

    General manager, Andrew Pitman from Geelong based Belmont Timber and Fagg's Mitre 10 said the business believes the federal budget will help revitalise the wider economy and provide a confidence boost for the local community. He said he is pleased the government will borrow to fund personal tax relief and new incentive programs for business, infrastructure and job creation. He told The Geelong Advertiser:

    A trillion-dollar national debt is breathtaking in scale but it's what the country, and regional Australia, needs to support future investment and growth.

    In particular, Mr Pitman welcomed the extension of the first home loan deposit scheme, the ability to write off new assets, job creation incentives and the tax cuts. He said:

    The payment of up to $200 per week to hire young Australians is very appealing and will help reverse some of the high youth unemployment we have in Geelong. This aligns with our participation in the GROW G21 program that helps disadvantaged youth secure new work opportunities.

    Mr Pitman said the hardware retailer would also take advantage of the ability to write off assets through the purchase of vehicles and equipment with that investment to be shared among Geelong suppliers.

    He believes personal income tax cuts will also ultimately see more money flow back into the economy and build consumer confidence. He said:

    In the lead-up to Christmas, the additional money will be spent in the retail space and help resuscitate retailers that have suffocated under the weight of COVID-19...
    Small business, tourism and the hospitality industry have been haemorrhaging under lockdown and the additional federal government stimulus will help bring back the customers as Australians seek to holiday domestically.
    We also believe that 2021 will see a strengthening trend of Melburnians migrating to regional Victoria and in particular Geelong.
    COVID-19 has been an enabler for the development of the home office workplace. The new work from home ethos will see Geelong's population continue to grow as Melburnians seek the appeal of an affordable regional lifestyle.

    Total Tools in Warrnambool

    Total Tools Warrnambool franchise director Kyall Wragge has been placing the final touches on a 1534sqm store in East Warrnambool's Harvey Norman Complex. It is expected to open in mid-November.

    The business owner went ahead with plans to open despite this year's disruptions, using a vacant shopfront and a site occupied previously by floorcare and cleaning retailer Goodfreys. Mr Wragge told The Warrnambool Standard:

    We weren't going to let the challenge of COVID hold us back.

    A former Melbourne resident, Mr Wragge moved to Warrnambool to start the store because of the city's growing trade-based industries. He explains:

    Data shows there's a lot of qualified tradies around the area. It's a growing area, you can see it through the roads and the housing ... It was voted the most liveable city in Australia; it's a beautiful place and it's growing.

    Mr Wragge said he is gearing the new store at both DIY and trades markets to "complement" existing hardware stores in the region.

    Narromine Hardware

    Narromine Hardware located about 40 kilometres west of Dubbo (NSW) is benefitting from an air of optimism with local shopkeepers enjoying increased foot traffic and farmers excited by the prospect of a long-awaited, decent harvest.

    After experiencing the devastating impacts of a prolonged, unprecedented dry spell, closely followed by the global pandemic blow, the general vibe among locals is finally looking up, according to Dubbo Photo News.

    The hardware store will soon celebrate its second year under new ownership in November. In its first year, the team made much-needed changes to the space which was home to previous hardware shop fronts for over 65 years. In an earlier interview, manager Tracy Brennan said:

    We've remodelled the layout to serve our customers better, expanded the range of stock and refurbished both the interior and exterior of the shop and trade desk. We also cemented our back shed and turned it into a trade centre.

    It also modified the range in store to better suit the current water restrictions, and ordered grey water hoses and a range of gardening products so residents can reuse their water elsewhere.

    More recently, it brought the newsagency into the hardware store, making it a one-stop-shop for locals.

    Capitalising on the buoyant atmosphere, retailers have teamed up with the Narromine Shire Council for a major Shop Local campaign which will run from November 1 to December 18.

    The marketing strategy aims to promote the Narromine region as a leading shopping destination in the lead up to Christmas and continue to encourage people to shop locally. Narromine Shire Council communications manager, Kelly McCutcheon, told Dubbo Photo News:

    Come December, our shops will turn into overall weekend trading so they will be open on Saturday and Sunday. A lot of our cafes are going to complement that and open for that time as well.

    A late-night shopping event in Narromine is also planned for December 10, where most retailers will keep their doors open for a few extra hours.

  • Sources: Geelong Advertiser, The Warrnambool Standard and Dubbo Photo News
  • retailers

    Pandemic drives sales at Beacon Lighting

    Effective online channel

    The company said first-quarter underlying net profit after tax (excluding Beacon Energy Solutions) had increased to $8.4 million from $2.2 million

    A trading update for the first quarter of 2021 showed Beacon Lighting's like-for-like store sales was up by 26.6% driven by an increase in home renovations and home offices during COVID-19 lockdowns. Consumers have been sprucing up their homes with new lighting products, as well as desk lamps or ceiling fans for home offices.

    The online channel proved successful for Beacon Lighting, as it has for many retailers during home isolation. Its online sales rose by 156% in the period.

    Retail trading conditions have been supportive of the lighting and fan product categories, with strong growth being exhibited across all Australian markets except for the Melbourne region.

    Due to lockdowns, the company's Melbourne stores have been closed to retail customers since 6 August 2020. However, it has made use of these stores to process online orders, click & collect contact-free pickups, and service trade customers.

    Beacon Lighting chief executive Glen Robinson said during the difficult times around the coronavirus pandemic the retailer had been able to provide its customers with a safe and rewarding shopping experience in stores and online.

    We are seeing many customers investing in their home as they spend more time at home working and studying. Thanks to the support of our customers and the commitment of our team members, the group has been able to achieve these strong results.

    FY results

    Beacon Lighting has been benefitting from the trend to work from home driven by the COVID-19 restrictions, as stuck-at-home Aussies spruce up their fixtures and fittings with the spare cash they have that would have otherwise been spent on a holiday, travel or hospitality. In August, it unveiled a bumper full-year profit, up 38.5% to $22.2 million after sales grew to $252.2 million for the 12 months through June.

    On an underlying basis, which strips out the impact of Beacon's exit from its solar business as well as the sale of a distribution centre, net profit after tax lifted 16.8% to $19.1 million.

    Beacon Lighting's online sales surged 78% in the June half, lifting online sales for the year by 50.6%.

    In an earlier trading update back in June, Mr Robinson told The Australian:

    Much of it (rising sales) is coming from the fact people are not spending in cafes and restaurants, they are not going on overseas holidays, so they are investing in their house.
    Some of it might be coming out of superannuation money, and they see it as a good opportunity to improve the value of their home and change their spending habits from where they would usually go...
    [Sales increase] is across the board so there has been an uplift. Probably the strongest growth categories were light globes, desk lamps that sort of stuff ... even things like ceiling fans, garden lighting was very popular.

    More recently, the lighting retailer took out a seven-year lease on prominent retail space located on 1860 Sandgate Road, Virginia (QLD). A Bunnings store is being built next door. CBRE's Adam Brimson told The Courier Mail that an estimated 63,000 vehicles passed the location each day.

    In Melbourne, Beacon Lighting's purpose-built distribution facility at the Gilbertson Industrial Estate in Derrimut (VIC), encompasses a 11,469sqm warehouse and office on a two-hectare site.

  • Sources: Weekend Australian, Motley Fool Australia, The Australian, The Australian Financial Review, The Courier Mail, and Sydney Morning Herald
  • retailers

    Sydney Tools setting up shop in Orange

    Tools for tradies

    Earlier this year, it opened a megastore in Darwin as part of its ongoing national expansion

    A fit-out for a new Sydney Tools store in Orange (NSW) has been underway and director Jason Bey told the Central Western Daily that the industrial power tool and accessory retailer is looking to hire upwards of 15 staff.

    As a significant regional centre, Orange has the industries where its customers rely on hand and power tools for their job. Mr Bey said this will be the 44th store for the business but the first in the Central West.

    Orange has been an area of interest for a very long time. Since the inception of Sydney Tools in 2001 we would always have people who would travel to our Sydney store.

    Northern Territory

    The Winnellie (NT) store is the first one outside Sydney Tools' eastern seaboard locations. Mr Bey said the 2500sqm store located on the Stuart Highway was recognition of its belief in Darwin as a growth market. He told The Northern Territory News:

    We see Darwin as offering enormous growth potential for the specialist tools market. Around 11,158 people were employed in the construction industry in the Northern Territory in 2018-19, making it the fourth-largest employing industry in the region.
    While this represented a decline in employment of 23.1% in year-on-year terms, in line with a decrease in building and engineering activity, we believe a number of significant upcoming infrastructure projects are set to underpin the sector.
    The upshot will be the provision of much-needed employment for specialists in a range of key trades, and a fuelling of demand for capital equipment, accessories and hand tools.

    Projects include the Federal Government's $1.6 billion works program at Darwin's RAAF Base Tindal that is expected to create 300 jobs during the construction phase and the $260 million Ship Lift and Marine Industries Project. The marine industries project is designed to expand shipbuilding and repairs capability and expected to create 100 jobs during construction and 400 positions permanently. Mr Bey said:

    Our move into the Northern Territory is a no-brainer. It's a market with enormous potential and growth over future years.
  • Sources: Central Western Daily and The Northern Territory News
  • retailers

    Lowe's lockers for contactless deliveries

    Growing popularity of BOPIS services

    The lockers will be installed at more than 1,700 stores by the end of March 2021

    US home improvement retailer Lowe's recently announced plans to install Buy Online Pickup in Store (BOPIS) self-service lockers across all its US stores, aiming to improve contactless delivery for online shoppers amid a worsening COVID-19 spread.

    Lowe's frictionless shopping experience through its pickup lockers is ideal for time-pressed customers especially during the upcoming Christmas holiday period. It provides consumers with a fast fulfillment solution, while also potentially serving as a more cost-efficient option for Lowe's over delivery.

    The addition of lockers leverages innovative technology to provide a safe and easier way for customers to collect same-day online orders at their convenience.

    Electronic technology embedded in the lockers generates a scannable barcode as soon as an order is ready for pickup. Once store staff stages an online order, the customer receives an automated email notification that contains a one-time user barcode.

    The customer then completes the pickup by scanning the barcode at the locker using their smartphone without having to wait in line, receive assistance from a store associate or contact a touchscreen or keypad. It eliminates checkout time and allows fast movement in and out of the store.

    Executives at Lowe's say more than 60% of orders customers place online are being retrieved at its big-box stores. Joe McFarland, Lowe's executive vice president of stores, said in a statement:

    With more than 60% of online orders picked up in our stores, this gives our customers one more option and the added flexibility to control how and when they get that order.

    According to a study conducted by McKinsey & Company, as many as 60% of US consumers stated that they are currently using BOPIS services and will continue using it when the pandemic subsides. So the popularity and widespread usage of contactless retail services are likely to continue in the future.

    Lowe's expects to install the lockers in most metropolitan cities by Thanksgiving in late November. For providing the retail locker solution, it is working with Parcel Pending by Quadient, a major package solutions provider in the US.

    Lowe's investment in pickup lockers builds on improvements the company has made to its Lowes.com website, in-store technology and its delivery network over the past 18 months.

    As the coronavirus took hold, many consumers began turning to e-commerce more than ever before. And though Lowe's was deemed an essential business during mass lockdowns, the retailer still saw online sales skyrocket in recent months.

    As shopping preferences shifted during the pandemic, Lowe's moved up the migration of Lowes.com to the cloud and rolled out curbside pickup to support sustained online growth.

    Moreover, the company is focusing on accelerating front-end work and drive customer-facing capabilities. These capabilities include online-delivery scheduling and order tracking, a customised homepage, simplified search and navigation as well as enhanced online product offering to boost customer experience.

    Related: Competitor, Home Depot already offers such lockers at a number of its stores.

    Home Depot results FY2018/19 H1 - page 43
  • Sources: Zacks Investment Research, RTT News, Retail Dive and PR Newswire
  • retailers

    Indie store update

    New Home Hardware store in Berry Springs, NT

    Terang and District Co-operative ended its 2019-20 financial year with an increased surplus after a solid year of trading

    A Home Hardware store has opened in Berry Springs, a mostly rural locality in the Northern Territory and Terang Co-op in regional Victoria delivers strong financial year results.

    Berry Springs

    The newly opened Home Hardware store is part of the Berry Springs shopping precinct, replacing Berry Springs Hardware.

    Owners Russell and Lindy Willing plan to have the business's drive-through ready by November so customers can stock up on bulky items such as feed and cement. Mr Willing said the store would also offer services including pool testing and key cutting, as well as barbecues, paint and power tools. He told the Northern Territory News:

    We've invested in a good range of garden and power tools we believe will be appreciated by locals. We are really confident the store's range will meet the needs of our rural folk. And if we don't have exactly what they need, we encourage feedback so we can genuinely meet people's needs wherever possible.

    The store is located on 10 Doris Road, Berry Springs (NT).

    Warrnambool

    In his annual report presentation, Brendan Kenna, chairman of Terang and District Co-operative, said trading had been steady and the co-op had achieved a before-tax profit of $76,255. The net operating profit after tax was $44,709, up from $17,079 the previous year, which was also an improvement on 2018.

    The $24.4 million turnover was the second highest on record. The co-op's financial year finished on 29 February, but the AGM was pushed back due to the coronavirus pandemic.

    Over the past 12 months, the co-op has continued its positive progression, introducing significant improvements such as a $900,000 redevelopment of the

    Supa-IGA supermarket, becoming part of Mitre 10, joining the National Rural Independent (NRI) group and introducing clothing lines for the first time in the 25-year history of the rural store.

    Mr Kenna told The Standard that changes implemented over previous years were starting to take effect, describing the past year as one of consolidation and implementation of the co-op's strategic plan.

    He said the financial year had been impacted by the St Patrick's Day fires as people and businesses dealt with the aftermath of that disaster. But he said there was a more promising outlook with better profits in the latter half of the financial year bolstered by improved confidence and prices in the dairy industry.

    During the 2019-20 financial year 129 new members were welcomed, bringing the total to 2844 and the figure has since grown to 2954.

  • Sources: The Northern Territory News and The Warrnambool Standard
  • retailers

    Green shopping aisle at UK's Homebase

    The shelves promote environmentally friendly products

    It showcases energy efficient and eco-friendly home improvement products and offers information on how to get a smart meter installed, all in one place

    UK-based home improvement retailer, Homebase has just launched a "green shopping aisle" in five stores located in London, Edinburgh, Bridgend, Birmingham and Leeds with more stores to follow.

    Designed for the environmentally conscious, the store aisle is a picturesque grass walkway and canopy infused with foliage and butterflies. It is also decorated with evergreen climbers and vegetation, to help customers find the section of the hardware store that will make their home more sustainable. Chris O'Boyle, trading director at Homebase, told the Daily Star:

    We know that more and more of our customers are looking to make environmentally friendly decisions as they embark on home and garden improvement projects.
    'The Green Aisle' not only puts some of our most sustainable and eco-friendly products all in one place for those who know what they're looking for, but will also provide advice and inspiration, supported by our expert teams, for people who need a hand turning their green ambitions into reality.
    Whether it's something as simple as a draught excluder to sit at the bottom of a door, getting a smart meter installed or a bigger project such as installing new insulation, there are hundreds of ways - both big and small - that can help people make a positive difference to their home.

    Homebase's Green Aisle has launched at the same time as the British government's "Green Homes Grant" scheme, with a number of items selected based on their energy efficiency credentials. Items range from white goods and electricals through to insulation and smart appliances.

    The Green Aisle is also available online at the following link:

    The Green Aisle at Homebase

    The concept was developed in partnership with Smart Energy GB, an organisation that is tasked to help people in Great Britain to understand smart meters during the national rollout and how to use their new meters to be cleaner and greener with their energy use.

    It was also created after research found 74% of Britons want to make their homes greener, but half have no idea where to start. The poll of 4,000 Brits, commissioned by Smart Energy GB, also found 71% hope going green will save them money.

    Meanwhile, seven in 10 said they want to help the environment. Four in 10 of those polled via OnePoll are keen to use environmentally friendly paint when redecorating. Others are looking to install energy efficient home appliances 38%, smart home tech 34%, a water-saving showerhead 31% or a smart meter 29%.

  • Sources: Daily Star (online) and Birmingham Mail
  • retailers

    Bondi Junction Timber & Hardware

    Small store, great strategies

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

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

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

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

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

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

    As Adrian describes their comfortable working arrangement:

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

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

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

    Store strategy

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

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

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

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

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

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

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

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

    Packaging

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

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

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

    Expansion points

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

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

    Timber

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

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

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

    Results

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

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

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

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

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

    To read the full story, please download HI News:

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    retailers

    Retail as audience

    How the pandemic will accelerate change in retail

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

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

    The whole catastrophe

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

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

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

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

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

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

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

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

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

    Post-manufacturing

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

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

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

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

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

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

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

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

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

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

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

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

    Post-manufacturing retail

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

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

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

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

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

    To read the full story, please download HI News:

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    retailers

    TradeTools positioned for current growth

    Hiring spree during COVID-19 restrictions

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

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

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

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

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

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

    Profit sharing

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

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

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

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

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

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

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

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

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

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

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

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

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

    Reece signs up with LatitudePay

    Access to more home improvement customers

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

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

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

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

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

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

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

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

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

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

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

    Capital raising

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

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

    Related:

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

    To read the latest edition, please download HI News:

    Download hinews-6-03

    retailers

    Mitre 10 store planned for Hobart CBD

    Clennett's Mitre 10 has signed a lease agreement

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

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

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

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

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

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

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

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

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

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

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

    Sourced from The Mercury

    retailers

    Brennan's rebadged as Petries Mitre 10 Dubbo

    Changing of the guard

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Michael Brennan looks back

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

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

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

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

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

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

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

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

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

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

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

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

    retailers

    Gunna-Do Hardware on the market

    Business is for sale after 37 years

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

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

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

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

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

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

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

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

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

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

    Sourced from The Morning Bulletin

    retailers

    IHG sales decline as new CEO takes over

    In midst of decline, Total Tools acquisition bid confirmed

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Store network

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

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

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

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

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

    Future

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

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

    Total Tools acquisition

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

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

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

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

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

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

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

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

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

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

    Analysis

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

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

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

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

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

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

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

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

    retailers

    Paint store proposal to expand

    Inspirations Paint North Rockhampton

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

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

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

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

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

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

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

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

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

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

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

    Sourced from The Morning Bulletin

    retailers

    Terang Co-op stores move to Mitre 10

    Signage is being changed

    The two stores, in Terang and Camperdown (VIC), will change their banners from Hardware Home and Timber

    Terang Co-op CEO Kevin Ford said moving to the Mitre 10 banner was an exciting change which would build on significant improvements made in recent years. He told The Standard:

    We have been remodelling the stores to ensure presentation and stock levels are what's needed by our communities. To move to the Mitre 10 brand is a natural progression for us.

    The stores have been operating as Home Timber and Hardware. Mr Ford said:

    It was logical to move to Mitre 10 whose support, range of goods and promotional campaigns fit well with the Co-op. Being part of the Mitre 10 brand lets our customers know we're competitive with stock and price compared to anyone in the market.
    The range of products will mostly stay the same. We've already made a lot of changes to better serve the needs of customers. However, more interactive support will help as Australia recovers from COVID-19. Mitre 10 is a much stronger click and collect business, which is ideal at this time. It means our customers can order online and pick it up from the stores.

    The Camperdown Hardware store re-opened under the Co-op ownership in 2014. According to its 2018-19 annual report, the year was challenging with the St Patrick's Day fires in March 2018.

    The report stated that in the first six months of the year the store performed poorly but after improvements were made, the business was reinvigorated. By the end of the financial year, the number of customer transactions had grown by 3,000 with sales growth to support this. According to the report:

    We still have a way to go but a very disturbing trend has been reversed and, with increased sales growth, we expect a vastly different result in the new financial year.

    Sourced from The Standard

    retailers

    Local hardware bucks the trend

    Eastern Suburbs Hardware

    Ipswich-based independent hardware stores are reporting solid trade amid the challenges of the pandemic

    Gerry Galligam, owner of Eastern Suburbs Hardware located in Eastern Heights (QLD) said that the business was trading strongly. He told The Queensland Times:

    We have had an increase in sales, in fact we have doubled our usual retail. DIY is big. We are not really a retail store as such, we do more with the trade.

    From the perspective of his business, he was unphased by the COVID-19 pandemic. He explains:

    There are always ups and downs. Frankly there is no dream run so this is just another one.

    Stores like Eastern Suburbs Hardware have found their niche as big box outlets continue to grow.

    Nutz and Boltz Hardware is another store that has secured a niche in the local market, something they have been doing for more than 23 years. Owner Lyn Willems said:

    We have had an increase in trade. The store continues to function within the government guidelines. We are allowing four people in the store at a time, and provide hand sanitiser and the like.

    Nutz and Boltz is a family business selling to the public with a trade customer base. Ms Willems is concerned that people are beginning to become casual around hygiene. However the business continues to keep strict controls in place.

    Hardware stores are enjoying the financial boost, but owners and managers are cautious about the duration of this phenomena. Mr Galligam said:

    A lot of the tradies are busy at the moment and that will last a few months, but things have been slowing up and it is the end of the year that is a challenge.
    I am not knocking the government. It would not matter what colour party is in, they have to make this up as it is unprecedented. I don't think they have hit the mark, especially not for this area. The price tag on a new home is a bit high for a lot of our community.

    Sunshine Mitre 10, in Ipswich, is heavily trade oriented store and shares these concerns for the remainder of the year. Spokesman Ernie Patterson believes the government support packages would help those moving into Ripley and Springfield as the funding was relevant to the price tag. He said:

    We have set up a 'click n collect' system so DIY clients can drive through and collect. This is proving very popular. The whole Sunshine Mitre 10 group is doing well and are very busy.

    Sourced from The Queensland Times

    Related: Eastern Suburbs Hardware featured in a previous story.

    Big boxes no problem for HBT store - HNN
    retailers

    Rural store investment

    Tom Grady Rural Merchandise

    During the coronavirus restrictions, it offered a drive-way service at both its locations that allowed customers to pay with EFTPOS from their cars to alleviate hygiene concerns and help comply with governments regulations

    Gympie businessman Tom Grady has made upgrades at his rural merchandise store. Earlier this year, Mr Grady announced a 3200sqm expansion to the family business.

    The long-established rural retailer, who also celebrated 40 years in the property market this year, said the expansions were all about offering more supplies and providing additional access for customers. Mr Grady told The Gympie Times:

    We reckoned we'd better make use of the land to try and help our business and basically that's what we're doing it for, mainly for better display and parking for customers.
    It will give us greater diversity in the product range, and the parking we've got now creates a bit of congestion at times.
    Compared with other businesses, even with the way it was, we're a mile in front, because we had a lot of parking for semi-trailers to unload.

    Mr Grady's son and store manager Jason Grady said early stages of the expansion would allow the company to stock more fencing materials, water tanks, agricultural products and livestock handling products.

    He said the business had also prioritised safety for customers.

    Sourced from The Gympie Times

    retailers

    Regional revival

    Mount Alexander H Hardware

    The team at Mount Alexander H Hardware revived an older store, and in the process changed it dramatically

    One of the main lessons of profiling hardware stores is that there is no real "centre" to the industry - you can't say that stores in inner-urban areas, stores in rural areas, or those in areas between these two in terms of population density and market diversity are the main sources of innovative ideas. Great stores pop up in a range of different places, and the only commonality between them is dedicated owners/managers who understand the industry and their markets.

    That said, HNN does think it is worth keeping an eye on one particular demographic area for hardware stores. These are what have come to be called the "exurbs", a mix of exurban and suburban areas. Located usually around 100km to 150km from a major city, these areas are heavily reliant on that city as both a market and the provider of tools and some raw materials.

    Elsewhere in the world exurbs have caused conflict between long-term residents with a small town focus, and newcomers from the adjacent city. In Australia, however, there's been a notable move to acceptance and adaptation, as these groups find shared values regarding quality of life, a desire to honour local history, as well as a love of the bush.

    One area that is something of a pioneer for this kind of combination in the state of Victoria is the town of Castlemaine, located in the Shire of Mount Alexander, about 120km to the north of Melbourne, and a 90 minute drive down the Calder Freeway. Artists have long been moving to the region in search of a closer link with Australia's pre-urban history - as well as cheaper rent - while still retaining close links with Melbourne itself. More recently they've been joined by both more mature people seeking a handy retreat, and younger families seeking an alternative to the high property prices of the city.

    Combined with the local manufacturing and agricultural markets, it is the kind of rich mix that hardware stores can do well in, so it's not much of a surprise to find the thriving Mount Alexander Timber & Hardware (known to locals by its acronym, "MATH"), a Hardware & Building Traders (HBT) H Hardware store located there.

    MATH is interesting for reasons that go far beyond its location, however. Just as the Castlemaine area may presage a change to the way Australian cities work (especially post-pandemic), so does MATH offer a glimpse into a new and different way to think about hardware stores, both from a business/economic outlook, and from a community involvement outlook.

    Insights into these areas has never been more important than they are now - and we mean, frankly, never before in the post-World War II history of Australian hardware retail. With an economy that will have a difficult job of spurring its recovery, the need to create better businesses by improving productivity has never been greater.

    Trevor Butcher, a long-time builder in the region, is one of the founding partners of MATH. Alongside him is a couple of married accountants, Lachlan Maltby and Jenna Maltby (nee Harding), and a very experienced hardware retailer, Rodney (Rod) Hickey.

    As Lachlan explains the situation:

    So I don't actually work here, this is Rod's sort of baby, you know. The other investor is a builder by trade, he doesn't work here either. But between the three of us gives us a good balanced approach. Plus, my wife Jenna Harding, she's also a CPA, with an IT background, which is interesting.

    Right from the start, of course, that's just a little bit of an unusual combination to find running a hardware store in regional Victoria. Lachlan and Jenna continue to work at an accountancy firm in Castlemaine, Smith & Maltby Accountants, and Trevor continues his building firm, Trevor Butcher Builders.

    Rod, as you might imagine, is constantly hands-on at the store, managing its daily operations. However, after five minutes or so of talking to Lachlan and Jenna, it is pretty evident that this is also something of a "passion project" for them. There are not only tales of just how much hard work and direct, physical effort they have put into the store, but a real sense of personal investment as well.

    The idea of entering into the hardware business by launching a new enterprise in Castlemaine was actually Rod's to begin with:

    I worked at another hardware store. I didn't actually know Lachlan prior to this venture. The key here, was Trevor. I knew Trevor. I first threw the idea at Trevor one day, when I saw him. With the other hardware store going [out of business], it seemed Castlemaine needed a hardware store. He said that he knew someone who might be interested. Then, it just sort of snowballed from there. So, here we are, two years later.

    To read the entire story, please download HI News:

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    retailers

    COVID-19 retail economy

    What shape will hardware retail assume?

    A V-shaped recovery is unlikely

    How will the novel cornonavirus SARS-CoV2 (which gives rise to the COVID-19 disease) affect hardware retail during 2020/21?

    Underlying every question about Australia's economic future under the pandemic are two related queries: how bad will the initial hit be to the economy, brought about by the urgent need to self-isolate and shut down most business activity? And, secondly, how fast can the economy come back from this self-imposed slowdown?

    In terms of hardware retail, it is important to look across a wide range of areas in order to effectively answer that first question. Those areas would include:

  • the overall economy
  • the housing market
  • the employment market
  • how retail overall is being affected
  • changes to markets
  • In effect, though, at the moment most of what we can say about all of these areas amounts to speculation.

    Most forecasters see Australia's gross domestic product falling by 4% to 6% for 2019/20, with a further, perhaps deeper fall for 2020/21. While there have been some "scare" figures suggesting urban house prices may fall by as much as 30% by 2024, a more reasonable view from the Commonwealth Bank of Australia is that there may be 11% property price falls from March 2020 to March 2023, followed by flat to mild price increases - providing the overall economy returns to growth.

    In the period from mid-April to early May, according to Australia Bureau of Statistics (ABS) figures there has been a massive job loss in areas such as hospitality, with over 240,000 jobs, or 25%, gone, while retail has seen a decline of 2.5%, or 34,000 jobs. Construction saw 63,000 jobs go, a loss of 5.3%. Other hard hit areas include real estate and the professional/scientific/tech sector.

    It is still too soon to really gauge the overall effect on the retail sector. Obviously, a number of categories have been hard hit, such as restaurants, fashion and personal services. At the same time, however, others have seen a considerable boost, including supermarkets, pharmacies, and - for the most part - hardware retail.

    The IHG position

    The Metcash-owned Independent Hardware Group (IHG) did release some information about its prospects in the immediate future, in a presentation it prepared for a round of equity raising, and released on 20 April 2020.

    HNN collated the points it provided about hardware throughout the document:

    Trading update - five months ended March 2020

  • Hardware sales declined 1.3% in the five months ended March 2020, which is an improvement on the decline in 1H20 of 4.2%
  • In March there was an increase in demand across both the Trade and DIY segments. The increase in Trade can be attributed to pre-purchasing based on concerns about COVID-19 restrictions being introduced for Hardware retailers
  • Ongoing

  • Full IHG store network continuing to trade (some restrictions in Tasmania)
  • Growth in DIY categories (paint, accessories and garden)
  • Demand continues to exceed supply in certain categories (personal protection equipment, cleaning products, seeds & seedlings)
  • Significant online sales growth, launched 'Click & Deliver' to DIY customers
  • Outlook

  • The stronger DIY sales in March have continued into early April, particularly in the paint and garden categories
  • There is uncertainty as to how long COVID-19 related buying behaviours will continue to impact demand
  • COVID-19 trading restrictions have, to date, not materially impacted the ability of Hardware stores to trade
  • Trade sales in FY21 are expected to continue to be impacted by a slowdown in construction activity. There is the risk of a further decline in construction activity related to COVID-19, however this is not expected until 2H21
  • The business continues to have a strong focus on costs to help offset the impact of any reduction in sales volumes
  • There seems to be a sharp contrast in these comments to what HNN is hearing from other independent retailers. Certainly, there is not a similar level of pessimism about trading conditions prior to February 2020, and many hardware retailers saw sales in March increase substantially over prior years.

    It is also just a little bit difficult to parse exactly what is meant by the notion that construction activity is set to slow down in 2020, but not due to COVID-19, while a slowdown in construction activity in 2021 will be due to COVID-19. The second point is valid, but it seems likely there will be a slowdown in 2020 that will be directly attributable to COVID-19.

    Analysis

    Most hardware retailers are aware that, while things have so far been OK, and many have enjoyed a boost in sales during a season that is usually a bit quiet, this is unlikely to continue. While much attention is spent on how businesses will open, the larger question that looms in the immediate future is not whether there will be an overall downturn in the economy, but just how deep that downturn is going to be.

    HNN has deliberately not added much comment about the future of the building and construction industry, because we are not convinced that anyone has a clear idea about how that will travel through the rest of 2020. Perhaps the best such analysis available at the moment comes from the RBA minutes from its May meeting. In terms of the housing and construction industries, those minutes note:

    Social distancing restrictions on home inspections and in-person auctions, as well as heightened uncertainty about the future, had significantly reduced turnover in the established housing market. Members noted that some of the concerns that construction activity could be severely affected in the near term by supply chain disruptions and health-related site closures had not been realised. However, contacts in the liaison program had reported that demand for both new and established housing had fallen.
    Lower incomes and confidence, as well as lower expected population growth, were expected to affect demand for new housing for an extended period. Members also discussed the effect of a possible increase in the number of people moving back home or living in larger households for financial reasons. At the same time, the supply of rental housing had been boosted as properties that had previously been offered as short-term accommodation were shifted to the long-term rental market.

    House prices are likely to continue to fall. Accommodation rental prices will also fall, as the Airbnb and other short-term rental markets collapse, along with tourism as an export market. On the other hand, it seems likely there will be substantial state government expenditure in infrastructure.

    To read the full story, please download the latest edition:

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    retailers

    Hardware store sales in self-isolation

    Covid-19 sparks a sales surge for many retailers

    Painting and outdoor landscaping top the list of current home improvements as homeowners use their time in isolation to give their living spaces a makeover

    Across Australia, demand for small jobs and DIY maintenance - such as repairing dodgy door hinges - from homeowners in isolation has gone through the roof. As a result, hardware and home improvement stores have benefited from a boost in sales.

    Tasmania

    Clennett's Mitre 10 managing director William Clennett told the Sunday Tasmanian that this past Easter had been busier than usual, during what is traditionally one of the busiest times for hardware stores.

    Following an initial few weeks when the store experienced an intense period for people buying products like seedlings and methylated spirits and greenhouses, the store remains busy and more orderly with people buying more traditional DIY products.

    Mr Clennett said painting appeared to be the number one job on people's lists, with interior paint being snapped up in huge quantities.

    Bathroom products - including tiles, toilets and vanities - were also among the top sellers across his four stores in Kingston, Huonville, Glenorchy and Mornington in Tasmania. And outdoor makeovers are also in high demand, with paving, fencing, cubby houses and gardening projects all popular.

    Power tools, chicken wire, pots, seedlings and timber for building backyard vegie gardens have all been strong sellers, as people look for easy and relatively cheap projects that kids can help with.

    Clennett's Mitre 10 also launched a free "dial and deliver" service, to ensure Tasmanians who don't feel comfortable going to a hardware store can still access supplies, with 20-30 deliveries made each day.

    Like many other retailers, Mr Clennett's stores have implemented social distancing strategies and are encouraging cashless payment.

    Victoria

    In regional Victoria, WB Hunter Home Timber & Hardware general manager Paul Serra said a range of measures had been introduced, including home delivery options, cancelling outside visitations, social distancing and staff disinfecting surfaces. Prior to the Easter break, he told Shepparton News:

    We also have good drive-through facilities.

    Mr Serra said the company's sole focus was to ensure the local rural industry and food producers had access to their products. He said:

    Our stores are very safe, they're very big, and if people aren't sure we can do deliveries.

    Mooroopna Hardware store manager Joey Campanelli said in a bid to encourage people to use their home delivery services, delivery fees had been reduced. He said:

    We're applying the 1.5-metre rule as much as possible, we have hand sanitiser and wipes at each counter, and encourage people to use them after each transaction.
    We're still open for trade and, in the event of a shutdown, we're still happy to do home delivery service.

    Seymour Timber and Hardware store manager Richard Morris said there was huge demand for garden equipment, plants and paint as people made the most of isolation. He told the Seymour Telegraph:

    We will keep operating as long as the government let us ... The team are still offering deliveries, but we are taking all the necessary social distancing precautions.

    Queensland

    Taylor's Hardware has been operating in Bundaberg for the past six decades and with two generations working within the business. It offered free timber offcuts for kids to keep their minds occupied during isolation and school holidays. Store manager Adam Taylor explained to NewsMail:

    We started giving timber offcuts to customers with young kids when they came in to the store to pick up some hardware supplies. Eventually it turned into a really fun activity for the school holidays, where the kids can get creative and they send photos into us of what they've made.

    Store managers at Home Timber and Hardware Biloela and Mitre 10 Biloela said staff had been "flat out" and were struggling to stock some products. HTH store manager Tim Kessler told the Central Telegraph that his store had had 33% customers in the month of April.

    People aren't allowed to travel so they are being forced to shop in town which has been a benefit for us and other businesses. People are taking the chance to do home renovations. Painting and gardening seem to be the two biggest ones as well as other little home renovations.
    Some customers have already said that the money they put aside to go on holidays they can't use, so they are using the money for renovations.

    Mr Kessler said paint supply companies had been working around the clock and his supply warehouse in Brisbane was up 40% in output. He said:

    If we'd known six weeks ago we'd be this busy we'd have put on extra casuals. When our stock comes in, getting it on the shelves has been hard because we're constantly serving customers.

    Mitre 10 Biloela store manager Warren Cullen said the industry as a whole were seeing a busy period nationally as residents stuck at home were spending money on their homes to stay productive. He told the Central Telegraph:

    We get one main delivery a week from our biggest supplier (and) we have had to increase volume on that. We have also had to do more orders with individual companies, the frequency of ordering has been higher than normal.

    Mr Cullen said that with Chinese exports closed from January to March, there had been a shortage of stock Australia wide and in his store on some products. He said:

    One of the areas that's been heavily affected is gardening, it has been heavily affected by the shortage of seeds nationally ... There's a number of products that are out of stock until June and July.

    Dalby's Sunshine Mitre 10 retail manager Lena Taylor said despite initially fearing the coronavirus restrictions would cause a downturn, the shop had been extremely busy (from early April to mid-May). She told the Dalby Herald:

    It's like everyone thinks doomsday is coming. People are buying gardening products, timber, paint. Paint is the big one...We have been having trouble keeping up stock because everybody has been hit and we're just starting to get more supplies in.

    Roma Home Improvement Centre owner Tony Lambert said it was an unusually busy time which had taken him by surprise. He also told the Dalby Herald:

    Store traffic is certainly up and sales are up because people can't go anywhere on holidays, there's no junior sport and people can't do the stuff they normally do. So they are just doing stuff around the house. Gardening is an area that has had a vast increase.

    Mr Lambert said he was fortunate to be maintaining his business at a time when many retailers were hurting. But he said it was inevitable that the demand for DIY materials would drop back to normal when restrictions are lifted.

    When we go back to normal life people will get back to their usual activities in due course.

    New South Wales

    Sydney residents have also been using the extra time spent at home to spruce up the garden, fix a crooked door or paint the walls. Sammy Sciglitano from Booth and Taylor Hardware in Annandale (NSW) told the Sydney Morning Herald:

    We've never seen business like this in our lives.

    Mr Sciglitano, who has worked at the store for 13 years, said customers first started stocking up on potting mix, fertiliser and fruit or vegetable seeds before turning to paints and outdoor decks. Sales were surging "at least 50%" on weekends as homeowners turned into DIY tradespeople, he said.

    Deniliquin Mitre 10 has seen an influx of customers since restrictions came into effect. Business co-owner Katrina Knuckey told the Deniliquin Pastoral Times that plants and paint have been the most popular items purchased since lockdown.

    People have been coming into the store all the time getting what they need to start or finish their renovations and DIY projects. A lot of people are painting indoors and outdoors, as well as perfecting their gardens and building new things with the kids which is great to see.

    But the pandemic has also brought on supply issues. Ms Knuckey explains:

    Supply is now returning to normal with most of the items in demand back on our shelves.

    While the lockdown has placed significant pressure on the economy, Mrs Knuckey said she has been pleasantly surprised that the store could continue operating through such a difficult time for all business.

    We thought we would need to close our doors and do what we could to keep our employees in a job. However we have been lucky in that coronavirus has had a positive impact, not just a negative one...

    Mawhood's Mitre 10 has been busy delivering gas bottles, gardening products and timber products, and has seen a "huge increase" in home deliveries, according to the Oberon Review.

    Ynez Campos, a staff member at Inspirations Paint, said interior and exterior paint had been flying off the shelves at the Haberfield-based store. She said:

    A lot of people are redoing their [house] exteriors and there's a lot of DIY. And people have kids at home so they're getting the kids to help.

    She said fewer time pressures meant customers had "a bit more time to fuss over the different tonnes of white".

    Western Australia

    Peel Paint Place owner Allan Elliott has had more people through the doors since social distancing restrictions began. He told the Mandurah Mail:

    [In April] our Mandurah and Rockingham stores both had a 30 per cent increase in foot traffic ... Covid-19 has definitely impacted our business positively...
    We offered deliveries or drive-thru services as we have an eftpos machine we can just take out to their cars.
    People appreciated the extra service in the first two weeks of social distancing but now more customers are coming into the store as the fear factor surrounding Covid-19 has dissipated.

    To read the latest edition, please download HI News:

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    retailers

    Ikea Australia to sell solar panels

    The range was initially introduced to international markets seven years ago

    The payback time in Australia when investing in a full solar system is the fastest payback time of any other Ikea country, according to Ikea Australia chief executive Jan Gardberg

    Home improvement and furniture retailer, Ikea has begun a trial to sell solar panels. The idea is for Ikea staff to test out the offering, provide feedback, and ensure any bugs are ironed out by the time the product is launched to consumers.

    Ikea's business leader for Home Solar, Petra Toth said Australia is the first country outside Europe to be offered panels. She said:

    Our strategy globally is to make solar more accessible for people to live a sustainable life every day. It has been going really well in Europe.

    Ikea has partnered with local solar panel supplier, Solargain, that has more than 20 years' experience in the market. The solar panels will not be offered as a DIY product but are designed to take the complexity out of installing home solar systems by establishing a one-stop shop model. They are expected to be available in all states by June or July. Ms Toth said:

    This product is not about picking up flatpacks. We will be focusing on quality and we have a range of warranties to back that up.

    Ikea will be the first point of contact, with trained staff collecting data such as the number of people in the household and booking quotes, while Solargain installs the solar panels, inverters and mounting systems backed by Ikea warranties.

    The Solstrale package includes a custom rooftop solar design, full installation (by Ikea's partners, not the homeowner), PV panels, inverters and mounting systems - with an option to add battery storage if so desired.

    Ikea said pricing in Australia would vary from region to region - depending on any local and state government incentives and rebates - and depend on the size of system purchased. Ultimately, the company hopes to expand Solstrale sales to all of its markets by 2025.

    According to Ikea Australia retail manager and chief sustainability officer, Jan Gardberg, the move to solar is ideally timed for the current conditions in Australia. He said:

    We know the unlocked potential that awaits with democratising sustainable solutions through renewable energy. Our climate is perfectly suited for Australia to be a leading market for the Ikea home solar offering.

    Ikea has already spent more than $4 billion on making its stores focused on cleaner energy, powering its buildings across the globe. In Australia alone, 20,000 solar panels have been installed across its sites, contributing to a total of 900,000 worldwide.

    To read the latest edition, please download HI News:

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    retailers

    For Ace Hardware, mobile means loyalty

    Engaging customers in the channels they prefer

    The hardware retailer has discovered that customers want in-store, mobile and online shopping experiences to be individualised

    Data from B2B platform, Payments News & Mobile Payments Trends (PYMNTS.com) suggests retailers that focus on innovating only one sales channel will likely squander opportunities and have difficulties generating consumer loyalty.

    Retailers should instead take hybrid approaches to customer relationships, maintaining both the speed expected from online and mobile platforms as well as in-store shopping's convenience and tactile advantages, according to Deanna Moreno Hernandez, mobile marketing senior manager at hardware retailer Ace Hardware. She said:

    We are in the process of enhancing our data capabilities to see a more holistic view of our consumers and their shopping journeys to better serve their needs [on] whichever channels they prefer to [use].
    We lean on our IT team to help develop in-house technologies to serve our retailers so they can provide memorable experiences in-store.

    Ace Hardware is revamping its rewards system and mobile channel but the company is also making sure its new experiences work with its existing physical locations and consumer shopping patterns. It believes consistently seamless experiences are key to retaining customers regardless of where they shop.

    Omnichannel ease of use

    Retailers that want smooth omnichannel experiences must harmoniously maintain three distinct shopping channels that serve shifting payment and customer needs, all without distracting consumers. Shoppers are expecting increased personalisation as well, so retailers must carefully consider how to foster customer trust and satisfaction.

    Mobile is thus emerging as a top channel for today's retailers - and not just because of its ease of use and popularity among younger consumers. This channel can also bridge in-store and online experiences, improving personalisation at brick-and-mortar stores and allowing shoppers to track purchases and loyalty points on the go. Ms Hernandez said:

    The [new Ace] mobile app is enabling this [convenience] by offering personalised experiences. The questions that a store owner would ask to get to know customers better are replicated in the mobile app.

    Ace has also grafted this mobile experience into its delivery options, allowing customers to mix and match where they make purchases, she added. App users can shop products and schedule pickups at particular locations or search for the nearest stores, and all can offer promotions directly within the app. Ms Hernandez said:

    Your purchases, whether in-store or online, are reflected on acehardware.com and in the app and can easily be repurchased.
    The fulfillment options of buying online and picking up in-store, assembly and delivery from your local store leverages our retail footprint of more than 4,500 stores to ensure the customer has a positive experience shopping in-store or digitally, in our new app or [on] acehardware.com.

    Using mobile to connect online and brick-and-mortar sales can also help retailers maintain consumers' trust. All purchases are categorised and maintained on devices that typically never leave shoppers' hands, encouraging them to head back to familiar brands.

    Loyalty in new retail age

    Ace Hardware is relying more on mobile as an integral part of its loyalty strategy. Ms Hernandez added that the retailer is implementing app features to simplify the purchasing process. She said:

    The integration of our loyalty program, Ace Rewards, will allow members to easily access their membership cards, coupons, rewards and birthday offers all in one place.
    Long gone are the days where customers will need to carry the coupon around to ensure they use it.

    Developing this mobile loyalty has its own obstacles, though. Smartphone real estate is finite, and brands stake their claim by creating easily navigable and convenient mobile apps. Ace Hardware is hoping its offerings will entice consumers and boost customer conversion, as such offerings - especially those tailored to mobile - may enable retailers to build trust with brand-agnostic consumers.

    Merchants will have to continually update their strategies, however, if they want to maintain customer relationships and satisfy new generations. Brick-and-mortar, mobile and online channels will likely experience major shifts in consumer behaviours over the next few years, and successful retailers will be the ones that engage consumers and anticipate what they want.

    To read the latest edition, please download HI News:

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    retailers

    Kingfisher negotiates rent as B&Q stores reopen

    The home improvement group drops out of FTSE 100

    It has also donated personal protective equipment (PPE) critical for frontline healthcare workers fighting Covid-19

    B&Q's network of 288 stores in the UK are now open to the public, albeit with strict new safety measures in place. The DIY chain is classed as an essential retailer under the British government's lockdown rules, but it shut up shop in March before making a staged return with an initial 155 stores opening first.

    It has limited the number of customers in stores, switching to card-only payments and installing perspex screens at checkouts. Owing to the bulky nature of some DIY materials, the retailer is allowing two people to shop together so that they can "self-serve" larger items.

    Parent company, Kingfisher has been negotiating its rent payment terms as it tries to save cash amid the coronavirus crisis. It has asked to pay rents across its 950 UK stores on a monthly basis, rather than each quarter, according to Sky News.

    If the home improvement retailer is given the go-ahead to pay monthly - rather than three months upfront each quarter - it will be able to keep the extra cash on its balance sheet during the coronavirus epidemic.

    Kingfisher is not seeking rent cuts and has no plans to suspend payments. A spokesman told CityAM:

    We are looking to work constructively with our landlords to successfully navigate our way through these extraordinary times.

    In early March, the company said supply chains in China and the Far East, which make up 25% of total goods sold, had started to reopen. Products from Italy were also still flowing, with factories remaining open.

    Prior to negotiating its retail rents, the home improvement retail group was relegated from the FTSE 100 following a quarterly reshuffle of the sought-after stock market ranking.

    The Financial Times Stock Exchange 100 Index, informally called the "Footsie", is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalisation.

    The news comes after a tough trading period for the group, which has so far seen new chief executive Thierry Garnier attempting to revitalise the company. However, it saw demand for DIY and garden equipment surge – up 38% in March – in the weeks before the coronavirus lockdown.

    Over the group's fiscal first quarter to April 30 total sales fell 24% to GBP2.16 billion pounds, with like-for-like sales down 24.8%, reflecting COVID-19 related disruption. It did not issue profit guidance for the 2020-21 year.

    Kingfisher also announced a donation of protective medical equipment to health services across Europe worth GBP1 million when demand for the items soared in the wake of the coronavirus pandemic.

    Since the COVID-19 crisis hit Europe, Kingfisher and its businesses have ringfenced all their remaining stock of personal protective equipment (PPE) so it can be donated to frontline healthcare workers.

    Kingfisher confirmed it ordered a further three million face masks from suppliers in China and Israel. These will be for donation to the health authorities in the UK, France, Poland and Romania, or to equip staff who are facilitating its online and click & collect orders in stores.

    To read the latest edition, please download HI News:

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    retailers

    Mining boosts Thrifty-Link store

    Kapunda mine site depends on local businesses

    Store manager Peter Duregon has been instrumental in acquiring materials for the Kapunda Mine project

    The ongoing copper recovery project at Kapunda Mine in South Australia has delivered economic benefits valued at around $25,000 to regional businesses including the Kapunda Hardware & Garden Centre, a Thrifty-Link store.

    Works at the historic mine site, headed by Environmental Copper Recovery (ECR) Pty Ltd, were done to validate research performed by CSIRO and Adelaide University.

    Kapunda Thrifty-Link Hardware was able to order in materials crucial to the work carried out by ECR. Store manager Peter Duregon said there was "no doubt" money was spent in the region. He told The Barossa Herald:

    They've (ECR) certainly been supportive as just one transaction alone for a bore casing was about $1000. Mining is not a cheap game, so it was nice to know they called on us when they could have gone elsewhere.

    Peter's knowledge and resourcefulness to quickly access the necessary hardware was referred to ECR by Drillsmith which is also involved in the project. DrillSmith is another Kapunda-based company that specialises in geotechnical investigation, drilling of earth stakes, environmental drilling and project management.

    ECR managing director Leon Faulkner said it was always the company's intention to rely on regional businesses. The financial benefits were further spread to Kapunda's hotels, accommodation and food outlets.

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    retailers

    Nowra loses local hardware store

    Taffa's Hardware site being sold

    James Stewart is moving on after the closure of his store and Taffa's Hardware is expected to sell for about $4.5 million, according to its real estate agent

    Stewart's Hardware in Nowra (NSW) will close at the end of February 2020. Owner James Stewart has spent 25 years in the local hardware industry, starting with North Nowra Hardware as a teenager. He worked for Walsh's Mitre 10 prior to taking over the business and re-launching it as Stewart's Hardware in March 2016.

    Mr Stewart cited online spending and high rental rates in Nowra's CBD as the main reasons for the store's closure, as well as the South Nowra Bunnings store doubling its size. He told the South Coast Register:

    Many of these factors are forcing a variety of different types of stores to close, or many are moving out of the area, largely to South Nowra.
    I felt obligated to take on and take over this business to continue the Walsh's family hardware business with good old-fashioned hardware knowledge and service that has been provided to this area since 1877. I couldn't just let it close. I wanted to take it on to continue to provide service to the community, conveniently located in town as an alternative to Bunnings.
    A lot of our customers are elderly and rely on public transport. I feel for them. We survived as long as we did, due to their support.

    After a short break following the store's closure, Mr Stewat plans to start Stewart's Handyman Business.

    West Ryde store for sale

    Taffa's Hardware, considered an iconic store after 64 years in the Sydney suburb of West Ryde, closed at the end of last year. Its 403sqm site, located in the heart of the suburb's CBD, is set to be auctioned in March 2020 through Ray White Commercial.

    Anthony Taffa worked alongside his dad and founder of the store, Ron, and has been managing the store that became Taffa's Mitre 10 with his sister Julianne. He told the District Northern Times:

    It was very difficult for us and took us a long time to come to that decision - it is in the long term the right one.

    Taffa's Hardware first opened its doors back in 1955. In the mid-1970s the store's floorspace was expanded and a second level was added.

    The business, which had operated independently, became part of Hardex Hardware, a co-operative of similar businesses created by Ron Taffa. In 1980, he left the group and joined the Mitre 10 group and remained part of it for the next 40 years. Anthony Taffa said:

    It was important to keep evolving and refreshing the business - we have four different logo sets for Mitre 10.

    Changes within the local area, increasing costs and decreasing margins led to the decision to stop trading. Ron Taffa passed away aged 90 in December 2018. In Commercial Real Estate, Anthony said:

    It was amazing when we closed down. We had so many people come through and say their grandparents used to do their shopping there, and then their parents after them, and now they did. It was incredible. They were thanking us for being such a great community service, and for everything we had done, and a couple of customers were in tears.

    The Taffa family have always been community-minded, and sponsored local football and cricket teams, and donated merchandise to local schools and groups to help them raise money for various charities and organisations. Anthony said:

    It's been a wonderful 64 years, but times have now changed and local community desires have changed too.
    It's very much part of our family history so closing the business and selling it are difficult things, but we have to move with the times. It's amazing how many people built their homes with what my father sold them, and their response when they heard we were going was very touching.

    To read the latest edition, please download HI News:

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    retailers

    Bunnings gets go-ahead for Rozelle store

    Heavy concessions

    While Bunnings has won its application, will the store actually work?

    The long-running saga of efforts by Bunnings to open a kind of mini-warehouse store in the inner-Sydney suburb of Rozelle has finally concluded its first phase. After several years, a refusal to grant a building application, and a successful appeal to the New South Wales Land Court, Bunnings now has a go-ahead to build the store.

    The judgement in the case Artazan Property Group Pty Ltd v Inner West Council [2019] NSWLEC 1555 is available online at: bit.ly/2Uq9it3 . Artazan pushed forward the case for the Wesfarmers-owned Bunnings. The development company has honed its skills at helping some less popular projects past council objections, most notably with the expansion of the Stiletto brothel in Camperdown, which one Sydney councillor dubbed "the Westfield of brothels".

    There are a number of features that make this case compelling. On the town planning, and local independent store versus corporate giant angle, the town council has had its hand forced to permit the construction of a large retail premise is an area that is basically industrial in nature. One question that gets raised by this is exactly how fair other planning decisions will now look in retrospect. Will the council need to slacken some restrictions, so that smaller retailers can compete at the same level as Bunnings?

    From the perspective of Bunnings, this kind of development has the potential to serve as a model store for a new strand of development, as it seeks to reach deeper into highly active areas of inner-cities with smaller format stores that are almost tailor-made of click-and-collect/home delivery operations.

    Objections

    In the end, the objections came down mainly to issues related to traffic and congestion. Additional matters considered included trading hours, secondary effects of traffic congestion, issues related to flooding and to pollution.

    The traffic issue was examined from a number of perspectives. According to Section 20 of the ruling:

    Council's traffic-related concerns can be summarised as follows: (1) negative impacts on local traffic system (here I also consider traffic-related amenity concerns), (2) inadequate parking and (3) inadequate loading and unloading arrangements.

    The first point came down to these three concerns:

    (1) expected traffic generation of the development, (2) capacities of existing network to accommodate expected new traffic; with the ultimate point of attention the capacity of the Parsons/Mullins Street intersection to accommodate the additional traffic, and (3) residential amenity implications of additional traffic.

    Expected traffic generation

    This portion of the discussion was further divided into three parts:

    (1) supply side predictors of traffic (in particular considering gross floor area (GFA) of the outlet, and product/service offerings (in particular the attraction to professional tradespersons), (2) demand side predictors (eg considering geographic sales catchments and relevant competition), and (3) proposed or induced constraints (eg specific conditions imposed by regulators or adopted by proponents).

    In terms of supply side, this largely came down to trying to find comparable Bunnings stores which could be used to infer the traffic load the store would attract, which was expressed as the "peak traffic generation rate", given in vehicle trips per hour, per 100 square metres of floor space. Four locations were used: Fairfield, Victoria; Lilydale, Victoria; Artarmon, New South Wales; and Kent Town, South Australia.

    Artarmon had a higher level of traffic generation than the other sites, but the Bunnings side countered this by suggesting this was because it had a larger catchment area.

    The point was also made by the Bunnings side that the store did not feature a tradie loading area for utes, which would reduce vehicular traffic.

    In terms of the demand side, Bunnings represented that the measure it used to determine catchment was the number of households within a 10 minute drive from the store, and suggested that stores such as Kent Town actually had a higher number of households than the store at Rozelle would have.

    In terms of constraints, the Bunnings side agreed to a number of constraints in terms of its delivery vehicles. These would be limited to 15 vehicles per weekday, except in the month of December, when this would be increased to 20 per day.

    The size of these vehicles was also restricted. There would be limited to medium rigid vehicles, up to 8.8 metres in length, excluding the 12.5 metre trucks previously proposed.

    The representatives for the Inner West Council did suggest that, while there were restrictions on the use of the loading dock for tradies, continued market demand might see this change. However, this concern was not agreed to.

    Capacities of existing network to accommodate expected new traffic

    This discussion largely devolved to the matter of whether the Mullins/Parsons Street intersection immediately in front of the proposed store location would be adversely affected to a critical extent. Expert opinion, modelling and video-based evidence was submitted by both sides.

    The critical factor considered was whether traffic at the intersection would back up so far as to block the actual exit and entrance to the proposed store. That entrance is set back just 30 metres from the intersection.

    It was found that in the end, the added traffic level would be acceptable.

    Local traffic impacts

    Here the Court chose to rely heavily on evidence tendered by the Bunnings side using traffic modelling through SIDRA (Signalized Intersection Design and Research Aid). This is a software package developed by the Australian Road Research Board as an aid for capacity planning.

    Modelling through SIDRA showed that the effect on local traffic of building the Bunnings store would be minimal. As a secondary point, the Court also noted that as the area was zoned light industrial, it did not have the same expectations and restrictions as a pure residential area might have had.

    Parking

    As regards parking, the decision followed the same pattern as that for traffic generation. The Council suggested a higher rate of parking per 100 square metres, the Bunnings side suggested a lower one, and the Court agreed more with the Bunnings modelling than the Council's. This was largely because the Council modelling was derived from parking at larger Bunnings warehouse store, and the Court accepted Bunnings' argument that customers parked for shorter periods at smaller stores.

    Summary

    One way of looking at the case for the Bunnings store in Rozelle is that it is a unique store being built in a somewhat unique location. While many locals do not think that the modelling presented by the Bunnings side will reflect the real traffic situations in the long term, the Court really had no choice but to accept the data tendered and regard it as reasonable.

    This does mean, however, that this development will be closely monitored into the future. If the Bunnings modelling proves correct, then the Rozelle Bunnings could serve as the basis for the construction of similar projects in other inner-urban areas. If it instead turns out that the modelling is quite wrong, Rozelle will form a strong basis for Councils elsewhere in Australia to reject similar planning permissions.

    To read the full article, please download HI News:

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    retailers

    Metcash no longer into Total Tools: report

    A deal could be confirmed soon

    Its focus on tradies - rather than mum-and-dad shoppers - was pitched as a selling point to prospective buyers

    The Street Talk column in the Australian Financial Review (AFR) has reported that Metcash, owner of the Independent Hardware Group (IHG), is no longer in the running to acquire the Total Tools business.

    Sources told the AFR that Metcash had decided the tool retail group was not for them - or perhaps did not meet the price expectations of the group's owner.

    According to the AFR, Total Tools is said to be more focused on holding discussions with private equity companies in the hope of having a deal confirmed by February 2020. Sources speculate it could be Quadrant Private Equity which was involved in the sale of Burson Auto Parts (now Bapcor) and taps and water systems company Zip Industries.

    The tradie-focused tools retailer said its stores have 7,000 products on hand with access to over 60,000 SKUs on its online store.

    Analysis

    With IHG recording negative sales growth for its most recent half, and Annette Welsh set to take over from Mark Laidlaw in May 2020, it's likely the Total Tools acquisition proved to be too uncertain a risk. Ms Welsh will be only the third CEO for Metcash's hardware business, and she will inherit a retailer highly attuned to Mr Laidlaw's aggressive style of doing business in what is largely a cooperative enterprise.

    Mr Laidlaw had personal ties with the leadership team at Total Tools, but Ms Welsh likely would prefer not to add a tricky acquisition to the set of tasks she faces moving into 2021.

    Related:

    Metcash 2019-20 H1 results: Hardware sales (including charge-throughs) fell by 4.2% over the pcp to $1040 million - HNN

    Sourced from Australian Financial Review

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    retailers

    Amazon Australia lockers through Stockland

    Located at malls across NSW and Victoria

    It has also partnered with Commonwealth Bank and the Victorian Association of Newsagents to host locker banks

    Stockland has brought the world of online shopping into the heart of its bricks-and-mortar retail centres by installing Amazon delivery lockers at malls in NSW and Victoria.

    The self-service kiosks for parcel pick-ups are located at Stockland's Piccadilly Centre in Sydney's CBD, Green Hills in the Hunter Valley's Maitland and The Pines in Melbourne's Doncaster East. Stockland chief executive of commercial property Louise Mason said:

    Offering Amazon Locker in Stockland retail town centres provides greater convenience for our customers who are not home for the delivery of their purchase and ensures they can pick up.

    It provides another option for those living in high-rise apartment blocks where packages can't be easily left at the door, or for those who don't want expensive items left on their doorstep during the day, tempting so-called parcel pirates. It's all about providing consumers with "more flexibility and control over their deliveries," Patrick Supanc, director of delivery technology at Amazon told Yahoo News Australia.

    When choosing a locker at the Amazon checkout, users will get a code used to open the locker. When it arrives, they will be notified in an e-mail and will have three days to collect their item.

    If shoppers decide to pick up from a staffed storefront which has partnered with Amazon, they will have 14 days to collect it. These stores will have signage denoting them as part of Amazon Hub.

    As well as providing another option for customers, it should help boost overall delivery times. Mr Supanc said:

    We also think about how can we make the experience easy for drivers who are delivering items.

    There are two options, a locker system as well as storefronts such as newsagents where customers can choose to pick up their items. Amazon has also partnered with Commonwealth Bank and Victorian Authorised Newsagents Associations for its automated locker rollout.

    Sourced from Urban Developer and Yahoo News Australia.

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    retailers

    Screwfix store rollout in Ireland

    The Irish network could grow to 40 stores

    With over 40 years of experience, Screwfix expanded its portfolio with bricks and mortar stores to complement its online business

    After launching three new stores in Ireland, trade specialist Screwfix wants to maximise the opportunities in the building and renovation boom with a plan to expand to 40 branches.

    The brand is already familiar to tradespeople and home renovators through its online operation, Screwfix.ie.

    Each of the new stores will stock about 10,000 products including power tools, workwear and heating and electrical parts. Customers can also place orders online or through phone for items from a catalogue of 24,000 products. Screwfix CEO John Mewett said in a statement:

    We're extremely excited to be launching Screwfix stores in Ireland to help tradespeople get their jobs done quickly, affordably and on time.
    The creation of bricks and mortar stores in Ireland is a major milestone for us and a direct result of the increasing demand from Irish tradespeople ... Our Irish customers are already committed to our Screwfix.ie website, but we know the convenience a Screwfix store provides their local town.

    The three new stores are located in Sandyford and Swords in Dublin and Waterford. Another store will open in Ennis, Co Clare.

    Screwfix is part of home improvement group Kingfisher which also owns B&Q and Castorama and Brico Depot.

    Sourced from Irish Times and Retail Insight Network.

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    retailers

    Store openings with stars of The Block

    Maclean Mitre 10 in New South Wales

    A Home Timber and Hardware store, part of Hastings Co-op, celebrated the first day of trade at Sovereign Place Town Centre in Port Macquarie (NSW)

    The Block contestants Andy and Deb Saunders were special guests at the Maclean Mitre 10 store opening recently. The Daily Examiner reports that families lined up to meet the TV celebrities. A stand-up comedian, Andy easily broke the ice with the store's customers. He told the newspaper:

    We just love things like this because we love to connect to people. Their barriers come down when you're relaxed and having fun with them. The alternative is not having fun with people...
    I love watching smiles on people's faces. Some people don't have as many teeth as others, but it's still a smile nonetheless.

    The couple share a lot in common with many people in the region. Their home at Wallabi Point on the Mid-North Coast was recently saved by the NSW Rural Fire Service.

    Maclean Mitre 10 co-owner Shaun Johnson said Andy and Deb were the latest in a string of The Block contestants to visit the store. He told the Daily Examiner:

    The Block is just such a fantastic show and Andy and Deb would probably be the

    fourth or fifth couple of contestants we've hosted over the years.

    It's great for the local community to come out and engage with celebrities and appreciate how down to earth and normal they are.

    The opening also acknowledged the hardware store's branding switch from Home Timber and Hardware. Mr Johnson and Jason Southwell have co-owned the store since September 2018 and have been in the process of transitioning the business to Mitre 10 since July 1. Mr Johnson said:

    In a town like Maclean, we understand the community needs to have responsive, knowledgeable staff in the hardware store so we can give them the right product for their jobs, at the right price.

    Sovereign Place Town Centre

    As one of the contestants of the latest series of The Block, Deb was also special guest at the opening of the Home Timber and Hardware (HTH) store in Thrumster (NSW).

    The store is just one of the Hasting Co-op's rural and hardware offerings that also includes a Mitre 10 and CRT, and is located in the newly opened Sovereign Place Town Centre in Port Macquarie. Hastings Co-operative CEO Allan Gordon said the opening was the beginning of a different era for retail in the Hastings.

    The IGA supermarket is a concept store which has been designed as a one-stop destination for shoppers with an in-house butcher, bakery, a significant range of locally-made products and produce as well as partnership hubs with HTH and Harvey Norman.

    Mr Gordon said the new IGA outlet, which has a creche, has set a new benchmark. He told Port Macquarie News:

    This project is at another level and captures the latest trends. Having a creche in a supermarket is a real winner for us too. We have set the new benchmark for future development in this area.

    The centre is home to Port Macquarie's first NRMA electric vehicle charging station. NRMA executive general manager motoring Neil Payne said this charger would help drive the next generation of motoring tourists to the region, improving mobility and contributing to the local tourism economy.

    Sourced from The Daily Examiner, Wauchope Gazette and Port Macquarie News

    retailers

    Sunshine Mitre 10

    The innovators

    Sunshine Mitre 10 has developed a network of stores in Queensland, which has provided a testbed for new innovations

    How will Australia's home improvement industry develop into the future? After spending several days with the managers of Sunshine Mitre 10, Travis Cunnane (general manager), Darren Fanshaw (group retail manager), Deen Saint (group trade manager) and Jason Monahan (trade operations manager), HNN thinks we might have had a glimpse of one possible future.

    It's a future that could enable more independent retailers to take a greater share of the ongoing growth in the home improvement category. It also might help some hardware retail entrepreneurs to escape the defensive, low-capital rut in which they have been trapped since the early 2000s.

    Sunshine Mitre 10 has 20 business units at 18 different locations, based in Queensland's Sunshine Coast, about 100km north of Brisbane. While the Sunshine Coast is central to Sunshine Mitre 10, its locations range from Ipswich, to the immediate west and south of Brisbane, up into northern Queensland, at Weipa. That is a span of some 2500km - roughly the same distance you would have to travel to reach Moscow from Zurich.

    It's a thriving, well-run business, with turnover of around $100 million a year. But what makes it really interesting is that Sunshine represents one of the best examples of a new kind of retail structure in the independent hardware and home improvement retail sector (iHHIR). It's a pointer towards the real potential that exists in this sector of the market, even as competitive pressures continue to grow.

    The Sunshine solution

    The big question is: what does that response need to be? Looking at the example of Bunnings itself, it's not difficult to give an answer. What is clearly needed is more market innovation, particularly when it comes to developing better path-to-customer offerings. However, innovation was a major problem for the iHHIR sector even before the global financial crisis (GFC) and reduction in mining activity that followed. With the Australian economy in a period of sustained slow growth, an increasing number of retailers now find innovation too risky a strategy to chance.

    These survival factors are compounded by structural difficulties in the small to medium business (SMB) sector. A major difficulty is that the sector does not have readily available sources of capital (as we'll discuss in more detail later), especially for innovation investments. Much of retail, and especially iHHIR, is dominated by small retailers, which struggle with innovation, because any change will affect their entire revenue stream, which means the risks are consistently high.

    What this points to is that if the iHHIR sector is to survive and thrive in the future, it needs to change more than just its processes. It needs to shift structure, to develop an overall business model which makes innovation more possible and less risky.

    It's important to note that this doesn't mean every retailer has to engage in risky innovation. It does mean, however, that the industry needs to develop significant centres of innovation, which can help to generate needed change for the overall industry.

    After spending several days on Queensland's Sunshine Coast being given a tour of, and insight into, IHG's Sunshine Mitre 10, it is fairly clear to HNN where the industry can find at least one starting point for building this kind of innovation engine.

    What Sunshine has done, over the past decade, is to mould its business into a kind of regional hub, a store network that not only can act as a growing profit centre, but which also - almost paradoxically - strengthens rather than diminishes the independent stores adjacent to - but outside of - its own network.

    It's not the case that most retailers in the iHHIR should consider becoming part of such a network - a type of network HNN is calling a "hub network". But most retailers would benefit from there being more regional hub networks in the Australian market.

    Sunshine history

    Sunshine Mitre 10 today is a network of stores, along with a small warehouse facility in Brisbane, and a truss plant. The company also participates directly in the business areas of locks, appliance sales, and steel products.

    Its formation dates back to 2008, before Metcash acquired the Mitre 10 group. It was built on the merger of two established Queensland retailers, Lanham's and the Melville family business, Melco.

    Lanham's began as W. Lanham & Sons Timber Mill in 1910, based in Nambour. The steam-powered sawmill provided timber for construction as the town prospered in the shadow of its sugar mill. By the 1970s, Lanham's had moved beyond timber to hardware supplies, and opened an additional store in Cooroy.

    John and Mark Melville opened their Noosaville Melco store in 1988, selling timber and building supplies. Subsequent stores were opened in Gympie, Maroochydore and Caloundra.

    When the two companies got together in 2008, the combined business was initially known as MelcoLanhams Mitre 10. The business also held the registered name of Sunshine Hardware Pty Ltd, and some years after the merger changed its operating name to Sunshine Mitre 10.

    Such amalgamations are not uncommon in hardware retail, but what followed was uncommon, as the Mitre 10 organisation (prior to its acquisition by Metcash) entered into a 49% ownership joint venture (JV) with Sunshine. According to Travis:

    John Melville wanted to get out, the Lanhams wanted to stay in. There were a few brothers on the Lanhams side, and two of them stayed. Dave Lanham is the chairman of Sunshine, and Tim is a shareholder who also works in the business. He's part of the management team.
    They own the freeholding in Nambour and Kingaroy. So that's how the joint venture came about, and they renamed it "Sunshine". And from there, opportunities [for expansion] came about, like [the stores at] Roma and Kingaroy.

    This investment ended up as a significant feature of Metcash's eventual acquisition of Mitre 10. The proffer documents from Metcash indicate that Sunshine produced earnings before interest, taxation, depreciation and amortisation (EBITDA) of $4.9 million in the 12 months to 30 June 2009. Mitre 10 gained $2.4 million for its 49% share. That equates to over 13% of Mitre 10's $18 million overall EBITDA at the time - a considerable contribution.

    The next change was that at some time during FY2013/14, Mitre 10 acquired a further 35.7% of Sunshine, moving its ownership up to 84.7%. The company also aquisitioned Northern Hardware Group in April 2016, which included the Weipa Mitre 10 and the Mareeba Mitre 10.

    Sunshine helped to create a key strategy that Mark Laidlaw adopted after he took over as CEO of Mitre 10, following Mark Burrowes, who was the first CEO after the Metcash acquisition. While Mr Laidlaw made it clear that Mitre 10 would not pursue a strategy of corporate ownership of stores - one of the wrong steps Mitre 10 had taken, with the development of a subsidiary to develop and own "Mega" stores, in a countermove to Bunnings - JVs offered an opportunity to extend Metcash's reach, while retaining the advantages of the knowledge and skill of independent hardware retailers. Similar JVs followed with companies such as Fagg's Mitre 10 stores in Geelong. (Metcash now controls 90% of Fagg's.)

    While the strategy has been copied and repeated, Sunshine has itself become something unique and original for Metcash's IHG. It could be said that Sunshine has become less of a JV arrangement, and more of a "hybrid" enterprise.

    In a standard JV, there tends to be a strong separation of concerns. The capital partner provides finance, and sets a series of guidelines and goals. The operational partner follows those guidelines and goals, but also pursues its own goals, and provides certain guidelines for the capital partner as well.

    The difficulty with this is that capital and non-capital partners can have very different objectives. In general, capital partners want to see growth, and non-capital partners concentrate on return on investment (RoI). The end arrangement is typically a balance between these two - but, in many cases, it is the RoI approach that wins out. JVs frequently provide above-average returns, but are a poor vehicle for growth.

    What has happened at Sunshine is that both the capital partner, IHG, and the independent principals are obviously committed to achieving high levels of growth, through innovation tied to appropriate - but far-ranging - expansion.

    The need to push beyond some of the unwarranted assumptions people have about JVs is something Travis is passionate about. As he told HNN:

    One of the things that frustrates me is because we're a JV corporate - whatever - people say a lot of nonsense about how the business works. Listen, we treat this as if it's our business. For the management team, this is our baby.
    Apart from the board meetings that we have, to be fair to Mark [Laidlaw] and to the directors, IHG gives us a fair bit of autonomy to deliver the outcomes, and they support us when we need it, pull us into the line on the odd occasion when we need that.
    It's really like every other single retailer in hardware, in that if you're passionate and you treat it like it's your own business, you generally get good results. If the people who work here are turning up just because they're getting a pay cheque, I think we're in trouble.

    Travis is also adamant that JVs do not get special privileges when it comes to treatment by IHG. They do get exposed to new ideas first, but that can be both good and bad, he says.

    We trial things before we roll them out to independent members and all that. It's true. We do. We often have this stuff, two years, 12 to 18 months before it gets rolled out to independents.
    We give a lot of feedback. We've told them some stuff is just crap and you need to start again, and they do it. It would be very difficult for an independent to put in, say, the core range for the first time, because what if it turns out to be a disaster?
    Whereas for us, we can just roll with the punches, and modify it, and give them the feedback. So it is really important from that regard.

    Travis also sees the expansion through the acquisition of HTH as offering considerable advantages:

    If you don't have a network, it's easier for the builder to go to Bunnings, because they have a network. Since Metcash have come onboard, and particularly with the Danks acquisition, we're starting to act like a network now. We have given jobs to Hudsons in New South Wales, through Murphy Builders, actually.
    We've started to act like a group, now. We've actually got a larger network than Bunnings. But yeah, historically we've never really taken advantage of that. I think now we're starting to do that.

    Travis and the rest of the Sunshine team also see JVs as providing a very good exit strategy for many independent hardware retailers, especially those that are "ageing out" of the business, without a clear path of succession.

    Having joint ventures is good for members that do want to get out. Because there aren't people queuing up to buy an independent hardware store, and if there's no succession planning, it's just becoming more common now. [JVs] are a good way for owners to extract some value out of the business. And they're entitled to that.

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    Hume & Iser, Bendigo

    Stephen Iser takes the store to the next level

    After nearly 140 years, Hume & Iser knows a thing or two about hardware retail. As does Stephen Iser, its managing director.

    Since the 1990s, Hume & Iser has been a watchword in the industry for how a regional retailer should operate, first under Home Timber & Hardware livery, and more recently as it has transformed into the virtual epitome of what a modern Mitre 10 Sapphire store should be.

    Stephen Iser, the company's managing director, is one of the stalwarts of his generation of retail managers, the people who have really defined what the modern hardware retail industry is all about. It is a generation that has been slowly but steadily retiring out of the industry. The reasons are usually, like Stephen's, family related.

    Hume & Iser modernises

    While Stephen modestly says he got the top job because he was "the last man standing" after many management changes, that was far from the case. By the time he was appointed, he had spent 22 years working at Hume & Iser, the last 10 of those as sales manager.

    In fact, as it turned out, this was almost perfect timing at Hume & Iser. Someone with a heavy sales background was exactly what was needed to take advantage of what was going to be the a strong, sustained surge in spending on home improvement by Australian households, and a rapid expansion in Bendigo.

    According to the website Australian Property Investor:

    Ranked 209th out of a total of 550, Greater-Bendigo was among Australia's top 20% when compared to the rest of Australia.
    The median price for a house in Bendigo has increased at an average of 8.3 per cent average annually, from $98,500 at the start of 2000 to $320,000 at the end of 2014. Average rental yields of 4.7 per cent resulted in a total return of 13 per cent.

    Bendigo's population has grown by an average of 1.5 per cent over the last decade, lower than the national average of 1.6 per cent.

    Currently, Bendigo also has home ownership of over 70%, and a steadily increasing overall population, with new suburbs growing at the fastest rate.

    The challenge facing Stephen, after he was appointed general manager, and the company had time to readjust to its changed circumstances, was how best to take advantage of the available growth. The solution he came up with for Hume & Iser was to make sure that it could grow its DIY/consumer business - something that he was very successful at doing. Even today, the balance between trade and DIY stands at around 50/50 - a considerable achievement, considering that it is now close to 70/30 across IHG.

    One of the main reasons for this is Stephen understood early on that to take advantage of the growth potential of the area, it was necessary to appeal to a broader market, especially women. A key part of that strategy was Hume & Iser's ongoing membership in HTH. After joining its early incarnation, Pro International, the company did leave for a while in the late 1980s, but rejoined HTH in the 1990s.

    The move to Sapphire

    Stephen admits that when Metcash initially took over HTH he was somewhat sceptical about how that arrangement was going to work.

    I just didn't think, you know - how could it work? How could one company own Mitre 10, Home Hardware, Thrifty-Link, and True Value?

    I!t just didn't gel with me. So in the interim, we joined Natbuild [National Building Suppliers Group] because I thought, we're going to end up a creek without a paddle. So we joined Natbuild in the interim.

    I sat on the national council of HTH, and we merged the HTH and Mitre 10 councils together. They started talking how they're going to manage it, in discussions with Mark Laidlaw and Annette Welsh. Anyway, a path became reasonably clear of how it could be done, even though it was very complicated.
    Then IHG said they would prefer us to go along with the IHG. They said, "And here's what we can do". So, cutting a long story short, we got out of our relationship with Natbuild.

    At that stage, Hume & Iser were still an HTH store, but clearly part of IHG. The Sapphire process started later in 2017,

    Then the process started about the Sapphire program, and they introduced the Sapphire program. And the Sapphire program was for them to build 200 Sapphire stores of this size throughout Australia by 2021 or 2022. And they came to us and said, "We want you to build" what they call "the best store in town: the Sapphire store".

    What is interesting about this is that, where for most retailers Sapphire has meant boosting their DIY/consumer business, in the case of Hume & Iser, it meant improving the store's trade business.

    When this Sapphire program came up, while we had a good business, I could see that there was better layouts and that it was a fresher store. In particular, we hadn't done anything out in this area, in the timberyard, for over 25 years. That was old hat [the way it was], so I said to the board, "We could've done that out there".

    Stephen realised that, given the current market, the under-investment in the trade area had meant some lost opportunities.

    Yeah, all the racking and that hadn't been updated. Inside, it wasn't too bad. It was quite reasonable in the main store, but I said to the board, "If we do [the store], we have to do [the outside trade area].. We just have to do this". So they agreed. They could see the merit.
    Builders are changing all the time, as you can imagine, the younger ones coming through now. Most stuff gets delivered, but they also pick up a lot of stuff from the first thing in the morning to the last thing at night.
    So we had massive congestion out there [in the yard] when we had a lot of staff in there, and a lot of utes and trailers. So [IHG] came up with this plan. The group's got a lot of experience in the people that are doing this. We could've fiddled around with it [ourselves], but would've got it as nowhere near as good as what they've done.
    [IHG] gave us a whole new concept, a whole new plan for the whole place. And then we put it on a big piece of paper, and we said week one, week two, week three, and off we went.

    To read more in Hume & Iser, please download HI News:

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    retailers

    Bunnings plan places other stores on alert

    It will join Bridgestone Select Tyre and Auto in the precinct

    Proposed store is consistent with the approvals in place at Plainland (QLD), according to the developer

    The Lockyer Valley in Queensland will be home to a new Bunnings Warehouse, with a location now confirmed. (See "Stores in development around Australia" story in Big Box Update.) Commercial construction website EstimateOne had a listing for a Bunnings store in Plainland, with a budget of between $15 million to $20 million.

    Prior to a location being confirmed, the news that Bunnings was planning a store in the region sparked major concerns amongst local hardware store owners.

    Goodwin and Storr Mitre 10 owner John Storr said it was worrying, as Bunnings was already affecting his business. He told the Gatton Star:

    Even at the moment when there's no Bunnings in the area they're still having a detrimental affect on my business. There's such a big floating population of workers that work outside the area - they're going to Bunnings all the time.

    He believes the arrival of the hardware retail chain would be catastrophic. Mr Storr said:

    We've been in business for over 100 years and I don't know how well I'll do against Bunnings, to be honest. It's not just prices, it's just the volume of product they have that I can't compete with.
    If they do open up, I'll give it two years to see how it is and if I can't make a living out of it I'm just going to close up the shop.

    He claimed the big box store "decimated" small businesses and questioned how it was allowed to expand.

    Plainland's Hardware and Rural owner Stephen Rule also told the Gatton Star:

    I hope our customers would be loyal, we're a family business - all the hardware stores in the area are family businesses.

    Mr Rule claimed customers wouldn't benefit, saying prices at Bunnings were no cheaper.

    I's perception - they try to give the perception they're cheaper but they're actually not.

    He believes any job creation from the development would be offset by losses in other businesses.

    Bunnings acting general manager for property Garry James said in response to the concerns there was room for everyone in the market. He said:

    We compete with a huge range of retailers and believe that there is ample room for a wide variety of operators, speciality providers and online retailers. Bunnings is a strong employer of local residents in the Lockyer Valley, with over 700 team members employed in surrounding stores.

    Sourced from the Gatton, Lockyer and Brisbane Valley Star

    To read more in Indie Store Update, please download HI News:

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    retailers

    Ace Hardware bets on e-commerce and delivery

    Investment in technology

    The company has more stores than its rivals, and believes this will provide it with a competitive advantage

    According to a special report in the Wall Street Journal (WSJ), Ace Hardware plans to spend billions to expand its e-commerce capabilities, including a recently launched buy-online-deliver-from-store service.

    A number of financial analysts question the viability and cost of such an effort. Each local Ace store owner has autonomy from the retail cooperative's corporate head office, and over half of them - at the time the report was published in August 2019 - have yet to embrace the company's online-delivery vision.

    However chief executive John Venhuizen believes the local focus of his company gives it an edge over bigger competitors such as Home Depot which is also spending billions to shorten the time it takes to reach any home with a delivery, no matter the size.

    Mr Venhuizen spoke to the WSJ about his strategy. In response to a question about how Ace Hardware plans to maintain its market share in a changing industry against larger competitors such Home Depot and Lowe's, as well as Amazon, he said:

    In order for us to win, we've got to wage a battle on three fronts. The first is service. Having local stores with local ownerships who live in, work in, and know that community better than anyone at corporate ever will is a huge strategic advantage to us.
    The second is convenience, and what we're trying to do is exploit the geographic proximity advantage we have. Versus everyone you just mentioned - Home Depot, Lowe's, Amazon - we have a lot more stores. We have 5,200 stores around the world in more than 67 countries, and more than 75% of US households are within 15 minutes of an Ace store. We've got about USD2 billion of inventory sitting right in the neighbourhoods.
    The third is quality. We have a fanatical devotion to locally relevant, high-quality products that are different than what you can get at some of the competitors you just mentioned.

    The WSJ also asked about the bricks-and-mortar focus of Ace said it had in the past. Mr Venhuizen said:

    We're betting the farm on what we know is a timeless principle - that serving hearts and human connection will always have the potential to stir a soul.
    So how do we apply that principle? We recently launched nationally BODFS, which is a goofy industry term that stands for Buy Online, Deliver From Store. We are actually leveraging our local stores, their inventory, their vehicles and - here's the key point - their people to do the delivery to their neighbours.
    There isn't some random who-knows-who delivering the product to whip onto your porch. The person delivering the product knows what the product does, how to use it, how to start it, how to season it in. That matters. Now, sometimes it may be far less relevant, but the greater the degree of complexity, the more important the degree of knowledge.

    Mr Venhuizen also explained how Ace's delivery offerings are different from Lowe's and Home Depot that offer their own delivery, installation and haul-away services.

    We have more stores than the two of them combined. So the proximity to the homes and businesses is a significant advantage.
    Then ... the delivery is actually done by the employees who work in those stores. So it isn't outsourced to a cobbled-together, third-party strategy. It's actually done by the employees who work in the store.

    As a retailer-owned cooperative, Ace store owners have to opt into doing this delivery service, and many aren't participating yet. Mr Venhuizen said:

    It's operationally really difficult to execute, and you see retailers all over the world struggling with that last mile.
    I think we have about 2,100 or 2,200 stores now that are fully executing [the buy-online-deliver-from-store service] from Acehardware.com. Almost every Ace-branded store is doing some form of delivery on their own, and as they operationalise that, they're waiting until it's excellent before they integrate with online because the volume is starting to surge.
    We're helping them with that as best we can, but some of them still feel like they have a way to go.

    Sourced from The Wall Street Journal

    To read more in USA Update, please download HI News:

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    retailers

    Homebase technology is part of turnaround

    It is working with Neptune's DX Platform

    The IT solutions should help simplify customer ordering, product inventory and supplier management

    UK DIY chain, Homebase has adopted "low-code and agile development methodologies" to build new applications as part of its digital transformation.

    The first application is a "product look-up" mobile app for employees that will enable them to quickly look-up product details and specifications. This app will eventually have features allowing staff to reserve and order items in real-time. It will also have the capability to help customers and staff specify and order complex products, such as bathrooms and kitchens, both instore and online.

    Key to the initiative is joining up information from supply-chain and supplier systems to make it simple for the customer to know if the product is available, how quickly it can be delivered and precisely when their purchase is due to arrive.

    In addition to product selection and availability, the app will include delivery scheduling, warehousing and stock integration, requiring a high level of integration with disparate legacy systems.

    The home improvement retailer is working with Neptune Software's DX Platform that provides a rapid-application development "front end" that connects with Homebase's legacy systems. IT teams can then design, develop, integrate and manage applications demanded by the business with little or no code required.

    Natalie Kouzeleas, managing director of Neptune Software UK, suggested that low-code development approaches can cut development time by 60%.

    Paul Cannon, director of IT at Homebase, talked up the importance of moving quickly with new technology deployments. He said:

    We want to empower our teams with the right, cutting edge technology which allows them to deliver the best possible customer service.
    Gone are the days of complex integration projects that take years to complete. Now we build a new experience, roll it out to a single store, and if it works it can be live across the business in weeks.

    Homebase said the new agile development approach is a key aspect of the company's turnaround strategy, and it indicated this route will give the business a better chance to compete digitally in an increasingly competitive market.

    Small format stores

    Homebase could also be testing small-format outlets and opening new stores in cities where existing branches have closed. CEO Damian McGloughlin spoke exclusively to DIY Week recently about the future of Homebase, as the retailer works to integrate its latest acquisition, Bathstore.

    Homebase has already introduced a number of concessions into its stores to help enhance its offer, including Tapi, Ponden Furniture, Silentnight and, most recently, AHF Furniture and Carpets, Denby, and Bedeck.

    The acquisition of bathroom specialist Bathstore looks set to further expand the collection of what Mr McGloughlin describes as "complementary concessions".

    Plans are afoot to introduce Bathstore into Homebase stores in a number of different forms, from a branded presence in the home improvement retailer's bathroom offer in smaller stores, to a shop-within-a-shop concept in larger Homebase outlets.

    Homebase took control of Bathstore's website, as well as 44 stores, when the bathroom retailer entered administration in June. Mr McGloughlin said it is working closely with landlords to secure the right deals for stores, as they look into the potential for some of these sites to house a small-format Homebase.

    With 70 loss-making Homebase stores set to close by the end of the year as part of an ongoing review of the portfolio, Mr McGloughlin said:

    I think we've got the right-sized stores now, 40,000-45,000sqft is the right size for me. But we could also test smaller stores in smaller locations like high streets.
    If we are very clear about what we are and our proposition, it might be that the smaller format is a decorating shop or even a small kitchen shop. I don't know at this stage ... It's my vision and I'm still shaping it.

    Looking at ways to grow the business further, Mr McGloughlin sees potential for new Homebase stores in a number of geographical locations that don't currently host a branch. Equally, he believes there is scope to return to some regions where Homebase has closed an unprofitable store. He said:

    We would look at putting a Homebase into one of the Bathstore sites ... But, if not, there's lots of retail space out there. There are big cities with opportunities for us to go back but in a better location.

    Sourced from Computing UK, Essential Retail and DIY Week

    To read more in Europe Update, please download HI News:

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    retailers

    Mitre 10 returns to Warrnambool

    Petrie's completes its renos

    The Bell family of Kangaroo Island sold its Linden Lea Mitre 10 store in Kingscote to new owners

    The exterior of the Ponting Bros Home Timber and Hardware store in the regional Victorian town of Warrnambool has recently undergone the process of being painted in Mitre 10's signature blue colour. It marks more than a decade since the hardware retailer last traded in the town.

    Independent Hardware Group now owns both brand names. Ponting Bros operations manager Brendan Raven believes the change will entice more shoppers into the store, which has also increased its stock range. He told The Standard:

    I think Mitre 10 is the stronger brand out of two with the public perception. Customers are pleased to see the Mitre 10 brand back in town.

    Warrnambool's former Calco Mitre 10 closed in the early 2000s. The Ponting Bros hardware store, which is now owned by third generation family members, has traded at its current site for nearly a century.

    Mr Raven explains that while the approximately 4000sqm store would remain the same, the layout would change to allow it to hold more stock. He said:

    It had been many years since Pontings had made changes to their retail part of the business and it was time for an upgrade. The paint department has grown three times the size in the new layout.

    Mr Raven said despite reports of a building downturn across the state, the Warrnambool business had seen "year-on-year growth" and expected to grow its 47 staff. He added:

    We are defying a lot of the averages you hear in the city.

    Petrie's upgrade

    Renovations have been under way at the Petrie's Mitre 10 store in Orange (NSW) for the last six months. The investment has seen the addition of a 2000sqm covered drive-through trade yard, reports the Central Western Daily.

    It recently officially opened the centre with a trade breakfast and a range of activities. Customers bought in their Paslode nail guns to be cleaned and serviced and their tools to be tested and tagged.

    Several suppliers offered specials to mark the official opening of the drive-through.

    Ownership change

    A new owner is also taking over the Linden Lea Mitre 10 in Kingscote on Kangaroo Island (SA). Proprietors, the Bell family were a looking to transition and sold the store.

    Philip Bell told The Islander the family had spent more than 40 years building the business up but was now ready to move on. The new owner would keep running the retail outlet under the Mitre 10 banner and there were no major staff changes expected, he said.

    retailers

    Ace Hardware expands with DIFM market

    It buys a home repair services franchise

    The hardware retail co-operative now boasts more locations than the combined store count of its main competitors Home Depot and Lowe's

    US retailer, Ace Hardware is getting straight into the "do it for me" (DIFM) market with its acquisition of home improvement service franchise Handyman Matters. CEO and president, John Venhuizen told Business Insider the timing seemed right for the move, given the group's growth trajectory.

    Its total store network is currently 5,300 globally. Most of those locations - 4,600 - are in the United States. He said:

    We feel like we have an incredible amount of momentum. There are not many retailers in the United States that are opening stores. Many are shutting them. We opened more than 900 in the last five years and we'll open more than 800 in the next five. We feel like we're aligned with what the consumer wants.

    Handyman Matters will be rebranded as Ace Handyman Services and operate as a standalone subsidiary. The Colorado-based company has 57 franchisees across 23 states in the US, employing a workforce of 250 people who help customers with carpentry, flooring, painting, and other home improvement services. On-site services for consumers and small businesses also include plumbing, electrical and flooring.

    Ace expects to complete the integration and re-branding initiatives by the first quarter of 2020. Andy Bell, founder and CEO, will continue to lead the day-to-day business operations for Ace Handyman Services.

    At its recent buying show in Atlanta, Ace Hardware said retailers will not be expected to be franchisees, but they will benefit from the acquisition because local franchisees will be required to purchase their materials at Ace stores.

    According to Mr Venhuizen, customers have been "basically begging" Ace Hardware to launch in-house home improvement services offerings, and Handyman Matters aligned with its goal of being "the helpful place". He explains:

    It's this natural fit of bringing 'helpful' to the home, so that we have a service provider that can actually do it for the consumer. It fits naturally with what we're known for and the trust that our brand has engendered in these communities.

    It also ties in with the rise of the DIFM market where home improvement customers hire professionals to do the heavy lifting on projects through trusted retailers.

    Mr Venhuizen said there's not much of a difference between the DIFM customers and the DIY shopper. Ultimately, it comes down to the customer's appetite for a home improvement project or maintenance task, level of expertise, and the nature of the project.

    DIFM offerings

    The Ace Hardware deal appears similar to Ikea's 2017 acquisition of TaskRabbit, the on-demand platform, which links freelance workers with jobs, from handymen to movers to assistants. TaskRabbit was expected to boost Ikea's delivery and assembly capabilities.

    Home Depot and Lowe's both offer installation services through independent contractors. In 2015, Amazon launched Amazon Home Services, which also works with external service providers.

    In its 2018 annual report, Home Depot wrote that demand for installation services is expanding "particularly for our 'baby boomer' customers who may have historically been DIY customers but who are now looking for someone to complete a project for them."

    The retailer has said it is focusing more on its professional service providers because they perform services for its DIFM customers that will help the it drive higher product sales.

    retailers

    Amazon Australia launches online garden store

    A challenge to Bunnings?

    The online retail giant wants to capture a share of the gardening and outdoor market

    The gardening and outdoor retail category has a new entrant with Amazon Australia now selling pool supplies, outdoor furniture, barbecues and gardening tools.

    Since its arrival in late 2017, the online retailer has rolled out a number of different categories into the Australian market including baby goods, pets, and pantry food and drinks. Rocco Braeuniger, the out-going country manager of Amazon Australia said:

    Our garden store adds to the over 125 million products already available on Amazon Australia, underscored by great value and fast delivery.

    Amazon will inevitably compete with Bunnings and other hardware and garden retailers in the outdoor and garden market. According to a report in the Sydney Morning Herald (SMH), Bunnings claims it has over 20% of this category. The gardening segment has been valued at about $2.7 billion.

    Bunnings is using click-and-collect as its primary logistics method, while Amazon will deliver products directly to its customers. Amazon Prime members will receive free shipping and a guaranteed two-business day delivery on eligible garden items. Customers who do not have Prime can access free delivery on orders above $39 when shipped by Amazon Australia. A one-day delivery service is available in select areas across the country.

    Amazon also said it has new drones that will deliver packages to customers in 30 minutes or less in the coming months. However, items not fulfilled by Amazon and sold through third-party sellers will not be able to get free shipping and likely incur additional delivery charges and longer transport times.

    In a statement to the SMH, Bunnings managing director Mike Schneider said he welcomed Amazon's competition but believed Bunnings in-store experience and expertise would win out.

    Having our team of experts in-store means we are also able to offer great service to run alongside our online transaction capability. We typically find that many of our online customers like to head into store to pick their items up.

    Trent Rigby, senior strategist at Retail Oasis, believes Amazon's garden store launch is well-timed and could potentially pose a challenge for Bunnings and other garden and outdoor retailers. He told the SMH:

    With the scale and speed that Amazon operates at, they're a big threat in whatever category they choose to go into. Not only will they compete on price, but the direct delivery option is more appealing and convenient than click and collect.

    To prepare for the launch, Amazon commissioned research to study the outdoors habits of Australians. It found younger people are the most enthusiastic gardeners, with 75% of millennials indicating they grow their own organic fruit, vegetables or herbs.

    Veggie gardens (22%) are the number one most wanted item, followed by the outdoor barbie (21%), and various outdoor furniture (18%). Somewhat surprisingly, 15% of respondents said they would be keen to give beekeeping a try.

    As part of the launch, Amazon Australia is attempting to bring back the garden gnome and giving the chance for five people to win a personalised, handmade gnome. Landscape designer and Selling Houses Australia co-host Charlie Albone is one of the judges. He said:

    Working in the landscaping industry, I've seen many outdoor trends come and go over the years, but one thing is a certainty and that is that Australians love the great outdoors. The humble garden gnome is a classic feature of the Australian garden, and I'm thrilled that Amazon Australia is giving it a 21st century makeover.

    New country manager

    Amazon Australia will also have a new country manager when Matt Furlong replaces Mr Braeuniger who is leaving after two years in the job. Mr Furlong will officially take over the reigns on October 1.

    A former Procter & Gamble executive, Mr Furlong has been at Amazon for seven years in a variety of roles including US category leader for home improvement, tools, major appliances and smart home. For the past 18 months, he has been technical advisor to Doug Herrington, who leads the North America consumer business.

    Mr Braeuniger was appointed country manager for Australia in August 2017, four months before Amazon launched its new e-commerce business. He is moving on to take a senior international role in Europe.

    The Financial Review reports that Amazon Australia's online retail sales reached $106 million in calendar 2018 and sales from related parties (including sales from the US website) rose to $158 million, taking total revenues to $292 million, based on accounts lodged with the corporate regulator.

    Retail experts say Amazon's Australian launch has been underwhelming and sales and the number of sellers have fallen short of expectations. However, Mr Braeuniger dismissed suggestions the world's largest online retailer was struggling to gain traction in Australia, pointing to the rapid growth in its product range and services, including delivery service Prime, Fulfilment By Amazon, Global Store and, most recently, Launchpad, an incubator program for start-ups and entrepreneurs. He told The Financial Review:

    The Prime launch has been successful, we are outperforming all the other countries on a relative scale ... and Prime Day was the most successful shopping event we have ever had in Australia.

    Sources: Amazon Australia, Sydney Morning Herald and Australian Financial Review

    Related: HNN covered Amazon's entry into the Australian market extensively.

    Amazon is coming to town - HI News, page 50

    Sources: Amazon Australia, Sydney Morning Herald and Australian Financial Review

    retailers

    Did independents outperform the big guys?

    Results from IHG and Bunnings subdued

    While both Bunnings and IHG claimed that the hardware retail market declined in the FY2019 H2, the stats show the decline was not dramatic

    Looking back over the Australian Bureau of Statistics (ABS) report for retail sales in the hardware sector for FY2018/19, the slightly surprising conclusion is that non-corporate independents - those outside of Metcash's Independent Hardware Group (IHG) - have won back some marketshare.

    Before we get to that, though, let's look at how the hardware retail market performed for FY2018/19. As shown in Chart 1, for Australia overall, hardware retail sales were $19480.8 million, an increase of 2.28% over the previous corresponding period (pcp), which was FY2017/18. This was also an improvement over the growth number for FY2017/18, which was just 1.11%.

    By far the best performing state was Victoria (VIC), with revenues of $5564.3 million, an increase of 8.90% on the pcp. The Australian Capital Territory increased revenues by 5.36% on the pcp, to record revenues of $367.8 million. The worst result for the financial year was Western Australia (WA), which dropped by 8.25% on the pcp, with sales of $1958 million - its first drop below $2 billion in sales since FY2013/14. The rest of the states and territories recorded mildly positive results of around 1% growth over the pcp.

    We've heard a number of companies in the industry claim that the last quarter of FY2018/19 saw some decline in their markets. Looking at Chart 3, which contrasts revenues in the Q4 of financial years, it would seem this is not entirely statistically supported. What is perhaps disheartening to corporate executives is that so many of the states and territories are contracting, but that contraction is, overall, around the 2% range, while VIC has growth figures of over 8%.

    Charts 4,5 and 6 look contrast FY2017/18 with FY2018/19 for New South Wales (NSW), VIC and Queensland (QLD), which together make up over 76% of hardware retail revenues. The biggest surprise is probably how optimistic these sales numbers are, with big increases for VIC, and both NSW and QLD closely shadowing sales for the previous year.

    Chart 7 shows the overall numbers for Australia over FY2016/17, FY2017/18 and FY2018/19. Growth from FY2016/17 to FY2017/18 is negative during the first half, becoming positive in the second half. Growth from FY2017/18 to FY2018/19 is positive throughout the year, though only mildly so.

    What we would really have to conclude, looking at the results for both IHG and Bunnings is that they have not done a good job of capturing the potential of this market. (The Metcash/IHG financial year does close out in April, but the company remarked that trading through May and June had been in decline.)

    It's likely, given this, that the real winner for FY2018/19 has been the non-corporate independents, many of whom are in buying groups such as National Builders (Natbuild) and Hardware & Building Traders (HBT). Partly that may be because Bunnings and IHG are overweight in NSW and underweight in VIC (in terms of growth prospects).

    Metcash/IHG

    Metcash's Hardware segment, which consists primarily of the Independent Hardware Group (IHG), recorded equally lacklustre results. Excluding charge-through sales, overall revenue for the reporting period was $1165.1, up 1.9% on the pcp. Including charge-through sales, sales were $2.10 billion, down by 0.9% on the pcp.

    Hardware did show a steep rise in EBIT, reporting $81.2 million, up by $11.9 million on the pcp, a gain of 17.2%. However, the company states that around $10 million of that is the result of one-off "synergies" from the acquisition of the Home Timber & Hardware Group (HTH).

    It appears much of those synergies originate from the closure of non-performing HTH stores, and subsequent asset sales. As a result estimated EBIT from continuing operations would be $71.2 million, a gain of 2.7% on the pcp (presuming that the pcp EBIT number relates to continuing operations as well).

    Other EBIT gains resulted from efforts by the company to improve the efficiency of its operations.

    Bunnings

    Bunnings reported topline revenue of $13,166 million, up by 5.0% on the pcp. EBIT rose by 8.1% on the pcp, to hit $1626 million. In terms of total stores growth, this was 5.2%, down from 8.0% in the pcp. For store-on-store (comp) sales growth, this was 3.9%, down from 7.8% in the pcp. Return on capital improved slightly, coming in at 50.5%, up from 49.4% in the pcp.

    In his prepared remarks, Bunnings managing director Michael Schneider reaffirmed the retailer's commitment to the DIY market, while also highlighting its growth in retail to trade customers.

    While making DIY even stronger remains core. We continue to build solutions that connect our customers with local experts, making it easier and more affordable for them to have products in-store, particularly when it comes to a licensed tradesperson.
    We have expanded our assembly and installation offer to help our customers who don't always have the time or skills to undertake some jobs and projects. 18 new services were introduced throughout the year with a total of 30 services now available. Uptake from customers continues to grow, with Dux hot water installation, toilet installation and barbecue assemblies being some of the most popular services we offer.

    Mr Schneider also pointed to the retailer's growing focus on lifestyle based retailing.

    We have also expanded our in-store events and activities, making it even easier for our customers to learn new skills and bring their home and lifestyle aspirations to life. Every store now has a mobile DIY unit, which is used to engage our customers in aisle with product demonstrations, displays and craft.

    To read more, please download HI News:

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    retailers

    Bretts moves to Natbuild

    Yenckens also leaves Mitre 10

    Old alliances and wholesale relationships continue to change in the trade end of hardware retail

    Queensland-based Bretts has switched its wholesale business from Independent Hardware Group (IHG) to Natbuild.

    In Victoria, Yenckens has also decided to move on from its Mitre 10 banner. The retailer has moved most of its business to Hardware & Building Traders (HBT), and the rest over to Natbuild.

    Both businesses will continue to do some purchases from IHG, however they will now conduct their buying of large bulky hardware goods, such as timber, from Natbuild,

    Natbuild chief executive Peter Way told The Australian he was receiving a pick-up in interest and inquiries from independent hardware chains wishing to sign up to the buying group. He said:

    There has been strong inquiries and interest, and I think our service or our value proposition is appealing because we are transparent. There's no 'you get this if you jump through this hoop'. It's probably the varying difference between us and other groups like Metcash.

    The trade category is increasingly becoming a heated area of competition for both corporate retailers and buying groups as they attempt to outbid each other in appealing to the needs of tradesmen.

    Source: The Australian

    Related:

    Bretts Timber sees steel in its future - HI News, page 22

    To read more about the Independent Hardware Group results and stories in Indie Update, please download the latest issue here:

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    retailers

    Homewares, the next retail battleground?

    Bunnings, Kmart, Coles and Aldi compete in the category

    Ecommerce homewares retailer, Temple & Webster said it generated a record $1 million in checkout revenue in one day in June

    In a relentlessly competitive retail environment, the homewares category is increasingly popular among shoppers. Bunnings, Kmart, Coles and Aldi have all launched their latest homewares ranges. So has online retailer, Temple & Webster, a specialist in this sector. It recently posted its first profit result.

    Bunnings' Smart Homes Products line features throws, rugs, cushions and chairs. There are also children's homewares as well as storage items.

    Recent research from Roy Morgan showed Kmart is considered a major a homewares shopping location, with one in five Australians shopping there for home products. Its collection continues to take inspiration from Scandi minimalism and boho luxury. Young children and toddlers have also been included in the new range that features a night light.

    Coles released a limited edition homewares range over a four-week period. Its Your Home Collection had 101 items including cushions, throw rugs, lamps, shelves and storage boxes.

    Aldi has had significant success selling homewares as part of its popular weekly special buys range. Its homewares collections have included Scandinavian-style floor lamps and furniture, knit throws and French linen sheet sets.

    Temple & Webster results

    Online homewares retailer, Temple & Webster said the number of active customers on its site increased by 37% to 271,000 in 2018-19.

    CEO Mark Coulter said much of the group's initiatives are about gaining marketshare of the number of millenials wanting to buy furniture and homewares online. He told the Sydney Morning Herald:

    Our core demographic is 35 plus, and as more millennials become 35 to 38-year-olds they begin to enter our market.
    They've grown up buying everything online, and furniture is something you start to spend more money on when you're in your late 30s and 40s. That trend is happening irrespective of what's happening with house prices and broader retail.

    Customers are buying furniture and homewares online, but online sales in Australia was still low at around four per cent, according to Euromonitor, compared with 13.7% in the United States and 14.2% in Britain. The Australian furniture and homewares market is worth about $13.6 billion.

    He said Temple & Webster's growth in July showed its customers hadn't been restrained by the broader softness in retail, and he intended to bolster spending on technology including a new mobile app and expanding the range of products available beyond the current 150,000 including its own private label range.

    Mr Coulter said Temple & Webster's ''drop-shipping'' delivery model, where products purchased online are then sent to customers directly from suppliers, was enabling quicker delivery times.

    Mr Coulter also said the group's major focus was on accelerating its Australian operations and capturing as much of the rebound in the housing market as possible, rather than any offshore expansion. He believes that ''now was the time to invest''.

    Temple & Webster produced earnings before interest, tax, depreciation and amortisation of $1.1 million for 2018-19 to be in the black for a full year for the first time. It made a loss of $700,000 a year ago.

    Sources: Australian Financial Review, Sydney Morning Herald and Daily Mail Australia

    Related:

    Big business in pet care - HNN

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